ESM Bill

The government has published the bill:

European Stability Mechanism Bill 2012

Explanatory Memo – European Stability Mechanism Bill 2012

Publication of European Stability Mechanism Bill 2012

149 replies on “ESM Bill”

I saw an information booklet about the referendum that was sent to every home in the country and was wondering how many voters would be likely to understand the document given the circulation of the Irish Independent and the English tabloids.

Capital Calls, Article 9, 3

“”The Managing Director shall call authorised unpaid capital in a timely manner if needed to avoid the ESM being in default of any scheduled or other payment obligation due to ESM creditors. The 40 Managing Director shall inform the Board of Directors and the Board of Governors of any such call. When a potential shortfall in ESM funds is detected, the Managing Director shall make such capital call(s) as soon as possible with a view to ensuring that the ESM shall have sufficient funds to meet payments due to creditors in full 45 on their due date. ESM Members hereby irrevocably and unconditionally undertake to pay on demand any capital call made on them by the Managing Director pursuant to this paragraph, such demand to be paid within seven days of receipt.””

The ECB have seen how well the ‘Guarantee’ of the banks has worked in Ireland. Now its time to have a similar ‘Guarantee’ for the ECB to guarantee all its bailouts including those for Spain, Italy. This is the ESM.

Not to worry, an unlimited supply of money can now be levied on european taxpayers to pay for any debts incurred through toxic banks and any other form of casino speculation you like to dream up.

Labour/Fine Gael out there lobbying to limit liability for members of the EMU. Nope, they can’t wait to win the approval of the ECB in the race to sign it before the Summer holidays.

There’s another piece re majority voting meaning the core can gang up on the periphery or individual members and limit their bailouts and generally bully them with threats they may lose their status as a puppet state with other sanctions involving the service of the European Court of Justice in the service of rotten usory laws masked as austerity and good housekeeping.

Look it up, you couldn’t make it up!

This is the conspiracy in open view … a conspiracy to seize fiat and subsequently tax the stuff using their agents in the local fiefdoms.

If this is not shocking I don’t know what is.

For the first time in the modern era the banks wish to control Fiat itself – the last protection of truely sovergin goverments from debt slavery.

Donegal Independent TD Thomas Pringle is pursuing a case through the High Court to force the Government to hold a referendum on the ESM Treaty on the basis that it commits this country to a potentially huge sum of money (€11bn) and more may be demanded at the sole discretion of the fund. In cash terms, our commitment is far less, about €0.4bn per year in 2012-2014 but it’s still a noticeable sum.

I understood that the case is set for mention in the High Court today and that it is hoped a hearing date may be set.

I applaud Enda Kenny’s concession that the fiscal treaty, which is wholly irrelevant apart from being an opportunity for us to add momentum to the growing chorus of boos for Germany’s demands in Europe, is more important than the General election. That EF is right about this is a great indictment on both his and labour’s contribution to this State in terms of making a difference after more than a year in office – they have proved even more deferential than the ‘rabbit in the headlights’ FF government.


“I saw an information booklet about the referendum that was sent to every home in the country…”

I only skip-read it myself. Can you confirm that it doesn’t mention the word ‘constitution’ in it once?

So the ECB / German axis that insisted that the debts of the Irish banks be nationalised to Ireland with all bondholders being paid in full, now wants Ireland to divvy up €11 billion to a communal funds for all of Europe.

Will this ESM fund be available to fund retrospectively all State contributions to banks?
Of what use is the so called ‘insurance’ element of the ESM, if we are going to have to contribute such a large sum to it?

With every new turn of the page of this crisis, it seems that Ireland has been royally screwed by the ECB/German banking axis.

@Joseph Ryan

“With every new turn of the page of this crisis, it seems that Ireland has been royally screwed by the ECB/German banking axis.”

No need to limit it to just them Joseph.

One bailout and we’re anybody’s. Two bailouts and we’ll be everybody’s.

Another €11 billion hard cash to ‘save the euro’. (i.e the banking elite.)
Forget it. Enough is enough.
I will vote against the Fiscal compact.
If Germany wants to save the euro, let her pay. I have had enough.

But what will the legions in this country who depend on a cheque from Brussels do. Oh wait there will be other sources of funding including that nice woman from the IMF… No conditions.
Social Democracy in Europe is on its debt bed. Greece looks like it will be escorted out of the EU. Spain is heading for the ESM and the 70 year European project to reintegrate a certain mid sized European power into the community of nations is failing.

We will not be voting on this even more sinister plot.
After a period of time they can call on capital (Fiat) at any time they wish , oh they are not accountable to anybody.

That is a simple dictatorship with representative bagmen pretending to be democratic in each jurisdiction to give it a air of respectability.

This is not in the interests of your average German either who has been propagandised to the point of absurdity.

This goes very deep…… with many levels.
On the front page of the working class Cork Evening Echo( De real paper for some) the Lord Mayor castigates Sinn Fein for espousing simple Republican values.
He wants a rising tide to lift all boats………..where did I hear that before ?

Now I think Sinn Feins views are obsolete since European goverments were prevented from borrowing off their CB 40 years ago…. (making the relationship completly one sided – based on tax and not the even more important money issuance.)

But it speaks volumes that there is such a concerted effort by the various heads no matter how small to get this monster passed.

People need to understand that the Banks have effectivally ditched the republics they created.
There is no relationship with the banks – they have and are becoming the executives with this control of fiat and not bank collateral as their collateral is worthless hyperinflated junk.


€64 billion so far to ‘save’ European banks bondholders and what is left of the ‘Irish’ banks.
Now another 11 billion to provide an insurance policy the net effect of which is to keep the euro alive and German exports underpriced.

I have bequeathed enough debts to my children at this stage. Enough is enough.
I want out.

@ Joseph Ryan

You may be wondering how we could be in such debt to the banks since the banking sector already has 97% of the money supply deposited with it.

The reason is that money doesn’t come from being printed anymore. Instead modern money comes from bank loans.

This is the source of the dent crisis and indeed many of our social problems.

It is also the case that money is deleted as loan repayments are made which is why there’s less money during a recession. This also explains why every business, including bank’s, can struggle for profit under this system.

One way to solve many of our problems would be to have the Central Bank carefully guage how much digital money the economy needs. They would create this money debt-free


Neoliberalism is broken. Even shareholders are giving up on soi disant “meritocracy” in companies like Trinity Mirror and Credit Suisse.
What will replace it ?

Re Supporters of No campaign and their claims that the IMF will continue to fund Ireland outside of ESM etc…


“European countries have adequate resources to finance their own recovery,” Flaherty said outside Parliament today. “European countries are relatively wealthy countries. The primary purpose of the IMF is to help poorer countries.”

It should be further noted that Ireland is in a grouping with Canada and some of the Caribbean countries and often speaks on our behalf at the IMF. Wake up to the reality.

The Canadian executive like the rest gave up their limited independence more then 40 years ago.
Yee are all part of the same Clan as far as I am concerned.…/oh-canada-imposing-austerity-on-the-w…

“The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalistic fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.

Each central bank . . . sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.”

Carroll Quigley

I don’t care because I believe I understand at least the objectives of this system.
If I am right – it will not matter in the end.

Freedom is when you realize you have nothing left to loose.


What a disgrace of a Flaherty. He should be excommunicated from the clann and banned from ever entering Co. Galway.

Those right wing Canucks are nuts anyway with their tar sands oil and trying to pass it off as environmentally sustainable.

@The Dork of Cork

“He wants a rising tide to lift all boats………..where did I hear that before ?”

The same place you heard “green shoots of recovery” and “Ireland has turned a corner”

FT: Spain finalises bank recap plan.

It starts off at €30bn guys but goes up from here…… ask Ireland.

@Bond. Eoin Bond.

I am not a supporter of further borrowing at all. Particularly borrowing that will be used to fund more payments to banks, this time European ones.

If the option is a further €11 Billion to ‘save the euro’ then cold turkey is fine by me.
Cold turkey, exit euro, devalue at least 25%.
Let the Germans and French save their own banks.
They bled us enough already to keep their banks happy.

And Flaherty is correct. Europe is wealthy enough to fund its own recovery. Funny thing about wealthy people. They do not like parting with it. That is why it was socialised.

@Joseph Ryan

And Flaherty is correct. Europe is wealthy enough to fund its own recovery. Funny thing about wealthy people. They do not like parting with it. That is why it was socialised

The fact that the IMF was involved in the European component of the global financial crisis is enough to suggest to me that the EU needs to be dissolved. The richest countries on earth looking for money to bail out their banks. Shameful.

Paraphrasing FSF very slightly:

Let me tell you about the wealthy. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft, where we are hard, cynical where we are trustful, in a way that, unless you were born wealthy, it is very difficult to understand

It is the cynicism of the Fiscal Compact that gets me every time, making social democracy take the fall for the intersecting crises of neoliberalism and laisez faire financial capitalism.

“Canada’s position is that conditionality should be determined exclusively by the IMF, and not by the “Troika” of the IMF plus the European Central Bank and the European Commission. If the eurozone is seeking assistance, it should not be setting the terms under which this assistance is provided.” Flaherty is Canada’s Finance Minister

From July 2011, since updated with reductions effective since last October, but we should remind ourselves vast profits are being made by our bailouts. Also it should be noted the UK can borrow at less than 3% compared to the rates that began at 6.4% in one drawdown for Ireland from the fund in, May 2011

“The €85bn financial rescue package to Ireland is composed of: €22.5bn EFSM* (from EU27 states); €17.7bn EFSF (from eurozone only); €22.5bn from IMF; €4.8bn from bilateral loans (the UK, Sweden; €17.5bn Irish pension fund.)”

It should also be noted in a bankrupt state that has left the euro, Ireland would be in a different position to its current position on tap to the above. I’m sure Canada(Flaherty), UK, IMF, China would look at us differently and be eager to help out in such a situation.

Really this sets up a system where European sovereigns can only finance themselves via the private bond market. It’s Goldman’s wet dream.
But it’ll leave an awful mess…

@ seafóid
“I saw an information booklet about the referendum that was sent to every home in the country and was wondering how many voters would be likely to understand the document given the circulation of the Irish Independent and the English tabloids.”

What intellectual arrogance! Do Irish Independent readers not understand Brendan Keenan, Shane Ross, Kevin Myers, Bruce Arnold, Elaine Byrne, Marc Coleman, Gene Kerrigan, Colum Kenny, Laura Noonan, etc., etc.?

The Irish Times is almost on a par with The Beano or VIZ except the latter two are genuinely funnier. I’ve long given up buying the IT due to its low standards but read it online while it is still free. Mrs B reads it however and never fails to find a few howlers. Today, she rolled around the floor laughing at its earnest editorial on breastfeeding. This editorial claimed that for some women breastfeeding may be ‘technically difficult’. As Mrs B (an enthusiastic member of La Leche and mother of 3) says, “What could be ‘technically difficulty’ about putting your hungry baby’s mouth to your nipple”?

BBC: “So some bankers argue that Spain might be better off asking the IMF for emergency funds that could go directly to the banks”

So Honohan’s speech was just softening us up for that. Presume if the IMF will be able to then so will the ESM?

Some heavy stuff going down in Spain….

@ PR guy
….but that would be capitalism. It must be loaned via the sovereign to pick up the guarantee.
This is all crazy stuff. Banks go bust – its a fact of life. Let them go bust. And if systemic shock ensues let the ECB provide he emergency liquidity to keep the system going.
It’s just silly now. Implosion is about to commence.

A comforting fact is this: Ireland has fewer people to support now than it did in Napoleonic times. When the meltdown comes we should be okayish

I still haven’t quite rationalised how you ‘partially’ nationalise a bank. It still sounds to me like being a ‘little bit’ pregnant.


“When the meltdown comes we should be okayish”

What does ‘okayish’ mean? That only 40% of us will starve to death 🙁

We had the biggest historical depression this country has every seen (in monetary terms , not people terms ) after the Napoleonic war.
Although this one is bigger me thinks as the world (Europe) outside Ireland was Industrialising , unlike now.
People need far more liquid fuel now then back then……(None) but maybe the travellers on the Mallow road today are showing the way somehow.

At least Colm Mcs new roads will be used for something anyhow.

The central question is where will the Spanish fuel ration go ?…/the-brutal-economics-of-less

Europe is not sovergin so Finance can move to wherever……. it does not need others to live Frugally … it just needs a short term return in America & pegged China.

We have wasted 5 years doing nothing.
We should have been laying iron roads on those old Victorian lines while we had a chance rather then hoping for some super fantastic DART Undergrounds in the far future which will cater for a demand that may never arise.
I bet the money they paid for all those DART consultants could have got us to Youghal at least.
People just don’t seem to get it.
The 40 years of non monetizing of Treasury paper serviced interest on this stock of debt instead.
To service this they cut back on things such as the Nuclear capital programme… we have entered the early 20th century level of technological capacity by some measures.

Interest service destroys capital ,it destroys wealth as it is a from of extraction.

@ Colm

You seem to have this mixed up, again. At this time the only financier of Ireland’s assistance program who is charging any margin at all is the IMF. The EU’s mechanisms are passing on the funding at no cost. Further, the IMF will under absolutely no terms ever provide funding without a margin. That Guardian article is horribly outdated, you would only link to it to muddy the real position. The EU, having initially erred in their idiotic margining of the funding, has actually shown a lot of solidarity in their reduction of funding since then. Any expectation of funding for a rich country like Ireland from China or Canada outside of an EU or IMF program is idiotic in the extreme.

Whats this digital agenda thingy – how many BTUs does that create ?

There can be no bank credit growth otherwise known as waste with a falling BTU ration.

What can happen is the introduction of interest free treasuary paper that in conjunction with energy taxes will increase the efficiency of the state and take the destructive leverage away from the financial sector.

Lucinda Creighton is a Female Dork who believes only banks can create money.
Exchequers can make money baby.

Is Lucinda creighton the greatest gift the no campaign could have? Charmlessness not helpful to the yes cause but uniformed, contradictory and unwavering arrogance has to major boost to No….is it just me?

@ V Barrett

No it is not just you. It is alarming and sad that such people represent us in important talks. She was/is totally incoherent.

Link not yet available to last night’s Vincent Browne Show

Lucinda Creighton, in an incredibly vital political position, is completely out of her depth – and has been from day-1. I hold no personals whatsoever on Ms Creighton … but she has becomes Minister for ‘Banalities’ as VB put it last night. She clearly does not understand the European Context; yet she is proposing postions that have destroyed one generation and will crucify the next generation!

Similarly, I cringed listening to Minister of State Brian Hayes waffling on on EuroNews as they did a piece on Ireland – including the Ballyhea Protest Group and Diarmuid O’Flynn, who easlily made far more sense than Minister Hayes – and O’Flynn is best known as a sports reporter!

@Ballyhea protest group


@An Taoiseach

Reshuffle asap.

@V Barrett

“Is Lucinda creighton the greatest gift the no campaign could have? ”

Unfortunately not as she doesn’t get enough mass media coverage, just appearing on late night shows with tiny audiences.

I am constantly surprised at how someone with apparently so little ability – who appears to be way out of her depth – has this position. Maybe she speaks French or German or something and Enda thought that admirably qualified her for a European role?


What gives with Spain only putting €4.5bn into Bankia? Sounds like a bit of a sticking plaster. Though of course, it’s always better to ‘drip-feed’ bad news. Perhaps if they just put €4.5bn in at a time, nobody will notice that it’s adding up? Ha ha ha. I see GS estimates that (in addition to the current €50bn they were originally told they would need to put aside) they need to reserve another €58bn to cover bad debts in the Spanish banking system. For once I find myself agreeing with them.

Crikey! And then I read this (HT DT):

Nouriel Roubini and Megan Greene explore Spain’s problems in an op-ed in today’s Financial Times – Spain’s credit boom peaked in 2008 when the supply of cheap, external finance began to fall sharply. Four years later, Spanish banks’ asset quality continues to plummet. The sector will require €100bn-€250bn in recapitalisation later this year to maintain a 9 per cent core tier one capital ratio, the minimum stipulated by the European Banking Authority. In the meantime, there are concerns about the capacity and appetite of Spanish banks to support the sovereign, particularly amid rating downgrades and deposit withdrawals.

Spain is toast isn’t it?

You can’t beat a good laugh 🙂

Angela Merkel, one to be admired but not to be agreed with 🙂 , has postponed ratification of FC

” The German chancellor had hoped to ratify the fiscal pact, including an EU treaty creating a eurozone bailout fund, on 25 May in Germany’s parliament, six days before Ireland holds a popular vote and ahead of French legislative elections in mid-June.

She had intended the ratification, to be choreographed with a symbolic, simultaneous vote in the Italian parliament, to put pressure on the Irish to vote Yes and as signal to François Hollande that the fiscal pact, once ratified by Germany and Italy, could not be tampered with.

Otto Fricke, budget spokesman for Chancellor Merkel’s liberal coalition partners, the FDP, admitted that she was struggling to “persuade the opposition to step up to its responsibilities”, denying her a Bundestag majority.
“It may take to late June before we have a necessary majority for the legislation,” he said. ”

Enda’s decision not to postpone the Referendum is a leading contender for ‘Biggest Embarrassment of the Referendum Campaign’ followed by the award for ‘Biggest Laugh of the Referendum Campaign’.

But Lucinda Creighton is putting up an almighty campaign to scoop both awards though she’s has no rival for scooping ‘The award for Referendum Banalities’

Gilmore has been spotted pursuing Hollande begging him not to breath a word on any alterations to FC until after the Irish Referendum.

‘Quelle surprise’ , they are joking, no? No. It’s likely Merkel if there is a Y outcome in the Irish ‘fiskalpact’ will use this to persuade Hollande the original FC without changes, is fine.

@ All

On the deadening impact of near bankrupt states and banks, like two drunks holding one another up, herewith an interesting link on aiding SMEs by the states actually paying their bills without this impacting on debt limits.

This idea can be linked to a recent blog by Gavyn Davies on the “wrong kind of money”.

Looks like we need a new thread on the ‘pain in Spain’ and the increasing likelihood of a disorderly Grexit.

There have been so many occasions over the last three years when it seemed things were coming to a head and would require some comprehensive resolution, but the EU’s apparently inexhaustible ability to shore things up on a temporary basis always seemed to prevail. This time it looks like the implications of just too many ‘events’ are colliding.

@Colm Brazel

“You can’t beat a good laugh”

A couple of good pics here:

The first one of Venizelos looks like he is describing a coalition along the lines of “the one that got away.”

The second one of Merkel appears to be of her rooting through her handbag muttering, “where’s that fiscal compact I put in here last month?”

@Paul Hunt

“Looks like we need a new thread on the ‘pain in Spain’ and the increasing likelihood of a disorderly Grexit.”


Events (“dear boy”) may be overtaking us.


tks for links to those interesting docs. I particularly liked the link to the views of
Tim Congdon. It is self evident QE and LTRO has not worked, the banks have held onto the money, are not lending into the economy. Congdon makes the point there is a negative effect to expansion of the balance sheets of companies even if banks were lending, by taking on more debt, that may in fact weaken the balance sheet of a company. Congdon’s suggestion is that governments borrow directly from the banks and spend directly into the economy increasing the money supply that way. How they do that, debt forgiveness, infrastructural projects, I presume is up to them.

The issue of how to return to growth is to the forefront at the moment. Its interesting to look back to similar challenges in the 1930’s. One of the inflexibles that prevented getting out of the recession was adherence to the gold standard. Arguably the fact that the UK was the first to abandon it, gave it the heads up in recovery from the effects of the depression. Another was WW11, the war effort increased employment and people didn’t object to paying higher taxes to support the war effort and benefit from lucrative govt contracts.

Bernanke makes a similar though counterintuitive point re inflexibility re floating currency exchange rates highlighting the fixed association between Renminbi and the dollar. Sceptics of which I am one, may see the opportunity in volatile exchange rates benefit to Goldman Sachs, or underlying opposition to a world currency return to a gold standard or a new Bancor, based on a group of currencies, nevertheless, flexibility re opportunity to get out of a coffin of depression, is worth examining.

Being the first country to escape the constraints and fixed exchange rates and failures of the euro with opportunity to stabilise the economy in a future outcome based on debt writedown, rather than further destabilise the economy with further unconscionable debt from our paymasters, should be our main priority.

Clearly, the FC or fiscal corset is not a pathway to growth. It makes sense to join with sterling and using Congdon’s approach, work with the Bank of England, to stimulate the Irish economy and work a fair resolution of Ireland’s debt.

Its not stable, its ludicrous, to look to the increasingly unstable euro for stability given the disastrous ‘bailout’ we’ve been dealt by the troika.

@ CB

I think it is fair to say now that the 1tr QE was never about QE in the conventional sense – if the money was used to make margin on government bonds it was never going to result in incremental capital flows into the economy….it was about artificially maintaining yields on sovereign bonds for governments that themselves were engaged in reducing the money supply programmes – so there was never any QE as we know just….just bond price intervention and bank recapitalisation through the back door.


I’m not disputing that that is what they claim it was all about…..just making the point that QE can’t actually be recorded as having failed as no QE has actually taken place in the sense that money has reached the wider economy i.e. any stimulus affect one might expect to see hasn’t failed, it hasn’t happened in order to determine whether QE has failed.

@Colm Brazel

“Nope, Draghi has signalled LTRO participation also having important target of small banks lending out to SME’s”

Sorry Colm. Might have been me or one of the team writing the script for that…. thought we’d have a bit of a laugh after a couple of beers and pretend LTRO was going to do something useful.

@ PR/Colm

at the moment, the M3 data has only suggested that the LTRO has prevented a deeper credit contraction, rather than create any credit expansion, but there is obviously a big of a lag between liquidity and lending. Most of the banks probably wont lend out significantly unless they can access some form of additional funding in the wholesale markets, LTRO has covered most of their requirements in this for the next year or two.

@ PR Guy

Pretend? You mean ‘Your Nation Needs You = Your Nation Needs U Turn” Or something like that, lol.

LTRO is a bit like red diesel for the financial markets 🙂

We can still do a couple of beers and a laugh at some stage 🙂

@ V Barrett

I understand what you are saying now. Maybe its not only a question of banks not lending, but of SME’s not wishing to take on further credit to expand into a broken and dysfunctional economy. Part of the solution could be Tim Congdon’s (must be carefule with my spelling 🙂 ideas above.

China’s sovereign wealth fund no longer looking to invest in Europe’s financial turmoil:

Discussion of LTRO effectiveness making the dysfunctional even more dysfunctional ?

Eh – we can borrow from ourselfs ……. any goverment can create fiat money ….. issue and tax issue and tax……

Whats so special about the IMF ?

Although I agree the No camp has been captured by leftists that like giving up sovereignty at any opportunity

@ Bond

This is really reductio ad absurdum by the No camp. You quote without linking to the source,

“But we can still borrow from the IMF”

Eh, who said that?

Your article quote Megan Greene

“There’s an argument then that Ireland can just borrow from the IMF. I went to the IMF (and) asked a number of officials about it. There’s no way the IMF will break ranks with its troika partners and fund Ireland on the side.”

Ehh, where’s that, or who’s that argument from?

I suggest it emanates from the No camp and its propaganda machine. With blinkers and myopia they have reduced the argument re funding to reductio ad absurdum.

I’ve never suggested the IMF is an alternative to funding by the troika. Closest I’ve read coming near to suggesting it is Flaherty, Canada’s Finance Minister who has issue with the IMF contributing to money he thinks the ECB can pony up for itself. The only other person is Stephen Donnelly TD whose put out vague notions without any detailed argument on the issue asking where we might get alternative funding from.

Perhaps the Y camp see it in their interest to stifle debate on membership of the euro so they will not address the real question of whether we remain in the euro; they wish us to remain hogtied to the bailouts for the financial services industry paid for by taxpayers.

Outside the euro, we qualify for IMF funding. Lets try and raise the level of debate to whether we remain in a dysfunctional euro with a dysfunctional bailout on our banks; or, we leave the euro and get funding from IMF, Canada, UK and negotiate debt writedown, that will get this country working again.


“Lets try and raise the level of debate to whether we remain in a dysfunctional euro with a dysfunctional bailout on our banks; or, we leave the euro..”

Opened and reasoned debate on this issue non-existent….its as rare as an Irish economits talking about a property bubble/crashes circa 2006.

I’m still waiting to hear a reasoned case for armegeddon if we leave the euro…i’m not interested in Lucinda Creighton unsubstantiated alarmist nonsense like last night when she told us that “foreign investment into Ireland will leave overnight if we don’t vote Yes”…(I sh*t you not!)

We leave Euro – here’s the upside:

1. “Structured” writedown on private creditor debt – particularly Anglo
2. We print our own cash – devalue currency at 20-40% below Euro
3. We remain in European, a la all other non-Euro members
4. Exports surge – competitiveness significantly restored
5. Greatly improved finanical ratios make reduces borrowing costs
6. We have an instant correction rather than a spiral to a bottomless pit where we’re heading now.
7. Don’t have to listen to any more nonsense about what we do with our corporate tax.

1. Foreign investment leaves overnight – it doesn’t like more competitive base to work from with same access to European markets as before?
2. Middle and upper middle class wealth takes a hit to the tune of the currency devaluation (I suspect this is the sole reason the debate is not opened up?)
3. Risk of high inflation

@V Barret
In a free floating currency world I am not sure our currency would devalue ….. it may or may not happen given the choices the goverment makes.

I am of the opinion that if the Goverment taxes private cars off the road and eliminates oil Central heating etc etc …(in other words solves our energy problem in a real fashion without those windmill thingies )
It may not be so bad.

But the country has to solve this catastrophic stock and flow problem one way or another.
If they don’t our currency will devalue anyway solving the problem.
But we need a positive base money supply in either case.

@ V Barrett

LTRO is a bit like pouring sand into a house built on sand…..the more dysfunctioanal parts are securing the most funding, but I’d like to see charts re banks, or how much has gone where.

Re Downside

1. We seem to have this inferiority complex they’ll all leave if we raise Corporation Tax, or we leave Europe. Ireland has significant advantages in terms of security, educational standards and other ongoing support for MNC’s.

2. + 1 Bailouts are paying for our uncompetitive disadvantages, Croke Park, budget deficits, NAMA, trips to Brussels, and the financial service industry built around our own dysfunctional banks and the debt economy.

@ VB

“Risk” of high inflation?? You admitted there would potentially be 40% devaluation? ergo 40% inflation for all imports, of which energy would be a rather large one. There is not a “risk”, there is simply a fact – there will be very high inflation, which will ultimately hurt people’s real standards of living. People complain about the cost of running a car or heating their home as is.

No capital flight or banking run seeking to avoid the devaluation?

No risk of trade sanctions given that we are now outside the Eurozone and most probably the EU (there is no legal mechanism to exit the EZ without exiting the EU) and have probably just defaulted on a lot of debt?

What do you reckon emmigration would be like in that first year? Higher than current rates? Massively higher than current rates?

There is few other ways to solve this stock and flow problem caused by this catastrophic leaking of high value Euros outside the state.

But if the money stops leaking out more will be available for domestic demand = more employment.
Many car dependent outer burbs and satellite towns will have to be abandoned I imagine.
The Knots Landing like Courtown comes to mind.

Your solution is to merely stop the flow and save the hypothetical debt stock…. you can’t do that …. money must always flow.
A fiat rather then a defective credit system will channel resourses to the most effiecent areas.


Has the capital flight to a large extent not already happened – last Target2 data I saw suggested much of it has? If not wouldn’t it return as soon as a devaluation had taken place?

Your linear inflation/devaluation assumption is over simplistic and not supported by evidence from historical devaluations that I am aware of – i would suggest the vista you have painted could only occur in the scenario that the currency was not over-valued in the first instance which I think we all know is not true in Irelands case adn again looking Target2 imbalances in Europe the Euro is only under-valued in Germany, not the periphery. T2 of course would only account for over-valuation vis-a-vis our EZ partners and not international partners….on that basis Germany “euros” are substantially under-valued.

There are other factors to consider not least that we woudl be forced to change our spending habits in accordance with rational consumer behaviour – there would definitely be a push towards buying more irish for example. On fuel we have ample scope to reduce taxes/duties to dampen the inflationary impact of buying oil with a weaker currency – this would alleviate one of the major concerns. If we are living beyond our means as a nation then purchasing less BMWs, top of the range electric appliances, iphones etc…may be just what we need. We are using borrowed money to fund this party as it stands anyway.

I’m not so sure emmigration would be higher – is there that many places to go – EU unemployment is now above 10%, you have US visa issues and the picking up and going to Australia is not a decision people take likely especially if they are not just out of college (btw, all the signs are that Australia is reaping what it sowed in terms of an abundance of cheap credit/property equation now too).

Emmigration is happening anyway…..unemployment is not coming down….we are getting further and further into debt – remember access to the ESM is access to even more debt that is not for stimulus spending – its austerity financing (by 2015 our national debt servicing will be in excess of 10bn per year)….I accept the risk of inflation argument but its certainly not the 1 for 1 as you have described.

I will ignore the trade sanctions/out of EU argument….I see that as a “Lucinda-esque” argument. There is also no legal mechanism to force us to pay IBRC PN’s…or to eject us from the EZ as a result but you wouldn’t regard that as a decent argument for defaulting on that debt?

….btw….i’m not suggesting a 100% default on debt….when you owe something, you’ve got leverage….not that our government seem to grasp that point.

@ VB

1. there is no legal mechanism to leave the Euro full stop. The only way, as currently stands, to do it would be to leave the entire EU. We would then have to negotiate our re-entry, which, given aforementioned defaulting, would not necessarily be a piece of cake.

2. buy Irish? Like Irish cars? Or Irish machinery? Or Irish energy products? We have one of the highest import levels in the world, we’re just fortunate enough to have one of the highest exprt levels as well. And what are you going to pay for the fuel or other imports with? A currency that no one is entirely sure the value of?

3. There has been capital flight chiefly from corporate and institutions. Personal consumer money will rocket either North of the border or whizz its way electronically to the continent. And the richest people will find this the easiest to do. This capital flight would undoubtedly lead to emmigration – there’s no way the money gets to come back tax and devaluation free afterwards. Anyone who managed to get money out of the country would almost certainly have to follow it out themselves. This is why Iceland is still maintaining tough capital controls, but its an island, a thousand miles away, and which is not part of the EU or EZ. It’ll be far easier for Irish people to exit the country with their capital.


At some point either the stickiness of the internal devaluation will have to be addressed – if not…


Same Armageddon scaremongering they played on Ingmar Grimsson et al, 7.5% unemployment and Iceland is back in the bond market though it was said they’d be ostracised forever 🙂 They cleaned up their act and the markets appreciate such cleanups.

In austerity europe, Financial services industry, Corporation Tax, a grab at incomes/salaries for middle class with higher taxes, reduced spending on the public service as they grab those payments for the bank debt. Universities here already feeling the pinch, think of downsizing in terms of size and standards. Only good news for the financial services sector here is from Aviva they’re not reducing the workforce 750, only 500…thanks. The price of austerity is Ireland turned into a chicken coop run remotely from Brussels ostracised from decision making by the ESM ‘majority’ vs ‘minority’ voting system having cashed in its sovereignty; budgets now have to be sent for approval…..3000? more this year from the banks to be let go?

To be fair all is not well with the SF ‘No’ campaign. They won’t exactly support joining up with sterling, will they; even though we would have far more clout in a UK of Scotland, England, Wales, Ireland, than the scarecrow role prepared for us by ESM ?


Same Armageddon scaremongering they played on Ingmar Grimsson et al, 7.5% unemployment and Iceland is back in the bond market though it was said they’d be ostracised forever 🙂 They cleaned up their act and the markets appreciate such cleanups.

In austerity europe, Financial services industry, Corporation Tax, a grab at incomes/salaries for middle class with higher taxes, reduced spending on the public service as they grab those payments for the bank debt. Universities here already feeling the pinch, think of downsizing in terms of size and standards. Only good news for the financial services sector here is from Aviva they’re not reducing the workforce 750, only 500…thanks. The price of austerity is Ireland turned into a chicken coop run remotely from Brussels ostracised from decision making by the ESM ‘majority’ vs ‘minority’ voting system having cashed in its sovereignty; budgets now have to be sent for approval…..3000? more this year from the banks to be let go?

To be fair all is not well with the SF ‘No’ campaign. They won’t exactly support joining up with sterling, will they? Even though we would have far more clout in a UK of Scotland, England, Wales, Ireland, than the scarecrow role prepared for us by ESM ?

I am not entirely sure what the Euro is worth either – it is a very novel new hybrid money experiment kept alive by $ swaps if you believe some.

Its pretty clear that Irish Exports for the most part operate withen the Ireland inc criminal structure rather then Ireland.
Apart from some local areas such as Corks lower harbour they do not contribute a hell of a lot to Irish domestic demand.

Ireland Inc is a very sick and thee most extreme market state experiment imaginable – its needs to be put down.

“It will be forced to pay the remainder of the €11bn if a member state calls upon the ESM in an emergency bailout situation.” Oh, Yes! Eamon and are you telling us that is not a racing certainty? At the moment the fund is not even established and we have Portugal and Spain both requiring a bailout. Spain is trying to get the EU to set up an EU bank resolution body but they are too late! They will need to nationalise many of their banks and they will need to be bailed out.

“A Department of Finance spokesman confirmed that the initial €1.27bn Ireland is due to pay will make up a European target of €80bn.

Having shored up a collective €80bn from the 25 states that are expected to have ratified the preceding stability treaty, the fund can then enter international markets and aim to raise up to €700bn.”

So Ireland’s contribution is to come from Bailout No 1. so that we can line up Bailout No. 2 ( “ludicrous” thought) from a fund, which itself intends to leverage up 800%. Now, that is what I call a big stinking mess that can and will blow up. Am I the only one in the country that thinks we should not borrow another red cent? The “yes” campaign keep asking where is the money going to come from to finance Croke Park after 2014. They talk about paying the salaries of garda, nurses, cleaners etc., the subterfuge is where is the money going to come from to keep the golden chariot of the public sector rolling along if we cannot borrow 40% of our salaries. My answer is, that it is not my problem but it becomes my problem when the people we have selected to run the country are scratching each others backs and are so fixated on borrowing that everybody else’s future flies out the window because that is what is happening. Our government are in a debt induced coma. Back in 2010 when there was an existential crisis looming they decided to dodge bullet after bullet with blanket guarantees, NAMA and Croke Park it was crony capitalism at its worst. I don’t want any more borrowing and if that means all your mortgages have to be frozen to stop you going bankrupt when your salaries are slashed then so be it. After all, we are very good at the creative OBS SPV stuff. I am sure we will survive and more importantly we might actually make some structural changes required. Yes, I know SW will have to be halved and yes I know the quango’s will no longer be affordable, that the semi states will have to be taken back and that the luxury of NAMA and IBRC won’t be tolerated for much longer but hey they have had a good run have they not? There is always the other option fessing up to the fact that a looming debt to GDP ration of 120% and that’s before our plan to borrow another 40bn to 60bn and just looking for a Greek style write down of our debt to sustainable levels that is under 90% of debt to GDP and preferably 80%. BTW remember I said back in 2010 that European banks were hiding hundreds of billions in bad loans and that American commentator Meredith Whitney said that she would not touch European banks with a barge pole because they were hiding hundreds of billions of losses. Well the chickens are coming home to roost!

@ Colm

capital controls, the value of the Krona and the rampant inflation of recent years. You always seem to forget this in favour dual posted meaningless rhetoric.

re SF and sterling – bizarrely, SF supporters also have the highest inclination to rejoin GBP. They are no longer an anti-UK party, they are an anti-Euro one.

@ VB

Re “There is also no legal mechanism to force us to pay IBRC PN’s…or to eject us from the EZ as a result but you wouldn’t regard that as a decent argument for defaulting on that debt?”

I don’t think I’m being overly cynical or sceptical in my belief the only reason for the draconian terms of the ESM ‘blackmail clause’ is the backstop given to ESM via the European Court of Justice empowered to take you to court with sanctions if you default on ELA/PN’s, or any other drawdown on bailout from EFSF or a future ESM.


based on that analysis you have presented your main problems seems to be with devaluation generally rather than leaving the euro. From a national perspective it matters only that our trade balance is positive…..and that positive balance would be significantly enhanced with a devalued currency, this is what pays for the dearer machinery, this is what stops irish people buying foreign imports they don’t really need until they have enough again. are you really suggesting, that all else being equal, a devaluation would be a bad thing for Ireland? I think you would be hard pressed to get much support from anyone from Creighton to Krugman on that one.

You have ignored the fuel counter measure i have suggested which could easily offset higher purchase price….I’m not sure what you mean about the money not being able to come back devaluation free? Will the notes be marked as former Irish euros? Would we be putting barriers up to capital inflows following devaluation. Btw, you don’t need to be rich to open a foreign bank account, but you probably need to be rich to be bothered.

There is no doubt it will be a hell of mess but that only brings us back to where we are now but the difference is we would have a much better chance going forward. it is inconcievable that any of the 400k unemployed in this country would not support such a move – they of course are powerless and don’t have wealth to protect unlike the ruling classes – so i’m not expecting this to happen any time soon.

Re “re SF and sterling – bizarrely, SF supporters also have the highest inclination to rejoin GBP. They are no longer an anti-UK party, they are an anti-Euro one.”

That would be a mature debate I would like to see. Perhaps a few L&H debates at UCD with speakers for and against?

32 counties Ireland with GBP in a Commonwealth, Scotland, England, Wales, Ireland….cool 🙂

To quote Keynes….

“if a reduction in money-wages leads to the expectation or even serious possibility of a further wage-reduction in prospect it…will lead to a postponement both of investment and of consumption”

…this is what is happening in Ireland today throught our attempts at internal devaluation and the vista of years of austerity budgets that the man on the street sees before him. This state of flux as identified by Keynes is going to continue here for years.

On balance has the Euro and all that it entails (no interest rate control, overvalued currecnty etc.) helped or harmed Ireland – if you believe the latter to be the case (and the evidence seems to be overwhelmingly in this direction) then why are we so afraid of extricating ourselves from it. In truth we’ve never been a brave nation, and our current government, a mirror image of the last, appears to be particularly spineless.

Angela is correct – Europe does not need more debt….
Countries withen it however need money growth.
Otherwise this stock of debt BeB wants to peserve will destroy all physical and human capital step by step , row by row.

Waldorf : “Listen Denver – you’re a good kid, let me help you get away so you don’t have to do this crummy show.
John Denver : “wait a minute I want to work with the muppets”
Waldorf : “you are beyond help.”

The longer these Canute’s try to stop the flow the more damage that will be done to the physical world as even the stuff that can and should be saved depreciates into dust to service a metaphysical debt.

@ Robert Browne

“So Ireland’s contribution is to come from Bailout No 1. so that we can line up Bailout No. 2 ( “ludicrous” thought) from a fund, which itself intends to leverage up 800%. ”

Never realised that. I assumed as we are currently in bailout 1, bailout 11 would come from ESM, but entry would be paid for out of bailout 11. So, where’s the money to pay for Spain’s banks going to come from in our next budget?

Rajoy has taken 45% share nationalising Spain’s Bancia with ¢4.5 bn investment, but we know that’s admission money to hide the mess for a few weeks …..

FYI Howlin seems to be questioning the role of the European Court of Justice in the FC, Article 8 refers to 3.2 in the Compact (read 3.2 yourself)

I think Article 8 is quite clear about the role of the European Court of Justice, judge for yourself:

“Article 8
1. The European Commission is invited to present in due time to the Contracting Parties a report on the provisions adopted by each of them in compliance with Article 3(2). If the European Commission, after having given the Contracting Party concerned the opportunity to submit its observations, concludes in its report that a Contracting Party has failed to comply with Article 3(2), the matter will be brought to the Court of Justice of the European Union by one or more of the Contracting Parties. Where a Contracting Party considers, independently of the Commission’s report, that another Contracting Party has failed to comply with Article 3 (2), it may also bring the matter to the Court of Justice. In both cases, the judgment of the Court of Justice shall be binding on the parties in the procedure, which shall take the necessary measures to comply with the judgment within a period to be decided by the Court.
2. If, on the basis of its own assessment or of an assessment by the European Commission, a Contracting Party considers that another Contracting Party has not taken the necessary measures to comply with the judgment of the Court of Justice referred to in paragraph 1, it may bring the case before the Court of Justice and request the imposition of financial sanctions following criteria established by the Commission in the framework of Article 260 of the Treaty on the Functioning of the European Union. If the Court finds that the Contracting Party concerned has not complied with its judgment, it may impose on it a lump sum or a penalty payment appropriate in the circumstances and that shall not exceed 0,1 % of its gross domestic product. The amounts imposed on a Contracting Party whose currency is the euro shall be payable to the European Stability Mechanism. In other cases, payments shall be made to the general budget of the European Union.
3. This Article constitutes a special agreement between the Contracting Parties within the meaning of Article 273 of the Treaty on the Functioning of the European Union”

re- Colm Brazel:”the ECB have seen how well the ‘Guarantee’ of the banks has worked in Ireland. Now its time to have a similar ‘Guarantee’ for the ECB to guarantee all its bailouts including those for Spain, Italy. This is the ESM.”

I’m only speculating here, but is there any chance that Spain has recapitalised Bancia despite it’s distressed situation under the same sort of ‘ECB duress’ mentioned by Colm McCarty – and admitted by Jorg Asmussen – when talking about the Anglo promissory notes ? Are there any ties that bind Bancia to bigger institutions outside the country ?

@ Mark

Spain has saved Bankia because the Europeans policy is for sovereigns to backstop their banking systems. You can disagree with its merits but not it existence. Bankia was a caja and so very internally invested and focused, but is ultimately the thin edge of he wedge. It’s not big enough to take Spain down (in relative % of GDP terms its probably about 10% of the size of Anglo). The bigger question is what happens to the other Spanish banks – Ireland had 6, Spain has a few dozen.


Lucinda LIVE at the Vincent Browne show … view and weep …


View the VB show: who would you prefer to be representing Ireland’s interests – Lucinda Creighton or Peadar Toibin? Sinn Fein are the pragmatic EU realists leading the pragmatic realist oppositon at the mo. As for Minister of State Hayes on EuroNews – he sounded like a PR Guy for the Bank Bondholders! This admin is simply not communicating the ‘nature’ and ‘form’ of the Irish Debt Load to fellow Europeans. If this is not being communicated then how the hell is one ever to negotiate a suitable ‘restructure’ or ‘writedown’ if and when an opportunity becomes available.

The Road to Damascus via Berlin and Frankfurt and Ballyhea

Breaking a German Taboo
Bundesbank Prepared to Accept Higher Inflation

Germany’s central bank has indicated it may tolerate higher inflation in Germany as the price of rebalancing economies within the euro zone. The move marks a major shift away from the Bundesbank’s hardline approach on price stability. Economists have hailed the decision as a “breakthrough.”

On Wednesday, Jens Ulbrich, head of the Bundesbank’s economics department, told the finance committee of the German parliament that Germany is likely to have inflation rates “somewhat above the average within the European monetary union” in the future and that the country might have to tolerate higher inflation for the sake of rebalancing within the euro zone. Inflation would, however, only rise from a very low to a moderate level, Ulbrich said.

Spose it will be more of the Kant_er_ing as distinct from the Gallop_er_in variety …

@ Mark


It’s a story of snow white and the seven dwarfs or cajas…If you follow our experience, the bill goes up and up. They are frantically trying to push through the ESM before this happens. Other banks then join the queue. Then they get ESM. They don’t like dodgy PN/ELA that allows a new Govt to say, hey!, not paying any more of that, we’re going to default. So, they’ll weed up a big ESM bond having secured Spanish taxpayers with the FC.

ESM is meant to be Prince Charming ready to wake up Bancia’s Snow White…it’s all just another one of these ponzi, debt scams…The twist is ESM is no Prince Charming, but you can figure the rest out for yourself 🙂

Meanwhile -for Psephology Addicts such as Loose_Enda all eYES on North Rhine-Westphalia this weekend for those who cannot stand either United or City!

This Sunday’s state election in North Rhine-Westphalia will put Germany’s new political landscape in the spotlight. A multitude of parties is making it more difficult to form governing coalitions and a growing focus on personalities has analysts speaking of the ‘Americanization’ of German politics.

I hope those Deutsche Pirates do Well – I sick to the teeth of the Vichy_financial system pirates and the way they have looked at us and ransommed the country …. I hear that Minister Hayes now has a Jolly Rodger tatoo … just a rumour from a usually unreliable source …

@DOCM & All

Patricia_the_Irish Sovereign_in_Exile has now restored full diplomatic relations with France.

Her comments on that ‘little’man remain ‘off the record’ under the 30-year rule. She is meeting Francois later this week for informal and frank-hiberno discussions on the ‘vichy_financial debt’ question, a spot of tea, and a few glasses of red wine. tbc

She is recommending a NO vote to her loyal citizenry on May 31.

As she put it to me in one of her agile moments and on the record – “You know, Blind Biddy has more balls than the entire Irish cabinet strung together”. Biddy, as we probably all know by now, is a Munster supporter and always ‘stands up and fights’.

re – Eoin Bond & Colm Brazel

– thanks for the replies, your patience & indulgence is appreciated.

Re your link
Interesting report ….if accurate would seem to indicate that Hollande has already outflanked Merkel.
Should help if she loses the weekend election.

@David Od

Regarding Lucinda on the Vincent Browne show, it was interesting that she went so far as to suggest via a combination of words, body language and tone, that as a matter of principle it would have been WRONG for Ireland to have made any attempt to resist the insertion into the ESM treaty of the requirement to sign up to the Fiscal Compact.

Leo Varadkar on an earlier VB show said he hadn’t heard anything to the effect that the Irish side had actively sought to have that requirement inserted, but it is hard to square Lucinda’s performance on that show with the idea that Ireland raised any objection to its insertion.

Stephen Donnelly noted that he got strange replies from Noonan – eg ‘I can confirm I was at the negotiations’ in response to ‘Did you raise any objection to the change to the ESM Treaty?’.

It is difficult not to look at the government and conclude that they are a bunch of people in the main with little initiative and who are still slightly surprised they have actually got a turn in charge.

Your conclusion is apt. Having taken direction from Merkel they are now kinda perplexed about this growth thingy and don’t know how to react. They are going to look very foolish when Hollande does a deal with Angela next week.

Btw, I notice they managed to change the name to the “stability” treaty in the booklet and in the introduction say it is about “growth”. I thought there was a requirement for balance….

@ Grumpy
“It is difficult not to look at the government and conclude that they are a bunch of people in the main with little initiative and who are still slightly surprised they have actually got a turn in charge.”

They have very little room to manoeuvre. We are nothing to Europe and we have an impossible mountain of debt to pay back. We are fubard and they know it.

We have no more cards to play. Our previous minister for finance and his advisors made sure of that. We just have to sit tight and wait for others to bring the thing crashing down. Then we take advantage, in whatever way we can, of the chaos. Our history is full of poorly timed rebellions – all based on a juvenile belief that right has some might. The world is a hard place – if you’re stupid you pay for it – we are paying for it…..


based on all the fumbling utterances and generalist banalities available, and the exceedingly uncomfortable body language, it looks like they sat in there furtively at the back of the class in an uncomprehending cloud of silent supine speechlessness … and hadn’t really thought about let alone figured out what was going on.

… this is not a strategy, nor is it a tactic. It is frightening.

Pity we didn’t send Tobin and Donnelly … at least they do know what is going on, and are more than competent to state facts and make realistic arguments. Anyone sane is beyond ideology at this stage.

You have a very defeatist attitude…… all is not lost.

The forces of darkness are slightly perturbed by all this me thinks.

I noticed Yanis Varofoukis clamoring for the EFSF to recapitalise the Spanish Cajas.
” Just take the Spanish government out of the ‘banking game………”

What he really means is to take the Spanish goverment out of the money game in case they get ideas.
As I said before the European project plans to take the Fiat power completly out of the hands of Goverments via the more formal ESM.

I cannot begin to describe how truely dangerous this is….. we must stop this before the banks gain full fiat power.
As Once they gain this all will indeed be lost.

A second more devastating Scouring of the Shires will be the result.

@Colm Brazel

“Rajoy has taken 45% share nationalising Spain’s Bancia with ¢4.5 bn investment, but we know that’s admission money to hide the mess for a few weeks …..”

Where I come from, €4.5bn is simply ‘going blind’ first round (if you’re a card player you’ll know what I mean).

@Bond Eoin Bond

“The bigger question is what happens to the other Spanish banks – Ireland had 6, Spain has a few dozen.”

That indeed is the question.

One assumes that deposits are flowing out of them at a rate of knots just now. It’s been more than just a slow trickle out anyway for the past few months. What is Switzerland going to do with even more Euros looking for a new home?

@PR Guy

I hear that Switzerland has leased the Castlecomer and Arrigna coal mines – and that The Dork has a little consultancy going on the qt


Will Angela Merkel know when to go?

10 May 2012 Presseurop Die Zeit

“How much longer?” wonders the Die Zeit headline over a picture of Angela Merkel, who no longer has many friends in Europe at a time when she is about to undergo a fresh electoral setback in 13-May regional elections in North-Rhine Westphalia. Arguing that virtually all of Germany’s chancellors have clung on for too long, Die Zeit editor Bernd Ulrich insists that now is the time for a look back over the Merkel years.

Simple and without any experience of speech making, the Protestant pastor’s daughter, who was born in East Germany, succeeded in establishing a rapport with the entire nation, and especially with West Germans whom she judged to be “spoiled, as well as a little cowardly, and lazy”. As for the West Germans themselves, they were soon to be “merkelised” – caught up in cult that worshiped her supposed weaknesses of sobriety and a lack of glamour. And it was the euro crisis that marked the high point of this transformation. As Ulrich points out-

In 2005, Merkel felt she had to give Germans a boost. Today she has to convince her voters to help others, to keep a clear head, and most importantly, to continue their wise and zealous consumption. Her policy has been completely reversed. The question is: has she completed her mission in Germany? Has she migrated to Europe? […] Were it not for German normality, and the fact that it is protected by an ultra-normal chancellor, Europe would have been plunged into chaos ages ago.

Far from imagining an imminent end to the Chancellor’s career, Ulrich concludes-

It may be that the German Merkel is now in decline, while the European Merkel is still at the height of her powers. Perhaps we no longer need her here, but rather in Europe. […] She is only 57 years old, and is thus a woman politician with a future. However, where exactly that future lies remains to be seen.

Have you figured out how Peadar and the boys would pat social welfare in the inevitable event of a no vote. The Shinners strategy appears to be no reform, tax somebody else and blackmail the Germans. I doubt it works. As regards Hollande’s deal, Merkel has ruled out any further borrowing in the Bundestag and both China and Norway seem disinclined to fund Europe’s L’oreal lifestyle.
Anyway good luck in your new party.

She is completly correct with regard to Europeans getting into more debt to its banks , she will however not countenance exchequers making interest free greenbacks ……
Germany does not fear Wiemar – it may however fear the power of the more corporatist Mefo bills.
It therefore prefers to borrow on our accounts so that it can remain pure.

PS the only mining work I have done was dig up some bogs in Scotland……. [h/t Irish Left Review

Just came across and thought it was worth a mention here. This is from the About page: is the Socialist Party’s anti austerity treaty campaign website, and was set up by Paul Murphy, Socialist Party & United Left Alliance MEP for Dublin. We are part of the broad-based Campaign Against the Austerity Treaty, and encourage everyone opposed to the treaty to get involved with their campaigning activies.

The following is why you should vote no: read on


Your support on the NO side, notwithstanding those residual ultra PDee leanings, is appreciated. Dev Og is apparently really chuffed, but both Gerry and Honest Joe regret that they are unable to consider your applications for membership at this time.

I remain, heteodoxically and independently yours, etc

The 6 o’clock on Merrion Square stands if and when you decide to leave the RRA (roight ranting anonymous) – but in June as your vote could yet prove vital on May 31.

@The Dork

Print Baby, Print Print Print Print loads of Sovvie write off dosh in Frankfurt or the EZ is done done done toast toast toast …. as Irish evidence empirically demonstrates [sat sig*****] – the Conflationist Fallacy is the Real Road to Serfdom … (-;

That I do but for completely different reasons. Most of the no side think it is a vote against austerity. I think it brings real budgetary reform, the breakup of the euro, the end of the French version if the European project. Of course there a few nasty side effects which necessitate putting a few bob offshore if you can. Against that the total humiliation of Mr Hollande and the European left would be welcome. I am afraid your new pals in SF are in for a shock. BTW, I would keep quiet about that around Adare.

Perhaps I’m jumping the gun but I’m hearing from PR colleagues in Greece that Samaras, in addition to that smaller lefty lot whose party name escapes me, is also offering to support Venizelos (e.g. in parliamentary voting etc.) to form a loose coalition with a small majority but not be ‘in government’. I’m not quite sure how they would organise that but if they do end up back in power as such it’s quite amazing how democracy works – the Greeks quite markedly voted against these two main parties but may be getting them back running the country…. streuth.

I’ve been saying for a couple of days now that I thought Venizelos is the ‘wild card’ – I’ve met a lot of powerful and power-hungry people in my life and he has a thirst for power just oozing out of every pore. If he needs to pretend to go along with some form of ‘government of national unity’ for the time being to achieve his own ends, I have absolutely no doubt he will.


In the end, if you are a Greek politician, have got yourself elected on a manifesto of ‘no more austerity’, ‘no more bailouts’ ‘stay in the Euro’ etc, what do you do if your plan goes wrong and you are actually in a position to be in government?

@ PR Guy/Grumpy

all the politicians in Greece are just positioning themselves for the next election, to say they “tried” but couldnt get a govt together. No one is serious about forming a coalition. There’s around a 1% chance of a govt being formed.

@ PR


Kouvelis (DL) has just announced he wont join the coalition fyi.

I’m revising that to 0%.

It looks like quite a few Greek voters (and far more than I’d expected) needed to have a good peer in to the abyss. They’ll have a chance to re-consider before the next general election. I expect the Troika will exhibit some forbearance while they re-consider.

It also appears that quite a few Irish voters would like to have a good peer in to the abyss. The difference in the Irish case is that if enough of them choose this option they are extremely unlikely to get an opportunity to re-consider.

If I were the leader of Pasok or ND, I would want a replay in June with a letter from the Troika in every letter box spelling out the stark choice for the Greeks. Vote for the Bailout or you will leave the Euro/EU.
If I was a twisted pro European Greek pol, I would ask the Merkel to visit Turkey and advocate closer ties between the EU and Turkey.

I reckon the vote for that Geek version of Richard Boyd Barrett would collapse.

@ PH

At this stage rather take my chances in the abyss than staring down the tunnel of sh*t we are facing for the next 10 years or more.

We have an outside Greek economist/consultant giving us updates. He reckons 90% of Greeks dont realise that they actually could be looking at an EZ exit. 80% of them want to keep the Euro, but 70% of them are dead set against the Troika programme. Difficult to get those two in balance.

@V Barrett,

Good luck. You’ll have your chance to vote to jump in very soon.

@Mr. Bond,

Two other percentages are more fundamental. 50% of the voters don’t want to pay tax; the other 50% want most of any taxes collected (plus any borrowing secured) spent on them. That’s a definition of a failed state. It’ll take more than the few weeks of the campaign before the next general election for the Greeks to begin to reforge some sort of the necessary common national bond. But I reckon they’ll give it a go.

These percentages are much better in Ireland, but they’re heading in the wrong direction. The referendum vote won’t capture these percentages precisely, but they’ll give an indication of the extent to which they’re heading in the wrong direction.


The Communist Party of Ireland said in a statement that the suspension of the German government’s ratification of the fiscal treaty and the ESM treaty “must send a strong warning signal to the Irish people. These two treaties pose a serious threat to their livelihood and to what little remains of their democracy and sovereignty. There is growing opposition throughout the EU by working people, who are sick of endless cuts with little if any prospect of relief any time soon . . . ”

not quiet as much as you think. The bottom 80% of households in Ireland pay less in direct tax than they receive in transfers.

A No vote will significantly change Irish society in that it will lead to a massive income transfer from the sheltered sector (including some of those on welfare) to the private sector. In general rent seekers will get squeezed but some innocent people will be hurt too. I do not think the bulk of the No campaign realise this. In some respects they are like squaddies in some WWI trench about to be sent over the top by General Gerry and Colonel Boyd Barrett. The latter of course are holed up in a Chateau miles behind the lines.

My two favourite data points
*Greek OAP retirement income for a couple cut from 1100 to 600 per month-the innocent victims
*Greek university professors salary 31k, Irish ????. I wonder what Greek GPs earn.

re Vote for the Bailout or you will leave the Euro/EU.

Since when did the Troika get the power to throw people out of the EU?
I seem to recall Germany, either Merkel or Schauble, proffering this choice for Greece.

Come to think of it, why must the act of default be a reason for exit from a currency union?
There is no reason that comes to my mind other than that of a threat to pay up. And that is what it is.
If Greece or Ireland or Spain cannot pay its debt, then they should not pay the debts, to whomever they are owed. The exit of the single currency would merely prevent the build up of another tranche of bad debts years down the line.

And this currency is not going to be there years down the line.


I understand precisely where you’re coming from and, though you might be over-estimating the mayhem that a ‘no’ vote would generate, the divil in me would love to see it. Your reference some time back to the look on the faces of the mollycoddled certainly resonated with me.

Maybe it is the kind of shock the system requires. But I’m not sure it would have the impact or intensity you anticipate. What would really gall me is that those who should be really taken to the cleaners would escape unscathed; while the genuinely innocent and fearful would get a hosing.

I would still put my faith in a few ‘events’ – on a much smaller scale and more precisely targeted – that would blindside the ‘powers-that-be’.

But these may not happen – or may not happen as I envisage. So you may get your wish. And the current indications are that you will. Some of those on the so-called ‘left’ are calling, hoping, praying for a postponement of the referendum so they won’t have to publicly make a choice. The rest just want to bring it on. The blood is charged; the Red Flag has been unfurled; and the Mythic and Transcendental Republic might be secured at last.

@Bond Eoin Bond

In fairness I didn’t see the Kouvelis statement before going for more than 1%. It’s now a dead parrot then.

So… logic says that a few more people will vote for ND and PASOK next time round, they will just about squeek a majority and Greece will simply be back at square one but this time without a ‘technocrat’ PM?

Afterthough… mind you, Syriza could pick up extra votes from the smaller parties too as they seem to have acquitted themselves fairly well over the past week.

Then, when New Dawn doesn’t get any seats in the next election they’ll be out smashing the place up saying they were robbed of democracy.

@ PR

i think you’ll see the bigger parties do better this time, there was an element of protest vote for the smaller guys last time out. I assume people will be a bit more thoughtful this time around.

@ DoD

things are getting weird when you reference SF and the Communist Part of Ireland in your recent posts. Turn back from the darkness. We trust you won’t be setting up a New Dawn in Ireland?

@ PH

yes, lots of wake up calls required for lots of people around Europe i feel.

Blankein said recently that he thought the greatest risk was that everything could go right.
There is only a 10% chance of everything working out ok. So let’s say Greece holds another election – how long does the new govt last before it has to call out the ranks?
Let’s say Hollande starts cutting – how long before the strikers are on the streets?
Let’s say Cameron gets tougher how lol before he gets it too.
This low grade but steady building up of frustration is lethal politically. Something’s going to bliw


I leave the New Dawn to Tull …

Worth noting that The Workers Party are also advocating a NO vote. The Dublin Unionists will declare for a NO next week …

Sinn Fein are leading the opposition at the mo – and as I noted above (wrt to the VB show) I’d much prefer a savvy Peadar Toibin to be representing Ireland in Europe rather than Lucinda who appears capable of selling out a future generation with the stroke of a banality and without even realising that she was doing so.

As for the CP. I’ve popped them in before here [they have a good debt clock on their website] – I’m very cosmopolitan when it comes to political discourse – and it appears that quite a few on this blog are incapable of discourse with any intelligent and pragmatic left of centre (they simply toss puerile insults) – touch of the Tally-Ban Randite Roight about them …. and without discourse it is impossible to reach an agreed definition of a situation which is a prerequisite to finding common ground on achieving plausible solutions – Pragmatic Political Science 101


Don’t fall for the Conflationist Fallacy – Let them go bust …. and force the hand of the ECB!

This week’s move by Spain to nationalize the country’s fourth-largest bank almost overnight is just the latest in a financial sector crisis that has been growing since the Spanish real estate bubble burst. It is likely to increase calls for Madrid to accept financial aid from its European partners.

…In contrast to their German counterparts, the Sparkassen, which are only allowed to do business in the areas where they are located, the Spanish eliminated such a “regional principle” in 1988. This allowed all the country’s cajas to participate in the construction boom that saw large parts of the country’s coast dotted with new concrete apartment buildings. It is estimated that the cajas are currently saddled with €180 billion ($233 billion) in troubled mortgage loans.


it strikes me that you might be closer to the Greek fascists than me given your worship of the Shinners. Placing store in the word of a party who leader denies what he denies strikes me as either naive or well lets just say naive.

I am also bemused at the dishonesty of the Left wing of the No campaign. I would have thought that you would at least have the honesty to spell out the consequences of a No to the electorate. These could include massive cuts in spending, services, salaries and transfers, possibly increases in taxes, default, loss of savings etc. But you never do. I am forced to conclude that you are therefore either naive or lets just say naive.

@ Tull
You’re position is interesting. You know a no vote will bring disaster for the country and yet you still advocate it.
I don’t understand.


I am sorry if I was not clear. A No vote will preclude access to official funding post the end of the programme-sometime in 2014. We are not going back to bond markets in the medium term as they are thoroughly fubared by the European politicans. This is the case for all bar the iner core.
Therefore you have to move quickly to a situation of primary surplus and it must be big enough to pay redemptions as they fall due otherwise you default. To run such a surplus require massive cuts in exchequer outlays and increases in inflows. That will lead to the slaughtering of many sacred cows and the ending of universal programmes. Personally, I think this is the reform the country needs.
Now will we leave the euro? Not sure but on balance yes we do.
The result a massive internal transfer of wealth/income internally in the economy from the public sector dependents/sheltered sector to the private sector.
I see this a the logical outcome.

Most of the private sector is not productive either – you are living withen a PD fantasy world.
Remember most of the private sector merely recycles petro $$s – it has no real function – they are but a comic stage act.
Their jobs cannot justify the commute to work as the inputs are greater then the outputs.

All of the input / output ratios have been skewed into the stratosphere by a defective global monetary system which gave false demand signals via the global credit / derivative system.

The Euro apparatus is at the heart of this synthetic structure – when or if it goes post 1987 “normality” will seem to be a crazy singularity.

@ Tull
Thanks for the clarification. Not sure about this bit
“To run such a surplus require massive cuts in exchequer outlays and increases in inflows”
Re the inflows. Where will they come from? Taxes? An increase in exports?

In this case it is taxation, fees for services (water etc.) asset sales. Most of the adjustment will have to be on spending because tax compliance will collapse (see the household tax).
For example if a household won’t pay the charge then the service gets cut or the SW or child benefit gets cut. Very ugly.

@ Tull
Ok – but taking the social welfare side – they’d be expected to pay those extra charges from a cut income?
Taking the private sector worker aspect – if they’re dependent on domestic disposable income to hold on to their jobs they’ll be looking at unemployment. If they’re export dependent they’d be paying high taxes to live in a crap country. Many would just go.
You would have a major economic squeeze with no real upside as far as I can see. Ok – there might be public sector pay cuts but many public sector workers are struggling too.
I don’t see an upside to the strategy.
If we are to do this in a way that leaves us with a sliver of hope we could only cut the stimulus after 100% default and reverting to another currency (but that has major risks too!)

@ Tull
BTW I know you said most would come through cuts – I know there is waste in the system but if we don’t default then savings are offset by interest repayments.
If we vote no it is possible that if Europe pulls the plug that we realistically won’t be able to keep the country going without default and reverting to a new currency.

Most of what you say is true, but expenditure exceeds income by close on 50% so cuts and increased taxes/charges are inevitable. Moreover most will of neccessity have to fall around the average income as that is where the money is and that is where effective tax rates are at their lowest. Of course a few millionaires/billionaires can be squeezed but most of them are already off shore.
Default and euro exit may follow so the few bob in the bank and the post office may be worth less even if only in overseas purchasing power.

I think a No vote gives the economy a shot at redemption from a lower base. Lower living standards by say 20% and it becomes more competitive. Of course most on the No side disagree with this analysis. They think we can keep bubble era incomes, will continue to access favourable borrowing and can blackmail the Germans. The Greeks might be about to find out that this will not work.

You don’t understand money I am afraid – a life spent too long in the Eurozone I image , not your fault – don’t worry about it chap.

Money is not a physical object to be saved – its first and foremost a medium of exchange.
I.e. – it needs a medium through which it can operate.

We are currently working withen a extremely non optimal monetary system where the real price of inputs and outputs has been skewed especially since 2007 as the bankers have stopped the flow.

Now given the decisions of the past it is very possible they will seek to block even more of the flow but then society will break down and money will become useless as commerce will become dangerous.

No more new oil and gas is going to come on line…… these Guys hope it will so that their sunk credit money investments will eventually come around…… its not happening and even if it did further bank credit expansion will get us back to where we started Pronto.

We need Goverment Fiat to increase the flow…. the Euro is not a Fiat currency….. its a double entry system that refuses to raise the price of Gold.
Its over…. everything will deflate into $$$

RRA (ranting roight anonymous) Road to Serfdom of the Month Award

… Colonel Tullmcadoo (anon.)


This is not a good day for Spain. The day began with the EU Commission revising its estimates for the Spanish economy. The contraction is now expected to be considerably deeper. Rather than contract 1% as the EU previously projected, now it is expected to shrink by 1.8%. The deficit this year, which was originally supposed to be 4.4% and PM Rajoy said would be 5.8%, before accepting a 5.3% target, is now likely to be 6.4%, according to the EU. The government is denial and even today is claiming the 5.3% goal is achievable this year and 3% next year.

Spain unveiled its new efforts to address the banking problems. It is the fourth one since the crisis began and the second one since Rajoy became PM. It is not likely to be the last either, as it seems largely to have failed to get ahead of the market expectations. In fact, today could mark the first time that the (generic) 10-year bond yield finishes the week above the 6% threshold in six months.

The key weakness of the earlier plans has not be addressed. Like them, the new plan appears to under-estimate the potential bank losses. Ironically, no major Spanish bank has reported an annual loss since the crisis began. If the news is too good to be true, it probably isn’t.

Spain is forcing the banks to boost their loan loss provisions on real estate loans by 30 bln euros. They have already put aside about 54 bln euros. The Center for European Policy Studies warns that bank losses could be as high as 380 bln euros. Moody’s estimates Spanish bank losses could be around 305 bln euros.

Read on: and shudder …

And the ESM is designed to dump all this solely on Spanish citizens …. while the vichy-financial system and its matrizsQuidesque overlords party on regardless …

@ Tull
A drop in living standards does not automatically lead to increased competitiveness. In fact what happens is that education, security, and infrastructure deplete leading to greater difficulty attracting MNC and retaining home grown wealth generators.

+1 Tull. The drop in living standards is as inevitable as it is undesirable. It is undesirable because it is unpleasant. It is inevitable because it is borrowed money that is maintainng that living standard. Many have already found out that the equity-release bling-und-tat lifestyle they were living has come back as personal austerity.

It isn’t really any different for states, whether they have the power to print money or not.

The Berlin Press on Dr Merkel’s hammering and a massive 74% NO vote in North Rhine Westphalia …

Chancellor Angela Merkel has been weakened by the humiliating election defeat of her conservatives in the large state of North Rhine-Westphalia on Sunday. German media commentators say she will face a harder time securing backing for her austerity policy at home, at a time when resistance to it is building across Europe.

Not to worry Angela – The Irish, apparently, still love your austerity and are delighted to wear the Fiscal Corkets, to vote YES YES OH YES and to keep paying the bills of all your bank bondholders for a generation or so … or maybe two generations …

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