168 replies on “Mistakes/self interest versus European pressure”
“Decisions taken then were taken because the government of the day believed them to be in Ireland’s best interests.”
Anybody know of any evidence for this claim?
“If such evidence existed one could be quite certain that the Irish authorities would have put it into the public domain, either directly or via a leak”
Why would they ? Would the DoF broadcast their ineptitude? This seems to be what the whole article hinges on.
And what sort of history does Ireland have regarding whistleblowing ? Would RTE have the guts ?
The operation of power is so obscure in Ireland.
” Even if the imposed €5 billion was retrospectively Europeanised in full, the impact would not be transformative”
Very smugly observed. It would go a long way towards paying for a policy approach to got people back working. Could be transformative for a lot of people suffering needlessly .
We owe more money than exists and most developed economies are the same. As we repay debts to banks the money supply drops by the same amount and as such we can’t repay our debts in full. It’s a matter of time before developed economies default but a much smoother way to to resolve the problem would be to create the money needed to repay our debts as they fall due.
This would be considered quite an underhand way of solving your debt problems but we’d have to recognise the level of emergency the e onony is in. The current system of money creation is unsustainable since it required ever increasing loans to function well. We’re finally at the point were households in particular are maxed out since mortgages have hit their natural limit of taking two incomes 30 years to repay.
Recognising how unique this recession is as a result would allow us to atrt investigating what proportion of the money supply has to be issued debt-free at source for a healthy economy to run well.
Paying our debts with money created for the purpose would not be inflationary since money repaid to banks doesn’t exist after the debt is settled.
So Dan O’Brien gets from €65 billion down to €5billion faster than Tommy Cooper could say ‘just like that’.
He does so on the basis of a number of points:
1. No evidence of ‘outside’ pressure for the guarantee. Its time to produce all the evidence both in Ireland and Europe.
2. AIB, BOI, PTSB and EBS bondies are not be to counted on the basis of;
“The only bank debt it ever seriously pushed to impose a haircut on was unguaranteed senior bonds in the two failed banks”.
Why no serious push. Where is the evidence that it was considered, that it was dismissed and what pressures were brought to bear to arrive at the conclusion that bondholders in these banks were sacrosanct, even at the very time that the State was lining up to put billions of borrowed money into them.
The elected leaders of this country and European institutions have destroyed this county but have made decisions to save the wealth of very many non national professional investors.
No amount of spoof or dismissal will change that change that fact.
€65 billion is €65 billion. And that €65 billion has destroyed the country.
The Irish people are entitled to a dossier documenting every minutiae of the decisions to spend every cent of that money.
Not a Tommy Cooper like airbrushing of unpleasant facts.
Ireland was royally screwed by its own leaders and by Europe and continues to be screwed by both.
That is a fact that we should offer no apology for proclaiming and continuing to proclaim.
The move came less than 24 hours after the ratings agency Fitch slashed Spain’s credit worthiness by three notches to just above junk status and warned that its estimate of the cost of a bank bailout had doubled to €60bn (£49bn).
How plausible is €60bn ? That’s only 3 AIBs worth of meltdown. It wouldn’t even buy 2 Anglo Irish.
I wouldn’t have one of those rating agencies playing corner back in an all Ireland final.
@ CP
I thought Dan was always on that side .
€100 billion to re-cap Spanish banks = 9% of GDP
Irish recap etc = 45/50% GDP/GNP
German equivalent of 45% GDP = €1.5 TRILLION
Good day Dan! Case rested.
(Spain prob needs half a Trillion – time to bust a few banks)
” the socialising of Irish banks’ debt prevented additional euro zone-wide chaos”
It’s arguable that it might have delayed it but it certainly didn’t prevent it.
With JCT at the helm of the ECB, the agenda was always going to be that the little people would bail out the banks and the bondholders. He was the evangelista for this and sure as hell, Ireland wasn’t going to get in his way – and he would issue any threat he cared to to ensure that. Ask him about, “…send Ireland back to the middle ages” (might have been “dark ages”).
Nobody in their right mind can say that all the banking/financial institutions that have survived really should have…. and some of them shouldn’t still be alive…. or that all the bondholders should have been let off the risk their investments carried.
But as history has shown us time and time again, there are plenty of people out there with airbrushes. I forget who it was that said it’s the winners that get to write history. Guess who the winners have been in this case.
@seafoid
Not sure it is clear they will ask for that. It could, could, be the rest of the EZ that wants the meeting to pressurize the Spanish.
@Dan O’Brien
The only bank debt it ever seriously pushed to impose a haircut on was unguaranteed senior bonds in the two failed banks. When the original guarantee expired in September 2010, the outstanding amount of senior bonds in this category was less than €5 billion.
Oh dear. The rhetorical trick played here is as follows.
*1 Argue that the initial bank guarantee was entirely voluntary on the basis that no one has produced a threatening letter signed in blood from Jean Claude Trichet. Really. This is faux naive stuff, there are multiple channels to apply pressure and you can be damn sure that Europe’s financial elite and their schills covered their tracks.
*2 Simply ignore the repeated extension of the bank guarantee under its initially very wide terms as if it was inevitable and argue by omission that no external pressure was therefore applied. This is staggeringly dishonest, it is public knowledge that the ECB lnot only obbied strongly against any losses being imposed on any class of bank bondholders but made the extension of Ireland’s “banking bailout by proxy” programme conditional on it.
*3 Argue, based on point 2, that since there was no option other than make some senior bond holders take their losses (ie: the Anglistas) and that these losses are comparatively small (I mean its only five billion, right?) the whole issue is not really significant any more.
65 billion Euro of not significant. And counting.
Dan does push his luck a bit when he draws attention to his earlier omission here:
If there is evidence from that time that outside actors had obliged the government to take the decisions it took, or prevented it from taking actions it wanted to take, where is it? If such evidence existed one could be quite certain that the Irish authorities would have put it into the public domain, either directly or via a leak. Such information would do a lot to strengthen the case for Europeanisation of bank debt. That no such evidence has become available suggests that it does not exist.
Of course the threats and pressure that ensured the bond holder bailout was continued once Ireland was bounced into the Troika programme are public knowledge. We are expected to believe that the thuggery and economic imperialism that was in plain view after we had surrendered to the ECB was not present before. Laughable.
Tired as this line is it is the right wing establishment one in Europe and that is what we get from the Irish Times (remember the miracle of Estonia Mr O’Brien?).
As a depressing side note I think the far right in Ireland is felling pretty happy with itself having pushed through the Fiscal Compact (with Labour’s help). What they will try next is anyone’s guess but they are now so emboldened I think that we will see more openly Thathcherite policies advanced as they try to restructure society in a more “enterprise” (read wealth and privilege) friendly way.
The class war is on and the financial capitalists and the feudal social network that surround them have enjoyed two notable victories. Lets see how it works out for them in the end.
@Seafoid/DOD
60b does not seem plausible.
Here are the various estimates….
“The IMF’s due to publish its report on the health of Spanish banks on Monday, and is expected to say it will take a cash injection of at least €40bn to recapitalise the lenders (forget for a moment that Fitch says €100bn, Roubini Global Economics predicts a cost of up to €250bn, JP Morgan says €350bn and RBS believes it could hit €450bn).”
Pick your number!
@ Shay
Morgan Kelly in his totemic WTF op ed for the IT last May pointed out that the original bank guarantee was so obviously suicidal and stupid that it could have been withdrawn with excuses once the original had expired. But of course it wasn’t. And why wasn’t it ? And why was the guarantee extended in the first place ?
It seems to me that the main economic problems facing Ireland are:
1)A level of private indebtedness that is the highest in the world, with depreciated assets on the other side of Irish household balanced sheet, because of the collapse of the housing bubble.
2)A dependence on multinationals that is excessive ,and a very weak “national” industry (see Paul Hunt and Michael Hennigan on the subject).
3) A society riddled with gross inequities in favor of the civil servants, the politicians, the medical profession, the lawyers, the commercial property owners, etc.
4)A budget deficit that will be extremely difficult ,or impossible to bring back to manageable levels (see Namawinelake http://namawinelake.wordpress.com/2012/06/03/having-our-cake-and-eating-it/).
Meanwhile this blog is discussing ad infinitum whether or not the bank bondholders can or will be burned or if the loss can be pushed on somebody else ,which would not solve any of the above mentioned problems .
Those bondholders have a great virtue :they are probably foreign ,which make them ideal scapegoats and can be used as a pretext to justify total inaction on the real problems facing the nation. They are the Irish equivalent to the Arab immigrants in France or the Germans in Greece.
Sad.
Dan does the state a service by daring (Dan Dare?) to go mainstream with this point:
“If there is evidence from that time that outside actors had obliged the government to take the decisions it took, or prevented it from taking actions it wanted to take, where is it? If such evidence existed one could be quite certain that the Irish authorities would have put it into the public domain, either directly or via a leak. Such information would do a lot to strengthen the case for Europeanisation of bank debt. That no such evidence has become available suggests that it does not exist.”
A service because outside Ireland, it is not believed that Ireland was forced against the will of its government by the ECB or anyone else to guarantee its banks’ liabilities – rather, it acted selfishly in what it perceived to be its own interest and it had no interest in the effect on its ‘partners’ in Europe. Nor is it believed that the decisions to roll over the guarantees and pay out the unguaranteed senior bonds were carried out under threat of ECB closure of Irelands banking system in retaliation for holding back some of the 5bn.
So if evidence does exist, it should be put into the public domain since keeping it under lock and key doesn’t seem to have been a great success as a strategy does it?
About as plausible as the figures that were first being bandied around for Irish banks when this all kicked off.
Does anyone remember what they were originally? The cheapest bailout in history.
It’s a standard approach in financial services PR. Always drip-feed the bad news, start as low as you dare go and bump up the figures step by step, over time. Doesn’t matter whether it’s the number of endowment mortgages that won’t deliver, mis-sold pensions, PPI, bank recapitalisation, the latest ponzi scheme to be discovered, etc. You will always be lied to all the way down the line (aka “based on the best information we had at the time”). Not just mis-informed but LIED to. Spain, its banks and the EU/ECB will lie to us again and again in the coming weeks and months. You can rely on it.
They were originally saying €40bn (I think the IMF still is but will probably be told to get their 5hit together over the weekend before their report is released on Monday – “the game has moved on Christine” and all that).
One thing you can be sure of is that the Finance Ministers meeting tomorrow morning will want to keep any bailout to the minimum for now not because they think that’s what will fix the problem but because they don’t want to scare the horses.
I’m still expecting some form of global, co-ordinated CB move over the next few days and don’t be surprised if the prevention of bank runs forms part of the announcement. Switzerland may let the lifeboat drift away under cover of any announcement. If you haven’t moved your Euros by the time it departs, it’s too late. “All aboard?” was the cry.
Unless a/the ‘threat letter’ is released and B.Lenihans contention that we were ‘bounced’ in to the guarantee is backed up, I can’t see how he’s wrong.
He could have added that just because the Euro is/was flawed doesn’t mean we had to have such a disasterous bubble. It was within our power to prevent.
Also let’s not forget that the tax slice of all the cheap credit was used for the destruction of the tax base and buying of votes and power via SSIA, ‘partnership’, hikes in welfare and other goodies etc….
What’s to be done. By in large we are only half way through our ‘fiscal adjustment’ and long term unemployment is at disgusting levels. The number one thing we need, that is linked to unemployment, is a sense of social unity during a crisis.
I feel 3 major things immediately within our power to do, that on their own won’t come near to closing the deficit but will facilitate its closing by laying the ground work for a more equitable society.
1) Justice and some cases jail time for those that brought the country to its knees, that may include retrospective claims/traces on pensions.
2) A proper partnership processes that will reverse some of the current overpayments to the civil service and semi-states. Particulary politicans. This won’t solve the whole problem but according to K.Whelan, a 25% cut in the wage/pension bill would save 2 billion or so. I’d favour a transparent process that saw each group pegged to the European average.
3) A frank and open admission by the government that the Bank Guarantee and socialising of private debt was/is wrong and legislation to ban it from ever occurring in the future.
Point 2 could marginally help our prospects when negotiating with our European partners.
These things are so essential because to close the deficit every group in society will be hit. The more inequities that exist in society the more corrosive it is to society in general and the more society breaks down and become interest groups in trenches flexing their muscle to be the last touched.
We are already seeing the consequences of inequity. Those who owe property tax are using these inequities to justify their position.
@ ALL
Der Spiegel has now accepted and posted comment on their story “Banking Woes: Ireland Still Long Way from Overcoming Debt Crisis”.
Please join in and communicate the Irish people’s understanding – views which Germans don’t hear often enough.
@seafoid
Morgan Kelly in his totemic WTF op ed for the IT last May pointed out that the original bank guarantee was so obviously suicidal and stupid that it could have been withdrawn with excuses once the original had expired.
The “Pay no attention to the financial sector and agents behind the curtain” act is laughable and immoral but it has worked well for them (class solidarity from the media certainly helped in Ireland).
I believe that the ECB will get the plurality of the blame for the scale of the European component of the global financial crisis in the history books. In Ireland we tend to blame senior figures like Trichet and Bini-Smaghi (who were obviously fools and co-conspirators with the financial sector) but the institution is an embodiment of failed and dangerous ideas and these ideas permeate the European Commission and the wider European establishment (currency fetishism, neoliberalism, financial sector sympathies) and dominate politics in the most powerful country in Europe.
I am with Martin Wolf as quoted by Krugman on the failure of European politics and institutions: “Before now, I had never really understood how the 1930s could happen.”
The original Wolf article is very good too.
Back to the Big Picture [h/t nakedcapialism
Marshall Auerback well worth a read ……….
Ironically, for all of Germany’s complaints about “bailing out” Europe, if they insist on extracting more pounds of flesh from the already emaciated periphery, the euro zone itself could collapse, and Berlin would be on the hook in more than one way for these lenders of last resort claims as well. More importantly, these claims would be largely unenforceable for Germany if the entire system collapses.
So you need something bigger. Unfortunately, for the most part, Germany is constitutionally incapable of thinking in ‘infinite’ terms. Moreover, a banking union faces another form of resistance from German banks: they are horrified that a real EBA will discover the truth about the black holes within them, notably their Landesbanken.’…
As for the proposal from Germany’s “wise men”, which is now gaining political momentum amongst Berlin’s governing elites, the devil is in the details. If a new “fiscal compact” is part of the deal, it will enshrine an economic impossibility. Leaving aside the point that virtually no country today is compliant with the EU’s Stability and Growth Pact, budget deficits are largely “endogenous” phenomena, which is to say that they are non-discretionary. Slower growth inexorably reduces tax receipts and increases social welfare expenditures (the so-called “automatic stabilisers”). And, as Yanis Varoufakis has noted:
If Spain, Italy, Portugal, Ireland, France, Greece, Germany etc. (i.e. countries with debt well above 60% of GDP) were to reduce their debt by the specified 5% per annum, this would mean that all these nations should turn an average 2.8% primary deficit to something akin to 6% primary surplus. Suppose we could do it (which, of course, we cannot). Were we to succeed in this endeavour, the result would be a very deep recession equal to at least -4.5% in terms of average Eurozone-wide ‘growth’. In a period when a banking crisis is in full swing, the Periphery is in free fall, US growth is tittering of the verge, China is slowing down etc., engineering such a recession via this piece of ‘legislation’ is the macroeconomic equivalent of committing suicide.
This time, it’s not the Greeks, but the Germans, who could well be introducing Trojan Horses into European economic policy. It’s bad economics, stupid politics and unlike the original Greek Trojan horse, might well not bring “victory” to Berlin. So everybody should beware Germans bearing economic “gifts” of this sort, including Mrs. Merkel’s own electorate.
Not forgetting the Derivatives Death Star in Frankfurt [BeB ???]
Puts Dan’s piddly little five billion in the haepinny place …
I’d love to see Dan O’Brien write an article about how Ireland can respond to a world economy that’s likely to be mired in the zero interest and low or no growth scenario for at least a decade. What strengths does the country have, what is lacking, what is currently ignored but valuable, what needs to be done to get there . What needs to be cut loose, what intellectual baggage needs to be abandoned. The house is still bet on the Troika programme delivering but what if it doesn’t ? What underutilised capacity does Ireland have and how can it be harnessed ?
I also now have a better understanding of the 1930s … a little experiential added to history and interdisciplinarity works wonders …
e.g.
‘Never have words been more misused in order to conceal the truth than to-day’ … Democracy is a system that creates the economic, political and cultural conditions for the full development of the individual. [Financial System] Fascism is a system that, regardless under which name, makes the individual subordinate to extraneous purposes and weakens’ her development.’ (1941: 236)
Written in 1941 by Erich Fromm, The Fear of Freedom [1991, Routledge]
An understanding of the sado-masochistic character and the capture of the lower middle class by the governing upper_echelons also assists. Fear and scapegoating (well demonstrated in the recent Fiscal Korset Referendum) are key tools of such an agenda. At the mo, they are winning …
… but the war goes on; and Blind Biddy still has her bazooka.
FT suggests debt for equity for all the Spanish banks in trouble
Regarding the life-sapping bank guarantee, if one transposed the actions of government politicians at the time into a Greek, Portuguese, Italian or Spanish setting, the volume of self-righteousness in Official Ireland would be enough to deafen a large town.
Four years on and there is still no sense of urgency in getting to the bottom of the background advice to the guarantee, the Anglo share support scheme, just who in the public service knew what, when and approved, etc.
The vast majority of the main actors in that danse macabre are either dead, retired with lottery sized pensions, or else pulling the levers of power themselves. Meanwhile the ordinary taxpayers and small business owners have to pick up the tab.
Forget about Spain, Greece, Italy etc. When it comes to fielding conservative crony influenced incompetence, Ireland reaches olympic standards.
Anyone read this on the EC threat to close down Greek, Spanish, Portugese banks?
For me and as noted by Shay above…ignorning the issue of the extension to the guarantee ALONE demands DOB’s article deserves to be simply ignored…
It is analogous to summing up WWII as the German decision to invade Poland and events thereafter were purely incidental to this action…
@Paul Ferguson – “We owe more money than exists”.
Cannot compute. Maybe I’m having a slow day.
In the weeks leading up to the 24 October (when the Irish guarantee law was finally signed), several EU governments, the EC and the ECB expressed their surprise, reservations and/or disagreement with the Irish government’s decision to unilaterally guarantee all the domestic banks.
There is plenty of documentation available in the public domain on this.
Remember that the Irish Finance Minister signed the bank guarantee law into law on 24 Oct (late on a Friday evening). So there was time to have a second think about it. And indeed there was time to read what the ECB, the European Commission, the UK, France etc all had to say about it. And a good deal of material is there in public for an enterprising scholar to do some research.
.
.
Check out e.g. the ECB http://www.ecb.int/ecb/legal/pdf/en_con_2008_48_f_sign.pdf
Bottom of p2, the ECB states
“In line with the common principles to guide the action of Member States agreed at the Ecofin meeting on 7 October 2008: (i) interventions should be timely and the support should in principle be temporary; (ii) the interests of taxpayers should be protected; (iii) existing shareholders should bear the due consequences of the intervention;” ….
Top of page 6
“The ECB also notes that the summit declaration states that the euro area Governments would make available a Government guarantee of new medium term (up to 5 years) bank senior debt issuance, whereas the scheme proposes to cover senior unsecured debt and asset covered securities, without limitation as to maturity, and dated subordinated debt (Lower Tier 2)”
So the ECB’s approach I’d characterise as one of caution, referring in particular to the decisions taken by EU ministers, but which the incumbent Irish government at the time decided to ignore.
.
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Check out too what Dr Merkel had to say e.g. in an interview on 2 Oct “The federal government cannot and does not want to issue a blank check for all banks, regardless of whether they have acted responsibly or not’. These views applied as much to German as to any other banks.
Later in Parliament on 15 Oct, Dr Merkel said the loans on offer “is about the protection of citizens, not the protection of banking interests … We’re offering something and they (the banks) have to offer something in return.” Etc.
.
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Remember Ecofin had developed principles around a common approach to support for banks. Ireland choose to go a different way, and protect all the domestic Irish banks without reserve.
Amazingly there was no requirement placed on Ireland to comply with what had been agreed at Ecofin. By then, you already had details on the support schemes of other countries (much more limited) coming out, and that raised no alarm bells in Dublin, let alone a desire to comply. That is what was truly amazing I find in the sorry saga. And the reason why may be no more silly than plain simple lethargy from all concerned (including the fourth estate).
As a result, I find that there is too much emphasis on the night of the guarantee, and not on what happened in the weeks after, or what didn’t happen. The public sources of information though are rich, for someone that has the time to put in the work.
It is one thing to take a momentous decision late one night. It is quite another to have received plenty of advice from other authorities in the interim, have had time to look at the books, have done a little bit of thinking, and then sign it into law on that Black Friday, 24 October 2008. Stunning, still.
And while some people here might have short memories, you probably can’t stay the same for policy makers, civil servants, and central bankers in other EU countries at the time, who had to deal with the Irish government at the time; . . . most of them are still in their jobs in Brussels, Frankfurt and elsewhere.
@Ciaran O’Hagan
Good point.
However, if BL had sought to water down the explicit guarantee he had announced to the markets,isn’t it likely we would have had the mother of all runs on deposits.
@Ciaran O Hagan
About your Merkel quote – Norman Finkelstein recently opined that he does not think that Obama believes one word that comes out of his mouth.
Maybe we’ll get the full details of what really happened in the Irish Times 1 Jan issue for 2038 or alternatively if it is too toxic 1 Jan 2078.
Anyway back to Spain. The contagion has reached Madrid. How would you rate the performance of the PTB in preventing this ?
My own view is that if Kenny Dalglish had been manager of the ECB he wouldn’t have been sacked.
“If there is evidence from that time that outside actors had obliged the government to take the decisions it took, or prevented it from taking actions it wanted to take, where is it? If such evidence existed one could be quite certain that the Irish authorities would have put it into the public domain, either directly or via a leak. Such information would do a lot to strengthen the case for Europeanisation of bank debt. That no such evidence has become available suggests that it does not exist.
…………………..
……………………
It is not in question that the European Central Bank played the central role in preventing the government imposing losses on these bondholders, thereby placing the onus on Irish taxpayers to cover private debt that they had no obligation to repay.”
Dan seems to suggest here that the ECB (or other outside actors) adopted two entirely opposite positions in relation to bank debt. Is this credible?
What his second sentence suggests to me is that there was pressure from outside actors in 2008 also. Was there claimed to be a letter? I don’t remember – all I can recall was the “save your banks” phone call with Trichet.
Mohamed El-Erian wrote in yesterday’s FT
“Finally, Spain would need to agree to a proper domestic policy mix. This involves not only avoiding the mistake that Greece made in agreeing to a series of unrealistically-designed and technically-flawed programmes but also enabled to make difficult upfront decisions about the best form of burden sharing (something that Ireland was not allowed to do by its European partners).”
@kor
Care to speculate on what Noonan et al will do should Spain get the EFSF (to be ESM) love embrace?
Both yesterday and today, two people (here in Italy) probed me on the Irish ‘recovery’. Apparently, a television documentary painted a rosy picture of the Irish economy.
No wonder Draghi says Ireland should pay its way.
That’s the problem with spin. It eventually settles like a (e)uroboras. The Irish government gets away with spin at home in the wink and nod culture of untruths, distortions and group opinion. Maybe the eurocrats aren’t that gullible and have refused an infusion of blather.
High in the sky the Bank Signal was visible, Commissioner Rehn knew that Eurotham was threatened by thought crime and the ECB needed a hero.
@Ciaran O’Hagan
So the ECB’s approach I’d characterise as one of caution, referring in particular to the decisions taken by EU ministers, but which the incumbent Irish government at the time decided to ignore.
Any thoughts on the repeated renewal of the bank guarantee under its original and shockingly broad terms Mr O’Hagan?
Were the ECB, the various other European authorities and Chancellor Merkel for or against that?
It is a brave man who would argue that the position in Europe now is not “no bondholder left behind”, and a braver man yet who found the moment in time when the European establishments changed their minds on the necessity for national bailouts of the bond holders in private Eurozone financial institutions.
Reading section 2.1 closely one senses considerably more focus on spillover effects and financial stability then the “in principle” temporary nature of support for the bank.
It is an interesting document though, with a different Chancellor in Germany perhaps the worst instincts of the ECB and German conservatives would not have combined as toxically as they have.
@oversea bloke
“Those bondholders have a great virtue :they are probably foreign ,which make them ideal scapegoats and can be used as a pretext to justify total inaction on the real problems facing the nation. They are the Irish equivalent to the Arab immigrants in France or the Germans in Greece.
Sad.”
There was a guy on here a few days ago attempting to draw parallels between people moaning about high rates of Irish public sector pay and Nazi persecution of Jews. You expect reform to actually happen in Ireland?
@ Shay
“Any thoughts on the repeated renewal of the bank guarantee under its original and shockingly broad terms Mr O’Hagan?”
Original terms? It now only covers deposits, not senior debt. Wasn’t that the main problem with the first one, that it covered senior debt??
Well it’s seems Germany (buba/ecb) have started ‘leaks’ designed to undermine Spain. This is pretty nasty – maybe Germany had anticipated capitulation following Thursday’s bond auction and are miffed things didn’t go their way. It seems these leaks are designed to force Spanish taxpayers to guarantee a bank bailout; whereas Spain hopes to avoid this. The longer Spain holds out the greater their chances of getting a better deal, but this isn’t the type of help Germany likes to offer.
Grumpy,
first they came for the overpaid senior public servants in secure jobs with DB pensions and early retirement and I laughed then etc etc.
@Eoin
” It now only covers deposits, not senior debt. Wasn’t that the main problem with the first one, that it covered senior debt??”
The guarantee of already issued (as opposed to new) senior debt was extremely generous of the taxpayer.
@Eoin Bond
Original terms? It now only covers deposits, not senior debt. Wasn’t that the main problem with the first one, that it covered senior debt??
* Timeline:
* 2008 Jun Original deposit guarantee, 24 month duration.
* 2008 Dec ELG put into place covering everything but subordinated debt. After all this is only a liquidity problem.
* 2010 Sep Bailout extended by 12 months and extended in scope again.
* 2010 Nov Ireland enters bailout program, now subject to whim of ECB, CDU’s domestic political considerations. Brian Cowen forced to kiss Schauble’s LVM signet ring in secret ceremony.
* 2012 May Ireland signs austerity pact, Eutopean business confidence increases that state is pushover.
Correct me if I am significantly wrong here on the workings of the guarantee/ELG but we are merely going from a situation where the senior bondholders were legally protected and politically sheltered to one where they are politically sheltered?
@Ahura Mazda
“Well it’s seems Germany (buba/ecb) have started ‘leaks’ designed to undermine Spain”
They did the same with Ireland.
@Bond Eoin bOnd
And it is only approved by the EU until jUne 30th.
“The Spanish government should copy resolution laws from Germany or the UK allowing states to create fresh equity for the banks from writing down creditors. This would avoid throwing good money – whether Spanish or European – after the bad money that is inside insolvent banks.”
Why didn’t Ireland have such laws in 2008 ?
This is getting tedious. Somebody needs to draw a diagram
The solution is radical bank reform, public sector wage cuts (graded per pay scale), social welfare reductions, rent law reform, reducrd taxes and real political reform in Europe.
The scope in each section is limited – that’s why they must be combined together.
It’s a combination of all of those things (and obviously Croke park must go too). Why do people not get it?
You argument seems to be that because we had Cowen, Lenihan, Doyle, Cardiff, Neary and Hurley and a cabinet collection of me feiners and incompetents that we must forever accept and pay for the destruction they brought to the citizens of the country by not standing up to the self interested European powers in the guise of the ECB.
In my view, it is not obligatory for children to accept and pay for the sins of their fathers.
If it was Germany would hardly be in pole position in Europe right now.
Good stuff Eureka. Get it all done quickly. This dragging things out is pointless.
Perhaps we can summarize thusly:
Although it was the Irish government that originally decided to guarantee the bond-holders, it later became clear that the ECB wanted Ireland to continue this policy. Therefore we can now transfer the entire blame for the matter onto the ECB and demand that they (and/or European taxpayers) repay our debts in full.
After all simply allowing the Irish banks to fail totally in 2008 would have had no effect on our economy and would have cost us nothing.
And indeed it was European banks that lent (at least some of) the money and although we Irish taxpayers disavow all responsibility for the actions of Irish banks, we do insist that the European taxpayers must take full responsibility for the actions of theirs.
A Game of Euro Chicken
Playing Until the Germans Lose Their Nerve
A commentary by Jan Fleischhauer
For Germany, being part of the European Union has always included an element of blackmail. France has been playing this card from the beginning, but now the Spanish and the Greeks have mastered the game. They’re banking on Berlin losing its nerve.
Angela I need have no such worries from Enda the Silent and her loyal Hibernian serfs!
Surveyors/auctioneers were responsible for three important and interlinking practices which created the bubble and crash.
First the valuation error i.e valuing all 5 euro notes as 20 euro
Second the ruinous commercial property lease law organised by a cartel
And third, ninty five per cent of all property sold in the state is sold by surveyors/auctioneers.
They controlled where the vast property advertising money was spent. Almost all of it was spent with the broadsheet media and the Irish Times got the lion’s share. Therefore these auctioneers controlled the Irish Times property propaganda and all the other broadsheet media property propaganda. They had enormous influence in these papers editorial policies.
This third item was the fatal one–the media faciltating this propaganda. There were other useful idiots like the soft landing economists etc. Dan O’Brien’s newspaper the Irish Times was the leading media organisation
which facilitated the property puff pieces and the grotesque property propaganda which was vital in creating the greatest property bubble and crash in the history of mankind.
@ Seafoid
FDR’s first one hundred days.
And the New Deal.
It will take hard work to fix this. But looking at the Irish unemployment figures and services sector contraction we are edging very close to a depression here. All it takes is one external shock and there are plenty of possibilities of that.
It takes hard work – for example the rent reform loops through to property values, bank loan books etc so that has to be linked to bank debt write down. Similarly public sector pay is the only stimulus left in the economy so it’s reduction needs to be offset by debt write down and lower taxes. You get what I mean?
At least a detailed 10 point plan is needed. We had better start drafting it
@grumpy
There was a guy on here a few days ago attempting to draw parallels between people moaning about high rates of Irish public sector pay and Nazi persecution of Jews.
That paraphrase (as is typical of propagandists) twists what I actually wrote to make something obvious (that there is a propaganda war against Ireland’s public sector led by INM) into something preposterous and obscene (that cuts to public sector pay are tantamount to a Holocaust). Do you have no sense of shame or is reading just not your thing? For the record, here’s what I actually wrote:
You may find it OTT, grumpy, but there can be no denying that there is a propaganda campaign against the public sector in this country, echoed by the likes of Richard M, and that uses language that bears more than a passing resemblance to certain kinds of anti-Semitic discourse: e.g., an ideological rhetoric of the PS as parasitical on the “real,” vital forces of society. Were the same rhetoric used on any other group in Irish society, it would be unacceptable.
As a result, a certain portion of the population has become convinced that all of our problems are the fault of the public sector and can be easily solved by simple cuts to public spending. Welcome to the Inverted World: “We could easily pay off the odious bank debt owned by wealthy bondholders and illegitimately foisted on the Irish people if only we weren’t saddled with public services that benefit Irish people.”
This propaganda campaign has everything to do with the triumph of the Yes side in the referendum.
“Philip II Says:
June 5th, 2012 at 11:30 am
Richard M
“As a disillusioned private sector employee it is likely that any write-down achieved on bank debt would be filtered back into jews that are bleeding the real economy dry.”
reads a bit worse now dont it”
@ BEB
that wasn’t about Jews. That was in response to someone who equated the PS to leeches or parasites or something equally complimentary. Maybe you missed the bit that went before it.
On the subject of pressure in Europe, the PR barrage against the Greek people knows no bounds. They’ve even roped Obama in to persuade them to ‘vote the right way’:
I know, but I think that was the piece Grumpy was referring to above, and not the piece Ernie thought, no?
re- Shay, Ceterisparibus, J. Ryan & Seafóid, etc.
If any of you have a ‘presence’ on any of the social media products necessary to respond to the IT piece, please consider repeating some of the excellent posts you all have made here, above, in reply to the article.
(I decided to draw the electronic line with e-mail, and 50% anonymous comments like these)
Ex Minister Eamon Ryan contradicted Dan’s interpretation, on at least two seperate occassion on the VB Tonight programme; saying that the ECB told them ‘in no uncertain terms’ were they to let a bank fail. As I’ve often mentioned. I think there have been some remarks from FF members, too.
Goes beyond mere retrospective, self-rehabilitation from the former government personnel.
As for why FG haven’t tried to make use of this; does anyone disbelieve that they’ve already assumed the mantle of administrators for the ECB, and ceased to represent their electorate ?
What is certain is that this issue, almost four years on, has entered the public consciousness, is gaining some momentum, and the ever-eager IT is peremptorily manufacturing a false consensus .,
@Seafoid
This ratrher bad tempered comment from RM:
“As a disillusioned private sector employee it is likely that any write-down achieved on bank debt would be filtered back into a lecherous public sector that is bleeding the real economy dry.
What the public sector economists in the DOF/ESRI axis will not admit is the bank debt is easily affordable if there are proper steps taken to bring public spending into line with new economic realities. Germany realises this and therefore justifiably will ensure this pathetic failed state keeps its sovereign promises.”
Drew the suggestion that the author should compare his hostility to the public sector to Nazi persecution of the Jewish people. To me that looks like it is about Jews and is a revealingly hysterical response which is in far worse taste than the original comment.
@Ernie I read what you wrote on that thread and can agree with most of it.
@ Grumpy
I didn’t draw the same conclusion. The point being made was that it was apparently acceptable to refer to the PS in a way that would be reprehensible to refer to Jews. That is how I read it. You can’t talk about Jews like that and it isn’t right to talk about the PS in such terms either was my interpretion. It never crossed my mind that the PS is being persecuted as the Nazis persecuted the Jews .
@ Grumpy
Perhaps itinerants would have been a less controversial choice of word.
Peace y’all please…
There are elites in the private sector and elites in the public sector. This isn’t about the sector – this is about a class of people in both sectors who are very happy to see the lesser mortals get shafted while they increase their money pile.
@JMc
“Mistake/self interest”
I can’t see how taking the debts of the banks onto the sov was in anyone’s SELF INTEREST. The banks were FUBR. Most of the CEOs and senior boxwallahs are now doing degrees in UCD AFAIK. Nobody will be studying their decision making at any serious MBA course unless to laugh. The decision broke FF which OWNED Irish politics up to then. It was a curse. Even the bond wallahs who got their thirty pieces of silver are looking at the potential collapse of the global financial system the way things are going. So a pyrrhic victory there.
The decision was stupid. It didn’t put the Euro on a stable footing- it showed that the politicans making the calls were afraid of the markets and set the scene for the complete capitulation to the bond vigilantes which has brought the Euro to the brink of collapse and has more or less destroyed Greece. The markets were effectively saying all along that they wanted to be led but nobody had the balls.
Maybe Dan O’Brien gets a few brown nose points but I wouldn’t envy him that he is so desperate.
In the background to all of these discussions is the subtext that this is how power works and the guys calling the shots are right because they have the power. It was the same with the war in Iraq. That only cost $3 trillion. The Financial crisis has already gone beyond that. The war on terror is generating one American grunt suicide a day but I think the Euro crisis is up around 10 per day for European civilians.
The March of Folly by Barbara Tuchman has a few new chapters that need writing.
@seafoid
I don’t read it that way first, because in Nazi propaganda the idea of that particular group bleeding the place dry was a central theme making it a uniquely powerful reference and second, because if you are right it would never be acceptable to talk of anyone – bankers, hedgies, middle eastern despots etc as behaving as they sometimes do because substituting the word ‘Jews’ would make it look distasteful.
“Germanys economy Expected to expand 1% faster than expected”
For how long will we have to listen to the puritans tell us these things are all down to fiscal responsibility and domestic competitiveness…it’s laughable how complicated we try to make analysis…would there be a flood of cheap credit in Germany now bolstered a flow of credit from the periphery, an undervalued currency keeping exports at very healthy levels in a tough market, a country getting paid to borrow short term debt? Inflation now at 2%…do u think ECB will reduce interest rates next quarter now as predicted.
With life so good in Germany at the moment is the political will there to tell them it’s all an illusion?
We have short memories. The bank situation is entirely our fault. Well when I say our I mean the Dept of Finance and the Central Bank. It was their job to regulate, or at the very least be AWARE of what was going within the banks. And have contingencies in place.
That the DoF is still expecting a bunch of Papal Knights or whomever to manage the money market in Ireland is bordering on treason.
Further, it doesn’t matter one iota what nod or wink was given by whoever at whatever level, if it wasn’t sanctioned by an Dáil Éireann it doesn’t matter what a Minister or Regulator does. But if it goes against what the Dáil has sanctioned IT IS ILLEGAL and so in the province of the policing authorities. This rubbish we’ve been hearing that sounds so plausible is just CBS boys spam.
I hope you put as much effort into your apology as you did into your rabid, paranoid ranting.
This being the weekend, I assume it will have to wait until Monday before you clock in again.
Grumpy
“in Nazi propaganda the idea of that particular group bleeding the place dry was a central theme making it a uniquely powerful reference ”
That’s a central theme of many commentators regarding thr public sector. There’s a level of vitriol directed there that exceeds that directed to thr bankers and developers. I for one find that most odd.
@ Grumpy
“in Nazi propaganda the idea of that particular group bleeding the place dry was a central theme making it a uniquely powerful reference ”
I wasn’t aware that it was code for the 1930s. Why would it be used to describe the PS ?
@ All
The debate on this issue is beyond that of tedium. What is at issue now is the role it plays both as a distraction and an excuse for inaction by the government.
Stephen Collins points out one elephant – indeed, the elephant – in the room i.e. tha failure of the governing establishment to lead by example by cutting top-level public service incomes and pensions. The idea that the responsibility for paying current rates can be transferred to German taxpapers – as skeptic 01 points out above – underlines the delusional level of the debate on the cost of the banking bailout.
In this context, the reference by Collins to “relativities” = “nomenklatura”. This is the system that has to be abandoned, the direct linking of a TD’s salary to that of a Principal Officer in the public service being the other Gordian know which has to be cut if the pernicious confusion between public servant and public representative is to be overcome.
There are some hints that the issue may be confronted because of the overspending in the health service (up to 85% in certain sectors being on salaries, according to the health minister) but absolutely no indication of fresh thinking in the higher ecehelons. Turkeys, of course, do not vote for Christmas.
Parallel action has to be taken in the area of social welfare and in broadening the taxation base (property, water, septic tanks etc.) as it is there that the real savings can be made.
But people will not follow if they are not led by example.
“Why would it be used to describe the PS ?”
Evidently, as a way of attempting to caricature and ridicule by inference, angry critics of PS costs and resistance to reform.
Maybe the obviousness is generational dependent.
Elements of the PS among the most financially privileged in the country. They are protecting their position by using other members of the PS and society generally as shields. They have a ‘victim’ mentality and employ ‘victim’ tactics wherever possible, this particular example being exceptionally crass.
Docm..why is spending on health and social welfare up? Could it be
A) the evil public sector sucking the precious bodily fluids from the heroic private sector
B) people in a recession get sicker and have a horrid tendency to ask for treatment, and even worse, to claim benefits?
Grumpy
Here’s the problem. There are 300k people working in the public sector. While SOME are lottery levels, what many find unpalatable is the blanket use of casual language. Every single protected sector, senior civil servants, barristers, university professors, consultants, all of em need to be shaken up.
@ Gtfaway
It is the overall level at which benefits are set that is the issue, not the justified increase in the volume of expenditure during an economic downturn. The level of salaries and pensions paid in the public sector is more than the economy can afford, as is the level of social welfare benefits widely defined i.e. all forms of benefit including pensions.
The tax base is also too narrow. It is urgent, for example, that a property and water tax be introduced as soon as possible.
This will involve sacrifices by all sectors of society. My point, and that made by Stephen Collins, is that the burden has to be shared equitably. Those that lead must lead by example. They are singularly failing to do so (as you can read in the newspaers any day of the week).
If you wish the present situation to continue, you are likely to be satsified.
This is why Europe will not work. At this point in time we should see this like a marriage: Good years at the start but then it hit a rough patch and the strain began to show. Now the pain of staying is greater than the pain of leaving. We need to decide on divorce.
We need to start planning. We have prospered before and will manage again.
As part of the settlement we need to be fault on everything apart from UK debt to give them an incentive to support the punt. We need to negotiate continuing free trade. we need our ten point post divorce plan.
There is no doubt in my mind any more that the time for divorce has come.
@ DOCM
Not one mention of banks or debt wrote down.
We accept the need for PS reform. But personally not one more penny should be sucked out of this economy without a bank debt write down.
That’s it. If that isn’t going to happen then we go
@ Gtfaway
It is the fact that relativities prevail all the way down from “lottery levels” that is the problem and everyone in the queue is watching everyone else. There will be no change until there is acknowledgment that a radical situation requires a not-so radical step viz. recognition that the public sector is not a single homogeneous block but is widely varied in character with different requirements and skill sets which varied – market-set – rates of pay should reflect.
The debate on another thread on the recruitment of economists at a standard grade whose – presumably standard – skills are to be spread like margarine around the existing public sector model shows the poverty of intellectual debate on the subject of reform in Ireland and not much else.
P.S. The fact that all protected sectors should be reformed is taken as a given by me.
@DOCM,
I’ll break my rule again – and hope to dodge the censors. I’m afraid you’re wasting your time and effort. Political and policy-making power is far, far too centralised in this polity; but the extent of its centralisation is inversely proportional to its weakness since it is constrained on every side by the resistance of every single narrow sectional economic interest – with all prepared to fight to the bitter end to protect their legally established entitlements.
The ability of Official Ireland to survive and manage the outcome of the blow-out – and to project a sense of ‘business-as-usual’ in as many sectors as possible (while conveying the false impression that major reform is underway) – is remarkable, but unsurprising. But its resilience has probably been weakened and its ability to keep a lid on a simmering pot is probably not as strong as it would like, so it is vunerable to some further inevitable car crashs. But one should not underestimate its ability to batten down the hatches and maintain ‘steady as she goes’.
@DOCM
re “But people will not follow if they are not led by example.”
+1
That is the nub of the problem. A problem that is and will sink the country even faster than the repayment of egregious bank debt.
It one of the better articles by Stephen Collins even though he is wrong to interpret the referendum result, as Merkel and Schauble did, as support for the government. The result was motivated by the majority avoiding the cataclysm that would have resulted in a no vote. That ~40% choose to vote for an outcome that would have been cataclysmic IMHO shows that the ground is rapidly shifting to the extremes. [I have long since departed to such an extreme, if extreme it be]
Why will the government not tackle these glaring pay and benefit inequalities, that as the primary employer it is responsible for?
Self interest, lack of courage, cynicism, elitism but most importantly a complete lack of empathy with their fellow citizens.
But on a practical front it would take too long to sort the largesse other than under emergency legislation (which I believe should be used) .
The simplest and most practical way to correct the situation is a 30% super levy on all annual PS emoluments /salaries in excess of €60,000 pa. To apply also to any payments issued from the exchequer. Lets call a ‘Distressed State Levy’.
Once the legislation goes through the Dail; thats it. Just press the buttons on the Revenue IT system.
If necessary, because of its application to PS related payments only, a referendum may be necessary.
That is one referendum that would have no difficulty at all in getting a yes vote.
Not for the first time, a thread on an unrelated subject ends up with diatribes on public sector debt.
Back to the bank debt, O’Brien is right that the bank debt is self-imposed, the attempts, started by Emonn Ryan and Mary O’Rourke, to retrospectively imply that Lenihan was secretly ‘taking one for the team’ on the night of the guarantee are designed to fool the citizens of this state, and not European policy makers, who of course know the truth of their own lack of involvement in the guarantee decision.
Remember what our beknighted elite were saying in the weeks after the guarantee when the media were still lauding it as a masterstroke. This article by Daniel McConnell says it all
To save time , towards the end of the article, the author , who obviously had spoken freely with the participants, explicitly says “By Friday, the short term joy of getting one over on the Eurocrats and the British was replaced by the fingering of blame as to how this crisis came about.”
Lenihan and his boys were boasting to a journalist weeks after the guarantee about putting one over the ‘Eurocrats’ . The internet is a wonder, no amount of waffle from Mammy O’Rourke can change what is recorded there.
We did not take one for the team and should not use that argument in front of the ECB and other people who know it is not true.
We should argue simply on the unsustainabibility and injustice of the bank debt, and admit it was wholly self-inflicted
@ Paul Hunt
With respect, might I suggest that both your voice and mine are just two of many and participation in open debate cannot come with any pre-conditions as to whether something will happen or not. That would be to wildly overstate the importance of any one contribution.
I think that there will be changes for reasons that have nothing to do with the debate in Ireland. This is a point which I have made before. In previous instances where bad government has caused a crisis in the public finances, external economic factors were helpful and the rising tide lifted all boats, including those bloated and overloaded and deserving of being left high and dry. This is not going to happen on this occasion. I saw in the FT a headline “Spanish government no longer in denial”. Hopefully, the same will – shortly – be said of the present Coalition.
@ Joseph Ryan
You would not need a referendum but it might be wise to have one.
@ DOCM
What is your position on bank debt?
@ Tim O’Halloran
Addressing the issue of the bank debt – which is but an element of the overall budget deficit – in isolation is a denial of eonomic and, more importantly, political reality. It is entirely justifiable to point this out on this thread.
@ Eureka
The short answer is that I consider that it is too onerous for the state to bear but that this will only be conceded by Germany when the necessary difficult decisions are taken nationally with regard to the rest of the ongoing current deficit (which has not really budged).
By the way, on the Der Spiegel article, it is one-sided but contains an element of truth in regard to the relationship between France and Germany. Lex has a tongue-in-cheek comment which fits the bill.
@ DOCM
So that’s your position. Take every opportunity to blast the public sector and never address bank debt.
That is disingenuous.
If you do not answer this time I will assume that you have an interest in banks.
So two questions this time:
1: What is your position on bank debt and
2: Why do you really find it so difficult to discuss them?
@ DOCM
Sorry – crossed posts.
Apologies.
@DOCM,
I fully agree that it would be totally arrogant – and entirely unrealistic – to consider that one contributor – or contribution – to the debate should expect to generate some movement in the policy-making process. The purpose of engaging is to seek to inform and to encourage some movement in public opinion. But it is totally pointless when those with knowledge and competence – and the necesssary ‘public standing’ – to inform and guide public opinion (and to ‘speak truth to power’) are unwilling to engage.
I had hoped this blog might have provided such a forum, but, apart from the magnifcent, but doomed, charge of the light brigade of the ’46’, it has provided a slightly querulous, but generally deferential, imprimatur of the behaviour of Official Ireland. Anyone from outside of Ireland reading the principal posts would have difficulty understanding their intense focus on very narrow aspects of the crisis. And, if they had some understanding of the background and the context, would struggle to understand the lack of focus on the comprehensive misgovernance that has brought Ireland to this pass, on the reforms that are required or on the extent to which the discipline of economics has been so subverted and abused as to make it of little use in the policy-making arena.
@ DOCM
The problem with that position is that it is essentially a stick and carrot approach. We have all seen the German stick (so to speak) but I think that the carrot is rotting at pace.
Do we want to be part of the Euro any more? It’s broken. It’s held together by bullying and blackmail. This is a toxic union. Personally, if there was a choice in the morning to strategically default and leave I’d take it. I remember life before this and it was ok – not perfect but manageable. The key is managing the default.
M. Martin…
“”But by the time of the bank guarantee, you couldn’t make that argument. I think he would have had a strong sense of vindication if he was around today.”
These guys don’t get it. It’s commonly accepted that the scope of the bank guarantee caused a ruinous increase in national debt.
It is highly unlikely that any write off will be forthcoming regarding bank debt.
The nonsense spouted by government in order to pass the referendum is simply that..nonsense.
Vindication anyone?
@ Tim O Halloran
I think Morgan Kelly’s analysis is the most plausible
“Brian Lenihan’s original decision to guarantee most of the bonds of Irish banks was a mistake, but a mistake so obvious and so ridiculous that it could easily have been reversed. The ideal time to have reversed the bank guarantee was a few months later when Patrick Honohan was appointed governor of the Central Bank and assumed de facto control of Irish economic policy.
As a respected academic expert on banking crises, Honohan commanded the international authority to have announced that the guarantee had been made in haste and with poor information, and would be replaced by a restructuring where bonds in the banks would be swapped for shares.”
St Patrick obviously let the side down but to what extent that was influenced by outsiders we can’t tell. As grumpy observes, a shambolic negotiating strategy was also in the mix but what is also notable is that the bailout and the coup de grace of the Anglo ELA appear to have been imposed by diktat.
As a post colonial state that has recently had its elite ransacked we are very unlikely to get to the bottom of what happened .
Now that Spain is in the knackers yard the ECB itself se trouve dans la merde. The whole edifice could come crashing down. It’s a mess and nobody comes out of it with much credit.
I should have used the full quote…
“FIANNA Fail leader Micheal Martin said last night that he believed former Finance Minister Brian Lenihan’s decisions on the bank guarantee were the right ones.
On the first anniversary of Mr Lenihan’s death, Mr Martin said: “In the initial few months, you could make the case that he was a new minister and you could argue that inexperience was a factor.
“But by the time of the bank guarantee, you couldn’t make that argument. I think he would have had a strong sense of vindication if he was around today.”
Irish Independent
@Seafoid
It’s a mess alright and likely to get messier.
The Spanish bank rescue is likely to be a long drawn out affair….the IMF saying 40b is needed and J P Morgan saying 350b. Roubini estimates 250b.
The IMF figure is not credible with one bank needing 23.5b alone. With Spanish banks holding 67% of their own sovereign paper any downturn could have a catastrophic impact.
We live in interesting times.
I wonder how many of us could survive a currency crash if it happened. We would be living in very unpleasant times as all revert to survival and beggar they neighbours. People kill for self survival. It’s only a thin veneer of ‘civilisation
‘ over man the ‘animal’
@DOCM
Most successes hinge on where one starts from. If the jumping off point is shaky and riddled with politically palatable assumptions, the journey is likely to be overly burdened and end up off course. Like most other actions in Official Ireland, the points of departure for policies on the public service are a shambles.
Ireland has too many local authorities, planning agencies, community enterprise boards, third level outfits, quangos, and so on. If you start out with the assumption that these cannot be reduced in whole or in part substantially, reform efforts must fail. Only today i read that Minster Bruton is proposing yet again more rejigging of research commercialization – it is only costing the taxpayer 800 million annually – entailing the recruitment of more pubic sector staff. Hasn’t anyone in and around government digested as a child the Emperor’s New Clothes? If this policy is working, one wonders why so many academics haven’t upped sticks for the private sector? Is unemployment now dismissed as a weather vane for the success and failure of government funded economic policies? It is worth bearing in mind that a previous government would not offer a loan guarantee of 30 million to keep Waterford Crystal open a while longer.
The central problem with government policy is that the questions regarding what is required for a properly functioning public service are either not seriously addressed by politicians or else passed out to gangs of insiders to produce palatable expert reviews.
The recent redundancy package caught the HSE so off guard, that it gives a disturbing insight into the distance to be travelled between asking the big questions and getting intelligent answers. Talk of salaries going up, down or sidewise in the public service only provides political theatre in the absence of the answers to the big questions, the reform questions.
How these latter questions are answered, or ignored, impinges very directly on how the bank debt will be serviced.
Before going out to mow a meadow literally, I point out that in Italy to provide a net monthly paycheck of 1000 euros, an employer has to come up with gross 2250 euros.
Want to read about the Germans feeling aggrieved and sorry for themselves? Click here. Mildly delusional, though occasional spatterings of truth at times too re Hollande.
“The next stage in the crisis will be blatant blackmail. With their refusal to accept money from the bailout fund to recapitalize their banks, the Spanish are not far from causing the entire system to explode. They clearly figure that the Germans will lose their nerve and agree to rehabilitate their banks for them without demanding any guarantee in return that things will take a lasting turn for the better.”
Isn’t this precisely what the Spanish are at? We are too big to fail, as one Spanish minister said recently.
Poor little old Ireland. Too small to succeed …in getting any bank debt relief.
The Irish economy is little more than a tribute system for international gravy fiends and the Mick Wallace cartel. The public sector have close to nought to do with it, and are used as a strawman by ideologically corrupted fellow travellers of the Sunday Indo to shore up the tax dodging plutocracy and the most worthles parts of the private sector – ie those that build house for noone in Cavan.
I’m all for public sector ‘reform’ and a sensible left, but first the Irish right needs to grow up, stop talking in soundbites and think logically (I understand I have done none of those things above, but monkey see monkey do)
@CP
“FIANNA Fail leader Micheal Martin said last night that he believed former Finance Minister Brian Lenihan’s decisions on the bank guarantee were the right ones.”
I reckon Cowen will never say anything about the guarantee and the decison to renew it. The FF brand requires spin to the effect that they died with their boots on .
And I will take Morgan Kelly over Martin any time
“Brian Lenihan’s original decision to guarantee most of the bonds of Irish banks was a mistake, but a mistake so obvious and so ridiculous that it could easily have been reversed”.
@ CP
If FF could beatify BLTD they would
As the situation became “unmanageable” in 2010, the then government began looking at ways to push more bank losses on to bondholders in a way that would not further undermine confidence in Ireland and its still viable banks.
The only bank debt it ever seriously pushed to impose a haircut on was unguaranteed senior bonds in the two failed banks. When the original guarantee expired in September 2010, the outstanding amount of senior bonds in this category was less than €5 billion.
It is not in question that the European Central Bank played the central role in preventing the government imposing losses on these bondholders, thereby placing the onus on Irish taxpayers to cover private debt that they had no obligation to repay.
Given that the current administration did not widen the front – only the seniors in non-viable banks were seriously pursued when it took office – the maximum amount of bank debt that can be said to have been imposed from without is less than €5 billion.
It seems DO’B agrees that, by the time of the bailout, the FF/PD government only decided to pay the unguaranteed seniors in AIB and BoI because the ECB (and we could throw in the United States) illegitimately threatened the government with serious adverse consequences if it did not. So how does he come to the conclusion that the post-bailout payments to AIB and BoI seniors were voluntary and not “imposed from without”?
There seem to be two arguments he could be making here. One is that while the FF/PD government took on the burden under duress, the new FG/Lab government agreed voluntarily. But this seems unlikely. The new government started off with the intention of burning the AIB and BoI seniors, then rapidly changed its mind when it “went to Europe”. I can think of three remotely plausible reasons for the change of mind:
1) It was persuaded that paying unguaranteed AIB and BoI seniors with Irish tax money was a great idea after all
2) It basically bowed to social pressure
3) It was, like the previous government, threatened: most likely, the ECB repeated its threat not to provide liquidity to Irish banks which had been restructured through senior-debt haircuts.
Now unfortunately we can’t discount 2) completely, or even 1) (“pillar banks, wheeeee!“). But still it seems the most likely reason for the change of mind was 3). So it seems that the new government, like the old one, agreed to continue paying off the AIB and BoI seniors involuntarily.
The other possible argument is that that since the two governments didn’t push seriously enough for AIB and BoI haircuts in the face of EU/IMF/US compulsion then its actions were actually voluntary after all. This is like arguing that, yes, the mugger demanded your wallet by threatening you with a knife, but because you didn’t choose to put up enough of a struggle with him in the alley you really gave it to him voluntarily. I mean … whaah, Gay?
So it seems the post-bailout payments to AIB and BoI seniors can be said to have been imposed from without. That implies that the maximum amount of bank debt imposed from without is much higher than €5 billion.
@CP
re: Isn’t this precisely what the Spanish are at?
Spain is refusing to take new funding loans for bust private banks onto their own sovereign balance sheet. Is that blackmail?
If so, is not the pressure to force Spain to take the funding loans onto the sovereign’s balance sheet an attempt at blackmail?.
Spain’s position appears to be that if ‘Europe’ wants the banks to survive, then ‘Europe’ should put up the readies. Otherwise, I presume that Spain will put the banks into resolution, an action which to me seems to be the obvious solution.
And let the chips fall where they will.
Spain with its 50% youth unemployment is in no position to prioritise private debts over the future of those young people.
If it does prioritise private debts at this its polity will not
democratic will not last long.
I get the feeling Spain knows it is at the brink. Regrettably the ECB and Germany in particular have a history of ignoring the brink, so they will keep pushing.
One other weird consequence of the second argument would be that the Irish government did itself out of many billions of Euros by failing to pursue its legitimate grievance vigorously and loudly enough. Presumably the Irish public and Irish media also played their part by not banging the drum hard enough and encouraging the government to do the same. I don’t think Dan O’Brien, among others, would really want to go there.
@CP
re “With their refusal to accept money from the bailout fund..”
Language is important also. Spain is ‘refusing to accept money’.
That is very disingenuous language.
That could equally be written as;
‘Spain unwilling to bankrupt its State by taking on addition borrowing to bail out private investors in banks’.
But that language may not interest the ‘Der Spiegel’ audience.
The op-ed in Der Speigel, linked by Mr. Bond, amid the posturing and delusions, expresses some uncomfortable truths. In normal times in the EU everyone is at the table. But in times of crisis, decisions are made at a very high table – and Ireland is not at this table. And if you’re not at this table you run the risk of being on the menu. The objective if you have a small economy, as the smaller economies such as Finland and Austria (within the Euro) and Denmark and Sweden (without) have achieved – and continue to achieve – is to stay off the menu. In quick succession, Greece, Ireland and Portugal put themselves on the menu and got chewed up – with only Greece making itself so indigestible that, to borrow Jeremy Paxman’s crude phrase, it is likely to be vomitted out like a bad kebab. Now Spain, having put itself on the menu, is seeking to minimise the implications.
It is entirely in Ireland’s hands to do everything in its power to avoid being put on the menu again – and to make sure it is never ever on the menu again. But there seems to be some desire to be in the spotlight – similar to the desire that has infected and corrupted both sides in Northern Ireland and the Palestinians and the Israelis: “Look at us, look at us. You’re not looking at us. If you don’t look at us, we’ll do something really stupid and it’ll be all your fault.”
Anything, of course, to avoid doing what needs to be done and to ignore Ireland’s membership of the ‘arc of misgovernance’ that stretches anti-clockwise from Ireland to Spain and Portugal through Italy to Greece and what needs to be done to remove it from this sad and sickly club.
This is a no win. 2 scenarios:
1: Spain refuses bailout – Bankia fails and the Spanish state has to recapitalize to prevent full blown bank collapse
2: Spain accepts bailout and lands itself with unsustainable debt to be collected on ruthlessly by the ESM
Neither outcome is stable
@ Paul Hunt
I’m afraid we are not only on the menu but we are about to be consumed as a side dish to accompany the paella.
@Seafoid
I’m sure Kelly is right in all of his account, if there was one dsputable detail the establsihment would be down on him like a sackful of anvils. The silence on his account is confirmation of his sources.
I would dispute the beatification of Patrick Honohan. Nobody mentions that this ‘world renowned banking expert’ , as he is always described, happily collected his publicly funded professor’s salary while remaining silent on Anglo just a few streets away, busily creating, pound for pound, the worst banking disaster in history. Not exactly the action (inaction) of a truly public spirited citizen.
Herr Hunt,
Your continued trust in some master race of governance in Central Europe is truly touching. Were one to exist, it would truly have come up with some brilliant idea to stem the crisis. But no, they keep repeating the same policy and expecting a different result.
After, Spain has been dealt with, expect a quick outbreak of the jitters in highly indebted & highly banked Belgium, followed quickly by France.
The Brits have got this right. They are preparing to leave the EU. Would that we had a policy making elite with the guts to do the same.
@Joseph
As I understand it Spain simply wants the money for their banks without onerous conditions and oversight.
If Angela allows this it sets a precedent for others…..the Greeks need bucketfuls for their banks…so it’s likely they will attempt something similar.
We have already thrown in our hand, so no mileage in it for us. We could try a little default with IRBC next week and put the cat amongst the pigeons.
I am surprised that my comment regarding the fiscally ruinous cost of the public sector caused so much debate on an unrelated thread. Once again it appears the pampered PS classes try to divert discussion away from the real problem towards a ludicrous racial propaganda angle.
The bitter truth is this country is being financially destroyed by the pay costs of the public sector in co-operation with former Marxist politicians who once pledged allegiance to The Soviet Union but who now have their feet under the cabinet table and are only too willing to pander to the demands of their paymasters in ICTU.
This country can now only be saved by intervention on an enormous scale by outside agencies which will see the public sector systematically gutted, trade union power broken and the current functions of government handed over to private enterprise.
Surely I am not the only citizen that finds it grotesque that the honourable goals on which trade unions were founded during the industrial revolution have been subverted in this country to protect public sector elites including hospital consultants and senior civil servants. Students of history will know the reason the unions were abolished in Hitler’s Germany was because they deviated from their stated mission of protecting exploited workers in dangerous jobs such as mining and instead tried to directly influence government policy to their member’s benefit.
Ireland has been basically a failed state since it was granted independence against the wishes of the majority of its citizens and the only way of salvaging some semblance of living standards for its population is for full political & fiscal control to be removed from the public sector/union axis and governing powers to be delegated to intellectually superior outsiders who will rule in the best interests of all members of society.
@ Tull
Say the Brits leave the EU.
What sort of average growth rate in GDP would you expect over the next 10 years ?
By when do you think RBS would be back in private hands ?
The notion comes across as having a lot in common with the rearranging of deckchairs.
@Richard M
“the current functions of government handed over to private enterprise”
They should be handed over to finance professionals, Richard but unfortunately very little of the finance sector is now in private hands. I think there was a Marxist conspiracy to place a mole called Evgeny Shehivich inside one of the banks but I can’t remember what happened.
@Tull,
You persist with this ‘master race’ trope. It is not that governance in northern Europe is perfect; it is simply that it is distinctly better than that in the ‘arc of misgovernance’. Germany, by virtue of economic success and heft is, by default, the leader. When the heat came on, the Belgians, without a government for more than a year shaped up pretty sharpish. When the nothern states compelled the emergence of a technocratic government in Italy and a technocrat-led one in Greece, the Nazi slurs surfaced. I would plead with everyone to banish these expressions.
The cruel irony is that Germany’s much criticised approach to this crisis is directly as a result of the democratic constraints it has imposed on itself to avoid any possibility of a repeat of the horrors the Third Reich inflicted on Europe and the world. If it could, I’m sure it would dearly love to impose better governance in the ‘arc of misgovernance’, but it can’t. It can only apply the pressure that co-ordinated fiscal and economic governance might impose – in the forlorn hope that the misgoverned might demand better governance from those they elect.
Will it work? I don’t think so. There are too many of the well-heeled and influential and powerful who gained their asendancy by virtue of this misgovernance – and its continuation is vital for the maintenance of their ascendancy. And they have an army of camp-followers beholden to them at every level and station in society.
Update:
Following 45 months of intensive experiential research:
Stat sig************************************************
I challenge anyone to dispute it.
@ Tull
How credible are those rumours re the British?
Herr Hunt,
I put it too you, that you are the only one who has ascribed supremacy in governance to the current governing elite in Germany despite manifest shortcomings in terms of competence not to mention corruption.
It is almost as if the Italian elite of Draghi and Monti have absorbed German competence while the German CDU has morphed into the Italian CD of the 1980s.
Seafoid,
Both the Tories and Labour seem to have come to the conclusion that there is no upside being shackled to a failed project which is beginning to more like the Soviet Union.
The hard part is focusing on the fact that three-quarters of the problem facing the country has been created at home by the huge gap between what the Government spends on services and the income it raises from taxation.
Let’s see
The banks have cost EUR 64bn so far
The deficit is EUR 15 bn or so
The crisis is 4 years old.
A portion of the deficit is related to the depression caused by the collapse of the banks
Three quarters is way off the mark
Collins you’ve gone too far
Collins you’ve gone too far and you should hang your head in shame
There has to be reform but at the very least it should be honest.
Tull
The UK wasted its North Sea oil, deindustrialised the north of England for Thatch, bet the house on the City, went off its t8ts on personal debt and has a very low growth future ahead of it. Leaving the EU won’t change that.
Re- vincent h:’ We have short memories. The bank situation is entirely our fault. Well when I say our I mean the Dept of Finance and the Central Bank. It was their job to regulate, or at the very least be AWARE of what was going within the banks. And have contingencies in place.
Further, it doesn’t matter one iota what nod or wink was given by whoever at whatever level, if it wasn’t sanctioned by an Dáil Éireann it doesn’t matter what a Minister or Regulator does. But if it goes against what the Dáil has sanctioned IT IS ILLEGAL’
– The blame on our representatives is not disputed.
What fails to be addressed is that the Irish banks – unbeknownst to almost everybody else – were the whore of europe. The central bank knew, the DoF knew, and the ECB certainly knew.
When it is stated that the Irish people were unfairly penalised for what happened, the line of demarcation has the ECB, the European banking cartel, and our own ‘reps’ on one side, and everybody else on the other.
This fallacy that a government beholden to these forces and one with them can, through their actions taken at the behest of these same elements, share the attribution of blame with an oblivious population has to end.
Re- Tim O’Halloran
It is all well and fine to doubt material on the internet, but to quote from the make-wish fool’s court of Irish journalism by way of contrast doesn’t work.
What wasn’t apparent to us plebs at the time was the existence and extent of european involvement in our banking system. The knee-jerk reaction of most sent them looking for evidence of Dáil shareholders in Anglo.
One thing the internet has provided is evidence of how facile and ill-qualified most of our official, hard-copy commentary is compared with any one of a hundred thousand amateurs out there.
As for current media activity, it looks like they’re positioning themselves in advance of anything negative that can be thrown in the way of an alien regime currently seeking to take control of taxation & expenditure.
The acquiesent, with their loyalty assessed and filtered through the control of appointments, are forming ranks.
@Maria Sharapova
Nice one!
@ Paul Hunt
And how would you rate the governance of banks??
Have the feeling that this is a watershed weekend. The last ingredient to topple the Eurozone has been added. The next few weeks are all about watching it wobble. Greece to go, Spain to be bailed out, Germany to baulk at going broke – whole thing is on the verge of collapse.
Thank you international banking sector!! And thank you thick twats who insist on seeing a banking crisis as a fiscal crisis!!
re- Paul Hunt
‘When the nothern states compelled the emergence of a technocratic government in Italy and a technocrat-led one in Greece, the Nazi slurs surfaced.’
The only problem I see there is the way ‘Nazi’, by inference, can be taken to allude to the Germans as a people.
We need a general noun for the purpose, one not tied to a particular instance of this phenomenon.
Because if we don’t see the real danger in the suspension or even mere interference with democratic control of governance, held by the people governed alone, this ignorance & deficiency leads us all into a very, very black pit.
Seafoid,
Wait til u see what the breakup of the euro and a global recession does for the German heartland. You will see the outcome of PH good governance then.
I need a break – let’s scan The Phoenix …
Declan Ganley … (a must read) hmmm X-Senator Joe O’Toole and X-AG and X-Minister Mick McDowell and a mere €30 million and a jail for the serfs … that NAMA developer lad and the Waterford County Council … love the mask on Minister Bruton … the Sindo … RTE … the Savages and Vincent B., Minister Coveney Greyhounds, Horses and Yes votes and of course IBEC … the usual suspects …. Dinny O’B and X-Minister Lowry in the Supreme Court … X-Minister McDowell representing NAMA … the usual suspects …. Stephen Collins noted as an ‘establishment journalist’ mind you – well done Stephen … the usual suspects … and of course, noone is ever ever accountable or responsible for anything if a member of the golden circles … who set the agendas …. the usual suspects …. still in situ still pulling the strings … the usual suspects …
Since I mentioned Dan O’Brien’s favourite advertisement for the purgative benefits of austerity Estonia again here are the Krugmanator’s two most recent enjoyably contemptuous austerian bug swats.
“Why the Baltics Matter” is partially about how Jörg Asmussen, Germany’s debt collecting thug de jour in the ECB, is at least one of a liar or an idiot.
What passes for the Irish policy elite needs to acknowledge the combination of fanaticism and dishonesty that has characterized the German response to this crisis and that it will not change without pressure – in fact it may not change at all and we may have to start maneuvering ourselves to a respectable Swedish/Danish distance to the self styled core EU (Germany and bordering client states).
It really does not help that the two largest national Irish newspapers are so far to the right economically that they constantly promulgate the same simple minded lies as the ECB front because they would prefer to fight the left rather than for Ireland.
Better, Tull, better; not ‘supreme’. And better most certainly that that produced locally in the ‘arc of misgovernance’ – and currently better, in a global strategic context, than that being produced in the US or the UK (and probably on a par with Australia, Canada and NZ).
30% of the Irish electorate decided to stick with the ‘devil they know’; 20% rejected it (but most are inveterate nay-sayers); 20% sat on their hands and about 30% never seem to vote (circumstances, incapacity, a feeling its pointless, lousy electoral rolls, whatever).
Get over it. This saga will continue until the misgoverned demand better governance. It’s a slow pincer movement. Germany and the other northern states will keep up the pressure on one side and bond investors will keep up the pressure on the other side. The penny will drop for the misgoverned eventually. Those who are pathologically deluded will be roadkill – and the Greeks have a week to decide if they want to fall in to that category. A sufficient number of Irish voters decided not to. They now have to take another big step to demand better governance, but they are leaderless and rudderless since those who might provide leadership are determined to keep their snouts in the trough.
re _ P.Hunt: ‘It is entirely in Ireland’s hands to do everything in its power to avoid being put on the menu again – and to make sure it is never ever on the menu again.’
Their metabolism can only accept their own denominated currency, so…
@Eureka on whether German pig headedness, neoliberalism with EU characteristics and financial capitalism can break Europe.
Thank you international banking sector!! And thank you thick twats who insist on seeing a banking crisis as a fiscal crisis!!
Amen.
Wolfgang Schauble, Lorenzo Bini-Smaghi, Ollie Rehn – we are talking about you-hoose!
What is it about people and banks?? Why has nobody focused on the governance of banks in all this?
@ Paul Hunt
I’ll ask you again. What do you think of the governance of banks in the EU? You can pay special attention to the ECB under JCT if you like. And you can look too at JCT’s role in Credit Lyonnais
PH,
Apart from the better bit, I agree with everything else. Governance is so poor , electors will demand better. President Romney anyone.
That said, your league table of the better governed have one common denominator- a Chinese bid for commodities. Remove that and we shall see. The Australian labour party looks a lot like FF.
“Economy Minister Luis de Guindos will hold a news conference at 6.30pm UK time to explain “actions on the recapitalisation of the Spanish banking system,” the ministry said in a statement.”
Btw, the price has gone to 100 billion
@ DoD
Stephen Collins should be reformed along with the PS.
@ tull
I know you yearn for the great cleansing but things are usually patched up and put back on the road. I think the Euro will survive. They’ll find some resilience in there. The guys with the money have interests in continuity. Mondays always come around and things go on.
The Goetterdaemmerung won’t happen until the environment collapses. And then it will be a case of the ultimate TSHTF.
@seafoid
Agree. Amazing how leisurely we are panicking. Euro is holding up fairly well with all the grim news. I suppose we should get ready for an Italian bailout.
The euro switch is seemingly turned on and off at will. Expect the next maelstrom when countries are being coerced into accepting the conditions of fiscal union.
re- Richard M:
Jesus Christ.
You start reasonably enough,
‘Surely I am not the only citizen that finds it grotesque that the honourable goals on which trade unions were founded during the industrial revolution have been subverted in this country to protect public sector elites…’
Then;
‘Students of history will know the reason the unions were abolished in Hitler’s Germany was because they deviated from their stated mission of protecting exploited workers in dangerous jobs such as mining and instead tried to directly influence government policy to their member’s benefit.’
– Not familiar with the particular policies they attempted to influence, but in any case do you think government policy can be seperated from conditions of employment ?
A red herring, in any case; the purpose was to dismantle all power-wielding structures not in the Fuhrer’s fold.
‘…Ireland has been basically a failed state since it was granted independence against the wishes of the majority of its citizens….’
Not according to the elections before the War of Independence. Though there has always been an enclave of imperial sentimentalists, mostly concentrated in Dun Laoghaire Rathdown, they were no more representative then than now.
And here we go:
‘….and the only way of salvaging some semblance of living standards for its population is for full political & fiscal control to be removed from the public sector/union axis and governing powers to be delegated to intellectually superior outsiders who will rule in the best interests of all members of society.’
Jesus Christ.
The first head above the trench; hoping for a medal ?
‘,,.intellectually superior outsiders…’
– and people wonder why the Nazis are always brought into this….
Ceterisparibus
Namawinelake on brianmlucey.wordpress.com has suggested that its going to take closer to 700b.
Who here dare bet against Namawinelake given how prescient that site has been on the numbers?
@ Paul Hunt
I do not think that your general presentation is true. Nothing could surprise anyone these days. That Europe has grown soft, is badly governed and that politics is more venal than ever is a phenomenon recognisable in most countries. Which leads me to;
@ The Alchemist
The arc of Northern good governance as described by Paul Hunt does not exist, at least, not if it includes Germany, Belgium and the Netherlands. The Scandinavian countries share the (Lutheran?) heritage of the ability to concentrate on function and output. The divide between public and private sector as perceived in Ireland and many other European countries would be unrecognisable there. This is because equality (jaemlikhet) is not just a concept but a reality e.g. the equivalence across all sectors of pension entitlements in Sweden. If we wish to aspire to Scandinavian standards of living, we must aspire to Scandinavian levels of governance.
Only outside pressures will achieve this in Ireland’s case and for reasons unrelated to any Scandinavian “vision”; simply the desire to get loaned money back.
There is little evidence of any recognition that the problem exists, not to mind that it must be resolved, other than the “volunteering” of pay cuts by some. I recommed once again a reading of the Buckley Report to all and sundry for its is truly Orwellian phraseology (not to mention its implications).
For those insisting on viewing the situation through the distorting prism of the left-right dialectic – and fans of Paul Krugman – herewith the views of the President of Estonia in case they may have escaped their attention.
In terms of ego, the two protagonists are equally matched although Krugman has the edge in observing the proprieties. He might be accused of a lot of things but racism is not one of them.
Regling is far and away the most suitable candidate to head the ESM. But will politics once again intervene? In other words, will the desire of Merkel to get rid of Schaeuble and appoint him outweigh French objections?
@ Seafoid
Thanks for the link.
From the article
‘One of the reasons for Sinn Féin’s big rise in the polls is the line the party has taken in condemning fat public service salaries and proposing a cap of €100,000 for the entire sector.
Mind you, as figures released during the week show, the party’s 14 TDs have not been behind the door in claiming their extremely generous tax-free Dáil expenses which, on top of their salary of €92,000, gives them an effective income of close to €150,000 a year.’
So far as I know they all take home the average industrial wage and the rest goes to party funds – open to correction on that.
On the face of it it’s a better deal already. And they are able to grasp the difference between a failure of banking and a failure of the state.
I am beginning to think that this simple bit of logic is completely beyond some people here.
Some people are so blinded by envy that they refuse to accept a very simple truth. This is a banking , not fiscal crisis.
Maybe those people are just thick or maybe they’re just small minded little cretins who love to see the taller poppies cut down.
@ Mark
‘Surely I am not the only citizen that finds it grotesque that the honourable goals on which trade unions were founded during the industrial revolution have been subverted in this country to protect public sector elites…
Well, you certainly have a fellow traveller here.
I studied the subject for 4 years and to say they are a disgusting, self serving bunch of hypocrites is putting it far too mildly. When I see jack and David I know that I am looking at the framers of the faustian pacts.
When the history of the collapse of this country is examined the trade union betrayers are going to be up there with the bankers and developers who ran amok. Trade unions are subsumed into the loving embrace of the state who buy them off. In Ireland, it is worst than that, the state and the unions are one in the same entity.
When the state had a choice of “getting real” they capitulated again to the trade union movement. If you only saw the standard of the stuff that comes out of Congress it would shock you. Most of it would not even warrant a pass on a Leaving Certificate Economics paper.
Time to revisit our deal with the Troika after Spain secures a sweetheart deal with no strings attached?
Maybe we should have set up a FROB instead of a NAMA!
“I studied the subject for 4 years”
Really? And what subject what that?
” to say they are a disgusting, self serving bunch of hypocrites is putting it far too mildly”
I really dont think thats putting it mildly at all
“the trade union betrayers are going to be up there with the bankers and developers who ran amok”
Any evidence for this, or are you simply offering personal opinion?
“the state and the unions are one in the same entity”
Would you care to explain what this actually means.
“Most of it would not even warrant a pass on a Leaving Certificate Economics paper”
Hmmm, noted without comment
Ordinary Man,
Look at the suits worn by the average SF TD and tell me they buy them on 35k per annum. As you say , each and every TD gets 92k plus exes. That is what they cost you and me. They can blow that on fags or booze or on leaflets for all I care but that is irrelevant.
@ Ceteris
This FROB thing seems to be the problem. The Spamish will have responsibility for it. So whatever it can’t collect the govt will have to make up.
Still tough – at least they’ve established a degree of separation between bank and state.
@Tull
There are no ‘average SF TDs’! SF doesn’t do ‘average’ (-;
re- Robert Browne
‘Well, you certainly have a fellow traveller here.’
– I was quoting someone; not my words.
There was a firm disagreement, above, with your post, I see.
But I have to say that from my own experience, the unions are often corrupt; SIPTU arren’t worthy of their role & position one iota.
They are both ineffective in genuinely protecting their members, and at the same time guilty of subverting the union role of representing worker’s rights into a trade-off, with an uneven spread of benefits.
Somebody once described the problem as due to turning the concept of rights and solidarity into a bargainable commodity; which of course both means that it can be reneged upon for a price and overinflated (the benefit often falling on those who didn’t merit it).
Speaking as one without an ideological objection to Sinn Féin, I’m afraid that if those (with whom I’d include myself) who have a major problem with the route FF/FG/Lab are taking for the benefit of the financial industry choose to pin their hopes on them (SF) as the most likelysaviour-candidates, we might end up sorely disappointed.
They’re making a lot of the right noises, alright.
But I think we’re in danger of merely surrendering self-determination (in the most absolute & inclusive sense) to an unproven redeemer.
Look at the complaints about our governance above – political and banking.
They all allege national culpability for the crimes of these powerful but micro- interests.
Surely we need to be developing a model that democratises governance still further, diminishing the ability of coteries to act for narrow interests, to the detriment of the many.
Look at the absurd fact that the euro-apologist ‘doctors’ are prescribing an enlarged version of what they allege to be the problem as the solution ( ceding political and fiscal control due to the ill-effects of the misuse of ceded political and fiscal control ).
Surely it’s time to stop lobotomising ourselves & our destinies, tying our limbs to strings and putting them in the control of others ?
I don’t necessarily disagree Mark, I just feel analysis is better than hyperbole. The political benefits of Unions, if we look beyond Ireland, are becoming apparent. Bloviating, as tends to happen when the public sector is mentioned on this site, gets us nowhere. (And, coming from a non-unionised private sector worker,it’s grown tiresome – I know you have to take that on face value)
That doesn’t mean I’m a fan of Croke Park or whatever this weeks strawman is. I’m more than in favour of intelligent analysis from people I might not agree with politically, like Paul Hunt and Michael H
that should be in response to the post above this one
re- RF – Yes. We know that a lot of the criticism directed at Unions isn’t coming from a constructive or rehabilitatory angle, but has an existential objection to their Being.
addendum to the last comment – there’s the problem in a nutshell – the same people that ensured the unions manifested in a corrupt form are the same people that want to see them neutered.
Just as the same people that ensured the banks were given a free-reign, and the government were facilitating this, are the same people who want the control of the country taken from it’s inhabitants.
@ rf
The initials “rf” does not tell us very much but out of courtesy I will say that the course I was doing at the time was a Bachelor degree in Business Studies in Limerick specializing in Personnel Management with a heavy emphasis on Industrial relations. btw with regard to your innuendo, did manage to get a “B” grade in Hon’s economics for Leaving certificate, a subject I took on and studied at home by myself. Later Pat Cox and Donal Dineen were very, very good lecturers in the subject which was always one I enjoyed. I also have a qualification in Systems Analysis form Galway University.
When I read the latest “Quarterly Economic Observer”, “fill in the blanks” stuff coming out of Neri Instituite in Parnell Square I knew why the country has to implode before it can have any prospect of recovery. I also have a qualifications in systems analysis form Galway University. My own preliminary research tells me that the door of the NERI and the ICTU are painted the same colour and that tells me a lot about the type of ‘research’ being carried out there.
I make no apologies for my description of trade unions, it is likely the most accurate one you will be given for a while to come. As for “the state and unions being one in the same entity”? Most trade union leaders, as you will be well aware, know their way around Leinster House like the back of their hand. I stood in amazement when Jack O’Connor was able to trot around taxi drivers protesting outside the Dail and skip his way through security with a nod and wink as he strolled with his brown leather bag to the late Brian Lenihan’s office for a pre arranged meeting to be given assurances, according to RTE the following day, that the Croke Park agreement would not be touched. Was David Begg not ensconced on the board of the ICB for the duration of the boom and bust?
The Croke Park deal, confirmed what we all know. that the government and unions were effectively sitting on each others remuneration committees. Don’t take my word for it MD Higgin’s is on the record of the Dail saying so in fact it was a Youtube clip. Many trade union officials have gone one step further and actually linked their salaries to the higher salary grades in the PS. I was in a room with Blair Horan of late of CPSU who was out campaigning for a “Yes” vote recently, when he told us, “we asked Bertie for 600 million for our members and he gave us the 1.2bn!” Sure why not, easy come, easy go.
So, “rf” tell us a bit about yourself?
I’m all for unions, but in Ireland in the recent past they have seemed mostly interested in retaining their – often well paid – members’ salaries. I don’t see what groups of highly paid people collectively bargaining has to do with the union movement.
If the issue was improving the lives of the vulnerable surely they should be promoting wage decreases and commensurate employment number increases (especially in the PS) given the damage unemployment is doing to the country.
@Darren
Increases in the level of public sector employment were never on the cards. The idea that the Croke Park Agreement or public sector unions are responsible for the drop in public sector employment is a total misreading of the situation. The only question was whether there was going to be further pay cuts in addition to the pay cuts that had already happened and the job cuts that had already happened and were already going to happen.
“So, “rf” tell us a bit about yourself?”
Well i could really say anything Robert, so i’m not sure of the point. But anyway, you’ll have to take this in good fate. Rf = Ronan Fitzgerald. I’m living in London. Working in the non public sector. Probably a good bit younger than you, but tired of your generations (or parts of its) bullsh*t.
Any moderators reading, you have my permission to pass on my email details so Robert can verify this.
And what Mark said
@ rf and I am also tired of my generations bullsh*t and have said more that once before that we have proved to be the most selfish generation in the history of the state. I despair at the cosy cartels that are running this state and sinking the country into totally unsustainable and unconscionable debt. I agree with you about analysis being better than hyperbole but unfortunately what passes for “analysis” in Ireland is invariably contaminated by self interest by those who do not really want any of the feather bedding removed.
In those situations hyperbole is sometimes a necessary and justified approach. It is completely justified in response to our economists and “researchers” ESRI, NERI and the ICB saying “our economy is improving, taxes returns are higher than they were for the same time last year and the rate of increase is greater than we have seen in the economy since 2008. Our partners in Europe are working hard and are fully supportive of our efforts to put the economy on the right trajectory we expect to return to modest growth rates of 2.2% next year with further increases in growth expected to follow in the latter half of the year” blah, blah.
How on earth or why would rational people enter into serious dialogue with these people who have one purpose and one purpose only in mind and that is to preserve the status quo and make sure the burden is put on somebody else’s shoulders. As long as the gamekeepers are in charge of the Zoo nothing will change it is only when they are captured by the game that we will be able to make any decent structural changes. Since leaving my house today, I have seen 3 crimes. A period house being burnt, a burglar trying to get in someone’s front door and some girl that had her mobile snatched from her hand while she was talking. This society is starting to unravel in my humble opinion.
I actually support Merkel’s approach to the crisis and dealing with the Irish, having worked in Germany I know that the Germans are well aware of the extraordinary pillaging that is being carried on by those who now want to be bailed out again and again and who want Eurobpnds, debt mutualization and propping of national balance sheets so that old cronies are not touched. Do this lot think that Merkel does not know about Croke Park and what is happening here? That is an insult to the woman of course she knows. She sat down with Kenny on their first meeting and you can be sure she was briefed. I won’t invade your privacy and feel free to request my email if you require it and thank you for your views.
Okay. Thanks for the long and entirely reasonable response. I think we’re both speaking past each other, or just coming from different political perspectives. Or maybe we’re just both frustrated. I apologise for any snark I directed your way or implications you were arguing in bad fate. Although I don’t agree with your perspective, (I think your laying it on a bit thick with the relevance of Croke Park and PS Unions in general), it’s thoughtful and well made.
I’d imagine there will be a number of policies that will need to be implemented to get us out of this crisis, renegotiating Croke Park being one. But from where I’m standing I see the PS being used as a scapegoat by the usual suspects to further their own economic and ideological interests. I think Croke Park is largely irrelevant to be honest.
But still I think there’s probably common ground between us, in resentment towards the various unaccountable interests that not only caused this crisis, but are now profiting from it and using it to further reinforce their position. We just disagree on who the villains are, I guess
@ Kevin Walsh
Can you explain how this is a misreading? With the reductions in overall funding you could still employ more people with wages closer to international norms for an economy of Ireland’s level. That it wasn’t a question seems indicative of the lack of broader ideal framework mentioned above.
@ rf
Well, twice last year Dr. Edward Walsh now retired but former head of Limerick University who more than anyone was responsible for the success of that institution said that if salaries in the Public Sector were benchmarked against their counterparts in the UK then the country would save 7.5bn per annum. Then Professor Morgan Kelly who has been more prescient than any other economist or researcher in predicting and challenging the status quo on the crisis and causes of the crisis said that he was paid 100% too much, that further isolated him with his colleagues. I don’t want to bash the PS I want to reform it and I think it is very much responsible for not tackling the the causes of the crisis. We are 4 years in and all we have had was three different reports on the banking crisis with the broadest of strokes which basically blamed “group think” and systemic failures to oversee and regulate and control bank leverage. The governor of the CB is on record as saying he was not interested in naming names he simply was concerned with process and systems theory. Why things went wrong not who caused them to go wrong. This is cowardly in the extreme and an ineffectual morally bankrupt way of pretending to address the problem.
This was Enda’s 5 Point plan that won the election. It is shocking in it’s simplicity and really shows how much the government advisors think of the people. I’d say the instruction was keep it simple and drill it in.
Point 1 – Protecting and creating jobs
Because jobs and opportunity are the best chance of keeping our best asset – our young people – at home.
Point 2 – Introducing better, fairer budgets to keep taxes low No country has ever taxed its way to economic recovery.
Point 3 – we will create a completely new health system
There’ll be more and better community care, meaning fewer hospital stays. Fewer hospital patients mean lower hospital costs for the taxpayer.
Point 4 – smaller, better government with the people’s money spent wisely on vital public services
Point 5 – a political system that achieves more and costs less, with the Government leading by example”
For Ireland to get out of this crisis there has to be accountability. Four years in to the crisis and the Chairman of Anglo is seen in Poland wearing a green jersey and booked into a 500 a night most expensive hotel and seen leaving samel with FF’s famous Press secretary PJ Mara.
The cures in Ireland will have to be debt write down for ordinary people.
In the link below about half way down in the comments section, I listed over 100 ideas straight off the top of my head
@ rf
Sorry pressed the “submit” without the link! Here is the link
Thanks Robert. I could see myself getting on board with maybe 20% of that,the law and order stuff not so much – and why not just throw white collar criminals in Mountjoy rather than giving them their own plush complex? And making striking illegal for employees in vital services (how could you define and police such a concept) definitely not! Also, it looks like any saving you’re making in lower PS wages etc are just going back into creating some huge prison bureaucracy.
But I can see where you’re coming from.
In relation to PS wages, i’m still sticking with Karl Whelans point – the figures dont equate to such hostility – until someone can offer me an explanation as to why I should be so concerned about such a, relative, irrelevance
Btw I’m not carrying water for any particular party – Your points on FGs ludicrous policy platform and PJ Mara are well received
@darren
My point is that it would never have occured to top management in the civil service or to the government (either government) to hire more staff. The fact that unions in the public sector are not as weak as they are in the private sector is the primary reason we haven’t seen a wave of “redundancies” in the public sector.
And the reason that vacancies at the top of the civil service are being filled by the same people who just left the jobs is that senior management protects itself – it has nothing to do with the unions or Croke Park.
We can actually leave Europe, as all are treaty referendums are flawed because of all the lies that the FF and FG and LB spinner, all the Irish treaty’s are flawed under false pretences, plus we can sue and take action against EU and troika and IMF and sack Troika and rid of Croke Park, If this government does not issue the letter, then the people have a right to vote them out of government, but they also have to redo all the treaty referendums again, as they were all on false pretences by Merkel and Trichet, and FF minister Brian Lennihan,
168 replies on “Mistakes/self interest versus European pressure”
“Decisions taken then were taken because the government of the day believed them to be in Ireland’s best interests.”
Anybody know of any evidence for this claim?
“If such evidence existed one could be quite certain that the Irish authorities would have put it into the public domain, either directly or via a leak”
Why would they ? Would the DoF broadcast their ineptitude? This seems to be what the whole article hinges on.
And what sort of history does Ireland have regarding whistleblowing ? Would RTE have the guts ?
The operation of power is so obscure in Ireland.
” Even if the imposed €5 billion was retrospectively Europeanised in full, the impact would not be transformative”
Very smugly observed. It would go a long way towards paying for a policy approach to got people back working. Could be transformative for a lot of people suffering needlessly .
We owe more money than exists and most developed economies are the same. As we repay debts to banks the money supply drops by the same amount and as such we can’t repay our debts in full. It’s a matter of time before developed economies default but a much smoother way to to resolve the problem would be to create the money needed to repay our debts as they fall due.
This would be considered quite an underhand way of solving your debt problems but we’d have to recognise the level of emergency the e onony is in. The current system of money creation is unsustainable since it required ever increasing loans to function well. We’re finally at the point were households in particular are maxed out since mortgages have hit their natural limit of taking two incomes 30 years to repay.
Recognising how unique this recession is as a result would allow us to atrt investigating what proportion of the money supply has to be issued debt-free at source for a healthy economy to run well.
Paying our debts with money created for the purpose would not be inflationary since money repaid to banks doesn’t exist after the debt is settled.
So Dan O’Brien gets from €65 billion down to €5billion faster than Tommy Cooper could say ‘just like that’.
He does so on the basis of a number of points:
1. No evidence of ‘outside’ pressure for the guarantee. Its time to produce all the evidence both in Ireland and Europe.
2. AIB, BOI, PTSB and EBS bondies are not be to counted on the basis of;
“The only bank debt it ever seriously pushed to impose a haircut on was unguaranteed senior bonds in the two failed banks”.
Why no serious push. Where is the evidence that it was considered, that it was dismissed and what pressures were brought to bear to arrive at the conclusion that bondholders in these banks were sacrosanct, even at the very time that the State was lining up to put billions of borrowed money into them.
The elected leaders of this country and European institutions have destroyed this county but have made decisions to save the wealth of very many non national professional investors.
No amount of spoof or dismissal will change that change that fact.
€65 billion is €65 billion. And that €65 billion has destroyed the country.
The Irish people are entitled to a dossier documenting every minutiae of the decisions to spend every cent of that money.
Not a Tommy Cooper like airbrushing of unpleasant facts.
Ireland was royally screwed by its own leaders and by Europe and continues to be screwed by both.
That is a fact that we should offer no apology for proclaiming and continuing to proclaim.
Dan has shown his colors as a RevIsionist.
Interesting article on Spain and its a lot worse than previously thought…
http://www.nytimes.com/2012/06/08/business/global/madrid-leans-on-its-troubled-banks-for-financing.html?_r=1&hpw
Apparently the banks own 67% of Spanish Gov. Bonds.
The Doom Loop?
Spain to seek financial bailout on Saturday
http://www.guardian.co.uk/business/2012/jun/08/eurozone-spain-financial-bailout-saturday
The move came less than 24 hours after the ratings agency Fitch slashed Spain’s credit worthiness by three notches to just above junk status and warned that its estimate of the cost of a bank bailout had doubled to €60bn (£49bn).
How plausible is €60bn ? That’s only 3 AIBs worth of meltdown. It wouldn’t even buy 2 Anglo Irish.
I wouldn’t have one of those rating agencies playing corner back in an all Ireland final.
@ CP
I thought Dan was always on that side .
€100 billion to re-cap Spanish banks = 9% of GDP
Irish recap etc = 45/50% GDP/GNP
German equivalent of 45% GDP = €1.5 TRILLION
Good day Dan! Case rested.
(Spain prob needs half a Trillion – time to bust a few banks)
” the socialising of Irish banks’ debt prevented additional euro zone-wide chaos”
It’s arguable that it might have delayed it but it certainly didn’t prevent it.
With JCT at the helm of the ECB, the agenda was always going to be that the little people would bail out the banks and the bondholders. He was the evangelista for this and sure as hell, Ireland wasn’t going to get in his way – and he would issue any threat he cared to to ensure that. Ask him about, “…send Ireland back to the middle ages” (might have been “dark ages”).
Nobody in their right mind can say that all the banking/financial institutions that have survived really should have…. and some of them shouldn’t still be alive…. or that all the bondholders should have been let off the risk their investments carried.
But as history has shown us time and time again, there are plenty of people out there with airbrushes. I forget who it was that said it’s the winners that get to write history. Guess who the winners have been in this case.
@seafoid
Not sure it is clear they will ask for that. It could, could, be the rest of the EZ that wants the meeting to pressurize the Spanish.
@Dan O’Brien
Oh dear. The rhetorical trick played here is as follows.
*1 Argue that the initial bank guarantee was entirely voluntary on the basis that no one has produced a threatening letter signed in blood from Jean Claude Trichet. Really. This is faux naive stuff, there are multiple channels to apply pressure and you can be damn sure that Europe’s financial elite and their schills covered their tracks.
*2 Simply ignore the repeated extension of the bank guarantee under its initially very wide terms as if it was inevitable and argue by omission that no external pressure was therefore applied. This is staggeringly dishonest, it is public knowledge that the ECB lnot only obbied strongly against any losses being imposed on any class of bank bondholders but made the extension of Ireland’s “banking bailout by proxy” programme conditional on it.
*3 Argue, based on point 2, that since there was no option other than make some senior bond holders take their losses (ie: the Anglistas) and that these losses are comparatively small (I mean its only five billion, right?) the whole issue is not really significant any more.
65 billion Euro of not significant. And counting.
Dan does push his luck a bit when he draws attention to his earlier omission here:
Of course the threats and pressure that ensured the bond holder bailout was continued once Ireland was bounced into the Troika programme are public knowledge. We are expected to believe that the thuggery and economic imperialism that was in plain view after we had surrendered to the ECB was not present before. Laughable.
Tired as this line is it is the right wing establishment one in Europe and that is what we get from the Irish Times (remember the miracle of Estonia Mr O’Brien?).
As a depressing side note I think the far right in Ireland is felling pretty happy with itself having pushed through the Fiscal Compact (with Labour’s help). What they will try next is anyone’s guess but they are now so emboldened I think that we will see more openly Thathcherite policies advanced as they try to restructure society in a more “enterprise” (read wealth and privilege) friendly way.
The class war is on and the financial capitalists and the feudal social network that surround them have enjoyed two notable victories. Lets see how it works out for them in the end.
@Seafoid/DOD
60b does not seem plausible.
Here are the various estimates….
“The IMF’s due to publish its report on the health of Spanish banks on Monday, and is expected to say it will take a cash injection of at least €40bn to recapitalise the lenders (forget for a moment that Fitch says €100bn, Roubini Global Economics predicts a cost of up to €250bn, JP Morgan says €350bn and RBS believes it could hit €450bn).”
Pick your number!
@ Shay
Morgan Kelly in his totemic WTF op ed for the IT last May pointed out that the original bank guarantee was so obviously suicidal and stupid that it could have been withdrawn with excuses once the original had expired. But of course it wasn’t. And why wasn’t it ? And why was the guarantee extended in the first place ?
This is also noteworthy
http://www.irisheconomy.ie/index.php/2011/09/10/establishment-thinking
It seems to me that the main economic problems facing Ireland are:
1)A level of private indebtedness that is the highest in the world, with depreciated assets on the other side of Irish household balanced sheet, because of the collapse of the housing bubble.
2)A dependence on multinationals that is excessive ,and a very weak “national” industry (see Paul Hunt and Michael Hennigan on the subject).
3) A society riddled with gross inequities in favor of the civil servants, the politicians, the medical profession, the lawyers, the commercial property owners, etc.
4)A budget deficit that will be extremely difficult ,or impossible to bring back to manageable levels (see Namawinelake http://namawinelake.wordpress.com/2012/06/03/having-our-cake-and-eating-it/).
Meanwhile this blog is discussing ad infinitum whether or not the bank bondholders can or will be burned or if the loss can be pushed on somebody else ,which would not solve any of the above mentioned problems .
Those bondholders have a great virtue :they are probably foreign ,which make them ideal scapegoats and can be used as a pretext to justify total inaction on the real problems facing the nation. They are the Irish equivalent to the Arab immigrants in France or the Germans in Greece.
Sad.
Dan does the state a service by daring (Dan Dare?) to go mainstream with this point:
“If there is evidence from that time that outside actors had obliged the government to take the decisions it took, or prevented it from taking actions it wanted to take, where is it? If such evidence existed one could be quite certain that the Irish authorities would have put it into the public domain, either directly or via a leak. Such information would do a lot to strengthen the case for Europeanisation of bank debt. That no such evidence has become available suggests that it does not exist.”
A service because outside Ireland, it is not believed that Ireland was forced against the will of its government by the ECB or anyone else to guarantee its banks’ liabilities – rather, it acted selfishly in what it perceived to be its own interest and it had no interest in the effect on its ‘partners’ in Europe. Nor is it believed that the decisions to roll over the guarantees and pay out the unguaranteed senior bonds were carried out under threat of ECB closure of Irelands banking system in retaliation for holding back some of the 5bn.
So if evidence does exist, it should be put into the public domain since keeping it under lock and key doesn’t seem to have been a great success as a strategy does it?
Discussion with the learned anonym here:
http://www.irisheconomy.ie/index.php/2012/06/05/germany-no-deal-on-irelands-bank-debt/#comment-293399
http://www.irisheconomy.ie/index.php/2012/06/05/germany-no-deal-on-irelands-bank-debt/#comment-293665
http://www.irisheconomy.ie/index.php/2012/06/05/germany-no-deal-on-irelands-bank-debt/#comment-293927
http://www.irisheconomy.ie/index.php/2012/06/05/germany-no-deal-on-irelands-bank-debt/#comment-294033
@seafóid
“How plausible is €60bn ?”
About as plausible as the figures that were first being bandied around for Irish banks when this all kicked off.
Does anyone remember what they were originally? The cheapest bailout in history.
It’s a standard approach in financial services PR. Always drip-feed the bad news, start as low as you dare go and bump up the figures step by step, over time. Doesn’t matter whether it’s the number of endowment mortgages that won’t deliver, mis-sold pensions, PPI, bank recapitalisation, the latest ponzi scheme to be discovered, etc. You will always be lied to all the way down the line (aka “based on the best information we had at the time”). Not just mis-informed but LIED to. Spain, its banks and the EU/ECB will lie to us again and again in the coming weeks and months. You can rely on it.
They were originally saying €40bn (I think the IMF still is but will probably be told to get their 5hit together over the weekend before their report is released on Monday – “the game has moved on Christine” and all that).
One thing you can be sure of is that the Finance Ministers meeting tomorrow morning will want to keep any bailout to the minimum for now not because they think that’s what will fix the problem but because they don’t want to scare the horses.
I’m still expecting some form of global, co-ordinated CB move over the next few days and don’t be surprised if the prevention of bank runs forms part of the announcement. Switzerland may let the lifeboat drift away under cover of any announcement. If you haven’t moved your Euros by the time it departs, it’s too late. “All aboard?” was the cry.
Unless a/the ‘threat letter’ is released and B.Lenihans contention that we were ‘bounced’ in to the guarantee is backed up, I can’t see how he’s wrong.
He could have added that just because the Euro is/was flawed doesn’t mean we had to have such a disasterous bubble. It was within our power to prevent.
Also let’s not forget that the tax slice of all the cheap credit was used for the destruction of the tax base and buying of votes and power via SSIA, ‘partnership’, hikes in welfare and other goodies etc….
What’s to be done. By in large we are only half way through our ‘fiscal adjustment’ and long term unemployment is at disgusting levels. The number one thing we need, that is linked to unemployment, is a sense of social unity during a crisis.
I feel 3 major things immediately within our power to do, that on their own won’t come near to closing the deficit but will facilitate its closing by laying the ground work for a more equitable society.
1) Justice and some cases jail time for those that brought the country to its knees, that may include retrospective claims/traces on pensions.
2) A proper partnership processes that will reverse some of the current overpayments to the civil service and semi-states. Particulary politicans. This won’t solve the whole problem but according to K.Whelan, a 25% cut in the wage/pension bill would save 2 billion or so. I’d favour a transparent process that saw each group pegged to the European average.
3) A frank and open admission by the government that the Bank Guarantee and socialising of private debt was/is wrong and legislation to ban it from ever occurring in the future.
Point 2 could marginally help our prospects when negotiating with our European partners.
These things are so essential because to close the deficit every group in society will be hit. The more inequities that exist in society the more corrosive it is to society in general and the more society breaks down and become interest groups in trenches flexing their muscle to be the last touched.
We are already seeing the consequences of inequity. Those who owe property tax are using these inequities to justify their position.
@ ALL
Der Spiegel has now accepted and posted comment on their story “Banking Woes: Ireland Still Long Way from Overcoming Debt Crisis”.
http://forum-international.spiegel.de/showthread.php?p=113916
Please join in and communicate the Irish people’s understanding – views which Germans don’t hear often enough.
@seafoid
The “Pay no attention to the financial sector and agents behind the curtain” act is laughable and immoral but it has worked well for them (class solidarity from the media certainly helped in Ireland).
I believe that the ECB will get the plurality of the blame for the scale of the European component of the global financial crisis in the history books. In Ireland we tend to blame senior figures like Trichet and Bini-Smaghi (who were obviously fools and co-conspirators with the financial sector) but the institution is an embodiment of failed and dangerous ideas and these ideas permeate the European Commission and the wider European establishment (currency fetishism, neoliberalism, financial sector sympathies) and dominate politics in the most powerful country in Europe.
I am with Martin Wolf as quoted by Krugman on the failure of European politics and institutions: “Before now, I had never really understood how the 1930s could happen.”
The original Wolf article is very good too.
Back to the Big Picture [h/t nakedcapialism
Marshall Auerback well worth a read ……….
Ironically, for all of Germany’s complaints about “bailing out” Europe, if they insist on extracting more pounds of flesh from the already emaciated periphery, the euro zone itself could collapse, and Berlin would be on the hook in more than one way for these lenders of last resort claims as well. More importantly, these claims would be largely unenforceable for Germany if the entire system collapses.
So you need something bigger. Unfortunately, for the most part, Germany is constitutionally incapable of thinking in ‘infinite’ terms. Moreover, a banking union faces another form of resistance from German banks: they are horrified that a real EBA will discover the truth about the black holes within them, notably their Landesbanken.’…
As for the proposal from Germany’s “wise men”, which is now gaining political momentum amongst Berlin’s governing elites, the devil is in the details. If a new “fiscal compact” is part of the deal, it will enshrine an economic impossibility. Leaving aside the point that virtually no country today is compliant with the EU’s Stability and Growth Pact, budget deficits are largely “endogenous” phenomena, which is to say that they are non-discretionary. Slower growth inexorably reduces tax receipts and increases social welfare expenditures (the so-called “automatic stabilisers”). And, as Yanis Varoufakis has noted:
If Spain, Italy, Portugal, Ireland, France, Greece, Germany etc. (i.e. countries with debt well above 60% of GDP) were to reduce their debt by the specified 5% per annum, this would mean that all these nations should turn an average 2.8% primary deficit to something akin to 6% primary surplus. Suppose we could do it (which, of course, we cannot). Were we to succeed in this endeavour, the result would be a very deep recession equal to at least -4.5% in terms of average Eurozone-wide ‘growth’. In a period when a banking crisis is in full swing, the Periphery is in free fall, US growth is tittering of the verge, China is slowing down etc., engineering such a recession via this piece of ‘legislation’ is the macroeconomic equivalent of committing suicide.
This time, it’s not the Greeks, but the Germans, who could well be introducing Trojan Horses into European economic policy. It’s bad economics, stupid politics and unlike the original Greek Trojan horse, might well not bring “victory” to Berlin. So everybody should beware Germans bearing economic “gifts” of this sort, including Mrs. Merkel’s own electorate.
http://www.nakedcapitalism.com/2012/06/marshall-auerback-beware-german-trojan-horses-more-europe-might-mean-more-fiscal-austerity.html
Not forgetting the Derivatives Death Star in Frankfurt [BeB ???]
Puts Dan’s piddly little five billion in the haepinny place …
I’d love to see Dan O’Brien write an article about how Ireland can respond to a world economy that’s likely to be mired in the zero interest and low or no growth scenario for at least a decade. What strengths does the country have, what is lacking, what is currently ignored but valuable, what needs to be done to get there . What needs to be cut loose, what intellectual baggage needs to be abandoned. The house is still bet on the Troika programme delivering but what if it doesn’t ? What underutilised capacity does Ireland have and how can it be harnessed ?
I also now have a better understanding of the 1930s … a little experiential added to history and interdisciplinarity works wonders …
e.g.
‘Never have words been more misused in order to conceal the truth than to-day’ … Democracy is a system that creates the economic, political and cultural conditions for the full development of the individual. [Financial System] Fascism is a system that, regardless under which name, makes the individual subordinate to extraneous purposes and weakens’ her development.’ (1941: 236)
Written in 1941 by Erich Fromm, The Fear of Freedom [1991, Routledge]
An understanding of the sado-masochistic character and the capture of the lower middle class by the governing upper_echelons also assists. Fear and scapegoating (well demonstrated in the recent Fiscal Korset Referendum) are key tools of such an agenda. At the mo, they are winning …
… but the war goes on; and Blind Biddy still has her bazooka.
FT suggests debt for equity for all the Spanish banks in trouble
Did FF do the same back in the day ?
http://www.ft.com/intl/cms/s/0/ce704b98-afdb-11e1-a025-00144feabdc0.html#axzz1xBlU3Hx5
Regarding the life-sapping bank guarantee, if one transposed the actions of government politicians at the time into a Greek, Portuguese, Italian or Spanish setting, the volume of self-righteousness in Official Ireland would be enough to deafen a large town.
Four years on and there is still no sense of urgency in getting to the bottom of the background advice to the guarantee, the Anglo share support scheme, just who in the public service knew what, when and approved, etc.
The vast majority of the main actors in that danse macabre are either dead, retired with lottery sized pensions, or else pulling the levers of power themselves. Meanwhile the ordinary taxpayers and small business owners have to pick up the tab.
Forget about Spain, Greece, Italy etc. When it comes to fielding conservative crony influenced incompetence, Ireland reaches olympic standards.
Anyone read this on the EC threat to close down Greek, Spanish, Portugese banks?
http://www.telegraph.co.uk/finance/financialcrisis/9319416/Debt-crisis-EC-plot-to-use-competition-rules-to-close-down-eurozone-banks.html
For me and as noted by Shay above…ignorning the issue of the extension to the guarantee ALONE demands DOB’s article deserves to be simply ignored…
It is analogous to summing up WWII as the German decision to invade Poland and events thereafter were purely incidental to this action…
@Paul Ferguson – “We owe more money than exists”.
Cannot compute. Maybe I’m having a slow day.
In the weeks leading up to the 24 October (when the Irish guarantee law was finally signed), several EU governments, the EC and the ECB expressed their surprise, reservations and/or disagreement with the Irish government’s decision to unilaterally guarantee all the domestic banks.
There is plenty of documentation available in the public domain on this.
Remember that the Irish Finance Minister signed the bank guarantee law into law on 24 Oct (late on a Friday evening). So there was time to have a second think about it. And indeed there was time to read what the ECB, the European Commission, the UK, France etc all had to say about it. And a good deal of material is there in public for an enterprising scholar to do some research.
.
.
Check out e.g. the ECB
http://www.ecb.int/ecb/legal/pdf/en_con_2008_48_f_sign.pdf
Bottom of p2, the ECB states
“In line with the common principles to guide the action of Member States agreed at the Ecofin meeting on 7 October 2008: (i) interventions should be timely and the support should in principle be temporary; (ii) the interests of taxpayers should be protected; (iii) existing shareholders should bear the due consequences of the intervention;” ….
Top of page 6
“The ECB also notes that the summit declaration states that the euro area Governments would make available a Government guarantee of new medium term (up to 5 years) bank senior debt issuance, whereas the scheme proposes to cover senior unsecured debt and asset covered securities, without limitation as to maturity, and dated subordinated debt (Lower Tier 2)”
So the ECB’s approach I’d characterise as one of caution, referring in particular to the decisions taken by EU ministers, but which the incumbent Irish government at the time decided to ignore.
.
.
Check out too what Dr Merkel had to say e.g. in an interview on 2 Oct “The federal government cannot and does not want to issue a blank check for all banks, regardless of whether they have acted responsibly or not’. These views applied as much to German as to any other banks.
Later in Parliament on 15 Oct, Dr Merkel said the loans on offer “is about the protection of citizens, not the protection of banking interests … We’re offering something and they (the banks) have to offer something in return.” Etc.
.
.
Remember Ecofin had developed principles around a common approach to support for banks. Ireland choose to go a different way, and protect all the domestic Irish banks without reserve.
Amazingly there was no requirement placed on Ireland to comply with what had been agreed at Ecofin. By then, you already had details on the support schemes of other countries (much more limited) coming out, and that raised no alarm bells in Dublin, let alone a desire to comply. That is what was truly amazing I find in the sorry saga. And the reason why may be no more silly than plain simple lethargy from all concerned (including the fourth estate).
As a result, I find that there is too much emphasis on the night of the guarantee, and not on what happened in the weeks after, or what didn’t happen. The public sources of information though are rich, for someone that has the time to put in the work.
It is one thing to take a momentous decision late one night. It is quite another to have received plenty of advice from other authorities in the interim, have had time to look at the books, have done a little bit of thinking, and then sign it into law on that Black Friday, 24 October 2008. Stunning, still.
And while some people here might have short memories, you probably can’t stay the same for policy makers, civil servants, and central bankers in other EU countries at the time, who had to deal with the Irish government at the time; . . . most of them are still in their jobs in Brussels, Frankfurt and elsewhere.
@Ciaran O’Hagan
Good point.
However, if BL had sought to water down the explicit guarantee he had announced to the markets,isn’t it likely we would have had the mother of all runs on deposits.
@Ciaran O Hagan
About your Merkel quote – Norman Finkelstein recently opined that he does not think that Obama believes one word that comes out of his mouth.
Maybe we’ll get the full details of what really happened in the Irish Times 1 Jan issue for 2038 or alternatively if it is too toxic 1 Jan 2078.
Anyway back to Spain. The contagion has reached Madrid. How would you rate the performance of the PTB in preventing this ?
My own view is that if Kenny Dalglish had been manager of the ECB he wouldn’t have been sacked.
“If there is evidence from that time that outside actors had obliged the government to take the decisions it took, or prevented it from taking actions it wanted to take, where is it? If such evidence existed one could be quite certain that the Irish authorities would have put it into the public domain, either directly or via a leak. Such information would do a lot to strengthen the case for Europeanisation of bank debt. That no such evidence has become available suggests that it does not exist.
…………………..
……………………
It is not in question that the European Central Bank played the central role in preventing the government imposing losses on these bondholders, thereby placing the onus on Irish taxpayers to cover private debt that they had no obligation to repay.”
Dan seems to suggest here that the ECB (or other outside actors) adopted two entirely opposite positions in relation to bank debt. Is this credible?
What his second sentence suggests to me is that there was pressure from outside actors in 2008 also. Was there claimed to be a letter? I don’t remember – all I can recall was the “save your banks” phone call with Trichet.
Mohamed El-Erian wrote in yesterday’s FT
“Finally, Spain would need to agree to a proper domestic policy mix. This involves not only avoiding the mistake that Greece made in agreeing to a series of unrealistically-designed and technically-flawed programmes but also enabled to make difficult upfront decisions about the best form of burden sharing (something that Ireland was not allowed to do by its European partners).”
@kor
Care to speculate on what Noonan et al will do should Spain get the EFSF (to be ESM) love embrace?
Both yesterday and today, two people (here in Italy) probed me on the Irish ‘recovery’. Apparently, a television documentary painted a rosy picture of the Irish economy.
No wonder Draghi says Ireland should pay its way.
That’s the problem with spin. It eventually settles like a (e)uroboras. The Irish government gets away with spin at home in the wink and nod culture of untruths, distortions and group opinion. Maybe the eurocrats aren’t that gullible and have refused an infusion of blather.
High in the sky the Bank Signal was visible, Commissioner Rehn knew that Eurotham was threatened by thought crime and the ECB needed a hero.
@Ciaran O’Hagan
Any thoughts on the repeated renewal of the bank guarantee under its original and shockingly broad terms Mr O’Hagan?
Were the ECB, the various other European authorities and Chancellor Merkel for or against that?
It is a brave man who would argue that the position in Europe now is not “no bondholder left behind”, and a braver man yet who found the moment in time when the European establishments changed their minds on the necessity for national bailouts of the bond holders in private Eurozone financial institutions.
Reading section 2.1 closely one senses considerably more focus on spillover effects and financial stability then the “in principle” temporary nature of support for the bank.
It is an interesting document though, with a different Chancellor in Germany perhaps the worst instincts of the ECB and German conservatives would not have combined as toxically as they have.
@oversea bloke
“Those bondholders have a great virtue :they are probably foreign ,which make them ideal scapegoats and can be used as a pretext to justify total inaction on the real problems facing the nation. They are the Irish equivalent to the Arab immigrants in France or the Germans in Greece.
Sad.”
There was a guy on here a few days ago attempting to draw parallels between people moaning about high rates of Irish public sector pay and Nazi persecution of Jews. You expect reform to actually happen in Ireland?
@ Shay
“Any thoughts on the repeated renewal of the bank guarantee under its original and shockingly broad terms Mr O’Hagan?”
Original terms? It now only covers deposits, not senior debt. Wasn’t that the main problem with the first one, that it covered senior debt??
Well it’s seems Germany (buba/ecb) have started ‘leaks’ designed to undermine Spain. This is pretty nasty – maybe Germany had anticipated capitulation following Thursday’s bond auction and are miffed things didn’t go their way. It seems these leaks are designed to force Spanish taxpayers to guarantee a bank bailout; whereas Spain hopes to avoid this. The longer Spain holds out the greater their chances of getting a better deal, but this isn’t the type of help Germany likes to offer.
Grumpy,
first they came for the overpaid senior public servants in secure jobs with DB pensions and early retirement and I laughed then etc etc.
@Eoin
” It now only covers deposits, not senior debt. Wasn’t that the main problem with the first one, that it covered senior debt??”
The guarantee of already issued (as opposed to new) senior debt was extremely generous of the taxpayer.
@Eoin Bond
* Timeline:
* 2008 Jun Original deposit guarantee, 24 month duration.
* 2008 Dec ELG put into place covering everything but subordinated debt. After all this is only a liquidity problem.
* 2010 Sep Bailout extended by 12 months and extended in scope again.
* 2010 Nov Ireland enters bailout program, now subject to whim of ECB, CDU’s domestic political considerations. Brian Cowen forced to kiss Schauble’s LVM signet ring in secret ceremony.
* 2012 May Ireland signs austerity pact, Eutopean business confidence increases that state is pushover.
Correct me if I am significantly wrong here on the workings of the guarantee/ELG but we are merely going from a situation where the senior bondholders were legally protected and politically sheltered to one where they are politically sheltered?
@Ahura Mazda
“Well it’s seems Germany (buba/ecb) have started ‘leaks’ designed to undermine Spain”
They did the same with Ireland.
@Bond Eoin bOnd
And it is only approved by the EU until jUne 30th.
“The Spanish government should copy resolution laws from Germany or the UK allowing states to create fresh equity for the banks from writing down creditors. This would avoid throwing good money – whether Spanish or European – after the bad money that is inside insolvent banks.”
Why didn’t Ireland have such laws in 2008 ?
This is getting tedious. Somebody needs to draw a diagram
The solution is radical bank reform, public sector wage cuts (graded per pay scale), social welfare reductions, rent law reform, reducrd taxes and real political reform in Europe.
The scope in each section is limited – that’s why they must be combined together.
It’s a combination of all of those things (and obviously Croke park must go too). Why do people not get it?
Cartoon of the Day
http://www.presseurop.eu/en/content/cartoon/2140241-angela-i-europe
@Ciaran O’Hagan
You argument seems to be that because we had Cowen, Lenihan, Doyle, Cardiff, Neary and Hurley and a cabinet collection of me feiners and incompetents that we must forever accept and pay for the destruction they brought to the citizens of the country by not standing up to the self interested European powers in the guise of the ECB.
In my view, it is not obligatory for children to accept and pay for the sins of their fathers.
If it was Germany would hardly be in pole position in Europe right now.
Good stuff Eureka. Get it all done quickly. This dragging things out is pointless.
Perhaps we can summarize thusly:
Although it was the Irish government that originally decided to guarantee the bond-holders, it later became clear that the ECB wanted Ireland to continue this policy. Therefore we can now transfer the entire blame for the matter onto the ECB and demand that they (and/or European taxpayers) repay our debts in full.
After all simply allowing the Irish banks to fail totally in 2008 would have had no effect on our economy and would have cost us nothing.
And indeed it was European banks that lent (at least some of) the money and although we Irish taxpayers disavow all responsibility for the actions of Irish banks, we do insist that the European taxpayers must take full responsibility for the actions of theirs.
A Game of Euro Chicken
Playing Until the Germans Lose Their Nerve
A commentary by Jan Fleischhauer
For Germany, being part of the European Union has always included an element of blackmail. France has been playing this card from the beginning, but now the Spanish and the Greeks have mastered the game. They’re banking on Berlin losing its nerve.
http://www.spiegel.de/international/europe/how-germany-s-eu-partners-are-using-blackmail-in-the-euro-crisis-a-837768.html
Angela I need have no such worries from Enda the Silent and her loyal Hibernian serfs!
Surveyors/auctioneers were responsible for three important and interlinking practices which created the bubble and crash.
First the valuation error i.e valuing all 5 euro notes as 20 euro
Second the ruinous commercial property lease law organised by a cartel
And third, ninty five per cent of all property sold in the state is sold by surveyors/auctioneers.
They controlled where the vast property advertising money was spent. Almost all of it was spent with the broadsheet media and the Irish Times got the lion’s share. Therefore these auctioneers controlled the Irish Times property propaganda and all the other broadsheet media property propaganda. They had enormous influence in these papers editorial policies.
This third item was the fatal one–the media faciltating this propaganda. There were other useful idiots like the soft landing economists etc. Dan O’Brien’s newspaper the Irish Times was the leading media organisation
which facilitated the property puff pieces and the grotesque property propaganda which was vital in creating the greatest property bubble and crash in the history of mankind.
@ Seafoid
FDR’s first one hundred days.
And the New Deal.
It will take hard work to fix this. But looking at the Irish unemployment figures and services sector contraction we are edging very close to a depression here. All it takes is one external shock and there are plenty of possibilities of that.
It takes hard work – for example the rent reform loops through to property values, bank loan books etc so that has to be linked to bank debt write down. Similarly public sector pay is the only stimulus left in the economy so it’s reduction needs to be offset by debt write down and lower taxes. You get what I mean?
At least a detailed 10 point plan is needed. We had better start drafting it
@grumpy
That paraphrase (as is typical of propagandists) twists what I actually wrote to make something obvious (that there is a propaganda war against Ireland’s public sector led by INM) into something preposterous and obscene (that cuts to public sector pay are tantamount to a Holocaust). Do you have no sense of shame or is reading just not your thing? For the record, here’s what I actually wrote:
@ Ernie
Eh, I think he was actually referring to this…
http://www.irisheconomy.ie/index.php/2012/06/05/germany-no-deal-on-irelands-bank-debt/#comment-292775
“Philip II Says:
June 5th, 2012 at 11:30 am
Richard M
“As a disillusioned private sector employee it is likely that any write-down achieved on bank debt would be filtered back into jews that are bleeding the real economy dry.”
reads a bit worse now dont it”
@ BEB
that wasn’t about Jews. That was in response to someone who equated the PS to leeches or parasites or something equally complimentary. Maybe you missed the bit that went before it.
On the subject of pressure in Europe, the PR barrage against the Greek people knows no bounds. They’ve even roped Obama in to persuade them to ‘vote the right way’:
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_08/06/2012_446108
@ Seafoid
I know, but I think that was the piece Grumpy was referring to above, and not the piece Ernie thought, no?
re- Shay, Ceterisparibus, J. Ryan & Seafóid, etc.
If any of you have a ‘presence’ on any of the social media products necessary to respond to the IT piece, please consider repeating some of the excellent posts you all have made here, above, in reply to the article.
(I decided to draw the electronic line with e-mail, and 50% anonymous comments like these)
Ex Minister Eamon Ryan contradicted Dan’s interpretation, on at least two seperate occassion on the VB Tonight programme; saying that the ECB told them ‘in no uncertain terms’ were they to let a bank fail. As I’ve often mentioned. I think there have been some remarks from FF members, too.
Goes beyond mere retrospective, self-rehabilitation from the former government personnel.
As for why FG haven’t tried to make use of this; does anyone disbelieve that they’ve already assumed the mantle of administrators for the ECB, and ceased to represent their electorate ?
What is certain is that this issue, almost four years on, has entered the public consciousness, is gaining some momentum, and the ever-eager IT is peremptorily manufacturing a false consensus .,
@Seafoid
This ratrher bad tempered comment from RM:
“As a disillusioned private sector employee it is likely that any write-down achieved on bank debt would be filtered back into a lecherous public sector that is bleeding the real economy dry.
What the public sector economists in the DOF/ESRI axis will not admit is the bank debt is easily affordable if there are proper steps taken to bring public spending into line with new economic realities. Germany realises this and therefore justifiably will ensure this pathetic failed state keeps its sovereign promises.”
Drew the suggestion that the author should compare his hostility to the public sector to Nazi persecution of the Jewish people. To me that looks like it is about Jews and is a revealingly hysterical response which is in far worse taste than the original comment.
@Ernie I read what you wrote on that thread and can agree with most of it.
@ Grumpy
I didn’t draw the same conclusion. The point being made was that it was apparently acceptable to refer to the PS in a way that would be reprehensible to refer to Jews. That is how I read it. You can’t talk about Jews like that and it isn’t right to talk about the PS in such terms either was my interpretion. It never crossed my mind that the PS is being persecuted as the Nazis persecuted the Jews .
@ Grumpy
Perhaps itinerants would have been a less controversial choice of word.
Peace y’all please…
There are elites in the private sector and elites in the public sector. This isn’t about the sector – this is about a class of people in both sectors who are very happy to see the lesser mortals get shafted while they increase their money pile.
@JMc
“Mistake/self interest”
I can’t see how taking the debts of the banks onto the sov was in anyone’s SELF INTEREST. The banks were FUBR. Most of the CEOs and senior boxwallahs are now doing degrees in UCD AFAIK. Nobody will be studying their decision making at any serious MBA course unless to laugh. The decision broke FF which OWNED Irish politics up to then. It was a curse. Even the bond wallahs who got their thirty pieces of silver are looking at the potential collapse of the global financial system the way things are going. So a pyrrhic victory there.
The decision was stupid. It didn’t put the Euro on a stable footing- it showed that the politicans making the calls were afraid of the markets and set the scene for the complete capitulation to the bond vigilantes which has brought the Euro to the brink of collapse and has more or less destroyed Greece. The markets were effectively saying all along that they wanted to be led but nobody had the balls.
Maybe Dan O’Brien gets a few brown nose points but I wouldn’t envy him that he is so desperate.
In the background to all of these discussions is the subtext that this is how power works and the guys calling the shots are right because they have the power. It was the same with the war in Iraq. That only cost $3 trillion. The Financial crisis has already gone beyond that. The war on terror is generating one American grunt suicide a day but I think the Euro crisis is up around 10 per day for European civilians.
The March of Folly by Barbara Tuchman has a few new chapters that need writing.
@seafoid
I don’t read it that way first, because in Nazi propaganda the idea of that particular group bleeding the place dry was a central theme making it a uniquely powerful reference and second, because if you are right it would never be acceptable to talk of anyone – bankers, hedgies, middle eastern despots etc as behaving as they sometimes do because substituting the word ‘Jews’ would make it look distasteful.
“Germanys economy Expected to expand 1% faster than expected”
http://www.irishtimes.com/newspaper/finance/2012/0609/1224317566226.html
For how long will we have to listen to the puritans tell us these things are all down to fiscal responsibility and domestic competitiveness…it’s laughable how complicated we try to make analysis…would there be a flood of cheap credit in Germany now bolstered a flow of credit from the periphery, an undervalued currency keeping exports at very healthy levels in a tough market, a country getting paid to borrow short term debt? Inflation now at 2%…do u think ECB will reduce interest rates next quarter now as predicted.
With life so good in Germany at the moment is the political will there to tell them it’s all an illusion?
We have short memories. The bank situation is entirely our fault. Well when I say our I mean the Dept of Finance and the Central Bank. It was their job to regulate, or at the very least be AWARE of what was going within the banks. And have contingencies in place.
That the DoF is still expecting a bunch of Papal Knights or whomever to manage the money market in Ireland is bordering on treason.
Further, it doesn’t matter one iota what nod or wink was given by whoever at whatever level, if it wasn’t sanctioned by an Dáil Éireann it doesn’t matter what a Minister or Regulator does. But if it goes against what the Dáil has sanctioned IT IS ILLEGAL and so in the province of the policing authorities. This rubbish we’ve been hearing that sounds so plausible is just CBS boys spam.
Oi Ernie!
http://www.irisheconomy.ie/index.php/2012/06/08/mistakesself-interest-versus-european-pressure/#comment-294489
and
http://www.irisheconomy.ie/index.php/2012/06/08/mistakesself-interest-versus-european-pressure/#comment-294524
I hope you put as much effort into your apology as you did into your rabid, paranoid ranting.
This being the weekend, I assume it will have to wait until Monday before you clock in again.
Grumpy
“in Nazi propaganda the idea of that particular group bleeding the place dry was a central theme making it a uniquely powerful reference ”
That’s a central theme of many commentators regarding thr public sector. There’s a level of vitriol directed there that exceeds that directed to thr bankers and developers. I for one find that most odd.
@ Grumpy
“in Nazi propaganda the idea of that particular group bleeding the place dry was a central theme making it a uniquely powerful reference ”
I wasn’t aware that it was code for the 1930s. Why would it be used to describe the PS ?
@ All
The debate on this issue is beyond that of tedium. What is at issue now is the role it plays both as a distraction and an excuse for inaction by the government.
Stephen Collins points out one elephant – indeed, the elephant – in the room i.e. tha failure of the governing establishment to lead by example by cutting top-level public service incomes and pensions. The idea that the responsibility for paying current rates can be transferred to German taxpapers – as skeptic 01 points out above – underlines the delusional level of the debate on the cost of the banking bailout.
http://www.irishtimes.com/newspaper/opinion/2012/0609/1224317565234.html
In this context, the reference by Collins to “relativities” = “nomenklatura”. This is the system that has to be abandoned, the direct linking of a TD’s salary to that of a Principal Officer in the public service being the other Gordian know which has to be cut if the pernicious confusion between public servant and public representative is to be overcome.
There are some hints that the issue may be confronted because of the overspending in the health service (up to 85% in certain sectors being on salaries, according to the health minister) but absolutely no indication of fresh thinking in the higher ecehelons. Turkeys, of course, do not vote for Christmas.
Parallel action has to be taken in the area of social welfare and in broadening the taxation base (property, water, septic tanks etc.) as it is there that the real savings can be made.
But people will not follow if they are not led by example.
“Why would it be used to describe the PS ?”
Evidently, as a way of attempting to caricature and ridicule by inference, angry critics of PS costs and resistance to reform.
Maybe the obviousness is generational dependent.
Elements of the PS among the most financially privileged in the country. They are protecting their position by using other members of the PS and society generally as shields. They have a ‘victim’ mentality and employ ‘victim’ tactics wherever possible, this particular example being exceptionally crass.
Docm..why is spending on health and social welfare up? Could it be
A) the evil public sector sucking the precious bodily fluids from the heroic private sector
B) people in a recession get sicker and have a horrid tendency to ask for treatment, and even worse, to claim benefits?
Grumpy
Here’s the problem. There are 300k people working in the public sector. While SOME are lottery levels, what many find unpalatable is the blanket use of casual language. Every single protected sector, senior civil servants, barristers, university professors, consultants, all of em need to be shaken up.
@ Gtfaway
It is the overall level at which benefits are set that is the issue, not the justified increase in the volume of expenditure during an economic downturn. The level of salaries and pensions paid in the public sector is more than the economy can afford, as is the level of social welfare benefits widely defined i.e. all forms of benefit including pensions.
The tax base is also too narrow. It is urgent, for example, that a property and water tax be introduced as soon as possible.
This will involve sacrifices by all sectors of society. My point, and that made by Stephen Collins, is that the burden has to be shared equitably. Those that lead must lead by example. They are singularly failing to do so (as you can read in the newspaers any day of the week).
If you wish the present situation to continue, you are likely to be satsified.
A German perspective
http://www.spiegel.de/international/europe/how-germany-s-eu-partners-are-using-blackmail-in-the-euro-crisis-a-837768.html
This is why Europe will not work. At this point in time we should see this like a marriage: Good years at the start but then it hit a rough patch and the strain began to show. Now the pain of staying is greater than the pain of leaving. We need to decide on divorce.
We need to start planning. We have prospered before and will manage again.
As part of the settlement we need to be fault on everything apart from UK debt to give them an incentive to support the punt. We need to negotiate continuing free trade. we need our ten point post divorce plan.
There is no doubt in my mind any more that the time for divorce has come.
@ DOCM
Not one mention of banks or debt wrote down.
We accept the need for PS reform. But personally not one more penny should be sucked out of this economy without a bank debt write down.
That’s it. If that isn’t going to happen then we go
@ Gtfaway
It is the fact that relativities prevail all the way down from “lottery levels” that is the problem and everyone in the queue is watching everyone else. There will be no change until there is acknowledgment that a radical situation requires a not-so radical step viz. recognition that the public sector is not a single homogeneous block but is widely varied in character with different requirements and skill sets which varied – market-set – rates of pay should reflect.
The debate on another thread on the recruitment of economists at a standard grade whose – presumably standard – skills are to be spread like margarine around the existing public sector model shows the poverty of intellectual debate on the subject of reform in Ireland and not much else.
P.S. The fact that all protected sectors should be reformed is taken as a given by me.
@DOCM,
I’ll break my rule again – and hope to dodge the censors. I’m afraid you’re wasting your time and effort. Political and policy-making power is far, far too centralised in this polity; but the extent of its centralisation is inversely proportional to its weakness since it is constrained on every side by the resistance of every single narrow sectional economic interest – with all prepared to fight to the bitter end to protect their legally established entitlements.
The ability of Official Ireland to survive and manage the outcome of the blow-out – and to project a sense of ‘business-as-usual’ in as many sectors as possible (while conveying the false impression that major reform is underway) – is remarkable, but unsurprising. But its resilience has probably been weakened and its ability to keep a lid on a simmering pot is probably not as strong as it would like, so it is vunerable to some further inevitable car crashs. But one should not underestimate its ability to batten down the hatches and maintain ‘steady as she goes’.
@DOCM
re “But people will not follow if they are not led by example.”
+1
That is the nub of the problem. A problem that is and will sink the country even faster than the repayment of egregious bank debt.
It one of the better articles by Stephen Collins even though he is wrong to interpret the referendum result, as Merkel and Schauble did, as support for the government. The result was motivated by the majority avoiding the cataclysm that would have resulted in a no vote. That ~40% choose to vote for an outcome that would have been cataclysmic IMHO shows that the ground is rapidly shifting to the extremes. [I have long since departed to such an extreme, if extreme it be]
Why will the government not tackle these glaring pay and benefit inequalities, that as the primary employer it is responsible for?
Self interest, lack of courage, cynicism, elitism but most importantly a complete lack of empathy with their fellow citizens.
But on a practical front it would take too long to sort the largesse other than under emergency legislation (which I believe should be used) .
The simplest and most practical way to correct the situation is a 30% super levy on all annual PS emoluments /salaries in excess of €60,000 pa. To apply also to any payments issued from the exchequer. Lets call a ‘Distressed State Levy’.
Once the legislation goes through the Dail; thats it. Just press the buttons on the Revenue IT system.
If necessary, because of its application to PS related payments only, a referendum may be necessary.
That is one referendum that would have no difficulty at all in getting a yes vote.
Not for the first time, a thread on an unrelated subject ends up with diatribes on public sector debt.
Back to the bank debt, O’Brien is right that the bank debt is self-imposed, the attempts, started by Emonn Ryan and Mary O’Rourke, to retrospectively imply that Lenihan was secretly ‘taking one for the team’ on the night of the guarantee are designed to fool the citizens of this state, and not European policy makers, who of course know the truth of their own lack of involvement in the guarantee decision.
Remember what our beknighted elite were saying in the weeks after the guarantee when the media were still lauding it as a masterstroke. This article by Daniel McConnell says it all
http://www.independent.ie/national-news/financial-hurricane-that-put-the-wind-in-brian-lenihans-sails-1490370.html
To save time , towards the end of the article, the author , who obviously had spoken freely with the participants, explicitly says “By Friday, the short term joy of getting one over on the Eurocrats and the British was replaced by the fingering of blame as to how this crisis came about.”
Lenihan and his boys were boasting to a journalist weeks after the guarantee about putting one over the ‘Eurocrats’ . The internet is a wonder, no amount of waffle from Mammy O’Rourke can change what is recorded there.
We did not take one for the team and should not use that argument in front of the ECB and other people who know it is not true.
We should argue simply on the unsustainabibility and injustice of the bank debt, and admit it was wholly self-inflicted
@ Paul Hunt
With respect, might I suggest that both your voice and mine are just two of many and participation in open debate cannot come with any pre-conditions as to whether something will happen or not. That would be to wildly overstate the importance of any one contribution.
I think that there will be changes for reasons that have nothing to do with the debate in Ireland. This is a point which I have made before. In previous instances where bad government has caused a crisis in the public finances, external economic factors were helpful and the rising tide lifted all boats, including those bloated and overloaded and deserving of being left high and dry. This is not going to happen on this occasion. I saw in the FT a headline “Spanish government no longer in denial”. Hopefully, the same will – shortly – be said of the present Coalition.
@ Joseph Ryan
You would not need a referendum but it might be wise to have one.
@ DOCM
What is your position on bank debt?
@ Tim O’Halloran
Addressing the issue of the bank debt – which is but an element of the overall budget deficit – in isolation is a denial of eonomic and, more importantly, political reality. It is entirely justifiable to point this out on this thread.
@ Eureka
The short answer is that I consider that it is too onerous for the state to bear but that this will only be conceded by Germany when the necessary difficult decisions are taken nationally with regard to the rest of the ongoing current deficit (which has not really budged).
By the way, on the Der Spiegel article, it is one-sided but contains an element of truth in regard to the relationship between France and Germany. Lex has a tongue-in-cheek comment which fits the bill.
http://www.ft.com/intl/cms/s/3/d5429580-b165-11e1-bb9b-00144feabdc0.html
@ DOCM
So that’s your position. Take every opportunity to blast the public sector and never address bank debt.
That is disingenuous.
If you do not answer this time I will assume that you have an interest in banks.
So two questions this time:
1: What is your position on bank debt and
2: Why do you really find it so difficult to discuss them?
@ DOCM
Sorry – crossed posts.
Apologies.
@DOCM,
I fully agree that it would be totally arrogant – and entirely unrealistic – to consider that one contributor – or contribution – to the debate should expect to generate some movement in the policy-making process. The purpose of engaging is to seek to inform and to encourage some movement in public opinion. But it is totally pointless when those with knowledge and competence – and the necesssary ‘public standing’ – to inform and guide public opinion (and to ‘speak truth to power’) are unwilling to engage.
I had hoped this blog might have provided such a forum, but, apart from the magnifcent, but doomed, charge of the light brigade of the ’46’, it has provided a slightly querulous, but generally deferential, imprimatur of the behaviour of Official Ireland. Anyone from outside of Ireland reading the principal posts would have difficulty understanding their intense focus on very narrow aspects of the crisis. And, if they had some understanding of the background and the context, would struggle to understand the lack of focus on the comprehensive misgovernance that has brought Ireland to this pass, on the reforms that are required or on the extent to which the discipline of economics has been so subverted and abused as to make it of little use in the policy-making arena.
@ DOCM
The problem with that position is that it is essentially a stick and carrot approach. We have all seen the German stick (so to speak) but I think that the carrot is rotting at pace.
Do we want to be part of the Euro any more? It’s broken. It’s held together by bullying and blackmail. This is a toxic union. Personally, if there was a choice in the morning to strategically default and leave I’d take it. I remember life before this and it was ok – not perfect but manageable. The key is managing the default.
M. Martin…
“”But by the time of the bank guarantee, you couldn’t make that argument. I think he would have had a strong sense of vindication if he was around today.”
These guys don’t get it. It’s commonly accepted that the scope of the bank guarantee caused a ruinous increase in national debt.
It is highly unlikely that any write off will be forthcoming regarding bank debt.
The nonsense spouted by government in order to pass the referendum is simply that..nonsense.
Vindication anyone?
@ Tim O Halloran
I think Morgan Kelly’s analysis is the most plausible
http://www.presseurop.eu/fr/node/657881
“Brian Lenihan’s original decision to guarantee most of the bonds of Irish banks was a mistake, but a mistake so obvious and so ridiculous that it could easily have been reversed. The ideal time to have reversed the bank guarantee was a few months later when Patrick Honohan was appointed governor of the Central Bank and assumed de facto control of Irish economic policy.
As a respected academic expert on banking crises, Honohan commanded the international authority to have announced that the guarantee had been made in haste and with poor information, and would be replaced by a restructuring where bonds in the banks would be swapped for shares.”
St Patrick obviously let the side down but to what extent that was influenced by outsiders we can’t tell. As grumpy observes, a shambolic negotiating strategy was also in the mix but what is also notable is that the bailout and the coup de grace of the Anglo ELA appear to have been imposed by diktat.
As a post colonial state that has recently had its elite ransacked we are very unlikely to get to the bottom of what happened .
Now that Spain is in the knackers yard the ECB itself se trouve dans la merde. The whole edifice could come crashing down. It’s a mess and nobody comes out of it with much credit.
I should have used the full quote…
“FIANNA Fail leader Micheal Martin said last night that he believed former Finance Minister Brian Lenihan’s decisions on the bank guarantee were the right ones.
On the first anniversary of Mr Lenihan’s death, Mr Martin said: “In the initial few months, you could make the case that he was a new minister and you could argue that inexperience was a factor.
“But by the time of the bank guarantee, you couldn’t make that argument. I think he would have had a strong sense of vindication if he was around today.”
Irish Independent
@Seafoid
It’s a mess alright and likely to get messier.
The Spanish bank rescue is likely to be a long drawn out affair….the IMF saying 40b is needed and J P Morgan saying 350b. Roubini estimates 250b.
The IMF figure is not credible with one bank needing 23.5b alone. With Spanish banks holding 67% of their own sovereign paper any downturn could have a catastrophic impact.
We live in interesting times.
Spanish bond cartoon
http://www.guardian.co.uk/commentisfree/cartoon/2012/jun/09/rowson-spanish-banking-bailout-cartoon
Interesting times indeed.
I wonder how many of us could survive a currency crash if it happened. We would be living in very unpleasant times as all revert to survival and beggar they neighbours. People kill for self survival. It’s only a thin veneer of ‘civilisation
‘ over man the ‘animal’
@DOCM
Most successes hinge on where one starts from. If the jumping off point is shaky and riddled with politically palatable assumptions, the journey is likely to be overly burdened and end up off course. Like most other actions in Official Ireland, the points of departure for policies on the public service are a shambles.
Ireland has too many local authorities, planning agencies, community enterprise boards, third level outfits, quangos, and so on. If you start out with the assumption that these cannot be reduced in whole or in part substantially, reform efforts must fail. Only today i read that Minster Bruton is proposing yet again more rejigging of research commercialization – it is only costing the taxpayer 800 million annually – entailing the recruitment of more pubic sector staff. Hasn’t anyone in and around government digested as a child the Emperor’s New Clothes? If this policy is working, one wonders why so many academics haven’t upped sticks for the private sector? Is unemployment now dismissed as a weather vane for the success and failure of government funded economic policies? It is worth bearing in mind that a previous government would not offer a loan guarantee of 30 million to keep Waterford Crystal open a while longer.
The central problem with government policy is that the questions regarding what is required for a properly functioning public service are either not seriously addressed by politicians or else passed out to gangs of insiders to produce palatable expert reviews.
The recent redundancy package caught the HSE so off guard, that it gives a disturbing insight into the distance to be travelled between asking the big questions and getting intelligent answers. Talk of salaries going up, down or sidewise in the public service only provides political theatre in the absence of the answers to the big questions, the reform questions.
How these latter questions are answered, or ignored, impinges very directly on how the bank debt will be serviced.
Before going out to mow a meadow literally, I point out that in Italy to provide a net monthly paycheck of 1000 euros, an employer has to come up with gross 2250 euros.
Want to read about the Germans feeling aggrieved and sorry for themselves? Click here. Mildly delusional, though occasional spatterings of truth at times too re Hollande.
http://m.spiegel.de/international/europe/a-837768.html
It seems that Europe is ot the only place experiencing “bank jogs”….
Argentinians are removing 80-120 million dollars a day from their accounts and stuffing it into the mattress.
http://www.reuters.com/article/2012/06/08/argentina-dollar-idUSL1E8H8EJA20120608
@Bond Eoin Bond
Not so sure it is delusional…
“The next stage in the crisis will be blatant blackmail. With their refusal to accept money from the bailout fund to recapitalize their banks, the Spanish are not far from causing the entire system to explode. They clearly figure that the Germans will lose their nerve and agree to rehabilitate their banks for them without demanding any guarantee in return that things will take a lasting turn for the better.”
Isn’t this precisely what the Spanish are at? We are too big to fail, as one Spanish minister said recently.
Poor little old Ireland. Too small to succeed …in getting any bank debt relief.
The Irish economy is little more than a tribute system for international gravy fiends and the Mick Wallace cartel. The public sector have close to nought to do with it, and are used as a strawman by ideologically corrupted fellow travellers of the Sunday Indo to shore up the tax dodging plutocracy and the most worthles parts of the private sector – ie those that build house for noone in Cavan.
I’m all for public sector ‘reform’ and a sensible left, but first the Irish right needs to grow up, stop talking in soundbites and think logically (I understand I have done none of those things above, but monkey see monkey do)
@CP
“FIANNA Fail leader Micheal Martin said last night that he believed former Finance Minister Brian Lenihan’s decisions on the bank guarantee were the right ones.”
I reckon Cowen will never say anything about the guarantee and the decison to renew it. The FF brand requires spin to the effect that they died with their boots on .
And I will take Morgan Kelly over Martin any time
“Brian Lenihan’s original decision to guarantee most of the bonds of Irish banks was a mistake, but a mistake so obvious and so ridiculous that it could easily have been reversed”.
@ CP
If FF could beatify BLTD they would
It seems DO’B agrees that, by the time of the bailout, the FF/PD government only decided to pay the unguaranteed seniors in AIB and BoI because the ECB (and we could throw in the United States) illegitimately threatened the government with serious adverse consequences if it did not. So how does he come to the conclusion that the post-bailout payments to AIB and BoI seniors were voluntary and not “imposed from without”?
There seem to be two arguments he could be making here. One is that while the FF/PD government took on the burden under duress, the new FG/Lab government agreed voluntarily. But this seems unlikely. The new government started off with the intention of burning the AIB and BoI seniors, then rapidly changed its mind when it “went to Europe”. I can think of three remotely plausible reasons for the change of mind:
1) It was persuaded that paying unguaranteed AIB and BoI seniors with Irish tax money was a great idea after all
2) It basically bowed to social pressure
3) It was, like the previous government, threatened: most likely, the ECB repeated its threat not to provide liquidity to Irish banks which had been restructured through senior-debt haircuts.
Now unfortunately we can’t discount 2) completely, or even 1) (“pillar banks, wheeeee!“). But still it seems the most likely reason for the change of mind was 3). So it seems that the new government, like the old one, agreed to continue paying off the AIB and BoI seniors involuntarily.
The other possible argument is that that since the two governments didn’t push seriously enough for AIB and BoI haircuts in the face of EU/IMF/US compulsion then its actions were actually voluntary after all. This is like arguing that, yes, the mugger demanded your wallet by threatening you with a knife, but because you didn’t choose to put up enough of a struggle with him in the alley you really gave it to him voluntarily. I mean … whaah, Gay?
So it seems the post-bailout payments to AIB and BoI seniors can be said to have been imposed from without. That implies that the maximum amount of bank debt imposed from without is much higher than €5 billion.
@CP
re: Isn’t this precisely what the Spanish are at?
Spain is refusing to take new funding loans for bust private banks onto their own sovereign balance sheet. Is that blackmail?
If so, is not the pressure to force Spain to take the funding loans onto the sovereign’s balance sheet an attempt at blackmail?.
Spain’s position appears to be that if ‘Europe’ wants the banks to survive, then ‘Europe’ should put up the readies. Otherwise, I presume that Spain will put the banks into resolution, an action which to me seems to be the obvious solution.
And let the chips fall where they will.
Spain with its 50% youth unemployment is in no position to prioritise private debts over the future of those young people.
If it does prioritise private debts at this its polity will not
democratic will not last long.
I get the feeling Spain knows it is at the brink. Regrettably the ECB and Germany in particular have a history of ignoring the brink, so they will keep pushing.
One other weird consequence of the second argument would be that the Irish government did itself out of many billions of Euros by failing to pursue its legitimate grievance vigorously and loudly enough. Presumably the Irish public and Irish media also played their part by not banging the drum hard enough and encouraging the government to do the same. I don’t think Dan O’Brien, among others, would really want to go there.
@CP
re “With their refusal to accept money from the bailout fund..”
Language is important also. Spain is ‘refusing to accept money’.
That is very disingenuous language.
That could equally be written as;
‘Spain unwilling to bankrupt its State by taking on addition borrowing to bail out private investors in banks’.
But that language may not interest the ‘Der Spiegel’ audience.
The op-ed in Der Speigel, linked by Mr. Bond, amid the posturing and delusions, expresses some uncomfortable truths. In normal times in the EU everyone is at the table. But in times of crisis, decisions are made at a very high table – and Ireland is not at this table. And if you’re not at this table you run the risk of being on the menu. The objective if you have a small economy, as the smaller economies such as Finland and Austria (within the Euro) and Denmark and Sweden (without) have achieved – and continue to achieve – is to stay off the menu. In quick succession, Greece, Ireland and Portugal put themselves on the menu and got chewed up – with only Greece making itself so indigestible that, to borrow Jeremy Paxman’s crude phrase, it is likely to be vomitted out like a bad kebab. Now Spain, having put itself on the menu, is seeking to minimise the implications.
It is entirely in Ireland’s hands to do everything in its power to avoid being put on the menu again – and to make sure it is never ever on the menu again. But there seems to be some desire to be in the spotlight – similar to the desire that has infected and corrupted both sides in Northern Ireland and the Palestinians and the Israelis: “Look at us, look at us. You’re not looking at us. If you don’t look at us, we’ll do something really stupid and it’ll be all your fault.”
Anything, of course, to avoid doing what needs to be done and to ignore Ireland’s membership of the ‘arc of misgovernance’ that stretches anti-clockwise from Ireland to Spain and Portugal through Italy to Greece and what needs to be done to remove it from this sad and sickly club.
This is a no win. 2 scenarios:
1: Spain refuses bailout – Bankia fails and the Spanish state has to recapitalize to prevent full blown bank collapse
2: Spain accepts bailout and lands itself with unsustainable debt to be collected on ruthlessly by the ESM
Neither outcome is stable
@ Paul Hunt
I’m afraid we are not only on the menu but we are about to be consumed as a side dish to accompany the paella.
@Seafoid
I’m sure Kelly is right in all of his account, if there was one dsputable detail the establsihment would be down on him like a sackful of anvils. The silence on his account is confirmation of his sources.
I would dispute the beatification of Patrick Honohan. Nobody mentions that this ‘world renowned banking expert’ , as he is always described, happily collected his publicly funded professor’s salary while remaining silent on Anglo just a few streets away, busily creating, pound for pound, the worst banking disaster in history. Not exactly the action (inaction) of a truly public spirited citizen.
Herr Hunt,
Your continued trust in some master race of governance in Central Europe is truly touching. Were one to exist, it would truly have come up with some brilliant idea to stem the crisis. But no, they keep repeating the same policy and expecting a different result.
After, Spain has been dealt with, expect a quick outbreak of the jitters in highly indebted & highly banked Belgium, followed quickly by France.
The Brits have got this right. They are preparing to leave the EU. Would that we had a policy making elite with the guts to do the same.
@Joseph
As I understand it Spain simply wants the money for their banks without onerous conditions and oversight.
If Angela allows this it sets a precedent for others…..the Greeks need bucketfuls for their banks…so it’s likely they will attempt something similar.
We have already thrown in our hand, so no mileage in it for us. We could try a little default with IRBC next week and put the cat amongst the pigeons.
I am surprised that my comment regarding the fiscally ruinous cost of the public sector caused so much debate on an unrelated thread. Once again it appears the pampered PS classes try to divert discussion away from the real problem towards a ludicrous racial propaganda angle.
The bitter truth is this country is being financially destroyed by the pay costs of the public sector in co-operation with former Marxist politicians who once pledged allegiance to The Soviet Union but who now have their feet under the cabinet table and are only too willing to pander to the demands of their paymasters in ICTU.
This country can now only be saved by intervention on an enormous scale by outside agencies which will see the public sector systematically gutted, trade union power broken and the current functions of government handed over to private enterprise.
Surely I am not the only citizen that finds it grotesque that the honourable goals on which trade unions were founded during the industrial revolution have been subverted in this country to protect public sector elites including hospital consultants and senior civil servants. Students of history will know the reason the unions were abolished in Hitler’s Germany was because they deviated from their stated mission of protecting exploited workers in dangerous jobs such as mining and instead tried to directly influence government policy to their member’s benefit.
Ireland has been basically a failed state since it was granted independence against the wishes of the majority of its citizens and the only way of salvaging some semblance of living standards for its population is for full political & fiscal control to be removed from the public sector/union axis and governing powers to be delegated to intellectually superior outsiders who will rule in the best interests of all members of society.
@ Tull
Say the Brits leave the EU.
What sort of average growth rate in GDP would you expect over the next 10 years ?
By when do you think RBS would be back in private hands ?
The notion comes across as having a lot in common with the rearranging of deckchairs.
@Richard M
“the current functions of government handed over to private enterprise”
They should be handed over to finance professionals, Richard but unfortunately very little of the finance sector is now in private hands. I think there was a Marxist conspiracy to place a mole called Evgeny Shehivich inside one of the banks but I can’t remember what happened.
@Tull,
You persist with this ‘master race’ trope. It is not that governance in northern Europe is perfect; it is simply that it is distinctly better than that in the ‘arc of misgovernance’. Germany, by virtue of economic success and heft is, by default, the leader. When the heat came on, the Belgians, without a government for more than a year shaped up pretty sharpish. When the nothern states compelled the emergence of a technocratic government in Italy and a technocrat-led one in Greece, the Nazi slurs surfaced. I would plead with everyone to banish these expressions.
The cruel irony is that Germany’s much criticised approach to this crisis is directly as a result of the democratic constraints it has imposed on itself to avoid any possibility of a repeat of the horrors the Third Reich inflicted on Europe and the world. If it could, I’m sure it would dearly love to impose better governance in the ‘arc of misgovernance’, but it can’t. It can only apply the pressure that co-ordinated fiscal and economic governance might impose – in the forlorn hope that the misgoverned might demand better governance from those they elect.
Will it work? I don’t think so. There are too many of the well-heeled and influential and powerful who gained their asendancy by virtue of this misgovernance – and its continuation is vital for the maintenance of their ascendancy. And they have an army of camp-followers beholden to them at every level and station in society.
Update:
Following 45 months of intensive experiential research:
Irish Upper_Echelon Insider Governance pre-crash = Irish Upper_Echelon Insider Governance post-crash
Stat sig************************************************
I challenge anyone to dispute it.
@ Tull
How credible are those rumours re the British?
Herr Hunt,
I put it too you, that you are the only one who has ascribed supremacy in governance to the current governing elite in Germany despite manifest shortcomings in terms of competence not to mention corruption.
It is almost as if the Italian elite of Draghi and Monti have absorbed German competence while the German CDU has morphed into the Italian CD of the 1980s.
Seafoid,
Both the Tories and Labour seem to have come to the conclusion that there is no upside being shackled to a failed project which is beginning to more like the Soviet Union.
Stephen Collins
http://www.irishtimes.com/newspaper/opinion/2012/0609/1224317565234.html
The hard part is focusing on the fact that three-quarters of the problem facing the country has been created at home by the huge gap between what the Government spends on services and the income it raises from taxation.
Let’s see
The banks have cost EUR 64bn so far
The deficit is EUR 15 bn or so
The crisis is 4 years old.
A portion of the deficit is related to the depression caused by the collapse of the banks
Three quarters is way off the mark
Collins you’ve gone too far
Collins you’ve gone too far and you should hang your head in shame
http://www.youtube.com/watch?v=p-GWKBe-u8Q
There has to be reform but at the very least it should be honest.
Tull
The UK wasted its North Sea oil, deindustrialised the north of England for Thatch, bet the house on the City, went off its t8ts on personal debt and has a very low growth future ahead of it. Leaving the EU won’t change that.
Re- vincent h:’ We have short memories. The bank situation is entirely our fault. Well when I say our I mean the Dept of Finance and the Central Bank. It was their job to regulate, or at the very least be AWARE of what was going within the banks. And have contingencies in place.
Further, it doesn’t matter one iota what nod or wink was given by whoever at whatever level, if it wasn’t sanctioned by an Dáil Éireann it doesn’t matter what a Minister or Regulator does. But if it goes against what the Dáil has sanctioned IT IS ILLEGAL’
– The blame on our representatives is not disputed.
What fails to be addressed is that the Irish banks – unbeknownst to almost everybody else – were the whore of europe. The central bank knew, the DoF knew, and the ECB certainly knew.
When it is stated that the Irish people were unfairly penalised for what happened, the line of demarcation has the ECB, the European banking cartel, and our own ‘reps’ on one side, and everybody else on the other.
This fallacy that a government beholden to these forces and one with them can, through their actions taken at the behest of these same elements, share the attribution of blame with an oblivious population has to end.
Re- Tim O’Halloran
It is all well and fine to doubt material on the internet, but to quote from the make-wish fool’s court of Irish journalism by way of contrast doesn’t work.
What wasn’t apparent to us plebs at the time was the existence and extent of european involvement in our banking system. The knee-jerk reaction of most sent them looking for evidence of Dáil shareholders in Anglo.
One thing the internet has provided is evidence of how facile and ill-qualified most of our official, hard-copy commentary is compared with any one of a hundred thousand amateurs out there.
Now, I’m not giving these links to back up that particular thesis, but in the belief that, despite perhaps some overly dramatic aspects and certain unsubstantiated filling-in of gaps, these writers are far more on the money with regards to our guarantee and it’s reasons than the official version (which suffers from AT LEAST the same degree of unsubstantiation and opinion that these can be accused of)
http://www.golemxiv.co.uk/2010/10/who-are-the-bond-holders-we-are-bailing-out/
http://order-order.com/2010/10/15/anglo-irish-bondholders-should-take-the-lossesis-the-ecb-forcing-ireland-to-protect-german-investments/
As for current media activity, it looks like they’re positioning themselves in advance of anything negative that can be thrown in the way of an alien regime currently seeking to take control of taxation & expenditure.
The acquiesent, with their loyalty assessed and filtered through the control of appointments, are forming ranks.
@Maria Sharapova
Nice one!
@ Paul Hunt
And how would you rate the governance of banks??
Have the feeling that this is a watershed weekend. The last ingredient to topple the Eurozone has been added. The next few weeks are all about watching it wobble. Greece to go, Spain to be bailed out, Germany to baulk at going broke – whole thing is on the verge of collapse.
Thank you international banking sector!! And thank you thick twats who insist on seeing a banking crisis as a fiscal crisis!!
re- Paul Hunt
‘When the nothern states compelled the emergence of a technocratic government in Italy and a technocrat-led one in Greece, the Nazi slurs surfaced.’
The only problem I see there is the way ‘Nazi’, by inference, can be taken to allude to the Germans as a people.
We need a general noun for the purpose, one not tied to a particular instance of this phenomenon.
Because if we don’t see the real danger in the suspension or even mere interference with democratic control of governance, held by the people governed alone, this ignorance & deficiency leads us all into a very, very black pit.
Seafoid,
Wait til u see what the breakup of the euro and a global recession does for the German heartland. You will see the outcome of PH good governance then.
I need a break – let’s scan The Phoenix …
Declan Ganley … (a must read) hmmm X-Senator Joe O’Toole and X-AG and X-Minister Mick McDowell and a mere €30 million and a jail for the serfs … that NAMA developer lad and the Waterford County Council … love the mask on Minister Bruton … the Sindo … RTE … the Savages and Vincent B., Minister Coveney Greyhounds, Horses and Yes votes and of course IBEC … the usual suspects …. Dinny O’B and X-Minister Lowry in the Supreme Court … X-Minister McDowell representing NAMA … the usual suspects …. Stephen Collins noted as an ‘establishment journalist’ mind you – well done Stephen … the usual suspects … and of course, noone is ever ever accountable or responsible for anything if a member of the golden circles … who set the agendas …. the usual suspects …. still in situ still pulling the strings … the usual suspects …
Since I mentioned Dan O’Brien’s favourite advertisement for the purgative benefits of austerity Estonia again here are the Krugmanator’s two most recent enjoyably contemptuous austerian bug swats.
“Why the Baltics Matter” is partially about how Jörg Asmussen, Germany’s debt collecting thug de jour in the ECB, is at least one of a liar or an idiot.
“Baltic Business Cycles, Continued” puts the boot in a little more thoroughly with the aid of Simon Wren Lewis.
What passes for the Irish policy elite needs to acknowledge the combination of fanaticism and dishonesty that has characterized the German response to this crisis and that it will not change without pressure – in fact it may not change at all and we may have to start maneuvering ourselves to a respectable Swedish/Danish distance to the self styled core EU (Germany and bordering client states).
It really does not help that the two largest national Irish newspapers are so far to the right economically that they constantly promulgate the same simple minded lies as the ECB front because they would prefer to fight the left rather than for Ireland.
Better, Tull, better; not ‘supreme’. And better most certainly that that produced locally in the ‘arc of misgovernance’ – and currently better, in a global strategic context, than that being produced in the US or the UK (and probably on a par with Australia, Canada and NZ).
30% of the Irish electorate decided to stick with the ‘devil they know’; 20% rejected it (but most are inveterate nay-sayers); 20% sat on their hands and about 30% never seem to vote (circumstances, incapacity, a feeling its pointless, lousy electoral rolls, whatever).
Get over it. This saga will continue until the misgoverned demand better governance. It’s a slow pincer movement. Germany and the other northern states will keep up the pressure on one side and bond investors will keep up the pressure on the other side. The penny will drop for the misgoverned eventually. Those who are pathologically deluded will be roadkill – and the Greeks have a week to decide if they want to fall in to that category. A sufficient number of Irish voters decided not to. They now have to take another big step to demand better governance, but they are leaderless and rudderless since those who might provide leadership are determined to keep their snouts in the trough.
re _ P.Hunt: ‘It is entirely in Ireland’s hands to do everything in its power to avoid being put on the menu again – and to make sure it is never ever on the menu again.’
Their metabolism can only accept their own denominated currency, so…
@Eureka on whether German pig headedness, neoliberalism with EU characteristics and financial capitalism can break Europe.
Amen.
Wolfgang Schauble, Lorenzo Bini-Smaghi, Ollie Rehn – we are talking about you-hoose!
What is it about people and banks?? Why has nobody focused on the governance of banks in all this?
@ Paul Hunt
I’ll ask you again. What do you think of the governance of banks in the EU? You can pay special attention to the ECB under JCT if you like. And you can look too at JCT’s role in Credit Lyonnais
PH,
Apart from the better bit, I agree with everything else. Governance is so poor , electors will demand better. President Romney anyone.
That said, your league table of the better governed have one common denominator- a Chinese bid for commodities. Remove that and we shall see. The Australian labour party looks a lot like FF.
“Economy Minister Luis de Guindos will hold a news conference at 6.30pm UK time to explain “actions on the recapitalisation of the Spanish banking system,” the ministry said in a statement.”
Btw, the price has gone to 100 billion
@ DoD
Stephen Collins should be reformed along with the PS.
@ tull
I know you yearn for the great cleansing but things are usually patched up and put back on the road. I think the Euro will survive. They’ll find some resilience in there. The guys with the money have interests in continuity. Mondays always come around and things go on.
The Goetterdaemmerung won’t happen until the environment collapses. And then it will be a case of the ultimate TSHTF.
@seafoid
Agree. Amazing how leisurely we are panicking. Euro is holding up fairly well with all the grim news. I suppose we should get ready for an Italian bailout.
The euro switch is seemingly turned on and off at will. Expect the next maelstrom when countries are being coerced into accepting the conditions of fiscal union.
re- Richard M:
Jesus Christ.
You start reasonably enough,
‘Surely I am not the only citizen that finds it grotesque that the honourable goals on which trade unions were founded during the industrial revolution have been subverted in this country to protect public sector elites…’
Then;
‘Students of history will know the reason the unions were abolished in Hitler’s Germany was because they deviated from their stated mission of protecting exploited workers in dangerous jobs such as mining and instead tried to directly influence government policy to their member’s benefit.’
– Not familiar with the particular policies they attempted to influence, but in any case do you think government policy can be seperated from conditions of employment ?
A red herring, in any case; the purpose was to dismantle all power-wielding structures not in the Fuhrer’s fold.
‘…Ireland has been basically a failed state since it was granted independence against the wishes of the majority of its citizens….’
Not according to the elections before the War of Independence. Though there has always been an enclave of imperial sentimentalists, mostly concentrated in Dun Laoghaire Rathdown, they were no more representative then than now.
And here we go:
‘….and the only way of salvaging some semblance of living standards for its population is for full political & fiscal control to be removed from the public sector/union axis and governing powers to be delegated to intellectually superior outsiders who will rule in the best interests of all members of society.’
Jesus Christ.
The first head above the trench; hoping for a medal ?
‘,,.intellectually superior outsiders…’
– and people wonder why the Nazis are always brought into this….
Ceterisparibus
Namawinelake on brianmlucey.wordpress.com has suggested that its going to take closer to 700b.
Who here dare bet against Namawinelake given how prescient that site has been on the numbers?
@ Paul Hunt
I do not think that your general presentation is true. Nothing could surprise anyone these days. That Europe has grown soft, is badly governed and that politics is more venal than ever is a phenomenon recognisable in most countries. Which leads me to;
@ The Alchemist
The arc of Northern good governance as described by Paul Hunt does not exist, at least, not if it includes Germany, Belgium and the Netherlands. The Scandinavian countries share the (Lutheran?) heritage of the ability to concentrate on function and output. The divide between public and private sector as perceived in Ireland and many other European countries would be unrecognisable there. This is because equality (jaemlikhet) is not just a concept but a reality e.g. the equivalence across all sectors of pension entitlements in Sweden. If we wish to aspire to Scandinavian standards of living, we must aspire to Scandinavian levels of governance.
Only outside pressures will achieve this in Ireland’s case and for reasons unrelated to any Scandinavian “vision”; simply the desire to get loaned money back.
There is little evidence of any recognition that the problem exists, not to mind that it must be resolved, other than the “volunteering” of pay cuts by some. I recommed once again a reading of the Buckley Report to all and sundry for its is truly Orwellian phraseology (not to mention its implications).
http://www.finance.gov.ie/documents/pressreleases/2001/report38.pdf
For those insisting on viewing the situation through the distorting prism of the left-right dialectic – and fans of Paul Krugman – herewith the views of the President of Estonia in case they may have escaped their attention.
http://www.irishtimes.com/newspaper/world/2012/0608/1224317500533.html
In terms of ego, the two protagonists are equally matched although Krugman has the edge in observing the proprieties. He might be accused of a lot of things but racism is not one of them.
@ All
No free lunches in Scandinavia either!
http://www.businessweek.com/news/2012-06-09/regling-says-europe-rescue-fund-offers-no-free-lunch
Regling is far and away the most suitable candidate to head the ESM. But will politics once again intervene? In other words, will the desire of Merkel to get rid of Schaeuble and appoint him outweigh French objections?
@ Seafoid
Thanks for the link.
From the article
‘One of the reasons for Sinn Féin’s big rise in the polls is the line the party has taken in condemning fat public service salaries and proposing a cap of €100,000 for the entire sector.
Mind you, as figures released during the week show, the party’s 14 TDs have not been behind the door in claiming their extremely generous tax-free Dáil expenses which, on top of their salary of €92,000, gives them an effective income of close to €150,000 a year.’
So far as I know they all take home the average industrial wage and the rest goes to party funds – open to correction on that.
Enda 200KPA ? WTF
😉
This is the Spanish deal
http://m.bbc.co.uk/news/business-18382659
On the face of it it’s a better deal already. And they are able to grasp the difference between a failure of banking and a failure of the state.
I am beginning to think that this simple bit of logic is completely beyond some people here.
Some people are so blinded by envy that they refuse to accept a very simple truth. This is a banking , not fiscal crisis.
Maybe those people are just thick or maybe they’re just small minded little cretins who love to see the taller poppies cut down.
@ Mark
‘Surely I am not the only citizen that finds it grotesque that the honourable goals on which trade unions were founded during the industrial revolution have been subverted in this country to protect public sector elites…
Well, you certainly have a fellow traveller here.
I studied the subject for 4 years and to say they are a disgusting, self serving bunch of hypocrites is putting it far too mildly. When I see jack and David I know that I am looking at the framers of the faustian pacts.
When the history of the collapse of this country is examined the trade union betrayers are going to be up there with the bankers and developers who ran amok. Trade unions are subsumed into the loving embrace of the state who buy them off. In Ireland, it is worst than that, the state and the unions are one in the same entity.
When the state had a choice of “getting real” they capitulated again to the trade union movement. If you only saw the standard of the stuff that comes out of Congress it would shock you. Most of it would not even warrant a pass on a Leaving Certificate Economics paper.
Time to revisit our deal with the Troika after Spain secures a sweetheart deal with no strings attached?
Maybe we should have set up a FROB instead of a NAMA!
“I studied the subject for 4 years”
Really? And what subject what that?
” to say they are a disgusting, self serving bunch of hypocrites is putting it far too mildly”
I really dont think thats putting it mildly at all
“the trade union betrayers are going to be up there with the bankers and developers who ran amok”
Any evidence for this, or are you simply offering personal opinion?
“the state and the unions are one in the same entity”
Would you care to explain what this actually means.
“Most of it would not even warrant a pass on a Leaving Certificate Economics paper”
Hmmm, noted without comment
Ordinary Man,
Look at the suits worn by the average SF TD and tell me they buy them on 35k per annum. As you say , each and every TD gets 92k plus exes. That is what they cost you and me. They can blow that on fags or booze or on leaflets for all I care but that is irrelevant.
@ Ceteris
This FROB thing seems to be the problem. The Spamish will have responsibility for it. So whatever it can’t collect the govt will have to make up.
Still tough – at least they’ve established a degree of separation between bank and state.
@Tull
There are no ‘average SF TDs’! SF doesn’t do ‘average’ (-;
re- Robert Browne
‘Well, you certainly have a fellow traveller here.’
– I was quoting someone; not my words.
There was a firm disagreement, above, with your post, I see.
But I have to say that from my own experience, the unions are often corrupt; SIPTU arren’t worthy of their role & position one iota.
They are both ineffective in genuinely protecting their members, and at the same time guilty of subverting the union role of representing worker’s rights into a trade-off, with an uneven spread of benefits.
Somebody once described the problem as due to turning the concept of rights and solidarity into a bargainable commodity; which of course both means that it can be reneged upon for a price and overinflated (the benefit often falling on those who didn’t merit it).
Speaking as one without an ideological objection to Sinn Féin, I’m afraid that if those (with whom I’d include myself) who have a major problem with the route FF/FG/Lab are taking for the benefit of the financial industry choose to pin their hopes on them (SF) as the most likelysaviour-candidates, we might end up sorely disappointed.
They’re making a lot of the right noises, alright.
But I think we’re in danger of merely surrendering self-determination (in the most absolute & inclusive sense) to an unproven redeemer.
Look at the complaints about our governance above – political and banking.
They all allege national culpability for the crimes of these powerful but micro- interests.
Surely we need to be developing a model that democratises governance still further, diminishing the ability of coteries to act for narrow interests, to the detriment of the many.
Look at the absurd fact that the euro-apologist ‘doctors’ are prescribing an enlarged version of what they allege to be the problem as the solution ( ceding political and fiscal control due to the ill-effects of the misuse of ceded political and fiscal control ).
Surely it’s time to stop lobotomising ourselves & our destinies, tying our limbs to strings and putting them in the control of others ?
I don’t necessarily disagree Mark, I just feel analysis is better than hyperbole. The political benefits of Unions, if we look beyond Ireland, are becoming apparent. Bloviating, as tends to happen when the public sector is mentioned on this site, gets us nowhere. (And, coming from a non-unionised private sector worker,it’s grown tiresome – I know you have to take that on face value)
That doesn’t mean I’m a fan of Croke Park or whatever this weeks strawman is. I’m more than in favour of intelligent analysis from people I might not agree with politically, like Paul Hunt and Michael H
that should be in response to the post above this one
re- RF – Yes. We know that a lot of the criticism directed at Unions isn’t coming from a constructive or rehabilitatory angle, but has an existential objection to their Being.
addendum to the last comment – there’s the problem in a nutshell – the same people that ensured the unions manifested in a corrupt form are the same people that want to see them neutered.
Just as the same people that ensured the banks were given a free-reign, and the government were facilitating this, are the same people who want the control of the country taken from it’s inhabitants.
@ rf
The initials “rf” does not tell us very much but out of courtesy I will say that the course I was doing at the time was a Bachelor degree in Business Studies in Limerick specializing in Personnel Management with a heavy emphasis on Industrial relations. btw with regard to your innuendo, did manage to get a “B” grade in Hon’s economics for Leaving certificate, a subject I took on and studied at home by myself. Later Pat Cox and Donal Dineen were very, very good lecturers in the subject which was always one I enjoyed. I also have a qualification in Systems Analysis form Galway University.
When I read the latest “Quarterly Economic Observer”, “fill in the blanks” stuff coming out of Neri Instituite in Parnell Square I knew why the country has to implode before it can have any prospect of recovery. I also have a qualifications in systems analysis form Galway University. My own preliminary research tells me that the door of the NERI and the ICTU are painted the same colour and that tells me a lot about the type of ‘research’ being carried out there.
I make no apologies for my description of trade unions, it is likely the most accurate one you will be given for a while to come. As for “the state and unions being one in the same entity”? Most trade union leaders, as you will be well aware, know their way around Leinster House like the back of their hand. I stood in amazement when Jack O’Connor was able to trot around taxi drivers protesting outside the Dail and skip his way through security with a nod and wink as he strolled with his brown leather bag to the late Brian Lenihan’s office for a pre arranged meeting to be given assurances, according to RTE the following day, that the Croke Park agreement would not be touched. Was David Begg not ensconced on the board of the ICB for the duration of the boom and bust?
The Croke Park deal, confirmed what we all know. that the government and unions were effectively sitting on each others remuneration committees. Don’t take my word for it MD Higgin’s is on the record of the Dail saying so in fact it was a Youtube clip. Many trade union officials have gone one step further and actually linked their salaries to the higher salary grades in the PS. I was in a room with Blair Horan of late of CPSU who was out campaigning for a “Yes” vote recently, when he told us, “we asked Bertie for 600 million for our members and he gave us the 1.2bn!” Sure why not, easy come, easy go.
So, “rf” tell us a bit about yourself?
I’m all for unions, but in Ireland in the recent past they have seemed mostly interested in retaining their – often well paid – members’ salaries. I don’t see what groups of highly paid people collectively bargaining has to do with the union movement.
If the issue was improving the lives of the vulnerable surely they should be promoting wage decreases and commensurate employment number increases (especially in the PS) given the damage unemployment is doing to the country.
@Darren
Increases in the level of public sector employment were never on the cards. The idea that the Croke Park Agreement or public sector unions are responsible for the drop in public sector employment is a total misreading of the situation. The only question was whether there was going to be further pay cuts in addition to the pay cuts that had already happened and the job cuts that had already happened and were already going to happen.
“So, “rf” tell us a bit about yourself?”
Well i could really say anything Robert, so i’m not sure of the point. But anyway, you’ll have to take this in good fate. Rf = Ronan Fitzgerald. I’m living in London. Working in the non public sector. Probably a good bit younger than you, but tired of your generations (or parts of its) bullsh*t.
Any moderators reading, you have my permission to pass on my email details so Robert can verify this.
And what Mark said
@ rf and I am also tired of my generations bullsh*t and have said more that once before that we have proved to be the most selfish generation in the history of the state. I despair at the cosy cartels that are running this state and sinking the country into totally unsustainable and unconscionable debt. I agree with you about analysis being better than hyperbole but unfortunately what passes for “analysis” in Ireland is invariably contaminated by self interest by those who do not really want any of the feather bedding removed.
In those situations hyperbole is sometimes a necessary and justified approach. It is completely justified in response to our economists and “researchers” ESRI, NERI and the ICB saying “our economy is improving, taxes returns are higher than they were for the same time last year and the rate of increase is greater than we have seen in the economy since 2008. Our partners in Europe are working hard and are fully supportive of our efforts to put the economy on the right trajectory we expect to return to modest growth rates of 2.2% next year with further increases in growth expected to follow in the latter half of the year” blah, blah.
How on earth or why would rational people enter into serious dialogue with these people who have one purpose and one purpose only in mind and that is to preserve the status quo and make sure the burden is put on somebody else’s shoulders. As long as the gamekeepers are in charge of the Zoo nothing will change it is only when they are captured by the game that we will be able to make any decent structural changes. Since leaving my house today, I have seen 3 crimes. A period house being burnt, a burglar trying to get in someone’s front door and some girl that had her mobile snatched from her hand while she was talking. This society is starting to unravel in my humble opinion.
I actually support Merkel’s approach to the crisis and dealing with the Irish, having worked in Germany I know that the Germans are well aware of the extraordinary pillaging that is being carried on by those who now want to be bailed out again and again and who want Eurobpnds, debt mutualization and propping of national balance sheets so that old cronies are not touched. Do this lot think that Merkel does not know about Croke Park and what is happening here? That is an insult to the woman of course she knows. She sat down with Kenny on their first meeting and you can be sure she was briefed. I won’t invade your privacy and feel free to request my email if you require it and thank you for your views.
Okay. Thanks for the long and entirely reasonable response. I think we’re both speaking past each other, or just coming from different political perspectives. Or maybe we’re just both frustrated. I apologise for any snark I directed your way or implications you were arguing in bad fate. Although I don’t agree with your perspective, (I think your laying it on a bit thick with the relevance of Croke Park and PS Unions in general), it’s thoughtful and well made.
I’d imagine there will be a number of policies that will need to be implemented to get us out of this crisis, renegotiating Croke Park being one. But from where I’m standing I see the PS being used as a scapegoat by the usual suspects to further their own economic and ideological interests. I think Croke Park is largely irrelevant to be honest.
But still I think there’s probably common ground between us, in resentment towards the various unaccountable interests that not only caused this crisis, but are now profiting from it and using it to further reinforce their position. We just disagree on who the villains are, I guess
@ Kevin Walsh
Can you explain how this is a misreading? With the reductions in overall funding you could still employ more people with wages closer to international norms for an economy of Ireland’s level. That it wasn’t a question seems indicative of the lack of broader ideal framework mentioned above.
@ rf
Well, twice last year Dr. Edward Walsh now retired but former head of Limerick University who more than anyone was responsible for the success of that institution said that if salaries in the Public Sector were benchmarked against their counterparts in the UK then the country would save 7.5bn per annum. Then Professor Morgan Kelly who has been more prescient than any other economist or researcher in predicting and challenging the status quo on the crisis and causes of the crisis said that he was paid 100% too much, that further isolated him with his colleagues. I don’t want to bash the PS I want to reform it and I think it is very much responsible for not tackling the the causes of the crisis. We are 4 years in and all we have had was three different reports on the banking crisis with the broadest of strokes which basically blamed “group think” and systemic failures to oversee and regulate and control bank leverage. The governor of the CB is on record as saying he was not interested in naming names he simply was concerned with process and systems theory. Why things went wrong not who caused them to go wrong. This is cowardly in the extreme and an ineffectual morally bankrupt way of pretending to address the problem.
This was Enda’s 5 Point plan that won the election. It is shocking in it’s simplicity and really shows how much the government advisors think of the people. I’d say the instruction was keep it simple and drill it in.
Point 1 – Protecting and creating jobs
Because jobs and opportunity are the best chance of keeping our best asset – our young people – at home.
Point 2 – Introducing better, fairer budgets to keep taxes low No country has ever taxed its way to economic recovery.
Point 3 – we will create a completely new health system
There’ll be more and better community care, meaning fewer hospital stays. Fewer hospital patients mean lower hospital costs for the taxpayer.
Point 4 – smaller, better government with the people’s money spent wisely on vital public services
Point 5 – a political system that achieves more and costs less, with the Government leading by example”
For Ireland to get out of this crisis there has to be accountability. Four years in to the crisis and the Chairman of Anglo is seen in Poland wearing a green jersey and booked into a 500 a night most expensive hotel and seen leaving samel with FF’s famous Press secretary PJ Mara.
The cures in Ireland will have to be debt write down for ordinary people.
In the link below about half way down in the comments section, I listed over 100 ideas straight off the top of my head
@ rf
Sorry pressed the “submit” without the link! Here is the link
file:///Users/geraldinefitzgerald/Desktop/MY%20TEN%20PROPOSALS%20FOR%20POLITICAL%20REFORM%20«%20politicalreform.ie.webarchive
@ rf
One more time!
http://politicalreform.ie/2010/11/22/my-ten-proposals-for-political-reform/
Thanks Robert. I could see myself getting on board with maybe 20% of that,the law and order stuff not so much – and why not just throw white collar criminals in Mountjoy rather than giving them their own plush complex? And making striking illegal for employees in vital services (how could you define and police such a concept) definitely not! Also, it looks like any saving you’re making in lower PS wages etc are just going back into creating some huge prison bureaucracy.
But I can see where you’re coming from.
In relation to PS wages, i’m still sticking with Karl Whelans point – the figures dont equate to such hostility – until someone can offer me an explanation as to why I should be so concerned about such a, relative, irrelevance
http://www.irisheconomy.ie/index.php/2011/09/11/public-pay-and-the-sindo/
Btw I’m not carrying water for any particular party – Your points on FGs ludicrous policy platform and PJ Mara are well received
@darren
My point is that it would never have occured to top management in the civil service or to the government (either government) to hire more staff. The fact that unions in the public sector are not as weak as they are in the private sector is the primary reason we haven’t seen a wave of “redundancies” in the public sector.
And the reason that vacancies at the top of the civil service are being filled by the same people who just left the jobs is that senior management protects itself – it has nothing to do with the unions or Croke Park.
We can actually leave Europe, as all are treaty referendums are flawed because of all the lies that the FF and FG and LB spinner, all the Irish treaty’s are flawed under false pretences, plus we can sue and take action against EU and troika and IMF and sack Troika and rid of Croke Park, If this government does not issue the letter, then the people have a right to vote them out of government, but they also have to redo all the treaty referendums again, as they were all on false pretences by Merkel and Trichet, and FF minister Brian Lennihan,