Let’s not get carried away

While the euro zone leaders’ summit certainly exceeded expectations, the shift from dire pessimism to elation in the Irish press reaction over the last few days seems overdone.    The big question across numerous articles seems to be how much of the €63 billion put into the banks will now be mutualised.   Unfortunately, I don’t see anything in the post-summit statement that leads me to revise a view that the chances of other European countries absorbing already crystallised losses in the Irish banks are approaching zero – the “similar treatment” statement notwithstanding.   More positively, the chances of beneficially refinancing the promissory notes/ELA arrangement looks to have  increased, which (depending on the details) could lead to a large NPV benefit, and thus significantly reduce the burden of banking-related debt.    While this might partly explain the fall in bond yields, my guess is that the majority of the fall reflects a decline in the chances of a major euro zone crisis following financing difficulties in Italy and Spain.    Excessively hyping what has been achieved runs the risk of later disappointment, undermining support for unavoidable adjustment efforts. 

Another worry is that the triumphalism on display following the summit runs the risk complicating German politics on risk sharing.   Thus far, the German government has moved incrementally, slowly bringing a sceptical electorate along with them.   The perception that “Merkel blinked” could lead to a backlash.  

So, yes, Friday morning brought some very welcome news.    But there remains a hard slog ahead. 

54 replies on “Let’s not get carried away”

@john McHale
It is good to see a sober analysis of the post summit crisis situation. I thought I was alone in warning not to read too much into the supposed deal. I agree that it is going to be an uphill (very,very steep) struggle to recoup crystallized bank losses.
I’m worried though…are you becoming pessimistic. I had you in the overly optimistic camp.
Btw, Greece is still to be sorted and it’s looking increasingly inevitable that they will leave the euro. Schauble is reported today as saying his advisers are saying there is no way out of crisis for Greece other than an external devaluation. His finance ministry is denying it but he said it to a crowd of his parliamentary colleagues.
An exit would cast doubt on euro irreversibility and who knows what might ensue.

Additional important questions include:

1) How much of the losses yet to be recognised in NAMA will be mutualised?

2) How much of the funding required to cover bank losses recognised in the future will be mutualised?

There’s a dam of policy measures holding loan defaults and falling values of security held against loans. Some of these measures are unsustainable over the long term, and some (such as Croke Park on pay) are damaging to wider prospects for economic recovery.

Another major point is that this deal has arisen largely because the Spanish govt decided not to do what the Irish govt decided to do, i.e. to guarantee all their banks’ debts.

The Irish govt took that step (as far as we know so far) on its own.

The Spanish govt refused to do it even under pressure and could point out that the creditors were often outside Spain so there’d be damage outside Spain if something wasn’t done….so something was done.

While there’s a moral case to take the banking debts off the shoulders of residents of Ireland the problem of who pays is still real. Who’d volunteer to replace the Irish as holders of the bill?

Professor McHale I think you are being professionally inconsistent.

For years you have warned of financial doom, fiscal apocalypse and social chaos unless we do whatever we are told by the EU/IMF/ECB. Now the Troika is doing what the PIGGS tell it and you’re saying that we shouldn’t regard this as financial jubilee, social utopia and fiscal rapture? Inconsistent I say!

If we are not to be hypocritical then we must, immediately, jump for joy, host a nationwide champagne party, and award ourselves 15% pay, welfare and bonuses all round. The government should immediately hire an additional 100,000 new public servants, go on a borrowing blowout bender, and everyone should take the rest of the summer off in Las Vegas.

Austerity is so last week. Let the good times roll again(and don’t worry about who has to pay).

NAMA has paid €5bn so far in state aid for the bank loans it has acquired according to the CAG, and this will likely rise to €6-7bn when the final due diligence is completed. Property in NAMA’s main market Ireland has declined 22-30% since November 2009, the NAMA valuation date. NAMA is presently in difficult territory and it is economic recovery that is to a large extent outside its control, that will determine if it ultimately makes a loss or not.

I wish I shared Prof McHale’s qualified optimism on ELA. If a deal is done for Ireland, then every Tom, Dick and Harry in Europe will want it for their banking/credit union/saving and loan hole. And changes to ELA would require the “independent” ECB getting involved, and the silence coming from Frankfurt since Friday morning has been deafening.

@John McHale

Yes. Let’s not get carried away. I remain as reasonably content with this ‘first step’ today as I was yesterday … it is simply a ‘procedural step_up’ towards a more sophisticated level of system integration between Money and Power where richer and more effective tools may be thought and applied. Ireland simply happens to have been in the appropriate current of affairs at the time … the vicariousness of beneficial chance does tend to pop up in the odd equation. Carpe diem!




thanks for that


‘Bout Time for ‘The Conflationist Fallacy’ to get a good kick up the proverbial: that said, it remains standing at the mo … and Irish Citizenry remains on the hook …. not a bob has been substracted … and the insider_inbred governance clique remains in power … and insidious dispersion of resources remains untouched … half a million un(under)employed … and socio-economic-psychological re-structuring to be thought and done …

At EU Level – a positive step to sever Sovereign from FinSystem … essential to future of Democracy …

Bout Time for ‘The Conflationist Fallacy’ to get a good kick up the proverbial: that said, it remains standing at the mo … and Irish Citizenry remains on the hook …. not a bob has been substracted …

So? The banks are going to rule the roost now and so they’ll be paid off regardless. We don’t have to worry because this banking union will force the ECB to print money like it’s going out of style. Coupled with a dearth of regulation, the banks will party like it’s 2005 again, necessitating more printing and inflation will cause our debt to simply evaporate.

Savers will be decimated, but screw those losers. This is a bankers union. To the risk takers go the spoils, and to the victims go the costs. If you’re smart you’ll join the winning team, immediately borrow your way to riches, support the new regime, and reap all the benefits. If you’re dumb you’ll call for prudence, save your money, and end up a pauper with a load of worthless notes in ponzi banks.

So, do you understand now why all the newspapers are so ecstatic this morning? I’ll be the Dublin restaurants are booked out tonight.

Isn’t it the political leadership that has led this chorus when the facts are that to transfer of all bank bailouts since late 2008 to the ESM, including German ones e.g Hypo, Commerzbank and some landenbanken, would exhaust most of the fund?

It illustrates why external supervision should continue.

Public service trade unions will start presenting pay claims soon on the basis of officially approved phantom savings while a large number of the unemployed will not work again.

This government is as addicted to spin as its predecessors and today a press release reads: ‘Minister Bruton announces €12.9m of new business
for Irish agricultural technology companies on Enterprise Ireland trade mission to France.’

It’s likely a lie to use the term ‘new.’ In March 2009, when Enterprise Ireland claimed €71m in orders were won during a 2-day visit to the US by Brian Cowen, EI later admitted that that orders dated back six months.

Ah shur, what’s the harm?

@All those who supported, spun for, claimed there was no other way, heralded, gloated over etc. The Conflationist Fallacy ….

Blind Biddy knows who you are!

Have the Irish elite been so cowed in their finery that they do not understand what the following sentence should mean.
“Similar cases will be treated equally”.

Why can we simply not take that at face value.
Why must we revert to the ‘flat cap’ and ‘you’ll do the besht you can’ mentality.
Let us pursue similar treatment and let us live with similar treatment when that is applied but lets not at this early stage settle or appear to settle for anything less.

Let us suppose similar treatment comes with the proviso that the PS is paid the same other European countries. Are we going to refuse it because it discommodes our elite or the PS?

It seems to me that that could be the only reason for not being willing to pursue what the communique proclaimed.

Perhaps we should be cautious but we should not be cautious on account of protecting our many homegrown elites.

Merkel’s race is run. The Germans will vote her out and leave the euro before too long. Then we’ll be stuck in a currency union with the Spaniards and Italians, with the French failing to direct it. At that stage you can try under estimating by previous post.


Let’s just agree to differ on this one; am much in agreement with you at other times. Conflationist Fallacy is prime reason I appear on this blog …. and this war imposed on the citizen_serfs of Europe ain’t over yet …


This could be an amusing thread. The comments feed currently reads:

“Comment on Let’s not get carried away by Ceterisparibus”

…particularly if the D of C finally changes his name to “Tram”

You never went on that sub-editing course did you!

I think End-tangle’s comments were unwise and Gilmore’s were OTT. They came across as comments that might have been made by people inexperienced in negotiation – even footballers don’t boast like that, particularly not at half time.

The political dynamic has been, predictably for calls for reform to be deflected with references to injustice about banking liabilities. To the extent that the agreement about ESM contributions to Irish banks underperforms the triumphalist coverage encouraged by the government this tactic will remain available and effective. Maybe that suits Gilmore.

What the ESM now is in principle is uncertain, and up for grabs imho. Any thoughts on this?

It’s taken a while Here but the skeptics have been out for a while.
Here’s a post I made on the pin earlier on
“SO : a few days on and the verdict from the commentatoriate is muted

Stephen Kinsella : More questions than answers http://www.stephenkinsella.net/2012/06/30/5691/
Dr Gurdgiv : bwahahaha what deal http://trueeconomics.blogspot.ie/2012/06/2962012-deal-preliminary-reaction.html
Brian Lucey : forward maybe but http://brianmlucey.wordpress.com/2012/06/29/euro-deal-saves-ireland-maybe/
Karl Whelan : much ado about something http://karlwhelan.com/blog/?p=551
Cormac Lucey : seismic wha? http://cormaclucey.blogspot.ie/2012/07/seismic-shifts-that-measure-just-four.html
Seamus Coffey : devils in the detail http://www.independent.ie/opinion/comment/seamus-coffey-a-huge-shift-at-eu-summit-but-the-devil-will-be-in-the-detail-3153879.html
etc etc

Verdict : a for spin, b for hope, c for potential, d for effort”

I wish I could remember the article, probably in Irish Times, a few years ago, which pointed out that the difference between the Irish soccer yob and the English soccer yob is that the Irish yob assumes his antics are amusing to others, whereas for the English it’s all about the obnoxiousness and defiance.

This principle has more general applicability. I don’t think some members of our UEFA 2012 delegation have done us any favours, at least not the stone-faced man reading his copy of Bild who is after all the median voter in Germany. The endzone dancing of some domestic cheerleaders for the Friday deal is similarly problematic. The appalling vista of our busted banks is ours alone.


No, never did take the course. I may have to employ you. But I quite like that title for the feed.

The likely net contributor countries must be starting to look aghast at a lending/bond buying/capital injecting ESM. Despite its price tag, the redemption fund must be looking more attractive, with its stricter controls and exit mechanism. I doubt we’ve heard the last of it.

I was thinking about this after me Sunday meal …….Maybe.

As for Mchales articles – they are always soul destroying pieces of the establishment.
Its impossible to put into even by normal gibberish as I begin sobbing in a Dork like fashion over me keyboard.

Listen lads – the Irish economy simply cannot be integrated with central and Eastern Europe.
The flow of funds is not circular…….it stays put in Germany or the Czech republic , now more then ever as the price of Jet Kerosene stays high.
Look no further then Vauxhalls (GMs) Ellesmere plant.


Northern Ireland new car regs Jan to March 2012
Total new & used 25,212
Ford : 13% (2,136) second hand : 931
Vauxhall : 10% (1,629) second hand : 1,228
Volks : 9% (1,460) second hand : 1,291

Vauxhall is normally in the top one or two N.I. brands every quarter.
Why is that ? – its a shit car.

Now lets look at more recent southern Irish Data.
New and used imported private cars new regs. Jan – May 2012 total :69,620

1.Volks: new cars : 6,664 second hand :2,249 (top brand in total)
2.Toyota new cars :7,044 second hand : 1,570.

The southern Irish car market is completly different in character to the Northern car market.
Why is that ? its a small island.

down near the bottom is Vauxhall

Vauxhall : new cars : 0 second hand : 1,092

The geographical economy has been completly ignored withen the eurozone as the bank credit has been divorced from input / output signals.

Like it or not our economic relationship should orbit around the UK and France as it always has in the past.

The more normal Henry Ford economics of wages and demand rather then credit and demand is manifesting itself in a brutal fashion yet our “elite” will not accept this.
The debt of the past credit cycle will hang over us forever it seems.

The press presume a high degree of stupidity from their punters; the cartoon on the cover of the Independent was about on the level of their feature on the ‘deal’.
I don’t think it’s alleging too much to fill in the gaps and say that we’re witnessing the policy approach for the next referendum – ”we’ll restructure your debts (the money we got your govt to steal from your country) if you cede A through Z of your remaining sovereign powers.”

@Dork of Cork: You realise that ‘Vauxhall’ is essentially just a marque of Opel for the UK market, right? ‘Vauxhall’ doesn’t really exist outside of the UK except as imports; elsewhere ‘Vauxhall’ cars use the Opel marque. Are you counting ‘Vauxhall’ badged cars as Opel or are you counting them separately? Yes, I know it’s more complex than that, but for the sake of your comparison to be fair and accurate, they have to be counted as the very same thing.

@Grumpy and JMcH

Sunday Times has an article where Minister Hayes is suggesting that we redeem the debts over a hundred years…100 years.
HSJ, I said yesterday the our glorious leader ( don’t tangle with me) Enda might just keep us buried in debt for fifty years if we are not careful.
Little did I think that they are seriously considering burying us for generations.
Not a word about write off of some of the imposed debt…unlike Greece who saved themselves 100 billion and are now holding their hands out for EFSF money for their banks.
And btw, ESM money could end up very expensive over a protracted period.

PS Grumpy
If wages /money supply rises and not credit /oil, the average worker will be bidding for the same amount of resourses.
Thats when good substitution comes in.
However you cannot get efficient good substitution with a declining money supply.

Me thinks that will mean Trams all over the shop although I could be wrong.
This is the most simple of economics in many ways.
I find it amazing that the nature of bank credit is not understood by all – its about wasting more resourses via the money / loan creation process.
Its the most ineffiecent form of money production ever invented.
The present credit cycle has destroyed 100s of years of wealth in a matter of decades !!!

Railway Gazette June 29
“UK: Work is set to begin shortly on the construction of a concrete sleeper plant in Doncaster which will supply more than half of Network Rail’s annual needs. Production is scheduled to start in spring 2013.

The factory on the former Woodyard site will be owned and funded by Network Rail, which is seeking to protect supplies and reduce costs by increasing competition and introducing modern production methods.

The plant will be built and operated by the Trackwork Moll consortium of local firm Trackwork and German company Leonhard Moll. The consortium will procure and own the specialised production machinery, and has a 10-year contract to supply sleepers to Network Rail.

Building the concrete sleeper factory is a strategic decision for Network Rail, according to Martin Elwood, director of the infrastructure manager’s National Delivery Service. There are currently two UK suppliers, Cemex and Tarmac, but Tarmac is seeking to leave the market and only retains a small presence to serve an existing Network Rail contract which runs to March 2013.

‘We need around 700 000 concrete sleepers each year and, once commissioned, this factory will produce around 400 000 of those’, said Elwood. ‘It will also directly create around 30 new jobs, with knock-on benefits to the local supply chain.”

Dork – The one thing Ireland can do is produce 400,000 concrete sleepers a year.

From an outsider point of view ,the victory cries heard in Ireland are rather hard to understand.
First, the debts due to the banking system are only a third of the sovereign debt and the present budget deficit makes it highly unlikely that Ireland will be able to reinter the sovereign bond market in the foreseeable future ,even if 60 billion Euros are taken of the sovereign debt ,which they won’t.
Second the ESM will certainly not be used for straight fiscal transfers ,only for loans and ,maybe capital subscriptions (which might not be accepted by the German supreme court). Since the Irish banks are nationalized ,a loan to the banks and a loan to the sovereign are both loans to the Irish taxpayers, a default would have the same dire consequences in both cases.
Thirdly, it seems extremely unlikely that the ESM can help in any way the two banks that are in the process of being liquidated ,or NAMA.
It is difficult to know if Mr. Kenny or Mr. Noonan believe they have won a big victory ,if they believe what they are saying ,there is a lot to worry about.

I would take 20bn PN amortised over 100 years rather than 10. That would be a great deal, depending on the rate of course. You can work out the NPb on your BBerg calc.

Greece got a great deal, OAP has been all but halved and university lecturers get 31k per year. Are you advocating that we do something like that to negotitate a better deal? At this stage, I would say your bitterness towards the great Helmsan from Mayo is beginning to show. This bile is not pretty.


The policy has been strolen from the Last-Chance-Saloon Credit Card Co., interest may exceed repayment installments.

‘Shure we are on the pigs neck.
Must read Animal Farm again,’ you’d earlier said.
Remember the Fox & the Gingerbread Man ?


To be fair to Mickey Noonan he did admit that the deal did NOT involve any debt write off.
It’s Enda I’d worry about with reported comments like ” don’t tangle with me”

We still owe around 190-200 billion and rising.

An ST article has it that we are down 11billion on our “investment” in BOI and AIB (as valued by NTMA). Add NAMA losses and the pile looks ominous.

On the contrary..I quite like the man from Mayo. I just object to infantile comments from our leaders

my take is:
“When an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalize banks directly.”

This is an entirely FORWARD looking statement, there is nothing of help here for Spain or Ireland today.

see also

In the moment, we do not look any longer for “winners and loosers” at those summits, but for reasonable long term general rules, and least in discussion blogs like this , we are actually making progress

You are correct, The N Eiropean will try to stall the process. Spain will lose market access if forced down the same road as Ireland. Soon after Italy will follow. Within days, countries with large Banking sectors- France and Belgium will follow. A wave of sovereign defaults will follow and the 1.5 trillion loss for the German economy will crystallise. The major European economies will be mired in depression. As your own Axel Weber and Joska Fischer point out this will be the third time in a century that Germany will be blamed for destroying the continent. I think the summit is the first evidence that European leaders have woken up to the dangers of a Guns of August scenario.

@ John McHale,

In relation to your point about “getting carried away”…

Somebody needs to have a word in Joan Burton’s ear, she thinks by increasing the social welfare budget it will create growth in the economy.

“role of the welfare state, which promotes social cohesion and “puts money into the hands of consumers and through these hands into the tills of business”.

Obviously if more is spent on buying goods by social welfare recipient’s then its mostly foreign manufacturers who benefit, not just Irish shops.

If increased social welfare spending is going to save us Joan, then go ahead increase spending from 20 Billion to 40 Billion in your Dept and we can all stay in bed.

THe real victor in Brussels was Merkel.

By Wolfgang Münchau

Mario Monti faced down the German chancellor and won the battle. He will survive a few more weeks or months in politics. It was clever of him to threaten a veto on something Angela Merkel badly needed. He had her in the corner. It was an example of classic EU diplomacy.

But this was only the foreground spectacle. If you look behind the curtain, you will find that, for Italy at least, nothing has changed at all. The European Stability Mechanism was already able to purchase Italian bonds in the open market. The instrument was there, but not used. The agreed changes are subtle. Italy must still sign a memorandum of understanding, and subject itself to the troika – the International Monetary Fund, the European Central Bank and the European Commission. The procedure will be less invasive, more face-saving. But there will still be a procedure.

The real constraint for ESM bond purchases had less to do with the rules than with the overall size limit of the ESM. It has a lending capacity of €500bn – and that has not changed. No matter how you twist and turn it, the ESM is simply not big enough. It will inject equity into Spanish banks. It will need to refinance the programme for Greece, Ireland, and Portugal. It will soon have to cope with Cyprus and, who knows, maybe Slovenia as well. A full-scale programme for Spain still looks likely. I cannot see how you can fit Spain under the umbrella, plus Italian bond purchases.

One of the lessons from the history of financial crises is that bazookas must be big to be effective. This one is not. Nor was the now defunct securities markets programme of the ECB. It did not stem the crisis because the ECB’s commitment was strictly limited – and contested by members of its governing council. The ECB still spent more than €200bn on this programme, and yet it did not work. The ESM’s budget for bond purchases will probably be lower.

Mr Monti may have secured the right kind of deal politically but to solve the ESM’s size problem he really should have insisted on a banking licence. With that, the ESM could have leveraged its lending ceiling to a more realistic level. It will not be able to do this now.

This is why I believe the real winner of last week’s summit was not Mr Monti but Ms Merkel after all. She managed to keep Germany’s liabilities unchanged. Someone will have to explain to me how we can have no change to Germany’s overall liabilities, nor of ECB policies, and yet Italy and Spain can now be safe when they were not safe a week ago.

The deal on Spain was marginally better – on paper. But it, too, is not what it seems. I see three obstacles:

1. A mandate to inject equity into the banks will be conditional on a political agreement for joint banking supervision. This is where Ms Merkel can still exact her revenge. Do not expect this to proceed easily. A joint system of banking would be a very big deal, and I doubt that a sensible agreement can be agreed by October.

2. Direct bank recapitalisations may require a change in the ESM treaty. I know this point is disputed. EU officials say they can do it by diktat. But I cannot see how one can conceivably let the ESM inject equity into banks directly when the treaty says specifically that the ESM lends money to member states for that purpose. Would the treaty not have mentioned this important detail? The head of the Bundestag’s budget committee also seems to think that a treaty change is now needed.

3. The new facility is still constrained by the same overall funding limits of the ESM as the bond purchases. I believe the Spanish banks will ultimately need a lot more than the €100bn earmarked for this programme once you take into account the effects of both the housing crash and the depression. The ESM is seriously overloaded.

The most important event last week was probably not the agreement at the summit anyway, but the statement by Ms Merkel that there will be no eurozone bonds “for as long as I live”. My belief is that this statement reveals she is not serious about political union, to which she has been paying lip-service over the past few weeks. Her tactics remind me of the “coronation theory” of the 1980s: the Bundesbank used to say that monetary union was acceptable but only after full political union was completed. It was another way of saying never. I always suspected all this talk about long-term solutions might be a ruse. Now, it seems, we know.

If Ms Merkel is right and there are no eurozone bonds in her lifetime, the eurozone will not survive. Without eurozone bonds or a change in ECB policy, Italy’s and Spain’s debt – and eurozone membership – is not sustainable. That was as true on Wednesday as it is today.

Unfortunately withen the Euro under present circumstances of almost no bank credit production that is true for the most part.

You have to realise we are all conduits for debt repayment under the current rule – rational national economics does not really come into it.

We import more oil /export oil euros then import food /export food Euros.

Any rise in Euro dole will be ineffective without substantial increases in tax on oil either directly via higher taxes on heating oil etc or indirectly via higher car taxes.
Although me thinks a subsidy of public transport to French levels could possibly be more effective given the defective monetary envoirment we live under and benefit people who need to travel to work everyday.

The Irish media doesn’t do ‘Emperor’s New Clothes’ stories. A large part of the reason why the Ireland is the way it is.

Here’s a few numbers the Irish will have to get their head around if $ pegged China keeps doing what its doing and the reserve currency stays the reserve currency….. looking likely now.

Weighted average CIF cost of crude imported into Ireland (IEA)
($s per barrel)
Y1998 :13.55 (through)
Y2000 :29.88
Y2005 :55.24
Y2008 :100.39
Y2009 : 62.61
Y2010 : 80.95

closer to $100 in Y2011 again I guess.

We now live in a Ireland where you can’t get a flight from Cork to Belfast , where road freight has collapsed chiefly because of the collapse of the road & house building industry although not entirely .
Where the fuel efficiency of the car fleet has increased substancially.
Yet the oil problem remains…….

Again I am calling for more radical measures in both the tax and rail construction areas.
We have a major problem with Nat Gas but it is nothing compared to the oil problem.
Immediate simple measures must be taken.

First the creation of a new car tax bracket (A+) for sub 100 G/ km vehicles and increase the taxes on all other private vehicle taxes dramatically.
We need a post war 2 CV (with a German twist) culture in this country.


Sorry DoC but just don’t see what the price of oil has to do with the European summit.

You are in danger of getting to the point where people just scroll past your posts as they have very little relevance to the subject matter.

re- Sporthog

– She certainly wasn’t talking about increasing welfare or other payments.
Trying to find a way to alleviate or delay welfare reductions, which nobody is allowed talk about, more likely.

But the $ became a global petro currency in 1922 .

“The US exorbitant privilege began at the International Monetary Conference of 1922 when for the first time international banks were allowed to accept not only physical gold, but also US dollars (paper gold) as reserves. But all US dollars held by foreign banks were put on deposit back in New York City banks. And there they were counted as local US deposits, the same as if you and I put our gold into the bank, in addition to being counted abroad.

These deposits were used as the basis for credit expansion in both the US and in the foreign countries claiming them as reserves. This process doubled the money supply paid out through the US balance-of-payments deficit for the last 88 years (except that money which France demanded in gold). US deficits never contracted the aggregate purchasing power of the US after 1922, the way deficit settlement is supposed to. It also exported US inflation outward. And it continues today.”

Everything and I mean Everything orbits this now Red Giant Sol.
As long as they accept the $ is the King these $ energy dynanics are all that matters I am afraid.

Energy is defined as the ability to do work.

It (The Euro) won’t devalue against the $ perhaps because of Imperial pride and it is too frightened to go alone.

Europe is a Sick Joke.
It appears as a mere agent for the US treasuary.
What good is it ?
We are better off having some control over our domestic affairs rather then engage in this folly.

The Anglos at least don’t care much for fishing and the like – they let you get on with it as long as you pay their debt.
But Europe wants it all from us , including our domestic politics.

Why go along with this ? – what benefit do we get ?


Don’t be surprised by the latitude given to D of C on this blog. I found it puzzling for a while but then I sussed it out – without having to invoke the international space station. Just ask yourself this: have you ever seen the Dork and Philip Lane comment on the same thread?

No coincidence that I think!

New Opel cars registered Southern Ireland jan – may

New Opel cars reg. northern Ireland
jan – march
0………. second hand 3…….
Changes the numbers a little bit……
I thought things changed after the restructuring as I never walked into a Opel church.

mea culpa … sloppy work.
Better stick to the tram stuff

could the merkel ‘blink’ imply ECB interest rates rising, finally, this year? thoughts?

“But the $ became a global petro currency in 1922 .”

Even connecting the European summit to the $ is tangential at best, then linking to Oil is another tangential jump.

Why not just a discussion board where you can set up threads on specific topics.

I don’t mean to single you out, but one of the main reasons this site has lost a lot of value to me personally is that the comments sections have lost much of their value.

In the initial days of the site there used to be decent discussions on the threads where many of the economists on the site contributed. These days that is much less common.

No I go to a thread with 100 comments where maybe less than half are really about the topic of the thread. Just doesn’t make the site a worthwhile read now.

You are right of course.
Perhaps is desperation on my part and I am sorry for that.

But if you can’t print interest free base money and then tax waste it there is absolutely no point to these endless Euro meetings.
Italy & Italians falling off a cliff as its people run out of tokens is the latest example of this and is directly a result of the euros structure.

There is absolutely no post war precedent for these events , – we are all far better off returning to sovergin currencies immediatley then endlessly standing in this Euro killing zone , waiting for growth…..when there is no demand and no possibility of it.

You can’t fight this withen the euro – the euro will kill you first.
The euro is not a currency
It is a yield instrument.
A plaything of the $.


“could the merkel ‘blink’ imply ECB interest rates rising, finally, this year? thoughts?”

Why would rates rise? ECB has always indicated they’d help out so long as government’s took the first steps. Cuts a coming on Thursday.

Its now obvious the Euros prime directive has been to keep up the price of $ oil(recaptilising the global banking cartel) via their monetary policey while transferring even more economic activity outside the eurozone to other more profitable slave states.

The Goldman operative in Italy has followed these instructions to the letter immediately after coming to office.
There has now been a near 15% drop in Italian oil consumption YoY and it is still nose diving.
That oil did not disappear – it was transfered elsewhere.
That is some coincidence is it not ?

A world of Liras & pesetas would have destroyed Wall Street.
The Euro is not some Gaullist monetary machine taking on the might of New York & London.
It is a invention of the city.

@ Joseph Ryan

How about “we will treat you the same as Spain when you have the same corpo tax”?

@ All

Because so much is yet to be decided in the detail, the Government has a very difficult “spinning” job. The best spin is of course one which under promises but over delivers. However, since delivery is outside the Gov’s control too much underspin could be self fulfilling and too much overspin will end in tears.

The CSO money supply data is showing the M1 M2 M3 Etc as zero .. thats 0 for the month of May 2012………

Its quite funny really.

Oh – data corrected.
We still have a medium of exchange thingy.
For a second I thought the Ulster bank thingy had gone Dark.

@Mr. Bond,

Yes, I’m back again. A few things bubbling nicely that could blindside our smug and arrogant government and I have to keep myself in shape.

On other matters I expect you’re envisaging an ECB quarter per cent cut followed by another later. Proabably won’t do much here. The Government may haved viewed the summit communique as a victory – with the specific reference to poor lil ole Ireland, but the reality is that it is now in a deep political hole.

With huge expectation of significant relief on ongoing bank resolution costs there will be enormous public resistance to further fiscal adjustment and even more, if that could be possible, to any meaningful structural reforms.

Merkel may have moved on conceding that individual states should not bear excessive bank resolution burdens, but she has shored up the line on no fiscal transfers to relieve previous purely fiscal incontinence even more solidly. The German (and other creditor nation) emphasis on fiscal adjustment and structural reform is even stronger. Taking steps to reduce the exposure of sovereigns to bank resolution should reduce bond investors’ perception of risk in this area – but it will sharpen their focus on pure fiscal incontinence and the need for structural reforms. Which is precisely what the creditor nations want to see. It has always been a pincer movement, with the EU’s AAA sovereigns seeking to combine, from different directions, with the rate investors to put manners on the PIIGS +, possibly, FR & BE. The risk of default created by imposing an excessive bank resolution burden on some sovereigns prevented this pincer movement working previously. This summit is the start to clearing the way for it to work effectively.

It’ll take a while for this penny to drop in Ireland, but a few unanticipated ‘events’ might help to improve the general understanding.

Could someone please tell me if the ESM will be financed through the bond market? It’s important because ESM bonds will compete with sovereign bonds in the market place and ESM bonds are a much better bet (with Europe wide guarantees and very effective debt collecting mechanisms).

@ Paul Hunt
Have you read Money and Power by William D Cohan yet? If not you really should

Let’s not get carried away indeed.

The money supply for the economy is still dropping across Europe. Any new money is still expected to comes from bank loans in an era when not many are willing or able to get a bank loan.

Couple this with the fact that mortgages have reached their natural limit of taking two careers to repay and we’re in a very unique recession.


Surely this is just sensible banking practice in the EZ with a tranche of performing loans in one place being backed by deposits elsewhere – in contrast to the previous practice of crazy loans being backed overwhelmingly by stupid bond investors seeing no risk and licking their lips at juicy returns?

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