ESM Meeting and Bond Yields

Following this morning’s decision in Karlsruhe, Jean Claude Juncker has announced that the first meeting of the ESM’s Board of Governors will take place on October 8th.

This morning has also seen some fairly large drops in Irish government bond yields.  According to the yields calculated by Bloomberg this is most apparent for the three-year and five-year terms.  The nine-year has not been as affected.

With the one-year yield estimated at around 1.5% the T-Bill auction announced for tomorrow should be an improvement on July’s issue.

UPDATE: The auction results are here.

72 replies on “ESM Meeting and Bond Yields”

Irish sovereign 2025 bond now trading close to par.

So if you picked it up in January when Colm McCarthy suggested the improbability of a return to the markets, then you’ve made 15% capital gain and 5.4% coupon paid in March. Not bad for 8 months.

Colm presented two choices if default is to be avoided: a return to the markets at high yields, driven by high GDP growth, or a huge appreciation in the value of long term bonds driven by improved investor confidence. It now looks like we will are ploughing a furrow between these two extremes.

Now it is time for the German Leadership to stop telling “porkies” to its Citizenry and to tell it as it is.

[Helmut] Schmidt: If I may, I would like to make a basic observation: The reconstruction of postwar Germany was possible at first thanks to the Americans and, to an increasing extent after 1950, to the Europeans, primarily the French. The European Coal and Steel Community was established in 1952, and the Élysée Treaty on German-French cooperation was signed 11 years later. Both came about as the result of French initiatives. The Germans benefited from the global situation and from their neighbors’ solidarity, which was not granted out of selflessness, but rather out of necessity. After 1945, they could not allow the formation of areas of extreme poverty in the heart of Europe. And today the Germans, for their part, are in a position where they can — and must — pay. And they should embrace this. It first needs to be explained to the German people, however. But this is not happening — at least not to a sufficient extent.

SPIEGEL: Who has to explain it?

Schmidt: The chancellor, the German president and the governing parties in the Bundestag.

SPIEGEL: They would respond that they are making every possible effort. And that includes Sigmar Gabriel, the chairman of your own center-left Social Democratic Party (SPD).

Schmidt: Some of them are doing it a bit, including Mr Gabriel, who you mentioned. The chancellor is doing very little (to explain the situation to the German people). The conservative group in the Bundestag is hardly doing it. The (influential mass-circulation) Bild newspaper is not doing it at all.

Green Light for ESM
German High Court OKs Permanent Bailout Fund with Reservations

Germany and Europe can both breathe a sigh of relief on Wednesday: The Federal Constitutional Court has rejected a petition to stop the ratification of the permanent euro rescue fund, the European Stability Mechanism. The decision clears the way for the ESM to go into effect.

The court ordered that ratification can only be completed if it is ensured under international law that Germany’s current maximum liability of €190 billion ($245 billion) can only be increased with the approval of the German representative in the ESM board, court President Andreas Vosskuhle said. “(No) provision of this treaty may be interpreted in a way that establishes higher payment obligations for the Federal Republic of Germany without the agreement of the German representative,” the court states.

This also means that Germany’s federal parliament, the Bundestag, must play the leading role in important decisions. Under a German law accompanying the ratification of the ESM treaty, the German parliament must first vote on the positions taken by the German representative in the ESM board before they can act on them. However, it is still unclear at this point whether decisions will require a vote of the full parliament or the significantly smaller budget committee.

In another significant condition, the court ruled that Germany must ensure that the treaty is implemented in a way that ensures that representatives of the Bundestag, and the Bundesrat, the upper legislative chamber that represents the federal states, are comprehensively informed of the bailout fund’s activities despite the professional secrecy that ESM employees are required to adhere to.

Vosskuhle also noted that the decision on the permanent rescue fund is provisional and that full proceedings would follow.

Germany is the only euro-zone member state that has not yet ratified the treaty establishing the ESM. Without the participation of the EU’s largest member state, the bailout fund has not been able to begin its work yet.

Helmut Schmidt is being fair to the Americans and the French on the post WWII settlement, but should have given a mention to the Brits. Keynes, supported by Churchill and Attlee, did most to ensure that the WWII sequel was an improvement on what happened in the 1920s.

The current mess is being addressed in Versailles fashion, with the Germans playing the role played on that occasion by the French.

Here is a link to an article and video by Paul Martin former Finance Minister and Prime Minister of Canada. Comes from a French-Irish political family and was a highly successful and well respected politician.

For people in a hurry here are a few quotes.

“The Europeans are going to have to come to grips with the fact that it takes the same economic institutions to run a monetary union as it does to run a country. And until the Europeans face up to that and show us a path from a banking union to a fiscal union and ultimately to a political union, everything they do is going to be a Band-Aid.

As long as they just continue to muddle through – even if they have a veryy successful medium sized bazooka like the one Mario Draghi brought in last week – we all know that sooner or later markets are going to react negatively and we are going to be back to another of the many false starts we’ve seen so many times.

They’re going to have to show us that they can create the same kind of institutions that are required to run a country in order to run that monetary union or they’re going to continue to fall back.”

I know the Irish knee jerk reaction to this. Could we get our brains in gear and decide whether we want to be a larger Skellig Michael, totally isolated on the fringe of civilisation or a member of the greatest Union the world has ever seen.

@Colm Mcarthy

re Versailles;

I recall a history teacher referring to remarks attributed to Clemenceau’s at Versailles;

‘When the goose on the table you don’t ask her how she would like to be plucked’.

The analogy you use seems spot on. There are a lot of geese at or near the table and Germany is busy making the best of both the feathers and the feast.

[I never found a authoritative reference for the remarks].

It depends for how long “risk on” applies. There is a dichotomy between the optimism of peripheral bond markets over the week and the direction the global economy is taking. Commodities are way down in April levels. China has just announced a 160bn stimulus package. The bondwallahs in the states are looking for QE3.
Things have been better .

Spanish bond yields came in significantly but the assumption behind that is that the markets get their way versus the people and that is an optimistic reading.

Those tbills tomorrow will issue well under 1%, probably more like 0.75% or so. Ireland 5YR traded at 3.85% this afternoon. Demand outta the US in particular is massive.

@ Joseph Ryan

He was a pretty poor history teacher! What you heard was bowdlerisation of a famous remark by Colbert, minister of finance to Louis XIV.

“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”.

As to the views of Paul Martin, all politicians see the world through the prism of their own circumstances. Ireland was in a monetary union with the UK when the movement politically was in the opposite direction. Maybe we should have stayed in it!

Parallels with the aftermath of two devastating world wars are what the are i.e. irrelevant!

It seems that Ollie Rehn is now responsible for the October deadline for a deal on the “Irish question”!

Looking up the usage of the term “promissory note”, something rather unusual in my culture, I recently read again the Martin Luther King „I have a Dream“speech.,0,36081.story

One of the things, which struck me, was the powerful metaphor of the bad check.

“Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check that has come back marked “insufficient funds.”

As somebody, who has probably signed less than a dozen checks in my whole life, outside the US, I am actually still wondering, why the German Supreme Court (Bundesverfassungsgericht) was the only one, pondering the legality of the ESM. The outcome today was pretty close to my constitutional understanding.

One of the most fundamental rules in life is that one is extremely careful about general, and potentially unlimited, commitments. No blank checks, No Nibelungentreue, never, ever, again.

I am just now becoming aware, that there is no non-German wiki for “Nibelungentreue”, a pretty rare thing.

The Supreme Court has made it clear, that it is the Sovereign, “We, the people”, “das Volk”, in his directly elected representation, the parliament (Bundestag), who wields the ultimate power of the purse, decides on financial obligations. This cannot be delegated, in unlimited or irrevocable ways, to any other institutions. People in my culture see this as a very fundamental “western parliamentary” principle.

Why is this then apparently not a problem for other European Nations? WHY?

Why did everybody else sign off the present version of the ESM?
Because, they think, the big benevolent brother Germany takes care of anyways? Or that treaties can be broken, when they become inconvenient? Or they are sure, that they never will pay anything into that obligation for all Euro zone members anyways? WHY?

In my world, a currency is not backed by a little gold in some vaults, here or there, but by “the full faith and credit” of a people, to “honor their sacred obligation”, to pay the national bonds, in full and on time, the will and the ability to do so. I abhor the idea of signing an uncovered check.

It makes me wonder, how far the different European nations are apart, culturally. May be it is better to go separate ways. Europe was never united for long, like China, or Aztec regimes.

Is there any algorithmic trading in Irish bonds ?
Anyone selling out while the market goes nuts and buying when the nihilism is at its peak would make a nice return, presumably.

@ genauer

As matters stand, Germany has not paid one red cent to bail out other countries. What it has done is accept a contingent liability with regard to other countries in difficulties within a monetary union which it freely joined. Meanwhile, because of uncertainty as to the future of said monetary union, Germany, as the anchor of it and a safe haven, has enjoyed unprecedented, allmost free, access to loan financing.

Helmut Schmidt has spelt out the facts and emphasised the need to correct the fairytale fed to the German electorate.

@ genauer

By the way, Germany is not the only country in Europe with a parliament or a constitutional court. If all decided that their way was the only way, where would that leave Europe? The absolute budgetary powers of a parliament cannot be elevated to a fundamental law. Acceptance of it would be the antithesis of European integration. Luckily, common sense across Europe is winning the day. cf this comment by Gavyn Davies of the FT.


The Roman Empire and the Catholic Church placed an indelible stamp on Europe. Europeans are in a position where they have to resort to gross exaggerations of minor differences to set themselves apart. The Irish are experts on gross exaggeration of minor differences having been fervent practitioners for over 800 years. If you were on the streets of Shanghai, Tokyo, Kolkata, Mumbai, Karachi you would be amazed at how similar and familiar Vienna, Paris, Hamburg, London, Dublin and even Athens and Moscow appear.

In the present circumstances there is more than enough blame for every country:
1) Why did the major German banks neglect to do due diligence when lending to the periphery.

2) Why did the Gov’ts on the periphery not take away the gravy bowl before their banks became bloated.

3) Where were the EC, ECB, IMF, OECD and every bank regulator in Europe as the bubble grew larger.

4) There is no plausible scenario where Germany can avoid becoming a repository for the wreckage created.

5) Germany can face up to its responsibilities or take its marbles and sulk all the way back to the DM.

6) The EZ can can survive without Germany. Not desirable but better than allowing Germany to destroy the EZ followed by the EU.

7) France would become the leader in a EZ without Germany.

“The 9 year was unchanged. “The 9 year was an unloved child with dull brown hair who couldn’t catch a ball and lived in the shadow of her coruscating blonde older sister the 10 year who jetted between frankfurt and new york and was on first name terms with the a listers while the 9 year hung around raheny and had severe self esteem issues and the lads at ncb wouldn’t even look at her but that was before tragedy struck the family when the 10 year was electrocuted in a totally foreseeable accident by ajay chopra and jct and the 9 year was thrust into the limelight despite her gawkiness and the fact she was several inches shorter than the other girls on the circuit. And BEB even asked her out. But she never felt comfortable in the FT.


German leadership in the EZ is a function of GDP in China – which could implode in the next couple of years, you never know.

Ryan could get the chance to sack Bernanke.

Attitudes can change.

re- Mickey ”I know the Irish knee jerk reaction to this. Could we get our brains in gear and decide whether we want to be a larger Skellig Michael, totally isolated on the fringe of civilisation or a member of the greatest Union the world has ever seen.”

Like the last one that the sun never set on ?
What you’re describing is the reactionary ‘final solution’ that has reanimated the corpse of imperialism when it was finally put down by national cultural self-determination – the opposite of racist, imperial nationalism; which is far more akin in it’s underlying impetus to the current EU Projekt . The arguments have run out of track, as evidenced by your Skellig cartoon (go have a look at the current exhibition in the national gallery showing the rabid doodles from ‘The Union’ in the british panic that preceded the founding of our state – we’ve been here before !) and the execrable Barrosso’s ‘state of the union’ speech to his own applauding entourage today.

The tepid support that the EU has scraped through on with diminshing success is showing every sign of a complete unravelling – the social democratic groupings called today for a full union, with the abolition of national government; the rush of blood of a gambler at the end of the line. This has no support, except among a tiny and unrepresentative class of vested political anf finacial interests.
The attempt to install this regime is setting the seeds for unrest and possibly war. It is not the consolidation but the undoing of the last sixty years of relative peace & prosperity.

My German friend,
It should be pointed out that Germany does not have a pristine record of honouring its obligations on time. It failed to meet those imposed by Vetsailles & of course it benefitted from debt restructuring post WW II…thankfully.
Only a select few countries have a pristine track record.

Perhaps less stone throwing in the glasshouse.

re Genauer:’This cannot be delegated, in unlimited or irrevocable ways, to any other institutions. People in my culture see this as a very fundamental “western parliamentary” principle.

Why is this then apparently not a problem for other European Nations ?’

– I, for one, fully agree with you.
And I think that this goes beyond mere opinion and is a value deeply held by the vast majority of the european peoples.
What we’re witnessing is a very crude attempt to sugar-coat the centralising of power in a way that is utterly contrary to the general movement for the better of society & the representative expressions they operate through that has just about prevailed and succeeded hitherto.
I don’t doubt that the external interests attempting to push Germany into this vile role exceed by far those working to the same end within Germany.

@ Mark

Assuming that your logic is correct, the conclusion to be drawn is ineluctable; don’t join a monetary union!

Unfortunately, leaving a monetary union is much more complicated than participating in it, especially in a leading role.

….ie; they’ve madly come up with the idea of painting germany as a villain for showing any reluctance to lock other sovereign nations into economic and political indenture; it doesn’t matter whether or not German reluctance stems from trying to protect democratic principles or for other reasons.
It is the fleece over the wolfish covenant that must confuse for long enough to forestall popular opposition.
Rest assured, the calls for the mono-governmental regime that have recently come out of the closet with increasing frequency in the commission would and will struggle to survive outside it – our politicians and media cannot even admit it openly, and much of the voices of support heard here would be torn apart outside an internet forum.

Leaving the monetary union need be no more irksome than it’s implementation. It was pushed through by subterfuge, with ignorance of it’s consequences. How many trick-contracts do you suppose are viable ?

@ Mark

If it is that easy, by all means, fire ahead!

I have to confess that I am rather attached to the (appreciating) value of my currency, the euro, and do not view with a benign eye those wish tp see its return to the status of a minor (depreciating) national currency.

“Germany has not paid one red cent”
And why should we? What gives you that idea? Last time I looked, Irish GDP per capita was larger than in Germany, Italians have more money and assets than Germans.

“Germany is not the only country in Europe with a parliament or a constitutional court”.

Well, guess what, I took that as fundamentally evident in my question, why they don’t have a problem with signing of the ESM.

@ grumpy
Why are you happy about the Euro rising? It makes it more difficult for the rest of the GIPSI countries to compete on the global marketplace without painful internal devaluations.

Not so much for Germany and the Nordics like us, our large corporations built factories around the world in the 1980ties, not really for Ireland, but for Spain, Italy, Portugal a rising Euro is unwelcome news, as I see it.

@ D-O-D, General
With your citations of
“ [Helmut] Schmidt [….] the Germans, [ …] must — pay”
I am becoming more and more aware, that some of you have this weird idea, that Germany is some kind of Über-father, who has to somehow take care of his unruly children, and pay for their damages. “Benevolent hegemon” and all this nonsense.

If Europe ever works, it will be with no one one millimeter above or below the others.

Germany is just one of 27 European countries, the largest one, so far, and now. We have gone through some tough times, demanding and obtaining significant sacrifices from rich middle, and poor.

Until recently we were worrying about whether we are becoming a kind of “rust belt” of outdated, old industries. The reunification did not go like hoped, and was a very expensive experience.

And with producing high value goods like Mercedes (vs Dacia) and investment goods, we are more sensitive to the global business cycles than any other large country. There is no spoil money to go around.


The Roman Empire might have conquered most of Gaulle and Britain, but it did realize its limits in Germania. The elite Varus legions were eliminated down to one single man, who was sent back with the head of Varus to Rome, to make that point clear. Talibans are pussies compared to a furor teutonicus.

The power of the catholic church was broken, after Czech (Jan Hus, etc) and German Protestants (Martin Luther, etc) did not accept ultra montan rule any longer. After the 30 years war 1648, more than half of Bohemia and Germany was dead, but we had our freedom.

In the moment it looks to me, that these 2 stories are told a little different in your schools.

re- Genauer

European history is taught on odd cycles here – for a few years the syllabus will be on the renaissance, then prehistoria for the next batch of students, and so on. It is quite typical to emerge from schooling with a partial & disjointed picture, and some of us afterwards try to make good the deficit by piecing it together from the backs of the proverbial cereal boxes.

The worst misapprehension, subtly inculcated, is the picture of an Irish history with various European agencies cast in the role of unrealised saviours of Ireland from the British; even Napoleon was tarted up to look that way from a certain angle – but only the mad remain deceived for long (though I do know of a former courtesan of the Labour Party [!] who has a shrine to that particular antichrist installed in her offices in Dublin).
What generally is impressed on us, though, as a result of our own history, is a keen awareness of the concept of right and wrong with regard to matters of self-determination and imperialism – hence the sympathy, even without unconditional support, to Basque & Palestinian causes common here – and this transcends the skepticism that those, like me, felt for the false, gombeen nationalism that often polluted our politics.
You’ll find a lot of support for what I can only poorly refer to as the Casper David Friedrich vision, with the french imperial soldier dwarfed and confounded by the resolute, towering German Wald. Before, of course, the forest in later generations sought to plant itself elsewhere.

As a country that had threats of invasion from both Britain & Germany in WWII, and which escaped the depredations of the war, we generally have a more level-headed estimation of Germany than some, and I suspect that most people here would not disagree with you,
”In the moment it looks to me, that these 2 stories are told a little different in your schools”
– most likely they never heard or read of them. Personally, I admire Arminius as much as you can admire someone through the fragments of history that carries his story, along with Vercingetorix & Boadicea. Empire is not racial, national or cultural, and today has chosen to occupy the a-national & a-cultural – whatever carries the most potential force; (hence the attempted conscription of Germany as ‘leader’). The danger is the same.

Any animosity towards Germany in Ireland generally stems from those particular financial institutions that benefitted from the guarantee & bailout, rather than some suicidal desire to be locked in obligation to you..


To your questions:
1. Why did German banks … ?
I don’t know, ask them. What I do know, is what I thought until recently, that you “periphery” all are basically like me/”us”, same European culture / values. You just have to catch up, and with a little help, also financially, via the EU, indirect, we will all become some happy, prosperous European family of equals.

The OECD is just some number collectors. 2000 people doing statistics, and, as I learned last year, after going in a lot more details, often pretty bad at that, very disappointing.

The IMF is a kind of pawn broker / insolvency judge . They only get involved, after the shit hits the fan. They are not your über-father.

The ECB, until recently only had to care for price stability. They are NOT government. And I absolutely want to keep with that, the treaties. They are not elected (politicians).

4. The only way Germany would have to pay for others, is when some country defaults on the rest of the European people. This is not like Argentine defaulting on some US banks. It would be a people defaulting on the people of Europe. This would have much harder, longer consequences.

I think 5 – 7 is pretty theoretically. As much as many of us in Germany want to just somehow get out and let the rest do whatever they want. Just look at the geography and the streams of trade. Even 1947, when everybody hated us, for good reason, the Montan Union was the realization that Germany is the center of Europe.

Economist Straubhaar on the ESM
‘Germany Has to Accept More Redistribution’

Does the introduction of the ESM bailout fund mean Europe is turning into a transfer union? Economist Thomas Straubhaar argues that it is — and that it’s a good thing. In a SPIEGEL ONLINE interview, he says that Germany will have to get used to sharing its prosperity with other countries.


Luther promised the great Reformation and delivered “plus ca change plus c’est le meme chose”.

Religious order lands to be distributed amongst the peasants. Not done.

Tithes reduced or eliminated. Not done.

Luther did not emerge until the 17th century. By that time Germany was deeply immersed in Catholicism. Afterwards little had changed. As a matter of fact Germany is one of a few countries that directly support organised religion.

“but we had our freedom”. In fact you had new masters.

My German relatives would be appalled at phrases like “Taliban are pussies compared to a furor Teutonicus.”. Get with the program which is: Germany is now more cultured and civilised than France. Have a good look at modern Berlin.

@ Mark

I appreciate your comments a lot. The more I hate it, that I am now too tired this night, to write an equally thoughtful response. At some point even my grammar, typo just become too bad, as I see above. Manana : – )

Constitutional Court Ruling
A Setback for Germany’s Euroskeptics

An Analysis By Roland Nelles and Severin Weiland

Germany’s Federal Constitutional Court has rejected a lawsuit brought by opponents of the euro, and has set only a few conditions for the ratification of the European Stability Mechanism and the fiscal pact. The main proviso is that the ESM cannot increase the scope of Germany’s liability without the country’s agreement. What will the ruling mean for Berlin and Europe?

Ceding Power
Ruling Shows Court’s Weakness in Europe Matters

A Commentary by Thomas Darnstädt

The ruling on Wednesday by the Federal Constitutional Court on the euro bailout fund makes one thing very clear: The Karlsruhe-based institution will not stop European integration because it can’t. The justices have created expectations among the people that they are no longer able to fulfill.

So, what happened? Just what everyone expected: The European Union will not be stopped in its tracks. Germany can now ratify the European Stability Mechanism (ESM), the permanent euro bailout fund, and the fiscal pact aimed at bringing economic governance to countries in the euro zone — albeit with a few conditions. What’s more, court President Andreas Vosskuhle repeated his usual warning that euro bailout packages cannot come at the cost of a loss of power for the Bundestag, Germany’s federal parliament. Everyone has now relaxed, and even the German DAX index of blue chip companies is climbing.

But that’s not all that happened. Never before has it been so clear that the best days of the Karlsruhe court are already behind it. All the pomp and circumstance of the eight judges in their red robes has grown hollow. The panel regularly and solemnly convenes in its massive courtroom to rule on what the relationship between the European Union and the democracy guaranteed in Germany’s constitution should be. However, everyone sitting in the courtroom knows that there is precious little democracy when it comes to the current crisis in Europe.

In reality, these kinds of policies have long been determined elsewhere. For days, it has already been clear that the European Central Bank’s (ECB) decision to launch an unlimited bond-buying program will bestow upon Germany’s constitutional democracy debt burdens and stability risks that are of unimaginable dimensions — and ones that this court cannot pass judgment on. What’s more, German parliamentarians and the citizens of EU member states have had just as little say in all this as the German government. That’s not a violation of the constitution, that is merely European Union politics, as it has been agreed to by the parliaments of every EU member state. From the very beginning, the central bank had been part of the major plans for a currency union. The fact that it is independent of any influence from parliaments is also permissable under Germany’s constitution.

re- the Spiegel article
– quietly alarming in tone, no ?

”German parliamentarians and the citizens of EU member states have had just as little say in all this as the German government. That’s not a violation of the constitution, that is merely European Union politics, as it has been agreed to by the parliaments of every EU member state. From the very beginning, the central bank had been part of the major plans for a currency union. The fact that it is independent of any influence from parliaments is also permissable under Germany’s constitution.”

– the author doesn’t seem convinced by the assurances that parliament would not be subverted by technocracy that were given afterwards. The ECB has become an untethered kind of entity. Independence after all is not the same as neutrality, as becomes especially clear when the programmed task diverges from a formerly common intent/purpose.

@ Mark

I agree with all your comments. I knew these judges were about as independent as our own aptly named “criminal courts of justice” and would “bottle it”, again!

Fiscal and monetary fascism now rule europe with democracy as the whipping boy. They have unleashed a monster they will not be able to tame. The media will make great play about the conditionality being imposed by the court but this is only useless posturing and was predictable by past performances of the court.

The Germans had to work like dogs to reconstruct after the WWII, they paid for East Germany to be rehabilitated and now they will pay for the crude financial profligacy of the Piigs. At the end of the day, Germans are foolish people in my eyes. Having worked in Germany, believe me, there are few Irish people who would be able to take the relentless grind of work, work and more work. Meanwhile back at the ranch the Irish Troika of Unions, government and Bankers who earn much more than their German counterparts must be very happy that the battlements to their ivory towers have been strengthened.

One thing for sure though the ESM is fully underfunded and Mario’s printing press is going to be red hot.

Modern Monetary Theory explained in animated gifs.

Only in America can you find this level of comic creativity. I particularly like the “More Wine” skit.

@ Mark

‘The tepid support that the EU has scraped through on with diminshing success is showing every sign of a complete unravelling – the social democratic groupings called today for a full union, with the abolition of national government; the rush of blood of a gambler at the end of the line. This has no support, except among a tiny and unrepresentative class of vested political anf finacial interests.
The attempt to install this regime is setting the seeds for unrest and possibly war. It is not the consolidation but the undoing of the last sixty years of relative peace & prosperity’

‘The rush of blood of a gambler at the end of the line’ +1000
Great stuff!

It was incompetent embarking on the euro project as we did. Of course we doubled down on that incompetence by fuelling the property boom and allowing no touch ‘regulation. Then we trebled down with the Bank Guarantee, and now as the waves of destruction formed as a result begin to breach the fort built by the state class we may even see a quadruple down, who knows?

Politicians seen low interest rates, cheap money for all and so votes. Now they’re scrambling. They’re willing to erode democracy to live a while longer or to cover their tracks, anything but embark on the painful process of explaining to the people the real story about the real mess we’re in.

Though on the other hand, as long as citizens have access to decent public services and have hope for the future aka not one jobless or that of a debt slave, they tend not to be too bothered who is running the show. Either way if enough people are deprived of these things, ‘bad stuff’ happens until most again do.

@BEB / @Seamus Coffey

With the lower short term rates, is there scope or benefit for Ireland to issue short terms bonds and use them to pay off some of the higher yield longer term bonds issued in the 2008/2009/ early 2010 time frame?

I wonder what it will take to shift the Bild Zeitung. Or will the elite just do it when the circumstances demand it ?

For a country with Ireland’s level of debt short term financing would be the kiss of death (debt). Our only hope is ten year + debt and inflation of 5%+ for each of the next ten years. Add to that no recession and average real growth of 2% (nominal 7%).

As this recession bites Germany, Nederlands, Finland, Luxembourg will join in on the stimulus chorus and before you know it (Mein Gott im Himmel) inflation is reborn, lusty, gesunde, heulen. The periphery will slowly rise from the dead and the world will be restored as God intended.

Our TDs’ will not have to make unpopular decisions and sales of antacids will rise in Germany but life will go on.


ECB would spot that they are buying short dated stuff they would be forced to effectively roll over. They should then price it as a longer dated bond – and buy at a yield appropriate to that. Note, they have not stated yields they will buy at.

Enda sounds enthusiastic and so he should. There is a six month window now in which to arrange relief. The conditions placed on Germany’s involvement in the bail out by the Karlsruhe court has not gone unnoticed. Italy and Spain will delay admitting their countries are bankrupt. Call it pride, nationalism, shame but they will not come forward until there is a full blown crisis and then they will both be asking for more than is available.

George Soros, Paul Martin and Sheila Colleen Bair are calling this correctly. Begrudgery, too little too late, politicians devoid of vision and leadership catering to the basest instincts in their countries. On the periphery a bunch of ditherers hoping for miracles also lacking in leadership, imagination and honesty.

By April of next year we will be back to square one. Enda ! run don’t walk to the wicket. Temporary relief is better than no relief.

The GOP will win the House & might win the Senate. Romney though is crashing. He should beat Obama but he is running a terrible campaign,

Update – Dutch Elections

Election in the Netherlands
Dutch Voters Choose Pro-European Parties

The incumbent conservative-liberal VVD party has won the Dutch election, with the center-left Labor Party coming in second. The result is a show of support for the current government’s euro-crisis policies and a rejection of euroskeptic parties, with right-wing populist Geert Wilders suffering a major defeat.

Dutch Grand on the cards: Wilders out of the picture …

The Bain connection and the hollowing out of US manufacturing is hurting Romney. Romney was the ideal candidate a la Regan, handsome, square jawed, articulate, experienced and of course rich and successful. Ryan appeals to the core of the GOP but is too far to the right for mass appeal. The continuing decline in incomes of the middle and lower middle classes is starting to worry them. Lower upward mobility than in Britain and Europe with today’s youngsters likely to be worse off than their parents is also festering.

The two party system is also coming into question as both parties are seen as being bought and paid for by the oligarchs. All in all I expect the Democrats to make modest gains.

i never thought I would see the day when America would be as screwed up as Ireland.

@Mickey Hickey

The US is in quite bad shape. Politics is polarised. The Republican Party is nuts

“Capitalist utopianism and unqualified loathing for all that remains of the welfare state are the dispositions that now unite the Republican Party from the bottom up. ”

Very few undecideds will vote for Ryan but Romney had no choice because he has to respect his base.

Then you have campaign finance

“The McCain-Feingold Act, passed in 2002, limited the use of soft money, and the Supreme Court upheld this landmark reform in 2003. But after Samuel Alito replaced Sandra Day O’Connor in 2006, the Court took every opportunity to chip away at McCain-Feingold and then, in January 2010 in Citizens United v. FEC, by a vote of 5–4, it stripped away virtually all the constraints on the activities of corporations, unions, and wealthy individuals with respect to federal elections. The Court thus overturned a century of law.”

and plutocracy

Ireland isn’t that bad yet

@ JR

Great comment. You’re smarter than 99% on here.

@ Grumpy

OMT will not be just about yield levels. Read Asmussen’s speech the other day, very important, stresses need to stop volatility and bring back stability to sov debt markets. Draghi also mentioned illiquidity, wide bid/offer spreads, CDS levels etc as reasons for using OMT. Yields will only be part of the issue.

Old-Age Poverty in Germany

‘Being Poor Also Makes You Lonely’

Old-age poverty is an increasingly worrisome problem in Germany. In a SPIEGEL interview, 74-year-old Renate Apel discusses how, even after working and paying into her pension for some 40 years, her life has become one of deprivation and want.

As Germany’s population ages, its birth rate declines and a smaller proportion of its citizens are paying into the state retirement fund, meager pensions for elderly citizens are becoming an increasingly troubling issue.

German Minister of Labor and Social Affairs Ursula von der Leyen recently published alarming figures on the future level of German pensions that have sparked widespread concern over the looming danger of old-age poverty.

Likewise, figures from the German government’s new report on provisions for old age, to be published in November, show that of the roughly 25 million employees in the country between the ages of 25 and 65 who make social security contributions, more than 4.2 million earn a gross monthly salary of less than €1,500. This only entitles these individuals to the legally guaranteed basic social security. The tax-funded payment was introduced in 2003 as a supplement to help elderly people who have low pensions and opt not to apply for welfare assistance eke out a subsistence-level existence.

@Joseph R, Eoin B

I’m assuming Joseph was hinting at a wheeze where you redeem early your longer bonds and exaggeratedly bias your funding short – so as to get effective lower funding rates.

My point about yields is that if the ECB spot a country doing this then they will rightly conclude they are having the Mickey taken out of them. Because they have not pre-announced yield levels for short dated bonds to be defended, they retain the flexibility to refuse to defend a very low short maturity yield for such a smart-Alec country.

I don’t think the ECB will agree to be the exit for long term bonds via early buy-backs and re-issue at short maturity.

If I’ve missed something, do tell…

@ mark

Sorry for the long delay.

1. Your „I think that this goes beyond mere opinion and is a value deeply held by the vast majority of the European peoples.”
I thought so too, not so long ago, but unfortunately I am not longer so sure about this.

2. Your “I don’t doubt that the external interests attempting to push Germany into this vile role exceed by far those working to the same end within Germany.”

I am very afraid, that this is true, George Soros is just the latest example of external vile, who tries to pitch one country against the other, and make his profit on it, just like he did in 1992, and it was very open for everybody to see it. Everybody knows , he organized the raid on the Bank of England. His agents he pays in Russia now, now have to file officially as alien agents, of course they don’t like it.
What George Soros tries, is to create resentiments, with his “benevolent hegemon”. The “benevolent” should try to extort money from Germany, and the “hegemon” to push up the instinctive resentiment of all freedom loving people against that. And all that to the benefit of parasites like him.

3. The way history is taught in public schools (erg “public” as in the continental meaning “for normal people”, paid by the public), is apparently in most countries pretty self centered. See e.g.
And, especially the Greek comments there.

4. What really stunned me, there and here, and that was also a (minor) reason for my delayed response to you here, is that this is apparently still the case in many European nations.

When I read a “Mickey Hickey” writing: “Luther promised …. Tithes reduced or eliminated. Not done. Luther did not emerge until the 17th century. By that time Germany was deeply immersed in Catholicism”, I wonder very much, in what hands the Irish education system still is.

Martin Luther was born 10. November 1483, and certainly not in the 17th century. When this verbose guy put down his 95 theses, elimination of the tithe was not mentioned, or relevant for anyone, but I am curious, how Mickey Hickey For the spread in Germany:
How do they teach that in Irish Schools and Textbooks? I am curious!

5. “tithe” (Zehnt , Kirchensteuer) versus “indulgence” (Ablassbrief)
Just read the wikis.
Mickey Hickey Says… “Luther promised … Tithes reduced or eliminated. Not done”.
Does he not know the fundamental difference between that? Where in these very verbose 95 theses of that Martin Luther find you the shameless lies of a Mickey Hickey?
A Mickey Hickey is just the present day catholic version of those Islamic people who storm western embassies the recent days.

6. Your “Personally, I admire Arminius”.
Most here call him “Hermann, den Cheruskerfürst”, and the common narrative here is that he was killed a few years later, after the big alien Rome aggressor threat was annihilated. THE typical European story, I would say. Unite against a big alien threat, and then return to the usual internal feuding : – )
And the repeated and remarkable difference of Herrmann to Vercingetorix and Boadicea was that Germania was permanently successful : – )

7. And that brings me to the present situation.
After WWI and WII I think everybody understood, that perpetuating such an arch enemy feuding between France and Germany became a little too expensive, 20 and 55 million people dead, for what? And we had the new major, overriding enemy, Russia. Nothing unites people as much as a common threat.
But now nobody fears a French/German war anymore, or an invading communist Russia.

One of the big narratives of Europhiles is that there is strength in numbers. But that certainly doesn’t work if we are constantly in internal fights about how can steal whose wallet.

Another narrative is that we have
1. a close common culture,

2. the rule of law,
To that:
1. What then drove a Mickey Hickey to mention manifest evil as the “The Roman Empire and the Catholic Church placed an indelible stamp on Europe.” Maybe on you, NOT on me and my people. He is deeply offensive and divisive. Is he not aware of it? Both were at the time mass murdering, religiously extremely intolerant, evil empires, at the times before they were beaten, the exact antithesis of what Our present day European Union should be, community of adult, tolerant, freedom loving, responsible, HONEST people, as an individual and a nation.

Again, NO HEGEMON, no one with stiff knees like us, one tenth of a millimeter above or below the others. Or does he just not care anymore on the seemingly straight road to a 3rd Roman Empire? I have read my postings above, why I could have caused that. I don’t find it. But please, tell me.

2. The Maastricht treaty said: no bail out, no money printing, what is left of that?

Again, what value you find in an appreciating of the Euro beyond a fair value of about 1.21 – 1.25 Dollar to the Euro, is beyond me. Switzerland pegged their Franken in 1978 (2011) against the Deutschmark (Euro) in, in my view a pretty legitimate self defense.

When I see Putin from Mother Russia coming to my Fatherland, addressing the Bundestag in very good Deutsch, needing less than a tenth of the security entourage, when he comes to my quarters, speaking honest and checkable truth, from a honorable nation, able and willing to defend itself, I wonder more and more, how close various cultures are.

When I look at Mickey Hickey, D-O-D, B-E-B, I see more and more that the Euro is doomed, despite the relief of this week.

Finally, To avoid any misunderstandings, The present day catholic church is, after domestication, a very different beast. And, as I a die hard physicist, in a vastly irreligious environment, I repeatedly defend Her right to preach Her Gospel here. This is My civilized Central Europe, for what I have put my life on the line before. And we don’t hold the old history against Her any longer. When I look at the present, German Pope, Benedict XVI, the Bavarian spitzbuben, when he shows his intellect, knowledge of arch anarchists like Paul Feyerabend. He has not only read him, he really understood. And then I look at the ignorant ,stupid crowds at “La Sapienza” in Rome, opposing him, and I just laugh.

The Irish education system as I experienced it does not know that Luther existed.
My reference to 17th century came out of a date you used in one of your posts 16xx.

We drifted a bit off topic. To get back to basics. German banks DB, Commerz and others as well as British banks lent enormous amounts to private Irish banks Anglo, B of I, AIB, EBS and others. Those privately owned Irish banks became dangerously overexposed to the property market which collapsed. Essentially Irish privately owned banks went bankrupt. Instead of putting them into receivership (examinership), auctioning them off in the open international market and using the proceeds to compensate (partially) the creditors,. The Irish decided to make the Irish banks and it follows the German and British banks whole using Irish Gov;t funds. In essence all on the Irish taxpayers tab.

There are people in this country who are more than a little upset at the turn of events. Some of them go so far as to say it is a perversion of capitalism that leaves Adam Smith turning in his grave. Voltaire and Rousseau would find it equeally strange even Kant and Heidegger would not be able to fathom the perverted logic.

That is why I say the wreckage will finish up in Berlin and Frankfurt. Germany can at best slow down the flow if it plays its cards right.

As far as religion goes, it is no longer a factor other than noticing how the decline is proceeding most rapidly in places that were previously considered to be overly religious.

@ mickey hickey, and

@all, in 2. the Irish debt question, and my questions in that
1. Reformation ( a few more points)
2. Irish Banks / Germans (let us compare the different views of that story)
3. ESM / Supreme Court (What has all this to do with that )

1. Reformation ( a few more points)
a) Indulgence
Yesterday I just looked up the word „indulgence” via the wiki from the deutsche “Ablass(brief)”. What I just realize now, is the fact that these have substantially different meanings.
Shortest version (in: :
„A few years later, in 1567, Pope Pius V cancelled all grants of indulgences involving any fees or other financial transactions”
What infuriated the people at this time, and Luther, was the SELLING of indulgence, even for dead people, and for any (?) serious crime.
And up to this moment, I also thought that this has ended, long ago. I just became aware of seeing a sign in a church in Breslau, Summer 2005, still doing that. I only remembered it for one of the few signs with reasonable English and German wording : – ) Attracting Tourists looks different.

b) Luther and the whole reformation thing
If it wouldn’t have been for the printing press from Gutenberg (only this one time, in a in general excessive way, because of the discussion above: In general I expect people here to look up the relevant wiki for themselves) Luther may have ended up like Jan Hus and so many before him, the leaders of a “social riot” or “heresy” burnt at the stake by the Catholic Church, the rest forced to repent, or summarily, genocidal killed (Waldenser (interesting point in, they show up as the largest non-catholic denomination, Albigenser, … ). But this time was different, people discussed the theses, they could read. Luther also translated the bible into German, and that was somewhat the end of latin as the lingua franca. From that on people could and did contradict a catholic priest and other “authority” with “but my bible says”. We see this as a transformative event, not only for Germany, Protestants, but for all mankind.

c) When I think about your apparent knowledge of Martin Luther, it might be appropriate to provide as a suitable link to what I hinted to with mentioning Pope Benedict XVI and Paul Feyerabend.

d) I was not me, who brought up the divisive issues Roman Empire, and the state of the Catholic Church around 1500. But I find it very remarkable, how close the geography of reformation states resemble the area, which the Romans did not subdue, 1500 years later. In Europe in general, and in Germany often even down to the county level, despite 1500 years of moving boundaries, kind of at least every 100 years.

And again, how close that is, now 500 years later, to which European countries are now in financial troubles.

2. Irish Banks / Germans
If somebody here has a proposal, how we can make this a editable left/ right comparison of the German / Irish version, I would be very interested.

Apparently we have different opinions /information about what this situation is. To cite the Kant, you mentioned, “Enlightenment is man’s emergence from his self-incurred immaturity.”

Let us therefore go into a little more details of the different views of Irish debt. May I start with a German view, probably easier, since I know much less and also see this a little more from the outside and in general.

a) Pre 2007
Ireland had a hell of a property boom in the decade after 1995, fueled by cheap credit, financial deregulation and a seemingly unending economic boom, 6 % real and 4 % inflation. You were not alone with this, the US and all “late comers” in Europe had it, and if you read Reinhart/Rogoff “This time it’s different” or “the equity culture”, look at private debt in South Korea at 160% GDP now, this bubble at the end of a long boom is the norm, and not the exception.

b) 2007
The bubble did crackle in 2007, for everybody to see in the US with the famous Case-Shiller Index, and for Irish Regulators in July 2007. Even the very lax Irish rules were broken.

FINTAN O’TOOLE: “The finance manager who tried to play by the rules”

„CATASTROPHIC as this week’s banking bailout figures are, they could actually have been much worse. It is a matter of sheer luck that in 2007, before the credit crunch, a Dublin-based bank called Depfa was bought by the German financial group Hypo Real Estate. Very few people in Ireland had ever heard of Depfa. Although it was as German as sauerkraut, it was actually the largest bank in Ireland – bigger than AIB. It was, in legal and regulatory terms, an entirely Irish company. When the financial crisis unfolded, Depfa brought down Hypo. The cost to the German government so far is €102 billion. The IFSC, where Depfa was based, provides 25,000 jobs, and at its height brought in well over €1 billion a year in taxes.”
(I have the original post, I became aware of that April 2010 story only in December 2010, the acronym for Hypo Real Estate is now HRE. And it is liked as the plague in Germany and associated with Ireland)
In August 2007 the Irish “Conduits” of publicly owned German banks, like “Sachsen LB”, , (again excessive English wiki links, to make sure, we are on the very same page)
It was the German taxpayer, who had to bail out the consequences of lax or non-existent Irish financial supervision. Dependent on who calculates that how, I got indirect, via the state, some 2 – 10 thousand Euro debt to pay, for, as I see it, Irish reasons.

c) 2008
The bursting real estate bubble unfolded, most visible to most of us in the US.

At a time, most Euro country CDS were in the very low double digits, if they existed at all, I don’t have numbers for Ireland, just for Greece and Spain, before Lehman Brothers 13.10.2008, the Government of Ireland surprised the Rest of the World with

From various posts in the “”

“Ireland announced yesterday that the state would safeguard all deposits, bonds and debts in six banks and building societies for two years following a huge share sell-off on Monday.”

“In the short but eventful history of the credit crisis, there has never been anything quite like the Irish government’s {promise to guarantee all saving deposits at its six retail banks}.
The implications of the move have stunned City analysts, even those battle-hardened by the collapse of Lehman Brothers and the nationalisation of two UK banks.”

“So has the Celtic Tiger blundered into an elephant trap that makes the US Congress’s cackhanded performance over the $700bn Wall Street bailout look like a minor indiscretion?”
From that moment, the Republic of Ireland is on the hook, a default of Irish banks became a default of Ireland in total.

My questions:
a) Where was the hand of somebody outside Ireland in this? And why should another European taxpayer, specifically me German be responsible for this ?
b) What was the financial position of German banks, in detail, if possible, please, in Ireland before that 09/29?
c) Where do see Irish people, when and why other taxpayers should get on the hook for unilateral moves of the Republic of Ireland.
I leave it here so far, before it becomes too long. Please comment, fill in the blanks I don’t know.

d) 2009
e) 2010
f) 2011 –

As long as we don’t get all the facts known to each others, and how we see this from different nations angles, we will only get into more national resentiments, which will then end in national hatred, as usual in Europe, as long as we have written history.

The originally intented 3rd part of this, we might write together, after getting through some more parts of the very recent financial history.


I found that question more effective than “Test, Test”, especially when I know, I hang “in moderation” for providing multiple links, what is, in general, a useful rule.

After the repeated offensive comments from Bond- Eoin Bond, I was tempted to just let it go. But I refuse to believe that a majority here is like him.

But when I realized what Mickey Hickey, despite his German relatives, knows about the times of Martin Luther, most likely very similar to most people here, I felt I have to take back my “shameless lies”, because that requires knowledge and intent. And then I actually forgot to say this above, requiring this additional post.

Beyond that, people like me thought, that the internet would have a similar transformative quality (technology, information, political) like Gutenberg/Luther, making it much easier to exchange precise information and opinion, in an instant around the world, making it harder for hardened, isolated viewpoints within single nations and/or subgroups. Unfortunately I dont see this so far, it worries me a lot, and is one of the reasons I read and comment here.

re Genauer
”My questions:
a) Where was the hand of somebody outside Ireland in this? And why should another European taxpayer, specifically me German be responsible for this ?
b) What was the financial position of German banks, in detail, if possible, please, in Ireland before that 09/29?
c) Where do see Irish people, when and why other taxpayers should get on the hook for unilateral moves of the Republic of Ireland.”

I only visit here from time-to-time, and missed your posts.
But on the offchance you re-read these threads, as I sometimes do….

(a) It has come to light since the guarantee that the govt. were in full communication with the ECB, and it has been alleged by ex-minsters & TDs that the ECB demanded that ‘no bank be allowed fail’ for the implications that this would have on the european banks that had over-extended themselves through Anglo-Irish. There was communication with european finance ministers, too, at the time. All this was denied back then.

(c) I would contend that no taxpayer be penalised, in Ireland or europe. The banks should have taken the hit they deserved, with only deposits guaranteed.

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