Tall Ships and Sovereign Default

Story here.

80 replies on “Tall Ships and Sovereign Default”

This is nothing short of pure cowboy debt collection. Instead of going to court in Argentina, the US or the UK, Singer’s company has pulled some strings (greasily?) in Ghana and attempted to seize a ship which doesn’t belong to them under any logical interpretation of any law anywhere.

What’s important to understand here is that Financialists are fundamentally poseurs. They bluff and posture, argue and drone, but at the end of the day these people are gamblers who have lost at the casino and who just won’t accept it.

Like a small child whose toys are finally taken away, Singer and Co. resort to petulant tantrums like this stunt. It’s a huge bluff and I hope the Argentine government has the fortitude to call it.

If a hedge fund tries to pull this on Ireland, I would expect no less than a complete response in the form of several men with Shillelagh’s showing up at their New York offices—or better yet outside their parking lot.

My understanding is that this vessel was in Dublin for the Tall ships festival only a few weeks ago. Why did Elliot Capital not petition the High Court at that time?

The reality is that no serious western court would dream of allowing what the court in Ghana has allowed here. The reputation of cities like New York, London or Dublin as safe financial harbours would be ruined if any such seizures of unconnected assets were to be permitted. What money is in Ghana today will be haemorrhaging out come Monday.

Now that the Asgard is gone what is the new name for the Asgard list.
Shylock tends to want his money back- a fact lost on many people . CJH dis not think much of the Argentine fighting spirit- right again.

Very simple solution to this one.
Argentina to announce that the ship will be hit with an exocet missile the next time it enters international waters, regardless of who is on board or who owns it.
That should leave Mr Singer paying port charges for a very long time.


I’m no fan of hedge funds, but why would he not have a case legally – wasn’t the ship ultimately owned by the Argentine government, and he did not accept the offer of 30cents in the dollar etc.? Why would a court not entertain it in Ireland?

The Argies no longer have an airforce due to incompetent governance.Mr Singer has a nice ship.
Argentina was the 8th richest country in the world a century ago but adopted a FF like model of governance. Good result.

Friday, October 5, 2012
Randy Wray: The World’s Worst Central Banker

Yves here. I guarantee some readers will recoil at Wray’s refusal to depict inflation as Economic Enemy Number One. Even if you think his praise of the central banker in question is overdone, consider: would you rather be an ordinary worker in her country, or in, say, Ireland, Latvia, or Spain right now?

Well, here’s the deal. The head of the Argentine Central Bank—Mercedes Marco del Pont–has been awarded the distinction as “the world’s worst central banker”. By whom, you might ask? Well, by Wall Street’s sycophantic press. Wall Street hates Mercedes. The woman, not the car.

Why? Well, for one thing she’s a woman. Wall Street hates female heads of central banks (take a look at the list of the top ten worst—3 out of 10 are female; then take a look at the 10 best, of which all but one are males.)

But that’s not anywhere near the most important reason. Ms. Marco del Pont kicked off the conference with a rousing talk, defending her central bank’s recent move away from a single mandate (inflation target) to pursuit of multiple mandates: financial stability, employment creation, and economic development with social equity.


I’m no fan of hedge funds, but why would he not have a case legally – wasn’t the ship ultimately owned by the Argentine government, and he did not accept the offer of 30cents in the dollar etc.?

Because the Argentines defaulted. He was made an offer, he didn’t take it, he lost his money. End of story. The ship wasn’t collateral for anything.

Why would a court not entertain it in Ireland?

For the same reason they wouldn’t entertain it in New York or London; he doesn’t have a case. If he’s owed money, he can go looking for money. He’s not owed a ship or anything else, and if he thinks he can just go around and seize any of his debtors property that he pleases, I hope he gets what’s coming to him.

The Argentinians are not virgins when it comes to bribery. A counter offer will be made and after some negotiation will be accepted. The police and armed forces in Argentina are incorruptible, it is no Mexico.

I greased the way with a few cases of Scotch and cartons of cigarettes in Lagos once. An hour or so later the upper management showed up to ascertain the amount I had gifted them. At first I thought bribery was coming under control. I was quickly disabused of that notion when they made it clear to me that the officers had not fairly shared the “gift” with their superiors.

We have lightly disguised bribery in Ireland but we are not rotten to the core like some countries.

We have lightly disguised bribery in Ireland but we are not rotten to the core like some countries.

I completely disagree.

From tall ships to tall tales.

Just saw Enda Kenny’s mug on the cover of ‘Time’ with the headline: ‘The Celtic Comeback’ on a newstand at Schipol.

Wolfgang Schauble on Friday in the Wall Street Journal was claiming that the ‘treatment is working.’

He said Irish unit labour costs had fallen 12% since 2009 –really?

Kenny must be as pleased as punch with the continued conflation of the FDI sector with the rest of the economy.

This enduring fairytale that is bought by suckers overseas has of course a negative feedback loop on two scores:

1) Shur aren’t we doing grand and why risk any big changes at home?

2) Herr Schauble: Why do they need our money when they’re scoring so well with exports and falling costs?

@ Obsessive

Argentina was forced to issue lots of debt governed by international laws, precisely because people realised they probably weren’t trustworthy enough to adhere to their own domestic laws and would simply change them if things got difficult. What Singer is doing is not about the value of the ship (it’s meaningless vs their debt), but about sending Argentina a message that if they issue debt governed by international law, creditors have many avenues with which to chase that debt. It’s as simple as that. Singer is no angel, but the Argentinian government sure ain’t one either. Sovereign states have to hold up their end of the bargain if they want markets to play nice with them.

I don’t know why people have a problem with this. This is what happens when sovereign governments borrow money.
Look – a country is like a company with conscripted shareholders who have unlimited liability and who get the chance to choose a board of incompetent narcissists every 4 years. It should not be let next or near money lenders.
The price of democracy is not eternal vigilance – it is a law prohibiting governments from borrowing at all.

You might be right. However , when you ask me to choose between your obsessive negativity on every thing green and Wilbur & Mikey who have put cash on the table, I will go the pros.
You were right as the bubble inflated and a lot of you say is still right to a point. However, there are some early signs of improvement that should be noted- current a/c balance, limited access to debt markets, FDI flows, flattening out in the public finances, a promise of a deal in debt.
Of course it all go pear shaped but your blindness to progree intrigues me.

@ All

Tháinig Long ó Valparaiso – Pádraig de Brún 1889-1960

Tháinig long ó Valparaiso,

Scaoileadh téad a seol sa chuan,

Chuir a hainm dom i gcuimhne

Ríocht na Gréine, Tír na mBua.

“Gluais,’ ar sí, ‘ar thuras fada,

Liom ó scamall is ó cheo,

Tá fé shleasaibh gorm Andes

Cathair scáfar, glé mar sheod.”

Bhíos óg is ní imeoinnse,

Am an dóchais, tus mo shaoil,

Chreideas fós go raibh i ndán dom

Iontaisí na ndán ‘s na scéal.

Ghluais an long thar lintibh mara,

Fad ó shin is a crann mar ór,

Scríobh a scéal ar phár na hoíche,

Ard i rian na réaltean mór.

Fillfidh sí aris chugam áfach;

Chífead cathair bhán fén sléibh,

Le hais mara na síochána –

Creidim fós beagnach, a Dhé.


‘an outstanding artlcle by Stephen Collins …’: I MUST READ THIS

‘Another important piece of information when it comes to the budget jigsaw is that Ireland has the most progressive income tax system, including social insurance contributions, in the entire EU.

This again is not something that the average voter would glean from most political debate. The information was contained in a recent assessment by independent think tank PublicPolicy.ie.’

Collins takes this as FACT – the most progressive in the EU!

Much I agree with in Collins article but NOT THIS ONE from a right of centre free_mawrkett think tank.

@Brendan Walsh

You are on the board. Do you stand over this assertion?

@Peter Clinch
You are on the board. Do you stand over this assertion?

@ All

Courtesy the wonders of the net, the original;

Oliver St John Gogarty’s ‘The Ship’

A ship from Valparaiso came
And in the Bay her sails were furled;
She brought the wonder of her name,
And tidings from a sunnier world.

O you must voyage far if you
Would sail away from gloom and wet,
And see beneath the Andes blue
Our white, umbrageous city set.

But I was young and would not go;
For I believed when I was young
That somehow life in time would show
All that was ever said or sung.

Over the golden pools of sleep
She went long since with gilded spars;
Into the night-empurpled deep,
And traced her legend on the stars.

But she will come for me once more,
And I shall see the city set,
The mountainous, Pacific shore –
By God, I half believe it yet!


It cost Joe Kennedy $75,000 in 1957 to have Senator JFK on the cover of Time magazine. I’ts rumoured the Fine Gael landlords Association ponied up the money–as a thank you for the u-turn on the upward-only rent reviews.

@ DoD,

There are no shortage of pundits who are plugging their own agenda.

Reading some of the recommendations by TASC, NERI institute and so on one would think there is no personal income taxation at all in Ireland.

I have traveled extensively during my time, and on meeting various people I got to talk to them about taxation matters, cost of living and so on. Comparing taxation rates is not easy, due to different bands and allowances etc, but in my opinion, Ireland is very much a progressive taxation society.

But for the begrudgers out there, even 99% marginal taxation on income above 32K is NOT progressive enough.

When you get grossly misinformed far left organisations pontificating black propaganda, it is inevitable that the right of center become mobilized to give balance to the debate.

As for me, I have given up caring at this stage, this crisis is a wasted opportunity, it’s just about slashing / burning of services, gross incompetence, wastage of public money, and the Dept of Finance moving from highly progressive taxation to considering issues of financial Sadism against the middle class.

I really am sick of it. I would advise all young people, and those who can to get out of Ireland, this country has NO future.


The crowds at the RDS today seeking opportunities in Canada appear to be following your advice.

Sovereign states have to hold up their end of the bargain if they want markets to play nice with them.

They’re “Sovereign” states. It past time that the “The Markets” learned the meaning of that word.

@ Tullmcadoo

You might be right. However , when you ask me to choose between your obsessive negativity on every thing green and Wilbur & Mikey who have put cash on the table, I will go the pros.

There’s a touch of Bertie Ahern and William Shakespeare about this comment – – ‘every thing green’? Talking down the country eh? Yes as regards people who are greenhorns when it comes to spoof.

Of course people would remember what is negative relative to their perceptions and ignore positive points.

It was foolish also to have been sceptical about rosy recovery scenarios. Maybe not so now?

It’s not difficult to be perceived as negative when querying what is generally accepted as fact.

You refer to ‘FDI flows’ – – that was surely a good headline this week? “US investment into Ireland in 2011 amounted to $30.5 billion, up 9% on the previous year and was the second highest level of US investment in Ireland on record…Amazingly, what US firms invested in Ireland last year was greater than total US foreign investment in developing Asia combined (roughly $23 billion).?”

Finfacts did not report on the US Chamber’s report that was launched by Minister Bruton because it was grossly misleading. It was of course good news. The minister endorsed it and the big media fish reported the claims.

The term ‘flows’ implies that x amount of money is transferred for investment but that is generally not the case. It would surely have boosted reported growth when total fixed capital formation in the national accounts fell almost €3bn to €16bn in 2011.

UNCTAD, the UN agency which has a section that tracks these issues and it uses fDi, a unit of the FT, said earlier this year: “Ireland witnessed a large increase in FDI flows due entirely to equity and debt movements in the financial sector.”

The total global figures for Ireland are at about one-third of what is claimed above.

We are back to tax strategies.

‘US firms invested in Ireland last year’: some did but part was retained earnings and related rising cash balances (not investment). A big chunk related to fiddling with services accounting.

So Mr Tull, you hardly missed other good news this week: a wind energy group says 30,000 jobs could be created in a decade; the VC industry group presented a plan to the Government which claims 20,000 jobs could be added in a decade – – all looking for more public money and tax breaks. These are claims made just in recent days.

It’s not that we are short of tax breaks or more schemes than people know about, but there is certainly need for a reality check that is not done by vested interests or fantasists.

Sometimes it’s instructive when policy makers do not have important information to hand (assuming that it is not being withheld).

Was reported higher business spending on R&D mainly triggered by the R&D tax credit where applications have jumped in recent years or actual innovation? One useful metric would be the rate of application rejection. Wonder how easy it is to get information like this?

“I will go the pros” — it’s good to be with the crowd!


“They’re “Sovereign” states. It past time that the “The Markets” learned the meaning of that word.”

Fine. Then don’t try and borrow from international investors, using loans backed by international laws. Borrow from your own domestic investors, using your own sovereign currency and governed by your own sovereign legislation. But this is the problem for them, no?

Dear Mr. Corcoran,

thank you very much for bringing this information to my attention.

Klaus Regling
From: john corcoran [simonhart@eircom.net]
Sent: 11 December 2010 10:58
Subject: A Preliminary Report on the Sources of Ireland`s Banking Crisis-May 2010

Dear Mr Regling

I recently read the above report produced by you and Max Watson. I
suggest ,and I may be wrong , you may have overlooked an important
feature of the Irish commercial property market which is unique in the
eurozone area, namely the ratchet upward only rent review (UORRs)
commercial lease clause.

Commercial lease lenghts in Ireland are longer than all other eurozone
countries, twenty five years ,with five yearly upward only rent reviews
and usually no break clauses. UORRs incentivised high rents and
were the rocket fuel for the valuation model for commercial property
asset pricing. In contrast all other eurozone countries have
short leases with consumer price indexed linked rents and frequent break
clauses eg the French 3/6/9 leases with breaks in years 3 ,6 and 9.

I am a tenant in a retail shop on Dublin`s Grafton Street. When I
entered the lease in 1995 there was twenty five years remaining on a
thirty five year lease which began in 1985. In 1995 the rent was 140,000
euro per annum, in 2000 it was increased to 211,000 euro and in 2005 in
was further increased to 445,000 euro per annum. During this period
1995 to 2005 the rent increased 318% ,whereas general inflation during
this period was 35%. Investment yields for Grafton Street freeholds
were 2% during this period.

I sincerely believe Irish banks lent recklessly,with 100% LTV loans ,to
commercial property developers and speculators because of these
notorious UORRS leases. On the 1st March 2010 the Irish Government
banned the upward only rent review clauses in all future commercial
leases. I would be happy to discuss this issue with you
anytime. My mobile is 00353872587634 .

Yours sincerely
John Corcoran
M.Sc. Economics-London School of Economics and Political Science

Grafton Street Tenants Association

A bit off topic …but interesting article in the Sindo on the AIB hike which contains this gem..

“The Government claimed that it could not question AIB’s decision because of the relationship framework it entered into with the bank in March, which does not allow it to intervene in the day-to-day operations of the bank.”

Now what happened to shareholders rights. Get 20 billion and then enter into a “relationship framework” so your shareholders cannot interfere. This sounds like Croke Park for banks. Wonder if they have “relationship framework” agreements with the other State owned or rescued banks?


Imagining the reinvention of democracy

WORLD VIEW: Is the age of party democracy over, as the late scholar Peter Mair argued?

ROLLING PROTESTS in Spain, mass demonstrations in Portugal, Italian trade-union strike threats, continuous street politics in Greece, and a rapid-fire online rebellion in France against a new tax on small-business innovation.

These recent events all point to great turbulence in European politics, which is confronted with the imperatives of imposed austerity within the EU and the question of who should bear its costs. Can domestic politics take the strain or will electorates revolt? Might that take a populist turn? What effects do wider changes in the quality of party democracy have on these developments? Are governments capable of combining responsiveness to the voters who elected them with responsibility to implement agreed policies?

Or is democracy being eroded and hollowed out at national level without being adequately compensated elsewhere in the multilevel political systems we now inhabit in the EU?

These questions were considered last week at a conference in Florence at the European University Institute in honour of Peter Mair, the Irish political scientist who taught there until his sudden death last year. It is a tribute to his international standing and influence as a writer on European political parties and their democratic role that such issues can so readily be framed in terms of his research and theories.


Sunday, October 7, 2012

“What if the Global Financial Crisis is Permanent?”
Yves here. I’m featuring a MacroBusiness post, “What If the GFC is Permanent?” despite its being a bit meandering, because it asks some Big Questions, and therefore will give readers something to chew over.

The headline doesn’t quite get at what the post is about. Its focus is a recent paper by Robert Gordon questioning whether growth is over. I’ve read the underlying paper; MacroBusiness’s relies on a comment by Martin Wolf that discusses it. Key sections of its abstract:

There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely. Rather, the paper suggests that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history…

The analysis links periods of slow and rapid growth to the timing of the three industrial revolutions (IR’s), that is, IR #1 (steam, railroads) from 1750 to 1830; IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and IR #3 (computers, the web, mobile phones) from 1960 to present. It provides evidence that IR #2 was more important than the others and was largely responsible for 80 years of relatively rapid productivity growth between 1890 and 1972. Once the spin-off inventions from IR #2 (airplanes, air conditioning, interstate highways) had run their course, productivity growth during 1972-96 was much slower than before. In contrast, IR #3 created only a short-lived growth revival between 1996 and 2004. Many of the original and spin-off inventions of IR #2 could happen only once – urbanization, transportation speed, the freedom of females from the drudgery of carrying tons of water per year, and the role of central heating and air conditioning in achieving a year-round constant temperature.

Even if innovation were to continue into the future at the rate of the two decades before 2007, the U.S. faces six headwinds that are in the process of dragging long-term growth to half or less of the 1.9 percent annual rate experienced between 1860 and 2007. These include demography, education, inequality, globalization, energy/environment, and the overhang of consumer and government debt. A provocative “exercise in subtraction” suggests that future growth in consumption per capita for the bottom 99 percent of the income distribution could fall below 0.5 percent per year for an extended period of decades.

Read more at http://www.nakedcapitalism.com/2012/10/what-if-the-global-financial-crisis-is-permanent.html#PGVW0cjxZVBU4Ck0.99

@Brian Woods Snr
Your cup of tea?

@ D’OD: Yes. Thanks. I am no longer commenting- its a pure waste of time on this site. And that article was the ‘good news’.

Fine. Then don’t try and borrow from international investors, using loans backed by international laws. Borrow from your own domestic investors, using your own sovereign currency and governed by your own sovereign legislation. But this is the problem for them, no?

No. It doesn’t matter whose laws they borrowed under. They are sovereigns. Sovereigns. Look it up.

@ Fiatluxjnr

Joseph Quinlan was commissioned by the Irish unit of the US Chamber to write the report I cited.

So profitshifting etc does not exist and these ‘amazing’ comparisons with big countries, in particular the rise in the value of US FDI in Ireland since 2000, should be taken seriously!

So why are jobs in FDI firms in Ireland at a 1999 year low? — some might consider that negativity but propaganda from ‘important’ sources has a big audience of suckers, including policy makers.


“No. It doesn’t matter whose laws they borrowed under. They are sovereigns. Sovereigns. Look it up.”

So your understanding appears to be that sovereign states do not have to adhere to international law, or respect the property rights of individuals from other jurisdictions over contracts governed by other jurisdictions? Can sovereigns kill people in other jurisdictions with impunity too?

By the way, i did look it up, and of course you are completely incorrect. You should read both the link below, as well as the posting about the Greek Debt Exchange Autopsy, in terms of domestic law bonds vs international law ones (which are still ‘live’). A little education can really open your eyes.


BEB: “Can sovereigns kill people in other jurisdictions with impunity too?”

Sadly, yes. I could create a very long list indeed if I resorted to Google, but off the top of my head: the Duc d’Enghien, Gerald Bull, Georgi Markov. Some, like Osama Bin Laden, are no great loss. Of course no sovereign can kill anyone, anywhere, with impunity. Many states are merely semi-sovereign. Still, I’d advise Paul Singer to mind how he goes if he’s planning to try stunts like this with any of the world’s more bloody-minded rulers.

@Kevin Donoghue

Still, I’d advise Paul Singer to mind how he goes if he’s planning to try stunts like this with any of the world’s more bloody-minded rulers.

Not at all – I encourage Mr Singer to keep pushing. I think the mysterious deaths of a few hedge/vulture fund managers is exactly the kind of morality focussing tonic international finance needs.

In fact it a mystery to me that the lords of finance have escaped without any casualties so far. The law has obviously been warped in their favour but, notwithstanding the coddling given to the financial sector in Europe, sooner or later a hedgie is going to meet a rum end.

There will be many a toast.

@ Shay

you seem to have a rather simplistic outlook on HF’s and the people that run them. If a hedge fund was screaming, to anyone who’d listen, about how bloated house prices and the financial sector was in 2007, and subsequently took on investments which profited from the collapse of the housing market and banking sector, would you have a good or bad view of them?

@Bond Eoin Bond

If a hedge fund was screaming, to anyone who’d listen, about how bloated house prices and the financial sector was in 2007, and subsequently took on investments which profited from the collapse of the housing market and banking sector, would you have a good or bad view of them?

Elliot Capital does things that I think most people would be comfortable classifying as “evil” and Singer’s insight about the danger of CDOs and the housing sector does not make up for what he does.

This aspect of international finance, the combination of access to capital and legal expertise to exploit the weaknesses of vulnerable countries and entities, is a shameful, shameful thing and the fact that it is considered a normal aspect of financial sector activity is one of the many reasons that the financial sector is in such disrepute.

@Bond Eoin Bond

Singer has also been at this particular game for a while and his targets have often been less first world than Argentina.


And Peter Singer was one of the original innovators in the area of using cerditor friendly international law and private capital to extract money from countries already in severe financial trouble.

From http://www.democracynow.org/2007/2/15/vulture_fund_company_seeks_40_million

Greg Palast said:

Here they are feeding on poor nations all over the globe. 36th floor, Elliott Associates, home of billionaire Paul Singer. Singer practically invented the vulture fund. In 1996, he bought up some of Peru’s debt for $11 million, then threatened to bankrupt Peru if they didn’t give him $58 million. He got his $58 million. Then Singer bought some discounted debt from Congo Brazzaville for only about $10 million. His company then sued the Congo and turned the $10 million into $127 million.

Paul Singer is a moral black hole of a man operating in an area of the financial sector that is, if one were prone to religious thoughts, sinful.

This is not a man or a business you want to be associated with.

@ Shay

in all those situations the debt in question was governed by international laws – which goes back to my very basic point that if sovereign wants to borrow on the international markets, they will have to adhere to international laws and obligations. As your link aptly shows, its not their like there isn’t any history or precedent for this. However, it was rather disingenuous of you to not link to this story, which gives the actual outcome of the Liberia case cited in your case, and shows how countries genuinely undertaking economic and social reform can work to get international laws changed in their favour. The continued mismanagement of the Argentine economy by the Argentine government is probably a reason no one seems to put out by Elliots conduct in this situation.


@Bond Eoin Bond

The continued mismanagement of the Argentine economy by the Argentine government is probably a reason no one seems to put out by Elliots conduct in this situation.

The financial sector’s fundamental inability to come to terms with (or even acknowledge) the moral aspect of their activities is the reason “no one” is upset by Elliot’s practices.

Singer is a bad, bad individual working in a legal but fundamentally immoral sector of the global financial system. The legality of the actions he undertakes and the international legal framework we currently operate in is a huge part of the continuing global financial crisis.

Until bad investments are forced to be written off how can we expect the financial sector to fulfil its supposed purpose of helping to efficiently allocate capital?

@ Eoin Bond
“Can sovereigns kill people in other jurisdictions with impunity too?”
It is actually a scary thought that people that have as much power as you have so little knowledge of basic levels of geo politics.
Willful ignorance in the extreme.
One word, Drones.

I am guessing that when Ireland was able to purchase government debt it is subject to these same international laws?
The vast majority of countries have no means of being able to generate funds for all the loans they need from within their own boarders.

These vulture funds are an attack on democracy.
Enjoy defending the indefensible all you like.

re- Shay ”Elliot Capital does things that I think most people would be comfortable classifying as “evil” …”

Looking at those cases reminds me of the voices that once warned that not only was it morally reprehensible for the developed world to ignore or condone these practices, but that the tacit acceptance of them would sooner or later result in becomming the recipient of similar treatment as it becomes virtually de rigeur.

Something to be borne in mind when european financial and political drones eye up the Chinese systems so admiringly.

@ Michael Hennigan

I don’t know if you heard the interview between Nora Casey and the publisher of the American chamber of commerce report on Newstalks breakfast show last week.
It was a beauty.

She started asking him about tax rates and the author had to admit that they had made no attempt to establish the effective tax rates paid.
It became clear to anyone that was listening that the report was a mere PR stunt.

@ Bond
There are other laws which cannot be ignored – the laws of nature. If you acquire vast amounts of wealth at the expense of others you had better prepare to defend it with force. It is unfortunate that when great imbalances in wealth occur there is a righting mechanism which tends to be violent and awful for all concerned.
Man made laws are subscribed to as long as they are a scaffold supporting most people. When they become tools of oppression the nature of society changes – it inevitably becomes more militarised.

re DOCM: ”Regling ventures the opinion that Ireland would no longer be in the euro were it not be for the existence of the EFSF.”

The referendum would have failed, a process of disentanglement from the euro and further committments to follow ?

I think the obvious consequences are more that people do not lend any more to countries, which default, or only at extremely high rates. That then does not only involve the government, but also corporations, importers, exporters, private people, if their assets can be effectively seized by their government, as it happened in Argentina, repeatedly.

Lookup 10 year rate at the economist,
at what rates countries like Brazil and Mexico can borrow now:

and some analysis of permanent capital flight from argentina

What something like Krugman does, is to lure people into some short term myopic “what can they do to us now”, willfully forgetting the long term consequences, companies cut out of the supply chains, demanding up front collateral on contracts. Transport has got a lot cheaper and faster, the benefits of global integration, and that makes other factors, especially risk of all kinds, relatively more important.

I am not aware that any economic sanctions were in place against Argentina after 1983, after all, they screwed only US banks.

During the years after 1983, the GDP per capita of countries like Ireland and Greece grew by factors like 3 – 5 , compared to argentina 20%, if at all, after proper, not government, inflation accounting.

@ Eamonn

“One word, Drones.”

Drones currently being used in Afghanistan are covered by UN resolutions and by agreement with the Afghani government. Drones being used by Pakistan are governed by agreements made with the Pakistani government. Again, the very simple issue here is that the people in charge of making the laws (ie the local government’s) have agreed to their usage. Argentina is essentially faced with the same problem, but from the other side of the coin – they are not in control of the laws being used against them, just like Al Qaeda are not in control of the laws being used against them. By “with impunity” i meant that with no regard for the law of the land.

“I am guessing that when Ireland was able to purchase government debt it is subject to these same international laws?”

Here’s the situation with Ireland – all our government bonds are covered by domestic Irish law, something which makes us relatively unique amongst the periphery EU countries, and something which only came about because of our respect for the rule of law and the strong protections for individual rights contained in our constitution. This issuance under domestic law is why Greece was able to agree a large debt writedown in very quick time with its creditors, and why their international law bonds will likely be the subject of court cases for years to come. Probably best to save the ‘wilful ignorance’ comments to yourself, no?

@ Mark

I think Regling is undoubtedly correct and that any idea that an exit from the euro would have been an exercise beneficial to Ireland does not stand up to serious examination.

The question as far as Ireland is concerned is essentially one of governance; how we got into the mess we are in and how we propose to get out. I am not normally a fan of Fintan O’Toole but he dealt with the issue in a recent commentary.


He overdoes it, in may opinion. Ireland has many faults but by and large the country compares well with others in the so-called corruption league tables. This extract, however, stuck in my mind in relation to the understanding that Irish politicians have with regard to sovereignty.

“Becoming The Machine also means that you don’t have to worry about the freak-show of the banking disaster, mass unemployment, emigration and growing inequality. The Machine runs on the small stuff of personal and local patronage. It is entirely indifferent to national misery – indeed, the more miserably dependent people are, the more they think they need The Machine. The beauty of it all, indeed, is that you don’t even need national sovereignty – the local is all, Home Rule is fine.”

Home Rule is, indeed, fine as far as the bulk of them are concerned. They simply do not have either the “formation”, as the French put it, or the vision to act in any other way. The radical nature of the crisis has not been matched by the necessary level of radical reform. And the traditional safety valve of emigration may, or may not, allow this situation to continue.

There was a delightful momemnt on the Marian Finucance radio show yesterday when a youthful Paddy Cosgrave, founder of the Dublin Web Summit, zeroed in on the age of the rest of the panel and the contrast between the level of education of its generation compared to that of those now forced to emigrate because of the failure of the elders to come to grips with a crisis largely of their making.

We shall see what happens!


I think Regling is undoubtedly correct and that any idea that an exit from the euro would have been an exercise beneficial to Ireland does not stand up to serious examination.

Why it could be as disastrous as not returning to the gold standard!

The question as far as Ireland is concerned is essentially one of governance; how we got into the mess we are in and how we propose to get out.

How we got in to the mess would be market liberalism, the European component of the global financial crisis, and the behaviour of the ECB over a period of nearly a decade.

Why we cannot get out would be the structure of EMU, the coddling of the financial sector and Germany’s sado-monetarist political culture (which has a domestic social rationale).

Is that so difficult really?

I think it is time for a littleUpton Sinclair:

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

If I understand you correctly, I agree that our political class are quite fine with surrendering their power to Brussels, or Berlin – does it, in fact, give them greater freedom than obedience to the obligations existing in a democratic republic ?
I guess that we are at odds in a very entrenched way about the EU.
My own position is not one of uber-nationalism or anti-europe, but I am thoroughly convinced that the movement away from a democracy that rises from it’s local environment and does not seek to extend it’s sway beyond this.
‘Europe’ is far more of an abstract proposition, and in the same manner, for those who find the concept of ‘Ireland’ a surrender to an oppressive group-think for which they may not necessarily feel a strong affinity.
In the economic sphere there may be many who’d recoil from this, but at the end of the day we need to mould these artificial systems to serve our societies, and not mould society to an economic template.
‘Europe’ should begin, and end, as the conduit of our co-operation & interpenetration, while remaining seperate and discrete entities.

We should, in fact, be moving towards a greater devolution of democratic power, as Iceland is forging at the moment.


in your link, from somebody who doesnt speak at all for the UN or any legal body, but just some private opinion of some grad student from a 3rd tier university , or do I miss something here?

I do not find any mention of what is permissible to do to a sovereign bankrupter. Which, in classic interpretation means, anything goes, or ?

@ Genaeur

The point of that link was to show that sovereign states have obligations and must follow laws, much like the rest of us. Just like us, there may be recourse available for some sovereign state not adhering to its obligation. There was a rather simplistically naive assumption above that sovereigns can just do what they want. I believe the retort was “they’re called sovereigns for a reason, look it up”.


I might have mixed that aspect with some other comments here,
some folks here thinking that Irish law would protect an Irish “sovereign” in any way from the collectors. Silly thought.

A German liquidator put the aircraft of some Thai prince on the chain, until Thailand paid its debt to a private German company

Maybe that is even some more convincing than a student opinion or a court in Ghana. Wanton bankruptcy is a very serious crime, could get you in jail for up to 10 years

@ Bond
Don’t pretend right or wrong comes into this. Law is one thing – right and wrong is another.
This man has taken a risk on the part of the financiers. It’s a very dangerous game

Off course you are right. But you also appear to have forgotten your own history . The great powers imposed intolerable burdens on Germany post WWi which lead to 1933 by a circuitous route. In contrast post WWIi pragmatism won out with debt forgiveness and slate cleaning- no Morgenthau plan.
Yet many in Germany appear to want to follow Versailles rather than the post WWII enlightenment.

Surprised people still don’t get this. The logic goes like this:

If you, as a foreigner, buy a bond governed by domestic law of the issuer, you run a risk that if the debt sustainability starts to look dodgy, the local law could be altered against your bonds. So you ask a higher yield on the bonds before you can justify buying them – how much higher depends on how likely you think that occurrence is.

(Ireland has generally been assumed to be very unlikely to do so and has not had to issue under English law to get lower yields).

If you, as a foreigner, don’t trust the local law that much, and enough fellow investors share your distrust, the country may have to issue bonds say, under English law, which is generally considered OK. This may tempt you to buy bonds, on the basis you are less likely to be told to PFO via a change of domestic law.

Were it the case that a sovereign would be unaffected by breach of obligation under English law, then issuing bonds under it would have no effect in inducing lenders to buy the bonds – so more countries would be unable to borrow on international markets.

Not accepting the credit of a country in a spot of difficulty has a long tradition. British currency for example was not accepted by Icelanders during World War 2. The British navy would not let them sail past and refuse to land their catches on the way to the occupied continent, so they grudgingly ‘sold’ fish at UK ports – sailing away with trawlers full of goods, no paper money.

@ Grumpy

Finally someone who gets it. The naked contempt for hedge funds (which is such an amazingly generic and multi-meaning word) seems to make allegedly sensible people go insane.

In Ireland the interface between private property and the public sector is where much political corruption occurs. Two examples are the planning process and state commercial leases. The findings of the Mahon Tribunal were–”Corruption in Irish political life was both systemic and endemic”. In the Moriarty Tribunal the findings were ” What was attempted on the part of Mr Dunne and Mr Lowry was profoundly corrupt to a degree that was nothing short of breathtaking”

Former Taoiseach Mr Haughey was a corrupt politician. Mr Haughey needed a million pounds per year to finance his lavish lifestyle. Many of Mr Haughey’s bagmen are state landlords–this was the pay back. Many Irish politicians families,friends and bagmen are state landlords. This is institutionalised political corruption. No other government in the world would sign these ruinous commercial leases. Once the state signed these leases it copperfastened them for all commercial tenants. The sovereign/OPW should have been a price maker and not a price taker. These state leases are sovereign bonds with the notorious ratchet rent reviews attached.These state landlords have bled the state dry using these ruinous commercial leases and wasted billions of Irish citizens money.

The Irish commercial property market is an organised cartel who have imposed the most anti-tenant commercial lease law in the world on all Irish commercial tenants i.e. ratchet upward-only rent reviews tied to long leases. This cartel could not have existed without the state’s collusion. The rent arbitration system is systemically corrupt,where secret agreements,side agreements and other corruption is widespread. We are alone in the eurozone with this feudal commercial lease law. Reckless Irish banks lent tens of billions against these ruinous leases,not against the properties,and created the greatest commercial property bubble and bust in the history of mankind.

@BEB, grumpy, Shay

A too powerful voice ?

THE IMPORTANCE of the International Financial Services Centre (IFSC) to the economy is indisputable. Over a period of 25 years, it has become one of the leading hedge fund service centres in Europe, and many of the world’s most important financial institutions have a presence there. They employ an estimated 33,000 people; pay about €1 billion in corporate taxes each year, with a further €1 billion going to the exchequer in payroll taxes. Small wonder that the sector has a powerful voice at Government.


Let’g give them Vatican Status – €10 billion a year a good deal!


Stop Lying.
Pakistan Publicly condemns these attacks.
Pakistan has never openly agreed to the US Drone strikes in Pakistan.
Its not even the US Army that conduct the strikes its a covert CIA operation.

UN resolutions?
Are we expected to believe China and Russia would pass a resolution allowing a covert CIA Drone operations to take place in Pakistan.
Somalia and Yemen too?
UN resolutions are not even sought.

There are now at least 11 countries with Drones and unofficial figures put the figures at 50 as china are happy to sell them to anyone with the money. Its a brave new world.

@ Eamon Moran

“Stop Lying”

You think Pakistan hasn’t agreed to the drones in private, you know, in return for all the military assistance/cash they receive from the US?

I never said the resolutions involved other countries outside Afghanistan, only their local government cooperation would be required.

You need to read properly, and stop calling people liars. Or else they’ll call you an idiot.


They can call me what ever they like.
It would only matter to me if I valued their opinion.
I don’t value peoples opinion when they are unable to see past their own self interest and are willing to make virtually any argument to protect it.

You are defending the indefensible as far as I am concerned.

@ EM

im trying to explain to you how the world actually works. Not entirely sure how CIA drones or the seizing of an Argentinian tallship are in my “own self interest”, but hopefully one day my position extends to such importance and interest…


You are not just explaining how the world works you were justifying the actions taken above by this well known vulture fund. Actions that people like you have an interest in supporting. In that world sovereignty is to be sacrificed in order to guarantee the interests of entities that prey on weak sovereigns because all written contracts trump the will of a democratic country. Humbly I disagree. But you are correct to say it is how the world works. Your guys are winning. I made the CIA drone comment because you said “Can sovereigns kill people in other jurisdictions with impunity too?” and your implication was that they could not.

The actual answer to that question is that it depends on who sovereign is. That’s the only point I was making.

@ Eamonn

“In that world sovereignty is to be sacrificed”

You genuinely don’t seem to understand what sovereignty actually is. They are legal entities with obligations under international law. They can do whatever they want with their own laws, but not international ones. Thats the key thing to understand.

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