McSharry on Trichet

Former finance minister and EU commissioner Ray McSharry has contributed a chapter to the book of tributes to the late Brian Lenihan (Brian Lenihan, In Calm and in Crisis, Murphy, O’Rourke and Whelan (eds), Merrion Press 2014).

The chapter contains the following complete paragraph at page 111:

‘Brian had been keen to burn the big bondholders and we discussed this on a number of occasions. One morning I got a call about a quarter past eight and it was Brian. He told me that he was able to burn the bondholders and he was very happy because the European Central Bank President, Jean-Claude Trichet, had told him he could do it. This would have improved Ireland’s position significantly and it was going to be a big story, but later that day a now despondent Brian rang me back. He said Trichet had changed his mind because he realised that the main casualty if the bondholders were burnt would be big German and French banks. This was a disgraceful decision because the ECB is supposed to represent the interests of Europe generally, but they were clearly under the sway of the German and French banks. Even today, I still would not have much confidence in the ECB and until Europe gets a totally independent entity to defend its currency, the euro will remain a fragile currency’.

The context in McSharry’s piece indicates that

(i) the conversation took place in the summer or autumn of 2010, as the bank guarantee was coming to an end or had already ended, but prior to the EU/IMF programme, and

(ii) the bondholders referred to were bank, not sovereign, bondholders.

The phrase ‘…the main casualty if the bondholders were burnt would be big German and French banks…’ refers, it is reasonable to assume, not (or not only) to the direct losses that these banks would suffer as holders of the bonds in question (it is doubtful that they were big holders) but to the impact of default or haircuts in Ireland on their continued access to new debt funding from the bank bond market.

This reported conversation goes to the heart of Ireland’s unfinished business with the ECB. It is reasonable for the ECB president to display concern about the continued access of major European banks to important funding sources. Whether it is within the ECB’s powers under the statute to impose on an individual member state the cost of shoring up debt market access for Eurozone banks generally is not clear and will not be clarified until the European Court of Justice rules on the matter. The statute does not contain any explicit provisions conferring such an important power.

McSharry’s report of his conversation with Lenihan is further support for the view, which I have expressed many times, that Ireland should take a case against the ECB as provided for in the ECB statute. This is important for the credibility of the ECB as an independent central bank. Win or lose, referral of the matter to the ECJ would clarify whether the ECB possesses the powers it appeared to believe it had back in 2010. If the ECB can impose costs of policies aimed at stabilising markets across the common currency area on an individual member state it is time the member states knew about it.

Comments

comments

56 thoughts on “McSharry on Trichet”

  1. This story in the Independent about Dr. Honohan’s piece in the book.

    http://www.independent.ie/irish-news/politics/revealed-the-troika-threats-to-bankrupt-ireland-30621197.html

    “The Troika staff told Brian in categorical terms that burning the bondholders would mean no programme and, accordingly, could not be countenanced,” Dr Honohan writes. “For whatever reason, they waited until after this showdown to inform me of this decision, which had apparently been taken at a very high-level teleconference to which no Irish representative was invited.”

  2. Very interesting stuff in the Sunday biz Post today from John McHale about his IFAC outfit’s advice for a E2bn adjustment in the context of an election cycle. Roisin O’Sullivan , also on the council, points out that “we have gap of E7bn between what we are spending an what we are taking and a debt 1.2 times the size of the economy” while elsewhere IBEC have an ad “we can’t make Ireland one of Europe’s most prosperous countries overnight. But how dopes 2016 suit you ?

    http://www.ibec.ie/IBEC/IBEC.nsf/vPages/About_Us~ibec-advertising-campaign-2014?OpenDocument

    I was at the hurling yesterday and noted from the ads on the Hogan stand that

    a) a lot were empty or otherwise bedecked with GAA/GAAgo wording ie not leased
    b) no sign of the banks (still very unwell in their natural home)
    c) prominent companies all either foreign (Liberty, Eitihad)
    or retail (Centra). Liberty took over Quinn and Ethihad will take over Aer Lingus.
    d) basically no non retail domestic firm with the wherewithal

    The contrast between the mastery of the Kilkenny hurlers and the sad state of Ireland inc was notable.

    Reminded me of what the Dork said. Ireland is being farmed.

  3. Whatever the legal posi of the ECB, one thing we can now be fairly sure of, given that we have rapidly turned the corner, is that by and large the correct steps were taken from the guarantee to the bail-out. I don’t think we would be in a better place today if we had taken the nuclear option.

    As to making sure French and German banks don’t go under, that is most certainly in the best interests of Ireland and indeed the EZ as a whole.

  4. I think those bank stress tests will be another cop-out. A lot of regional German banks are stuffed with mispriced piggy sov debt. What sort of maximum loss assumptions will they use ? Political influence like this is really dangerous .

  5. One could also quote this from the contribution of the head of the CB.

    “In terms of market confidence, the die was cast by the Merkel-Sarkozy announcement on October 18 at Deauville to the effect that the holders of European government debt would have to contribute to any bailout. As the financial markets absorbed the implications of this new policy, interest rates on all peripheral government debt, but especially Ireland – now clearly seen as next-in-line for a bailout – jumped to insupportable levels. Now, Irish companies and individuals joined the external investors in removing their funds from the Irish banking system and the need for the protection of official external assistance became acute. Public and semi-public statements and briefings by senior Eurozone officials to that effect added fuel to the fire.”

    Other political players in Europe were reacting to the political clamour in their own countries. That’s politics! The sooner the fact that politics do not cease once Ireland gets involved internationally, and it does not become simply a question of the need to take a legal case on some aspect or other of what was a political crisis of the first order, is recognised, the better!

    It was the entire Irish banking system that was at risk. If the threat of burning bondholders in the future could have such a market impact, one can only wonder what an uncontrolled and disputed decision to actually do so would have had.

  6. Hi Brian, “one thing we can now be fairly sure of, given that we have rapidly turned the corner …”

    Nope.

    “[is] that by and large the correct steps were taken from the guarantee to the bail-out.”

    That’s a relative position. What would have been the incorrect ones – and most importantly, why?

    “[I] don’t think we would be in a better place today if we had taken the nuclear option.”

    I assume you mean refusing to take on the burden of repaying the debts of the private banking sector. If our government had refused. We could not be in default for non-payment? Now could we? Catch-22 esque.

    The very best result would have been for all those incompetently run organizations to have been bankrupted. We would be rid of them by now, and hopefully have a banking system that served the people, not the inverse.

    And as a matter of timing. Surely the financials had already collapsed, or were collapsing by the time the bail-out was demanded. And all that has been achieved is that they have been admitted to the Critical Care Unit and placed on life-support, where they are, by most accounts, languishing in a permanent vegetative state.

    So, all that hysterical nonsense that the global banking system would have collapsed if the First Division of the Celtic Paddies had not ridden to the rescue was just a load of b*ll*cks! The Big Lie abides.

    We were, and are, just a bunch of suckers. Our government bottled. We pay. The counterfactual: the French and German taxpayers were put on the hook. Boy, that would have been some fireworks display.

  7. 100% agree that Ireland should refer the actions of the ECB at that time to the ECJ.Its time to stop rolling over.

    We have been kissing every cheek and rear-end in Europe for the past four four years. To what effect?
    We have got nothing, except a reduction in the bail-out interest rate that was given because Portugal had demanded and got it for themselves. The so-called PN that was hailed as a breakthrough is now being torn up by the ECB; so that the recent agreement to repay IMF loans, hailed as another ‘diplomatic coup’, can now only be done if the ECB gets its way and Ireland stumps up by releasing the bonds into the markets early.

    Interesting interview yesterday with Olli Rehn. One got the impression that Rehn is ready to tell a few tales. He most certainly did not jump to the defence of the ECB in his comments on the matter.

    @Seafoid:
    Good for you to be able to get to hurling.
    Kilkenny did not win yesterday by deciding to stand back and act like a bunch of Mr Nice-guys.

  8. @BWS

    “………………………………We were, and are, just a bunch of suckers. Our government bottled. We pay. The counterfactual: the French and German taxpayers were put on the hook. Boy, that would have been some fireworks display.”

    Well said. One could add that our politicians and negotiators that made us into suckers are still doing rather nicely. None of them down in Werburgh Street or emigrated with their air-fare in their hand.

  9. The gov. is too vulnerable to plámás from the likes of the FT leader page and people in Frankfurt to do anything like take the ECB to court.

    If they had the cojones they could draw attention to the lamentable state of the EZ safety net the next time the markets get a dose of the mercedes bends. The market is actually a risk contagion mechanism.
    We just do not have the regulatory system in place for the current level of deluded optimism about sov bonds.

    The first bank resolution under the next crisis is going to be some show.

  10. @Seafoid
    “I think those bank stress tests will be another cop-out. A lot of regional German banks are stuffed with mispriced piggy sov debt. ”

    I have read, somewhere, that a lot of the smaller regional are not subject to the tests, the rules having been drawn up that way, even though such banks may well be much larger that banks in ‘bail-out’ countries.

    [I think that, as far as the stress tests are concerned, we are still a bail-out country. Not a piece of information that one gets on the top of the daily government press briefing]

  11. Soon
    a) John the Obscure will be here to say that if we only had built more houses and shot Morgan Kelly we would have paid the debt by now
    b) DOCM will link to something peripherally relevant and say that its our fault anyhow
    c) francis will accuse McSharry of being anti German

  12. Sam Macquire,

    since you make, most likely false, claims about me …. : – )

    Did I miss something ?

    Do you see any bad word of McSharry in this post about german individuals, associations, or Germany as a whole? Please tell.

  13. BWII:

    Firstly, I don’t believe its obvious that we are in a better place now than if we had exited the Euro. Places like the UK which have been able to devalue their currencies have had the best recovery (of the private-sector-creditor countries) as far as I can see. Secondly, just as we were in a good place in say 2005, we’re in a good place now* only if you discount the looming problem, which this time is our monster public debt. Granted, this time our downfall isn’t quite as certain and looming as in 2005, but you’d have to be pretty optimistic to be sure that external conditions are going to keep on allowing us to wangle through indefinitely. Finally, as was explained many times at the time, you can be the world’s greatest supporter of indiscriminate EU bank bailouts and still consider that Ireland’s per capita contribution to the rescue of Deutsche Bank and friends was excessive.

    * Of course you’d also have to note that our current growth is catch-up from several years of recession and stagnation etc.

  14. @Sam Maguire, @Colm McCarthy

    Courts tend to use standing to refuse to hear cases like this brought by individuals. And in fact I seem to recall that TFEU explicitly reserves to only governments (and maybe the Commission/European Parliament? I don’t remember) the standing to sue the ECB. (I am not a lawyer.)

  15. Joseph Ryan:

    One could add that our politicians and negotiators that made us into suckers are still doing rather nicely. None of them down in Werburgh Street or emigrated with their air-fare in their hand.

    Be fair now: many of them expect to be working abroad in Europe in the future…

  16. Francis
    You generally seem, apologies if thats not the case, very sensitive to anyone critiquing the ECB and the german influence thereon. Or indeed those that suggest that perhaps Germany could do more to stop the rot.

  17. If the account of Trichet being prevailed upon to change his mind – presumably after a couple of phone calls with people from other EU states, or their banks, or regulators – is true it really does suggest the decision making was chaotic and near-whimsical.

    He who shouts the loudest and all that.

    If so, it emphasises the importance of the lack of an Irish effort to at least look from the outside, as if it had public support for the consequences of “playing hardball” (remember that term?). The Irish government’s decision to do quite the reverse, by publicly guaranteeing its population that funding would be there, placed it in a very weak position when it became necessary for each interest group to yell down the phone at Trichet.

  18. @ my senior

    You do realise that we HAVE to borrow just to get by day by day. It happens that having followed the course we did we can do that borrowing at less of a cost than even the UK. If we hade nuked, then I guess that borrowing, if available at all, would be at about 25% per annum. Even on the highly dubious assumption that there would be no other repercussions in pressing the nuclear button, it is moot whether a clean balance sheet but borrowing afresh at 25% p.a. would be better than we are now. The nuke option was high risk. The doomsayers who said that playing ball would condemn us to a generation of ex growth have been proved wrong. Get over it.

    @ CMcC Sorry, call me naïve but the idea that Trichet screwed Ireland in favour of his German and French masters may appeal to Indo editors and readers but it is simply paranoic xenophobic rubbish so far as I am concerned.

  19. Sam,

    given my truly overwhelming empathy for the ECB (ROFL) and the practically non-existing german influence there,

    I just play back your wording to you,

    “very sensitive to anyone critiquing the ECB and the german influence thereon.”

    and kindly ask you, to give examples for that, or rephrase, or ……

    If you would ask the common man on the german street about “what Germany could do more to stop the rot”, you would often get “shoot the b*st*rds.”

    Where do you think 10% AfD and 20% communist vote come from?

  20. @Colm McCarthy

    On what date did that MacSharry conversation occur ?

    Remember what Greenspan said in 2008

    “I made a mistake in presuming that the self-interest of organisations, specifically banks and others, was such that they were best capable of protecting their own shareholders.”
    Same went for the ECB

    Remember what Con Houlihan said about that Mikey Sheehy goal
    ‘Paddy dashed back to his goal like a woman who smells a cake burning … ‘

    http://www.youtube.com/watch?v=JRSnT7bxKNs
    They had no safety net and the markets knew it . They still don’t…

    http://www.irisheconomy.ie/index.php/2010/08/25/sp-downgrade-irish-debt-put-on-negative-watch/#comment-67963

    “Bondholders had the perception that paper they held was not as senior as it used to be, that their bonds could be used as political football at some later stage. And of course, the aid entailed a long coma for the local bond market. Easier to put markets into coma than take them out sound and safe. There has been very little flow since, and yields are ever higher. All this despite good news on reform.The implications for future debt raising – most policies that limit the future public debt burden will prove beneficial. The difficulty in this case arises from simultaneously assuring that the contingent liability from the banks remains contained. No use robbing Peter to pay Paul. However there are many different ways of skinning a cat… . We need however to understand that going down the Japanese route – trying to save everything and anything – is no panacea.”

    http://www.theguardian.com/business/2010/nov/16/ireland-bailout-government-says-no-need-to-panic

    “Herman Van Rompuy, president of the European Council, raised the stakes ahead of this evening’s showdown talks between finance ministers in Brussels. With Ireland and Portugal both on the brink of seeking a bailout, Van Rompuy warned that there is a serious risk of contagion spreading across the continent.
    “We’re in a survival crisis,” Van Rompuy said in a speech in Brussels. “We all have to work together in order to survive with the eurozone, because if we don’t survive with the eurozone we will not survive with the European Union.””

    http://www.rte.ie/news/business/2010/1129/294931-imf2/
    “Mr Rehn denied there was any difference of opinion between the ECB, the European Commission and the IMF on whether or not senior bondholders should be ‘burned’ in the Irish banking sector.
    He said senior debt would not be jeopardised, otherwise there could be the risk of further contagion in the system.
    ‘The EU-IMF-ECB troika worked in excellent co-operation and there was no significant deviation of positions on these issues. Our position is very clear. The senior debt, not to speak of sovereign debt, should not be and will not be restructured. It is another thing as regards subordinated bondholders,’ he said.”

    They panicked just like the FF boys in 2008 . This should be exposed.
    Pour encourager les autres.

  21. Fine, but Ireland’s image has been tarnished by its “tax strategies”, which undermines any Irish defense…..

    You haven’t seen this yet, obviously:

    http://www.ft.com/intl/cms/s/0/ae979ad0-4708-11e4-8c50-00144feab7de.html#axzz3EeMDDYay

    Ireland needs to stand up and defend itself, for the benefit of the whole country…..problem is that the “comfortable” who are generally in power /insiders (as per McWilliams) will only focus on their own wealth…..”I’m alright Jack”. Just watch (over time of course).

  22. “We’re in a good place now.” Spoken on behalf of the rentier class, the BTL owners who retain possession (in a rising market!) while not servicing their mortgages, the estate agents who can once again afford new Mercs and treat prospective buyers like cattle, the 1% who contributed nothing to bailing out the nation, et al.

    Maybe try asking someone whose child has special needs (or simply thinks being educated in classes of 33 on average is less than optimum) or any public-sector worker (all of whom have borne almost the entirety of the burden that is glibly attributed to “the Irish people”) whether the country is “in a good place.”

  23. @TheSecond

    Well said. Why does it take people from N. Ireland to talk sense on this site?

    As you say, a host of economists stated in 2009-11 that Ireland should use the nuclear option because the outlook for growth in the decade (or decades) ahead was so awful. They have now been proved totally wrong. Ireland will be the fastest-growing economy in Europe in 2014. That is the end of the matter. If they had any integrity, they would now take a vow of silence on all matters economic.

    An analogy would be this.

    You have a pain in your thigh and you go to the doctor. The doctor tells you that the problem is incurable and insists that your only hope is immediate amputation of your leg. You turn down his advice, lose a few pounds and a couple of years later you win the Olympic 1,500 metres. As you stand on the podium collecting your Gold medal, you’d be bound to be saying to yourself ‘Than God, I didn’t listen to that quack doctor’. Morgan Kelly was that doctor.

  24. “If they had any integrity, they would now take a vow of silence on all matters economic.”

    In fairness, Morgan Kelly seems to have done just that. Others should follow suit.

  25. Hi Brian, yes we were borrowing to fund day-to-day expenditures, and still are. Its fiscal nuttiness, but that’s the Rate-of-Growth exponential economic paradigm (aka: Permagrowth) for ye! Day of Reckoning for all indebted sovereigns is coming up. Book your seats early!

    I distinguish between two separate issues: sovereign debt and private debt. Our sovereign debt are ‘agreed’ to in advance by a vote in the Dáil. Effectively the Government ‘rams’ it through on Budget Day over the anguished bleatings of the dead sheep opposition, you understand. I hardly need to draw the picture.

    However, the Bank Guarantee was (and still is) another matter entirely. And it mystifies me that so many folk do not observe the difference between a sovereign loan voted in parliament and a sovereign guarantee made in private under duress. A small number of elected and non-elected folk made that decision. They had the option to decline, but clearly they were offered a choice that they could not refuse. Basically the suckers were railroaded. And they bottled it. But I am still adamant that we could have, and should still do, tell the ECB we are not going to make good those very bad loans of private financial companies and let the ECB sort out the mess. And they will. They just have to be railroaded into it.

    If the ECB did act – the financials would be made liable for their own loans and would in future, be a lot more careful with their lending protocols. But what will happen? They will be given ‘free credit’, again! The mind boggles.

    Maybe its just as well that the domestic consumer has enough sense to reduce their consumptions, hence need less credit. So what do our lusty lads do? They re-speculate in financial and real estate assets. Creating more debt because they now know who will pick up their tabs when the Rate-of-Growth economic paradigm inflects over toward zero and their debts become unpayable, again. Madness!

    Look, we were not going to default on any existing sovereign loans – but, and this is the kicker, the state guarantee to the private banks did NOT exist – until it did. We guaranteed, retrospectively, not state loans, but private ones! And anyways, just what proportion of those private loans were leveraged? You know, with fiat credit? I reckon a lot.

    It will be sometime before the Fat lady sings. And in the meantime, a lot of folk will be harmed.

  26. Is JTO an IBEC production? After winning the olympics what if the stadium roof collapses because the builders used sand instead of concrete to facilitate a share buyback ?

  27. Whatever Trichet said, I doubt if it was as MacSharry recalled it.

    …and if he had said what was reported in the first conversation, it is unlikely that he would in the second have given the reason for his change of mind as being protection of French and German banks.

    Disagree with him by all means but he wasn’t an amateur or fool – that would have been a valid judgement at the time if that was the way he dealth with politicians.

    Of course he knew the exposure of French banks to Greece and so on while presumably he could call on economists to give him all the exposures in minutes.

  28. @ BWS

    I came across this in the SBP. (I hope the link works!).

    http://www.businesspost.ie/#!story/Comment/Opinion/How+debt+always+trumps+democracy/id/0b24f59f-677e-4be1-ba42-4b24e8ee3c5f

    It is an interesting story but only coincides with Ireland’s experience intermittently. How the author arrives at the conclusion in the title escapes me. As far as I can see, the people of Newfoundland, or at least their elected representatives, agree democratically on every step taken.

    A not totally unrelated item from Derek Scally on Germany and the view that the new head of the DIW takes.

    http://www.irishtimes.com/business/economy/germany-s-modern-economic-miracle-built-on-sand-1.1944583

    As to why there should be such differing views, it seems to me that a sense of mistaken aggrieved victim-hood is a common denominator in all conflicts.

  29. Colm McCarthy is correct that the Irish State should utilise the mechanisms of legal accountability in the design the EU which are an inherent part of its democratic structure. We should not dedicate all our efforts to back-room deals which have failed us in the past.

    Of course, Ireland could easily be secretly pressurised into inaction by its IMF creditors who hold the whip hand in relation to early repayment of sovereign bonds. That is the loss of sovereignty which is involved in going bust. It is also a gruesome mechanism for individual EU states to subvert EU law, and a further denigration of the EU as a political entity.

    In the meantime, there is nothing to stop the Oireachtas, supported by our stroker Taoiseach, calling for Jean Claude Trichet and others in the ECB to give testimony and to disclose all relevant documents to the banking inquiry. Then again, who knows how much the Agriculture Commissioner’s job really cost us.

  30. @ my senior

    It will for ever be debated whether we should have dumped Anglo bondholders; the pillar banks less so, but hey that is such well trodden ground it has formed a canyon.

    The current zeitgeist is one of victimhood, of having been bullied, of taking one for the team. If JtO is right about our growth trajectory then such bleatings ring very hollow indeed.

    Our EU/ECB parners have in many ways been very supportive, soaking up a massive deposit flight; letting us borrow cheaply on the never,never; converting promissory notes into same never,nevers; allowing us to use Draghi induced extra cheap credit to pay back the IMF etc. etc.

    It seems to me really churlish to be thinking of taking legal action against the ECB on a technicality not to mention accusing them of treachery in favour of their German and French masters .

  31. @ DOCM: Thanks, but those illigitimi want an armful of blood! I’ll try some other route.

    Actually I blame Hurricane Charlie for it all!

    Jeeze, does John the you-know-what never give up?

    “Hey there John – how about you go a bit easy on the red meat!” “And leave the ad homs outside – OK.”

  32. @ the Second

    “It seems to me really churlish to be thinking of taking legal action against the ECB on a technicality not to mention accusing them of treachery in favour of their German and French masters .”

    Remember Sarko

    110628 Irish Times

    “Pledging to exercise control over France’s own debt, he said: “I wasn’t elected so that France would experience the agony of Greece, Ireland and Portugal.”

    http://www.ft.com/cms/s/0/bfa9b80e-02b0-11e4-a68d-00144feab7de.html

    “The former president may be energetic, but his policies have been dreadfully shallow. Soon after his election in 2007, he cast his lot with the Ancients. He asked Jacques Attali, a leading economist, to study how to lift obstacles to economic growth, only to bury his report. His plan to open up regulated professions was shelved after the government gave in to vocal taxi drivers. A few months later, Mr Sarkozy used the financial crisis as a pretext to revert to the classical interventionist approach.

    In a 2008 speech in the southern city of Toulon, he rejected market forces and affirmed his belief in the capacity of the state to shield the French from the outside world. During Mr Sarkozy’s tenure, public spending increased by 15 per cent. Sovereign debt jumped from 64 to 85 per cent of output. More than 20 new taxes were created. The number of public servants kept increasing. So-called re-industrialisation commissioners were dispatched to all corners of the Republic, charged with turning back the tide of globalisation. ”

    Donc voila quoi

  33. @ seafóid

    Hollande, having wasted two years – just like Mitterand – and now lost his majority in the Senat, is drinking in the last chance saloon. However, there is evidence to suggest that the establishments in both Paris and Berlin are waking up to the dangers that the growing economic disparity between France and Germany represents.

    http://tinyurl.com/nk5txwd

    http://www.pwc.co.uk/corporate-finance/publications/in-the-debt-markets/schuldschein-german-private-placements-attract-international-borrowers.jhtml

  34. @ All

    FYI

    The opening salvos in the legal battle on OMT.

    http://www.welt.de/wirtschaft/article132689768/Europaeische-Attacke-auf-das-Verfassungsgericht.html

    Germany’s problems with its constitutional court are its own. However, when the court sets itself up as final arbiter on issues of EU law which all countries – of the EU, including, of course, Germany, have assigned under clear treaty provisions to the ECJ, it becomes a problem for Europe.

    The idea of the Irish government taking a politically motivated sore thumb case against the ECB against such a general background is fanciful, to put it mildly.

  35. Looks like the FT/GroanyAd story was yet another anti-Ireland hoax emanating from the UK media. Given their behaviour in the Scotland referendum, it does not surprise me in the least. The BBC also splashed the hoax earlier this morning, the same BBC that splashed lie after lie about the dire effect on the Scottish economy of exiting the UK.

    http://www.forbes.com/sites/timworstall/2014/09/29/the-european-commission-is-not-about-to-fine-apple-nor-even-to-accuse-the-company-of-anything/

  36. “Hollande, having wasted two years – just like Mitterand – and now lost his majority in the Senat, is drinking in the last chance saloon”

    Even Sweden is fighting deflation, DOCM.
    That has he potential to sink the Euro when the markets wake up to the risk. Is the Commission interested ?

  37. This smacks of FOFF revisionism. having driven the economy into the ditch for the 2nd time in my working life, they need to rewrite the narrative to prove there was somebody else in control of the car. It was the dreaded “furriners” that did it.

  38. Trichet had a pal across the pond – wonder if Mad Oul Jozie down the road still has contact with her mole in the NSA? The Conversation between Herr Geithner and Herr Trichet might be on the cloud somewhere …..

    Shur what’s 20 Billion ……

    Wonder how would the First ‘The Minister’ have handled it?

    @Tull
    There is a concerted effort, led by The Mammy, to protect the reputation of The Minister … and by FF to do a Pontius Pilate ….

    @The Second

    Which ‘pillar’ did you work for?

    @Paul McGinley et al.

    Magic!

  39. DOD,
    BL was a decent man who was left with the responsibility of cleaning up the gaffe after de Bert, Biffo etc trashed it. History will be kind to him.

  40. http://www.irishtimes.com/life-and-style/homes-and-property/property-bubble-of-2000s-not-being-repeated-nama-chair-says-1.1945576

    “Nama is on track to repay some 50 per cent of its €30.2 billion senior debt by the end of the year – two years ahead of schedule – and to repay some 80 per cent of its debt by 2016 with the agency working hard then to repay the outstanding 20 per cent, he added.”

    “Mr Daly revealed that Nama has to date spend some €5 million on remediating ghost estates as..”

    30 billion paid back, 5 million on boots on the ground. Well done Frank! I make that about about 100th of 1% spent on remediation.

    What part of Asset Management don’t the boys at NAMA understand.

    Keep paying back the money early. That’s the way to keep getting pats on the head.

    NAMA is an anti-national organization.

  41. @ seafóid

    You are, if you will forgive me for saying so, rather missing the point. We are talking of the two economies which make up more than half the EZ and whose economies are by now very interlinked. They have also, more than incidentally, fought three major wars – two which expanded and qualified as world wars – in the past two centuries. Both are now confronted by dissident nationalist movements. The hope must be that the leaders involved will draw the necessary conclusions and get their economies back on parallel rather than diverging tracks.

  42. DOCM,

    since you brought the DIW Marcel Fratzscher crap up now for about the 6th time in the last 11 weeks, first
    http://www.irisheconomy.ie/index.php/2014/07/04/irish-times-new-finance-chief-told-junior-official-to-disregard-property-crash-fears/#comment-551937
    today via the Scally irishtimes link:

    last week you brought a link from “the evil economist” declaring the book “is all the rage in Berlin”.

    Just that it was released just TODAY. Yesterday it was not found in any 3 open bookstores, nor on display in 10 bookstores in Dresden (1mio people area), it does not even show up on the brestseller list http://www.spiegel.de/kultur/spiegel-bestseller-hardcover-a-458991.html

    just the notorious dishonest english economist.

    In contrast to a book “Crash is the solution” advocating to actively Crash the ECB, the EU and the whole global banking system.

    Burning down the house, Yeah!

    Today, in the morning, on my daily bike trip, I bought the fratzscher pamphlet, 1 minute before official release : -. ) and started reading, maybe there is something worthful

    Starting with the foreword “23% infrastructure invest” early 90ties, now 17%,

    yeah, probably technical correct, but obviously misleading, since early 90ties was when we added 110 thousand sq km (to prior 248 ) Germany with rotten bankrupt industry and fudge books, the typical with socialists.

    And where is the reference to data? Next chapter? appendix? footnotes? references?

    Gulp

    Nowhere to be seen.

    Hmmmm.

  43. @seafóid

    Even Sweden is fighting deflation, DOCM.
    That has he potential to sink the Euro when the markets wake up to the risk. Is the Commission interested ?

    Wolfgang Munchau was chortling about Finland and the power of structural reforms in the FT recently.

    Finland was crazy for structural reforms, strongly determined to avoid a budget deficit (they have a surplus) and
    absolutely committed to the German/ECB consensus on competitiveness, the confidence fairy and a market led recovery.

    Cue falling GDP for the last two years, sclerotic growth this year, shrinking domestic demand and internal deflation and no significant improvement for unemployment.

    Absolute commitment to the Austerian Creed in a wealthy, well governed country still leads to failure unless that country is in the rather unique position that Germany enjoys geographically and politically and is also Germany’s size. Yet this is the model the EU has settled on.

    It is to laugh.

    p.s. After Finland’s doctrinaire neoliberal prime minister Jyrki Katainen presided over three miserable years of economic performance and falling popularity he did guess what next?

    That’s right, he resigned from Finish politics and got a 250K a year job as European Commission Vice-President, responsible for Economic and Monetary Affairs and the Euro. Well, he has the experience.

    In the Eurozone it does not matter if you fail as long as you do it in the approved way.

  44. There is one positive thing to say about the Fratzscher frat boy pamphlet:

    You can easily read it on the toilet, in many small pieces, with the brown masses underneath you, and limited damage from abrupt barfing incitement. No references, just stand alone garbage.

    I went on to read this. One wild claim after the other, “Unsere Euphorie ist gefährlich” ?

    This alien ilk doesn’t belong to “Uns”, he is not “one of us”

    Whose “Euphoria” ? How did I miss this, living here, in this real world a lot longer.

    no reference, no justification. It reminds me of the blahblah of McKinsey expats, who were supposed to be “immersed in local culture” and were in fact just living at the raffles bar in some gated community.

    Comparing the Oxford PPE elitist Fratzscher garbage to more home grown economics books:

    A) Sinn, Hans Werner „Ist Deutschland noch zu retten“ 2004, 8 chapters, 497 effective pages, 240 references, 9.8% of pages are references, registry, appendix

    B) Sarrazin, Thilo „Europa braucht den Euro nicht“, 2012, 8 chapters, 389 effective pages, 556 references, 9.7% of pages are references, registry, appendix

    C) Fratzscher, Marcel „Die Deutschland Illusion“, 2014, 16 chapters, 216 effective pages,

    ZERO references,

    just 3 pages of registry to general topics, like England, Belgium,

    just 15 names, 9 of them

    dead and/or irrelevant like Immanuel Kant (certainly a good german philosopher ,no doubt, 250 years ago, but what does he tell us now about the ECB?)

    „Effective“ means without empty pages, advertisements, thanks, apparatus

    And then it goes on and on, endless claims, I doubt, and don’t find any reference for. Especially about public mood or enthusiasm.

    This Oxford PPE elitist lives in his own hubris bubble and declares it to be reality. He probably even believes in the straw men he is building to be valiantly stricken down by him, just like his Don Quijote brother Krugman.

  45. “notorious dishonest english economist.”
    Isn’t that just libel? You can’t call someone notorious dishonest in all fairness

  46. Sam,

    Yes, I can : – )

    wiki/Defamation:

    Proving libel[edit]
    There are several ways a person must go about proving that libel has taken place. For example, in the United States, the person must prove that the statement was false, caused harm, and was made without adequate research into the truthfulness of the statement. These steps are for an ordinary citizen. For a celebrity or a public official, the person must prove the first three steps and that the statement was made with the intent to do harm or with reckless disregard for the truth,[11] which is usually specifically referred to as “proving malice”.[12]

    Sam,

    now let us see how you would argue the case of whatever person or institution you believe I have infringed on : – )

  47. @ DOCM

    The point is that the EZ is headed in the direction of the deflation cliff. Draghis TRATRO or whatever you call it isn’t working. Les Francais aren’t stupid either.

    And if the markets over the other side of the pond hit the wall the Eurozone is going to be a complete mess.

    There is nothing prepared for when TSHTF v 2.0

  48. Martin Wolf questioned Trichet on this matter in July 2012.

    http://www.ft.com/intl/cms/s/2/d3508ac0-c687-11e1-943a-00144feabdc0.html#axzz3EifDQrGZ

    Martin Wolf: I turn to the ECB’s insistence that governments, particularly in Ireland’s case, should not allow default by their banks to creditors. What was the thinking behind that?

    “This was something which was very lengthily and thoroughly discussed,” says Trichet. “And the judgment was that at that time and in these circumstances, the threat of contagion in Ireland itself was such that it would have been extremely dangerous [to allow the Irish banks to default].”

    The question remains whether the ECB actions were legal under their statutes and if they were ever justifiable given fragility of the financial system and possible spread of contagion. The issue of contagion is explored by ECB vice president here Vítor Constâncio http://www.banque-france.fr/fileadmin/user_upload/banque_de_france/publications/Revue_de_la_stabilite_financiere/2012/rsf-avril-2012/FSR16-article-10.pdf

  49. Arthur Beesley picks up all the essential elements in this contribution.

    http://www.irishtimes.com/business/economy/political-and-banking-laxity-at-root-of-irish-bailout-1.1950080

    The only real remaining question is whether the various actions taken by EZ and some EU partners (notably the UK and Sweden), and still to be completed, can ever be viewed as drawing a line under the matter in the minds of the Irish public (on the supposed injustice done). Doubtful!

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