Headline in the FT this morning, “Europe signs up to Irish rescue.” That is how the financial class would like you to see it. A more accurate description is “Europe signs up to use Ireland as a conduit for bailing out its own banks and gets Irish tax payers to foot the bill.”
Less catchy I admit. But a great deal more accurate.
Back in June of this year I wrote this.
Basically it boils down to this. The system of finance, globally, must lower its level of indebtedness. The obvious place is bank bad debts. That has been ruled out by the financial class via our oh so compliant politicians. The other way to lose indebtedness is to use a country or countries as a conduit for debt reduction – a sphincter through which to shit out as much debt pressure as possible. Ireland is already in that ignominious position.
And so it has come to pass for Ireland. European and UK banks are now going to use Ireland as their sphincter. And the Irish people are going to clean it up for them. Ably volunteered for the job by their loyal political class. Loyal to who and what is another question.
We, the people of these various countries need now to be very careful.
Over the next few weeks we are going to be treated to a carefully incubated efflorescence of xenophobic bile and blame throwing. As tabloid papers in every nation try to whip up ill feeling and blame into an obscuring fog of ethnic bigotry whose main purpose will be to hide the bankers, of all our nations, pissing themselves with glee.
The British are being told “we” are going to help Ireland to the tune of €7 billion. Which, we are quickly assured we expect back. No doubt the “Why should we pay” squad will be roused from their easy chairs to fart out some ethnically oriented observation. But the truth is “we” are not helping the Irish, nor even the Irish banks. “We” will be stumping up the cash to ‘help’ UK banks. RBS being one of those near the front of the queue. We will ‘give’ money to the Irish banks who will promptly give back most of it to the British banks to whom they owe the money. And the Irish people will find themselves charged interest for having facilitated this bail out. THAT is what is happening.
Let’s all be careful and clear about this. Irish banks are being used as a sphincter to for European bank debts. European and British banks are horribly exposed to to Irish debt. Which means, when translated into English, that private banks in many countries lent money into the well known Irish property bubble in order to chase high returns during the bubble years. Irish private banks accepted the money in order to lend unwisely so they too could chase high returns. Entirely PRIVATE contracts between two sets of equally greedy bankers.
There is nothing in those contracts that pertains to or involves the people of any of our nations. And yet all our bankers with the connivance of all our politicians are engineering things so that we ALL pay the bankers’ private debts.
The Irish people have not bankrupted Germany’s banks. German banks in partnership with Irish banks and the Irish ‘regulator’ (to abuse the word yet again) bankrupted Germany’s banks through deals the German banks were delighted to make. British banks have left themselves with massive unpaid loans to Irish banks. Neither the British nor the Irish people had any say in the idiot deals done.
This IS NOT people against people. We, all the peoples of all these nations, are being forced to pay off all the banks. It may seem that German and British tax payers are bailing our ‘the Irish’, but it is not true. We are bailing out OUR own banks through Ireland. And the greatest losers will be the Irish people because they are the orifice through which we are going to squeeze the bankers present to us all.
Put this in the article at first).
The Irish bail out could well lead to a domino effect now with Portugal, Spain and Italy to follow with continuing destruction in economies and currencies. The madness of loans on top of loans on top of loans, like a nightmarish Monetary Russian Doll, carries on at increasing pace. Implosion can be the only end result here.
Intersting link for Eric Cantona and his 'protest against the bank by with drawing cash' line.
http://www.guardian.co.uk/world/2010/nov/20/eric-cantona-bank-protest-campaign
I seem to remember Golem advocating this on the guardian in February 2009…
jms452
jms452,
Yes I did. I first suggested it a couple of years ago on the Guardian.
You can either wirthdraw your cash and just sit on it for a while watching as the banks gasp for breath. Or you can move your money out of the banks hwose behaviour offends you and put it in a different banks. Put it in a non bail out babnk.
Or move it stategically, moving it from bank to bank whenever you want to put pressure on whatever bank it is then in. In which case you are using your money like a moveable and re-usable vote. This option is the one that gives you the most long term power, if people could ever coordinate their moves.
I wrote it in January. Second post ever on the blog. Called Deposit Union.
The organisers of Bankrun 2010 sadly omit to distinguish between Banks who are likely to be part of the problem and banks who may be part of the solution….for instance Frances 4 big Co operatives , Caisse D'epargne, Cedit Mutuel, Banque Populaire, Credit Agricole…I have already had to point this out to a few people who were about to run off and take their money out of a co-operative…which surely is where they should be putting it after they've taken it out of Soc Gen / BNP etc on Dec 7….
There is something very French about this… Well intentioned, enthusiastic, but not thought through… ..my guess is that most people will go back on the Wednesday and put their cash back in the same banks.
No news of any revolution in Ireland? Not even an Iceland-style referendum? How obvious the Iceland solution now must seem! Is there not yet an office set up where friends of the Irish people can volunteer to help them chase the puppets of the international financial class out of their country, build barricades…….
Nice to hear from you Lars,
I hope you and yours are happy and well.
I think just konwing they have friends helps Lars.
How hard it is to get people, no matter how angry they are, to make that first break with their meek acceptance of what they are told must be. But there is a breaking point in every country and I think we are all, in every nation, getting closer to that point.
OK, a couple of interesting links culled from the Gaurdian comments section. Worth a look though I've not had time (!) to digest properly.
1: New York Fed paper on the shadow banking system ! Mind-blowing diagrams. http://www.ny.frb.org/research/staff_reports/sr458.pdf
2: Bank for International Settlements quarterly review with some great graphs for different countries, (our graphs look VERY like Ireland and Spains) plus a good table of who owes how much to whom.
i have seen a few so called experts saying that the UK could be next but the accepted wisdom is that it will be Portugal, Spain, Italy, France,
but all the graphs i have seen show that the UK is the most indebted country in Europe, and i think no2 in the industrial world behind japan
have we got a get out of jail free card or are we just waiting our turn
you know i have this perverse image of a row of naughty schoolboys bent over awaiting their punishment and hoping that the teacher exhausts himself before it's their turn
Ben,
that is the article I was quoting in the Undead Heart series looking at securitization and the shadow banking system. It is a great article though I obvioulsy disagree with their sentiment. I am looking out eagerly for the second half to be published.
Haven't seen the BIS review yet.
Richard,
It not purely a matter how much debt a country has it also how big an engine the country has to pull the load. Think of debt as an unweildy caravan. If you have a straight 8 or V12 monster 4 wheel drive pulling it, like the Germans, you can pull and sixe caravan you want and no one will worry and you will hardly notice a loss of power in your car.
If you're Ireland or Portugal and you are driving a converted twin stroke lawn mower then you are in trouble. That is why teh US pulls such a large debt and so far has been left alone. Japan has also got away with it. But not for much longer I don't think.
UK is considered to have better growth possibilities than other nations. But that will evaporate if the finance sector is not bailed out for ever. Because our growth depends on everyone bailing out our banks.
So if ever any nation defaults, expect GB to shoot to the top of the 'Next to go' table.
golem
thanks
so we were the ones putting pressure on the ECB to go in and rescue the Irish banks
you remember that the ECB said there was another player which was putting pressure on them to sort out Ireland
I do remember.
sorry, of course you remember
i been wondering for some time who the other player was my list of suspects included
the USA
Portugal
one of the sovereign wealth funds
Goldman Sachs
but i didn't see that we had an interest in pressurizing the ECB until now
but i guess we will never know
Please don't say sorry. I wasn't meaning to be snippy. Problem with typing. No intonation.
It will take a revolution for us to know. But that doesn't mean it won't happen.
The more you delve into this continuing farce of economic recession/downturn/catastrophe, the more you realise it is mainly based on over valued casino property. Basically the idea of lending money to people to buy a home turned into a mad money churning pigs trough of greed and speculation. This was due to insane banking reform and new speculation ideas. US, UK and much of Europe, bar for Germany, are bust in reality. The economics of the markets have been reformed over night virtually to attempt to keep property prices high to stop the inevitable crash. They are simply putting it off. The boy with his finger in the hole in the damn. France and Germany may not have played the same property game but the banks did with oversees investments in the property economics built on sand..and most of the big biz players and politicians have vast amounts of houses and investments tied up in these schemes. The answer is low interest rates and more and more QE and borrowed money that does not exist..with future generations to pay if off..and a lot of prayers that immense growth will blow away the problem..but for now it's deliberate inflation to start wiping out some of the debt. It's crazy!!
Maybe the creation of the Carbon futures market was an attempt to create money to liquify the banking sector?
Thanks again, Golem, for spelling it out in more easily digestible, & comprehensible, form.
For me the two main problems were/are 1) the intentional crimes of the ratings agencies, who despite all evidence appear to still be taken seriously, &
2) the mere existence of the CDS.
That it is legal (?) to purchase insurance for a financial asset which you do not own just…leaves me speechless. I've known about this for a while, but the shock of realization every time I'm reminded of it never relents. It is just extraordinary the amount of $$$ AIG were on the hook for.
And yet more extraordinary than that even is that govts did not hesitate to promise to make them whole, despite (in the US at least) wide-spread, publicized opposition to the bailout (something like 80% of calls to congressional reps were against it, and polls all showed its unpopularity.)
I suppose the standard of living in the US has been so (relatively) high for so long that we still have a long way to fall. Not sure how else to explain the lack of organized opposition to austerity, from the local level all the way up.
Then again, we're talking about the kind of people who hold placards saying "Keep your government hands off my Medicare".
Informed opinion is in short supply on the ground here.
it's time for the ECB to shut down the markets
this is getting insane
portugal is already being targeted
they might last to the end of the month but not til xmas
just reading the press reports you can feel that the pace has picked up
DopeAddict and RIchard let's put you two together.
If you were bank facing losses on CDS contracts or on CDOs on which you thought a CDS was going to save you but now you realize it might not, what market would you look to to make a quick and serious killing?
Sovereign debts and betting against them are the last bubble in town. Better get on while there are still places.
Looks like a Forbes blogger has hopped on the Golem train. Minus the sphincter reference.
I think I saw some reflections of the sentiment expressed in recent posts here on tonight's newsnight (UK 'heavyweight' news programme) as well. Of course that could be me being dim and / or hopeful.
One thing I am sure about is that I do wish David had been on the panel instead of Will Hutton.
The image of Ireland being used as the sphincter for the financial system to shit out its debt pressure is worthy of Swift! If only Steve Bell would create the cartoon for it! It would define the ghastly place the Irish have been put by their traitorous political class!
Her approach, he said, would only turn Europeans against one another at a time when 72 million Greeks, Portuguese, Spaniards and Irish owed European banks €1.5 trillion, about $2.06 trillion, or five times the German government’s budget.
Apropos of your post, it's not hard to find insidious language like this from a story on Merkel, Germany & debt in the New York Times. Despite the problem stemming from private gambling debt, it's all the people of these countries who owe the money!
@wirplit
As I'm sure you've seen, Steve Bell's risen to the occasion nicely…
http://www.guardian.co.uk/commentisfree/cartoon/2010/nov/23/ireland-bailout-ireland
guardian today – Ireland's central bank governor, Patrick Honohan, also tried to drum up interest in the Irish troubled banking sector – saying the nation's banks were all "up for sale".
"They are up for sale as far as I am concerned," Honohan said this morning. "I have been an advocate for a number of years for small countries to have foreign owners for their banks."
any comments on whether he is right or not ?
He's trying to tie any incoming government in to deals which make any defaut more and more expensive for Ireland. That way voters can vote for who the hell they want but will then find the new government will turn around and say, "Sorry we can't re-structure' or deafult or any number of other things voters might wish, because the present government has done deals which make it impossible.
The man one is to agree to put up various state assets Railways, grid, water whatever the state stillvowns as 'collateral' for the various bail out loans. If they do this, then in any future default these could/would be seized and sold by the creditors with tax payers who used to own it having no say or recourse.
I think he is hoping that if he can tie Ireland in to such deals before he goes, then he makes any real change of policy impossible and saves his mates even after he has gone.
Could be wrong but that's how it looks to me.
In reference to 'Anglo Ireland Inc.', here is an example of the bitterness felt in Ireland.
And Now the attention turns to Portugal
With Ireland potentially accepting a €90bn international bailout for debt-laden Ireland – of which the UK could contribute up to £10bn
The article goes onto say "Instead there was a sense of growing unease in the markets amid evidence that investors felt Portugal would not survive without aid".
So do the speculators sense another plum ripe for the pick?
The article also says "Analysts said the support was needed to prop up the UK's banks, which have extended £140bn of loans to Ireland".
So does that mean more QE for the UK?
Martin,
probaby means buying up more bonds from the banks. Which proabably does mean more QE. They will not announce 'new' because it has already been put into the public sphere. So they will just bring it forward a little and increase the rate of buying a little and hope they can 'contain' the worries before anythigng embarassing like having to announce an actual increase in the total amount of planned QE.
It could also mean a quiet extension of the Asset Protection Scheme.
Could also mean UK borrowing costs inching up with the BoE buying at the lond dated end to make sure nothing is left to chance.
So we print more money via QE. Use the money to by bonds from the banks.
The bankers get bonuses on the sale of the bonds.
Would I be correct in saying that?
I agree mostly, but the Irish people do bear some of the blame as we voted in Fianna Fail and believed their bullshit about being the Richert Country in the World.
Matin,
Not quite that neat sadly. Bonuses would be much more broadly assessed. But sales of bonds would contribute to bank profts and that does establish the size of the bonus pot.
Famousseamus,
Quite right. Not just the Irish. People in every nation wanted to belive the hype. No one is clean and blameless in this. It's just some of us want to share the hurt out equitably. Others are determined not to.
@golem
'I think he is hoping that if he can tie Ireland in to such deals before he goes, then he makes any real change of policy impossible and saves his mates even after he has gone.'
I agree. This is what happened in Iceland, leaving all the newly elected (mostly left wing) politicians locked into the policy and unable to make any changes. Presumably Irish politicians on both sides are aware of how that turned out…
@Golem
Thanks for that. By the way just got your book. I'm only 20 pages in. But its already an enjoyable and very informative read.
Tam,
As far as I can see they all know and quietly behind the scenes want all their dirty laudry to be kept secret.
Every nation is in the same boat now as far as having all the main parties being essentailly 'with' the banks and against their own people. In the UK labour and Tory are just two versions of teh SAME policy – bail the banks. One says bail them and keep borrowing. The other says bail them then stop borrowing and seize the opportunity to tear down the welfare state.
It's a false and imprisoning choice.
The real choice would be to NOT bail the banks endlessly and instead, start to force their debts from the system. We would find without borrwoing for bank bail outs our debt load would be vastly lighter giving us the ability to borrow for spending on not just welfare but on stimulating growth in the real economy.
It wouldn't be painless but it would get us on our feet which the present policy hasn't and won't.
But there isn't a country anywhere with a leader prepared to stand up for that choice. Until there is we will see more bail outs, more recession and more erosion of democracy.
@Golem
I think you're slightly overgeneralising about politicians. Check out what Gerry Adams and Sinn Fein have been saying in interviews today.
Me? Never! OK, may be a little.
Ive took all my money out of Banks years ago, its good to see you Guardianistas catching up!
Gold and copper seem to be a better store for my labour. And of course I keep the larder full and the cellar topped up.
I dont think you have all really grasped the nettle as yet, yup cdos ect are a big pile of bull, but they are a product of the fractional reserve banking system and fiat money which is a big pile of bull and is a ponzi scheme initself.
And as for those govt pensions you guardian readers (sorry cant help myself today) so love are also a great big ponzi. But hey the unborn do not vote.
Whenever I talk to ordinary folk, if there is such a thing and try to explain the them that the money in there pocket has no intrinsic value or that when they hand over their money to the bank it legally does not belong to then AND they then take it round the back and and a multiplier to the cash, they look at me as if I have just come from the planet ZOG. And they are right too its a mad system.
FFS, All the Irish banks passed the ECBs stress test in July..if you are looking for fraud I would start there.
http://www.irishtimes.com/newspaper/breaking/2010/0723/breaking13.html
And now Irish Democracy whats left of it is being shafted by the Euros telling them when and if they can have elections(not in so many words, but read between the lines)
If you really wont to bring this issue to a head and confront the politicians and bankers I suggest you lobby Irish Mps and get them to vote against the upcoming budget, not mess about trying to take little bits of cash of the the cash machine.
Nice site of Cdos here.
http://www.mortgagerates.info/dyk/cdos/
IF you take these figures out of the 8 Trillion US housing bubble you are still left with a 6 and half trillion bubble.
I am with Dean Baker on this one, Ireland should rebel and rebel right now!
http://www.guardian.co.uk/commentisfree/cifamerica/2010/nov/22/ecb-ireland-bailout-argentina
@Sean
'And of course I keep the larder full and the cellar topped up.'
Sounds like all all Golem's blog followers would do well to invite themselves round to Sean's gaff when the apocalypse arrives..
(yes, I know I've got too much spare time today…)
money in there pocket has no intrinsic value
This is hardly news, nor does it automatically mean that our monetary system is a ponzi scheme. Money is an abstract representation of goods & services. That's all it is. One can fashion a ponzi scheme using money but, as you say, money itself has no intrinsic properties. Its value is whatever people agree it is.
If a bank or a country uses the cash form to manipulate the value of goods & services this says nothing about the intrinsic value of money.
You can choose to trade in cash representations of goods & services, or metal representations of good & services. It's up to you. But if you want to accumulate wealth or maintain what you already have, you'd do better to hold something of value to everyone, like land. You can at least grow food on land.
Just as there's nothing intrinsically special about money, there's nothing special about gold, either. If people won't exchange it for something you need, it's worthless.
Try scraping a shaving gold off your bullion bar to pay at the greengrocers 😉
A bank has to go soon, it just a question of which one and how much collateral damage is wrought in the backdraft.
Rather than PIIGS, we should have a chronological series – how the dominoes fall – the only question really being whether all this financial mucking about can stop them falling. Not looking good so far.
G-I-P-S-I-F-UK-J-US
Reads quite nicely too. Forget "drinking the Kool Aid", we're drinking the "Gipsi Fuk Jus"! Doesn't taste very nice.
http://tv3.ie/shows.php?request=tonightwithvincentbrowne&tv3_preview=
2pm Nov 24 2010. Xanu-FF announce Euro Bank's bail out. Irish people delighted, revolt put off.
I could hardly believe it that Ireland in its attempt to cut its deficit had gone so far as to cut its minimum wage as it makes the people suffer for its banks…
but then I looked at the statistics and Lo! Ireland had the highest in the EEC apart from Luxembourg. ( Germany doesn't have a comparable one) at 1461 euros per month. In the UK its 1169. Portugal is 554 while Poland is so far down at 317. Maybe that partly explains the muted response so far in Ireland to the cuts. When they start applying the IMF medicine to Portugal for example it will be much much worse…
Bill ,Dublin,
This bailout for Ireland is a bailout for the Euro. It keeps the Euro alive at the expense
of the Irish citizens.The bondholders are simply private gamblers in a casino betting with their own money to make even more money. I say tough,.If they back a loser then tough. They seem to be on a winner no matter what happens.Ireland has to be the first contry to stop this capitalist blackmail or we will all be burned forever. The Bondholders ,i.e ,German,British, French and others lent money to reckless Irish banks without due diligence and so be it. Tough.tough and tougher again. The Banks and the markets WILL NEVEER take away the country we enjoy and a country that we love.
We the Irish people do not owe one cent to the "PRIVATE " gamblers but We as a Nation would never default on a Sovereign debt.
The Irsh people will rise to that challenge, as always. We have a proud history of beating tough times in the past and by Jesus we will do it again. The MONEY LENDERS have to be dealth with
so that the they feel the losses when they have a "beaten docket" i.e a loser.
Yours Sincerely
Bill Copeland.
months later..
Joe Higgins, Irish Socialist MEP, calls it like it is.
http://www.youtube.com/watch?v=uah_BVTmHeM&feature=player_embedded
European Commission President, José Barosso, defends european banks and international markets, lays all responsibility with Irish, Europe to the rescue.
sigh