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We haven't seen the end of the Euro crisis by a long chalk, this just kicks this particular can down the road a bit further, the Greek can will probably need kicking again before the Portugese can comes into range.

The question is can the European and US economies recover sufficiently before the Asian bubble bursts.

The whole global financial system is out of kilter, the business cycles are colliding and accentuating rather than damping the shocks. (it might be time to get out the defibrillator)

In the meantime if I were Brian Cowen I'd ask for 4.2 trillion just to see the look on the IMF/ECB/EU faces.

I guess I must be missing something. The European Commission has been supervising the economies of Europe for many years. Even Britain is said to have 'enjoyed' economic surveillance courtesy of our masters in Brussels. So why should greater central interference in the running of economies help? They have had *plenty* of opportunity to warn of impending doom and insist member states do something about it but the EC and ECB didn't.

Every crisis is a beneficial crisis to the EC and while they appear to ride to the rescue nobody asks what part they played in causing, or in this case not avoiding the crisis in the first place.

When the State is making mistakes the solution isn't more State. It isn't State pushing in the opposite direction either. The solution is less State.

You say there is no real wide-spread public anger at the moment, just resignation. Well the real pain hasn't even started yet and public anger has always been somewhat of a slow burning fuse, it is amazing what people will tolerate but there always is a breaking point...we are just not there yet.
It doesn't seem to matter what country you live in it is the same wherever you go. Here in the UK our three mainstream parties are revealed to be more like one party with three faces every day...deliberately vague on any kind of policy debate during the election campaign because there is no real difference in what any of them want to do once in power. We have one party no matter who we vote for, its the bankers party...and every day is a party for them.
Take the new social housing policy for instance. By slashing the budget for new social housing by 60%, removing security of tenure and charging rent that is 80% of the market rate they are effectively killing of the whole concept of affordable secure homes for the low paid. Where was that in the election campaign? Where was the debate? Can you find me one person who voted for that in the last election? Housing is in such crisis here now that you simply can't have affordable social housing sitting there pointing to how better things were just a few years ago. So do you build more? No...the banks don't want that, it undermines the all important 'housing market' because it offers an 'alternative to the way things have to be' and that can't be allowed. The legislation will only pass with Lib-Dem support, and no matter what fuss they make about it now, no Labour government with go back on it in the future...One party with three faces...The Bankers Party.

#3 muggwhump

Spot on post!...especially given the time you posted it.

I accept that Paul wrote the above on-the-hoof, however I will point out a contradiction.

In one passage Paul states 'Now the issue is, did Brian Cowen do enough tonight to prevent contagion in the Eurozone?'

You write this as if Cowen had some sort of say in the matter. He effectively had a gun put to his gov'ts head. I'm not absolving the actions he or his gov't took leading up to this crisis. Just describing what happened last night.

Then Paul later wrote 'But it has forced a member state to take the bailout to save the system, just as eventually it created a bailout mechanism for Greece.'

Who is 'it'?. It was not the EU that forced this position. The EU was reacting to external market pressures.

We live in a faux democracy. Gov'ts don't control banks. It's the other way round.

There are two words that describe what is happening to Ireland...

ECONOMIC RAPE!

Of course, just what Ireland needs is a whopping loan to resolve the problems caused by easy credit and excessive lending.

We are constantly being told how much the loan amount will be, but no-one appears to have asked "how much will Ireland have to pay back?"

I tried to make sense of this article, which seems to indicate the costs of borrowing (in basis points):



The loan sharks are flexing their muscles and handing out a few knocks, but ever careful not to choke their patsy too hard.

‘We export more to Ireland than we do to Brazil, Russia, India, China combined.'

this needs exploring as the real legacy of hayekism that has resulted in a lopsided weak economy. There is no political recognition that in a zero sum game world economy if you are not taking money from other people then you defacto 'lock in' a trend of increasing poverty for the uk as other more savy nations take from you. The market is not the best regulator. If you leave national policy totally to 'the market' [ie hot money, oligarchs and foreign state backed super companies] you will end up in the poor house. This is the lesson of chinese communism ie take control of your own destiny.

Those who think the market is some kind of rational fair minded place where people are perfect rational agents in possession of all knowledge only motivated by profit [and not nationalism, politics, ideology etc] and so will sort out the world's problems in the most efficient way are deluded. That idea of a market is a cult view of the market. A religious view. A false belief that doesn't exist except as some fairytale in books. Some people really do believe in a market santa.

The uk govt is spending billions so that no one rich loses money through bad/lazy choices. Why do people think money is 'safe' in the market and that you cannot lose? If you cannot lose in a zero sum game how can you win? Except with public subsidy? If people put pension money in the market there is the risk you will have no pension.

the uk govt is putting in 8 billion to protect 4 billion of potential losses? No. They are putting in 8 billion to protect rich people from losing money. The same reason why they haven't cut the 4 billion a year public tax money subsidy to millionaire landowners for merely being rich enough to own land. This is a harder 'cut' than child benefit. Think about that. The political class would rather take money from mothers with babies than from millionaires for merely owning land.

it is the job of the oligarchs front men [ie the politicians] to present all this in a way that won't upset the public. Create a smokescreen of plausible excuses for the naked greed behind this massive wealth transfer from the poor to the rich. So they are economical with the truth only highlighting some things while not mentioning others

trying to create a market with only winners is like creating a Catholicism with condoms? In a zero sum game the market is the place where winners and losers are made. Currently its a national state funded game.

the money would be better spent as risk capital directly in new start ups. e.g film industry writers [how much has the potter film made so far?] Fund the creators of wealth not the gamblers of it.

Well said 3 and 4 above. Social housing is a good case study in the exhumation of the poor law by the coalition. I agree I think it is premature to write off the reaction of the population perhaps even if you argue they suffering from shock fatigue. There is certainly more to come in the detail of the liabilities of banks to say it is all 'knocked' on the head.

`...the ordinary bondholders - pension fund managers - are most worried about "restructuring" - ie controlled debt default overseen by the EU.'

It will come down to this in the end so why don't we just chuck some QE money at the pension funds to cover their losses and leave the other bondholders to stew in their own juice as the value of investements can go down as well as up. Remember that one?

Or would such a strategy leave all the governments in all the world unable to borrow thus forcing their elites to scale down their insane ambitions and go get themselves a real job?

It seems to me that our entire lifes' blood is going to squeezed out before we are done and then the problem will still be left to be sorted out.

The big question is why is nobody capable of sorting this out? How big is this debt-hole? Who has eaten all the pies?

8

the pensions are ponzis that depend not upon any real wealth being created but on ever increasing public money. All those gold plated pensions in the state sector [that is over 50% of the workforce now] are untenable. The uk will go bankrupt if it tries to prop up those fantasy pensions.

the pension model is broken. it is unsustainable. some real economics has to come into them. basically only those in total poverty will get state aid. the rest will have to save or find investments that produce a return knowing that there might not be any return or even losses.

i agree uk politics institutionalises incompetence given anyone can become chancellor. The shadow chancellor admits he knows nothing about it. so how can he select good questions or judge the answers or offer solutions? Which means they cannot provide safe leadership. Would we elect surgeons on the same basis? Or air traffic controllers? Give them an 'air traffic control book for dummies' and expect them to learn on the job? Would planes not be falling out the sky? So its NO wonder the economy is being trashed, gambled and diverted to the rich?

Something else that Paul wrote above seems to resonate...

'But, as they say, "Earth to Ireland's political class and media": getting your country's budget controlled from outside is not a normal part of the shared sovereignty arrangement. It is abnormal. Likewise Anglo-Irish and Allied Irish banks look like they will soon be sold at knockdown prices to bigger, more solvent EU banks. Losing nationally owned banks is not normal either.'

None of this is NORMAL!

Anyone else recall a certain whacky ex sports presenter's theory of..
PROBLEM, REACTION, SOLUTION as a method that the establishment uses to manipulate the unsuspecting masses by creating great crises just to engineer public reaction in order to achieve a predetermined outcome?

We truly are in the realms of the whacky at the moment!

As Paul stated in a previous blog, this is all about LISBON (the Lisbon treaty that is). Yes it may be about protecting the Euro in the short term etc., but I can't help thinking there is something more sinister behind all of this.

Ireland effectively lost it's full sovereignty to the EU yesterday evening, without even a whimper. WHY?...or more imprortantly - HOW?

This is the start of ECONOMIC UNION within Europe via a fastrack process that will see the ending of the nation states of Europe as discrete sovereign entities.

Who benefits from all of this?

The great thing about the Internet is that you can sit in the comfort of your own home working out which supermarket has the best deals on baked beans and tin foil.

This crisis is just beginning.

A BIT IRISH?

I was struck by the British bailout stance that runs: "They are our brothers AND it is to our advantage."

Is there a RATIO here at all? How much are we doing for our brothers because they are loveable blood-rascles, and how much because of some meanly-calculated, hard-nosed, monetary self-interest?

I think we should be told.

Hi Paul,
I know you have already written on the situation in Spain but can we have an update? It seems there lies the key to the Euro crisis. In the cajas, blinding unemployment and the extremely social social system. Will they stick to their austerity regime? is that regime tough enough? is low or negative growth likely to wipe out any possiblegain from austerity and tax rises? and finally will the markets give the the chance to rid it out?
Crystel balls out!!
Thanks,
Andrew

Barrie,

Please refer to this post.

/blogs/nickrobinson/2010/11/a_friend_in_nee.html

When do we get tired of the bankstas and their political whores screwing everything up?

'FREDSASTAR' INDEED DJ (#14 link)

I have been 'enjoying' the desperate ConDem plea, that exports to Ireland, being 6% of our total, must not shrink if Britain is to remain Great.

I feel sure 'Integrity Nick' will not allow anything improper, even if Dodgy Dave has some Olympian adjustment in mind.

I dont quite share the optimistic feel that we have reached the nadir. We dont know the conditions to be imposed on Ireland nor the interest rate. We dont know how Ireland will repay it borrowings or what its IMF/EU/ECB control will mean for its economic growth. We dont know how the bond markets will view super-austerity. We dont know whether the German Constitutional Court will find bailouts contrary to Treaty. For example, the legal thread relied on is to suggest that these countries are victim to circumstances beyong their control, justifying assistance. Are these countries victims of circumstances beyond their control or victims of their own ineptidude?

Finally, one point that has become obvious. Usually banks conduct due diligence on borrowers before lending money. It would appear there has been a woeful lack of due diligence on Irish bank lending. But hang on, the UK Chancellor has just committed himself to lending our [ borrowed] money to Ireland? What due diligence has he carried out on our behalf? Listening to him on Today, he doesnt appear to know the detail of what the EU knows yet, or what they will be doing. Funny old world, really.

Senior creditors will have to share the pain, sometime somewhere. The Germans will want new treaty clauses to make sure they wont take the brunt or be so exposed ever again.Mr Osborne will be sucked along in the backdraft.

HAVE WE GIVEN UP OR DO WE THINK (on recent evidence) WE CAN'T GO DOWN?

News of a mad shopping spree.

'When in (ancient) Rome. . . '

#16 That's something I really don't understand either. How can one heavily indebted country lending another heavily indepted country borrowed or printed money help shore up confidence in anything?

YOUR PHILOSOPHY IS RUBBISH HORATIO

Those who have lived with any degree of awareness - particularly parents - know when behaviour JUST DOES NOT ADD UP. That is to say, when AN EXTRA FACTOR must be present, for the person(s) in question to act as they do. I have posted before: 'MONEY IS MORE POWERFUL THAN GOVERNMENT'.
Odd, in that money does not really exist. Perhaps that should read: 'THOSE WHO NOTIONALLY CONTROL MONEY, HAVE POWER OVER GOVERNMENT'.

Cherchez la scam.

It was SOOOO evident that when Labour 'bought the banks' they cringed back from ANY CONFRONTATION. There is a whole layer of skulduggery that we know nothing of. It is part of the Lie that we live in. I don't know the answer; many who do are not telling (fear, enlightened self-interest?) Is there no one left in this land, to champion INTEGRITY at any price to themselves?

'It's an inequitable world Henry.'

#3 muggwhump

"It doesn't seem to matter what country you live in it is the same wherever you go. Here in the UK our three mainstream parties are revealed to be more like one party with three faces every day..."

Absolutely.
Why? Because the state is the political reflection of the underlying economic relations.
That is, the politicans have their own fortunes, & those of their family, friends & fundraisers, all at stake.
To maintain their life of privilege & power they need money.
They don't want the banks to suffer losses because that means them.
Far better to socialise the losses & get taxpayers to pay.

19

Perhaps that should read: 'THOSE WHO NOTIONALLY CONTROL MONEY, HAVE POWER OVER GOVERNMENT'....

lots of quotes on that

"Give me control of a nation's money and I care not who makes it's laws" Mayer Amschel Bauer Rothschild

Thomas Jefferson
"I believe that banking institutions are more dangerous to our liberties than standing armies.
Already they have raised up a monied aristocracy that has set the government at defiance. The
issuing power (of money) should be taken away from the banks and restored to the people to
whom it properly belongs." — Thomas Jefferson, U.S. President.

Andrew Jackson
"If Congress has the right [it doesn't] to issue paper money [currency], it was given to them to be used by...[the government] and not to be delegated to individuals or corporations" President Andrew Jackson, Vetoed Bank Bill of 1836

James Madison
"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance." James Madison

..I am convinced that the agreement [Bretton Woods] will enthrone a world dictatorship of private finance more complete and terrible than and Hitlerite dream. It offers no solution of world problems, but quite blatantly sets up controls which will reduce the smaller nations to vassal states and make every government the mouthpiece and tool of International Finance. It will undermine and destroy the democratic institutions of this country - in fact as effectively as ever the Fascist forces could have done - pervert and paganise our Christian ideals; and will undoubtedly present a new menace, endangering world peace. World collaboration of private financial interests can only mean mass unemployment, slavery, misery, degradation and financial destruction. Therefore, as freedom loving Australians we should reject this infamous proposal. -- Labor Minister of Australia, Eddie Ward, during the inception of the World Bank and Bretton Woods, he gave this warning.


Charles August Lindbergh objected to the private ownership of the Federal Reserve banks, complaining that the financial system "has been turned over to the Federal Reserve Board ... [which] administers the finance system by authority of a purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money."

money is power. Rothschild is right. If you control the cash who cares what anyone 'thinks'.

Ireland is not being bailed out. The bond holders are being bailed out and the Irish people are going to have to pay for it.

They - the people - do share a sizeable part of the blame in that they indulged in the massize ponzi property bubble. Interestingly, the ³ÉÈËÂÛ̳ and Sky has been almost wall to wall today condemning the naivety of the Irish for spending such ludicrous sums on flats, townhouses, etc.

The fact that I have not heard one single ³ÉÈËÂÛ̳ or Sky News commentator dare utter that the UK has had such an equally mad ponzi property bubble, and still has, only confirms to me that the madness continues.

Lets all laugh at the Irish for paying 500,000 Euros for a studio appartment in Dublin or getting mortgage on a 3 bedroom semi in Cork for 1 million Euros!

Such a thing would never happen here in London or the rest of the UK - would it!?

Oops - too late!

an excellent piece, Paul, but as you mentioned in your account the speculators who fed the flames and even now are betting on the fall of the Euro so what is the pain for them? What is their penalty? They are largely responsible for a lot of this pain so why don't they try and take a measure of responsibility instead of taking shedloads of dosh to the bank....probably offshore...

'18. At 12:24pm on 22 Nov 2010, MyNames wrote:
#16 That's something I really don't understand either. How can one heavily indebted country lending another heavily indepted country borrowed or printed money help shore up confidence in anything?

I think it involves a quantity of easing, from on high. It's how mushrooms are grown.

Luckily, the media is onside.

IGNORANC IS BLISS BUT ONLY THE DUMB CAN STAY IGNORANT (#19)

Grief and double grief Jaunty - I knew none of that. Nothing to add,

All three political parties are just different wings of the Capitalist Party. Our elections are no different from the Soviet ones. How long will this sham continue? Democracy is here to protect the politicians from the people. They need reminding.

We, the people, have Madame Guillotine, and They do not.

THE POLITICS OF DUPLICITY (#26)

A small point, in passing. I read today that cigarettes might have to be packed in plain packs. Meanwhile the EU will continue to grow the stuff (still with a subsidy?) across (at the last count) 8 states.

I seem fortunate in my brain chemistry, so I am in no position to denigrate those who wish to augment theirs. But (just like drugs in sport) either we embrace 'happy poisons' or we eschew them. Pretending to do both, HONOURABLY, hacks me off.

CIA ACTED ODDLY BEFORE 9/11. ARE WE GOING TO FIND MI5 BEHAVED SIMILARLY PRIOR TO 7/7?

9/11 was clearly 'self harm' for nefarious political advantage. . .