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I'm reacting to this from above (and all over the net)

Ireland's Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: "You are Ireland's salvation."

    The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.


by rootless2 on Mon May 9th, 2011 at 07:51:26 PM EST
[ Parent ]
I don't know how good Morgan's information is here, but it seems to have come from an IMF source who, if his account is to be believed, does not regard the plan which eventually emerged as workable.  Geithner's objection was unexpected, and is presumed by Morgan Kelly to be due to his closeness to US banks.  Perhaps they also had a stake in the Irish bank bonds which would have received a haircut under the IMF proposal.

But Morgan's main fire is directed at the ECB (not the IMF) who would not countenance any restructuring (or even buying back of Irish debt at a discount on secondary markets). Morgan portrays the IMF (at staff level at least) as supporting his thesis that the ECB insistence on no restructuring, high interest rates, and total focus on price stability making an Irish default inevitable.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon May 9th, 2011 at 08:11:08 PM EST
[ Parent ]
The CDS market is largely custom, over the counter, non-public arrangements -- very opaque. Giethner, as US Sec. Treas. might have, or might have been given a heads up by Goldman or JPM about possible CDS blow-up if European banks holding bonds are given a haircut. Just speculation, but it seems plausible that he cares a whole lot less about 8 million Irish than about one TBTF.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 10th, 2011 at 01:02:38 AM EST
[ Parent ]
This is the problem with the current left. There is a storyline that Geithner is a bad guy, so we ignore all economics, all interest, all power politics, and rely entirely on "just speculation" that makes us easily manipulable.
by rootless2 on Tue May 10th, 2011 at 07:36:29 AM EST
[ Parent ]
We are ignoring all economics? Seriously? It rather seems we have some disagreements on how economics functions. Specifically on the efficiency of the extend and pretend model of crisis management.

Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter
by generic on Tue May 10th, 2011 at 09:35:33 AM EST
[ Parent ]
indeed. You seem to be reduced to totally untethered speculation that there might have been a US bank that wanted Geithner to intervene in order to prop up a rumor that makes sense only if one ignores the actual economic/political interests of German and UK banks and governments as well as their documented behavior.
by rootless2 on Tue May 10th, 2011 at 09:55:59 AM EST
[ Parent ]
We have a claim from the Irish Times that Geithner ordered the IMF to get with the program. What makes this interesting is that there is no apparent reason for this. Are we to pretend that it couldn't have happened because we can't find a ready motive? How could one expect to learn anything if one discounts everything that doesn't make sense on the first glance?

And to reiterate: I don't think anybody here is claiming that this whole austerity fiasco is an American conspiracy or that the US played an important part. It is quite clear that the responsibility for these decisions lies on this side of the Atlantic.

Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter

by generic on Tue May 10th, 2011 at 10:31:19 AM EST
[ Parent ]
No what we have is a claim by Morgan Kelly that Geithner "torpedoed" a plan that neither the Irish government nor the ECB/EU have advocated. We know that ECB/EU have been acting as enforcers for German/UK banks. We know that Geithner is under attack from Wall Street as they desperately try to fend off regulation. We know that the German media have sold Germans on the story that foreigners, many of them swarthy, have pissed away money and are demanding that hard working Germans bail them out. And, yet, the a large number of people on the  "left" are happy to wander off into silly speculations that don't address any of the issues at hand - at the instigation of "Reagan Democrats" and others.
by rootless2 on Tue May 10th, 2011 at 12:23:29 PM EST
[ Parent ]
There was no rescue plan. The IMF had a plan that was supported by parts of the Irish government and possibly, though that is far from clear, Osborne. No one else. And the claim is that the IMF had to give up on it once Geithner vetoed it. Everything else we knew already. So why is it silly to think about this new piece of information?

We know that Geithner is under attack from Wall Street as they desperately try to fend off regulation.

We do? What is this planned regulation that would so severely damage Wall Street?

Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter

by generic on Tue May 10th, 2011 at 12:49:36 PM EST
[ Parent ]
by rootless2 on Tue May 10th, 2011 at 01:04:52 PM EST
[ Parent ]
Wall Street doesn't like Elizabeth Warren and her consumer protection agency. But what is the connection to Geithner? Its not him trying to appoint her. It rather looks like Wall Street would very much prefer to be regulated by the treasury and the Fed.

Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter
by generic on Tue May 10th, 2011 at 01:23:09 PM EST
[ Parent ]
Warren works under Geithner.
by rootless2 on Tue May 10th, 2011 at 01:27:08 PM EST
[ Parent ]
Likely only because that was the worst place Wall Street sycophants in Congress could find to place the agency. And the only times I have seen Geithner come out for reforms has been at Obama's instigation, presumedly after he has lost the argument in the cabinet, but that is just my read. What has he done that has so impressed you?

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 10th, 2011 at 01:52:43 PM EST
[ Parent ]
You have no idea what arguments Geithner has had in the cabinet.

Warren works for Geithner

The auto rescue and scalping of bondholders happened under Geithner

WS was forced to repay TARP and purchase back options at open market prices under Geithner.

Billions in TARP money went to small banks, including labor banks under Geithner

That's fact. The narrative that relies on speculation about what happened in conversations nobody overheard or in dark plots that have no evidentiary basis is just narrative.

by rootless2 on Tue May 10th, 2011 at 02:05:45 PM EST
[ Parent ]
That's fact.

"Facts" without context are meaningless.

I certainly do not recall Giethner leading the bail-out of GM and Chrysler. Seemed more like he was drug along kicking and screeming. Giethner did not appoint Warren and I have seen little evidence that he supports her efforts, though I would be pleased to be wrong.

The terms on which WS "repaid" TARP and bought back options were about the minimum that would not be seen as outright gifts and the revenue to make those payments came largely from WS arbitrage of the difference between the Fed cost of funds and what they could get in the market. I.E. the public gave them free money for them to lend at interest. Oh, and they understood how much and how long these funds, including QE I and QE 2 would last and were able to "invest" them in markets, such as the stock markets, which they effectively have manipulated. The whole TARP issue is only the tip of the iceberg of Fed and Treasury assistance to TBTFs, and this has been to the detriment of the "real economy", which has continued to wither.

Small banks didn't get TARP money, but mid sized regional banks, such as my bank, Bank of the Ozarks, did, at Treasury insistence, under Paulson.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 10th, 2011 at 03:30:42 PM EST
[ Parent ]
"I certainly do not recall Giethner leading the bail-out of GM and Chrysler. Seemed more like he was drug along kicking and screeming. "

That's pure fiction unless you know someone in the Administration who tells you otherwise.

"The terms on which WS "repaid" TARP and bought back options were about the minimum that would not be seen as outright gifts "

More fiction - if McCain had won they would have been allowed to cancel the warrants which they were demanding strongly.

"revenue to make those payments came largely from WS arbitrage of the difference between the Fed cost of funds and what they could get in the market. I.E. the public gave them free money for them to lend at interest. "

Wrong again. By the way, the discount window was not invented by the Obama administration.

"The whole TARP issue is only the tip of the iceberg of Fed and Treasury assistance to TBTFs, and this has been to the detriment of the "real economy", which has continued to wither."

Which is why we have just had the longest period of manufacturing growth in 20 years.

"Small banks didn't get TARP money, but mid sized regional banks, such as my bank, Bank of the Ozarks, did, at Treasury insistence, under Paulson. "

And that's not even false, it's Republican PR bullshit. The records are online - look it up.

Keep reading Yves Smith and keep believing RW propaganda and calling it "left".

by rootless2 on Tue May 10th, 2011 at 09:38:50 PM EST
[ Parent ]
Well, I am certainly not going to take instruction from you.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 10th, 2011 at 11:52:50 PM EST
[ Parent ]
I think we may have reached the end of the productive part of this thread, then.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed May 11th, 2011 at 01:45:13 AM EST
[ Parent ]
N
O
T

Y
E
T

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Wed May 11th, 2011 at 04:41:00 AM EST
[ Parent ]
Please consider a diary "setting the record straight"...

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed May 11th, 2011 at 01:54:57 AM EST
[ Parent ]
The argument appears to be, insofar as Ireland is considered, whether Geithner was a key actor in determining the outcome of the IMF/ECB/Irish negotiations, or whether he was the fall guy, someone the ECB could use as cover for a very regressive, bank bondholder driven, austerity policy directed at Ireland.

We have Morgan Kelly arguing he was a key actor, apparently based on an account from an IMF source with knowledge of the negotiations. Morgan Kelly is an economic historian, not an insider in either IMF or Irish Government circles, and so we have to make a judgement call on how reliable his source and his account is.  Based on his track record, and based on only partial denials coming out of Washington, I would tend to believe him on this occasion, mainly because the ECB have no need of a US scapegoat:  they are doing exactly what they think they should eb doing, and making no apologies for it.

You are free to differ, and seem to be arguing that Geithner is a much misunderstood and maligned guy, both by Morgan Kelly and by US progressives more generally.  That is an argument I am not qualified to get into, but I suspect the position people will adopt depends on their view of the Obama administrator's dealing with wall street more generally.

This is a topic which deserves a diary of its own, and does not deserve to be buried in a 250+ comment stream where only 3 or 4 people are still involved.  From an Irish point of view, if we are looking for support from the US administration, it is important that we understand the internal dynamics and politics at work within that administration.

So please Rootless2, give us a diary on what you consider to be Geithner's approach to dealing with the financial crisis as it has unfolded in the US and Europe, and how it might differ from the approach of the Germans and the ECB.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed May 11th, 2011 at 06:51:30 AM EST
[ Parent ]
Oh, and they understood how much and how long these funds, including QE I and QE 2 would last and were able to "invest" them in markets, such as the stock markets, which they effectively have manipulated.

QE1&2, as I understand it, involved US sovereign bonds. Insofar as this is the case, the only extraordinary thing about them is that they are considered extraordinary.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed May 11th, 2011 at 02:40:50 AM EST
[ Parent ]
Small banks didn't get TARP money, but mid sized regional banks, such as my bank, Bank of the Ozarks, did, at Treasury insistence, under Paulson.

red herrings to throw off the scent of regulator bloodhounds?

this whole global heist analysis is becoming like an agatha christie whodunit.

and the best de-veilers are right here!

layer by layer, the obfuscatory games are laid bare, and soon the whole world will know if the butler dunnit or not.

was it the colonel with the candelabra?

i still have dreams of paulson in the stocks outside the wall street skyscrapers, getting pelted with defunct 401Ks.

here's beppe grillo's remodded 'animal farm' take on it.
Beppe Grillo's Blog


A gentleman called PIG, is about to go bust. He's got a great idea. In order to survive, he's selling his debts. He calls them State Bonds. Many people are buying them; they only want a low rate of interest and a tiny bit of interest when the capital is returned when the loan arrangement ends. Mr PIG has found the system for living above his means. He continues to get debts and to sell them. His family accounts however get worse and to protect themselves, those who buy his bonds, are asking for a higher rate of interest. Mr PIG is obliged to increase the interest rates. Over time, the situation becomes critical. The number of people buying the debt goes down as they are afraid of the risk. The debt is no longer triple A minusminus, but a triple B plusplus. The time will come when Mr PIG is no longer able to pay the interest. The neighbours of Mr PIG who have lent him most of the money, have nothing to gain by making him go bust. If he goes bust they will lose their money. Thus they offer him a loan with lots of conditions, something they call a "bail out".
Mr PIG is obliged to accept so as not to go bust. When the money from the loan dries up, Mr PIG finds he's paying more interest than before. Those who have lent him money have only gained time and now they are doubly at risk, they can lose both the State bonds and the loan that is the bail out.
Mr PIG, technically a bankrupt, is thus able to raise his voice as though it were he that had lent money to the others. He threatens to restructure the debt. In other words, those who bought his bonds at 100 will see the value halved to 50 and Mr PIG will be freed of half the debt with no one being able to stop him doing so. The creditors, who are ever more worried, don't know which way to turn. In fact, the State bonds, like those of any company quoted on the Stock Exchange, can lose their value. The creditors have one thing in common with Mr PIG, the currency. Once upon a time, Mr PIG used the Drachma, now the Euro. His behaviour is putting at risk the good name of the currency of the virtuous gentlemen that have no debts or few debts. The Euro cannot be compromised. The neighbours can throw out Mr bankrupt PIG from the Euro and see part of their credit go up in smoke for ever or continue to give him finance with one "bail out" after another. Germany and France have about 250 billion dollars in Greek State bonds and because of Mr PIG, the Euro is losing value in relation to the dollar and the yuan. Mr PIG leaves the Euro and his State bonds become waste paper. I would like to find the logic and the moral of the story, but I cannot.

i don't either, unless it's 'the cunning always cheat the weak'.

;(

"I would rather have questions that can't be answered than answers that can't be questioned." - Richard Feynman

by melo (melometa4(at)gmail.com) on Wed May 11th, 2011 at 10:36:31 AM EST
[ Parent ]
BG:s blog perhaps makes sense if he replaces PIG with "Greece," otherwise not so much.
by kjr63 on Wed May 11th, 2011 at 11:33:26 AM EST
[ Parent ]
Or Ireland, or Portugal. If any one of them publicly defaulted on a significant portion of their debt it would likely take down numerous banks in the EMU core. But the default would likely need to be public in order to prevent selective "extend and pretend" from being continued and to exceed the reach of "regulatory forbearance".  

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 12th, 2011 at 10:35:09 AM EST
[ Parent ]
I don't see why a default has to be widely publicised, apart from the fact that it would be difficult to avoid publicity.

From the point of view of the PIGS economies, it is actually preferable if a default is "kept in the family" until some time after the fact, so the money markets don't throw a hissy fit and crash their economies. And if German politicians want to bail out German banks and then lie to their public about it, then that's a matter between the German electorate and Mrs Merkel.

Indeed I can think of a lot of excellent reasons we might prefer her to try to keep it under wraps. Not the least of which reasons would be that such a coverup would make her politically radioactive when exposed (as it inevitably must be - you can't hide a bailout on that scale). Sadly, I think she'll prove to be too politically savvy or too ideologically committed to the fiction that Germany holds some sort of moral high ground to let such a default pass unmentioned.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu May 12th, 2011 at 11:15:13 AM EST
[ Parent ]
Especially in the USA, but probably elsewhere as well, I see ongoing damage from the fraud based TBTF banking model with its accompanying regulatory and governmental capture. The longer the system runs the more damage it does. So I would prefer a crash NOW to entropy death later. There are so many unpayable debts out there that the best thing would be an event that would take down enough bad banks that the system could not be saved and it would have to be reconstructed. Of course it could well be reconstructed along similar lines, but, at least, there would be an opportunity for something better to emerge.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 14th, 2011 at 08:08:53 PM EST
[ Parent ]
So I would prefer a crash NOW to entropy death later.

Yes, but a country with a structural import dependence on fuel and food and a foreign primary deficit may view things in slightly different terms. Especially if they have neo-Nazis rampaging through the streets, looking to take advantage of any "national humiliation."

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 15th, 2011 at 03:58:19 AM EST
[ Parent ]
I don't see why a default has to be widely publicised

It needs to be publicized to further discredit the system and to force recognition and write down of unpayable debts. If bad debts can be written down a better economy becomes possible. Anything that a TBTF is forced to write down is one more former bad debt that they will no longer be able to use in their ongoing attempts to squeeze blood from stones. And if it takes down the TBTF, that is a good thing.

I don't see how anyone other than the elites can benefit from the current situation and I find it surreal that the elected governments of the chief victims, the PIGs, have been turned into the enablers for the continuation of the torture of their own populations. Guess I just don't have the stomach for serial abomination.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 14th, 2011 at 08:19:56 PM EST
[ Parent ]
I recognize that such a "moral" position is totally at variance with what passes for contemporary academic economics, so I don't recommend that any that look forward to employment in that discipline publicly join me in my desire for a collapse. I really don't want it either, it is just that I think it is the least worst long term outcome and offers the best chance for a genuine improvement in governance. But, to paraphrase what Lenin said of the Romanovs: We have had 120 years of financial capitalism. Why not another 120 years?

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 14th, 2011 at 08:25:50 PM EST
[ Parent ]
I really don't know where you are coming from on this - or whether you are including me and others here in "the current left".  If there is one thing that intrigues me about this crisis - as seen from Ireland - it is that the left are often more sycophantic than some on the right.  In either case Geithner is a sideshow which has barely emerged in the narrative here.  

If the USA is to make a positive contribution, I see it coming through Obama/Clinton and a wide selection of Irishphile political and administration figures within the US with Geithner understandably more focused on the global players - both corporate and national - and with US based financial interests.  Our main problem is with a resurgent nationalism in Germany and with a disintegration of the Eurozone thanks to an inadequate institutional and policy framework.

What's with your simplistic bad guy narrative?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 10th, 2011 at 10:05:00 AM EST
[ Parent ]
i really don't have any issues with your diary. I'm just reacting to the way in which the Geithner rumor, which seems to me to be most likely an effort by EU/Ireland to blame the bogeyman,  has taken off and not just here.

http://www.irishcentral.com/story/roots/the_american_in_ireland/tim-geithner-helped-sink-ireland-121 510004.html

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1059150

http://alethonews.wordpress.com/2011/05/09/geithner-scuppered-imf-plan-to-impose-haircut-on-irish-de bt/

just google "geithner ireland"

by rootless2 on Tue May 10th, 2011 at 10:11:01 AM EST
[ Parent ]
I'm not familiar with any of the sites you cite - are the US based?  I am amazed that an opinion piece by a hitherto marginal and reviled Irish academic has resonated so much elsewhere - the Geithner reference is tangential to Morgan Kelly's main targets - Honahan, slight dim former rugby players running Irish banks, the ECB, and the Irish Government.

I suspect the Geithner reference is playing into some pre-existing anti-Geithner sentiment on the US left and also a pressure point for Irish Americans on the Obama administration.  But from an Irish perspective the main bogeymen are the Irish Government, regulator, central bank, structural flaws in the design and implementation of the Euro, ECB and German nationalism.  

The US administration, for once, is a marginal player, but one which I think could be a positive player since it is less austerity fixated and much less hidebound in its dealings with banks than Germany.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 10th, 2011 at 10:28:53 AM EST
[ Parent ]
Yves-Smith and similar have fixed on Geithner as the bad guy. It's weird.

I think the reemergence of German nationalism is very dangerous.
 

by rootless2 on Tue May 10th, 2011 at 10:37:07 AM EST
[ Parent ]
Never heard of Yves-Smith before, but have just read his/her? critique of the very limited Treasury denial of Geithner's role.  It seems an entirely reasonable critique given the denial didn't deal with the point Morgan Kelly made.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 10th, 2011 at 10:51:54 AM EST
[ Parent ]
Kelly's claim

The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers.

Treasury denial (as reported)

Last night, a senior US official said this report was "inaccurate".

The official pointed out the ECB and the European Commission (EC) did not want to impose haircuts on bondholders who loaned money to Irish banks.

"The ECB and EC were both dead opposed and they are decisive. The US is not a decision maker on European issues," the official said

The Yves Smith take:

Ahem. Notice the statement. It does not say that Geithner was against the restructuring, merely that his opposition made no difference.

But this finesses what Kelly discussed, which is that Geithner effectively undercut the IMF

And that's just gibberish. Kelly alleges that US "torpedoed" the rescue plan, the US says the obvious - that it didn't torpedo anything because the ECB is calling the shots and the ECB is protecting the bondholders. The key claim of Kelly is "torpedoed" and that's exactly what Treasury addresses. So what we have is a Kelly claim of "torpedoed" that is (a) unsubstantiated (b) denied and (c) based on a clearly false theory that the US is calling the shots. When you add that to the other problems with Kelly's argument (he even gets the total of treasury payments to GS wrong by a factor of 2 1/2)  Smith's silly "ahem" just reduces to "but the script has Tim as the bad guy".

There are plenty of reasons to object to US treasury policies from a left wing point of view, but neither Yves Smiths "timmy is evil" cartoon or Kelly's apparent water carrying for the ECB comes close.

by rootless2 on Tue May 10th, 2011 at 11:31:12 AM EST
[ Parent ]
The IMF are providing a separate loan to Ireland (at a lower interest rate) and would have needed ECB agreement to any haircut plan.  Whether the ECB would have agreed to that under any circumstances became moot once Geithner vetoed the IMF proposal.

The idea that Kelly carries any water whatsoever for the ECB is just plain ridiculous, given the only water he wants to give the ECB is ownership of the Irish banks in return for the 150 Billion the banks owe the ECB.

Some water carrying.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 10th, 2011 at 12:31:08 PM EST
[ Parent ]
"Whether the ECB would have agreed to that under any circumstances became moot once Geithner vetoed the IMF proposal."

But we only have one unsubstantiated and denied allegation that Geithner vetoed anything. And that allegation is surrounded by checkable inaccuracies.

Whether Kelly is telling the truth, making it up, or carrying someone else's excuse is impossible to tell. What's easy to tell is who benefits: the Germans, the UK and the Irish government all of whom have a convenient scapegoat.

Obama blocked IMF deal to haircut Irish debt. Boycott Obama's speech in O'Connell St - pass the word around

http://www.politicalworld.org/showthread.php?t=8075

And this at a time when the US and Germany are actually in a known dispute

On a more fundamental level, however, Washington is concerned that, should Europe overreach in its rush to cut government spending, it could endanger the fragile economic recovery that has taken hold on the Continent and around the globe. In particular, the US would like to see countries like Germany and France continue efforts to stimulate their economies.

http://www.spiegel.de/international/business/0,1518,697132,00.html

And the US policy has been, for a while to oppose Euro austerity

"In a letter to G20 leaders last week, US President Barack Obama warned against cutting national debts too quickly, arguing it would put economic recovery at risk"
http://www.bbc.co.uk/news/10411167

So the claim is that in contrast to clear US policy, the US treasury department is forcing massive austerity on Ireland and backing up the bond hawks. I guess it is possible, but to me it seems more likely to be disinformation designed to focus popular discontent on an easy target.

by rootless2 on Tue May 10th, 2011 at 12:59:06 PM EST
[ Parent ]
  1. Geithner is not an important part of this story from a European perspective.  Everyone knows the ECB is opposed to all haircuts.  No one here is blaming Geithner for this. At most he undercut IMF efforts to negotiate a slightly more enlightened policy.

  2. I have already argued above that I see the US and the Obama administration as a potential ally against excessive German/ECB inspired austerity policies.

  3. You seem to be trying to overlay a US left/right debate around Geithner on a European discussion of Austerity policies, German ECB obsession with protecting Bondholders, and structural deficiencies in the design of the ECB and Eurozone.

  4. Please stop buttressing your argument with websites I have never heard of making points no one here has ever made. Your argument is with other people!


Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 10th, 2011 at 01:18:40 PM EST
[ Parent ]
"No one here is blaming Geithner for this"

Kelly certainly is. And the websites show that he is not the only one in Ireland.

by rootless2 on Tue May 10th, 2011 at 01:28:51 PM EST
[ Parent ]
The fact is, ARGeezer did bring up Yves Smith's angle on the Morgan Kelly piece. Where in your excerpting you ignored the G7/IMF conference call episode, Yves Smith focuses on that. There's also the "Geithner and DSK" diary.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue May 10th, 2011 at 01:39:17 PM EST
[ Parent ]

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