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For Kelly, O'Hagen, or the Octopus?

I was referring to Kelly, but your link answered the question. Kelly makes the point that the original bond holders have been paid off. This whole process needs to be investigated and, probably, prosecuted. It was just TOO DAMN CONVENIENT! Clawbacks would be in order from a process that was found to be based on collusive fraud. And there is still a lot to be explained about the urgency with which the ECB wanted Ireland to accept a bailout, given the time they had until the next payment was due. But maybe I have missed something.

I suspect that one of the reasons for the Irish elite's reluctance to consider any real alternatives is that amongst those alternatives there might be investigation and prosecution of many of them for their roles in the whole debacle and many might be ruined and even do time in prison. This all smells like the reluctance in the USA to look at the past, etc. ever since Watergate, but, especially, since Clinton. Just ignore past potential infractions and move forward. In both cases I strongly suspect that a proper investigation of events in previous administrations would open 55 gallon barrels, not of worms, but of vipers. (Imported vipers, to be sure.)

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jun 1st, 2011 at 11:33:50 PM EST
[ Parent ]
Kelly makes the point that the original bond holders have been paid off.

shrug

That was a Troika decision. I can see no downside to sticking the Troika with the cost of that decision by defaulting on the bonds they bought to enable it.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 2nd, 2011 at 12:14:27 AM EST
[ Parent ]
Good. I didn't have the specifics of the deal. If they are as you state I completely agree. F#*k 'em. I recalled that most of the money would have gone to foreign bond holders.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 2nd, 2011 at 12:43:03 AM EST
[ Parent ]
What you are referring to as criminal behaviour passes for normal around here.  It works like this:

Our banks were massively insolvent but because everyone in the elite "believed" the drop in the property market was a blip and thought there would be a "soft landing", they were able to claim they were merely illiquid, not insolvent.

The ECB provides up to €150 Billion (or thereabouts - what's a few Billion between friends) in "emergency" liquidity - allegedly secured on the Banks assets (you must be joking) in return for the Government committing to recapitalising the banks.

The Government cannot envisage a situation where the economy can continue to function without the banks functioning and paints a nightmare scenario of "the ATM's will stop working" to establish a TINA narrative.

The cost of recapitalising the banks goes up and up with each succeeding "stress test" as reality gradually intrudes and the ECB/IMF have to come in to "generously" bail out the Irish Government to bail out the Irish banks to bail out their German Bondholders - all at an exorbitant interest rate.

The Irish Government has little choice to accept the ECB generosity because the Global sovereign debt markets won't lend to the Irish Government any more  - correctly judging that the cost of the Bank bail-out, plus the cost of a ballooning public sector deficit (largely caused by the collapse of the asset bubble caused by German banks excessive lending to Irish banks etc. ) is too much for the Irish economy to service.  

Just to make sure TINA to the ECB "bail-out", Merkel and other EU heavies makes lots of comments about taxpayers not bailing out future bank losses which freaks out the markets during the IMF/ECB "bail-out" negotiations and makes it absolutely impossible for the Irish Government to borrow anywhere but from the ECB.

So, despite otherwise having been funded for most of this year, even the new Irish Government is well into the clutches of the ECB and makes only token changes to the ECB/IMF bailout deal on the grounds that:

  1. If the ECB withdraws liquidity from the Irish banks they go under straight away

  2. They can't borrow anywhere else

  3. As one of the most open economies in the world heavily dependent on exports, we need access to EU markets and the "stable" currency regime the Euro provides.

It's all about school yard economic.  Big boys bully the little boys and there is no teacher willing or able to stop it anyway.

Oh, and did I mention that not a single civil servant in the Irish Department of finance is an economist, and the only economist hired by the public service in recent years made his name slagging off Morgan Kelly?

For any Irish Government to have done otherwise, they would have needed an independent political vision and some serious economic expertise at their disposal, but we're all Europeans now and the markets and their ringmasters have to be obeyed.


Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 2nd, 2011 at 06:53:53 AM EST
[ Parent ]

largely caused by the collapse of the asset bubble caused by German banks excessive lending to Irish banks etc.

The German banks participated to the bubble but did not cause it - and the lack of intervention/policies by domestic authorities certainly did not help.

Sure, Germany is refusing to acknowledge their part in the crisis - but it does not mean that they were the only ones to blame.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Thu Jun 2nd, 2011 at 07:58:27 AM EST
[ Parent ]
Please allow me some rhetorical latitude in a somewhat tongue in cheek response to ARG.  My point was that under our present systems there is no need to hypothesise criminality in order to explain what happened.  Ideological capture, yes.  Incompetence on a grand scale yes. Some criminality on the margins, also yes.  But the basic problems were systemic.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 2nd, 2011 at 09:44:32 AM EST
[ Parent ]
no need to hypothesise criminality in order to explain what happened.

True, the need is to discourage continuation of the behavior and to force a cleanup of the systemic problems. The need to go after criminality "at the margins" is to demonstrate that, if your incompetence and cronyism weak sufficient damage on the entire society you are vulnerable to a thorough investigation and to prosecution for ANYTHING that turns up. If there are no consequences for the perpetrators, there will be no change.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 2nd, 2011 at 10:05:19 AM EST
[ Parent ]
Same problem as in the USA: it is called regulatory and prosecutorial forbearance; it is not really a crime until someone has been investigated, prosecuted, convicted and sentenced; and the forbearance is insured through governmental capture by interested parties. Given the attitudes of impunity prevalent, there will be crimes if there is investigation. The sunlight that would be thrown on the whole corrupt process MIGHT give social democracy a chance. You never know until you try.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 2nd, 2011 at 09:54:13 AM EST
[ Parent ]

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