I tend to believe most people involved are basically honest, and that they actually believe the crap you've outlined. It's very easy to do if you want to, and the rewards are high.

The Power of Ideology

We [Irish] are thus, to some extent, externalising the consequences of the bankers/developers profligacy onto the Eurozone/ECB/EU who are effectively guaranteeing our currency and our bonds and onto the collective bargaining power of Irish taxpayers as represented by the state.

This is the rub. As I suggested in your previous diary, it is likely that a large fraction of the debt owed by Irish banks and which the Irish government has guaranteed is owed to creditors in the Eurozone. As part of the same currency area it would be very difficult for Ireland to do a good bank/bad bank situation in which foreign creditors are hung out to dry without suffering the consequences.

The question is, who benefits. Is it a certain Eurozone-wide financial elite that benefits to the detriment of the populations in all the countries?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

Axioms of neo-liberal (Neo-Classical) economics from E. Roy Weintraub via wikipedia:

   1. People have rational preferences among outcomes that can be identified and associated with a value.
   2. Individuals maximize utility and firms maximize profits.
   3. People act independently on the basis of full and relevant information.

The items in your list are deductions, inferences, conclusions, and etc. stemming from these axioms.

All of these are demonstrably False-to-Reality.  

When one constructs a economic action or policy based on False-to-Reality axioms the economic action or policy MUST be False-to-Reality.  Therefore, it MUST follow implementing a False-to-Reality action or policy cannot solve the True-to-Reality problem(s) being addressed.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

Greens must accept Nama to stay in Government, says Gormley - The Irish Times - Fri, Sep 18, 2009

GREEN PARTY leader John Gormley has warned that his party will not continue in Government if the membership declines to approve the National Asset Management Agency (Nama), or a new programme for government, at a crucial convention in about three weeks' time.

It emerged last night that serious tension developed at the Cabinet meeting on Wednesday morning, involving the two Green Ministers and Taoiseach Brian Cowen, over the details of the speech on the Nama Bill to be delivered later in the day by Minister for Finance Brian Lenihan.

Government sources played down the row but conceded that there was "tension and intense negotiation right to the end" over the details of the figures to be announced by Mr Lenihan.

Shares in the country's two largest banks, Bank of Ireland and Allied Irish Banks (AIB), hit their highest levels this year after the Government outlined the scale of the toxic loans moving to Nama.

The two banks gained €1.16 billion in value as investors were buoyed that Nama's writedown of their bad property loans would not lead to a higher Government stake and dilute the investments of the existing shareholders.

AIB's declaration of confidence in its capacity to private raise about €2 billion in new capital without any resort to fresh State capital was greeted with considerable scepticism in Government circles.

notes from no w here

IMO, it is not so much about "ideology", but ignorance. Neoliberals are unable to make the difference between "profits" (from production) and "rents". They seem to believe "rents" are "wealth", instead of income extracted out from wealth. Instead of seeing banks as the originator of increasing rents (housing prices) they see banks as "victims" of "human irrationality". They perhaps even see banks as "wealth creator", because cheap money causes higher "asset values", not the fools or crooks they really are.
Now the economy must pay billions of these artificial rents. When all money comes for economic surplus, this can only mean lower consumption and lower capital formation, less wealth.

In Brief: Expenses . . . Sinking . . . Mortgage . . . Misogynist - Letters, Opinion - Independent.ie

• I don't want to harp on about this, but isn't it time we replaced the national symbol on the euro coin with a fiddle?

Frank Schnittger

notes from no w here

ECB funding 25% of Irish deficit indirectly, data reveal - The Irish Times - Sat, Sep 19, 2009

THE EUROPEAN Central Bank (ECB) is indirectly funding about a quarter of the Irish Government deficit, according to Central Bank figures.

The data shows that Irish banks have availed of ECB support to purchase almost €7 billion worth of Irish Government bonds since last November, when the National Treasury Management Agency (NTMA) stepped up its borrowing programme.

Irish banks account for 26 per cent of the €26.3 billion in debt issued over the last 10 months. The banks are able to purchase the debt by borrowing from the ECB at a rate of 1 per cent to buy the Irish bonds which pay about 5 per cent per year. They have been allowed access to unlimited ECB funding lines to purchase bonds as part of the emergency liquidity measures introduced in the the wake of the crisis in world credit markets.

Under the ECB refinancing operations, the Irish banks must first purchase the Irish bonds - usually with short-term financing. Once they own the bonds, they can refinance them at the ECB, that is get cash by putting the bonds up as collateral. The final part of the process is to repay the original borrowing.

The ECB is forbidden under its own rules to lend directly to member states, as this would be equivalent to printing money to fund a government deficit. However, the current system, under which Irish banks are borrowing from it at a low rate in order to lend on to the Irish Government at a higher rate - in the form of bond purchases - is tantamount to lending directly to the Government, market sources claim.

notes from no w here