Relief

by Colman Mon Nov 22nd, 2010 at 06:58:01 AM EST

Apparently, I am this morning hanging my head in shame at the ignominy of Ireland's impending rescue by the seriously suited legions of the Washington/Brussels consensus. The papers - Irish and British - are talking about loss of sovereignty as if our total surrender to the markets had never happened, as if it was this rescue rather than our defeat - all of Europe's defeat - by the priests of the free markets that we should be ashamed of.

In fact, the main new emotion is relief, and this is something that's been said to me by a number of (thoroughly bourgeois) friends over the weekend. Get the inevitable bail-out over with, have a new election as soon as possible and let's get on with our lives as best we can.

Update [2010-11-22 7:18:29 by Colman]: The Green Party have called for an election in January - they're pulling the plug on the government. RTÉ. I wouldn't be surprised if the government didn't survive that long.

Relief | 79 comments (79 topical, 0 editorial, 0 hidden)

Re: Relief (4.00 / 2)

Not to minimise the suffering this is going to cause of course, but the government policy already seemed to be to inflict that suffering without the help of a bailout. It doesn't seem likely that the IMF/EU approved policies are going to be much worse than what we already had on the way.

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 07:00:57 AM EST

Re: Relief (none / 0)

It will just make it so much easier for the Irish political class to blame the IMF and the EU for the policies.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 07:12:08 AM EST
[ Parent ]

Re: Relief (none / 0)

Well, they're busy denying the IMF/EU have made any difference to the policies. <shrug>

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 07:15:20 AM EST
[ Parent ]

Re: Relief (none / 1)

Well, if they're such idiots they don't even want to rely on voter amnesia 6 months from now...

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 07:18:50 AM EST
[ Parent ]

Re: Relief (none / 1)

The Green Party have called for an election in January - they're pulling the plug on the government. RTÉ.

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 07:17:33 AM EST

Re: Relief (none / 1)

They need to do an Iceland. Call in Eva Joly.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 07:19:10 AM EST
[ Parent ]

It's a bit late for the Greens to regain (none / 0)

their virginity...

I still think they were mostly just in the wrong place at the wrong time... like a nun in a speakeasy when the cops turn up...

but they are presumably out of circulation for a while now.

Still, it's nice to see them do the decent thing... simultaneously falling on their sword, and sticking it to Fianna Fail.

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Mon Nov 22nd, 2010 at 12:17:07 PM EST
[ Parent ]

Re: It's a bit late for the Greens to regain (none / 0)

Nah, they were so desperate to be in power they jumped in with FF. They deserve everything they get.

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 12:20:53 PM EST
[ Parent ]

I agree (none / 1)

Bitter experience tells me that it was naive and foolish to enter into a coalition in those circumstances.

But not corrupt or evil.

This distinction will, of course, be lost on the public.

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Tue Nov 23rd, 2010 at 05:46:41 AM EST
[ Parent ]

Re: Relief (none / 1)

If you're entitled to vote in Irish elections, you have until Thursday to get yourself on the register: http://www.checktheregister.ie/

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 07:27:56 AM EST

Re: Relief (none / 1)

Listening just now, Monday a.m., to the business report on NPR, where they're interviewing a priest, asking Are you embarrassed?

Although why they should be asking a priest about finances is anyone's guess.

And I'm screaming at the radio, "Listen to Colman! It's the banksters' fault. And the people will pay!"

by Mnemosyne on Mon Nov 22nd, 2010 at 07:57:19 AM EST

Re: Relief (none / 1)

A priest? Now I'm embarrassed. For NPR.

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 08:05:03 AM EST
[ Parent ]

The banksters (4.00 / 5)

are identified in the FT this morning:

Irish rescue is expensive sticking plaster
There are only two ways out of the Irish crisis. The first is what is likely to happen: following Ireland's finance minister agreeing to apply for a bail-out loan on Sunday, European states will pick up the tab for bailing out Irish banks, and leave the mess elsewhere for another day. But this is unfair to European taxpayers, conducive to moral hazard, and highly unlikely to solve the underlying problem.
The other, better option is to address the problem of EU banks as a whole. To do this a ruthless mark-to-market analysis of the balance sheets of all European banks is now needed - the only way to find out how much their assets are actually worth - followed by a continenal rescue plan.
Europe's politicians do not want to consider this. As they imposed a bail-out the bail-out on Ireland, the poor Irish protested that they are not like Greece. And they weren't: their government did not follow a profligate fiscal policy; indeed, in recent years it has been draconian.
But Ireland is like Iceland. Their banks participated in unwise real estate speculations, and their system is now insolvent. The Irish state knew it had to bail-out its banks, but their balance sheets were large in relation to GDP - exactly the Icelandic dilemma.
The Irish know that if their banks fail, their liabilities will fall on other European banks, especially in Germany and Britain. Some of those are fragile themselves. A chain reaction and panic in money and bond markets could easily ensue. In other words, another Lehman Brothers.
German politicians and taxpayers are right to be alarmed. They do not wish to have to make good all the holes in the balance sheets of all Europe's banks. And so they reason the ultimate solution is that some öf the pain should be borne by investors too. It is a reasonable position, but one which caused market perturbations when aired by Mrs Merkel aired, and she had to retract.
The problem is that if you force investors to shoulder some of the losses you cannot move one country at a time. A deal for Irish banks that left bank bondholders with a loss would result in flight from the securities of other European financial institutions.
Instead, a Europe-wide solution is needed.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon Nov 22nd, 2010 at 08:10:48 AM EST
[ Parent ]

Re: The banksters (none / 1)

Jerome a Paris:

a Europe-wide solution is needed

but none will be had.

Portugal is next.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 08:20:53 AM EST
[ Parent ]

Re: The banksters (none / 1)

Migeru:

Portugal is next.

Already happening:

FT.com / FT's rolling global market overview - Euro rally fades as contagion fears grip investors

Relief that Ireland and the European Union have agreed a €80bn-€90bn bail-out has quickly faded as investors note political turmoil in Dublin and worries about sovereign debt contagion remain.
...
In addition, it became clear at the start of European trading that while the market was prepared to reduce the premium for Ireland's debt following the bailout, investors were reluctant to believe the agreement signalled the end of the eurozone periphery's fiscal problems.
The yield on Portugal's benchmark debt has edged higher with traders fearing the market will now turn its attention to Lisbon's budget struggle.

FT.com / Europe - Portugal moves to head off market pressure

Portugal has moved to pre-empt the threat of renewed market pressure on its borrowing costs following the emergency financial rescue of Ireland, saying it has a "clear strategy" to reduce its yawning budget deficit and implement reforms to lift economic growth.
In an effort to reassure investors that Portugal would not need a bail-out, the minority Socialist government also stressed in a statement on Monday that the country had a "resilient and well capitalised" banking sector.
The Lisbon statement came as economists said the €80bn-€90bn Irish bail-out package, aimed mainly at assisting debt-ridden banks, might not succeed in preventing the eurozone sovereign debt crisis spreading to Portugal or other vulnerable economies.

"People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them." - Jean Monnet

by Melanchthon on Mon Nov 22nd, 2010 at 08:43:53 AM EST
[ Parent ]

Re: The banksters (none / 1)

traders fearing the market

<snort>

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 08:58:32 AM EST
[ Parent ]

Good catch (4.00 / 2)

the "market" now fears the "market." Time to close the "market"?

Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon Nov 22nd, 2010 at 09:55:22 AM EST
[ Parent ]

Re: Good catch (4.00 / 3)

The market is a god. The traders fear their God. All is well.

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 09:58:38 AM EST
[ Parent ]

Re: The banksters (none / 0)

portugal, then italy?

how many bailouts can the ECB afford? is it real money (!), or just paper promises?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Nov 22nd, 2010 at 09:51:52 AM EST
[ Parent ]

Re: The banksters (4.00 / 2)

The ECB hasn't bailed out anyone. They keep absconding their responsibility and calling in the IMF, first on Greece, now on Ireland.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 09:53:48 AM EST
[ Parent ]

Re: The banksters (none / 1)

Maybe not:

What we know for certain is that the magnitude of the budgetary adjustment remains unchanged.
Its composition, however, has shifted towards higher taxes and away from spending cuts. The €15 billion adjustment will be achieved with one-third extra taxes and two-thirds spending cuts. The Department of Finance had been working on the basis of a quarter to three-quarters ratio as recently as two weeks ago.
Could the change be accounted for by an increase in corporation tax? This uncertainty needs to be squashed, and fast. If it is off the agenda, then one of the rescuers should urgently be persuaded to say so publicly.
Another eyebrow-raiser from last night statements was that the bailout funding would be exclusively European. No IMF money would be involved and two EU countries which are not in the euro area - Britain and Sweden - might "possibly" chip in. (Irish Times)

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 09:58:00 AM EST
[ Parent ]

Re: The banksters (none / 1)

Colman:

Another eyebrow-raiser from last night statements was that the bailout funding would be exclusively European. No IMF money would be involved and two EU countries which are not in the euro area - Britain and Sweden - might "possibly" chip in.

That's good news, IMHO.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 10:01:03 AM EST
[ Parent ]

Re: The banksters (none / 1)

And so's the bit about the balance between taxes and spending cuts.

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 10:07:27 AM EST
[ Parent ]

Re: The banksters (none / 1)

Soc-dems are pushing for Sweden to demand higher corporate taxes in Ireland as a condition.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Mon Nov 22nd, 2010 at 10:52:44 AM EST
[ Parent ]

Re: The banksters (none / 0)

Forget it.

It's an article of faith here that the only red line for negotiations is the corp tax rate. Not subject to debate.

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 11:10:02 AM EST
[ Parent ]

Re: The banksters (none / 1)

Then it's all a sham.

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

by ATinNM on Mon Nov 22nd, 2010 at 11:59:34 AM EST
[ Parent ]

Re: The banksters (4.00 / 2)

Of course it is. Now the markets are focuding on Portuguese and Spanish debt while "Brussels believes it's a 'mistake' to compare Ireland and Spain". Rinse and repeat.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 12:02:12 PM EST
[ Parent ]

It's a MONEY MACHINE! (none / 1)

Short Portuguese and Spanish debt, you silly person, and make money the Old Fashioned© Way: steal it.

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

by ATinNM on Mon Nov 22nd, 2010 at 03:15:59 PM EST
[ Parent ]

Re: The banksters (none / 1)

It is one article of faith that creates pretty sour grapes outside Ireland, though.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Nov 22nd, 2010 at 12:21:13 PM EST
[ Parent ]

Re: The banksters (4.00 / 4)

Let me just point out that the IMF was the good cop in Greece's case. The ECB was the bad cop, and they have insisted on both huge increases in indirect taxes and spending cuts. Some rise in direct taxes and property taxes occured too, a few symbolic arrests and confiscations over semi-bigwig tax evasion, but really most of the weight has most definitely not fallen on the rich.

Now they demand collective bargaining agreements be scraped and huge numbers of public servants to be fired, leading to a "liberated" labor market of (even more) pauperized workers at all levels (because the skilled ones are already leaving the country). Is that within their mandate in Ireland?

I'm not sure how much of the labor market is left to "liberalize" in Ireland, neither what the teacher to pupil ratio is in public schools. But the ECB is bad news on both counts

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Mon Nov 22nd, 2010 at 11:38:37 AM EST
[ Parent ]

Re: The banksters (4.00 / 6)

Let me just point out that the IMF was the good cop in Greece's case. The ECB was the bad cop

Jean-Claude Trichet is an incompetent fuckwit ideologue.

Impeachment. Now.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Nov 22nd, 2010 at 03:12:47 PM EST
[ Parent ]

Re: The banksters (4.00 / 2)

Could we start a campaign here or something: "Impeach Trichet"? Along the Central Bankers / Central Wankers line that Migeru has been insisting on? Or something like "when European Central Bankers fail, who fires them?". Which is a valid question anyway: who decides about firing Europe's central banker, and based on what criteria of success is their performance evaluated?

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Tue Nov 23rd, 2010 at 09:58:54 AM EST
[ Parent ]

Re: The banksters (none / 1)

Jake and I are considering a 4-pronged campaign.

Impeach Trichet
Fire Stark
Stop Weber
Draft Buiter

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Tue Nov 23rd, 2010 at 10:02:43 AM EST
[ Parent ]

Re: The banksters (none / 0)

Yes!

What is the institutional framework here? Who can impeach, fire, and appoint?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Nov 23rd, 2010 at 03:27:49 PM EST
[ Parent ]

Re: The banksters (4.00 / 3)

I think appointment is by the Council, at the recommendation of the €-zone central wankers. I don't think it's possible to impeach or fire a central wanker - that's the whole point of having an "independent" (read: Dependent on courting the banksters rather than the democratically elected parliament) central bank.

But the whole point of having a constitutional crisis is to re-write the institutional relationships...

I'd suggest going after Weber. As satisfying as putting Trichet's head on a pike would be, he has only a year left as chairman of the ~~Politburo~~ ECB. So Weber and Stark are the clear and present dangers. And when the Council tells us to fuck off and die, we have a perfectly fine argument for when Weber and Stark blow up the €-zone political economy again a few years down the road: "We told the Council that this was insane, but they went and did it anyway. Clearly it is time to make the Council more receptive to democratic input and less to shady back-room deals."

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Nov 23rd, 2010 at 05:04:19 PM EST
[ Parent ]

Re: The banksters (none / 0)

Lovely! where do I sign up?

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Tue Nov 23rd, 2010 at 06:19:12 PM EST
[ Parent ]

Re: The banksters (none / 0)

Does the e-mail in your sig work?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Nov 23rd, 2010 at 06:48:10 PM EST
[ Parent ]

Re: The banksters (none / 0)

Yep!

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Tue Nov 23rd, 2010 at 07:50:21 PM EST
[ Parent ]

Re: The banksters (4.00 / 4)

Jerome a Paris:

The Irish state knew it had to bail-out its banks, but their balance sheets were large in relation to GDP - exactly the Icelandic dilemma.

What? They only needed to guarantee deposits and could have done a good old bank intervention saving the retail branches, the good assets and the deposits. Instead thay saddled the state with several multiples of GDP in blanket guarantees of the entire balance sheet of all the banks.

Ireland is like Iceland.

It has equally corrupt elites...

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 08:24:32 AM EST
[ Parent ]

Re: The banksters (4.00 / 6)

FT.com / Comment / Op-Ed Columnists - How to stop Ireland's financial contagion

If you merge 16 small open economies, you get a large closed economy. But here is the catch. If you assemble the leaders of the 16 small open economies, you get a roomful of 16 small-economy politicians. Economic governance through the European Council has proved always cacophonous and often incompetent. It is an institutional framework of finger-pointing. The Irish say they are not Greece. The Portuguese say they are not Irish. The Spanish finance minister said last week that Spain is not Portugal. There are no prizes for guessing what Italy is not.
This governance paradox lies at the heart of the eurozone crisis.

"People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them." - Jean Monnet

by Melanchthon on Mon Nov 22nd, 2010 at 10:15:49 AM EST
[ Parent ]

Re: Relief (4.00 / 3)

I think NPR is confused. The rape in this case is metaphorical, not actual. No reason to ask the priests about this.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon Nov 22nd, 2010 at 10:03:47 AM EST
[ Parent ]

Re: Relief (none / 0)

Pondering the multiple interpretations of the phrase "disaster relief".

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 08:09:58 AM EST

Mental Capture Progress Report (none / 1)

Ireland no longer a 'low tax economy' - Rehn - RTÉ News

When asked in an interview with RTÉ News if the corporate tax rate was now off the table for good, Mr Rehn said that by Ireland's ceasing to be a low tax country, this did not imply specific measures, but 'it is likely unfortunately to imply tax increases'.

Get that? Taxes are unfortunate.

He said that there would be conditions attached to the EU/IMF rescue programme even if the programme were based on the Government's four-year budgetary plan.
Without going into specifics, Mr Rehn said the goal of the European Commission, IMF and ECB teams working in Dublin was that the Government's plan would meet the target of reducing the budget deficit to 3% by 2014.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 08:40:12 AM EST

False Frame (4.00 / 3)

From an article in today's FT:

"There seems to be a creeping realisation that this [the Irish bail-out] won't necessarily mark the end of the eurozone sovereign debt crisis," said Will Hedden, sales trader at IG Index."

Eurozone Sovereign Debt Crisis. How did a crisis of private banks balance sheets receive this frame? Is this one place for a point of attack, on re-framing?

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

by Crazy Horse on Mon Nov 22nd, 2010 at 08:49:21 AM EST

At least (none / 1)

hanging your head is somewhat better than pounding your desk again.

European Tribune - Comments - Relief

the seriously suited legions of the Washington/Brussels consensus. The papers - Irish and British - are talking about loss of sovereignty as if our total surrender to the markets had never happened, as if it was this rescue rather than our defeat - all of Europe's defeat - by the priests of the free markets that we should be ashamed of.

There's a book in all of this, akin to the "Shock Doctrine" but then the "Creep Doctrine".

by Nomad (Bjinse) on Mon Nov 22nd, 2010 at 09:24:41 AM EST

Re: Relief (none / 1)

Have seen rumours that Sinn Fein have attempted to storm the Finance ministry.

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Mon Nov 22nd, 2010 at 09:40:09 AM EST

Re: Relief (none / 0)

Meh.

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 09:47:44 AM EST
[ Parent ]

Re: Relief (4.00 / 3)

Regarding the conventional wisdom that portugal is next, it would appear that Ireland was punching way above its weight and, if the EU can handle Ireland they can probably handle Spain or Italy as well. Portugal should be a walk in the park.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 09:52:25 AM EST

The biggest arrow on that chart (none / 0)

being Italian debt to France...

A possible resolution to the Italian political crisis :

France calls in the receivers.

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Mon Nov 22nd, 2010 at 12:26:32 PM EST
[ Parent ]

do you remember (4.00 / 2)

what these arrows are?

Government bonds? All bonds? All capital assets? All financial assets? Those owned by specific kinds of actors?

Some debt is / some assets are / more noxious than others

Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon Nov 22nd, 2010 at 12:42:48 PM EST
[ Parent ]

Re: do you remember (none / 0)

NY Times: Europe's Web of Debt (May 1, 2010)

Source: Bank for International Settlements

This version of the graph has a caption saying "banks and governments"...

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 03:07:51 PM EST
[ Parent ]

Re: do you remember (none / 0)

The infographic was attached to In and Out of Each Other's European Wallets By NELSON D. SCHWARTZ (NY Times, May 1, 2010)

The first domino is Greece. It owes nearly $10 billion to Portuguese banks, and with Portugal already falling two notches in S. & P.'s ratings and facing higher borrowing costs, a default by Greece would be a staggering blow. Portugal, in turn, owes $86 billion to banks in Spain; Spain's debt was downgraded one notch last week.
The numbers quickly mount. Ireland is heavily indebted to Germany and Britain. The exposure of German banks to Spanish debt totals $238 billion, according to the Bank for International Settlements, while French banks hold another $220 billion. And Italy, whose finances are perennially shaky, is owed $31 billion by Spain and owes France $511 billion, or nearly 20 percent of the French gross domestic product.

Which was criticised thusly

While an interesting use of data visualization, the problem with the graph is that it uses the wrong figures! It looks at all debt, no matter who took the debt out. (And even then, some of the figures aren't that impressive: total lending by Greece to other PIIGS countries? $2bn.) For example, Nelson and Bill should have been concerned that their graphic showed Irish debt at almost the same level as Spain, a country ten times its size. If they'd divided the debt by population, they might have been a little suspicious to read that Ireland's citizens apparently owe an average of over $500,000 each! Trust me, if the Irish government had debts of the guts of a trillion dollars, I'd be the first to be proclaiming the end times.
...
That is why the markets are worried not about all debt. They are worried particularly about government debt, because typically there is no corresponding asset. And it turns out that there is a difference in scale between all debt and government debt - a huge difference in some cases. It turns out that, in the case of Greece and Italy, only about half of all debt is government debt. For Portugal and Spain, it's only one fifth of all debt. In the case of Ireland, just five percent of all its debt is general government debt.
The reason is hardly a secret: Ireland is a major international financial services centre. The international financial services sector plays such a large role in the Irish economy that it even gets its own set of statistics from the Central Statistics Office. At the end of 2008, the sector had debts of almost €1,650bn. Don't worry though - it also had assets worth about €1,660bn.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 03:16:31 PM EST
[ Parent ]

Re: do you remember (4.00 / 3)

They are worried particularly about government debt, because typically there is no corresponding asset.

As opposed to all those solid Real Estate backed "assets" on bank's Balance Sheets.

(When the fuck did Dada move from Art to mainstream political-economics?)

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

by ATinNM on Mon Nov 22nd, 2010 at 03:24:00 PM EST
[ Parent ]

Re: do you remember (none / 0)

The author of that piece is whoring for the "internationally active financial sector", clearly.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 03:37:31 PM EST
[ Parent ]

Thanks (none / 1)

so that sounds like 'gross financial assets' (but it presumably excludes CDSs and other nth order derivatives.... which may matter more here as to what the "markets" think)

Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon Nov 22nd, 2010 at 04:21:29 PM EST
[ Parent ]

Re: Relief (4.00 / 2)

All those graphic thingummies looks like the USS Enterprise:

to me. Wonder if that was deliberate?

(HELP! I'm losing it!)

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

by ATinNM on Mon Nov 22nd, 2010 at 03:26:34 PM EST
[ Parent ]

Re: Relief (none / 1)

FT.com / Comment / Op-Ed Columnists - How to stop Ireland's financial contagion

I expect that the eurozone will get over this particular short-term funding crisis. The mechanisms to solve it are in place. But I am concerned about two medium-term developments, for which they are not prepared - not even close. The first is solvency. The EFSF can provide liquidity for Irish banks, but it cannot make them solvent. Ireland's gross external debt stood at $2,131bn at the end of the second quarter, roughly 1,000 per cent of gross domestic product...
To maintain solvency, Ireland and the other peripheral eurozone countries require a return to solid growth very soon... At a time of extreme fiscal tightening, moderate monetary tightening and weak global demand, I fail to see where Ireland will grow. Does Dublin really think foreign corporations would be lured by low corporate tax rates, and choose this moment to invest, given the current uncertainties? And can Ireland really produce a devaluation of sufficient size with sufficient speed to create an export boom at a time like this?
My second concern is the return of large intra-eurozone imbalances. The Organisation for Economic Co-operation and Development last week forecast Germany's current account surplus would be heading back towards 7 per cent of GDP by 2012 - close to the pre-crisis record. We are planting the seeds for the next crisis, for which the EU has no institution, no facility and no task force.

"People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them." - Jean Monnet

by Melanchthon on Mon Nov 22nd, 2010 at 09:56:59 AM EST

Re: Relief (4.00 / 2)

Melanchthon:

The EFSF can provide liquidity for Irish banks, but it cannot make them solvent.

Don't tell me our Dear Leaders are still pretending this is a liquidity crisis!?

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 09:58:51 AM EST
[ Parent ]

Re: Relief (4.00 / 3)

Geeee.... austerity has two euro countries KO and a lot of banks waiting for the domino effect...

Meanwhile German has not feel yet the feedback of a hard monetary policy via debt deflation and insolvency in the peripheries creeping into German banks. That's why there are bank bail outs.
If german is smart it will keep bailing out other banks to bail himself out...with the destruction of the safety net in one country after the other. Portugal is the next one.. and it will be easy to bail again without problems.

The big ifs are Italy and Spain. Can they destroy Italy and Spain , their safety net and not be affected? Is Spain too big to fail or not? can the german monetary policy destroy Spain via a "crazy market moment"? I always thought Spain was too big to fail, so no further GDP destruction was accpeted and sapnish debt will be monetized.. now I am not sure what the crazy Merkel austeristas group thinks.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Mon Nov 22nd, 2010 at 10:15:33 AM EST

Re: Relief (4.00 / 2)

Who will be the Lehman Brothers of this crisis?

I suspect, given the amount of debt Italy owes France (per the notorious "web of debt" chart elsewhere in this thread), Italy might be Bear Stearns to France's JP Morgan. The ECB and Germany will underwrite France's takeover of Italy for less than the value of Italy's Palazzo Chigi. That leaves Spain as Lehman Brothers and Germany as Citi (which remarkably, avoided a bailout even though its share lost 99% of its value at one point).

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 10:24:25 AM EST
[ Parent ]

Re: Relief (none / 0)

There are mutterings from the IMF that destroying the welfare system of countries probably isn't a good plan.

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 10:27:00 AM EST
[ Parent ]

Re: Relief (none / 0)

Brussels knows better.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 10:44:01 AM EST
[ Parent ]

Re: Relief (4.00 / 4)

It says something when the IMF is the sane one.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon Nov 22nd, 2010 at 10:45:32 AM EST
[ Parent ]

Re: Relief (none / 0)

European Tribune - Relief

Ireland's impending rescue by the seriously suited legions of the ~~Washington/~~Brussels consensus

I corrected your unfair jab at the Anglo-Saxon Economic Elite.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 10:50:53 AM EST
[ Parent ]

Re: Relief (none / 1)

Well - they should know.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Nov 22nd, 2010 at 11:25:18 AM EST
[ Parent ]

Re: Relief (none / 1)

Sometimes it does not feel like a plan... it feels like.. I do not know what it feels like.

Europe and the USA self-destructing for the sake of.. what? a short delay of the destruction of the white-western elite?

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Mon Nov 22nd, 2010 at 05:09:05 PM EST
[ Parent ]

Re: Relief (none / 0)

So far, there have been few strikes in Ireland. People have been conditioned to believe that the deficit must be cut and that Ireland, as a small open economy, has little choice but to pay its debts and take the tough policy choices.

From the NYT current front page article on the subject. Straight news piece, not a 'news analysis' one.

by MarekNYC on Mon Nov 22nd, 2010 at 11:17:37 AM EST

Re: Relief (4.00 / 2)

Irish unemployment is around 12 percent, and services like universal child benefits remain generous by European standards.

By US standards, perhaps.

by Colman (colman at eurotrib.com) on Mon Nov 22nd, 2010 at 11:21:01 AM EST
[ Parent ]

Deep Thought (4.00 / 5)

The US can stay irrational longer than the EU can stay solvent.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon Nov 22nd, 2010 at 11:27:01 AM EST

Re: Deep Thought (none / 0)

Also, death panels.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon Nov 22nd, 2010 at 11:27:52 AM EST
[ Parent ]

Actually (none / 1)

I'm willing to take a bit on that one!

Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon Nov 22nd, 2010 at 01:31:48 PM EST
[ Parent ]

Re: Actually (none / 0)

A bit of a bet?

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Carrie (migeru at eurotrib dot com) on Mon Nov 22nd, 2010 at 03:04:46 PM EST
[ Parent ]

oui (none / 0)

a bet! A ril one!

Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon Nov 22nd, 2010 at 04:17:56 PM EST
[ Parent ]

Re: oui (none / 1)

You seriously underestimate America's capacity for irrationality. If we could securitize it, we could pay off the national debt tomorrow.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon Nov 22nd, 2010 at 05:06:23 PM EST
[ Parent ]

Re: Deep Thought (none / 0)

serious gallows humor.

you are the media you consume.

by MillMan (millguy at gmail) on Mon Nov 22nd, 2010 at 01:36:11 PM EST
[ Parent ]

Re: Deep Thought (none / 1)

Is there any other kind of humor these days? Christ, I dunno what I'm going to do when football's over.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon Nov 22nd, 2010 at 02:49:01 PM EST
[ Parent ]

Re: Deep Thought (none / 1)

Oh I'm sure theres another sport around somewhere. At least you don't have the rollercoaster of stupidity which is English World cup Hopes (Or Scottish). A pair of desperate delusions bought out by the media and the cause of more gallows humour than any sane man should ever have to cope with.

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Tue Nov 23rd, 2010 at 08:56:56 PM EST
[ Parent ]

Re: Deep Thought (none / 0)

That was kind of amusing. England is kind of the soccer equivalent to Notre Dame or the New York Jets in American football. Lots of hype in the press before the actual competition begins, followed by the inevitable collapse to mediocrity.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Nov 30th, 2010 at 09:27:28 AM EST
[ Parent ]

Re: Relief (none / 0)

Johnny B Goode (CityJohn) on Twitter

Election announcement? Hmm. 6 minutes ago via Twitter for iPhone
#Cowen to make another announcement at 7pm (8:27pm?)

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Mon Nov 22nd, 2010 at 01:43:51 PM EST

Relief | 79 comments (79 topical, 0 editorial, 0 hidden)

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Relief

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