May 18, 2013
An Irish Banking Inquiry
300,000 of Ireland’s mainly young people have emigrated (1), no jobs for those remaining, unemployment rates of 14.7%, in reality closer to 28% when hidden buffers disguising true figures are removed.
We have an economy driven to meltdown following an economic joyride by the previous administration; an economy of failed austerity and a culture of national dependency on bailout.
This was brought about by the current administration’s disastrous policies of ruining the economic engine while in their garage.
We should at least be able to look forward to a banking inquiry.
We still need to hold to account those who got us to where we are. You are more likely to see some of these people who refused to burn bondholders from our previous administration and our current administration, who agreed to odious debt burdens on Irish taxpayers, who compliant at the behest of their master puppeteers in the troika, have brought this economy to economic national dependency and lost our sovereignty, receiving awards and honorary doctorates eg Enda Kenny receiving one from Boston College today!
There would appear to be no great pressure coming from our European partners and the troika as to the urgency of carrying out a banking inquiry in Ireland. Veritable silence in fact. Mario Draghi, President of the European Central Bank, when have you heard him speak out on the urgency of a banking inquiry in Ireland?
We need to get to the root of what caused financial meltdown in Ireland. We need also to know who exactly were the leading insiders who stoked the mess, what actions taken and what advice was given.
It’s easy enough to do this before an Oireachtas committee with proceedings held in camera taxpayers can watch.
Of no great interest is the large-scale policy of lending stimulated by a bonus culture among banking personnel that led to rules being bent and good practice set aside. Cast aside were the managers sitting down examining the ability of borrowers to pay back conservative projections of their lending obligations measured with conservative lending practices; in place of widespread irresponsible lending practices fed by a bonus culture and demands that targets be reached at any cost.
What matters is that leading personnel, Ireland’s top ten or 20 players in the Dept of Finance, the Central Bank, the Regulators Office, FF and FG ministers for Finance, be deeply questioned as to their role in decisions taken. Perhaps also representatives from the Central Statistics Office should be asked to give account.
It’s noticeable current growth projections by CSO/Dept Finance invariably fall short of projections without anyone being held accountable. CSO practices the current canary in the mine whereby its forecasts are tempered by the caveat that growth projections are given on the understanding that growth will occur in Europe and elsewhere.
There will be growth if there is growth. Right.
What? This is base propaganda and not science. We need forensic application of empirical science not false propaganda fielding trumped-up stats fueled by bubble speculation on growth in the EMU.
We need for balance a group of 10 developers who can be questioned on how they got their Finance.
Representatives from the ECB, if possible Jean Claude Trichet should also be quizzed on the role/leadership played by ECB in Ireland’s response to its meltdown in particular terms offered for bailout. Add in some representatives from the EU and the IMF.
60 days over 3 months should establish the facts helped by powers of inquiry given to PAC (Public Accounts Committee), eg compelling attendance/assistance to PAC under legal sanction of contempt.
Selective amnesia maybe can be dealt with through laws demanding imprisonment for contempt of court. But I wouldn’t bet on it.
The collapse of the market economy in the EMU
Much mileage is made in Ireland on purveying the view the Irish Financial meltdown was caused by a simple banking collapse due to massive over lending in the property sector fueled by incompetent oversight and management of state finances.
You’ll hear the phrase ‘nothing to do with exotic derivatives’ meaning the writer usually understands little of these funds, or misunderstands and does not appreciate their impact on currency collapse and property speculation. Yet it was the bundling of property mortgages into toxic derivatives that fueled the Wall Street collapse in 2008 that precipitated the collapse of the Irish property market.
Countries like Germany love this view.For example, Finance ministers of Germany, Netherlands, Finland have signaled any future banking deal in the EMU will not retrospectively be used to finance Ireland’s banking debt.
Ireland’s property bubble and Celtic Tiger years were fueled much more by external conditions than local conditions. Let’s have a look into the engine that runs on bubbles to get a better overview of our financial meltdown. Perhaps PAC in its inquiries should focus much more on this aspect to get to the root of Ireland’s financial collapse.
There are 2 stages to its collapse: one is due to our ‘banking property bubble collapse’ fed by loose unregulated money supply at ECB level; the second is subsequent to it, call it a combination of austerity, banking bailout, that has led to the destruction of Ireland’s market economy leading to unemployment/emigration and a new pretend/virtual economy fueling toxic financial resources into the financial sector.
Dr Heiner Flassbeck, Economics Professor, Hamburg University
has spoken of the lack of clear regulation that led to the Wall Street meltdown and that continues to this day “endangering democracy and the moral ground upon which our societies were built in the past”
He’s asked that governments need to be prepared to step in to restrict the movement of the financial markets. Instead governments are collaborating with proponents of deregulation and toxic Zeppelin stimulus of the financial sector through QE1/2/3/4 in the US and currently in Japan leading to massive distortions in financial markets.
These markets are no longer market driven but stimulus driven virtual constructs manipulated by forces in the financial sector and banking purveying the falsehood that stimulating the financial markets will kick-start labor markets.
Unemployment in the EMU is currently 12%+ and growing steadily.
A good example of distortion of the financial markets and destruction of the market economy is in the case of commodities. Manipulation through shorting in these markets has led in the past year to enormous market fluctuations in real commodities with investors running away due to the realisation markets are controlled and driven down by financial forces in the banking sector that have taken control away from market driven influence.
Financial sector forces have forced bailouts on economies such as Ireland, Portugal, Greece to the detriment of the free market economy in each of these markets that has been driven underground with unemployment and emigration and a growing divide between rich and poor.
Countries such as Ireland are becoming more dependent as they become more enslaved by the financial sector. Similar to satellite states in the previous USSR countries across the EU are no longer free market driven economies, but enslaved to the demands of the financial sector for austerity and the supply of national tribute through taxation and massive lending with punitive interest rates.
According to Flassbeck ”monetary stimulus is not working”. According to him we have not even “the pretension of a real market”. Currently there is huge subsidization of the financial markets through QE and through zero interest rates.
Support for this view comes from Max Keiser who is even more pointedly direct in his views than the exhortation of Flassbeck for the management of the financial sector by competent governments willing to step into the breach and make difficult decisions.
Keiser’s critique of the ‘sacred Dow’ warns that the massive explosion in the DOW over the past year is a false sign of recovery in global markets. Like Flassbeck he points to the crisis painted in unemployment figures unresponsive to the DOW index.
Explosion of the stock market (Max Keiser) is hyperinflation, interest rates are low if any, employment/spending/wage rates are low, the currency of the future is The Dow
How much QE and manipulation can the DOW and the financial markets take before eventual collapse.
In Japan, “The stimulus program will be affordable because under Haruhiko the Bank of Japan is committed to printing as much money and buying as many bonds as are out there.” undermining other currency areas eg china forced to compete with the Japanese currency which in the last 6 months has devalued by 30%. However the Japanese bond market is Fukushima and its crashing. It too is undermining currency stability locally between China and Japan.
In Ireland support for the false Zeppelin toxic balloon of the financial markets has led to taxpayers being raided to pay bondholders, austerity, destruction of the local economy, mass emigration, destruction of health/education services, 25% + unemployment and “selective amnesia” on behalf of those who engineered Ireland’s economic collapse.
Ireland undoubtedly has been effected by a global heist of market economy economics by the financial sector.
Instead of hyperinflation through currency manipulation, manipulation of the financial markets, commodity markets, exotic derivatives distorting world trade, a cleansing of the financial markets needs to take place before it’s too late. Dodd Frank won’t do it, Basil 111 and FTT won’t do it, nothing less than a reset to currency exchanges anchored to freedom from manipulation money supply will do it.
At one time under gold the financial markets served the concept of market driven economies. In the dollar there was relative currency stability until Nixon separated the dollar from gold in 1971:
The experiment has been a failure. IT’s time for a new global currency agreement partially based on gold and including other factors to be agreed by world leaders. It would appear this will not happen before global currency collapse. Around us are plenty of indicators our currency system is off the rails.
The irony is austerity is fueling the financial markets, the financial markets are fueling global currency collapse. Now the financial markets have plundered taxpayers, next up are depositors in their banks.
Lending was fed through the financial sector through the ECB to Ireland. Ireland’s deregulated financial sector rose to the toxic occasion. It’s time Ireland replaced incompetent government with competencies of Icelandic calibre to take on its delinquent financial sector agents in government and its other decision making arms in banking, Dept of Fin and Central Bank/Regulator/Developer relationships.
A banking inquiry is a first step. Will it ever happen or will selective amnesia and coverup dupe democracy in Ireland.
1. Emigration patterns:
May 5, 2013
Dedicated to President Higgins http://www.independent.ie/irish-news/president-higgins-criticises-failures-of-eu-leaders-on-banking-crisis-29237692.html
The financial system we all take for granted is in a deep crisis. It’s far from over. Kevin Spacey in the movie ‘Margin Call’ http://www.examiner.com/review/margin-call-how-wall-street-crashed-the-economy-5-stars in a pivotal moment “He delivers one final speech to his team, urging them to sell worthless, mortgage-backed securities for million dollar bonuses. True empathy is never shown in Margin Call, except by Sam for his dog.”
We see the fund managers at their desks facing their screens as they shout calls to their clients in a desperate attempt to sell everything they know is toxic on their books. We are not told nor see who the buyers are.
For example, In Germany were German banks involved,one suspects banks throughout Europe were heavily involved in such losses.
What was the involvement of central bank, state banks or large commercial banks eg the following out of a list of many many more such banks across the EMU?
Deutsche Bundesbank, Frankfurt, Deutsche Pfandbriefbank, Frankfurt, Landesbank Berlin
Dresdner Bank, Frankfurt
EuroHypo, Frankfurt (real estate bank)
Those toxic derivatives still exist and they are hidden under stress test radar. We need to open their black boxes of toxic derivatives. They need to be fully accounted for and audited and posted on public exchanges to examine and expose them. We need further banking regulation, more public banks and new rules enforcing the requirements that investment banking be made public through the sanitisation of derivatives by means of public exchange traded derivatives.
Fraud, so-called derivative €30trillion + insurance scams need windows opened to see what is inside such black boxes.
Do you recall when Minister Michael Noonan announced he would be pursuing the burning of senior bondholders with the ECB – he met with Timothy Geithner’s meeting with Minister Noonan in Washington in June 2011. The meeting ended that pursuit with the widespread belief that Tim Geithner refused to countenance such a position. Noonan capitulated and the bill instead was passed to Irish taxpayers.
Largely to blame is the toxic domino effect as follows: Ireland burns senior bondholders, losses are realised in European and US banks. Banks refuse to lend because of liquidity fears. European banks now require bailout and cannot fund their loan book. Losses to
Bank of America,
JP Morgan Chase
To avoid such losses the losses are to be shouldered by poor Irish taxpayers.
Let’s look at the meaning of this burden sharing for Irish taxpayers for a moment.
In spite of all the austerity, new taxes, property taxes, salary cuts, job losses, emigration, destruction of the local economy that is ongoing, enough is not enough.
Dan White in an excellent article writing in Business, Sunday Independent, states final cost of fixing the Irish banks will be €100bn, “Irish Banks need another €30bn at least” . This could be a conservative estimate , €27bn SME lending on Irish bank books of which 50% is currently in distress, €37bn of compromised mortgage loans could yield €18.5bn losses without speaking of the €50bn of tracker mortgages. The list of potential losses goes on and on. The NAMA basket case is not mentioned.
Currently the only target to pay up on such losses is the Irish taxpayer, no burden sharing, no debt write-down to alleviate the pain of the Irish economy suffocated by debt.
Up the creek bailout economics with bailout loans at skullduggery lending rates that will extort further profits for institutional lenders is the only item on the Irish menu for taxpayers.
Currently some of the large institutional funds that should be sharing in the losses of the Irish economy instead of bailing out Irish taxpayers are bailing out of the Irish economy. Some of the major players in the global financial industry are handing back their licenses and leaving the IFSC. Deputy Chairman of Allied Irish Bank Dr Michael Somers:
Michael Somers is against regulation and capping bankers pay. However, there is probably another reason banks are pulling out of the IFSC rather than the fear of regulation imposed by the ECB, at the imminent collapse of the Irish economy is not where you want to be.
Europe is bust with many of its leading banks in severe financial disarray exposed to investment loan accounts that are dicey. The only real movement to improve matters reminds you of those movies where the vehicle does not fall over the cliff but almost goes. Its held in balance along some invisible fulcrom. The occupants movement causes it to imbalance with the threat of imminent fall. So occupants step back again or become frozen in their seats. Such is the case with financial reform in Europe. Proposals to raid depositors money in Cyprus almost led to collapse of the Cypriot economy and ‘bailout’. It looks as though Europe is in danger of free fall and imminent collapse. In such a scenario, depositors are in the firing line across Europe.
Writing in CounterPunch online investigative journalism publication, Ellen Browne writes:
“The reason this risky move would subject the FDIC to insolvency, as explained in my earlier article here, is that under the Bankruptcy Reform Act of 2005, derivatives counter-parties are given preference over all other creditors and customers of the bankrupt financial institution, including FDIC insured depositors. Normally, the FDIC would have the powers as trustee in receivership to protect the failed bank’s collateral for payments made to depositors. But the FDIC’s powers are overridden by the special status of derivatives. (Remember MF Global? The reason its customers lost their segregated customer funds to the derivatives claimants was that derivatives have super-priority in bankruptcy.)
The FDIC has only about $25 billion in its deposit insurance fund, which is mandated by law to keep a balance equivalent to only 1.15 percent of insured deposits. And the Dodd-Frank Act (Section 716) now bans taxpayer bailouts of most speculative derivatives activities. Drawing on the FDIC’s credit line with the Treasury to cover a BofA or JPMorgan derivatives bust would be the equivalent of a
taxpayer bailout, at least if the money were not paid back; and imposing that burden on the FDIC’s member banks is something they can ill afford.”
So, if taxpayers can’t pay for losses in global or Irish banks, who else is left to pay. Right, DEPOSITORS.
And what do you get to pay for, unregulated aka Micheal Somers toxic banking hoovering up money skyward to bondholders and financial paper money merchants who’ve collapsed the real global economy.
I recall a story told to denigrate socialism ridiculing the state of affairs where A,B,C,D groups in society were treated as one and the same with the elite, hard workers having to pay for those who failed through laziness or some other poor excuse?
The story teller did not do a similar logic test on the question of all the assets of B,C,D being taken away from those groups swept upward to the ‘hard working elite’ pressing buttons on a computer screen amassing great wealth for their clients.
The poor and now the middle class are plundered to pay for the financial, toxic paper balloon scam Abraham Lincoln declared against in fighting the mandarins of private banking.
The toxic financial cancer of derivatives and unregulated investment banking will come to its own end as it destroys the fiat currency upon which it is based. This may precipitate a new Glass Steagal or return to the gold standard or both. Clearly Dodd Frank and Basil 111 do not go far enough in regulating the financial sector.
We need a new financial system that will take the banks out of private ownership and into public ownership. Irish taxpayers require new banks built and maintained and serviced to serve their needs. Banks already exist that serve such a model eg The Bank of North Dakota:
This would be a bank where the profits are reinvested on behalf of taxpayers into the state/country/county/community and the profits not sent to anonymous private sources, to fund out of this world salaries/allowances and bonuses. This would be a new world of regulated banking where white-collar crime gets put behind bars with no immunity from prosecution and we finally find out who gave the guarantee on foot of what information in a Banking Inquiry worthy of taxpayers.
What Brooksley Borne warned ‘The Warning’ against has come to pass. depositors money is now the new target:
It will take a longer dissertation to describe how Germany has benefited from the euro keeping inflation down, keeping the overall value of the euro down as opposed to what the deutschmark would skyrocket to without the euro never mind all those loans handed out to debtor EMU members to buy their engineering output.
No need to worry that these nations crippled by debt are ripe for full takeover now they are financially hogtied to the new EMU with Germany taking over the helm. George Orwell does not rest easy in his grave
Can democracy be taken back from the financial sector or even be taken back from Germany and her allies?
April 28, 2013
As clouds gather in Ireland and unions get ready for strike action rejecting government policy and the salary cuts and service cutbacks implicit in the troika inspired Croke Park 11 deal, it’s time to reject the government and troika led austerity and leave the euro.
With the demise of Labour and Fine Gael and Ireland’s short memory of the disastrous policies of the previous FF government, there is not much to choose from by an electorate growing in ennui, disillusionment and passive indifference that may shortly turn to more serious rebellion if austerity continues to make matters worse instead of better.
Next election hopefully will see a mass rejection/ejection of main parties with outmoded and anti democratic policies that are pro bondholders, pro banking, set against shared write-down of odious debt put upon shoulders of those not responsible for government incurred debt. This is the result of calamitous and disastrous leadership by failed negotiators in government parties.
There will be plenty of opportunity for a massive show by independents to build a new political foundation for true democracy in Ireland. Whether this opportunity will be availed of is anyone’s guess.
Clearly democracy has failed in Ireland. Lack of democracy within political parties themselves has led to a small cabal in each party dictating policy on economics, on negotiation of banking debt with the majority kept outside the loop. Rising to the fore of this plutocratic cabal is Taoiseach Enda Kenny evermore by the day fitting into the shoes of petty dictatorship with workers under threat.
As clouds gather inside the bunker things get more absurd by the day. The extremely sensitive and delicate matter of abortion legislation is being mishandled.
“The proposal to assess suicidal pregnant woman by six consultants has been deemed “abusive” and “idiotic” by one of the country’s leading perinatal psychiatrists.
A team of 6 psychiatrists perhaps 3 each on consecutive days in a formula reminiscent of the inquisition will adjudicate on the right of a vulnerable and deeply stressed woman to terminate her child under threat of suicide.
This is not the only idiotic, abusive and absurd policy being enacted in Ireland.
Cutbacks in education, health, R&D are slowly tearing this country apart.
The bailouts from the troika have proven to be secret devices to extract tribute from Ireland for German banks as part of our contribution to Germany’s growing surplus at our expense.
Joining the euro has proven to be a massive mistake costing this country it’s prosperity and democracy and has been a device to exploit the poor by the rich both in Europe and Ireland out to protect their interests at any cost.
It’s time to Leave eUrO! The previous FF government built its failed policies on fueling property speculation and this led to disaster. The current government at a time of crisis when good leadership is required has squandered every opportunity to get a good deal for Ireland.
Fine Gael/Labour policy of compliance and appeasement of banking and political influence in Europe has sold out democracy in Ireland protecting the rich at expense of the poor. Further penury at the expense of the appeasement/compliance is being led by an increasingly dictatorial government in Ireland ignoring public opinion in pursuit of idiotic policies furthering the pain inflicted on Ireland.
The absurdity of SIPs turning householders into serfs with a life of penury that sees at its end their house sold to pay remaining debt of the banks, is unacceptable. The level of household debt is unsustainable in Ireland. Private debt levels in Ireland combined with increasing open and hidden taxes including property taxes is like a toxic and deadly invisible gas killing the Irish economy.
Its clear the Europe Ireland joined is no longer the Europe Ireland aspired to. Credit union Europe is a Europe spawning petty Kenny dictatorships with the sole aim of replacing elected politicians with unelected banking officials pulling their strings.
Support for leaving the euro is growing (see previous post):
There are at least 800 occasions where default has happened over the previous centuries. Without debt write-off/write-down Ireland’s economy will be destroyed and its debt will not be repaid. A large part of our exports go to the UK and not to Europe. Our MNC’s export worldwide and the majority are here not just because of EMU footprint. Our agricultural sector exports worldwide.
Tim Worstall writing in Forbes:
“It would be theoretically possible to renegotiate the borrowings, as was the case in Greece. But the problem will be the same as what happened in Greece. Too much of the debt is “official” debt now. Owed to various arms of the EU (the EFSF, ECB and the like). And they simply will not take haircuts on their loans: they have decided that they should be treated as the IMF is, as invulnerable creditors. So much so that if all of the privately held (a very small amount) were haircut 100% this still would not solve Portugal’s problems.
The solution would therefore have to include those creditors taking a loss. And the only way I can see that being possible is for Portugal to adopt the new escudo and redenominate the debts into that new currency. Allow the fall in the value of the new escudo to be that de facto haircut on such creditors.
The only problem with this solution is political. Economically it is both possible and, in my opinion at least, desirable. The political problem is that large parts of the European political classes have huge investments in this concept of “Europe”. This ever closer union of which the euro itself is a large symbol. It is this cross that the Portuguese people are being nailed to, as with William Jennings Bryan’s complaints about the cross of gold. It is a political problem, not an economic one.
I should perhaps note that I live in rural Portugal. I’m doing fine of course, my income is from outside the country. But I look around at what’s happening in the small market town and I cannot see that the pain and grief is worth bearing in the name of “European unity”. You might take this to be a trivial example: but when the local supermarket is only half stocked as compared to two years ago you really do know that there’s an awful lot of economic pain going on around you.
Time to accept that the experiment didn’t work and to abandon it. Default is necessary, leaving the euro is a darn good idea and if that causes problems for the European Union, well, so be it.”
Last blog mentioned “Mario Soares, who steered the country to democracy after the Salazar dictatorship, said all political forces should unite to “bring down the government” and repudiate the austerity policies of the EU-IMF Troika. “Portugal will never be able to pay its debts, however much it impoverishes itself. If you can’t pay, the only solution is not to pay. When Argentina was in crisis it didn’t pay. Did anything happen? No,nothing happened”
There is growing dissent in Portugal and growing support for leaving the eUrO.
Ireland needs to grow support for a similar movement to leave the eUrO if not to free the current generation from the shackles of the eUrO, then future generations of Irish people. I don’t have to travel to the future to see the support for this from those who suffer the extended maturity dates of Irish debt and need to cripple their finances on those maturity dates when they do arise.
The question is, is Ireland mature enough to make the decision to leave eUrO ? It would appear with the growing absurdity of politics in Ireland, right now, it’s not. It only takes a phone call from a central banker like Tim Geithner to Eamon Gilmore, Michael Noonan, Enda Kenny, to secure their agreement to whatever the trolls of the financial sector decide can be extracted from Ireland.
April 18, 2013
The death of the euro is more likely than its survival.
Signs of imminent collapse are everywhere. Its tearing Europe apart. The EMU does not fulfill the ideals of the European Union anymore. (1) In The Telegraph, 12/04/13, Ambrose Evans-Pritchard writes: "Portugal’s elder statesman calls for 'Argentine-style' default - Telegraph Portugal's leading elder statesman has called on the country to copy Argentina and default on its debt to avert economic collapse, a move that would lead to near certain ejection from the euro.
April 17, 2013
The death of the euro is more likely than its survival.
Signs of imminent collapse are everywhere. Its tearing Europe apart. The EMU does not fulfill the ideals of the European Union anymore. (1) In The Telegraph, 12/04/13, Ambrose Evans-Pritchard writes: “Portugal’s elder statesman calls for ‘Argentine-style’ default – Telegraph Portugal’s leading elder statesman has called on the country to copy Argentina and default on its debt to avert economic collapse, a move that would lead to near certain ejection from the euro.
Mario Soares, who steered the country to democracy after the Salazar dictatorship, said all political forces should unite to “bring down the government” and repudiate the austerity policies of the EU-IMF Troika. “Portugal will never be able to pay its debts, however much it impoverishes itself. If you can’t pay, the only solution is not to pay. When Argentina was in crisis it didn’t pay. Did anything happen? No,nothing happened”
The former socialist premier and president said the Portuguese government has become a servant of German Chancellor Angela Merkel, meekly doing whatever it is told. “In their eagerness to do the bidding of Senhora Merkel, they have sold everything and ruined this country. In two years this government has destroyed Portugal,” he said.
Meanwhile Greece has been stung with a leaked 80 page report pointing out “Germany’s debts were forgiven after the war at the London Conference in 1953 – including its debts to Greece – and that Berlin should remember that Germany’s Wirtschaftwunder was built with US Marshal aid and American help. Some 300,000 Greeks died under the Axis occupation, mostly from starvation.”
According to The Telegraph, (09/04/13, Ambrose Evans-Pritchard) ”The alleged claim against Germany reaches a grand total of €162bn, including €108bn for rebuilding the country’s infrastructure after the Nazi occupation from 1941 to 1944. This is 80pc of Greek GDP.The probe was chaired by Panagiotis Karakousis, director-general of the General Accounting Office at the Finance Ministry, and relied on 190,000 pages of documents scattered through the country’s ministries and archives.”
Mr Samaras and his New Democracy Party are likely to use the document to get a better deal for Greece.
Meanwhile in Ireland democracy continues to be under attack. One recalls the Hitler parody movies with Keitel, Krebs, Steiner, Yodi while wondering how Minister Howlin will deliver the news of the failure of Croke Park 11 to the troika, I digress.
The judicial arm of democracy is under attack: http://aji.ie/news/view/report-in-sunday-business-post-14.04.2013 Leaving out the issue of judges pay, all should be concerned at alarm bells in the following points made in reaction to recent statements by Justice Kelly,
“8. The Personal Insolvency Act was enacted without any notice or debate concerning the insolvency judges who are to be recruited in the first instance solely from the ranks of county registrars. Neither serving judges nor practicing lawyers will be eligible to be considered for such appointments until 2014. These judges, unlike all others, will be subject to ministerial direction concerning sittings.
9. Three further constitutional referenda are to take place within months. No wording concerning these has been forthcoming although they all have huge implications for the judiciary. The AJI accepts the need for a court of appeal but is concerned as to the form of amendment to the Constitution which may be proposed. The AJI has no information as to what the proposal is concerning specialist family courts. The abolition of the Senate renders the removal of judges subject only to a simple majority resolution in the Dáil. At present a resolution of both Houses is required.
10. All of these matters have implications for judicial independence. An independent judiciary and the perception of an independent judiciary is a vital element in a properly functioning constitutional democracy.”
Above statement by the Association of Justices of Ireland. Clearly there is interference by government in the judicial system in Ireland. Efforts are being made to bypass the rights of individuals founded in the rule of law, to replace them with executive powers of government to give free rein to the financial sector to free it from the rule of law with government sanctioned powers.
This is another way rights of citizens are cast aside by a growing authoritarianism fed by the financial sector and government usurping the constitutional rights of people/taxpayers; it seeks to place the financial sector above the law.
Meanwhile the massive mess of Ireland’s state Finances has grown deeper with the massive rejection by over 70% of Ireland’s trade union movement of the troika and government demands for public sector pay cuts.
It would have been interesting to be a fly on the wall to hear the ministers phone call to the troika to explain his failure to realise the deal with the unions. Minister for Public Expenditure and Reform Brendan Howlin is adamant that savings of €300 million in the public pay bill would have to be found this year despite the collapse of the Croke Park II deal.
His comments came as unions warned of industrial action in the event of the Government pressing ahead with pay cuts on a unilateral basis.
Cuts are due for next July which doesn’t give much time to reflect, negotiate and realise acceptance of a new deal.
Clearly 7% of €100 euro leaving €93 has greater impact than 7% of €100000 leaving €93000.
It may be 3:2:1 proportionality or refined version of proportional cuts may be unilaterally imposed.
This may be the straw that takes Labour out of government and into the arms of Fianna Fail to give Enda Kenny‘s Fine Gael its deserved swan song.
The rejection of the deal by a significant majority presents a major headache for the Coalition, and in particular for Labour. Mr Howlin spoke to EU-IMF troika representatives on the phone last night to explain the significance of the vote and will meet them next week for more detailed discussions.
We should recall with fondness: http://www.youtube.com/watch?v=vAABy2768WU Mr Howlin on summing up in 2012 his summary of governments first year in office, “.. We are more confident now there is a path to recovery, there is a confident government in place, who knows what they are about, who will do it on a fair basis and over time will get us to a place we want to be where we wont have queues for jobs abroad but queues for jobs in this economy” A large fail on all of that then…is there anyone left who believes that?
Clearly Fine Gael is on course to emulate the demise of the dictatorship of Nicolai Ceaucescu, the question is, can democracy survive the onslaught from the troika and the financial sector as citizen’s rights are cast aside more and more…as austerity experiments dismantle national economies rather than make them recoverable and fit for purpose.
Perhaps rejection of Croke Park 11 is a rejection of the politics of austerity that lead to economic catastrophe and ruination fueled by political incompetence….light in the tunnel for those who see an end to these policies.
Reform of the global financial sector is the direction to go….
We need more Mario Soares individuals to resist the mess of the EMU bull. Recent falls in the pricing of metals/commodities in the financial sector require significant oversight, regulation and investigation. The transparency in the financial sector is not such to attribute recent falls to the tiny state of Cyprus intending to sell some of its reserves. It’s not inconceivable that moves by Germany and Switzerland to repatriate their gold reserves have led to a shorting of markets to drive the price of gold down to make good such repatriation at affordable prices. The markets are led by a handful of large players who can set pricing at will. Selling short to drive prices down on foot of future profits to be made in repurchasing even greater market share to even higher profit is a question not probed at this time.
Unregulated market forces legacy of the Greenspan era still hold sway in spite of efforts to reform by Volcker/Dodd Frank/financial transaction tax.
Pretty soon the only game in town will be the financial sector of monopoly money ballooning. As democracy pays the price, how high can the balloon go before eventually falling to earth?
A worldwide ban on short selling and other market curbs such as the investigation/ banning of certain derivatives and emptying of the marsh of financial paper is required; eg paper IOU’s that falsely claim collateralisation in a false future’s with 100′s of transactions IOU’ing the same commodity to different buyers/swappers/lenders.
This is a market gone AWOL requiring strong disinfectant rather than QE stimulus/austerity to paper up a false money trail. The only disinfectant on the table is further transfusions from taxpayers through austerity to fill up these paper balloons with more hot air.
Today 18/04/13 news/information/rules governing(more anon) on PIPS (Personal Insolvency Practitioners) released, perhaps that should be PI(m)PS. Those who go this route will forever have their names etched as insolvents on the bankruptcy role, every item in your expenditure will have to be accounted to them.
Abraham Lincoln would turn in his grave at the concept. For those who wish to avail of this financial slavery and financial prostitution, the inquisitorial booths await at your local bank.
And who are the PIPS? Perhaps estate agents/financial advisors those who sold you your mortgage to make sure your trapdoor is sprung for new lives of financial bondage, you enter serfdom.
April 11, 2013
http://www.amody.com/ Ashokum Mody interviewed on Morning Ireland, 11/04/13 approx 08:25 - 08:25 (RTE’s I player) has come out and clearly stated austerity has been a mistake, bondholders should have been burned, drizzling small alterations to Ireland’s bailout terms, is merely prolonging the agony of Ireland’s silent tragedy.
Proponents of our bailout terms with Ireland languishing close to the cliff of 120% debt to GDP ratio have used 3% economic growth to justify the setting up of NAMA and our bailout terms demanding our creditors be paid in full notwithstanding their bad investments.
According to Ashokum Mody our bailout terms were mistaken. History shows that rather than increasing risk to the financial system a fair distribution of losses among stakeholders including bondholders leads to a shortening of time required for recovery.
A combination of austerity and the shouldering of creditor debt of bondholders on the shoulders of taxpayers is not working. Ireland is being lured onto the rocks by Greek sirens who claim otherwise.
Ireland is an economic patient etherised upon a table of debt at best the beneficiary of life support aid to prevent economic death that will not take Ireland out of its economic coma(my words). Ireland is being dragged into the gutter.
The problem is the magical 3% growth to grow recovery and sustainability was never achievable unless gold mines or oil was discovered and we magically became Norway.
Since 2008 economic slowdown in the world economy has been inevitable. Evidence for this has been accumulating across the world from the USA to Japan and the EMU. World trade under current economic conditions in spite of massive quantitive easing in the USA and Japan is set to contract further.
An open economy such as Ireland’s dependent on favorable world trading conditions is more at risk than most of economic downturn because of negative growth in world trade. Ireland is caught in a wedge of negative downturn because of deteriorating world trade conditions combined with austerity and its massive damage to the local economy.
The only relief for Ireland is some form of official relief from our massive debt obligations.
Currently being explored is the ‘seven year itch’(my term) proposal before European Finance ministers of extending Ireland’s debt maturities by seven years. Massive increases in taxation, emigration, rising unemployment and falling standards in state services should leave Ireland itching to get out of its cage of debt custom-built for it by the troika; should it even gain this debt relief. Ireland’s silent tragedy is set to continue.
Declaration of a default based on the burning of bondholders, most of the bank bondholders having been paid already, our biggest sovereign bondholder is the ECB, should be seriously considered.
This would mean an exit for Ireland from the EMU. Not a great loss when one considers the EMU itself is being riven apart by austerity, with Germany and the the inner core countries of the EMU unwilling to pay for bailouts of the outer core; now that the outer core is being tubed up to suck all to the inner core led by German banks.
The bailout transfusions offered to countries such as Portugal, I(O)reland, Cyprus have been inequitable in the extreme.
No template exists for such bailouts with the debt extraction principle of a tailored solution, ‘grab what you can’ offered to each country.
Some countries odious with weak leadership such as Ireland more compliant and easily manipulated than others gave in early to bondholders with deals ransacking and plundering taxpayers .
We were made to suffer banking debt as concessionary sovereign debt.Ireland is Europe’s sacrificial lamb and is currently being roasted on Germany’s table of debt.
This is a long way from the EU concept of sovereign, independent members of the EU joined together to protect the democratic nature of Europe. Europe’s new EMU template is a Russian equivalent of the old USSR with Russia as vending machine for its satellites.
Germany is veering into a prototype of Russia of old. depositors in Cyprus have seen their savings stolen.
In ”Financial crises and the multilateral response:What the historical record shows” Ashokum Mody calls for a review of the bond system particularly in regard to sovereign bonds.
I propose extending his suggestion re ‘sovereign cocos’ to Irelands sovereign debt.
Instead of the absurd extension of odious Irish sovereign debt by seven years, as odious as that leveled on Germany in the Treaty of Versailles, sovereign cocos could return Ireland’s debt to stable levels.
“Lobbying by bondholders who stand to take haircuts
may prevent officials from moving. Insofar as sovereign debt restructuring
has up-front political and economic costs but deferred benefits,
elected officials with finite political lives and higher discount rates
than society as a whole may put it off excessively.
One way of addressing this would be for future bond covenants to
include provisions that trigger restructurings automatically. These
would be “sovereign cocos,” contingent debt securities that automatically
convert when pre-specified levels of indebtedness are breached.
The idea is that if adequate incentive to restructure is not present
once a crisis starts, it should be built in ex ante.
The concept is taken from the debate over bank debt, where there
is a similar reluctance to restructure. Because of the difficulty of putting
banks through a bankruptcy-like procedure, which among other
things can create difficulties for bank counterparties, there is an incentive,
analogous to that which arises in the context of sovereign
debt, to provide a bailout and hope that good news will turn up rather
than proceed with the delicate process of bailing in bondholders. Contingent
convertible bonds (cocos) have been suggested as a solution
to this problem. When Tier 1 capital falls below a pre-specified
limit, these bonds automatically convert to equity, bailing in the
bondholders and helping to recapitalize the bank.15
A number of banks have issued these instruments. In 2010 Lloyds
Banking Group Plc exchanged some of its subordinated bonds for enhanced
capital notes that become equity if the lender’s core Tier 1
ratio falls below 5% of assets. Rabobank Groep NV sold senior notes
that will be written down to a quarter of their face value if its capital
ratio slips below 7%. Credit Suisse issued more than $2 billion of cocos
in February 2011. The Bank of Cyprus received subscriptions for more
than $1.2 billion of cocos in May.
Extending this idea to the sovereign-debt domain, government
bond contracts could provide that if a sovereign’s debt/GDP ratio exceeds
a specified threshold, there will be an automatic reduction in
principal and interest payments. One could also imagine making the
trigger a function of the debt service/government revenue ratio, or
of a convex combination of the two ratios.”
Transcript of a Conference Call on the Ninth Review under Extended Fund Facility Arrangement for Ireland
with Craig Beaumont, Mission Chief for Ireland, European Department, and
Olga Stankova, Senior Press Officer, External Relations Department
April 3, 2012
“Our baseline economic outlook is for a gradual economic recovery with growth remaining low at just over 1 percent in 2013, and rising to just over 2 percent in 2014. But we continue to see a range of risks to that baseline, both to the trading partner recovery expected to strengthen exports from 2014 and also to the revival of domestic demand. One of those risks to domestic demand is that lending remains very low, owing to both the slow rate of progress in resolving loans in arrears to households and SMEs and also due to the broader weakness in the profitability of the banks.
If these factors hindered the gradual pickup in growth we have in the baseline, Ireland’s debt outlook would be significantly affected. Rather than peaking at just over 122 percent of GDP this year and then declining, debt would continue rising which could eventually undermine Ireland’s access to market funding.”
Leaving aside the dodgy reliance on GDP figures whose method of analysis should be given in depth explanation, the risks alluded to above are economic markers that deserve more than the label ‘risk’. The risk we are talking about is the risk that an apple falling from a tree will risk hitting the ground.
Inevitable economic disaster for Ireland beckons.
Our banks require approx €16bn further recapitalisation, deposits are at risk, further damage is being done to the Irish economy by the troika and current Black Adder princes in Fine Gael, Labour and FF preach ‘confidence’ urging private investment when none exists and banks refuse to lend; a ‘confidence’ mantra fed to them by puppet masters in the ECB and the EMU.
Meanwhile Micheal Noonan, on foot of a miserable extension of 7 years to our unpayable debt maturities lectures the rating agency Moody’s, it should upgrade Ireland from junk bond status. Such delusionary politics lies close to the heart of Ireland’s silent tragedy. It would be polite to state ‘out of his depth’.
A young Irish woman at an EU Citizen’s Initiative in Ghent, Belgium yesterday responded to the EU Commissioner for Trade’s claim that Ireland is out of a recession – and got a round of applause while doing so, Made Flemish news!
March 29, 2013
One is reminded of the Trojan Horse of the Trojan Wars:
“The Greeks pretended to sail away, and the Trojans pulled the horse into their city as a victory trophy. That night the Greek force crept out of the horse and opened the gates for the rest of the Greek army, which had sailed back under cover of night. The Greeks entered and destroyed the city of Troy, decisively ending the war”(1)
Following Ireland’s meltdown, the EU, the IMF and the ECB were presented with a unique problem: There was a danger to bondholders in European banks. It would be unseemly to close a bank such as Anglo, the world’s worst bank. Senior bondholders would be protected. Instead of loan write-down vast unpayable loans would be levied on Ireland, its economy and democracy would be reduced to serfdom.
It would be necessary to sell a deal to the Irish to protect European interests. It was decided to do so at the expense of Irish taxpayers. This ‘bailout’ would be Ireland’s Trojan Horse. Ireland’s politicians were weak both in terms of their knowledge of economics and they had no wish to stand up to the ECB.
In Ireland there were many compliant politicians enamoured with ECB and membership of EMU whose vanity would be susceptible to getting a Trojan bailout protecting the financial sector, banking interests, bondholders. All the better if you can persuade Irish politicians the deal on offer is a method of bailout that will save Ireland and return it to prosperity…fools rush in where angels fear to thread. Enter the Labour Party.
The scene was set for a propaganda war that continues to now with Labour still in the wake of the Meath by-election result still extolling its own virtue in stepping in for Ireland to gain a successful bailout that will return this economy to stability and viability.
In spite of propaganda black white to the contrary, voters see in their take-home pay, their austerity taxes, what Labour cannot see, financial ruin lies ahead for many while services in education/health and security deteriorate rapidly. The financial sector is protected at expense of leading taxpayers to destruction.
Into this Trojan Horse jumped many politicians including Eamon Gilmore, Brendan Howlin, Michael Noonan, Enda Kenny. In the shadows others such as Peter Sutherland, John Bruton, Professor Honahan of the Irish Central Bank none of home suit the role of Odysseus in this tale. Few warned the Irish people to beware of Greeks bearing gifts. Fools rush in…..
As austerity is currently devastating and ruining the Irish economy, the crew of the Irish Trojan Horse are still blindly trying to sell to us the notion the bailout for Ireland along with negotiations subsequent to it, is evidence of the Labour party’s efforts to save Ireland from ruin.
Others believe, if the evidence of Cyprus is anything to go by, with senior bondholders in Cypriot banks burning, closure of banks in Cyprus on the cards, that compared to Cyprus and/or Greece, Ireland was sold a pup of a deal…
The result of the Meath by-election has been a devastating result for Labour with Labour suffering a humiliating result, the party’s candidate Eoin Holmes running in fifth with just 1,245 votes, 5% of the valid poll.
The result was a success for Fine Gael capitalising on a large sympathy vote for their candidate Helen McEntee.
I would like to draw your attention to some interesting parallels beyond the obvious question over the better deals dealt to Cyprus and to Greece compared to the penal laws exacted by our erstwhile bendable, adaptable, easily led, intellectually challenged in economic matters, economic saviours in The Labour Party.
Financial sector should have a one to one relationship with the real economy. When confidence is lost in the financial sector(2) eg the possibility and probability of sudden and sometimes unpredictable events rises. For example, Wall Street Crash on Black Monday followed by Black Tuesday, see changes in the DOW here:
|October 28, 1929||−38.33||−12.82||260.64|
|October 29, 1929||−30.57||−11.73||230.07|
We have entered the territory of sudden and unpredictable financial events in the EMU. The crisis is not ending, its beginning; Spain, Italy, Greece, Portugal, Ireland, Cyprus are huge icebergs breaking away from the euro.
It’s due to global warming, toxic gasses in the financial sector that have been bubbling away unimpeded since 1970 with the creation of derivatives, toxic instruments of mass destruction, currencies running on confidence alone, free lending to the outer core by the inner core economies of the EMU.
Instead of a real European Union built on a strong economic foundation the EU is foundering on the euro which is destroying the EU and its member states. The outer core countries such as Cyprus were in fact financial hot air balloons bloated by the financial sector whose economies instead of being based on real economic foundations, instead became based on toxic lending and toxic financial instruments of mass destruction.
Now that such economies are beginning to founder, the response is to dismantle the real economies in these countries and to sacrifice their economies to the same tenets and ideologies of the financial sector that led to their demise in the first place.
Austerity will not recover the ‘success’ of the financial sector’. Instead it will spearhead its demise and bring us closer to Black Mondays. Anyone who believes current European bailouts accompanied by policies of austerity will return Europe or Ireland to prosperity, is clearly misguided and foolish.
But among European politicians there are as many misguided politicians as those in the Irish Labour Party, perhaps it needs a new name, the IOrush Labour Party.
“Definition of ‘Fungibility’
A good or asset’s interchangeability with other individual goods/assets of the same type. Assets possessing this property simplify the exchange/trade process, as interchangeability assumes that everyone values all goods of that class as the same.”
Stocks, shares, bonds, derivatives, complex over the counter derivatives because of deregulation since 1970 plus unregulated lending/speculation has seen a course mapped in global economics a pattern last seen in the years 1925 to 1929 previous to The Wall Street Crash. This time its global.
Complex over the counter derivatives in the trillions have been traded across a world increasingly without economic borders. Little is being done in spite of Dodd Franck or Volcker or financial transaction tax (ludicrously opposed from an Irish standpoint) to patch the burst holes in the world’s economic balloon.
Crisis in Europe and its current meltdown is as a result of the export of this financial economic model with many of the toxic instruments of financial mass destruction hidden away in European bank vaults having been exported to Europe by US banks.
It would appear the repatriation of gold reserves to Germany and to Switzerland at the current levels would be an indication that even those countries are preparing for the worst.
We are now entering in Europe the phase of the European Hot Air Balloon economies.
They are Zeppelins filled with many surprises ahead, the least of which is the non too surprising result of the Meath By-Election.
The dangerous financial sector threatens the destruction of world democracy at the hands of private banks. The financial sector is desperately trying to reconnect with some semblance of real economics as its own virtual bubble bursts in Cyprus, Spain. Portugal, Italy, Greece and Ireland.
Financial sector contagion is spreading. It cannot connect to the real economy. Neither can the Labour Party.
The fungible mapping of traded goods priced in the financial services sector through the means of complex derivatives and similar vehicles is being tested with weakening confidence in the euro, weakening confidence confidence in banks in the EMU; the question is how long the center will hold before a pin pricks this balloon.
And I didn’t even use the term Irish Debt once!
March 24, 2013
Even small savers no longer trust their money in Cypriot banks.
Parliamentarians as this is written are fighting a rear guard action in Cyrus to protect depositors, their banking system, the Cypriot economy.
The Cypriot economy wound around its banks is not merely a victim of the shadow banking financial system set loose by unregulated lending in a global perspective since 1970 aided by unregulated investment banking; its fall is the result of the burning of bondholders and losses in respect of Greece, it’s another shadow banking cancer in the euro, a band-aid is being used instead of dealing with a cancer within the make-up of the euro.
Write-offs for Greece have impacted severely on the Cypriot banking system. Unlike in France and Germany and Ireland managing to hide losses behind the domestic economy and bad hidey- holes such as NAMA, there is no economic activity worth speaking of in Cyprus outside of banking.
According to Ellen Browne http://www.globalresearch.ca/the-cyprus-bank-battle-the-long-planned-deposit-confiscation-scheme/5328098 bank depositors everywhere should realise they are classified as ‘creditors’ of the bank and their deposits can just as easily be burned as those of bondholders.
Capital controls will not stop a run on their banks. A tax on depositors money especially on large institutional deposits will set off a flight of capital from Cypriot banks that will not return.
This flight of capital occurred in Irish banks and that money has not returned. In spite of the brave fight of Cypriot parliamentarians in contrast to ‘where do I sign’ Irish parliamentarians, the f9 monkeys will press a button and flight of capital from Cyprus will be complete.
http://video.pbs.org/video/2226666502/ (derivatives/f9 monkeys)
“We are beginning to see positive employment results and we are coming out from end of crisis.” He believes our banks are sufficiently well capitalised but they are not sufficiently addressing the mortgage crisis. It remains to be seen what penal measures banks will introduce to deal with the growing problem of mortgage arrears effecting 1:10 mortgages in Ireland. It would be naive to believe Irish banks are sufficiently well capitalised to deal with such losses.
The people of Ireland know their domestic economy is scuppered and will not be persuaded by announcements from Bruton of a new entrant to Ireland’s digital league of new business startup flagging 60 new jobs requiring qualifications and foreign language proficiency that will only be found by importing personnel from abroad into Ireland. All this to obtain tax relief with Corporation Tax incentives secure in the knowledge tax is on Irish property and will be kept low on their huge salaries especially if you work in financial services.
Statistics hide the true state of unemployment in Ireland. Many SME owners underwater because of the financial meltdown are for statistical purposes not counted as unemployed because their business has not been taken off the register. Emigration and part-time employment also manage the disguise.
Taxes such as property taxes, new household taxes in Ireland are brought in under the disguise of dealing with our balance of payments deficit. Not as open in their grab of bank depositors money as in Cyprus, nevertheless such levies are leveraged to pay external bondholders and foreign banks policed by our troika bailout.
Before Richard Bruton speaks of turnaround or recovery he should await the effective results of such changes in our taxation system brought about under direct orders from the troika and our gang of four, Enda Kenny, Eamon Gilmore,Brendan Howlin and Prof ‘giveaway’ Honan, puppets under direct orders from the troika.
These willing suspenders of disbelief parrot and puppet Europe’s experiment with a new zombie economic system that many believe will goose the Irish economy for good.
We will see if Frankenstein rises from the grave and what economic and democratic shape this country will end up in as a result. Augurs are not good.
Meanwhile it appears Enda Kenny and Richard Bruton and Michael Noonan in Sheriff of Nottingham style are now imposing targets on the banks to deal with mortgage arrears that will see severe losses that will further exacerbate the problems of those in negative equity and further damage the economy.
How many of the cohort of those in negative equity and mortgage arrears will rise to being able to pay their new household property taxes remains to be seen. Augurs are not good many laughing at these new bills through the letterbox.
Dealings with the troika led by ECB and IMF are in stark contrast with Ireland’s supplicant ‘where do I sign’ inability to say no the troika. Exit from the euro zone would appear to be the best option for the Cypriot people, alternative being a ruined praetorship of the troika owned by Germany with a new unlikely consul, Nicos Anastasiades, president of Cyprus in his new role as consul of the troika, a role more suited to Enda Kenny, who is much more easily led.
The European Credit Union of the Euro is already speaking out against bailout for Cyprus, Germany will not spend its money to write down Cypriot losses. Instead Germany has decided to pass the Rubicon and steal depositors money from depositors in Cypriot banks. Don’t believe for one second depositors in Irish banks are safe, they can and will attempt to steal your money too.
Their parliament through due process has examined in critical fine detail what’s on offer and have turned down what’s currently on the table from the troika in a blow for democracy, in contrast to Ireland’s smothering of debate coupled with false propaganda that the best is on the table.
Ireland’s negotiators have successively accepted impossible deals distinguished by their lack of feasibility coupled with their immorality and evidence of incompetent prescience.
It takes Ireland time to realise its been sold a pup meanwhile embarking on social engineering experiments, emigration, a raft of new taxes including property taxes, all unravelling to the sound of politicians preaching confidence that Ireland’s economy can manage its debt burden and is recovering.
Thus we are led by Ireland’s version of Ceaucescu, Enda Kenny, into a bizarre non write-down debt experiment that will certainly end as badly for him as it did for Ceaucescu.
Eventually gravity of Ireland’s unconscionable debt profile will so damage this economy that Kenny’s goose that lays the golden egg for Ireland’s insiders will inevitably come crashing down as in the pricking of a balloon. Cyprus is part of what this blog described as the surprises that are to come before this crisis is over.
In contrast to Ireland’s zombie response to its meltdown led by ‘Where Do I Sign?’ Enda Kenny, Cyprus President Nicos Anastasiades is leading a brave attempt to save Cyprus from the troika attempts to burn depositors and destroy the economy of Cyprus.
It’s a fruitless band-aid attempt to recover all monies lent to Cyprus by the troika in a disguised destruction of the Cypriot people masked as ‘bailout’, no write down, future lock-down into unconscionable debt repayments endured by countries such as Ireland.
But Cyprus is different. Its economy cannot be separated from its banking sector. It cannot be used to extract odious debt from the citizens, its losses are too great. So the troika decided to cross the Rubicon and burn deposits with severe tax levies on depositors money.
In a bid to clean up banking, the EU is sceptical of the Volcker Rule(1) which already is a watered down version of the Glass Steagal Act. It is running into severe difficulties in attempting to impose a Financial Transaction Tax that could be used to help countries such as Ireland and Cyprus with their banking difficulties.
“This proposal, announced by US President Barack Obama, aims to limit risky behaviour within banks but is narrower than the Glass-Steagall Act. Banks that take retail deposits would not be allowed to engage in proprietary trading that is not directly related to the market making and trading they do for customers. These banks would also be prohibited from owning or sponsoring hedge funds or private equity funds.
Mr Obama also wants to cap the overall size of banks.
This rule was inspired by Paul Volcker, the former chairman of the Federal Reserve.
Europe is seeking to impose on Cyprus, Ireland and later Spain, Italy a doomed financial system that has led to 2008 and a haemmhorhaging of the euro, many of Europe’s banks are running on LTRO air.
Added to the above crisis is the inherent instability of the euro, a currency that is not a true currency union such as the dollar under the Fed, but a credit union system whose leading members appear to be hell-bent on the extraction of unconscionable debt from weaker members of the union.
The euro is destroying the European Union turning it into a union of cannibals.
In Cyprus we are witnessing the breakup of the euro.
Hats off to Cyprus President Nicos Anastasiades. However, see below:
Lest the Cypriot government appear to be knights in shining armour defending their citizens instead of leeching the best deal out of the pockets of citizens to stave off losses for large institutional investments aka dodgy money laundering for Russian oligarchs, Bill Black has some probing reflections here:
Large institutional investments or SME’s in the eurozone should learn the lesson their money in European banks is no longer safe.
Expect more surprises in this growing financial crisis. Not enough water to put out the bush fires…..
March 14, 2013
Irish mortgage arrears situation is turning into an awful mess. It’s been ignored, hidden away but head-in-the-sand people eyes fixed on ‘The Gathering’, are now being forced to take notice. There’s a lot of toxic waste post Ireland’s meltdown ready to take Ireland down more.
A lot of it is in the mortgage arrears area and even zombies can’t hide it.
Government led by Professor Honahan tearing his hair out, now Kenny and Noonan errant school boys in his wake, have decided to do something about this, clean up and throw out the trash, Homer Simpson has some experience of this, see later:
Enda Kenny is turning into Homer Simpson who, aided by the ECB and the troika, is turning Ireland into an old abandoned mine into which hidden away and deposited into the arms of children and grandchildren is the debt of Irish and European banks.
Losses in the form of mortgage default, negative equity, cannot be hidden away in three card trick bonds dropped into the arms of future generations.
If the analogy is lost on you, enjoy this episode of The Simpsons, ‘Trash of the Titans’,
Increasingly Irish mortgage default cannot be hidden away and serious business is afoot set to cripple those in arrears with draconian debt extraction devices set to worsen the current crisis.
Government is dealing with this crisis with incompetence and betrayal of the electorate to the banks. It’s fitting to quote the following in full, it is serious business and is not a cartoon.
“Dublin, March 13th 2013
Today’s announcement that the Central Bank of Ireland will set targets for six major banks in relation to restructuring of mortgages in arrears is a sad extension of the failed policies of the past that have allowed Irish mortgages crisis to spin out of control and have resulted in total mortgages arrears of unprecedented proportions.
The latest plan lacks any prescriptive solutions and allows banks to determine the nature, the extent and the application of all solutions while setting the terms and conditions without any supervision. The plan delivers no improvement in transparency of solutions to be offered to borrowers by the lenders and provides no protection for borrowers against potential abuses by the lenders of their powers.
While the review of the code of conduct is to be welcomed the review fails to deliver a meaningful improvement to the previous practices and does not allow for an effective protections for borrowers.
Mr Elderfield’s statement claiming that the regulator intends to remove the current cap on number of times a bank is allowed to contact or call or visit a borrower ahead of the review of the code of conduct is very concerning. In our view, the central bank is underestimating the extent to which the banks are willing to go to pressure borrowers. It also pre-empts the actual review of the code of conduct for mortgage arrears.
The borrower is exposed and has been afforded no protection in this plan. The lenders are incentivized to maximize the rate of extraction of savings and income from the already distressed borrowers prior to completion of any long-term forbearance or restructuring agreements, thus reducing the effective relief that can be accorded the borrower in the end.
The net effect of this plan will be additional stress on mortgage holders and more power to banks without an appropriate safety net or independent arbitration for mortgage holders.
The Irish mortgages crisis, now into its sixth year, is still raging beyond any control of the authorities. Per latest figures from the Central Bank of Ireland, 186,785 mortgages (including BTL) in Ireland are at risk (in arrears, restructured or in repossession), accounting for an unprecedented 25.3% of all mortgage accounts still outstanding. The balance of mortgages at risk, relative to the total balance of all mortgages outstanding has reached a catastrophic figure of 31.9%. With some 650,000-750,000 estimated people residing in the households with the principal residence in mortgages difficulties, we are witnessing a wholesale destruction of savings, pensions and wealth of several generations of Irish people.
State response to this crisis to-date has been woefully inadequate and erring on the side of the financial institutions. Today’s announcement offers no hope for any meaningful change in the ways Irish authorities treat ordinary borrowers in distress.
Director, Irish Mortgage Holders Organisation
Dr. Constantin Gurdgiev
Director, Irish Mortgage Holders Organisation”
Issue of Bonds 10 yr propaganda continues.
The truth is, Ireland is not returning to the markets, it still carries junk bond status with Moody’s.
Markets are looking at Ireland’s sugar daddy ECB that has protected bondholders, parked Irish bond maturities beyond the 10yr and ensures bondholders get their money back. Ireland has a delinquent debt profile but markets hope this will be sorted by the ECB. This is the meaning of ‘stable’ used by S&P.
This is a long cry from sovereign, market driven capitalism, more like a reawakened USSR satellite transylvanian vampire economic disaster zone, hidden away as one of the new EMU’s debt mines, the social implications of which for Ireland over 2013, when the comets of new property taxes, increasing taxation, falling salaries, unemployment, emigration, poor public services in health and education, will hit every home.
Ireland is not a sovereign, independent, market driven economy, its a new banking entity, run by the banks, for the banks and of the banks. As in Homer’s Odyssey, the laws of gravity will win out in the end.
Part 11 Property Taxes (5)
Its another fine mess. Leaving aside the argument that the poor of Dublin will pay tax on their properties to pay for the taxes that ought to fall on the property of their rich country cousins, the subject in Ireland’s case is a rather blunt instrument unfair in the extreme.
The problem with a market driven approach as is Ireland’s is that the property market is Ireland is extremely volatile with prices falling sometimes as far as 90% in extreme cases. Estimations of the value of property without a stable base are a gamble. Added to the complexity is the property tax itself. Such property taxes, municipal or otherwise, are factored by the buyer into affordability and so effect the purchase price. Attaching estimations to historic property values free of such taxes is unfair. Readers can make up their own mind on the question of municipal taxes going to the state or to local services in a given municipality.
Notice below “After a decision made by the Federal Constitutional Court in June 1995 the use of historical values is no longer allowed for purposes…”
“4. THE CURRENT PROPERTY TAX IN GERMANY
The property tax in Germany is levied on agricultural land, forest land and built and unbuilt sites. There are about 35 Million tax objects. The property tax is stable revenue for municipalities with yearly tax revenue of about 10.7 Billion Euros. The current property tax system uses standard assessment values, assessment factors and rates of assessment.
The standard assessment value (Einheitswert) was formally used for many different taxes, e.g.
inheritance and gift tax and property tax. It is defined in the German tax valuation act. After a
decision made by the Federal Constitutional Court in June 1995 the use of historical values is
not longer allowed for purposes, which taxes different kind of goods. Immovable property had
been taxed on a standard assessment value while shares and money were taxed on market values.
The decision also said that the standard assessment value is not a market value. Nowadays,the standard assessment value is only used for the property tax. By law, the tax administration sought to declare the standard assessment value every six years. So the assessment value should approximate the market value. But, the last declaration of market values was in 1964 for Western Germany and in 1935 in Eastern Germany; besides this there are some more dates, which are subject for assessment. At the moment, the standard assessment value is a historical value and is discussed to be reformed. The standard assessment value is the basis of assessment (for property tax) in Germany.”
More next time on this important subject….No Ólafur Ragnar Grímsson Icelandic type debt write-down to 110% of current market value for Irish people in mortgage arrears…..ork debt extractor/collectors for these unfortunates, lame government instead…
As for debt for equity swaps with banks taking a 50% stake in a property worth €400k the owner can’t pay back due to high taxes including property taxes and falling or no salary, it doesn’t ring my bell. The owner only owns 50% stake in his her/own house, who gets paid first on the sale of the house, bank or seller; with property taxes and awareness of these ballooned expected values, who’s expected to pay such prices for toxic property? Future sellers get burned by toxic loans.
There ought to be laws preventing the export of loans to future victims of such loans.
One is reminded of similar practices in relation to notorious CDO’s that bundled thousands of such mortgages into toxic credit default swaps. In the film “Margin Call” the inner management core is given the directive to sell off in one day the full toxic portfolio of the bank in order to save itself.
The toxic portfolio is not broken down to its toxic content, but one is left with the distinct feeling the buyers were European banks. With these ‘toxic assets’ comprising a major part of the portfolio of many European banks, its doubtful whether they would like to go twice to Irish banks hoping to get themselves on the hook for similar toxic tranches of mortgage loans wrapped in new linen.
Any solution where complexity makes a worse mess is a fools mess.
A simple solution such as the Grimsson solution has great merit.
More about Iceland and debt writedown next time…
Back to Homer:-)
March 3, 2013
One would be forgiven for believing you had woken up in a satellite state of USSR last week.
On the one hand, news filled the air of our very own Ghulag, the Magdelene Laundries, extension of abuse allegations from children, now a new cohort of adult, single, females out-of-wedlock the main controversy.
But I digress.
This followed the previous week’s announcement of the laundering of Irish Promissory note repayments into commercial and legally enforceable bonds. There has been some doubt as to the legality of promissory note repayments from both the ECB and the Irish government’s point of view.
If we had politicians of the mettle of Iceland’s Grimsson, we would have refused to pay these notes. In capitalism, Anglo would have been allowed to fall.
In totalitarian EMU, this totalitarianism, enforced by international banking cartels, set the ECB on its course, with eagerly compliant and obedient Irish politicians, challenged by lack of knowledge of economic matters, with an Irish Central Bank, operated in conjunction with senior officials in our Dept of Finance, whose involvement regulatory and otherwise in the demise of Anglo has been shrouded in secrecy by our lack of a banking inquiry, set out to protect French and German bondholders, at taxpayers expense.
Blindfolded or blindfooled Irish politicians set out to take one for the team! Embarrassing but true.
Here is a full list of the bondholders:
May I digress again, we had surprise news of Pope Benedict sudden standing down and retirement. It was a worthy global news story but in Ireland it was elevated to apocalyptic proportions with it appeared most of the staff of RTE decamping to St Peter’s Square to give moment by moment accounts of who the cobbler was who made Pope Benedict’s red shoes.
On radio and television there were debates ironically with two factions, one arguing RTE was in the main giving negative publicity to Catholic affairs; the other, well saturation coverage spoke volumes. At least we were protected from weeping crowds giving Kim Jong 11 of North Korea the status of a demigod, but it was too close for comfort.
IT was difficult to remind oneself The Pope’s office was not unburdened by allegations of sheltering those in authority who otherwise should have been made to hang their heads in public shameful resignations in respect of cover ups they were responsible for.
As recently as last January there has been the cancellation of abuse enquiries into abuse allegations in Germany. Arguably the investigations were moving into criticism of the hierarchy.
On the other hand, it turns out there have been fewer bankers asked to give account of their deeds than bishops in Ireland. There has been a transfer of power from church and state, to shadow banking in Ireland and in Europe now running our affairs through puppet politicians, no Vichy government surprise there.
Ireland’s left has moved as far to left it now has turned the corner and morphed into the right.
Meanwhile An Taoiseach Enda Kenny, of whom we have learned following Obama’s visit to Ireland, is a student admirer of Obama’s speech making – one was reminded of the visibly upset President Obama on reacting to the student shootings in Newtown as he wiped a tear from his eye – when Enda Kenny at the end of his announcement of apology to the Magdelene’s, victims of Ireland’s ghulag, shared a similar emotional moment with us in the Dail.
However, the authenticity of the moment was questioned in the lack of detail on a compensation scheme that is yet to be decided. Lurking in the background was Professor Honahan’s enjoining of the banks to get on with it, stating he was tearing his hair out at lack of progress, coupled with recent announcements of repossession orders of circa 1000/yr from one bank as they intend to get tough with those on mortgage arrears. This story has all the hallmarks for a new front in the war between the banks and Irish taxpayers.
This was further reinforced in the indifferent removal of mobility allowances for qualified recipients on the basis of their so-called illegality. This was a cold and downright insulting jack boot broken promise that disability allowances of this kind would not be touched by An Taoiseach, not ameliorated by statement of another scheme to be decided within 4 months to ring-fence the funding of the current mobility scheme?
No one believes recipients of the current scheme will not be at a loss or that this promise will not be broken to people with disabilities.
No more greater comparison exists for Ireland’s degeneration into a cloned dopelganger mirror image of a former soviet satellite state of the USSR exist than its lack of a proper banking inquiry.
The transformation of Promissory Notes into bonds however much short-term gain is measured against long-time cost, means Ireland has abandoned a growth path based on debt burden sharing, write-down, in favour of a long-term lock down into puppet economics, where the future of this country has been handed over to the IMF, ECB and bondholders by politicians scant in their knowledge of anything outside the comfort zone of preservation of power and blind obedience.
Austerity taxes, property and otherwise, hidden charges, reduced expenditure on public services, growing emigration, falling employment levels make compelling and growing evidence for a comparison between satellite EMU states and the EMU inner core in terms of similar comparisons in the former USSR between Russia and its previous satellite states. The euro is becoming the new rouble.
Jagjit S. Chadha, professor of economics at University of Kent, observing the effects of bailouts in the EMU and its growing economic difficulties over the past number of years, has noticed a deteriorating credit risk in terms of CDS for the eurozone.
“Let us, for example, consider credit default swaps on sovereign debt. These instruments are simply instrument designed to make a risky government bond into a risk-free government bond (you can buy them on corporates but let’s concentrate on govvies). The holder of a risky bond buys a hedge from someone who wishes to sell insurance. The seller of the credit default swap (CDS) collects the premia from the owner of the risky bond and insures against default by promising to pay the par value of the bond in the event of a default, or “credit event” by the original debt issuer.”
“we can observe a bifurcation of sorts between the change in the spread between 2010 and today for the EMU countries and non-EMU countries. The latter have been relatively flat, implying the financial market price have not priced in especially higher rates of sovereign risk, even though sustained economic growth has not returned. But for the four Euro Area economies Italy, France, Germany and Spain, CDS spreads seemed to have, at least, tripled. Whether this is contagion or liquidity or a true measure of heightened Euro Area risk, I leave for another time. But the price of a hedge does seem to say something clear-cut about the continuing problems of the Euro Area and that much work remains to be done.”
According to the recent political success of Beppe Grillo from Italy’s Five Star Movement Italians are listening to his view of Italy’s economic and political rubble filled with corrupt politicians and lazy bureaucrats and both surprises and changes are coming. In Ireland, recent polls show the electorate are not listening to the chattering nonsense of austerity working, enslavement to a failed banking system, with its tendrils oozing into every tax opening in Ireland with its government endorsed mandate to suck the life out of public services and economic prosperity and sovereignty.
In such a volatile environment on the political and economic level, bankers will not have their own way. There are some surprises ahead. Catch King Lear at the Abbey, if you can, perhaps those who’ve so graciously handed away the reins of this state at so little cost to themselves, at so great cost to us, may ponder on ”Time shall unfold what plaited cunning hides.”
- William Shakespeare, King Lear, 1.1.302
While Ireland’s Minister for Jobs, Enterprise and Innovation, Richard Bruton TD was appearing at yet another small announcement of a few extra jobs with scripted cliches on Ireland’s economic turnaround, Moody’s has downgraded UK’s AAA rating. This could effect Ireland’s exporters to the tune of a loss up to €1 bn.
In the currency wars between sterling, euro, dollar, Japanese yen, Chinese yuan, the race to debase continues piling more debt onto already troubled currencies.
Some politicians make bad actors.
Part 111 Postscript
Today 05/03/2013 propaganda fills the air from newspapers, RTE headed by cries of massive savings for Ireland, repayment schedule for Ireland’s loans to save billions for Ireland.
Richard Bruton was interviewed on Morning Ireland ( surely missing an E and a U there, but work that out yourself ), according to Richard Bruton, EU Finance ministers are on the point of agreeing a new deal on Ireland’s 2010 bailout costing taxpayers in the region of €40 bn ( bailout is not my word ).
The difficulty is in the coming years various tranches of these bailout loans are scheduled for payback over the next 3 – 10 yrs at a time when Ireland wishes to return to the markets and raise its own loans. For a country already economically crippled and unable to payback loans its difficult to see the markets take other than a negative view of this situation and proceed to punish Ireland accordingly threatening economic recovery.
There is an added complication in the fact that a large proportion of the original Irish bailout came from the EFSF supported by a minority of EMU states and the current ESM supported by all 27 members so political consideration of support for any deal done to favour Ireland is part of the agenda. Already signals from the ECB re its role in bailout negotiations would appear to signal cold feet in the matter.
But however much everyone is dragged to the table news is of an impending deal to be finalised before April. April 1 would be an appropriate date for finalisation of the deal!
According to Richard Bruton and later confirmed by Michael Noonan Min of Finance and Tony Connolly RTE European Correspondent, the kernel of the deal will involve an extension of maturities across a range of options, the nub being a deferral of maturity dates in the region of 10 – 15 yrs.
This would allow Ireland to return to the markets and raise 10 – 15yr bonds from the markets without the concern in those timeframes of Ireland scuttled by loans it cannot pay back. Don’t worry, Bruton and Noonan will be out of office by the time those maturity dates come around and your children are asked to pay up on the €40 bn.
Meanwhile propaganda headline abound “A Boost For Ireland…”, the reality is you need to replace to 2 zeros, Bruton and Noonan, in ‘Boost’ with ‘u’ meaning ‘bust’.
The reality is any return to the markets by Ireland with its current debt profile that has no element of debt write-down will be on a pretend basis. This is no longer a stand alone economy.
Any new bonds fleshing out the above deal as replacements for the original €40 bn bailout in 2010 will be paid for out of ESM funds at a fixed interest rate set by the ECB/ESM. The interest rate will be more favorable to anything Ireland could raise on its own in the markets. All loans are fully repayable with extended maturity dates
Ireland should give up the pretense of a return to the markets. Ireland is now cocooned by less than mediocre politicians into a Gordian knot of debt it will not be allowed to escape from. No Alexander The Great’s such as Iceland’s Grimmson will unravel it.
The EMU is turning into the new USSR funding its satellite states in a similar way to Russia during the Cold War.
The financial world of banking in particular the Central Bank of the EMU, the ECB, has almost extinguished democracy in Ireland. It is working on its extinction.