The proposed Fiscal Compact:

http://www.openeurope.org.uk/research/100112fiscalpactdraft.pdf

 
I think there’s a piece missing from my version of the draft. It should come after the following in the draft.

TITLE VI GENERAL AND FINAL PROVISIONS Article 14

Should there not be also:

TITLE VII

AMENDMENTS AND BURDEN SHARING

1. This Treaty shall be ratified by the Contracting Parties in accordance with their respective legal requirements. It will include a burden sharing structured agreement between contracting parties, the ECB and government of Ireland. A sum of ¢34 bn through ELA and promissory repayment mechanisms will be set to null and void. Instead this debt will be collateralised through the EFSF and later through the ESM to ensure the citizens of Ireland are not held legally responsible for the debt of Anglo and associated banks.

2. This Treaty shall further include clauses and amendments to be agreed as part of an overall restructuring agreement for Ireland’s debt based on ability to repay. These clauses and agreements on burden sharing will be put to the Irish people in a referendum; the support for these amendments and clauses requiring possible further burden sharing will include a decision to leave the euro currency if such conditionality is not accepted and such burden sharing losses are not to be freely accepted by all parties to the agreement.

end of draft.

_________________________________________

Meanwhile the Irish government are in some confusion regarding the Draft. Enda Kenny has flagged in the Dail that it is not his intention to do anything regarding sending the draft to the Attorney General, developing a position on a possible referendum, until he gets advice from the next meeting of EMU leaders at the next summit, end of January, Jan 30. This might explain Leo Varadkar stating that he could not discuss the question of the Fiscal Compact as it had not been finalised. It would appear Kenny and Varadkar are both in the dark on the matter; they intend to keep the country in the dark on this as well.

So next meeting of the summiteers held to discuss the Fiscal Compact should be fun?

Sarkozy: ‘Have you examined the Fiscal Compact, Mr Kenny?’

Kenny: ‘No, I was waiting to get its final wording today from you and Angela?’

Merkel: ‘You did not examine the proposed Draft and put it to the Irish Attorney General for his opinion?’

Kenny: ‘No point, it isn’t the final wording.’

Merkel: ‘The journalists did not release it in the media for general discussion and further advice”

Kenny: ‘Now we don’t want to go upsetting people with referendums and complex decisions that even I can’t understand!’

Kenny: ‘Just go ahead and add in any final changes there. I’ll rubber stamp them.’(Winks at Merkel, who is appalled)

Sarkozy/Merkel in chorus:

‘Ooh la, la…….’

Uncomfortable, embarrassed laughter ensues…

You know what, folks, I’m not laughing!

End.

However, that solution may not be the one you hope for:

I’m not going to use any mathematical laws of probability on this, but this could be done, there is currently very high risk, if not high probability of the following:

Following Sarkozy Toulon speech, given the lengthy negotiations that will be required to redesign European Treaties, we could be expelled from the EMU with a new hardening of the rules to be imposed on member states. Those rules may by majority make it impossible for peripherals to remain within the EMU.

There may already be a new core Treaty ready for signature by Germany and France initiating a core EMU with Germany leading a number of core countries out of the old and into the new.

This would also mean changes to the current Treaty on the the terms under which this tier 2 group, those remaining on some second level EMU status, could continue to retain membership of tier 2.

Less likely imho the EMU and ECB will be disbanded and the flag of a new redesigned EMU ready for application by intending members made ready for some future point.

High probability exists for any of these scenarios:

One thing for sure, the EMU as we know it is finished: der Euro ist fertig

Its a mistake to think this is a euro crisis that can be solved by the ECB. This is a world currency ‘floating’ dollar crisis on the verge of getting out of control.

The chaos we have now was there in the floating currencies of the 1930’s. Bretton Woods was required then to intervene and created the dollar as the world reserve currency with the dollar at $35 an ounce.

Unfortunately, the dollar/gold peg was removed in the early 70’s and aided and abetted with the birth of financial intruments such as derivatives and OTC’s instability and finally chaos beckons as it did in the 1930’s.

We need a global solution, a new G20 world reserve currency, such as that proposed by Keynes, ‘the bancor’, with a new FOMC type body composed of reps from each of the world’s major economic zones with fixed exchange rates based on gold. 

This would avoid a current forex mess damaging markets and announcement of a coordinated move by Central Banks such as the FED to relieve pressure on the euro:

http://en.wikipedia.org/wiki/Central_bank_liquidity_swap

“These swaps involve two transactions. When a foreign central bank draws on its swap line with the Federal Reserve, the foreign central bank sells a specified
amount of its currency to the Federal Reserve in exchange for dollars at the
prevailing market exchange rate. The Federal Reserve holds the foreign currency in an account at the foreign central bank.

The dollars that the Federal Reserve provides are deposited in an account that the foreign central bank maintains at the Federal Reserve Bank of New York. At the same time, the Federal Reserve and the foreign central bank enter into a binding agreement for a second transaction that obligates the foreign central bank to buy back its currency on a specified future date at the same exchange rate. The second transaction unwinds the first.
At the conclusion of the second transaction, the foreign central bank pays
interest, at a market-based rate, to the Federal Reserve. When the foreign central bank lends the dollars it obtained by drawing on its swap line to institutions in its jurisdiction, the dollars are transferred from the foreign central bank’s account at the Federal Reserve to the account of the bank that the borrowing institution uses to clear its dollar transactions. The foreign central bank remains obligated to return the dollars to the Federal Reserve under the terms of the agreement, and the Federal Reserve is not a counterparty to the loan extended by the foreign central bank. The foreign central bank bears the credit risk associated with the loans it makes to institutions in its jurisdiction.”

This essentially is an attempt to transfer pressure off the euro onto new dollar denominated backing by the Federal Reserve.

I’m curious as to how the arrangement in some form of reciprocal way doesn’t transfer risk onto the Federal Reserve and weaken the dollar?

FAQ:

http://www.federalreserve.gov/monetarypolicy/bst_swapfaqs.htm#5631

“How were the swaps structured?
The Federal Reserve provided U.S. dollars to a foreign central bank. At the same time, the foreign central bank provided the equivalent amount of funds in its currency to the Federal Reserve, based on the market exchange rate at the time of the transaction. The parties agreed to swap back these quantities of their two currencies at a specified date in the future, which was the next day or as far ahead as three months, using the same exchange rate as in the first transaction. Because the terms of this second transaction were set in advance, fluctuations in exchange rates during the interim did not alter the eventual payments. Accordingly, these swap operations carried no exchange rate or other market risks.”

Actually, the above is disingenuous. It presupposes that ability to pay exists and the currency hasn’t crashed. That’s dollar risk.

There is also bigger risk for the euro Central banks: come payback time, if the euro has considerably weakened against the dollar, there will be a big price to pay by the CB’s under the ECB.

‘The house always wins’ doesn’t always happen in the casino especially if you are Don Quixote and you back a donkey.

In 1998 one of the reasons that caused the Russian financial collapse was the attempt to maintain a too high fixed exchange rate just as right now our own exchange rate is damaging us. There has been high volatility on the forex markets with exchange rate of euro too high against the dollar recently. This was the reason for major objection from Trichet on US QE over the past two years, the euro was hurt rising in value against the dollar.

In the Forex casino, counter intuitively, if the euro falls further against the dollar, its rising slightly at the moment, its fall will be hastened against these forex payback contract obligations. If its value rises against the dollar, there’s vast profits to reap eg on one of these ‘cheap liquidity’ dollar loans exchange rate rising from 1.32 Euro/dollar purchase of 132 bn yields a 2 billion profit less inflation on a rise to 1.34/dollar.

Another beneficial effect of these swaps is the calming of CDS speculation against the euro where CDS triggers are effected in particular exchange rate milestones.

This may be the major intent of these moves as its a toss up whether the euro rising against the dollar in the long term is of any beneficial effect to long term prospects for the euro 

I totally disagree with the view of the FT Dec 8, 11 that the euro must be saved.

On the contrary, I believe the euro has a terminal disease and it must be allowed to die in an orderly and peaceful way as possible.

Therefore I believe the following quote is pure rubbish:

“So badly have European governments undermined their own credibility that the only way to shock markets back to confidence is by putting hard money on the table. The straightforward way would be to use the European Financial Stability Facility to the hilt. The EFSF would raise a large warchest to support the prices of new bonds issued by any sovereign that is solvent, at the lowest rates it can afford to charge.”

I do agree the ECB under Trichet has been badly managed from the outset crippled with the inability to intervene in sovereign markets and turning a blind eye to housing bubbles and reckless spending.

However, that’s not my main reason for wanting to see an end to the euro, some patients are not doomed to die as the euro is.

Fixing it now is like trying to fix a jet airliner over the Atlantic whose engines have failed!

I strongly encourage readers to see the excellent “The Inside Job” reported here in The Guardian re BBC2 reshowing last night

http://www.independent.co.uk/arts-entertainment/tv/reviews/last-nights-viewing-storyville-inside-job-bbc2br-frozen-planet-bbc1-6273716.html

Highlighted is the number of academic economists who had conflict of interest with the hedge funds, banks, and the pyramid that fed on the financial derivative bubbles that brought about the Lehman’s collapse and, I believe, will bring about the collapse of the euro. So watch from out of the timberwork hordes of tiny tims, financial bottom feeders, market analysts, government spokes persons whose interests lie in the financial Coup d’état currently being attempted by banks and financial institutions against democratic government at the present time.

What do you mean by that paragraph above?

Here is an example of what I mean?

J.P. Morgan Chase & Co. put out a report Wednesday that advised investors and companies to hedge against a collapse of the euro zone—though the bank said the likelihood of that happening was just 20%. It said many corporate clients were buying currency derivatives to place bets against the euro.

Unfortunately since 1971 the world has been afflicted with a growing derivative market that threatens the stability of all fiat currencies including the dollar. Trillions of dollars of investments are riding on financial instruments such as CDS, OTC, forex swap markets; combined with the lack of regulation governing the rules of trade in these markets, combined with massive over leveraging by these investment banks and financial institutions, such investment lines have undermined currency to such an extent that along with housing bubbles due to unregulated OTC’s, currency failure is now inevitable.

Failure of the euro will go a long way to liquidate losses and clean up currency markets. Currently the euro is not in a state of collapse due to housing bubbles alone. Primarily it is in a state of collapse because its losses in the casino markets due to failing subprime OTC’s in the US; EMZ’s over leveraged investment banks who’ve been failing in these markets since 2008 in europe, have not owned up through adequate stress testing, to their losses.

The euro has become through lack of regulation a huge casino making fortunes for the corrupt financial markets. The speculators in the insurance funds, the investment banks, the bonuses and profits in the millions, billions and trillions, are at stake if the euro casino gets burned.

Pouring more money on this fire will be disastrous for democracies in Europe and disastrous for the people of europe. It will make more profit for banks and financial institutions, but even for them, gain will only be short term.

We need to return to national currencies that will fairly measure and promote fair trade between nations. Industry and manufacturing, enterprise, creativity and innovation, should no longer be set aside in favour of chasing paper, virtual profits in financial instruments that smother real development.

Pouring more money into the euro now is to pour it into a toxic financial system whose main players should be in jail on charges of incompetence and corruption.

Let’s take down the euro. Get the G20 together for a new Glass Steagal that will outlaw wanton speculation and corruption in the derivatives market. Get national governments to police their banking and currency systems with adequate regulation.

Introduce proper stress testing on a global basis. The 6 largest banks in the USA control 60% of US GDP and are responsible for the plundering of manufacturing of the US middle class and disappearance of manufacturing in the US…Break up these banks under new currency rules to brake financial trading in derivatives and promote true economic development

If we stay in the Euro, we are turkeys for Xmas! We can say goodbye to democracy in Ireland, wealth in Ireland and the nation’s health!

end:

Our government after all, instead of saying to ECB, ‘Our banks lost it and burned all the money you lent them’, we said, ‘the Irish people will pay for it!’

Now when we plead for a bit of leeway, our pleas fall on deaf ears. We are the scarecrow of Europe but we are paraded as the European success story of default, as if our vibrant economy bursting at the growth starter gates, is ready to burst free of its constraints into growth.

But most of us on the island know this is deception and it is a lie.

However, it appears we are consumed by lies. Around us we see the growing mayhem of 150,000 or 1 in 5 mortgages already in arrears and pleading for default and this problem is only beginning to grow.

Our government on an economy teetering on deflation, default and a tumbleweed of failing response to our fiscal meltdown is about to embark on another misadventure, our ¢3.8 bn slasher budget.

Some elements of the budget have already been revealed, such as a 2% increase in our vat rate. We found this out courtesy of documents released to a German Finance committee operating under the aegis of the German Bundesbank.

Retailers and business groups point to the fact that this will drive buyers across the border to towns like Newry and beyond.

A more critical response to the vat increase points to the hypocrisy of the Irish Labour Party and the disproportionate effect of a vat increase on the lower percentile earning groups in our society, the poor, with higher income groups protected against a more fairer increase in tax rates based on ability to pay.

Meanwhile in Europe An Taoiseach, Enda Kenny, has rolled out to the German Chancellor, Angela Merkel, Irelands resistance to significant changes in the European Treaty; in  preference for any changes in relation to the current challenges facing Europe being carried out within the present framework of the European project.

Kenny has also lobbied Merkel with the view the ECB should become more proactive in the fiscal crisis facing the euro. Euro bonds, Quantitive Easing (QE), printing money would all be favoured courses of action Kenny would prefer to greater political union.

http://www.dailymail.co.uk/news/article-2063103/Germanys-war-pound-Youll-join-euro–sooner-think-Cameron-told.html

Meanwhile Cameron is urging the ECB to print money to solve the crisis.

“But in a sign of growing nervousness about the crisis, the ECB yesterday intervened to buy up Spanish and Italian government bonds to prevent market speculation driving interest rates to unsustainable levels.”

Time is running out. The finance industry of both London and Dublin will get severely burnt if the euro FIRE (Finance Insurance Real Estate) bubble is popped by the deepening debt crisis facing Europe.

Both UK and Ireland are on the side of the banxters pleading for more leeway in Europe to help distressed banks, to avoid default, that would bring the whole financial edifice of the euro tumbling down.

Irelands vat tax rate increase is another tax levied by the banks and their proxy government representatives to help pay their debts and avoid inevitable default. The only question is, how long will the people sleep before waking up to the realisation those who sold debt in unregulated frenzy in breach of conservative fiscal rules flaunted by irresponsible and incompetent politicians, are picking their pockets once again.

OWS, Ballyhea, represent the slow dawning that something rotten is in the state of Denmark, the banks represent an unweeded garden growing out of control.

Merkel and Schauble will not commit the German Bundesbank and the German economy to pay for the mess by QE; it could spiral out of control in ways reminiscent of the hyperinflation in the German Weimar Republic.

No one wants to be seen to be the one who will pull the plug on the euro.

The  EMU is turning into a debt hole colander with hitherto solutions that make the situation worse instead of better.

The current standoff  will be decided by the markets. One solution that would involve Euro Bonds or QE or closer fiscal union, would inevitably mean Germany becoming a new Super State with powers to dictate to parliaments in member states their will and way.

Its clear democracy as we know it is under threat as banxters control our government and impose a budget that is decided for us by the German Bundesbank and passed by the German parliament, before we get to see !it!

End

Two ministers of the FF government of the time, Willie O Dea TD and Mary Hanafin speak of being bounced and rushed into the  decision.

http://www.irishtimes.com/newspaper/ireland/2011/1107/1224307166256.html

One argument suggests the Irish banks, in particular, Anglo Irish,  controlled government in return for a pact of crony influence that gave FF control over the Irish banking sector. This led to an unhealthy and ultimately corrupt alliance between FF, cronies in the developer/construction industry and bankers. Light regulation led to an amber light turning green for a massive bubble economy unfettered by regulation.

It was a disastrous mistake to take the bill on the sovereign.

David McWilliams has argued it was a good thing to invoke the bank guarantee sovereign underwriting of Irish banking debt. For him there was the Swedish parallel in the early ’90′s whereby Sweden responded to its banking collapse by initiating a guarantee; then going in and cleaning up the banking sector with closures including default and the sale of mortgage property in massive firesale sell offs.

David sees the failure of the Guarantee due to the absence of the second stage of Sweden’s accomplishment, the cleanup. We had no default verboten by the ECB.

Temp things have a tendency to be difficult to unwind.

Unfortunately, our circumstances were different to those faced by Sweden. We were members of the EMU, stuck to an exchange rate with massive debt owed to bondholders located most probably in European Banks, France and Spain, and exposed to the US dollar fears of a global recession including a new financial world served by Credit Default Swaps held against the eurozone by banks eg Morgan Stanley and Goldman Sachs. We were in a different cocoon compared to that of Sweden in early 1990′s.

What should we have done?

We should have consulted with our neighbours, Alistair Darling, the British chancellor, should have been consulted:

http://www.guardian.co.uk/books/2011/sep/11/back-brink-alistair-darling-review

The French Finance Minister, Christine Lagarde, should have been consulted:

http://www.guardian.co.uk/books/2011/sep/11/back-brink-alistair-darling-review

The ECB under Trichet should have been consulted.

Conference calls should have laid it on the line that Ireland was under threat and a policy response to safeguard the Irish state interests with protection of the interests of the EMU, was at stake.

Alexander The Great

http://en.wikipedia.org/wiki/The_Battle_of_Alexander_at_Issus

Alexander the Great would never have made that mistake at the Battle of Isis. Alex would have deployed all his forces against the banks but have retained his elite guard, the Companion cavalry, and held them in abeyance until the battle was waged and the right opportunity to commit arose.

Alex would have used the European wide experience in dealing with the banks, especially Lenihan’s French counterpart, Christine Lagard, also Alistair Darling, Lenihan’s UK counterpart, also the ECB under Trichet, to initially defend this country against its attack by the banks.

We should have watched the battle ensue and allowed these counter parties to extract maximum defence of this country against the banks. Danger of european contagion could have been used by us to maximum effect in persuading the ECB to defend this country against contagion from our own banking sector.

It was disastrous to commit this country’s resources alone against the Irish banking sector fueled by the ECB; even taking into account DmcW’s belief that this was to give short term shelter from the storm, that later measures could be taken to unwind the guarantee.

Logic and reason should have shown that he who pays the piper would not call the tune in this instance, that the ECB would not step in and carry the burden of the banks for us, that we would carry that anchor all by ourselves to Davy Jones’s locker.

Alex would have assembled the forces of the ECB, the British Exchequer, the French under Ms Lagarde, to come up with a package favorable to Ireland.

When this package/response became clear, that was the time to release the Companion cavalry of the Irish parliament, to rip that package apart and demand a better deal for Ireland that we could sign up to, or OUT.

Lots of mistakes were made in strange and surprising circumstances by many involved in the bank guarantee.

Its easy to have 20:20 vision in hindsight.

Nevertheless, in examining the past, its useful to recognise mistakes and point out other courses of action, that could have avoided worst outcome for Ireland; namely, how bankers acting in unison with the ECB, Irish politicians, Department of Finance,  fleeced  Ireland.

::End::

Brooksley Born:

“We didn’t truly know the dangers of the market, because it was a dark market,” says Brooksley Born, the head of an obscure federal regulatory agency — the Commodity Futures Trading Commission [CFTC] — who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country’s key economic powerbrokers to take actions that could have helped avert the crisis. “They were totally opposed to it,” Born says. “That puzzled me. What was it that was in this market that had to be hidden?”

Read more: http://www.pbs.org/wgbh/pages/frontline/warning/view/#ixzz1YlKmnkWZ

Want to know why we face economic meltdown, start above.

Many economists, of the throwaway kind, will say the cause of our economic meltdown is unsustainable debt levels. Deal with the debt re austerity, or even restructuring,  the problems will go away. They won’t. The problems lie much deeper.  The worst that can happen is a double dip recession? No, our problems may exceed our expectations, so much so that 2008 may have been a significant warning of a lot worse to come. We may be on the cusp of a global recession that will far exceed any we have had before including that of the Great Depression.

The Banking Act of 1933 commonly known as Glass Steagall http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act instituted banking reforms to clean up the financial sector following the devastation wrought by the Great Depression of 1929 in the US. Many of the practices in banking, the lack of regulation, doubts re the authenticity of banking transactions in regard to investment bonds, interbank lending, led to a collapse in the markets at that time.

From link above:

“Proposed re-enactment

In mid-December 2009, Republican Senator John McCain of Arizona and Democratic Senator Maria Cantwell of Washington State jointly proposed re-enacting the Glass–Steagall Act, to re-impose the separation of commercial and investment banking that had been in effect from the original Act in 1933, to the time of its initial repeal in 1999.^[29] Legislation to re-enact parts of Glass–Steagall was also introduced into the House of Representatives. Banks such as Bank of America have strongly opposed the proposed re-enactment.^[30]

On January 21, 2010, President Barack Obama proposed bank regulations similar to some parts of Glass–Steagall in limiting certain of banks’ trading and investment capabilities. The proposal was dubbed “The Volcker Rule“,^[31] for Paul Volcker, who has been an outspoken advocate for the reimplementation of some aspects of Glass–Steagall^[32] and who appeared with Obama at the press conference in support of the proposed regulations. However, in May 2010, Volcker, in an interview with BBC Business Editor Robert Peston, said he was not advocating a return to Glass–Steagall or a complete separation between investment and commercial banking.^[33] In a May 2010 interview with Alternet, economist Nouriel Roubini described the “Volcker Rule” as insufficient and “essentially Glass–Steagall-Lite,” allowing conflicts of interest to remain and for financial entities to become too big to fail, a model he described as a disaster, and stated, “We need to go all the way and implement the kind of restrictions between commercial banking and investment banking that existed under Glass–Steagall.”^[34]“

Gramm Leach Bill repealing Glass Steagall was signed into law by Bill Clinton in 1999. One of the main arguments against this was the following: “Securities activities can be risky, leading to enormous losses. Such losses could threaten the integrity of deposits. In turn, the Government insures deposits and could be required to pay large sums if depository institutions were to collapse as the result of securities losses.

The rules allowing banks responsible for securing their depositors money and using depositors money to speculate for investment purposes were now in place. Banks speculated assured they would be rescued if they were ‘too big to fail’.

Meanwhile from 1970 onward rules governing the use of derivatives http://en.wikipedia.org/wiki/Derivative_(finance) were relaxed. Twinning with Gramm Leach Speculation and Arbitrage  took off and a new global financial industry was born. Thousands flocked to Wall St and other financial centres feeding on the opportunities provided by the global casino relaxing its rules.

But still another component was required to get the financial industry off its feet and up-and-running.

“August 15, 1971, President Richard M. Nixon announced that the United States would no longer redeem currency for gold. This was the final step in abandoning the gold standard.”

http://www.econlib.org/library/Enc/GoldStandard.html

“Conclusion

Although the last vestiges of the gold standard disappeared in 1971, its appeal is still strong. Those who oppose giving discretionary powers to the central bank are attracted by the simplicity of its basic rule. Others view it as an effective anchor for the world price level. Still others look back longingly to the fixity of exchange rates. Despite its appeal, however, many of the conditions that made the gold standard so successful vanished in 1914. In particular, the importance that governments attach to full employment means that they are unlikely to make maintaining the gold standard link and its corollary, long-run price stability, the primary goal of economic policy.”

The floating of the dollar in 1971 saw the dollar assume a new reliance on world reserve currency less dependant on a fixed exchange rate determined in gold and more reliant on speculation. http://en.wikipedia.org/wiki/World_currency Other currencies eg the Chinese yuan and the euro in a new globalised and computerised financial trade hedged their own currencies with the purchase of US treasury bonds and financial OTC derivative contracts and FX currency trading on the interbank market. They did this to avail of the rating agency AAA nature of dollar based investment returns in order to give greater stability to their own currency,  and banking for profit investment.

All of the above factors combined to create a global investment banking industry where profit was maximised through speculation in derivative trading, foreign currency exchange rates, and the exchange of financial futures products becoming ever more complex and further removed from reality as the industry assumed a life of its own due to lack of regulation.

2008 saw the collapse of Lehmans as the world realised much of its investments were in useless subprime paper. Since then in spite of QE1 and QE2 from Obama, the global financial world has deteriorated and we are on the cusp of  ’the great global meltdown’.

The response of politicians has been abysmal. Ben Bernanke of the US Fed only response is to throw more fuel on the fire.

We need to clarify the difference between the central banks and the markets.

There has been a massive coordinated push by central banks around the world to push liquidity support to the embattled euro, see here

http://seekingalpha.com/article/294195-central-banks-sell-dollars-to-prevent-liquidity-crises

It seems to me we are moving towards a stateless world currency led by the Fed.

The Fed is not only battling markets, but moves like this are attempting to negate free market capitalism as attempted by the markets, replacing it with a new Banking Socialism run by the Wizard of Oz, Bernanke and his clones.

This is a new bubble matrix world where even the markets themselves are being manoeuvered out of existence. Bernanke wants EMU to pump more money into the system, but here’s the problem:

Anyways, the bondholders get to squeeze another 3 months till end of December? Then the EFSF comes into play, but its against the rules to pump the QE that Geithner wants, so the money will have to come from money raised on the capital markets by participating countries enjoying their contributions to the EFSF.

Two things will be asked for: a) that there be an increased injection of funding to up the ¢440 bn available and b) greater political and monetary cohesion to make sure the creditors get their say.

The problem is EFSF puts Germany and France big time on the hook for bailouts, plus Spain, Portugal, Ireland and possibly even France itself (looking into bailing out some dodgy looking banks), may need to dip into the fund.

Greater political and monetary cohesion is a political joke at this stage. It was not on a few years ago when Lisbon scraped through. It certainly isn’t now politically on the cards to give more hammers and sickles to the banking/bondholder class to give them more powers to impose more austerity on us rabbits!!

Meanwhile economists are lining up to predict the breakup of the EMU:

Desmond LAchman was on Morning Ireland, amazingly Pravda RTE must be beginning to acknowledge the inevitable as well. Desmond joins growing list of economists forecasting breakup of the EMU possibly towards the end of this year:

http://www.aei.org/scholar/72

http://en.wikipedia.org/wiki/Martin_Feldstein

Surprisingly Stiglitz is in favour of euro bonds so unlike Roubini, Stiglitz seems to have lost the plot

Unless we get an orderly breakup the problems and chaos will escalate

http://gfs.eiu.com/Article.aspx?articleType=gef&articleId=1928440777&secID=1

Unfortunately, in our case we have no wise leaders such as Olaffur Grimsson

http://video.cnbc.com/gallery/?video=3000046687

In summary, there is €750 trillion of OTC currency trading out there: we need the following enacted in full asap:

“In September 2009, G-20 Leaders agreed in Pittsburgh that:

All standardised OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest. OTC derivative contracts should be reported to trade repositories. Non-centrally cleared contracts should be subject to higher capital requirements. “

http://ec.europa.eu/internal_market/financial-markets/docs/derivatives/20100915_proposal_en.pdf

A new global currency based on the gold standard to bring back stability to global finance needs enactment. Current austerity measures are making matters worse. No one knows the vast extent of how much debt, how much derivative OTC paper debt is out there concealed on the books of  banks across the world.

The G20 as part of its cleanup of the derivative market should establish a new gold backed world reserve currency to allow countries to transition to it over a ten year period. This process should be urgently undertaken because if it is not done, under present policies, pretty soon the dollar and currencies based on the dollar eg the yuan and even the euro, will disappear in value to zero, and that which won’t dive to zero, will be counterfeit.

For us Punt Nua may not be a route to take anymore.

We may be in a Hobsons choice situation where the inevitable choice between two objectionable alternatives is between Punt Nua and joining a commonwealth relationship with the UK and adopting sterling currency.

Only this way could our financial affairs be unwound with the leverage coming from UK and the ECB.

Realistically our political establishment is too much infiltrated by the banks. We have no Olafur Grimsson mindset in charge.

Sucks Sutherland made a speech yesterday to lash those doubting austerity. Goldman Sachs need their money back and that is what Suds is paid to do.

Expect a visit soon form John Bruton of IFSC to stoke support for the casino financial services sector squid thats plays a large part in the mess we’re in, these bankers want to suck blood.

Brooksley Born can take any satisfaction she can out of her warning. She told us so!  What she warned of has come to pass.

End

23/09/11

Its toxic housing bubble pyramid has collapsed in the US and Ireland; the OTC and exchange traded derivative associated scams built on it have yet to be unravelled.

People’s pockets and Government’s pockets have been picked again.

In the 80′s under Greenspan the game of deregulated exchange traded OTC derivatives was invented and the super rich made a pile of dough.

The effect of this has been well documented and researched in the US by both Elizabeth Warren and Brooksley Born:

Elizabeth Warren: Research/Writing on Disappearing Middle class. See end of

http://bit.ly/qB0FNf

Elizabeth Warren

“In 2001, more men and women went bankrupt than filed for divorce or graduated from college (1.5 million versus 1.1 million and 1.2 million, respectively). In 2002 those who declared bankruptcy far outnumbered those who suffered heart attacks or were diagnosed with cancer. At present rates, one in every seven children in America will live through a bankruptcy between now and the end of the decade. And it’s not the working poor, credit-crazy youth, spendthrift “DINKs” (dual income, no kids), or fixed-income seniors who are swelling the ranks of the insolvent. The hardest hit are middle-class families, says Gottlieb professor of law Elizabeth Warren.”

http://bit.ly/r3T865

Brooksley Born

http://bit.ly/p51qrq

Last January, Financial Crisis Inquiry Commission FCIC

Attacks Greenspan: http://bit.ly/oCm0em

We need to take on the banking and financial sector and regulate with decent handcuff laws.

An audit of practices in the financial services industry should examine malpractice and examine risk.

OTC’s should be banned. Proper laws enforcing decent regulation of exchange traded derivatives should be enforced.

In Ireland a proper inquiry into banking should examine the ‘loan to own’ lending practices in our banks that handed out mortgages to high risks.

The problem is Governments have been taken over by a modern version of the banker Yangs, Omega Glory starship episode:

We THE PEOPLE

http://www.youtube.com/watch?v=ipe5EjcchvY

Fascinating article here:

dark pools, gun slingers, day traders, owning the house and the ending of the uptick rule

http://moneymorning.com/2011/08/19/new-abnormal-permanently-engineered-market-volatility/

“But the biggest advantage these venues have is that they “see” what orders are coming into them. And, regardless of whether or not it’s legal, they trade against them and take advantage of knowing the specifics of other pending orders that can be used to backstop losses. I’ll get to that is a moment.”

“The New Abnormal

Wall Street finally got what it wanted on July 6, 2007, when the Securities and Exchange Commission (SEC) did away with the “uptick rule.” As of that day, it was no longer necessary to wait for a stock to go up in price before short-selling it. Without the uptick rule, short-sellers can short any stock, at any price, at any time.

There’s plenty more that Wall Street has done to ratchet up volatility. It has flooded the world with derivatives that aren’t regulated, and blessed high-frequency trading. It also introduced innumerable securities and financial instruments that it can arbitrage for healthy profits against unsuspecting institutions and the public.

Not surprisingly, market volatility is now a tradable product. And now that Wall Street has taken us down this path of entrenched, institutionalized volatility, there’s no going back.

Don’t expect any respite from what’s going on in the markets now. On the surface, it’s all about Europe, debt, downgrades, earnings, fundamentals and technicals. But underneath all those prime movers are the real shakers, the greasy palms of the markets hidden hands.

Abnormal is the new “normal.”

Progress of civilisation itself could depend on how we clean up these financial opium Houses! Unfortunately, Merkel, Sarkozy and Obama the blind, can’t see the dangers posed above:-

Currently the banks control the resolution of toxic mortgage debt; through NAMA the Government has virtually been turned into a bad bank that guarantees bank commercial property and toxic lending and continues to attempt to falsely inflate a housing bubble in Ireland through withholding property from the market place.

We are far form a humanitarian approach that would take control away from the banks with the setting up of a NAMA for homeowners facing a mortgage debt crisis:

Here is the outline of some suggestions to relieve the burden on families and on the state of mortgage debt arrears:

1. Reform of the bankruptcy laws in this country to be brought in line with best practice in UK and US. The homeowner gets to hand back the keys to the banks but falls under a 3yr bankruptcy system similar to same in the US.

2. A NAMA for homeowners with toxic mortgages: the State offers to buy back the mortgage at an agreed discount, which maps that used by NAMA to buy toxic commercial loans from the banks.

3. The homeowner gets to choose 1 above or alternatively can choose a Family Protection Bundle. The FPB would be a binding contract on the homeowner that:

a) They get to occupy the house for life.

b) They pay a TBA Rent or Lease on the property which is a percentage of their income. The percentage would be scaled from say 5%, if they are on Social Welfare, to 40% if they reach income ceilings to be decided. If the contract is broken, the property reverts to the state.

c) Upon death of the property owner, the same offer is extended re Rent/Lease is offered to the person’s next of kin to whom the property reverts per Will of the deceased.

d) A clause in the contract allows for the state if it chooses at any time to make an offer against the property to the Rent/Leaser, to allow the Rent/Leaser buy back the property.

End:

NAMA, the worlds larges property company, continues to bleed the economy, €11 ml consultancy fees paid out last year, estate agents, solicitors, auctioneers all benefit from the NAMA .

Recall the famous mortgages popular in the eighties and pushed with heavy advertising ‘pig in a poke’ whereby you invested in an insurance scheme that paid off a lump sum from which the principal would be paid off along with a tidy profit.

People across Ireland and UK because of the poor performance of their investments fell short and found themselves burned, the UK government had to dig out many victims of the scam. NAMA was seen as a device to save the Irish economy from the true effects of its property bubble. Last year its losses were of the order of €1 bn calculated at 2009 valuations, but must be close to double that loss calculated at 2010 valuations.

NAMA is meant to make a profit in the long term, 10 – 20yrs. Meanwhile the only people making a profit are developers on sweet deals, consultants and NAMA personnel on a wasted cost and drain to the Irish taxpayer.

How to deal with the end of a property bubble:

Lesson One:

1. Follow the example of Sweden’s Bo Lundgren and get rid of the potentially catastrophic toxic property portfolio ASAP.

2. To verify 1 checkout NAMA’s books in 2018 and see the catastrophic makings of the biggest property mess the world has seen!

Meanwhile government steels itself for another € 4 bn austerity cuts in the autumn. Emigration will help the coming budget! Ironically, Government budgets in the short term will benefit by being relieved of the burden of welfare payments for single people or entire families who emigrate.

In the medium to long term, the loss to the country through emigration is also a severe economic loss.

It’s often the brightest and most resourceful and best who leave.

They will not be contributing to the local economy by purchasing goods and services throughout their lives through themselves or their children.

Their creativity and talent, the investment in their education by the state, their potential future contribution, become a loss to community denying opportunity and enterprise going forward.

On the Titanic, among the list of variables effecting the eventual tragic loss of 1500 + lives:  there was the officer, who was replaced and who left the ship with the keys to the locker, the locker held the binoculars – the lookouts in the crows nest needed binoculars to see  growlers through the darkness, on a calm moonless night, with no waves washing against the icebergs deadly side, growlers were difficult to make out.  There  were the rivets that unzipped and popped their heads opening the steel plates along the ballast tanks because of the inferior grade 111 iron chosen as material. There was the lowering of the bulkheads to accommodate grandiose interior staircases at expense of safety;  the wireless operator concerned more at personal gain sending private messages, rather than the urgent concentration on ignoring crucial weather reports.

On the other hand, those emigrating will save themselves from our impending Titanic disaster.

There is much to be learned and enjoyed and gained by leaving to find a better livelihood and lifestyle elsewhere.

Meanwhile, at home the older population cohort have already spent their money in raising their families. They save and save terrified with everyday news of new charges/taxes for everything.

There are no jobs for the young, no jobs in the professions. Educated or uneducated, the young join in a growing tide of emigration taking with them the lifeblood of the country’s future.

Captain Smith, Enda the Titanic, gazes ahead with gimlet eyes riveting the growing darkness:)

If you are in the crow’s nest, please put on binoculars!

Those responsible for the mess find greater concealment in austerity.

Here’s how that works:

The trick is to distract away from such matters by surrounding them with a chinese walls eg NAMA with instruments such as ‘commercial sensitivity’. Or, a favorite, bury probes in long drawn out investigations that constantly get delayed eg the extra 6 months given into the Garda investigation into Anglo.

Favorite of all is the 3rd class passenger device. All departments use this. Basically this method is to direct the public’s attention to some useless bit of chicanery eg the threat of a hospital closure somewhere, or fueling debate on those ripping off the social welfare system.

These debates all help to distract from white collar crime or the true causes of why we are where we are.

http://titanicstation.blogspot.com/2007/02/third-class.html

On the titanic third class passengers were locked below and had to fend for themselves as the boat sank. Most all places in the lifeboats went to 1st class passengers.

Next budget will lock all our third class passengers below deck. Already interest rates, mortgages, utility bills and charges, cost for food, transport all rise above the ankles while wages fall…

Our first class passengers on our Titanic are doing quite well at the moment, so divide and conquer by leading a FG/ILP Charge of the Light Brigade of well-to-do chancers and hypocrites against the neer-do-well, is game on at the moment:)

The plan won’t work!

Cicero 45BC

“But I must explain to you how all this mistaken idea of denouncing pleasure and praising pain was born and I will give you a complete account of the system, and expound the actual teachings of the great explorer of the truth, the master-builder of human happiness. No one rejects, dislikes, or avoids pleasure itself, because it is pleasure, but because those who do not know how to pursue pleasure rationally encounter consequences that are extremely painful. Nor again is there anyone who loves or pursues or desires to obtain pain of itself, because it is pain, but because occasionally circumstances occur in which toil and pain can procure him some great pleasure. To take a trivial example, which of us ever undertakes laborious physical exercise, except to obtain some advantage from it? But who has any right to find fault with a man who chooses to enjoy a pleasure that has no annoying consequences, or one who avoids a pain that produces no resultant pleasure?”

So, the Central Bank, NTMA, the TRoika wish us to endure austerity/pain in order to achieve the pleasure of righting the economy and returning us to growth.

In fairness, we should do this if this path achieves the goal of righting the economy and returning us to growth. But we shouldn’t do this if this goal in fact achieves the opposite.

So, in a democracy how should this conundrum be resolved? The answer is by REFERENDUM.

If there is a sufficient body of evidence and belief in a society to question whether we should pursue a policy imposed on us from without, without our consent, the people should be given their say.

It is the duty of government and the presidency to protect the rights of the people and prevent them being usurped from without.

The Referendum:

1. Do you agree to the Irish taxpayer funding the debts incurred by Irish banking debt?

2. Would you choose to leave the EMU rather than pay back the private debts of Irish banks?

3. Are you satisfied with the way the Irish government has negotiated the ‘bailout’ with the EMU?

There’s a few q’s should be put to the Irish voter. If they are not put to the Irish people, forget all this transparency from the troika, the Irish government, its only a thinly disguised big stick wielded by the European Socialist Republic, more Stalin than Abe Lincoln.

It’ll pop our rivets.

Latest from Bill Still who supports an end to the problems of fiat money, or a return to a fairer system controlled by central banks owned by taxpayers, rather than private fiefdoms.

http://www.youtube.com/watch?v=Rq8s0JShs7o&feature=uploademail

Interesting Ellen Browne supporter of Bank of North Dakota quoted as well.

If you have a slow connection, download the free iLivid download manager

http://www.ilivid.com/

and download the video to the desktop.

http://www.videolan.org/vlc/download-windows.html

If you have the free VLC player it will play automatically:)

Just as it was on The Titanic, on Ireland Inc many still believe our default can be avoided, help will come soon.

The false message is being put out that austerity will work, our friends will come to our rescue,  and we will not be led to Davy Jones’ locker.

The irony is, it is our leaders, our Troika of EU, ECB and IMF who are to the forefront in leading us to Davy Jones’ locker!

Its time to distinguish between Irish sovereign debt and odious bank debt that has scuttled the Irish economy, it was  allowed to do so by political incompetence, corrupt involvement with developers, bankers, and Department of Finance mandarins, all  ineptly charmed by grevious personal and European ambition.

We should say no to such confidence tricksters and be aware NAMA along with political incompetence, corrupt involvement with developers, bankers, and Department of Finance mandarins, all  ineptly charmed by grevious personal and European ambition continue to pop the rivets out of the Irish economy.

Think of the above next time you hear ‘confidence’ and ‘growth’ mooted by confidence tricksters fronting banking special interest groups at the IFSC regarding the state of the Irish economy.

End.

1.
We should as soon as possible cut our ties and withdraw from the euro.

2.
We should print our own money ‘PuntNua’, ‘Saor’ .

3.
We should end the practice of fractional reserve banking in Ireland and simply refuse to allow government to borrow on our behalf. We need a banking system that will  spend only from deposits, to run banks that only operate along the lines of the following successful templates for successful banking, to never allow the likes of Anglo, AIB, BOI etc mess to happen again in Ireland.

http://www.banknd.nd.gov/

http://motherjones.com/mojo/2009/03/how-nation%E2%80%99s-only-state-owned-bank-became-envy-wall-street

4.
We should burn bank including senior bondholders and forgive government borrowing that has falsely been attributed as a remedy for the banking mess Ireland continues to slip more deeply into. See more below:

5.
We should restore our sovereignty

Implicitly these wordpress posts of mine have been preaching this message and now it seems there is international backing.

The following videos are recommended viewing, pay special attention to points where Ireland is mentioned:

http://www.youtube.com/watch?feature=player_embedded&v=SixS1JMDgUk

http://www.youtube.com/watch?feature=player_embedded&v=YUkNnQE-9B4

Just returned from France where I noticed we’re not in the news over there, Greece is but only to a minor extent.

On CNN the arguments re Greece are familiar, why should we pay a penal coupon on our ‘bailout billions’, sell off billions of state assets at distressed prices, run the austerity gauntlet to cripple our economy more? The Greeks are beginning to wake up and notice they’ve had austerity for the past two years and apparently find themselves in a worse position now than two years before now!

I agree with others in Ireland  the reason we’re kept out of the markets is because we are not burning bondholders, not because we are burning bondholders. But I disagree and go further than other commentators that our position on burning bondholders is a negotiation position that needs to persuade the ECB to adopt this position.

This will not happen from the standpoint of the ECB.

I disagree with the presumption that we need to renegotiate our bank debt with Frankfurt along the lines of debt audit to distinguish between odious debt and ‘bank’ debt that is in breach of moral hazard.

This is  something we need to do ‘WITHOUT consulting with our partners’ who are terrified we will take this course.

Noonan recently ventured the possibility of burning unsecured, unguaranteed, senior debt.

Immediately, ECB was on our doorstep, Van Rompuy et al from ECB lecturing the Irish it was difficult to help us because of the ‘guarantee’ we concocted last time we went on our own.

ECB are terrified they will be on the hook for a contagion to race across Europe from Greece, through Spain, Italy, Portugal that will close down these economies and lead to the closure of credit from the major banks of France and Germany as they battle the storm.

ECB policy at the moment is to follow the traditional Hoover line between 1929-1933 in the US which saw the disastrous policy response of austerity/taxation allow the bushfire of 1929 burn out of control.

Similarly, Europe is seeing these bush fires grow with solutions that temporarily mask the real problems that turn bush fires into a conflagration.

Readers might enjoy the holiday read of the recent ‘Inflated’ by R. Christopher Whalen for the evidence of this.

It will take 4 to 5 yrs since 2008 for the disastrous policy response of the ECB and Ireland’s policy response to fully burn out our economy and that of Greece and perhaps the euro project itself.

That is why Ireland needs to follow the above five point plan asap.

We should do this unilaterally with the view to leaving the EMU.

“A nod is as good as a wink to a blind horse”, phrase used by Noonan on News At One. According to Noonan, Ireland had not been threatened by ECB re his recent statement on unsecured, unguaranteed, senior debt intention to burn.

But Greece was recently threatened with having some of its bond paper burned if it adopted similar course!

His approach is to await the Autumn when he will then open it as a subject for discussion with ECB.

Noonan’s position on renegotiation of the interest rate on the bailout is now to threaten to stop negotiations on a reduction of the interest if this means he will be forced to up the Corporation Tax rate for Ireland.

This is ‘blind horse’ negotiation or  Reductio ad absurdum school of negotiation?

Ireland is being hoovered of its ability to function as an economy.

Pretty soon our GNP will leap into minus figures, our unemployment rates will accelerate and Ireland will be controlled and run by a small corporate footprint employing a relatively small number of people responsible for the GDP figures that tax havens enjoy without a local economy.

Neither can we hope from any sanctuary from our President tasked to defend taxpayers from moral hazard.

Regarding Reductio ad absurdum failure of the presidency was particularly poignant during these McUseless years when opportunity to defend taxpayers against government bailout of the banks and subsequent legislation on the banks was silently forfeit.

Surely it is time to take the presidency away from political lemmings sired by political parties and give it to the judiciary where it should belong?

An election with candidates from a judicial non political background alone should go before the people tasked with defending taxpayers against moral hazard with laws to compel referenda on matters of financial and economic importance such as our ‘guarantee’.

Citizens could rely more on people of the calibre of Justice Kelly or similar to protect them against the moral hazard we have been the victim of in the recent past.

The five point plan above should be read again and acted upon asap.

The alternative is to await the annihilation of politics and freedom as we know it in this country.

Perhaps future Tuatha De Danann governments  of a new political order will govern better.

End.

Morgan Kelly has echoed sentiments in this blog against our ‘so-called’ bailout so you won’t find much criticism here of its views, but plenty of praise.

http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html

Nevertheless, the naysayers were out in force and Pravda RTE yesterday had Patrick Honahan, Central Bank Governor and chief bailout negotiator, and today John McHale, Professor of Economics University of Limerick, blistering the airwaves with denunciations of Kelly and his views. Per usual, perhaps mindful of the adage of ‘the boy who cried wolf’, has not risen to the bait of debate, Kelly has wisely kept his silence and ex cathedra dignity, since the article was published.

The naysayers and swans who disagreed the most with Kelly’s analysis are the same swans, who urged we could successfully paddle against the current at the top of the waterfall of the ECB/IMF bailout.

Though they argued for optimism and confidence in the face of a loss of credibility, when bank losses were being revised upwards throughout 2010, in spite of their mistaken judgements to the contrary, we fell into the hands of the ECB/IMF bailiffs towards the end of 2010.

From under the water of ECB/IMF bailout yesterday, Honahan dragged himself out of the water, climbed back up the cliff, to take another dip paddling away this time to avoid default and the weight of Kelly’s weltanschauung or world view.

Arguably the current Honahan has to battle against,  is much stronger now with bailout borrowings of approx €57 billion added to our previous borrowings,  projections of 2.25% growth rates 2011-14 already missed in 2011, as growth hedges to less than 1%. There is plenty of ducking and weaving, to deny the impact of austerity cuts over the next three years to 2013/14.

But no, Honahan is happy to continue paddling away in the hope ongoing discussions with the ECB will provoke mercy while being roasted by the ECB.

But there was a sense of  desperation in the voice of Honahan on RTE radio yesterday.

He denied it was possible to walk away from the guarantee and bailout as Kelly suggests citing legal advice telling the government this was not possible. Under the Freedom of Information Act we should have access to this advice that according to Honahan was made available to him. But typically the interviewer on Pravda RTE did not probe this claim by Honahan and the matter was left unchallenged.

Its time journalists challenged this false claim by Honahan:

Bruce Arnold here writing in November 2010 http://bit.ly/hwQyFN  has challenged, as many others have done, including yours truly, the legality of the bailout under article 17.2 of the Constitution.

“If the banks had been allowed to fail, there would have been decisive pain, but new growth could have started.

Ultimately, it is easier to understand what has happened if we refer back to our Constitution, a document surprisingly sharp on all issues connected with how the State spends our money. In Article 17.2 it states: “Dail Eireann shall not pass any vote or resolution, and no law shall be enacted, for the appropriation of revenue or other public moneys unless the purpose of the appropriation shall have been recommended to Dail Eireann by a message from the Government signed by the Taoiseach.”

Of course the Lisbon Treaty vote made our Constitution largely irrelevant. But, personally, I hold it dear. There has been no intelligible message. How could there be when Patrick Honohan, Noel Dempsey, Brian Cowen and Brian Lenihan are neither putting the full story before us, nor understanding or explaining it in any coherent way. We don’t even have the text of the agreement. What ‘agreement?’ you say. Why, the agreement to abandon our sovereignty.

- Bruce Arnold”

Recently, Brian Lenihan has signalled he was shafted by the ECB, with the suggestion by MK and others Brian Lenihan was of the view, we did not require bailout, our reserves showed this. While this interpretation relies on seemingly good political navigation by Brian Lenihan, exceptional to the rule, nevertheless this paints the role of Honahan, in the rush to bailout, even more ignominiously than we were led to believe hitherto. The suggestion is Honahan played for the bankers, not the home team!

The matter should have been referred to our Supreme Court by Honahan, by Lenihan/Cowen, by  President McAleese.  We got no information, no White Paper to educate the Irish people prior to a referendum? Citizens were not given the chance in this undemocratic, plutocratic kleptocracy of ours.

The matter to seal the guarantee following the discovery that bank losses were understated, by the tens of billions, was further sealed by Honahan on radio yesterday with the view, that even if these losses were known prior to the guarantee, the guarantee undertaken by the government, was the correct course of action. This view must surely represent the hiatus of Gombeenism in the history of Irish public life.

However, I do not need a qualification in jurisprudence to know how the complaints by NAMA re false documentation, missing documentation, B&B Bed & Breakfast loans, will fare in court.  I refuse to believe the extent of NAMA’s losses were unknown to senior management at the time of the guarantee.  Accountability and culpability would lose any case made by Anglo, or by bondholders, against the Irish State.

The case to be made by the Irish taxpayer in walking away from the guarantee is  strong and backed up by our constitution, even though our Constitution is ignored by our politicians.

http://legal-dictionary.thefreedictionary.com/false+pretenses

http://www.google.ie/search?sourceid=chrome&ie=UTF-8&q=anglo+b%26b+loans

But Honahan’s mistakes are not limited to his actions in sealing the Irish Guarantee. He reinforces his view with the  argument that reneging on the guarantee, would have led to instant bankruptcy:

Firstly, its arguable that adopting a position on walking away from the guarantee, at its moment of chess piece checkmate  contagion of the eurozone, would have brought about an emergency reversal of the deal offered to Ireland, with better terms than the 5.8% Ein Danaergeschenk eventually given to our Charge of the Light Brigade negotiators;  Honahan had the Irish National Pension Reserve Fund to dip into, to keep our show on the road and defend our position. This matter was not unnoticed by the ECB who’ve made sure we pony up for losses from this reserve fund plunder before sinking us with bailout.

We should do as Kelly says, bring our balance of payments into line immediately, set losses made by the ECB and our private banks, not against the state, but against the banks.

The renewed state could set up a public bank to serve the needs of the people of Ireland along the lines of the Bank of North Dakota, see more about public banking here:

http://publicbanking.wordpress.com/

Either we do this, or we come a dominion of the ECB, our fiscal situation quickly deteriorating towards default, without a sovereign economy; and with a puppet government in service of the ECB/IMF presiding over the decimation of employment in Ireland currently 14.6%. The only message of hope to young people, emigRATION,  austerity is just beginning to cut into the economy….

Time to end the gombeenism! Its hard to know if ECB has set this country up as the village idiot, or scarecrow, to frighten Spain as MK believes.

Yes, this would be difficult with public service cuts of the order of 33.33% and welfare cuts of the same order to boot. But in spite of useless leadership at the political level, we have fine citizens in Ireland such as the Michael Collins or Tom Crean reincarnation in the person of Morgan Kelly; and friends in the world who would help; and we could help one another.

Its essential to reject the bailout loan which is more lending, more loans, more drink for the alcoholic. Lets give the banks back to the ECB and walk away from their messy pillars that endanger us all.

We need a Bank of Dakota that will fully serve the real needs of the people, not the rotten hulks of Anglo and AIB that lead to 36% and rising unemployment and national default.

This country has real assets in agri food, tourism, that require to be released after we clean the mess created by the financial ponzi schemes that threaten us throughout the banking sector and Nama. Feeding these ponzi schemes with further alcohol or chips at the casino tables, is not the answer.

Its time to end the agenda set for us by swans such as Honan, who’ve proven the worthlessness of their predictions in the past.

Let’s repudiate the blindfolds they urge us to wear for the future.

Lets close our ears to their Greek siren swan songs that lead us over the precipice to default.

end.

http://www.bankinginquiry.gov.ie/Preliminary%20Report%20into%20Ireland’s%20Banking%20Crisis%2031%20May%202010.pdf

This was flagged as a preliminary report that we were led to believe would be followed up:

“The report was also commissioned in order to “identify areas for further follow-up by the planned statutory Commission of Investigation. In this and other respects, it deals with the contribution of policies, markets and specific institutions, but not the role of individuals. At all times, moreover, the disclaimer in the Preface concerning judgements about legality, as well as issues of reputation, fully applies.”

So far, reform of banking regulations has been guided by notes from Brian Lenihan:

http://www.kildarestreet.com/wrans/?id=2010-11-10.1281.0

Touted reforms have been light on detail and vague on regulation, its vagueness attenuated by a reliance on self governance through directorships, that did not work in the past.

We’ve also had the Honahan Report, “the result of intensive work undertaken during the past four months by many individuals.

The team was led by the Governor, Patrick Honohan:

http://www.bankinginquiry.gov.ie/The%20Irish%20Banking%20Crisis%20Regulatory%20and%20Financial%20Stability%20Policy%202003-2008.pdf

Its summary conclusions were so broad in scope as to be meaningless. It gave us answers to questions we did not ask with information we already knew.

We  had and have been had by

http://www.bankinginquiry.gov.ie/Preliminary%20Report%20into%20Ireland’s%20Banking%20Crisis%2031%20May%202010.pdf

No individuals were named, everyone’s job was protected.

This was touted as:

“A Preliminary Report on

The Sources of Ireland’s Banking Crisis

Klaus Regling and Max Watson”

Again, its summary findings were so broad and scope as to be rendered virtually meaningless. It gave us answers to questions we did not ask with information we already knew.

Most recently we had the Nyberg Report:

http://www.irishtimes.com/focus/2011/nyberg/index.pdf

Once again it gave us answers to questions we did not ask with information we already knew.

Again, its summary findings were so broad and scope as to be rendered virtually meaningless. But because we had already figured out the answers in the report for ourselves, the report used our vindication of those findings as a cover for authenticity.

Each of the above reports were hindered by mandates that protected individuals and limited the scope to a broad brush that obscured the real truth. In each instance, personal responsibility and accountability is dissolved away into an ether of vague admonishment at the most, succumbing e.g in Nyberg to cultural stereotypes of risk averse ‘groupthink’.

If you are for  looking any daily, blow-by-blow account of the collapse of the Anglo and the Irish banking system you won’t find it above. You can see the documents regarding the collapse of Lehmans e.g

http://economicsofcontempt.blogspot.com/2010/08/more-lehman-documents-ny-feds-blow-by.html

You can assume the above authors had access to documents that allowed the general conclusions involved in those reports, but you can also assume documents  in regard to the Irish banking collapse,  are a guarded secret.

I suspect that if any of the above reports saw the light of day in Finland, the USA, or anywhere other than Ireland, they would be laughed out of court.

We know nothing more of the causes of the Irish banking collapse than we did before these ’inquiries’ began.

Insofar as we have any good information on the Irish banking collapse, the above reports amount to a load of  ’Irish Gibberish’ designed to flatter some mistaken notion that we have inquired into our banking meltdown with professionalism and probity.

We have as yet achieved neither professionalism nor probity.

So how can we redress this unfortunate situation that plays into the hands of government and the financial system in Ireland that clearly wishes to have its business remain hidden from you, its accountability and responsibility unchallenged.

For good measure, it seeks to switch accountability and responsibility onto the shoulders of taxpayers through vindication of the infamous bank guarantee. And now through absurd ‘groupthink’ we should expect hospital porters to live on less than the minimum wage to pay for the mistakes of bankers on pensions of €3m and the losses of bondholders who gambled on dodgy Irish banks!

So what terms of reference or guidelines could an inquiry into our banking collapse follow, that would give Irish taxpayers a ‘free from coverup’, authentic, true and solid picture of the cause of our banking collapse and meltdown?

We need to extend the terms of reference of the Criminal Assets Bureau to cover financial crimes against the state:

http://www.garda.ie/Controller.aspx?Page=94&Lang=1

The terms of reference should be extended to include a possible crime against the Irish taxpayer by banks and their senior management personnel:

The criminality involved above is being shored up and supported by Enda Kenny, who led us to believe all this would be investigated and the truth laid before the Irish people.”

So how should this CAB inquiry into our banking meltdown proceed?

It needs to follow the money.

To avoid Irish coverup gibberish found in the above reports, we need an inquiry along the following lines:

The CAB Inquiry into the Irish Banking Meltdown of 2008:

We would need a small team of 5 top detectives from the CAB and 5 good economists.

Strong and persuasive deterrent mandatory penalties of 5-10 yrs jail for willful witholding of evidence and giving of  false evidence.

A random sample of 5 individuals with loans of €500,000 – €1 ml should be interviewed on an agreed questionnaire list of questions,with q’s, such as, how gave them the money, what was the basis for the loan they were successful in obtaining?

Similarly, 5 individuals from each of the groups, €1-€5m, €5-€25m, €25-€50m, €50m -€150m, €150m -€250m, €250m-€500m, €500m-€1bn, including all who came within the range €500m + would also be interviewed.

Cross referencing the stories would soon bring out the change of command decisions and individuals at the heart of the Irish meltdown?

Currently, those individuals however are under NAMA protection, protected through ‘commercial sensitivity laws’ that were never designed to protect wrong doing. If NAMA was broken up, its toxic portfolio returned to the banks to liquidate, developers in NAMA under the above penalties, would only retain their current paid status with NAMA on agreement to fully cooperate with this inquiry.

If we are serious about a real investigation into our banking meltdown that does not treat us as witless fools, the CAB can be legislated for to give us the above inquiry that will quickly bear fruit.

The right tools and the right personnel will quickly yield the results required by the Irish people.

We need public access to documents, accountability and transparency,  and a decent inquiry.

Not the witless, tomfoolery of the above reports into our banking collapse?

Who’s fooling who Enda?

Prima facie evidence for the conduct of an inquiry along the above lines follows:

Here’s some prima facie evidence:

According to Enda Kenny,  there has been ” a positive response internationally ” to our position on the banks.

I presume he means the decision not to burn bondholders, which led to Moody’s reducing our ratings to one notch above junk!

In the topsy turvy world of black is white, perhaps we should reflect on the bondholders protected by Enda,(see list of bondholders in link below)eg RothsChild and Goldman Sachs. RothsChild own the IMF and Goldman Sachs (suds) provide advice to the Irish government on managing our meltdown.

http://www.abovetopsecret.com/forum/thread451439/pg1

nb

“http://www.politicalworld.org/archive/index.php/t-3395.html”

See above the offshore Anglo cesspool Ansbacher Bankers route used by Haughey and we remember the scandal of offshore account tax dodging and other Ansbacher accounts. Also from above:

“Kathleen Barrington strikes again: €600m Anglo deposits that got away, 16 January 2011 By Kathleen Barrington:

“Brian Cowen should explain why Anglo Irish Bank was allowed to sell a €600 million Austrian deposit book to a Swiss bank, at a time in 2008 when he knew that Anglo Irish Bank was in dire need of deposits.”

also………..

Lenihan silent on issue of Anglo’s Austrian depositors 23 January 2011 By Kathleen Barrington:
Minister for Finance Brian Lenihan has refused to provide assurances that none of the owners of €600 million-worth of deposits held in Anglo Irish Bank’s former Austrian subsidiary owes money to the nationalised bank.

Lenihan said a bank could not disclose information about its customers, as this data was protected by client confidentiality. Anglo Irish Bank announced the sale of its Austrian subsidiary to Swiss bank Valartis on September 5, 2008.

The announcement did not disclose that the deposit book contained €600 million of deposits, a matter which was subsequently disclosed in a little noticed note in Anglo’s 2009 accounts.

It has since emerged that Anglo was pleading with Taoiseach Brian Cowen as far back as April 2008 that it was in dire need of deposits.

The bank also sought to artificially boost its balance sheet at its 2008 year end to give the impression it was retaining deposits, even though it is now known that deposits were by then haemorrhaging out of the bank.”

”Last week, Anglo declined to provide assurances that none of the owners of the deposits owed the bank money. The bank cited client confidentiality.

http://www.thepost.ie/themarket/lenihan-silent-on-issue-of-anglos-austrian-depositors-54050.html ”

We had the helicoptering out of deposits under the shadow of Anglo’s imminent collapse.

Note all the above revelations are internet based and not the subject of open, transparent public inquiry. Though we hope and assume they are the subject of Garda Inquiry.

End