The Way Forward!

June 26, 2011

So here is the remedy or way out of Ireland’s current  financial difficulties:

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.

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4 Responses to “The Way Forward!”

  1. Mr No No said

    Your suggestions have flaws.

    Burning all bondholders will result in immediate problems of funding for the government and banks.

    You say:
    > simply refuse to allow government to borrow on our behalf

    All very well in saying that but our government has a current spending net shortfall, tax is less than spending. The only way to get the government to balance its books is by tax increases and spending cuts. That cant be done quickly without major fallout and problems for many in Irish society.

    You also write that Greece is ‘tired’ of austerity. It is also running a net debt and is being supported by these loans. Think of a sick patient on medice that doesnt like the doctor because it doesnt taste nice.

    Finally, leaving the euro would leave us with euro debts. If we do cancel and jetison ourselves from the EU, then dont expect many of the FDI comoanies to continue to locate here.

    • colmbrazel said

      Thanks for your comment. I’ve a comment related to your post as cbweb here:
      http://www.davidmcwilliams.ie/2011/06/23/aib-default
      There is no easy way out of this. My predictions are that the government response, largely in line with your views , to our banking and fiscal meltdown in Ireland and Greece will be a catastrophic fail.
      We will see over the next few years if I’m right. Right now our government is embarked on a course to turn this country into a tax haven and location for multi nationals with little or no domestic economy, unsustainable and unmanageable debt that the markets with spreads of 12% against us, are making a huge bet we will fail also. Mr Noonan has stated the markets are confusing us with Greece. Not so!

    • colmbrazel said

      There is no easy way out of this. In such a situation, the moral path is the way to go. Unless governments address the damage caused by deregulation, the hijacking by the financial industry and the banks of economic activity mirrored in economic conditions obtaining before 1929, Wall Street Crash, the world will be a poorer place. The solution is not to give the financial industry more of the people’s money to speculate with in the global casino it has built for itself with its own rules!

  2. Jon Mack said

    Please note that a number of US states have passed new legislation creating what are called here “partner banks,” that is banks structured as partners to the state, as in South Dakota.

    Perhaps an Irish city or two could pass legislation creating partner banks. But would they be honestly run, or politically run?

    I have concluded that the only way to get honest banks in Ireland would be to hire UK and Swedish banking executives as well as Irish executives. In addition, Irish banks should be overseen and audited by the UK and Swedish bank regulatory agencies. The UK banks now have an honest and competent overseer.

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