High Five!

July 14, 2013

imagesThe Government has won its vote on proposed abortion legislation 124 to 19.

Lucinda Creighton has become the fifth and final Fine Gael TD to rebel against the Coalition, and cast her decisive ballot on the second day of the abortion debate.”

http://www.independent.ie/irish-news/lucinda-creighton-confirms-she-will-resign-as-european-affairs-minister-29413597.html

“Ms Creighton follows Billy Timmins, Terence Flanagan, Brian Walsh and Peter Mathews in rebelling against Taoiseach Enda Kenny, who had imposed tough discipline on Fine Gael in the lead up to the vote.”

Lucinda Creighton will lose her position as European Affairs Minister. Criticised here in the past for compliant, unquestioning acceptance of European policy re Ireland’s unconscionable ‘bailout’, Creighton has shown probity and independence of mind in examination of proposed amendments to abortion laws in Ireland.

Such independence of mind declared by Creighton for her to be on  a matter of life or death issue distinct from all other issues, led her into conflict with Enda Kenny who unwisely introduced a government whip on this issue. In the process of which Kenny has shown poor political judgment and weakened his own party with the unnecessary loss of 5 TD’s.

The vote above is evidence there was no need for a whip on this issue. In fact opportunity was lost to provide inclusive and democratic representation of a wider set of views within the FG party that would not alienate a significant minority in his party. Kenny’s actions show more evidence of an autocratic and dictatorial tendency that becomes more Ceaucescu like by the day.

However, introduction of the party whip on such matters as abortion legislation pales in comparison to lack of democracy when it comes to financial issues in relation to Ireland’s ‘bailout’ : negotiations including Ireland’s poorly judged ‘guarantee’, subsequent lack of a deep and forensic probe of the causes of meltdown in the financial/banking sector; continuing management of our affairs by a cabal led by Kenny, Gilmore, Howlin and Noonan.

Led by Pinnochio economic policy Dept of Fiinance, Central Bank, ECB and troika have in turn led the Irish electorate a merry dance. With 14% unemployment rate and a hemorrhaging emigration rate, austerity and no jobs for the young, perhaps soon such matters will again become centre stage.

http://www.esri.ie/UserFiles/publications/QEC2013SPR_ES.pdf

“GDP for 2013 is expected to grow by 1.8 per cent, with growth of 2.7 per cent forecast for 2014. GNP is now forecast to grow by 1.0 per cent this year, before increasing a further 1.5 per cent next year, partly due to an improved outlook for domestic demand. Continued growth in the contribution from net exports underpin this year’s expected improvement, while an increase in growth in investment and the domestic economy will also contribute next year. The labour market will show moderate improvement over the forecast horizon, with the unemployment rate expected to decrease to 14.2 per cent this year and 13.9 per cent next year, albeit mainly as a result of continued net emigration.

Positive developments for the Irish economy in recent months have included the
deals to swap the promissory notes for long-dated government bonds, and the
extension of maturities of EU/IMF programme loans. While these developments
are not expected to affect budget targets for 2013, they contribute to our
expectation that the government’s overall fiscal target will be met in 2013 and
2014. Planned consolidation measures should be introduced as much uncertainty
remains for domestic and international growth. Analysis shows that when account
is taken of profit flows from redomiciled plcs, economic growth, as measured by
GNP, has been weaker than had been estimated. In addition, any boost to growth
from a fall in the balance of payments surplus will be smaller than previously
anticipated.”

Generally the ESRI has performed the role of uncritical massager of figures to give the optimistic upside on Ireland’s performance under bailout going forward.

Admission that falling unemployment levels because of the net contribution of emigration is tempered by injudicious positive statements  re long-dated government bonds replacing the promissory notes. Such blatant propaganda should not go unnoticed or unremarked. A more objective and critical evaluation might point out the lack of progress on a deal to lessen the odious demands of bailout on this economy, the fact that such bonds enshrine in law that such monies must be paid back, the fact that no write-off or burden sharing was agreed.

Pinocchio propaganda is endemic in reports emanating from the ESRI that do not do a deep level analysis of Ireland’s budgetary requirements under bailout going forward. Another significant omission in these reports is the absence of scientific data examining the impact of alternative solutions to dealing with Ireland’s significant banking and debt profile regarded by many as unmanageable. A report analysing the economic effect on Ireland of an exit from the euro would be useful. Research on the effect of downside projections for growth such as failure under percentage point levels of different scenarios that do not meet growth projections.

Instead, the ESRI  lending itself to optimistic forecasts and government propaganda that recovery in the European market economy and the world economy will bring about recovery for Ireland, has as much sense as the person who cannot pay their debts  under austerity arguing they will be able to pay their debts, if they get a raise.

The ESRI is long past the need to reinvent itself as a think tank ready to provide solutions to Ireland’s economic problems, rather than adding to them with head-in-the-sand self delusion.

Some do not have their head in the sand:

Godfrey Bloom MEP

http://www.youtube.com/watch?v=hYzX3YZoMrs

In Europe in contrast to the ESRI in Ireland some are taking seriously the prospect of a significant financial event effecting the ability of european economies to grow out of recession. This may take the form of a sudden decision by Greece or Portugal to leave the euro or simply renege on its debt and bailout commitments.

In such a scenario, the question as to who will pay for the cost of these events is exercising the minds of some. With the Cypriot case its no longer assured that depositors will be protected. There has been significant policy change perhaps in the realisation of economic damage caused by taxpayer bailouts to the extent that both bondholders and bank depositors will in the future be asked in future bailouts to take the burden of financial meltdown.

http://www.truthdig.com/report/item/think_your_money_is_safe_in_an_insured_bank_account_think_again_20130705/

Central Bankers around the world would appear to have had a significant policy change re ‘bailouts’. Depositors should watch out.

http://online.wsj.com/article/BT-CO-20130711-703033.html?mod=googlenews_wsj

By Todd Buell


MUNICH–New rules that regulate the resolution of banks don’t go far enough to keep the taxpayer from bailing out struggling financial institutions, European Central Bank governing council member Jens Weidmann said Thursday.

Mr. Weidnmann, who is president of the Deutsche Bundesbank, said the agreement, reached two weeks ago by European finance ministers, goes in the right direction in that it legally enshrines the principle of “bail- in,” meaning that shareholders, bond holders and then uninsured deposits will be on the hook if a bank needs to be resolved.

“The concept has, however, some weak points,” he said. There are “wide ranging possibilities for discretionary exceptions” from the application of a bail-in.

He said negotiations between the European Council and the European Parliament offer the possibility to correct such weak points. “It would be important from my point of view to implement the bail-in rules earlier than planned, namely already by 2015,” not 2018 as currently proposed, he said.

European officials agreed two weeks ago on the Bank Resolution and Recovery Directive. The rules would require that investors suffer losses equivalent to 8% of a bank’s total liabilities before national authorities could step in.

Mr.Weidmann’s comments suggest that the Bundesbank takes a different line on the matter than the German government. Speaking two weeks ago, Chancellor Angela Merkel told the German parliament that she welcomed the new rules.”

So, already preparations are being made for Ireland’s next bailout. Extrapolating from above its logical to deduce a further bailout for Ireland would involve a grab of between 8-30% of depositor funds in Irish banks. Germany has grown cool on using the ESM for bailouts. Money lying in fear to spend scenarios in Irish banks is obviously seen as a lucrative target.

The ESRI will not warn depositors of this growing danger as it may lead to a run on Irish banks and a run on the Irish economy.

The scenario for Black swan events in Europe and Ireland has increased significantly as the programme of austerity fails in bailout countries.

Meanwhile I wouldn’t give much credence to reports emanating from the ESRI on Ireland’s economic performance. Pigs don’t fly.

End

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