Dead Cat Bounce and Thamsanqa Jantjie

December 15, 2013

Thamsanqa Jantjie, the sign language interpreter at Nelson Mandela's funeral. Photograph: Itumeleng English/AP

Thamsanqa Jantjie, the sign language interpreter at Nelson Mandela’s funeral. Photograph: Itumeleng English/AP

An Taoiseach, Enda Kenny, will make a state of the nation address this evening on RTE. You will not learn more about the state of the Irish economy going forward than by trying to  interpret sign language of Thamsanga Jantiie at the funeral of  Nelson Mendela.

According to economist John McHale on  Primetime the idea that some other government would not have done what we have done in accepting bailout is beyond belief. This view is arrogant and conceited  nonsense. Iceland is an example to us of the nonsense of such views.

According to McHale whatever government was in power would have done the same thing. How bereft of imagination is that?

Comparisons were previously made in this blog between  Romanian dictator Ceausescu and Kenny.

More parallels now exist: for example, centralisation of power in his regime, intolerance for dissent, control of the media; mostly the  determination to pay off the national debt in full without burning bondholders; fire sales of state industry such as the recent proposed sale of energy provider An Bord Gais; sell off of state assets to pay creditors.

Another signature comparison is the uptick ‘address the nation’ speech. Expect many such speeches enjoining all to take his medicine! This is Nicolae Ceausescu‘s final speech, 1989 http://www.youtube.com/watch?v=Z3lTw0WMhpg Others have made similar parallels: http://www.irisheconomy.ie/index.php/2011/01/27/debt-repayment-and-ceausescu/

Buoyed up by the recent dead cat bounce in the economy expect Kenny to be full of hot air and dreamy golf dates with Joe Biden. Dead cat bounce occurs when investors decide to close out short positions in the belief that the market has reached rock bottom and prices will rise. Evidence for dead cat bounce is throughout the Irish economy at the moment. Helped by another factor where a short recovery is stimulated by people staying at home rather than travelling abroad; they unlock their savings frozen in fear at sudden financial meltdown.

However, when those savings are gone, they’re gone.

Stimulus assisting the DCB is the sudden rise in property prices in Dublin. One factor of price rise is the looting of the Irish property market by external investors. A useful project for the ESRI would be to audit the buyers to see if such property speculators are fleecing Irish buyers out of the market for homes and rental properties.

It would be extremely useful to look at Irish property investors in partnership with international property investors. There may be a smoking gun if it is proven Irish banks are funding Irish developers in such partnerships in order to boost local property asset prices to offset concern at falling property prices in coming bank stress tests in 2014.

This is not the taking off of the Celtic Tiger, but the thud of a DCB.

Put it on the taxpayer bill

There are three approaches when responding to financial meltdown: 1. attempt to pay off all creditors in full; 2. burn all creditors; 3, a mixture of 1/1. We did not have the possibility of devaluation.Whether by hubris or incompetence or a mixture of both, we decided on 1. One approach is guaranteed to fail but is much favoured by creditors and bondholders.

Concerned with our national reputation some incompetents argued that reneging on our debts would damage our reputation in the bond markets. They failed to grasp that failure to burn bondholders would be punished by the markets.

Tricked by Trichet

Craven capitulation to ECB pressure led at the time to excoriation of critics like yours truly who called for the burning of bondholders and resistance to Jean-Claude Trichet and ECB.

For Iceland, Sweden, Greece, Argentina, Russia along with thousands of examples throughout human history, it’s a norm that financial meltdown be dealt with by burning bondholders using devaluation a course not open to us because of our failed experiment with the euro: but uniquely Ireland as a member of the EU will pay off its €67bn troika bailout poured into banking black holes by having long maturities on its debt.

I listened with embarrassment to Michael Noonan, Irish Minister for Finance, responding to the question why Ireland, both he and the late Brian Lenihan, caved in to Jean-Claude Trichet of the ECB in refusing to burn senior bondholders.

Cringing with embarrassment, I squirmed as Noonan, stated in self-congratulatory fashion, proud as punch, that ‘we had won the argument’; ‘it was now policy of the ECB to bail in senior bondholders as well as taxpayers’.

A compliant wuda, cuda, shuda serf out of his depth unable to stand up for Irish taxpayers.

We have not been served well by useless politicians who are mouthpieces for even more useless puppet masters in high positions in Ireland. The cat did not get Noonan’s tongue. Unfortunately.

But it will get Kenny’s tongue this evening. We still do not know exactly from whom, under whose decision and advice, Ireland’s supremely incompetent decision to guarantee the banks came about.

Expect Enda Kenny from the ministry for propaganda and cover ups to smile down on us all congratulating us on our sacrifice he will throw upon his bonfire of vanities.

Failure to carry out troika reforms, wild cat out of control costs in the health service through overpaid doctors, nurses and administrative staff giving a poor return in terms of state investment; doctors/nurses Ireland trained emigrate on mass citing better conditions abroad.

The legal profession has not been reformed with some of the highest paid barristers in the world benefiting from state largesse with unproductive, costly and eternity taking tribunals whose findings arrive when we’ve forgotten what they were set up for and all the significant players have been safely retired; at enormous cost to taxpayers.

E(e)K will not be announcing a profound degree of investment in the Irish educational infrastructure and R& D to produce the graduates we need to avoid his mistakes. Measures given high value in finland and other Nordic countries following financial meltdown in eg finland and Sweden in earlier years.

He will leave that to Ruari Quinn to pretend black is white, starving education of investment, denying jobs for new teachers, doing away with the Junior Certificate that at least taught the modicum of literacy to the Irish population, pretending a wreaking ball is innovative reform!

The media

RTE is usually a cheerleader for whoever is in power. It knows where its bread is buttered through licence fees. A bit like Vatican Radio its a spokesperson for the status quo and compliant enough ready to butter up rather than egg down and examine what goes on under the hood in Irish society.

Expect no panorama undercover investigations of blue-collar crime or critique of policy that rattles the status quo.

Kudos to Shane Ross TD who threw down the gauntlet to the CRC board asking for resignations we subsequently got.

RTE should be defenders of the third estate, the common people. However even RTE does occasionally dig somewhat deeper than usual. In an RTE programme marking Ireland’s exit from bailout there were interesting contributions: http://www.rte.ie/news/primetime/ this past week Michael Noonan, minister for Finance, was interviewed by Miriam O Callaghan.

The interview brought out the mindset of those currently in power in Ireland. Noonan, stated the economy predicted to grow by 2% next year, 1000 new jobs a week, economy is growing.  Such growth predictions are usually wound down and never reached.

The EU economy will grow at a bare 1% next year but stress tests on the banks make even this projection at risk of not being realised.

Pressed by Miriam on whether he had a Plan B if we failed to meet our targets and were squeezed by the bond markets, Noonan’s response was:“we dont work on the basis of no growth”

Miriam, is the debt burden over 200bn sustainable? (its about 246.5 bn  slightly under 124% debt to gdp)

N: if you have long maturities the debt is more sustainable…..if you have low interest rates the debt is more sustainable…we’re holding €20bn in buffers we cant set against the debt, as these buffers come down, our debt gdp comes down in future years..we have big investments in the banks as the banks move towards profitability …we can sell the shares in the banks and use the money to bring down the debt.

The banks are choked with huge levels of property and loan default they still refuse to mark down.

M:  have you given up on retrospective recapitalisation of our banks

N:  no, havn’t…. Noonan has been refused retrospective bailout of our banks by the ECB who have also refused to backstop our venture into the markets.

But he wont take No for No!

N:  We got assistance with the 30bn promissory note debt….no capital to be paid back until 2037 and phase it out until 2055..extending maturities on the €40bn has also been important..we can replace more of the short term stuff with long term stuff 12-15 year paper..stress test will apply to 6 thousand banks across Europe…a lot of the bad debt is helped by property price assets rising..

Wow, clearly Noonan wants another bubble in Irish property prices to get the banks off the hook!

Clearly none of this Iceland taxpayer friendly stuff from him: http://www.thejournal.ie/iceland-goes-against-international-concern-writes-off-debt-1203320-Dec2013/

“Iceland to write €24,000 off every household mortgage”

“The measure has improved the country’s rating with Standard & Poor’s, who upgraded the economic outlook from negative to stable.”

The above measure was attacked by the OECD and Noonan is a useless banker friendly mouthpiece of propaganda to burn Irish taxpayers and give champagne to the banks, so such taxpayer friendly measures, expect only those that benefit the well off, who may have some concern their FDI investments are being compromised by high taxes in Ireland.

N: What would happen under stress if property values went down another 20%?

You can see why added buffers to property prices are being sought for at the moment. For Noonan, debt write down, writing down of assets is not on the cards for taxpayers.

Iceland proves there is another way to the chagrin of economist Alan Ahearne in conceited hubris who aired on Primetime that canard that no other government could have managed our difficulties during meltdown differently.

In spite of the universal acceptance the guarantee was a disaster; the bailout terms disastrously odious and badly negotiated and managed by Professor Honan, Honan’s undermining of democratic elected government under Brian Lenihan announcing bailout before it was officially announced by the Irish government, insiders stand by their useless decisions to bankrupt Irish taxpayers instead of bankrupting their banks.

M:  Could we be effected by problems in Italy and Spain?

The answer is Y.

N: Jean Claude Trichet …would not allow me to burn senior bondholders..but now we have won the argument….the norm in future will be bailing in bondholders…rather than being bailed out by the taxpayers.

I cringe in embarrassment. This event deserves a neologism. I invent the new word, ‘goblessness’ meaning what is stupid is stated as a claim for rational, smart thinking:)

Feel free to use it:)

On the same programme Colm McCarthy economist was asked  what methods could be used to kick start the economy. He mentioned the 90’s when thousands of jobs in manufacturing were created in Ireland.

Yeah, fine, but our banks are still broken. Personal debt is strangling growth and development. And that’s not the way the EU works. Germans manufacture, they invest in education and R&D and education like the Nordic countries. The inner core extract wealth from the peripheral outer core of which we are a part.

We lack the political and educated nous that Lemass showed at one point in our history in that regard.

Stimulus programs are only for the financial sector, don’t you know.

Noonan.. economy predicted to grow by 2% next year, 1000 jobs a week, economy is growing...

No, its not… “we don’t work on the basis of no growth”

M: Is the debt burden over €200bn sustainable?

Actually its closer to €250bn.

N: ..Slightly under 124% debt to GDP ..if you have long maturities the debt is more sustainable…..if you have low interest rates the debt is more sustainable…we’re holding €20bn in buffers we cant set against the debt, as these buffers come down, our debt gdp comes down in future years..we have big investments in the banks as the banks move towards profitability we can sell the shares in the banks and use the money to bring down the debt ..

We’ve exported our debt to future generations up to 2042. If you went into the future, you might see a decision by government  to refuse to pay the Promissory Note of €30bn for Anglo.

Ah sorry, gotcha, you see they’ve laundered the PM’s into a bond we have to repay sealed under international legally binding commercial law.

Incredibly Irish politicians sold this pup to us as a victory they got through negotiating maturities and interest rate payments.

At ECB they must still drink champagne celebrating this one.

M: Have you given up on retrospective recapitalisation of our banks?

N:  no, havn’t….

N: We got assistance with the 30bn promissory note debt….no capital to be paid back until 2037 and phase it out until 2055 …extending maturities on the 40bn has also been important… we can replace more of the short term stuff with long term stuff 12-15 year paper stress test will apply to 6 thousand banks across Europe a lot of the bad debt is helped by property price assets rising what would happen under stress if property values went down another 20%?

We need to use our €20bn of reserves to leave the EU and join the European Free Trade Agreement, but would you give the reins of that to what we got?

Michael Taft of IBEC made the point on Primetime that austerity did relatively little to bring down the deficit leading to rising costs due to job losses  higher social welfare etc 1/4 at poverty level and 1/3 of children deprived…investment levels half the Eurozone..poverty crisis.

Michael sees injection of investment by way of higher wages and state building projects a way out. In our post troika bailout state its clear our creditors have different ideas.

Megan Greene , Chief Economist, Maverick intelligence, took part in the discussion.

Erudite and lucid perhaps she can see what others cannot through being too close to the object in their field of view, that the Irish economy is a donkey(my word), a Don Quixote tilting at windmills.

M:  Did it work as regards Ireland having a sustainable growth model or debt model?

Megan: I actually dont think it has…Domestic demand has gone away…growth wont come back until the jobs come back and the banks lend and that wont happen for years…for the next year or so Ireland in the clear..Ireland has the biggest budget deficit, the fourth largest debt burden in the EU…OK for next couple of years but medium to long term there’s questions re sustainability….

Miriam: Do you think we will get a deal on our debt…

Megan: Absolutely no way

Megan points out the contradiction in saying on the one hand everything is fine, then asking for a bank bailout…

McCarthy  …if we grew 3/4% annually over the next few years

None of these numbers are achievable.

There was a Katie Hannon extended interview with Olli Rehn, European Commissioner for Economic & Monetary Affairs, who poured cold water on any retrospective bailout from the ESM or elsewhere for Irish banks. There is a long queue before us from Spain to Portugal, Greece, Italy.

Its possible as a back stop Ireland may be funded through private loans outside the ECB by German banks further securing Ireland as a serf nation of the Germanic Republic, but little information on this at present.

Ireland’s policy for growth has been to secure its creditors, cloak and protect those who brought upon us financial meltdown, guard the professional classes who loot Ireland, pour Ireland’s economy down a financial black hole and look for European handouts.

Its time to call a halt.

As long as the false propaganda purveyed by John Fitzgerald of ESRI, who also appeared on the same panel discussion, who conjures growth figures you can be assured the economy always fails to realise, remains like the bandaged finger he waved about on the show, we remain in the doldrums.

His  unravelling sticky plaster on his finger Makeup must have been horrified to see. Fitzgerald’s crew booted the propaganda of the soft landing during the tiger years with the same frenzy he delivers upbeat announcements re Ireland’s prospects today.

Ireland’s economy, after its dead cat bounce, will continue its looted downward trend. As it unravels, will the financial sector stay or MNC’s like to remain in Ireland in a looted public sector with consequent life choice decisions to be made on education for their employees’ children’s lifestyle, higher taxes with 20% of our tax take not going to investment in R&D and education and investment in manufacturing, but in paying the odious debt of dud zombie banks?

I look forward to seeing E(e)K on RTE this evening in a broadcast national ‘state of the nation’ address.

Tired of his rubbish I will probably dream at the same time of Thamsanqa Jantjie, Don Quixote tilting at windmills, golf with Joe Biden somewhere on the planet, glove puppets, Ceausescu, cowboy bankers, developers and cowboy Hi Ho Silver Away politicians like E(e)K, who cannot stand on their own two feet, who’ve disgraced their predecessors of 1916.

End

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