Who bankrupted Ireland?

[Lord and Master]

So for the most part it's fairly business as usual there on the emerald ilse, while the gobshites carry on with the financial problems?

Essentially, yes.
The Govt. announced this "4 year recovery plan" last night which lowered the minimum wage, lowered the tax entry point, lowered welfare pay-outs, introduced a household tax and promised water-rates for all. It would appear to specifically target low income households with little or no impact whatsoever on the higher earners who, to be fair, could better afford such targeting!
Very much business as usual for Fianna Fail...

On the (barely discernible) up-side, the main opposition party (Fine Gael) vouchsafed that they had been in talks with the ECB and IMF and had elicited the startling assurance that no incoming government (assuming, as we here in Ireland pretty much all do, that Fianna Fail will be heavily defeated in the upcoming general election) would be held to the current govt.'s so-called recovery plan.

It's also a major talking point here how Fianna Fail was only in a co-alition govt with the Green Party and the Green's withdrew from govt on Monday, thereby negating the govt.'s mandate to rule, yet Fianna Fail have bluntly refused to quit office! Choosing to wait to call an election until Jan or Feb of next year... The bandwagon rolls on and, ultimately, in a blatantly undemocratic fashion!

[greenoaks]

The second ‘theory’ really grabbed my attention. Before I respond to it I should say that the first has been pretty much discounted previously. The clothes don’t quite fit the body if you get my drift. The circumstances previous to the breakdown of the communist bloc were not conducive to the later ‘plans’, if there were ever any. Furthermore, many European Governments have proven somewhat intractable and do not seem to want to bend too readily to the rule from Brussels. One must always remember that the core idea of a United Europe sprang from France’s desperate need to somehow yoke Germany to a peaceful future after Franc had seen itself torn apart after two World Wars with all the horrors and the costs attached. The USSR (as was) may have had ideas of cashing in on the situation, but a single generation has undone this.

I thought France had attempted to form a United Europe prior to the two world wars

Isn't that what Napoleon attempted but was thwarted by the British and Russian controlled Germans

And wasn't it the British and Russians who stopped the Germans from creating a United Europe

In the modern era the British and Russians also refused to join the United Europeon currency

Perhaps they are once again the ones responsible for preventing European integration by destabilising the PIGS economies and the Euro

[Fruitcake]

The second ‘theory’ really grabbed my attention. Before I respond to it I should say that the first has been pretty much discounted previously. The clothes don’t quite fit the body if you get my drift. The circumstances previous to the breakdown of the communist bloc were not conducive to the later ‘plans’, if there were ever any. Furthermore, many European Governments have proven somewhat intractable and do not seem to want to bend too readily to the rule from Brussels. One must always remember that the core idea of a United Europe sprang from France’s desperate need to somehow yoke Germany to a peaceful future after Franc had seen itself torn apart after two World Wars with all the horrors and the costs attached. The USSR (as was) may have had ideas of cashing in on the situation, but a single generation has undone this.

I thought France had attempted to form a United Europe prior to the two world wars

Isn't that what Napoleon attempted but was thwarted by the British and Russian controlled Germans

And wasn't it the British and Russians who stopped the Germans from creating a United Europe

In the modern era the British and Russians also refused to join the United Europeon currency

Perhaps they are once again the ones responsible for preventing European integration by destabilising the PIGS economies and the Euro

Hush your mouth! Fancy imagining, or putting forward, that notion. I could never believe that the British (a mongrel race given to binge drinking, drunkenness, fighting and debauchery according to the French Ambassador to the Court of St James in a letter to the French Government....in 1682, so no change there then) could be responsible for stopping such a grand plan.

[DogAlmighty]

I thought France had attempted to form a United Europe prior to the two world wars

Isn't that what Napoleon attempted but was thwarted by the British and Russian controlled Germans

And wasn't it the British and Russians who stopped the Germans from creating a United Europe

In the modern era the British and Russians also refused to join the United Europeon currency

Perhaps they are once again the ones responsible for preventing European integration by destabilising the PIGS economies and the Euro

I think that that Coriscans idea of a United Europe mainly involved French cannonballs littering the fields of Europe and him getting to wear a funny hat. Not that he wasn't an excellent legislator and builder. Those eternally jealous brits managed to maneuver him out of his empire only to maneuver themselves out of their own.
Had the idea of an united imperial europe held firm it would have been interesting to see how better or worse off mainland Europe would be as regards to world affairs. Washington deferring to Paris or Berlin?
Europe less susceptible to the wholesale assimilation of eastern influences?
Perhaps we would be "spared" the hidden idiosyncrasies of our beloved free market in exchange for the more familliar carrot and stick. But now I've rambled off topic.

[2dimes]

one of the things preventing a single government running the world in the past was a lack of giant tyson and hormel type food industries that can control who eats via wal-mart or costco style food selling outlet corporations.

When everyone can produce food and feed themselves it's too easy for any small municipal area like Canada to just set up a regional government helping the people that took it over to think they are not even a citizen of France anymore.

[Pedronicus]

Interesting graphic showing who owes what to whom amongst the PIIGS

[bigimg]http://graphics8.nytimes.com/images/2010/05/02/weekinreview/02marsh-image/02marsh-image-custom1-v3.gif[/bigimg]

[2dimes]

I like how things are so complicated yet they want to simplify it with a graph. Not to dispute the potential to help with at least a rudimentery picture of the situation but...

If Italy owes Ireland 46 units but the Ireland owes them 18 units couldn't the graph just represent the net of 28. Though I certainly admit it's much more fun the way it is.

Thanks for posting it Pedro.

[Fruitcake]

Well the six month contracts are now due in the main. Those of us who decided to test the veracity of the so called bail outs have been richly rewarded with 6 month contracts tightening in price to reap a good harvest.

How does this work? Simple, some of us bet the bond markets would pay little heed to the Euro bail out and bet on it not having much effect, others bet that it would.....so those of us who set contracts to purchase Irish bonds this month when the prevailing bond rate was around 5.43% (see my bond yield posting in the Greek collapse thread at the bottom of this page: http://www.conquerclub.com/forum/viewtopic.php?f=8&t=114366&start=165 ) are seeing a very healthy return as we fixed contracts to sell, at a discount to the prevailing prices then, but nowhere near as far as they have fallen. In short, Irish bonds are now worth just 59% of what they were back in July with yields increasing from 5.43% then to 9.21% at close today. One friend of mine forward sold over £10M of bonds at 13.75% discount to the price back then, this means he got contracts to sell at 13.75% discount to the price prevailing and today purchased the lot for around 59% of the original price, netting (after insuring against failure of contract fulfillment) 77.63% sale price against 59% purchase, a near on £2M profit banked once the contracts settle this week. A tidy 31.6% profit margin on actual cash laid out in 3 days flat.

This is but the beginning of the end people....look at the list below and see if you can spot the next big earner over the first half of 2011.
1st number is the yield back in July, the second, the yield today.
Italy 4.02 Italy 4.42
Spain 4.36 Spain 5.18
Ireland 5.43 Ireland 9.20
Portugal 5.55 Portugal 6.99
Greece 11.38 Greece 11.77

[Pedronicus]

look at the list below and see if you can spot the next big earner over the first half of 2011.
1st number is the yield back in July, the second, the yield today.

Italy 4.02 Italy 4.42
Spain 4.36 Spain 5.18
Ireland 5.43 Ireland 9.20
Portugal 5.55 Portugal 6.99
Greece 11.38 Greece 11.77

Is it Kuwait ?

[nobbysheep]

Seems the world's banking sector has managed to plaster over the cracks for the time being. Some lovely big bubbles forming here in China, seemingly stoked by the same banking philosophies that have caused problems in the West. Reading lately about the Chinese banks new willingness to create some interesting off balance sheet credit lines to the tune of 3tn last year, in order to circumvent the government. Now Irish banks going under is one thing, how about a Chinese bank or two to swallow up some cash - now that would be a crash......

Slightly off topic may be, but an interesting look at Banks, Oil and Military influence tied to the Julian A events of 2010 -
http://english.aljazeera.net/indepth/op ... 33801.html

Bubbles.....aren't they great.

[Pedronicus]

read this...

http://www.zerohedge.com/article/albert-edwards-500-net-liabilities-gdp-it-too-late-prevent-collapse-g-7-greece-irrelevant-we

[Fruitcake]

The Portuguese government successfully sold €500m (£425m) of bonds yesterday. These bonds are repayable in six months but the yield – or cost in interest to its taxpayers – was 3.68 per cent. That compares with the 2.04 per cent the country paid for a similar auction in September. The yield was as low as 0.59 per cent as recently as a year ago. This also equates to around 7.5% annually, markedly up on the 6.99% annual return yield I recorded here less than a month ago.

It is widely expected that Portugal will test the markets on 12 January. That is just a day before Spain launches an auction of 3.25 per cent bonds for repayment in April 2016. Spain is the biggest of the debt-ridden and economically weak nations on the fringes of Europe, and were it to face similar problems to Ireland or Greece, the consequences would be dire. Its economy is bigger than that of theirs and Portugal's combined.

Further auctions of debt by Spain and Italy, another country causing concern, will take place later this month. Banks with the ability to tap the bond markets took advantage of the lull in issuance over the Christmas period to get bond issues of their own away before any fresh turbulence afflicts the markets. They include Deutsche Bank and Rabobank. (crafty sods)

Ireland's credit status took a big hit from ratings agencies late last year. Moody's slashed its rating by five notches to Baa1 - three notches above junk status - from Aa2 and warned further downgrades could follow if Ireland was unable to stabilise its debt.

[Mr Changsha]

One of the 'big questions' I have yet to resolve in my mind is whether I want the euro to fail (and therefore restore more sovereignty to the nation states) or if the euro, political intergration and all the rest of it is the only thing standing between Europe and descent into both poverty and pointlessness.

The tricky thing is that the only way to restore the integrity of the eurozone is through more political intergration (central bank, eu finance minister, more majority voting etc etc) and yet that is the exact path I detest. On the other side of this equation, without that fundamental political control the euro (and possibly the EU as a whole) is doomed to fail and while Fc calls such a prospect a 'self-correction' I call it one or two wasted generations as we attempt to pick up the pieces.

So I can't bear federalism. Yet has it all gone so far now that to pull back would be suicide? And was that the great conspiracy of the 80's and 90's? They knew it would fail without political control, but banked on that fail to establish control after the bust? When our economies are all so buggered we stare oblivion in the face if we don't submit?

[Lord and Master]

I'm in the middle of reading Naomi Kleins' "The Shock Doctrine" and see some disturbing similarities between the measures Ireland's govt have undertaken and the "laissez-faire" economics of Milton Friedman.

More than disturbing as a matter of fact...

[Fruitcake]

One of the 'big questions' I have yet to resolve in my mind is whether I want the euro to fail (and therefore restore more sovereignty to the nation states) or if the euro, political intergration and all the rest of it is the only thing standing between Europe and descent into both poverty and pointlessness.

The tricky thing is that the only way to restore the integrity of the eurozone is through more political intergration (central bank, eu finance minister, more majority voting etc etc) and yet that is the exact path I detest. On the other side of this equation, without that fundamental political control the euro (and possibly the EU as a whole) is doomed to fail and while Fc calls such a prospect a 'self-correction' I call it one or two wasted generations as we attempt to pick up the pieces.

So I can't bear federalism. Yet has it all gone so far now that to pull back would be suicide? And was that the great conspiracy of the 80's and 90's? They knew it would fail without political control, but banked on that fail to establish control after the bust? When our economies are all so buggered we stare oblivion in the face if we don't submit?

Taking your points one at a time Mr C.

Europe is already at the point of pointlessness. It is about time the European countries realised their seats at the ultimate top table are only there through the good graces of other nations fast expanding and accelerating past them. I don't think poverty is on the agenda, it just wont happen. 'Self-correction' will come whether we try to avoid it or not. Profligate spending is ensuring we keep heading in this direction. What will happen is that people have to get used to having less, simple. Is it such a bad thing to eschew buying that plasma TV, that latest iPad? These things are not really important in the grand scheme of things and the sooner we all get used to the idea the better.

I would point you in the direction of my post here: viewtopic.php?f=8&t=131329&start=15
If Politicians persist in ignoring the warning signs, they will ultimately be vilified for their actions. The current situation cannot be sustained, the clock is ticking and the likes of Christine Legard (on Newsnight the other day) can spout all the centrist nonsense they want. Add the following fact to the mix....interest rates the world over are starting to surge, a sure sign of impending inflation and you start to have an explosive cocktail. The last couple of years with such low interest rates were only putting off the fateful day when the correction arrives...as it surely will.

Those crafty operators, the Hedge fund managers are leaving London in their droves. Over 1,000 have emigrated to Switzerland, unsurprisingly. The new laws being put in place by the Politicos are driving them out and slowly eroding London as a centre of influence in the Global Financial markets, something the German and the French Political classes have had on their agenda for some time now. Another item they have had on their agenda has been the yoking of the spending habits of the PIIGS group. I cannot imagine seeing those countries, especially those centered around the Med. putting up with the kind of austerity the Franco/German axis want to put in place....it just ain't going to happen.

I stand by my forecast that 2011 will see the cracks starting to open. The bond markets will be a feeding frenzy as the weak are exposed fully, this is the way of things and, dare I say, a natural conclusion to the idiocy we have suffered for far too long now. Once the Bond markets turn away, in any sane manner, from the Eurobonds based in the PIIGS zones, the cash will dry up. The simple choice they will then have is to either break up the Euro or to print moolah by the shedload and we all know where that leads.

[Pedronicus]

Simple question.

When countries sell / auction or whatever they do (I'm not that clued up right now, due to an all day drinking session) to sell or buy debt we keep hearing about at worse rates..... Who exactly is buying this debt?

I don't get how companies or people have more money than a country.

[Fruitcake]

Simple question.

When countries sell / auction or whatever they do (I'm not that clued up right now, due to an all day drinking session) to sell or buy debt we keep hearing about at worse rates..... Who exactly is buying this debt?

I don't get how companies or people have more money than a country.

If you add the wealth, in liquid terms or otherwise, people and corporate institutions have massively more wealth than the Government (that's why Govts spend much of their time working out various ways to get their mitts on the moolah and the individual institution or person spends much of their waking hours working out ways to avoid handing it over). Banks have cash which they can use via their own Bond holders and depositors. Private investors with a reasonable access to liquidity via debt or their own resources are also able to buy these bonds.

Governments have differing attitudes to balancing the books so to speak. Those like Germany (and to an extent the UK in the pre Brown era) always tried not to spend more than they would raise in revenue. Med countries never had the same discipline. However, they nearly always had higher interest rates. So the 'risk' of lending to them via Bonds etc was counterbalanced by the increased return, a simple rule of thumb in any investment I think you'll agree. What has happened since the Euro was created is that these countries who historically have carried high debt ratios with high interest rates have suddenly found themselves in the land of plenty by being able to raise moolah and interest rates they could only dream of. This released whatever natural brakes they had in the system and they went wild. It was spend-city for quite a few years. The problem was that this was also the case with the people. So not only was national public debt increasing rapidly (but costing less than previously) but so was private debt increasing at much the same rate. When the financial crisis hit a couple of years back it acted as if some one had finally lit the blue touch paper. I stand firm that the Financial Crisis was not the cause but the catalyst to today's problems.

What is now becoming apparent to the many (and was as clear as glass to the few some time back) is that this situation cannot continue. Maggie Thatcher never spoke a truer word when she likened Government spending to the housewife balancing the household budget. The Politicos have been borrowing in ever increasing amounts until the risk level has risen to an extent where the lower interest rates were no longer applicable as the risk of them defaulting was steadily rising, think Bank loan versus secondary finance house loan to the low credit score client and the difference in % rates if that helps. The situation is now reaching a point where to stay in the Euro system certain countries HAVE to reduce their debt. However, their debt ratio is now at a point whereby they have to introduce such punitive measures that it will also take 2 generations to clear and balance the books. The answer to this is simple. Exit the Euro mechanism, re-float the currency at a vastly lower rate of value, take the surge in inflation for a couple of years then settle. Unfortunately for them, the Franco/German axis is fighting tooth and nail against this as it puts federalism back decades if not forever.

[nobbysheep]

An interesting article which backs up my believe that our 2008/2009 banking collapse was merely patched up. Unfortunately Lehman's is probably small in capitalisation vs some the real big players. Who's it going to be?
http://www.bbc.co.uk/news/business-12315962

A true sign that governments and regulators are not up to the job, especially then they are being coached/advised by the bankers.

[CreepersWiener]

I blame it all on the Undead!

[jimboston]

it was the combination of the US Congress, and the people of the US who took out loans (i.e Mortgages) that they could not afford to pay.

The banks took a slice of the transaction, but they where only middlemen.

The fault lies on Congress and stupid people.

[Pedronicus]

it was the combination of the US Congress, and the people of the US who took out loans (i.e Mortgages) that they could not afford to pay.

The banks took a slice of the transaction, but they where only middlemen.

The fault lies on Congress and stupid people.

Jim Jim Jim. People like you make me want me to smash my head into a brick wall repeatedly.
How can you defend the banks and then criticise the people of the US who took out loans they couldn't pay?

Do you really think that congress removed banking rules and allowed a relaxed finance system because congress had smoked a lovely big reefer and were really chilled out one afternoon?

NO

The banking lobbyists got their way and created the relaxed markets that lead to the current shit storm.
When the banks have enough money and power to influence congress, then a credit rating agency is going to be easy meat.

[jimboston]

People like you make me want me to smash my head into a brick wall repeatedly.

Can you video this and post on YouTube?

Do you really think that congress removed banking rules and allowed a relaxed finance system because congress had smoked a lovely big reefer and were really chilled out one afternoon?

No. I think that Congress was trying to win the favor of the public, without understanding the long-term ramifications of the laws they passed.

The result was these laws forced banks to make bad loans.

The Banking Industry... being filled with smart / creative and greedy people... them setup up new investment structures to spread the risk of these bad loans. In doing so they made a lot of money... but they were somewhat forced into this action.

The mortgage originators... having limited understanding of these investment vehicles, and not caring much about the long term... exploited the new system to offer ever more and more risky loans.

Yes... there was some fraud in there... but the vast majority of the problem is the result of;
1) Bad Regulation
2) People taking mortgages they couldn't afford... sometimes without understanding the contracts they were signing. Not because they were lied too... but rather because they chose to see only the upside / only what they wanted to see.

Now... because of this... I paid about 20% more for my house than it is worth... because the market was falsely inflated by the Congress and dumb people.

That said... even with losing this 20% I am better-off than the people who bought into a market they never should have.

[Fruitcake]

The Bond market is starting to surge again.

Spanish and Portuguese yield curves are rising once more after drawing breath after the last ridiculous issue which was picked up, in the main, by the ECB. One day, not so far in the future, the cracks in the Euro will begin to widen to a point they cannot be papered over. Both countries have auctions this week...we wait to see whether the ECB will hold firm after it suspended its emergency purchases of eurozone government binds last week for the first time since October.

Recently Bond yields have seemed to be stable, but some of us are not fooled. In the last few days yields on Portugal Bonds have finally broken through the 7% barrier and stayed there (Irish bonds did this as a stepping stone to their sudden rise to the present 9%+ some time back) and Spanish yields have started moving higher to near on 5.5%. The rises are inexorable and will only bring a terrible strain on the economies of these countries if they are not let loose from the Euro system. Wednesday 2nd Feb should be interesting as Portugal goes back into the markets to raise 1-1.25 billion euros in T-bills (Treasury Bills), Spain issues between 3 and 4 billion euros of 3-year and 2016 bonds on Thursday.

Word is that EU leaders may convene an extraordinary summit early in March to discuss changes to the eurozone bail-out fund....Ha!

Moving further afield, I have started shorting Chinese building and construction sector, construction accounts for 50-60% of GDP in China. Interestingly, exports have been stagnant as has the consumer segment of the economy. In other words, China's 9% GDP growth has mainly been derived from residential and commercial construction. This cannot continue and a property bubble is appearing. I may take a bath on this if the bubble doesn't burst within my specified timeframe but hey ho, such is the way of these things.

[Mr Changsha]

The Bond market is starting to surge again.

Moving further afield, I have started shorting Chinese building and construction sector, construction accounts for 50-60% of GDP in China. Interestingly, exports have been stagnant as has the consumer segment of the economy. In other words, China's 9% GDP growth has mainly been derived from residential and commercial construction. This cannot continue and a property bubble is appearing. I may take a bath on this if the bubble doesn't burst within my specified timeframe but hey ho, such is the way of these things.

And on the ground in China...

The top few percent here in Changsha (and this is an elite originating from all over the country) are becoming increasingly well-off. A married couple would have to be earning 25,000+ a month to be considered properly upper-middle/professional class in 2011. The business types are earning in the multi-millions, even the relatively small-time types.

In contrast, five or six years ago 10,000-15,000 a month would have been the equivalent professional family income (at best). It is an incredible surge and that 5% are now investing and spending seemingly for fun. The issue here though is that I would think the bottom 30% have seen no rise in income at all (in fact have lost out terribly through inflation) the middle 50% have seen moderate increases that have, again, been obliterated by inflation and finally there is a top 20% with really only half of them probably considering themselves to be doing particuarly well out of life.

I lack the knowledge to make firm conclusion about all this. But my gut tells me that a consumer-based recovery is going to be difficult to achieve when the majority of the people are getting poorer year by year . When I go shopping I see all this expensive stuff to buy but always think about how many people could actually afford to buy it. A decent new TV costs about 5,000RMB here. As an illustration, a typical office worker would be happy to earn 3,000RMB a month. Very happy. He would be doing pretty well. Yet he would have to save up a while to buy that TV.

On the flip side, construction is everywhere...new subway system being built here, new international airport on the way, half the centre of the city (where I happen to live) is being demolished to make way for shiny new high rises, state companies here are seemingly endlessly expanding both domestically and internationally. Naturally, private sector companies that cater to that top 10% of people are growing exponentially too.

Yet I go back to the great mass of the people. They are still riding to work on shitty buses, eating 5RMB lunches and not turning the heating on in the winter to save money. The gap between those that have, and those that do not is just insane. One final illustration: My wife and I tend to spend about 7,000RMB on the mortgage, bills, expenses, entertainment etc etc. A worker (for example an electrician) makes 1,500RMB a month. I'm at the bottom end of that top 5% here, that electrician would be bang in the middle in terms of income.

That's not right (possibly most importantly) but as a secondary issue I wouldn't have thought it would be good for the economy either.

[Fruitcake]

Fascinating article by Irwin Stelzer on the latest Euro fudge.

http://online.wsj.com/article/SB1000142 ... opWhatNews

We wait in breathless anticipation of how much further this can be screwed up…meanwhile the markets will continue to peck at the slowly deceasing, almost corpse like body as it lays twitching and sucking in the last oxygen it can.