The Big Bailout of the Eurozone (Another crisis coming? - Seriously)

[muppet]

For those of you who didn't watch the above video, and I strongly recommend that every single Irish person watch that 4 minute clip, I am going to paraphrase parts of it here.

(N.B. I don't understand all of the terminology either)

Firstly, somebody somewhere decided that Anglo/INBS bondholders must be saved at all costs. The solution was that the Irish Central Bank would literally print €30bn and give it to Anglo/INBS which in turn paid off the bondholders (note: the bondholders long gone). The Irish Government then promised, via a Promissory Note, to repay the €30bn from the Exchequer. The €3.1bn due at the end of this month is part of the schedule and comes straight out of the money cut in the budget/or borrowed from the Troika.

But this is the killer: When the Irish Government pays the €3.1 bn to the Irish Central Bank, the Central Bank destroys the money! It disappears. Gone. Out of our pockets and turned into dust.

http://www.nakedcapitalism.com/2012/03/philip-pilkington-the-irish-begin-to-wake-up-to-the-fact-that-they-are-repaying-money-that-is-then-burned.html

Crazy as this sounds it apparently is quite normal for banks to issue debt, collect it and then destroy it.

The problem is, when the banks don't get their money back, or specifically when they lent it ridiculously, they get bailed out by order of the ECB, funded by the taxpayer. However if a bunch of taxpayers do it, for example Lenihan's lugs to the west of Europe, no deal, they must pay themselves back the money, regardless of the social consequences, and then burn it.

One of two things happened to set up this lunacy:

a) Cowen, Lenihan & co acted unilaterally and issued the Promissory Note to save Anglo/INBS's Bondholders.

b) The ECB ordered it.

If it b) it is time everyone put on the green jersey and told the ECB to shove it.

If it is a) then we should hire the world's most expensive barristers and refuse to pay, on grounds of the inevitable mis-information (e.g.: it is a liquidity problem not a solvency one) that we were told made it necessary and which was the basis on which the Dáil voted for it.

So far Spain is way off target on its deficit and not remotely concerned, while even Germany and France are snubbing the ECB and missing their targets. The ECB sits idle watching them. What are we doing? We are organising a Joe Higgins re-election campaign by not paying €100. At least that €100 goes back into the economy. The above Promissory Note repayment literally goes up in smoke.

Historically the Irish always fragment into groups and fight the wrong fights or the right fight at the wrong time or fight to many different fights at the same time. We have protests over A&E in Ros, Joe Higgins & co, and various local Health, Education and other issues all drawing small groups of protesters.

We need to pick one fight, and get everyone behind it.

Our politicians, of all shades, would be doing us a far greater service by telling the EU we will not be paying the Promissory Note, or at least not in the near future. I have asked a few prominent people who know about such stuff and this action would not be considered a default. A default could be big trouble as all of our debt would fall due immediately, but non-payment of the Promissory Note, which we are paying ourselves, does not constitute a default.

[orangeman]

Jeez Muppet when you put it like that the €100 a house does look a bit silly compared with the cheque for €3.1billion.

Penny wise, pound foolish or something like that.

[muppet]

Jeez Muppet when you put it like that the €100 a house does look a bit silly compared with the cheque for €3.1billion.

Penny wise, pound foolish or something like that.

That video has another amazing stat: the €3.1bn we will shortly pay back on the Promissory Note, and which will be burned, is about 81% of the total cuts in the 2012 budget!

[Capt Pat]

http://www.rte.ie/news/2012/0316/exports-business.html

How to run an economy. Our biggest ever balance of trade surplus.

[muppet]

http://politico.ie/irish-politics/8367-questions-arise-on-promissory-note-deferral.html

Twitteratti speculating on some sort of deal to defer the €3.1bn.

[Denn Forever]

Please don't be true.  Heard that developers who have transferred their properties into NAMA may be able to buy them back. 

Surely if they have money to buy property they should be using this money to pay back their debt?

[Rossfan]

Nothing surprises me any more.
I presume the cnuts will buy them back for a quarter of what they owe and the debt will be written off.
Please , in the day that Mahon hits the shelves, don't let the developer mafia who wrecked the country loose to start their whole racketsoff again.

[Denn Forever]

Surely there are laws against child labour?

http://www.bbc.co.uk/news/business-17598550

An 11-year-old boy's plan to save the eurozone has been commended in a major competition that has attracted some of the world's top economists.

[muppet]

Surely there are laws against child labour?

http://www.bbc.co.uk/news/business-17598550

An 11-year-old boy's plan to save the eurozone has been commended in a major competition that has attracted some of the world's top economists.

Deep down I always knew the answer would be pizza.

[muppet]

And on it goes:

http://www.reuters.com/article/2012/04/17/eu-spain-idUSL6E8FHA1820120417

[Declan]

How the Goldman Vampire Squid Captured Europe
The Goldman Sachs coup that failed in America has nearly succeeded in Europe—a permanent, irrevocable, unchallengeable bailout for the banks underwritten by the taxpayers.
by Ellen Brown
In September 2008, Henry Paulson, former CEO of Goldman Sachs, managed to extort a $700 billion bank bailout from Congress.  But to pull it off, he had to fall on his knees and threaten the collapse of the entire global financial system and the imposition of martial law; and the bailout was a one-time affair.  Paulson's plea for a permanent bailout fund—the Troubled Asset Relief Program or TARP—was opposed by Congress and ultimately rejected.

By December 2011, European Central Bank president Mario Draghi, former vice president of Goldman Sachs Europe, was able to approve a 500 billion Euro bailout for European banks without asking anyone's permission.  And in January 2012, a permanent rescue funding program called the European Stability Mechanism (ESM) was passed in the dead of night with barely even a mention in the press.  The ESM imposes an open-ended debt on EU member governments, putting taxpayers on the hook for whatever the ESM's Eurocrat overseers demand.

The bankers' coup has triumphed in Europe seemingly without a fight.  The ESM is cheered by Eurozone governments, their creditors, and "the market" alike, because it means investors will keep buying sovereign debt.  All is sacrificed to the demands of the creditors, because where else can the money be had to float the crippling debts of the Eurozone governments?

There is another alternative to debt slavery to the banks.  But first, a closer look at the nefarious underbelly of the ESM and Goldman's silent takeover of the ECB ...

The ESM is a permanent rescue facility slated to replace the temporary European Financial Stability Facility and European Financial Stabilization Mechanism as soon as Member States representing 90% of the capital commitments have ratified it, something that is expected to happen in July 2012.  A December 2011 youtube video titled "The shocking truth of the pending EU collapse!", originally posted in German, gives such a revealing look at the ESM that it is worth quoting here at length.  It states:

"Europeans are being hoodwinked into relinquishing their cherished democracy to a rogue band of financial pirates, and the rest of the world is not far behind."

The EU is planning a new treaty called the European Stability Mechanism, or ESM:  a treaty of debt. . . . The authorized capital stock shall be 700 billion euros.  Question: why 700 billion?  [Probable answer: it simply mimicked the $700 billion the U.S. Congress bought into in 2008.] . . . .

[Article 9]: ". . . ESM Members hereby irrevocably and unconditionally undertake to pay on demand any capital call made on them . . . within seven days of receipt of such demand."  . . . If the ESM needs money, we have seven days to pay. . . . But what does "irrevocably and unconditionally" mean?  What if we have a new parliament, one that does not want to transfer money to the ESM?  . . . .

[Article 10]: "The Board of Governors may decide to change the authorized capital and amend Article 8 . . . accordingly."  Question:  . . . 700 billion is just the beginning?  The ESM can stock up the fund as much as it wants to, any time it wants to?  And we would then be required under Article 9 to irrevocably and unconditionally pay up?

[Article 27, lines 2-3]: "The ESM, its property, funding, and assets . . . shall enjoy immunity from every form of judicial process . . . ."  Question:  So the ESM program can sue us, but we can't challenge it in court?

[Article 27, line 4]: "The property, funding and assets of the ESM shall . . . be immune from search, requisition, confiscation, expropriation, or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action."  Question: . . . [T]his means that neither our governments, nor our legislatures, nor any of our democratic laws have any effect on the ESM organization?  That's a pretty powerful treaty!

[Article 30]:  "Governors, alternate Governors, Directors, alternate Directors, the Managing Director and staff members shall be immune from legal process with respect to acts performed by them . . . and shall enjoy inviolability in respect of their official papers and documents."   Question:  So anyone involved in the ESM is off the hook?  They can't be held accountable for anything? . . . The treaty establishes a new intergovernmental organization to which we are required to transfer unlimited assets within seven days if it so requests, an organization that can sue us but is immune from all forms of prosecution and whose managers enjoy the same immunity.  There are no independent reviewers and no existing laws apply?  Governments cannot take action against it?  Europe's national budgets in the hands of one single unelected intergovernmental organization?  Is that the future of Europe?  Is that the new EU – a Europe devoid of sovereign democracies?

Last November, without fanfare and barely noticed in the press, former Goldman exec Mario Draghi replaced Jean-Claude Trichet as head of the ECB.  Draghi wasted no time doing for the banks what the ECB has refused to do for its member governments—lavish money on them at very cheap rates.  French blogger Simon Thorpe reports:

On the 21st of December, the ECB "lent" 489 billion euros to European Banks at the extremely generous rate of just 1% over 3 years.  I say "lent", but in reality, they just ran the printing presses. The ECB doesn't have the money to lend. It's Quantitative Easing again.

The money was gobbled up virtually instantaneously by a total of 523 banks. It's complete madness. The ECB hopes that the banks will do something useful with it – like lending the money to the Greeks, who are currently paying 18% to the bond markets to get money. But there are absolutely no strings attached. If the banks decide to pay bonuses with the money, that's fine. Or they might just shift all the money to tax havens.
At 18% interest, debt doubles in just four years.  It is this onerous interest burden, not the debt itself, that is crippling Greece and other debtor nations.  Thorpe proposes the obvious solution:

Why not lend the money to the Greek government directly? Or to the Portuguese government, currently having to borrow money at 11.9%? Or the Hungarian government, currently paying 8.53%. Or the Irish government, currently paying 8.51%? Or the Italian government, who are having to pay 7.06%?
The stock objection to that alternative is that Article 123 of the Lisbon Treaty prevents the ECB from lending to governments.  But Thorpe reasons:

My understanding is that Article 123 is there to prevent elected governments from abusing Central Banks by ordering them to print money to finance excessive spending. That, we are told, is why the ECB has to be independent from governments. OK. But what we have now is a million times worse. The ECB is now completely in the hands of the banking sector. "We want half a billion of really cheap money!!" they say.  OK, no problem. Mario is here to fix that. And no need to consult anyone. By the time the ECB makes the announcement, the money has already disappeared.
At least if the ECB was working under the supervision of elected governments, we would have some influence when we elect those governments. But the bunch that now has their grubby hands on the instruments of power are now totally out of control.

"Goldman Sachs and the financial technocrats have taken over the European ship.  Democracy has gone out the window, all in the name of keeping the central bank independent from the 'abuses' of government."

Goldman Sachs and the financial technocrats have taken over the European ship.  Democracy has gone out the window, all in the name of keeping the central bank independent from the "abuses" of government.  Yet the government is the people—or it should be.  A democratically elected government represents the people.  Europeans are being hoodwinked into relinquishing their cherished democracy to a rogue band of financial pirates, and the rest of the world is not far behind.

Rather than ratifying the draconian ESM treaty, Europeans would be better advised to reverse article 123 of the Lisbon treaty.  Then the ECB could issue credit directly to its member governments.  Alternatively, Eurozone governments could re-establish their economic sovereignty by reviving their publicly-owned central banks and using them to issue the credit of the nation for the benefit of the nation, effectively interest-free.  This is not a new idea but has been used historically to very good effect, e.g. in Australia through the Commonwealth Bank of Australia and in Canada through the Bank of Canada.

Today the issuance of money and credit has become the private right of vampire rentiers, who are using it to squeeze the lifeblood out of economies.  This right needs to be returned to sovereign governments.  Credit should be a public utility, dispensed and managed for the benefit of the people.

[Declan]

More good news for the Germans

As Germany insists that Greece submit to harsh austerity measures leaving pensions cut, unemployment soaring and the healthcare system slashed, one area it believes needn't be cut is Greece's weapons purchases, provided in great part by and benefiting Germany.

The Guardian's Helena Smith reports from Athens that both Germany and France, while pushing Greece to make cuts to its healthcare program, were trying to seal lucrative arms deals with the country.

Smith writes: "Speculation is rife that international aid for the country was contingent on Greece following through on agreements to purchase military hardware from Germany and France."

Greek profligacy may be blamed for triggering the debt crisis that now threatens to tear the eurozone apart, but if there is one area where Berlin is less excoriating of state largesse it is in Athens' extravagant taste for arms.

Behind the frequent exhortations that Greece rein in spending after living "beyond its means" – admonishments made most loudly by Merkel and her finance minister Wolfgang Schäuble – there is another reality that paints Germany in a less than flattering light, according to MPs, military experts, economists and scholars.

"If there is one country that has benefited from the huge amounts Greece spends on defence it is Germany," said Dimitris Papadimoulis, an MP with the Coalition of the Radical Left party.

"Just under 15% of Germany's total arms exports are made to Greece, its biggest market in Europe," Papadimoulis said, reeling off figures from a scruffy armchair in his party's parliamentary office. "Greece has paid over €2bn for submarines that proved to be faulty and which it doesn't even need," he said.

"It owes another €1bn as part of the deal. That's three times the amount Athens was asked to make in additional pension cuts to secure its latest EU aid package."

According to the Stockholm International Peace Research Institute (SIPRI) France is not far behind. Some 10% of its total arms sales go to NATO-member Greece. From 2002 to 2006, Greece was the world's fourth biggest importer of conventional weapons. It now holds 10th place.

"As a proportion of GDP, Greece spends twice as much as any other EU member on defence," said Papadimoulis, who is also a former MEP.

"Well after the economic crisis had begun, Germany and France were trying to seal lucrative weapons deals even as they were pushing us to make deep cuts in areas like health."

Under the latest EU-IMF sponsored rescue program – which is propping up the near-bankrupt Greek economy with an extra €130bn in emergency loans until 2015 – Athens has agreed to pare back defence expenditure by €400m. But even with such cutbacks, its military budget still accounts for nearly 4% of national economic output compared to the eurozone average of around 2%.

Speculation is rife that international aid for the country was contingent on Greece following through on agreements to purchase military hardware from Germany and France.

Given Greece's parlous financial predicament – illuminated last week by IMF managing director Christine Lagarde's refusal to rule out a default by Athens – growing numbers have begun to question the probity of the nation's defence expenditure.

As the crisis was unraveling, deputy prime minister Theodore Pangalos publicly rued the fact that Athens was spending so much money on arms, exclaiming during a visit to the Greek capital by the Turkish prime minister, Recep Tayyip Erdogan, that Greece was being "forced to buy weapons we do not need".

No other area has contributed as heavily to the country's debt mountain. If Athens had scaled back defence spending to levels similar to other EU member states over the past decade, economists claim it would have saved around €150bn – more than its last bailout. Instead, Greece dedicates up to €7bn a year to military expenditure – down from a high of €10bn in 2009.

[muppet]

European Investment Bank includes 'Drachma clauses' in new contracts.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_21/04/2012_438736

[Declan]

Interesting one muppet. Have we restarted the presses out in Sandyford ?

[Declan]

Morgan Kelly May 2010
Morgan Kelly, professor of economics at UCD (University College Dublin) says in a recent paper, Whatever happened to Ireland?, that adding Irish bank losses to its national debt will leave Ireland in 2012 with a debt-GDP ratio of 115%. But if looking at the ratio in terms of GNP, which gives a more realistic picture of the Ireland's discretionary tax base, this is a debt-GNP ratio of 140% - - above the ratio that is currently sinking Greece.

http://www.rte.ie/news/2012/0423/banks-contribute-to-higher-deficit-for-2011.html - The real figure concerning Ireland is that the budget deficit is 17% of GNP and the national debt is 140% of GNP. Crucifying to say the least.

Shure why would we have listened to this fella didn't he get everything wrong?