Wow! Just wow!

At the moment when you think that all possible depths have been plumbed, the leadership of the Green Party pull a stunt that significantly increases the danger of the collapse of the Euro.

That is something more than incompetence. That borders on criminal negligence.

Are they acting as a ‘Green’ terrorist cell, hoping to bring the whole capitalist system collapsing down about them in order to stop the destruction of the planet through wanton exploitation and that a new ‘smart-economy’ Eden will arise from the smoking ashes of the ruins? If only revolutions were so manageable and predictable.

On the subject of predictions;
We will not get a budget or a 4 year plan;
There will be a General Election – FF running on the proposed budget;
There will be no negotiations on the EU/IMF bailout during the election;
FG/Lab will be unable to form a stable Government;
There will be massive capital flight out of the country (last of the corporates, remnants of middle class liquidity);
The banks will collapse;
The State will collapse.

After that it is anyone’s guess.

But at a minimum, a new Constitution, the end of FF and FG and increased inequality.

Probably also, oh, the departure of Intel, massive emigration and narco-violence.

Bad Call

I made a ‘bad call’ when I wrote earlier on this blog that Germany was getting ready to call it a day on endless propping up of Ireland’s out of control politician and bankers.

I believe that Germany has made a ‘bad call’ by going down the road of further ‘propping up’.

Surgery is a surer form of treatment for gangrene than antibiotics, especially when the patient has had lots of antibiotic already. The analogy breaks down in our favour when you recall that economies can regrow in a way that human bodies cannot.

This is not the end of the story but rather the opening of another chapter. Greece could be seen as a ‘one off’, marginal, always problematic, not financially ‘systemic’. Ireland is extremely cross linked, is central and is ‘systemic’, with a clear path to a domino effect.

I do not think that this story will have a happy ending.

The Guarantee ‘heard round the world’.

Well, folks, it’s taken a little time and it is still unfolding a bit slower than 1914 but the Leni/Cowen blanket guarantee is turning out to be the equivalent of the shot fired in Sarajevo in 1914.

The guarantee has triggered a wave of escalating reaction in all the captials of Europe and now stands on the brink of collapsing the Euro. If the Euro goes the Germans will, after losing more than a decade worth of growth to their Reunification project and after 40 years of funding French farmers, most likely up sticks and say ‘Goodnight, Vienna’.

The complex cross relationships between North and South, between France and Germany, the bugbear of British scepticism and the fragility of the Russian buffer states now and in 1914 are frighteningly similar. One thread could unravel the whole thing. Wouldn’t it be astounding if the Irish 1200 years after spreading the seeds of the end of the Dark Ages across Europe were to be the ones who ended the greatest democratic experiment in the history of the world. And all for the sake of a few lousy developers.

I don’t think we will have a war but I wouldn’t rule it out entirely.

The EU and the IMF are not here to sort our finances and help revivify the Celtic Tiger. They are here to ensure that the gangrene of Irish debt does not spread onto the Continent.

Personally, I do not believe that the application of more medicine will work and there is a real danger of the patient dying. I have been saying since the outset of this infection that surgery in the form of ‘haircuts’ is the only sure treatment.

The good thing is that an economy that suffers a small amputation can always regrow. But re-growth after a major amputation is not assured.

Follow the Money

Everyone is confused and no one really understands what is going on. Everything that was certain is now in doubt. The world has turned ‘topsy-turvy’. You can’t even bank on a bank anymore.

The list of things that have been upended seems endless. We have regulators who didn’t regulate. Our bankers are gamblers. The Irish Government embraces fiscal rectitude and austerity while the Germans are for bondholder haircuts and stimulus packages. Politicians don’t want to have elections. Apparently, we even have secure files from Microsoft.

So, what can you do to sort out the wood from the trees?

Follow the money” is the line everyone remembers from the story of the Nixon downfall. And it was “following the money” that finally brought down Al Capone.

It can be hard to “follow the money” in Ireland with everyone claiming ‘commercial sensitivity’, ‘privileged access’ and hiding behind our libel laws.

There is one place where there is some transparency and it is in the heart of our troubles. The Register of Members Interests at the Oireachtas tells us some of what we need to know. It is not quite up to the job but, with a very small tweak, it would provide a thread that could unravel the whole murky mess.

We are a conservative people and slow to adopt new ways. We were very slow to bring in a Register of Interests for our elected officials so that we might see whether they had vested interests that they might not be keen to reveal. Even today, the penalties for not properly or fully disclosing assets amount to little more that a slap on the wrist, as the Frank Fahy/Sage ‘affaire’ has shown.

But looking at a Register of Interests is the same as looking at one half of a balance sheet. It tells you less than half the story. It doesn’t tell you how the assets are funded or whether the entity is fiscally sound.

In the innocent days of yore, when we thought our banks were well-run, morally upright places, when no one worried about or even knew about bond markets, haircuts and gearing, no one thought to ask how the politicians assets had been acquired. Now that we know better and we all know boomtime stories of people with huge borrowings on tiny amounts of equity, we need to know whether any of our representatives are in the same boat.

It is another measure of our talent for inconsistency, that we have a penalty of immediate disbarment for bankrupt politicians but no means of determining whether they are bankrupt.

It is time for those who represent us and who are perverting normal corporate practice and taking such huge risks with our debts and mortgaging our childrens futures to their inexperience to come clean and to show us their ‘books’.

A one sentence amendment to the relevant legislation will oblige the representatives to disclose the debts attached to the declared interests. Only then will we be able to see whether the desperate urge to prop up developers and property prices and banks is truly in the national interest or is in the interest of keeping the ‘jobs for the boys’.

Where the rubber meets the road.

We are, as a people, about to be in the place where ‘the rubber meets the road’. We can do it as the rubber or as the road. We can be ridden over or we can be the drivers.

People feel powerless in the face of this but they have enormous power if they choose to wield it.

This is about cashflow now. Pure and simple. It is not about debt and it is not about tax-rates.

The Government has no money. The banks have no money. The Europeans have money. Most importantly, anyone with a job has money and cashflow. And anyone with a mortgage has a lever or, perhaps, even a trigger…

The banks are fighting for their lives. The elites, political, professional and administrative are negotiating for their lives. When people are fighting for their lives they make rash, ugly and desperate decisions, negotiated from positions of weakness and always regretted afterwards.

The Europeans are hovering, hoping that the petulant child won’t rock the boat so much that they end up having to harshly discipline us. We have a huge domestic problem but we are a tiny part of the EU. The Europeans only concern right now is whether we are about to become gangrenous for the rest of the EU. Anyone who thinks that there are any altrusitic motives at work here is asleep at the wheel. This is going to be about naked power and expedience, pure and simple.

The people are not at the table fighting their own corner. They, as citizens in a capital owning constitutional democracy, are entitled to. They, as hostages of massively incompetent and self-serving ‘gombeens’, ought to be looking after their own interests.

Cashflow is the only bargaining chip that counts now. Laws, contracts, propriety, property rights and obligations are on the table and will be crudely sliced and diced to make a new ‘modus vivendi’. The elites have no bargaining chips left other than what they think they can take from the peoples cashflow. They are more interested in preserving their hides than the future of the people and will make a bad bargain on our behalf to save themselves.

Rioting on the streets is not the answer and it shows that the rioters haven’t even understood the question, let alone figured out the answer. This is about cash and cashflow. The authorities love it when people riot. They are well setup to handle that. What they are not setup for is disobedience and the people using the tools of the elite against them.

Stop paying your mortgages, demand a seat at the table and keep on doing it until you get what you want. If the bond markets can go on strike, why can’t the borrowers?

This is a fight for our futures and our lives. It is taking the form of a negotiation. The people are entitled to a seat at the table. So far, we seem to be hiding under it.

Genius Insight

Orderly coercive sovereign debt restructuring can be achieved without an SDRM or CACs via traditional out-of-court exchange offers.

This is a nugget of a ‘Tweet’ from the smartest man around, Nouriel Roubini. The ‘thing’ now is to find some people with the guts and the gumption to pick up this ball and run with it.

We live under a  Constitution that endows all citizens with property rights. The key word here is ‘ALL’. It is not just the property developers and it is not just the banks. In fact, the banks and the corporations that the property developers hide behind have fewer rights than the human beings who are the citizens of what is, for the time being, the sovereign state of the Republic of Ireland.

We have the right to extinguish the existence of corporations and we do so regularly. We have recently been taking extraordinary measures to keep alive a few bankrupt corporations at the probable cost of bankrupting the State, so as to save the ‘face’ of our political elite.  If the elite are perverting the norms of corporate laws and commercial practice there is absolutely no reason that the citizens should tolerate it or allow it to happen at their expense.

Damn it! The people can either stand up and exercise their constitutional rights or lie down and get crushed by the vanity of the ‘gombeens’. But will they follow if anyone shows the way?

The Banality of Evil

Last Saturday I attended a ‘Member’s Workshop’ of the Green Party, held in Mullingar. I came away dejected, nauseated and alarmed.

Dejected because after two years of crisis, misrepresentation and poorly concealed subterfuge the membership of the Green Party still have not woken up to the extent to which FF are running rings around them and the leadership of the Green Party. The talk was still of partnership even as members asked why the famously re-negotiated Programme for Government was being ignored while the ‘Croke Park Agreement’ is apparently sacrosanct.

Nauseated because the membership and leadership are engaged in self-deception and hypocrisy on many levels.

The membership present wanted to reject all cuts without offering any alternative strategy for funding ourselves short of more borrowing while at the same time failing to show any understanding of the mechanics of international bond markets and while happily describing those they wish to borrow from, to support the lifestyles they have come to believe themselves entitled to, as ‘speculators’.

The leadership described the 2011 Budget as a responsible and fiscally sophisticated measure that would convince the bond markets of our probity despite the fact that it has been described by many independent observers as ‘baloney’ and despite the fact that none of the Governments assertions over the last two years have lasted longer than 6 months. Further, NAMA was described ‘working’ despite the delays, the profit revisions, the changes of parameters, the rejection by the bankers and the imposition of tougher remits by the supervising authorities.

Alarmed by both the attempts of the organizers to silence or evade questions from critics, by means of changes of rules and abandonment of agendas, and by the docile acceptance of this by the majority of the attendees. In an organization that was famously unruly and outspoken, this was a sad sight to behold.

Hannah Arendt is rightly famous for her quote about the ‘banality of evil’. It is clear to all now that the good people of the USA have completely been brainwashed by their self-marketed ‘exceptionalism’, which allows them to believe that they are inherently a force for good in the world, and therefore that “it can’t be torture if we are doing it”.

It has taken me too long to realize that the membership of the Green Party suffer from the same affliction. They believe that they are good people who have everyone’s best interests at heart and who see the world as it truly is. Consequently,  they can cope with massive amounts of cognitive dissonance which allows them support and enable the bankrupting of the State and the debt enslavement of the next generation in order to maintain the ‘reputation’ of FF and the wealth of property speculators.

Many times have I heard the mantra “We are in Government and we are doing good things”. This may be true in their own departments but it comes at the cost of supporting and enabling wholesale theft and the murder of the hopes and dreams of several generations. Many times have I heard people say, with a straight face, in workshops and policy formation meetings, words to the effect of “I don’t know what I am talking about but I have a opinion on this…….”.

The other great line that the Greens trot out and which is a measure of the degree and speed of their seduction by FF is the one from the late Seamus Brennan about “playing Senior hurling now”. Clearly, sports are not the Green’s strong suit as they have completely failed to grasp the distinction between being ‘on the field’ and actually being ‘in the game’.

This country is accelerating towards the end of the line and the 450 Green Party members who could have stopped the theft last October in the RDS but who, through vanity, cupidity and stupidity, chose to stay on in Government and back NAMA will, wake up very soon from their power-crazed hallucination amidst the wreckage of  the State.

Only then will they realize that , like the Germans before them, they have blood on their hands.

Germany’s Gift – Part II

I blogged some time ago about the German talent for strategic retreat.

The particular retreat that I have in mind is the one where the Germans decide that the long term interests of the health of the Euro, the EU and the German economy can no longer carry all the burden of the assorted hangers-on, malfeasants and meddlers that make up the PIIGS and decide that a sacrificial victim to explore the mechanisms of working out a sovereign default without a devaluation is called for.

Napoleon occasionally executed a general “pour encouragez les autres”. Done sparingly it is a useful disciplinary exercise. The Irish (people, Government and banks) make a perfect candidate for just such an exercise for the Germans. We are peripheral in every possible context to the European project and have no friends in Europe after our rejection of the Lisbon Treaty and the precipitate issuance of the ‘Guarantee’. More so now that the bulk of our borrowings have been heaped upon the State rather than the more diffusely held and legally less secure obligations of the Irish banks.

I have been bending the ears of friends, colleagues and dogs in the street about the precariousness of our fiscal/monetary position and how it is an unlikely combination of being both up a creek without a paddle and out on a rotten limb. There are no more policy alternatives for the State. All our borrowing options are exhausted. In poker terms, the Government has gone all in hoping that there will be a global economic recovery that will restore growth and that this will restore some of the previously obtaining property price levels.

In the meantime, as the original Guarantee expired a lot of bonds and notes issued under its protection could no longer be rolled over in the markets and the Government and its client/pariah banks have been forced to go back to borrowing directly from the ECB. The resulting explosion in ECB borrowing puts us right back at early 2009 levels.

In this article, the redoubtable Karl Whelan points out that the Germans (the only part of the ECB authority with authority) has been carefully laying the groundwork for that retreat.

Neither he nor I would suggest that an EU change of mind (a ‘volte-face’ as the French would say) is inevitable or even probable.

But it speaks volumes that the ground is being prepared for just such a retreat.

MERS mess

Greetings, Dear Reader.

I haven’t blogged in a while as I was acting as roadie for the UK ‘Institute of Collapsonomics’ Irish road show. We had a blast while modelling the end of civilisation as we know it and doing some collateral liver damage at the same time.

Glad to see that while I was offline, that things have taken a turn for the worst, domestically.

Meanwhile, abroad, this news just in. The MERS fraud, that I wrote about a year ago, seems to have gone ‘mainstream’ now with several major banks having to cease foreclosures because they can no longer get away with outright fraud and forgery in their documentation.

I am not sure which is more amazing; that they banks’ lawyers were trying it on or that the defence lawyers took a year to cotton on to the fact that there was no evidence of anything – debt, ownership or payments.

America, once again revealed as the country that swallowed whole its own marketing ‘bull’ and believed it.

Anyway, the latest summary of the whole mess can be read here.

I expect it will take another year for the realisation that swathes of USA homes have no owners and no debtors to impinge on the tiny brains of the traders and wake everyone up to the fact that there is not likely to be a recovery  given this much uncertainty.

Sleep tight, my pretties – the world is falling apart….

Peak Debt, a parable

There are limits to debt-issuance and consequences for those who ignore them, even in the case of sovereign governments managing their own currencies.

The Japanese have long been cited as a example of why, as per Republican/USA ideology, deficits of any variety do not matter. In the long run, we are all dead said Keynes, but before then we have debts to pay. The long run has now caught up with the Japanese and is increasingly gaining on the rest of the OECD/developed world.

These two articles, linked, below explain this better than I can.

There is a short version of this, here and a long version, here.

This is compulsory reading for anyone who wants to understand why the path that most Govt’s have taken out of the recent crisis will most likely turn out to have lain the seeds of the next, the last and biggest crash.

Granted there are one or two factors that make Japan a more extreme example than other OECD state balance sheets but the principle and the problem are exactly the same.