We have a better chance of winning our group in Poland than the euro has of surviving in its present form.
The currency may survive but not as it is at the moment. The total failure of the huge Spanish bank bailout changes the game because it signals the end of the easy options for Germany which must face up to how much it will cost to hold the euro together.
It is important to appreciate that this is not a fire drill. You know the way we Irish are with fire alarms? We pretend that someone must be messing about as the alarm couldn’t possibly suggest that there is anything to worry about, could it? We don’t have to evacuate the building because it must be just a joke, surely?
This is not a joke. It is deadly serious. According to Reuters yesterday, European finance officials are discussing limiting ATM withdrawals in Greece as well as introducing capital controls in the event that the Greeks vote this weekend for parties that want to tear up the bailout agreements.
We now have Spanish and Italian bond yields soaring, despite the €100bn bailout for the Spanish banks.
Remember the Spanish PM Mariano Rajoy, as recently as May 28, insisting: “There will be no Spanish banking rescue.” And what about the European Banking Authority stress tests last year which prompted Spain’s central bank governor to claim that there was no need to inject further capital into Spanish banks? It was all bogus.
No one believes a word that comes out of EU officialdom because they are making it up on the hoof. There is no plan and alarm bells are ringing all over the place and they claim there is no exit.
Up to now, the EU’s strategy has been described ad nauseam as “kicking the can down the road”. The strategy was to try to patch things together and hope that something would turn up. Well this week’s events in Spain reveal that the policy is less akin to kicking a can down the road and more like rolling a snowball down a hill. The more you roll, the more the snowball builds momentum, getting bigger and bigger, heavier and heavier until what was a tiny snowball builds and builds into something enormous and out of control ready to smash into something.
The key is the decision of Germany. Is it about to put itself in a huge hole for the rest of the eurozone? Could Merkel sell a deal to the German people which risks infusions of German cash for generations to countries such as Spain, Ireland and Italy, not to mention Greece?
If Germany decides to pull the plug, where does it leave us? Would we go it on our own? Or would we join a weaker euro bloc with Spain and Italy? Or would we opt for a new punt nestling in the shadow of sterling?
If you believe that the euro is 100pc secure, then you should stop reading now. However, if you think that there is a chance that the euro will, under the pressure of defaults and economic stagnation of the periphery, have to be changed, then stay with us.
The epicentre of the crisis is Germany, not the periphery, because Germany is the only country that will or can save the project. It is easy to say that Germany has profited from the euro and therefore it should pay the price now in transfers to the south and the west. But let’s think about things from a German point of view.
They will have heard a former Portuguese communist, Manuel Barroso, talk of the immediate need for a banking union. But as one German diplomat, quoted anonymously, said yesterday: “How can we have a banking or fiscal union with France which this week decided to bring its retirement age down to 60, when we decided to increase ours to 67?”
The Bundesbank was out of the blocks early on the banking union idea, dismissing it as not workable. Germany wants hard money not some fungible commodity that can be printed when the situation demands it.
Germany is a nation of savers and therefore they want to ensure that the currency they are using is a safe place to store their wealth. For them, a soft euro, made softer by printing money to bail out peripheral debtors, is not an option. They wanted the rest of Europe to be more German and thought the single currency would enforce discipline. But who ever suggested that the way to enforce financial discipline was to give those you are trying to discipline the pin number of your ATM? This is what Germany did when it joined the euro and the Spanish, Greeks, Italians and Irish withdrew as much cash as they could. The euro didn’t discipline the rest of Europe; it gave us all a free lunch — which now we can’t pay for.
The only real way to protect German savings is for them to pull up the drawbridge around a hard euro of Germany, Benelux, Finland, Austria and France.
Otherwise, the eurozone will end up like the Italian state where the prosperous north of Italy infuses cash to the Mezzogiorno indefinitely. Germany already operates such transfers from west to east Germany but, like the Italian example, the Germans are the same nation. Europeans are not.
If the Germans move to protect themselves and decide to put further European integration off for another generation because the place isn’t ready for it, what then for Ireland?
It is clear we would not be in their Premiership but would be relegated to the second division with Spain and Italy. Then do we join a currency union with the Mediterranean or do we choose to revert to the punt but with the understanding that we shadow sterling, our natural ally, our main trading partner and home to the majority of our emigrants?
Just to give you an idea of how inappropriate a link with the soft euro would be over and above a link with Britain, consider this: 51.2pc of all our imports from the EU come from Britain, excluding Northern Ireland, as opposed to 2.9pc and 2.4pc for Italy and Spain.
Initially we wouldn’t explicitly link to sterling, as this would only give speculators a target. There would be no need to explicitly tie the punt to sterling but it could behave more like the Swedish krona or Danish krona. Indeed, in the future, closer financial links with Britain and the three floating currencies of Norway, Sweden and Denmark, might make more sense than another supposedly irrevocable monetary union with Italy and Spain.
The crisis in Europe is not a drill. It is real. We would better be drawing up plan B pronto. By 2016, 100 years after the Rising, will we be closer to Britain than any of us expected?
Britain’s finances post New Labour/Phony tony/Flash Gordon are a disaster. The only way out will be to print Sterling. The ConDem coalition have been extremely reticent at fixing Britain’s financial problems. And Milliband is likely to beat them both in the next general election. In other words, Britain’s future will be lousy. Because Britain does not have a plan for fixing the future. If anything Britain is stuck with a plan for messing up the future, from which it simply cannot escapte. In fact this is what has been observed for most of British history since the 1950s. We might… Read more »
Charlemagne Empire It took a Frank in 768 to rule the EU then and Hollande will be his successor now .It is important to realise the area of that empire then covered exactly the same first division championship as in the caption of this article to include France & Germany . Charlemagne then executed his orders by a systematic logistic known as ‘missi dominici ‘ , or agents to investigate as we have today in the troika .He then issued royal decrees of observance to his people known as ‘ capitutaires ‘ now known today as ‘austerity measures ‘ .… Read more »
David, the question is…do we have a better plan than what you have suggested? England/ UK is a land in decline we like to say. It is just an economy which is a bank. But then again, it does have the BBC and it locks up white collar criminals and fires goverment representatives regularly. The consequences of dumping the Euro will be witnessed by all in the coming weeks as Greece tries to sort itself out. As I read the papers over that last few months, Greece was racially abused by the rest of Europe from its biggest institutions. Little… Read more »
Its obvious….only oil producers, cheap household item producers, electrical goods and car manufacturers are doing well….Chinas been producing merchandise so cheaply that the rest of the world cant compete….the german car industry is propping up the whole of Europe…its time to get back into cheap manufacturing and stop importing from China. They have agreements with the US and have been subsidising them for a while now…but thats not much use to the EU. Are the Germas the only people in the EU capable of producing a car? For all the talk out of Angela, is she willing to break up… Read more »
It seems like we’re nearing endgame after 4+years of distress. Most of us don’t have 100+k to worry about.
Can I ask the regular contributors – what tangible preparations are you making to protect yourselves and families over the next 6 months assuming some form of financial chaos?
Die “Stunde der Abrechnung” ist gekommen.
A friend of mine who by his own admssion has even less of a clue about finance than I do said the same…the best thing we could do is tie with sterling…..theyre our biggest customer and most likely always will be..they never had any intention of abandoning the pound and it was extremely shortsighted of us in our innocence to buy into the euro knowing this. For all the free education in the country people still havent a notion how to vote about things, blindly being BS’d by politicians into the wrong move time and again..then complaining about the politicians,… Read more »
maybe we should never have left the empire and stayed part of Britain!
@John Q Public.. Well were on the way gently into the bundestag as it is…what odds does it make? At least Cromwell came over and said straight up…to hell or to Connacht..the current crowd arent even offering that much choice.
Napoleon There is a beach place near Cannes known as Mandelieu La Napoule and is the arrival place of Napoleon from nearby Corsica and where he gathered all his army of men to conquer Europe by the sword. He marched with his thousands through the deep mountain gorges / ravines to avoid other settlements from local attacks so that he would reach Paris to conquer and make it his seat of throne . What is interesting is the ancient settlements of many villages perched atop of very high rock tops almost in accessible that lie along the mountain paths and… Read more »
I don’t think David is suggesting a currency union with the UK. Just a currency that floats and would likely act in a similar way to our main trading partner. We cannot get away from the fact that Ireland is an Anglo/American economy. Dublin is as much Bristol as it is Boston. A floating exchange rate and monetary policy set by the Irish Central Bank, fiscal policy set by an Irish Govt. It is time for some soul searching in Ireland and time to ensure the mistakes of the past are not repeated. Our future in Europe looks like Tasmania… Read more »
Very interesting article David. Jim Willie has been saying the same thing for over a year. He says the Germans will leave with similar countries to form a Northern Euro and not only will we be turfed out but France will as well. I believe you may be correct in all of this as the recent “bailout” of Spanish banks was a joke. How can bankrupt countries loan money to bankrupt banks. Its all absurd as Daniel Hannon described it as extracting blood from one arm and injecting it into your other one. You are correct this is not a… Read more »
My definition of Fungibility: The punt was worth 240d – 12d was a Shilling – a Shilling was once worth a cow — five cows was a crown – in some places a sheep – five cows was a crown – but for some reason there was a bull on the Irish Shilling – then a Shilling was 5p but it still had the image of bull on it – then 240d became 100p and it had a stag on it – then they said Euro made cents – but it didn’t – it could not – it made no… Read more »
Anglophobia fear Angela or fear of England? “London calling” It is not going to be pleasant but we need to plan our own future not wait for hangouts which demoralises nations as it does a person on the dole. My Memories of 1986 and my first trip on the overcrowded boat to Holyhead; After arriving to Holyhead then trying to find a seat on what seemed to be the most dilapidated train carriage I have ever seen the train to London departed at 3.00am it had no spare seats, no food so the three of us stood for over five… Read more »
[…] […]
David,
Finally you have moved the Debate from the past, the now, or what the Germans are others are doing to WHERE DO WE WANT TO BE, planning the Teutonic way, maybe.
Lots of hardships ahead, if we plan we may do better than Greece are now, I pity them now.
Since the German people are likely to reject a change in their constitution and assuming Anglia Markel wanted to persuade the German people to change it, how would she go about it?
Fear? Morality?
What would you do?
Hi David, Just to try and add to your argument, as I have been on here lately and criticised and I do think it too easy to criticise so don’t want to get into that. So in the event of Germany pulling up this draw bridge and going hard-core Ireland will be left with a number of choices. Before it commits to one course of action the real effect of this going hard-core should be considered. 1.The Deutsche-Euro will become a strong currency making it’s goods and services very expensive for us to import and their strong currency should make… Read more »
Does this Martin McGuiness might be asked by Enda Kenny to shake the English Queens Hand when she arrives in Stormont, mending bridges?
Crime pays crime pays and your chances of committing crime and getting away with it are very high ,just as Sean fits and all the big wigs the list is long and includes the government past and present .these shower are laughing at us from the moment they wake up till the last thing at night ,he’ll for all we know they are laughing at us while they are sleeping and I bet you they sleep like a baby ,wish I could sleep like a baby.the only reason I have trouble sleeping is I live In the real world.the main… Read more »
For your enjoyment. http://globaleconomicanalysis.blogspot.ie/2012/06/spain-is-not-greece-and-other-such.html We are all German taxpayers subsidising Greeks. [ “Spain is not Greece.” Elena Salgado, Spanish Finance minister, Feb. 2010 “Portugal is not Greece.” The Economist, 22nd April 2010. “Ireland is not in ‘Greek Territory.” Irish Finance Minister Brian Lenihan. “Greece is not Ireland.” George Papaconstantinou, Greek Finance minister, 8th November, 2010. “Spain is neither Ireland nor Portugal.” Elena Salgado, Spanish Finance minister, 16 November 2010. “Neither Spain nor Portugal is Ireland.” Angel Gurria, Secretary-general OECD, 18th November, 2010 ] The bit the Irish media never told us was the bit where Spain was saying words to… Read more »
@ Josey +1
Could I advise all readers and contributors to this blog to read Joseys post above on preparation for financial chaos. If there is no chaos you will not lose out but if there is chaos then basic preps ala food water and energy will pay dividends.
€500 will buy a lot of basic foodstuffs
Oil will be a lot more expensive if we devalue/get new currency
All the talk on this blog will be worth little if you don’t make some basic preparations and the proverbial hits the fan
I raise the question, when Eire gets around to burning the bondholders, well Britain be affected? Are they afraid of another Iceland? They are sitting on Banco Dantander right now, mostly a City apparition. This makes Northern Wreck seem like a currach!
So are some trying to protect the City? At expense?
If this is the situation, well there is nothing they can do about it without bringing the City under Glass-Steagall. Imagine Britain has now to implement FDR policy to survive. Eire cannot help them!
Ask the Rothchild’s and Rockefellers what’s going to happen.. They want one world electronic currency, controlled by them and other globalists. Everyone chipped, speak ill of them, and your chip stops working, and you starve
The financial crisis has been designed by them. They want their ORDER OUT OF CHAOS. People need to educate themselves to head this off! Don’t expect a complicit, some “criminal” ruling class to do anything useful.
The horrible idea of a 2nd class Euro you floated on Sunday, is more like what the globalists would settle for now, not a link with Sterling
I wouldn’t see this as the end of the Euro as such. More the end of our current system of money creation. Banks have created the money supply for centuries and to keep the system going someone has to organise enough bank loans to dwarf the existing money supply. Businesses used to borrow, then Governments, then households but we finally appear to be at the point were all three are maxed out. National debts are unsustainable, mortgages take two incomes 30 years to repay and cannot increase further. If we went to a currency other than the euro it would… Read more »
The Euro is not going to go
Just driving drunkenly home from nightcaps at the Tiggy-Legg-Burkes chaps. The law does not apply to us haw haw
The Irish came up in conversation. Haw haw haw haw haw. Haw!
People are seriously underestimating the state of British fiance. The rate of collapse has exceeded the rate of bailout with Spain. In fact pumping more bailout will accelerate both! What a bind! Will Monday Bring One, Two, or Three Systemic Explosions of the Euro System? June 14, 2012 (LPAC)–A panicked Spanish Foreign Minister, Jose Manuel Garcia-Margallo, stated late Thursday that “the future of the European Union will be played out in the next few days, perhaps in the coming hours.” He’s right about that. Garcia-Margallo was reacting to the fact that on June 13, Moody’s downgraded Spanish sovereign debt to… Read more »
Tony Blair (who lectures on Globalization and Religion — see below) Decrees: Save the Euro, Germany Must Comply; Hyper-inflate, Kill Off Population with Social ‘Reforms’ June 14, 2012 (EIRNS)–Tony Blair, adviser to Obama, issued his decrees for what Germany and the Eurozone nations must now do amidst turmoil, in an interview with the {Financial Times} of London, done earlier this week, while he was in Jerusalem. Blair called for a deal between Germany and the others of Europe, to save the euro, and the bankrupt imperial system, by killing the people. In his terminology, a “grand bargain” between Germany and… Read more »
Perspective for self-flagelators wandering through the blog : Senate Banking Committee to JPMorgan Chase’s Dimon: You Pay Us, You Get Your Way June 14, 2012 (EIRNS)–The scandalous behavior of the U.S. Senate Banking Committee, bowing and scraping before JPMorgan Chase chief Jamie Dimon yesterday, needs no comment. But readers might find the following background informative. First, only 6 of the 22 members of the Committee have not received campaign contributions from JPMorgan Chase. Second, one of the leading staffers for Committee chair Tim Johnson (D-SD), Dwight Fettig, is a former lobbyist for JPM Chase (JPMC). The “Agenda Project” website today,… Read more »
Had a lovely supper after a pleasant day fixing things on my boat. cycled to town for groceries and came back with panniers stoked with bacon, eggs, tomatoes, and mushrooms for breakfast. Looking forward to a sunday sail in the Jack and Jill race. My daughter will come as Jill to my jack. Three squares a day, a warm place to sleep and some pleasant company is what life is about. it is what we work for. The rest is all froth and noise. The world is to hell in a handbasket and I too am sitting at the side… Read more »
A few quotes Having trouble viewing this email? Click here “Ranting Andy” Hoffman Quotes of the Day Greece has about €2 billion to pay salaries and pensions until July 20th. Therefore, it is heading into a Sunday election which could lead to it leaving the euro zone. -RTE Media After Monday’s action, I would think Bernanke would be gassing up the helicopters. Bernanke just needs a tiny excuse to give us QE3. So load ’em up, Bennie! The most bearish action would be the Fed triggering QE3 and the market failing to rally. -Richard Russell For what it’s worth, I… Read more »
David you have been sucking too many Jubilee ice lollies laced with Bushmills
Over here we look and laugh at all that
Hell will freeze over before we start taking orders from the Eton mafia
I’d rather eat seaweed
We still don’t get that humility is more useful than pride.
We still have a herd mentality in this country that loves an expensive escapade.
Mediocrity is more acceptable than performance, for some strange reason.
When the crowd loses the plot, it is the clearest signal to run for cover.
TARGET 2, ELA, LTRO…. Central Wankers at the Helm
http://neweconomicperspectives.org/2012/06/germanys-constitutional-conundrum.html#more-2489
The entire financial capitalist Industry needs to be dismantled, someone needs to shit down these markets, the system has to be flushed out, and restarted.
Every other suggestion, like the one DMcW proposes here is just a continuation of the same, keeping the failed system alive at all cost, a typical insider solution.
The Euro is Dead long live the Euro
Unless I completely misunderstand something, something very peculiar has just happened in the UK government. They’ve announced a stimulus package of £140bn, which is roughly the annual amount by which they’ve been printing/borrowing since 2008. What’s peculiar to me is the declared source of these funds: It seems that this is not QE, and it’s not on the government’s balance sheet, it’s just ‘from the Bank of England’. So this debt is not, as such, to be declared anywhere? Should we rename the Bank of England ‘Raptor’, after one of the undeclared ‘vehicles’ that Enron and several Wall Street banks… Read more »
A very nice quote from Jakob Burckhardt, paraphrase “Small countries exist only so that the largest proportion of their citizens think nationally and that freedom offsets the larger countries” – I think that explains exactly the Swiss point of view. Precisely what I experience there. Exactly Ireland’s strength!
Well worth listening to that short audio!
The Consequences of Monetary Union (1972) The financier and businessman Emmett O’Connell, formerly of Aminex and Eglinton Oil and still successfully engaged in the international mining business, has long held the view that abolishing the Irish pound and joining the eurozone was the biggest policy error ever made by the Irish State. The Greek crisis and its drastic implications for the euro-currency, interwoven as it is with the crisis of the Irish public deficit and banks, seems to be confirming this daily before our eyes. Linked here a pamphlet in pdf format which Emmett O’Connell wrote in 1972. It sets… Read more »
While moderation takes its toll, the exact translation of Burckhardt’s wonderful summary :
The size of freedom
(JAKOBBURCKHARDT1818-1897. Switzerland Weltgeschichtliche Betrachtungen)
Small States exist in order that there may be some countries in the world where the maximum number of nationals are citizens in the true sense . . . For a small State has nothing else save this real and effective freedom, which fully offsets the advantages of a large State
To Pauldiv, Religion started when people were scared so they worshiped the sun and even stones, the speculators of the day coped on to this fear and became the witchdoctor’s, shaman’s, necromancies, and so called prophets today we realise that religion was and is a farce Now we are been scared by money or inputs on a computer program, speculators and encomiasts. The new church building is a stock exchange, the shamans of today are economist stock brokers pension funds manages and others this is not reality but the witchdoctors today seem quite happy to be the masters of death… Read more »
Financial Oligarchy Panics
The Financial Times Deutschland published the following in GREEK today:
“Dear Greeks, create clear political conditions. Vote courageously for reforms instead of angrily against the necessary, painful structural changes,” read the Financial Times Deutschland’s editorial, published in Greek and German.
“Your country will only be able to keep the euro with parties that accept the conditions of the international creditors,” the daily said, adding: “Resist the demagoguery of Alexis Tsipras and his (radical-left party) Syriza.”
Court challenge to Implementation of Fiscal Treaty to be heard next week.
Tom Pringle posted the following article from the Independent on his website
By The Independent reporter Tim Healy
A CHALLENGE to the implementation of the May 31 referendum on the Fiscal Stability Treaty will be heard next week in the High Court.
As LaRouche has repeatedly warned for months, either we impliment Glass-Steagall or the bankers will go for Hyperinflationary madness. In the wake of the Spanish blowout, there has been a non-stop series of panicked crisis meetings among European heads of state, Eurocrats, and central bankers — all aimed at one objective: Getting German Chancellor Angela Merkel to cave in to a German bailout of the euro. In statements covered prominently in the Financial Times today, Merkel flatly refused to cave in to the pressures, warning that “German resources are not unlimited,” and that she rejects the kind of “big bang”… Read more »
[…] lenders first test of mortgage ‘shop’ €12,000 per acre for residential land Closer ties to Britain offers a way out Boost as Ireland records third-best trade surplus Irish use of cash highest in EU Cost of buying […]
ALL EUROS ARE CREATED BY LOANS
-> DEPOSITS CANNOT BE LENT OUT!
BANK DEPOSITS ARE PRIVATE PROPERTY
BANKS CANNOT STEAL ONE CENT!
EACH BANK HAS ACCOUNT AT CENTRAL BANK
-> DEPOSITORS CASH IS SEPERATE
DEPOSITORS DO NOT GUARANTEE BANK LIABILITIES
-> DIGITAL SAFE DEPOSIT BOX
-> DEPOSITS ARE FOR FRACTIONAL RESERVE ONLY
DEPOSIT GUARANTEE?
-> THEFT & FRAUD & BANKRUPTCY DELAYS ONLY
DAVID KNOWS THIS
Here is the Financial Times Deutschland’s panic appeal to save the banks, in GREEK.
Banksters showing their true faces directly interfering in democracy with terror tactics.
http://www.ftd.de/politik/europa/:wahlempfehlung-antistatheite-sto-dimagogo-widersteht-den-demagogen/70050480.html
I wonder will they try this in Irish, bankster Gaeilge?
Hmm…..
Don’t kill me Georg, but I am Angela Merkel’s biggest fan!
Think Depeche Mode ‘Your own personal Jesus’ re-sung by J Cash……
As for Spain….this country [working here this week] will win… despite adversity.
Ireland has crap politicians and great people. Loads of opportunities present themselves in recessions.
Going from the airport to the debate in Dalkey [book festival]….David…I promise that this time I’ll be as quiet as a mouse. :) Best Dorothy
Hugo Price and Max Keiser on silver Drachmas
http://rrbi.co/2012/06/hugo-price-and-max-keiser-can-save-greece/
Nigel Farage on Spanish Bailout- The genius of Mutual indebtedness – June 2012
http://www.youtube.com/watch?v=K4ElFN77nkg&feature=player_embedded