The other day, I watched a Few teenage kids knocking around my neck of the woods.
One lad in particular caught my attention.
He walked like a young fella with haemorrhoids, legs far apart as if in total discomfort. I watched him as he hung around with his mates, trousers sagging down so far that every time he walked, he had to spread his legs apart just to keep his jeans up.
Fashion can be a strange thing.
Have you too noticed the fashion over the past few years for young lads’ jeans to be slung lower and lower? It is called ‘‘sagging’’.
The genesis of this particular trend is quite interesting.
Sagging stems from American hip hop culture and originated in the prison system.
Belts are banned in US prisons for obvious reasons and as a result prisoners’ trousers sag. During the early 1990s,black gangster rappers, trying to ape the ‘tough guy’ prison look, first started mimicking this US prison look. It soon became de rigueur for the hip hop movement.
A decade or so later, like all fashion, it morphed out of the original ghetto and found its way into the mainstream.
Today, quite bizarrely, you have extremely white, southside Dublin schoolboys who couldn’t locate Mountjoy without Google Earth, hanging with their homies, trousers somewhere between their rear ends and their knees, a ping US penitentiary chic.
But that’s the way of fashion, how it gets there and where it comes from is sometimes lost on everyone, except for the fact that we end up with classically inappropriate behaviour for apparently no reason at all.
We’ve all seen friends wear the most unsuitable things because of fashion.
But fashion isn’t limited to clothes. Fashion is everywhere, in politics, in ideas and most definitely in economics. In the 1990s for example, it was very much the fashion to demand an independent central bank with no other mandate but to keep inflation low.
For years, economists have been divided Over whether it is better to apply clear rules or human discretion when setting economy policy.
Those in the rules camp have argued that economics is scientific and there are verifiable, immutable rules which should be applied.
Once you apply these rules, these economists contend that there is no need for discretion or judgment on the part of policymakers.
On the other hand, there are those of us who believe that a bit of judgment is necessary. Since the 1990s, the rules guys have been in the ascendency and as a consequence, political interference or judgment was not deemed necessary.
Nowhere has this particular fashion become more evident than in the approach to central banking.
The European Central Bank (ECB) and its ‘narrow-gauge’ concerns with inflation and rules, over and above the more broad concerns about how its policies affect societies is a classic example of this.
This particular fashion – for independent central banks – stems from the idea that the crisis of the 1970s was made worse by central banks printing money, which only led to stagflation, a combination of inflation and stagnation.
So in the 1990s, the central bankers of Europe bullied the politicians to make the ECB not only independent, but limited to a very narrow mandate. In contrast, the Federal Reserve in the US is a much more political institution, with a mandate that covers both inflation and growth.
The ECB rather than being more discretionary like the Federal Reserve is obsessed with rules. In a crisis this inflexibility makes it a poor institution in which to place our trust.
A crisis is by definition unexpected and therefore the rules, which were supposed to protect us from unexpected events, prove to be inadequate.
More than that, an inflexible institution in a crisis is not just inappropriate, it is dangerous.
It might seem strange to you, but the biggest threat to the EU is not the likes of Ireland and Greece, nor vocal Eurosceptics in Britain, nor hedge fund managers who are only too willing to ‘short’ the bond market of the next domino in the tottering European peripheral bond market.
The biggest threat to the European Union and to the concept of a family of Nations moving forward together is the ECB.
It has become a prisoner of the fashion of rules, and this is destroying the credibility of the EU.
Many of us ask ourselves why the ECB is determined to destroy Ireland by, for example, forcing us to pay all the €65 billion of bank bonds when we know that our banks are bust and pretty much useless in the economic sense of the word.
This is particularly unusual When we see that the ECB has injected €100 billion of capital into the Irish banking system’s funding already. The reason it is doing this becomes clear when you read the rules it has set itself.
The most credible Irish source on the ECB is the wonderful blog. Corner turned.com.
Quoting from the ECB’s 2008 annual report, we see that the bank may provide – temporarily and against adequate collateral – emergency liquidity assistance (ELA) to illiquid but solvent credit institutions.
But what happens if these institutions turn out to be insolvent like our banks?
Then, according to the narrow rules, the ECB can’t provide support.
So think about this, if our banks default on their debts they are by definition insolvent, but this means that the ECB can’t support them anymore.
So in order to stay true to its own rules, the ECB will not allow our banks to default because it would then have provided short-term assistance to insolvent banks and thereby change its own charter.
So, rather than kill off bust banks, let them go and welch on the sacred bondholders, the ECB is injecting capital into them, which is just throwing good money after bad.
Politically, Germany has just woken up to this nonsense and is now on a collision course with the ECB because Germany realises that the bondholders have to pay.
Otherwise, taxpayers in the likes of Germany and Finland will pay and they don’t want that. So due to the obsession with fashion and the resulting attachment to rules, the ECB is now both in control and out of control at the same time.
By imposing narrow rules of broad discretion, it is endangering the entire EU. It is making everyone – the debtors and the creditors – Eurosceptic. It is doing this to protect the bondholders and to adhere to its outdated rules.
The great Keynes once said: ‘‘When the facts change, I change my mind. What do you do, sir?”
The facts have changed – and more to the point – fashion is changing.
The idea of an independent central bank will disappear before the end of this crisis. What seemed logical 20 years ago, seems dangerous now.
The ECB is preventing the EU from recovering, it is preventing the EU from acting like a family of nations in the same way as ‘sagging’ is preventing thebe-gelled southside teenager from walking.
Fashions change because their time passes and they are superseded by something else.
The fashion for independent central banks will also fade as this European crisis get more intense.
David McWilliams hosts the Dalkey Book Festival next weekend; www.dalkeybookfestival.org
Die Stunde der Abrechnung ist da.
http://www.independent.ie
Shane Ross has an excellent piece re this weeks BOI AGM.
2 ex -directors David Kennedy and Ray Mc Sharry have kids seeking election to the board.
If pious Pat Cox becomes president, the people of Ireland deserve another famine.Time to quit the EU and euro.
Thanks for not including the image which was in yesterday’s SBP!!!!
David. ‘The ECB is preventing the EU from recovering, it is preventing the EU from acting like a family of nations in the same way as ‘sagging’ is preventing thebe-gelled southside teenager from walking.’ Great stuff. Spot on too. In my opinion, goes without saying. Social darwinism is having a say faster than the insider elites can keep up. So, they panic, and carry out all sorts to try and hold things together. But, this only show’s em all up for their looperness even more. The insiders just love been on the inside. They love it. It makes em feel… Read more »
Intriguing to see you weaving gangsta rappers and central bankers into a pattern of a kind!
Some time ago, Sir Mervyn – knighted recently – entertained a similar association of ‘sagging pants’ with respect to bankers. He said, from then on, bankers should keep up their own pants, and he would see to it that they wore belts as well as breeches.
Why didn’t the US Prison system insist on elasticated waists, instead of inflicting the world another fashion fcuk up? Look what happens when common sense goes out the window!
Maybe the hairshirt will catch on in Frankfurt?
Saying that the ECB is a slave to unpractical fashions is too kind – more a slave to agendas that are prominent in Brussels and the Elysee Palace if you ask me.
To really see what is controlling the agenda, we would have to peer like Jens Peter Bonde into the lobbying that goes on in Brussels.
Well, apparently the Michael Lowry plan to build a Las Vegas in Two Mile Borris has got the official go ahead.
This really stinks !!! As if Lowry has not done enough damage with the findings of the Tribunal, and the Denis O’Brien “how to become a multimillionaire” path to riches and influence.
Just when it looked like we might be getting away from superficiality, bullsh1t, speculation, and funny dealings, Michael Lowry puts Ireland back on the path to becomming a sewer intellectual society once again.
I suppose it goes without saying that all of this will be tax free….
http://www.scribd.com/doc/57746002/EMEA-Determinations-Committee-Decision-13062011
oops..an AIB default or rather a restructuring event
….looks like its official…from the ISDA determinations committee
David,
Is Germany now acting the tough guy because it’s bank capital has been topped up by the US Federal Reserve in QE2? Does this mean all PIIGS debts will be restructured with a partial bonfire of bondholders?
Yes the Eurocrats have no choice now but to throw the rule book out of the window. The ECB as it is today is defunct and their straightjacket thinking does not serve the interests of Europe. The Germans are beginning to smell the coffee and they do not have the stomach to bankroll Europe simple as that. Georg Soros nailed way back and said they would eventually come to their senses and print the money. He estimated that they need to print no less than €1.5trillion. But the one thing we should learn from all if this ‘Don’t bother listening… Read more »
The ECB has a failed structure. It needs to be changed or countries will have to leave the Euro. I have a feeling that the French and Germans wouldn’t really mind the periphery countries leaving the Euro at this stage despite all their rethoric to the contrary. In fact they might look to throw someone out in the future. I had a friend once who wanted to break up with his girlfriend. He thought it was better to treat her badly for a few weeks in the hope that she would leave him. This would save him the embarrasment and… Read more »
Geek protesters chant “we are not Ireland, we will resist” http://www.guardian.co.uk/world/2010/feb/10/athens-greece-protest-strike
Least they tell it how it is – I look at my children and I wonder what they will think of my lack of action… when they are old enough to realise what we are allowed to happen as a nation of people.
I admire the Greeks- Ordinary citizens may actually shape ECB policy. They are way ahead of us (well a year anyway :)
There is an interesting article in Wikipedia on Bankruptcy. I’ve heard that several Irish developers plan to apply for bankruptcy in London, rather than Dublin. The banks have gone to the supreme court to try to prevent this ploy. Does anyone know more about this?
Here’s a comment from Colm McCarthy on irisheconomy.ie, scroll down a little bit to June 11, 10.05pm http://www.irisheconomy.ie/index.php/2011/06/11/patrick-honohan-on-vincent-browne/ “If the ECB screwed the the Irish governtment in November, which is what I understood Patrick Honohan to be saying… If they did what the Governor says they did, they deliberately (nd I must assume consciously) subverted their own declared policy objective (return to the market) in order to avoid facing a resolution of the banking mess up front. All of this presumably at the behest of the French and German governments… This is a shambles. As far as I know, the… Read more »
!!!!!! AIB DEFAULTED !!!!!!
http://www.rte.ie/news/2011/0613/aib-business.html
We need to return to the study of Political Economy, the interaction of economic policy and political policy, instead of letting economics be taught as a “science” apart from, above, and sovereign over the needs of citizens. Economics is no science, but a form of medieval secular theology used to justify the privileges of some of the elite (not all in the elite are twisted). Economics under social democracy is supposed to preserve a “free and fair market system” while providing good social benefits and public services. Instead Europe’s social democrats have allowed a rigged financial market system o develop,… Read more »
Get ready for a new teen fashion fad: sagging simultaneous with going commando.
If you’re not familiar with the term going commando, or just want to have some laughs, visit this rapper skit by some talented US teenage satirists. Some of their skits are hilarious.
http://www.youtube.com/user/BigGuknowme
ECB policies are dictated by Timothy Geithner of the USA. Geithner Message: “Save the bankers. Throw the women and children and a lot of men overboard, but save those bankers. Only the bankers can rebuild the economy they wrecked.”
LOL, some stuff is so bloody laughable it defies any belief.
http://namawinelake.wordpress.com/2011/06/13/enda-kenny-makes-serious-claims-about-nama’s-disposal-of-assets-to-developers/#comment-6865
Playlist for today Monday 13 June 2011 in Ireland. Only one song: In the Air by Laurie Anderon; excerpt as follows: ”Good evening. This is your Captain. We are about to attempt a crash landing. Please extinuish all cigarettes. Place your tray tables in their upright, locked position. Your Captain says: Put your head on your knees. Your Captain says: Put your head on your hands. Captain says: Put your hands on your head. Put your hands on your hips. Heh heh. This is your Captain-and we are going down. We are all going down, together. And I said: Uh… Read more »
David has said what is wrong with the ECB but hasnt said what the right approach would be. What is wrong with 160 billion of liquidity and 1.25 % interest rates???? The ECB has been nothing but kind to Ireland and David snipes at them. Kenny ” We will repay all the debts” has spoken, there will be no default , austerity will be the policy for the next decade no matter what the social cost. in fact allthe parties even Sinn Fein have agreed to us getting our borrowing to 3% of GDP in the coming years. So Davids… Read more »
Gilmore was in Tanzania fresh from Wikileaks and had meeting with Hilary Clinton, interviewed, he was asked re Geithner, “Well, did you discuss Timothy Geithner…”?
Quick as a bell, he replied, “No, the matter was not discussed”
Do you recall Enda’s similar stock answer when asked if he had raised the matter with Obama.
Noonan is on a 4 day visit to USA http://www.rte.ie/news/2011/0612/noonanm.html
I believe they’ve looked at Geithner’s diary, but Noonan is not on it.
Some things you just don’t want to know about:)
David, (Apologies to all for this but I wish to go back two articles it has taken a while to get a thorough response together) On the subject of your final post about Argentina – after a long chat with some young Argentines here (in Dublin) on Tuesday evening last I didn’t get a picture that things were that good there now, and most certainly for them, some 10 years( and a lot of 30% inflation according to them ) since the last big default there. I was there myself in 2007 – I speak some Spanish – and with… Read more »
Slightly off topic, but topical also
http://articles.mercola.com/sites/articles/archive/2011/06/11/burzynski-the-movie.aspx
Burzynski, amazing story!
There is controversial article in the FT today by Nouriel Roubini about the breakup of the Eurozone. http://blogs.ft.com/the-a-list/2011/06/13/the-eurozone-heads-for-break-up/ This is followed by a rejoinder by Sony Kapoor and dozens of well-informed speculation pieces about what happens next. Notable amongst these is one by john.turner: “The big flaw in Mr Roubini’s argument is that the Euro was designed like a Pharaoh’s tomb – there is no exit. Under the terms of the Accession Treaty if a country were to leave, the debts of its citizens i.e. mortgages, loans etc would stay denominated in Euro, as would of course the debt of… Read more »
This a really important article from the Sunday New York Times (June 12) on the head of Deutsche Bank and his control of EU policy and Madame Merkel. After reading this you will discover another reason that Ireland will never be allowed to defy the ECB (although it could, without permission).
http://www.nytimes.com/2011/06/12/business/12bank.html
This article, plus others and comments here, give us good reason to rename the EU Bankistan.
Malcolm, Good to see support growing for the option of a link to Sterling, see earlier posts. This would help our relationship with NI also. I believe John Turner’s critique of Roubini is incorrect. Debts would not increase by amount of devaluation. On devaluation one Irish Punt would be equal to One Euro and debt would be converted at this value into debt denominated in Irish Punt. As I understand this, this concept would be similar to money being exchanged into a different currency and redenominated at that new value in the new currency at one point in time. What… Read more »
I am all for an Irish link to Sterling. And both my parents were deeply involved in the Irish War of Independence (but no relatives ever supported FF, voting FG or Labour or getting out of Ireland). The future is more important than the past.
ECB-a-slave:prison bitch hey,David. ‘yo!’ etc ‘sagging pants is WAAAAY more complicated than you think! Jean Genet/Qeurelle: those pseudo-gurriers are signifying something that would both repel and entrance them, true rebel chic: http://www.snopes.com/risque/homosex/sagging.asp of course, when the bloated corpse of boutique fashion lays its’ fangs on the ultimate fashion ‘punk’ rock rebellion of the last 35 years: expect confusion and mixed signifiers. LOL! It’s a bit like the ‘hanky-code’ that was so popular back in the day before the great clueless copped on……(giggles) Obama utterly ‘dorked out’ on this sartorial middle-finger from the racial incarceration gulag to middle-America, what with him… Read more »
Roubini is making a public pronouncement concerning China’s real estate construction build out.
http://www.reuters.com/article/2011/06/13/us-roubini-idUSTRE75C1OF20110613
A giant stimulus plan that stimulated Australia, more than anywhere else on the planet – and now Australia is about to get caught out rightly.
News again this morning of increasing fears more NAMA developers, after offloading to NAMA, are running either themselves, spouses or other close relatives to other banks and being given the funding to repurchase their properties from NAMA at NAMA discount prices.
Unfortunately due to lack of transparency and cover-up in the NAMA legislation, we can’t follow an audit trail in NAMA to see where NAMA is scamming taxpayers in this way.
For those not familiar with the ECB’s thinking on monetary and fiscal policy, here is a link to what David calls their “fads”…..P.S. you will note that they also refer to their “two -pillar” approach…..I have to say that FG/ FF or DOF have’nt come uop with an original idea ever ever ever….Two-pillar me bloody arse……
http://www.ecb.int/mopo/strategy/html/index.en.html
DWM’s article is pure nonsense. Of course the ECB follows rules, that is what Europe’s politicians set it up to do. All you have to do is to read the relevant provisions of the Treaties and the Statute of the ECB to see that the ECB was given a very restricted mandate by the politicians (and indeed by the people of Ireland, who voted to ratify the Treaty of Maastricht). The ECB had no power to regulate financial institutions and its mandate was to act as a lender of last resort to the financial system within the bounds of its… Read more »
6-minute INTERVIEW with Michael NOONAN, today on CNBC
http://video.cnbc.com/gallery/?video=3000027427
Quote from NOONAN: “in general terms, we believe that the burden should be shared by the irish taxpayer, european taxpayers and private sector creditors. only with the consent of the european central bank.”
European taxpayers?
Commodities: Update
If you wonder what these ministers are reading before they come together for their FIRST EVER meeting in Paris next week:
http://www.g20-g8.com/g8-g20/g20/english/news/news/ministerial-meeting-agriculture.1344.html
wonder no longer:
http://www.unctad.org/en/docs/2011_G20_FoodPriceVolatility_en.pdf
Economic Hitmen http://www.youtube.com/watch?v=n7Fzm1hEiDQ
I agree boys
http://finance.yahoo.com/blogs/daily-ticker/roubini-says-perfect-storm-may-clobber-global-economy-143152963.html
Is the ECB Solvent?
http://www.fgmr.com/is-the-ecb-solvent.html
@ Manofiona:) I’ve heard this argument put over and over. Its part of the cretinous mentality put out by Honan and the DOF larkers. It requires a new word: GLOTCH GLOTCH refers to the ECB vassal mindset that is populated and self replicated by eg phrases ” a very restricted mandate by the politicians ” or “The ECB had no power to regulate financial institutions” or “provided the necessary liquidity to the Irish banks” and the particularly craven “It is no use asking the ECB to stray from its mandate” re “The ECB had no power to regulate financial institutions”… Read more »
If you have a rule book that leads to disaster, you tear up the rule book and write a new one.
It might also be helpful if you fired those who made up and carried out ‘their’ mandate in that first rule book:)
E
M
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Calling John Allen, Calling John Allen.
All flights out of Perth have been cancelled due to Chilean Volcanic eruption.
Ireland to experience blood red moon tonight…….
No mention of these events from your “dispatches” from Limerick.
I detect a level of complacency has set in Mr.Allen,you dont want us to bring back Willie O Dea do you ???? LOL
Link to Lunar event!!!!
http://www.breakingnews.ie/ireland/ireland-to-see-blood-red-moon-tonight-509028.html
Live streams from Greece
http://www.zerohedge.com/article/livestreaming-greek-general-strike-and-parliament-blockade
Financial ‘melt through’ – Blankfein as the ET in Alien spewing toxic derivatives – ‘the elite contract’ as opposed to ‘the social contract’ – Geithner head of the global economy funding Greek bailout?
http://rt.com/programs/keiser-report/episode-155-report-max/
[…] Foreign banks soaking up deposits 80 credit unions face collapse Emigration to Britain up 25% to almost 14,000, Allied Irish Banks Has Officially Defaulted Lenders warned to have new arrears code Rise in residential mortgage arrears Homeowners? debts still growing Builders trying to buy their NAMA properties EU split over plan for second bailout of Greece Greece is now lowest rated state Iceland makes successful return to bond markets Greek debt costs spike as strikers encircle parliament Demand slowing in China, says Glencore ECB a slave to passing fads […]
Has Noonan finally begun to waken up:
News just in, Noonan’s meeting with Geithner, because Noonan regards Anglo now as a warehouse of debt, he’s targeting ‘senior bondholder’ debt of €3.5 bn that shouldn’t be repaid.
Geithner’s reply was that they will work through a resolution of this….
Has the penny dropped finally for Noonan. Has he seen the iceberg?
Rodent Economics
Today hundreds of rats have been discovered in an area of the inner central city of Limerick where building developments have stopped and their breeding has led to the closure of nearby businesses due to these rats walking around with .
impunity.http://www.youtube.com/watch?v=PeqmAo8fgdE
Rodent Economics
Today hundreds of rats have been discovered in an area of the inner central city of Limerick where building developments have stopped and their breeding has led to the closure of nearby businesses due to these rats walking around with impunity.
http://www.youtube.com/watch?v=PeqmAo8fgdE
Michael Noonan constituency :
http://www.limerickleader.ie/news/local/limerick_nightclub_forced_to_close_due_to_rat_infestation_at_derelict_site_1_2772371