Thirty-one years ago this week the great Bob Marley passed away and ascended to the great Rasta heaven in the sky. For most of us, Marley was reggae and reggae was Marley. I remember the day he played in Dalymount in the summer of 1980. What I actually remember most (I was too young to go to the gig) was the lingering smell of ganga on the 7A bus that afternoon, as half of the ‘Noggin obviously skinned up on their way into town to pay homage the great man.
And paying homage is the right word, because it was the last outdoor concert Marley ever played. He died less than a year later. The cancer which had started in his toe, spread rapidly. Urban legend has it that Marley contracted an infection after injuring his toe playing soccer (by the way if you ever want to see an natural player with the ball at his feet, google “Bob Marley playing football”). The soccer story isn’t true.
Marley, who’s Dad was a white Englishman, suffered from a malignant melanoma found under the nail of his toe. It is speculated that because he was half-white living in the Caribbean, he was more susceptible to this type of skin cancer.
What is true was that his doctors suggested that he get his toe amputated. Marley refused on the grounds at Jah Rastafari stipulated that humans shouldn’t permit their own flesh to be cut. Marley’s life would have been saved had he had the amputation. Tragically the cancer spread and his health deteriorated rapidly leading to his tragic demise.
Watching the latest twists and turns on Europe’s road to financial calamity as each financial crisis mutates into a banking crisis and then into a bond market crisis and then into yet another capital flight crisis and ultimately, now to a political crisis, I am reminded of Bob Marley.
Financial market contagion, like contagious diseases, spread and mutate if you don’t deal with them early and decisively. They get worse, not better. This is the lesson of Europe in the past four years, and of the Asian crisis in 1997 and the Latin American debt crises in previous decades. In the case of Europe, a financial crisis first became economic and then jumped over to become a full-blown political crisis. The political scalp of Sarkozy is only the latest victim.
The European elite’s response has been to kick the can down the road as they say, in order to buy time and hopefully time will heal all. But time doesn’t heal at all. In fact it gives the contagion the time to mutate and become more virulent.
The more the EU pretends that peripheral countries are solvent the less people believe it. The infection rather than getting better gets more aggressive and it changes its nature, like mutating cells. It affects banks and companies, it then affects house prices and then it mutates back again to hamper economic growth. The faltering growth rates, drive up unemployment. Once unemployment starts to rise, politics falters and incumbents get kicked out.
Not only that, but big dreams of political integration and the like, seem really unnecessary and indicative of a deep disconnect between politics and the people. In these instances, the people just get fed up and tell their politicians to snap out of it via the ballot box.
Ultimately, Europe has four problems. The first is not enough growth; the second is too much debt; the third is no political leadership and the fourth is the political illegitimacy of the technocrats that have been installed to run the economies on the periphery.
Growth won’t return until the debt overhang is eliminated but the debt overhang will not be eliminated without growth. Unless of course, there is a managed default. The only way out of this growth and debt dilemma is some sort of default, somewhere fast.
In order to facilitate this the ECB will have to be involved and this means persuading Germans that the Euro will only be fixed and the continental economy put back together if the core issues of over-borrowing in the periphery and its handmaiden over-lending by the core is fixed. This must come through a mutual deal between the debtor and creditor countries. This is called co-responsibility.
The “fiscal compact” will not sort this. In fact, it will make the situation worse in the short-term because it will reduce growth rates in those very countries, which have too much debt. Eventually these populations, which are already showing their dissatisfaction at the polls, get fed up.
There’s a common misperception that countries default on their debt because they can’t pay back the money they’ve borrowed. This is rarely the case. For the most part, countries default because their citizens get sick of the hardships they have to endure because of onerous debt repayments. And it becomes politically impossible for governments to continue honoring their commitments to creditors. Default is a strategic decision.
One of the best books published in recent years of these financial episodes was a study of debts and defaults by Ken Rogoff and Carmen Reinhart called This Time It’s Different. These scholars point out that more than half the defaults by middle-income countries occur at levels of external debt relative to GDP below 60% Europe’s debt levels in the periphery are close to twice this.
History shows that “willingness to pay, rather than ability to pay,” as the authors put it, “is typically the main determinant of country default.”
As the crisis mutates and mutates all around Europe, the point at which the people will get fed up will come sooner rather than later. Contagion can only be stopped by decisive action. Buying time just makes the ultimate crisis much more disruptive.
When I hear politicians contenting the opposite, whether its about the fiscal compact or the growth by austerity argument, it strikes that they are smoking something stronger that the heads on the 7A in the summer of 1980.
Hi David,
Bankers are even worse than drug dealers because at the same time they are getting you hooked on their wares they take a lien on your assets.
Jonathan Sperber
Curator’s Professor
Ph.D., University of Chicago
area: modern European history
http://books.google.ie/books?id=BhfAxkW6dfsC&pg=PA109&source=gbs_toc_r&cad=4
Only Rasta can liberate the people
Over hills and valleys too
Don’t let them fool you
Don’t believe for a minute that they are with you
Jah free the people
Over hills and valleys too
Don’t let them fool you
Don’t believe for a minute, they don’t like you
; the third is no political leadership What political leadership,the only political leadership we have is bury your government heads in the sand. The government go off on a tangent over smoking ,social welfare fraud , and covering up there own past fraud . David you are right how can we provide growth /jobs when all we do is cut cut cut,if you starve a Plant of water it dies the same as starve a country of money it dies to. Remember how FF lost contact with its voting public and so payed the price ,well has the current government… Read more »
Good Article
Get up, stand up, Stand up for your rights. Get up, stand up, Don’t give up the fight.
Bob Marley.
Herb is the healing of a nation, alcohol is the destruction.
Bob Marley
Poor man wanna be rich, rich man wanna be king, and a king ain’t satisfied ’til he rules everything…..
from the prophet Bruce 1973!!
The king is closing in on ruling everything….. for nothing….. yet we wring our hands and change one useless puppet government for another.
Will you vote as you are told?
Someone in our leadership needs to stand up and say…lads the game is up. Time to tell our friends in Brussels and Frankfurt or the voters will hang us at the polls.
You see, this is why I do not believe in the “power” of elites. The lot here still do not “get it”. If I did not know any better, I’d swear FF’s apparent alignment with FG/LP is a case of rushing the incumbents down a slippery slope of a backlash. Something is up and Kenny and the lads are too tick to see it.
FG and Lab said we have to do this and we have to do that because FF policy’s signed us up to it .
What will FG/LAB say when they make there very own balls up they can’t do the blame game anymore,but if they get this wrong the steaks are to high,I call on this government to call of this vote till a later date because events all over Europe are moving at such an uncertain pase and we could be making a terrible decision .
David, Entertaining article. Of the four problems you cite I agree on numbers 1 and 2. Problems 3 and 4 are surrogates of the first two and reflect potential civil strife within each affected country. I disagree however that a default is the solution for the no-growth and high debt problems. Default is messy and the breaking of one’s word (remember Olie’s schoolboy latin phrase “pacta sunt servanda”). Devaluation through an exit of the Euro is the more honourable and feasible solution. Devaluation would prove to be quicker and more equitable as the consequent drop in asset prices and disposable… Read more »
Other Peoples Money And How The Bankers Use It
Louis D. Brandeis, 1914
http://ia700309.us.archive.org/32/items/otherpeoplesmone00bran/otherpeoplesmone00bran.pdf
The image of the “Circle” skinning up a spliff before the launch of their latest heist is hilarious.
“Throw us over the Rizlas there Seanie!”
Priceless.
I think one of the Euro Crew will break ranks soon to save their asses. Whether that be a nation, bank or bureaucrat, who knows. But break ranks they will.
Historic times.
The recent French and Greek elections display the emerging general character of European politics in the years immediately ahead. The population of Europe is saying: NO to austerity; NO to the ECB; NO to the IMF; NO to paying the debts of the private banks. However this NO is being expressed as a polarity of left and right. The move to the left is to be welcomed; but there is also an ominous move to the right. In the years immediately ahead this polarity will likely increase and will define the debate. Our fate as Europeans, and the fate of… Read more »
I was watching a programme on BBC last night about the Euro. Nations are starting to hate each other. Some basis for economic and political union.
‘The beatings will stop when morale improves’ seems to be the only approach being adopted.
How do we achieve better understanding an co-operation amongst the people of Europe ? If an end us put to the various attempts to corral them into imperial constructs, on the premise (as usual) that they need to be corralled into an empire, for their own moral wellbeing. And this is exactly what the EU is providing as the sell campaign for what has happened in the past two decades of “integration”. The British also had a vote over the weekend, and the UK had a debt to GDP ratio as bad as that of Greece in 2008. The British… Read more »
Look, folks,in an earlier blog David firmly ‘nailed his colours to the mast’ so to speak, by stating that he was going to be voting NO to the Fiscal Stability Treaty. I am going to be doing the same and so should everybody else who contributes to this blog in one form or another. Ireland is not Germany and it never will be!! Germany is Germany and if Germany wants to do what it thinks it wants to do then let Germany do exactly that!! Why should we be like Germany?? Germany is Germany and no amount of huffing and… Read more »
Awful lot of typos in there David. I wonder could I get a job with the Indo as a proof reader?
Leave the euro question would we starve I say no. With this government only interested in there own skins and see our saving grace in the export led growth . You see it’s not that we need to grow ourselves out of recession ,we need to grow ourselves out of Europe . Stay in the euro stay in Europe at what cost because we have so many billions that Iwe owe i believe Europe will use our country like what a pirhana stripping the meat of the bones. What can be sold will be sold for a song remember eircom… Read more »
I like the concluding remark, what is indeed stronger than mere pot? We all know the “traders” are cocaine junkies, but what about the suits running the economy into the ground? Something has indeed gripped their entire mental bandwidth (evidence being their machinations are programmed). It is hard to dismiss the “godlike” attitude of Rompuy etc as mere fantasy. All signs of human creative thought have vanished. It is amazing that this still holds citizens in thrall. It is the Roman method. Imagine arguing physical economic agro/industrial growth with Caesar, or even worse Nero? But this is exactly what is… Read more »
Most of the Ganga smoking in Dublin in 1980 was not going on in the Noggin!!
Sorry South County Dublin, in fact Bob Marley and Ganga were both very un-noggin in 1980
Doubt contagion!!
Here you will find a link and context :
http://laroucheirishbrigade.wordpress.com/2012/05/10/germans-put-off-ratifying-eu-fiscal-treaty/
Will Enda blink?
http://www.irishexaminer.com/ireland/germans-put-off-ratifying-eu-fiscal-treaty-193380.html#ixzz1uUaC4DEF
Hi David, The link below is to our graph of total deposits with, and total debts to, the Irish banking sector over time. http://www.sensiblemoney.ie/how-modern-economies-operate/#whats-different-about-this-recession It highlights a number of important points which we’ve tried to get across before. Firstly, The total money supply, and total debt to, the Irish banking sector are linked. This is because digital money, which forms 97% of the money supply, comes from bank loans. This is the root cause of the debt crisis since the commercial banks create money, and debt, whenever they process a loan. Secondly, it shows that as we settle our debts… Read more »
@ Josey What I wrote was that the debate and struggle in the years ahead will play itself out as a polarity. The centrism of the past decades is over…just as the unipolar world following the collapse of the USSR is over too, with the re-emergence of Russia onto the world stage; and the BRICs and the Shanghai Cooperation Organisation etc. For me the authentic left represents the rights of ordinary citizens, workers etc; and endeavours to moderate the exploitation of the population by the capitalist elites; which we see in full rampage in recent years. In my view this… Read more »
China has implied that getting involved in the EuroZone bailout is a waste of resources.
http://www.telegraph.co.uk/finance/financialcrisis/9258317/Chinese-sovereign-wealth-fund-stops-buying-European-government-debt.html
This may possibly be an attempt to negotiate something that is more favourable to China, from the EU, like better trade terms – which in the long run will make matters worse for economies with productivity problems like Portugal, Greece, etc..
FORCE INTEREST RATES LOWER -> CREATE HUGE PROPERTY BUBBLE
-> WHY?
DEREGULATE DERIVATIVES -> CREATE DERIVATIVE BUBBLE
-> WHY?
FORCE TAXPAYER BAILOUT -> TOO BIG TO FAIL -> AGAINST RULES OF CAPITALISM
-> WHY?
NO DEBT WRITEOFF -> UNSUSTAINABLE PONZI SCHEME
-> WHY NOW?
TO CHANGE AUTHORITY -> OLD MUST BE DISCREDITED
Hello Readers and David Some time past I told you we would canvass our town in support of a NO vote. Since then we worked very hard to get just 6 points in support a NO vote. I have included these 6 points below, I would like to see any comments on these. We intend to start our canvass next Monday evening 19:30 to 20:30 14th May. —————————————————– 1. Ireland has little sovereignty left. Don’t be the shamed generation that voted away the last of Ireland’s independence. For the sake of you children vote No. 2. The International Labour Organisation… Read more »
Definition – Contagion. A corrupting or harmful influence that tends to spread; pollutant. The Pollutant is Debt and the system is already infected, polluted and compromised. Take a look a world debt figure in the link below, it’s not just Govt/Sovereign Debt but household, financial and non financial debt. http://www.economist.com/blogs/graphicdetail/2012/01/daily-chart-8 Then consider the refinancing concerns for the next five years http://www.zerohedge.com/news/sp-opens-pandoras-box-wall-refi-worry-46000000000000-tall The glue holding the system together is Money Printing, Monetization the hope of future unlimited growth from a finite and limited world. The answer must be a debt jubilee and the re benchmarking of money to a quantifiable resource… Read more »
http://www.european-council.europa.eu/media/582311/05-tesm2.en12.pdf I’ve concentrated on just one article, 32. ARTICLE 32 Legal status, privileges and immunities … 1. To enable the ESM to fulfil its purpose, the legal status and the privileges and immunities set out in this Article shall be accorded to the ESM in the territory of each ESM Member. The ESM shall endeavour to obtain recognition of its legal status and of its privileges and immunities in other territories in which it performs functions or holds assets. 2. The ESM shall have full legal personality; it shall have full legal capacity to: (a) acquire and dispose of movable… Read more »
Some very interesting quotations on this page, from such diverse sources as Jefferson and Napoleon. When such men as these fear the power of the money changers, I say we should listen and learn “I wish it were possible to obtain a single amendment to our Constitution – taking from the federal government their power of borrowing.” Thomas Jefferson, 1798 I haven’t had time to check them all, but some I know to be true from my reading to date. http://www.xat.org/xat/moneyhistory.html “When a government is dependent upon bankers for money, they and not the leaders of the government control the… Read more »
One way that bankers make money from war. ++++++++++++++++++++++++++++++++++++++++++ Wellington’s attack from the south and other defeats eventually forced Napoleon into exile. However in 1815 he escaped from his banishment in Elba, an Island off the coast of Italy, and returned to Paris. By March of that year Napoleon had equipped an army with the help of borrowed money from the Eubard Banking House of Paris. With 74,000 French troops led by Napoleon, sizing up to meet 67,000 British and other European Troops 200 miles NE of Paris on June 18th 1815, it was a difficult one to call. Back… Read more »
I looked at Vincent Brownes program last night and the professor of business at DCU ( correct me if I am wrong) said that the real problem in Europe is that none of the people in Govt have a clue what exactly to do with all our economic woes. I thought to myself do any of these people have any qualifications or experience in economics.Probably not. So now I am thinking Well no wonder we have one crisis after another. Peter Browne was also on the program and said that the real problem was the fiscal debt year on year.… Read more »
Banking, War and Business – its all a racket. Anyone who thinks that America operates a Free Market, as opposed to a carefully rigged market has only got to read up on the recent fluctuations in the price of oil. This is another kind of war, because putting up the price of oil screws us all, adding cost to every good and service dependent on transport or goods made from oil. But this didn’t start in 2008 or 1998. This goes way back. Here is a page dealing with a military man’s appreciation of his life in the USMC, after… Read more »
“Ultimately, Europe has four problems. The first is not enough growth; the second is too much debt; the third is no political leadership and the fourth is the political illegitimacy of the technocrats that have been installed to run the economies on the periphery.”
Solution: Managed default. Co-responsibility. … That says it all. Could be a political slogan. Anyone out there want to run on that slogan?
Pass me them skins David. Good lad
Here are 2 very good articles from Yanis Varoufakis about the European financial crisis and the relationship between France and Greece:
http://yanisvaroufakis.eu/2012/05/10/a-one-word-explanation-on-why-the-eurozone-cannot-inflate-its-way-out-of-trouble-spain/
http://yanisvaroufakis.eu/2012/05/09/europes-potential-gains-from-a-silent-alliance-between-paris-and-athens/
Interesting that the yes side is promoting the pact as a stability pact when things have not being as unstable in Europe since probably the second world war. they are debating as if current policies are a succcess and need to be endorsed.
It is also clear even reading this blog how irrelevant our own politician shave become. They hardly merit a mention.
Mr_Hollande wants changes to the treaty why because this is where the unfairness comes into play,he may very well get changes but only because he is a big boy like Germany but the fools we have running Ireland are nothing more than a door mats
Was listening on the radio about some report from some swiss bank or other saying that no country ever dumped a major currency or walked away from a major industrial/ commmerical zone without heading down the route of extremism or civil war or both. That on default, we would be subject to 10K being worse off per citizen and then 3K worse per year thereafter. I may have misquoted terribly. Must say I am getting more than a little irritated when Kenny grins like idiot saying he’ll never be on TV3 with #VINB. What is up with that nonsense? It… Read more »
http://www.austeritytreaty.ie/
In a series of short videos, the key features of the Treaty such as the austerity required and the bondholder pay outs it demands are explained
Myself and a couple of lads were talking about this article in a bar last night and they all liked it. We are all in our 40s and like talking politics and music. Sometimes politics and music is the same thing
This is why I liked the article so much. Maybe one day John Lennon will inspire you to create such a fine opening mood.
There’s room at the top they’re telling you still
But first you must learn how to smile as you kill
If you want to be like the folks on the hill
http://www.lyrics007.com/John%20Lennon%20Lyrics/Working%20Class%20Hero%20Lyrics.html
Austeritytreaty.ie Website please check this out.
[…] full article at source: http://www.davidmcwilliams.ie/2012/05/10/financial-contagion […]
@ onq
Free market neo-liberal economics IS Darwinian in its inspiration; the survival of the fittest etc. Civilisation as a modern jungle (a resource to be exploited) in which individuals compete for wealth and prestige.
Perhaps you hadnt though of it in those terms; but it seems obvious to me.
Government TD to Dr. Constantin Gurdgiev: The best thing he can do for Ireland is get on a plane back to Moscow!!
http://thechatteringmagpie14.blogspot.com/2012/05/meeting-with-local-td.html
@ Josey Thanks, I didn’t know that comment by Darwin. In my view the Darwinian model does not apply to properly human development and civilisation. In fact the opposite is the case. The human world is a noöspheric or mind-made world; and mind and ideas expand by sharing and cooperation. Civilisation and human society is a cooperative venture; (not a business venture as some seem to believe). The human world is not merely an extension of the primeval forest. Humanity and the human world represents a new level of natural order emerging on the Earth. We could call it ‘human… Read more »
Mothers forced to sell their children: Mail reveals the distressing human toll of Greece’s Euro meltdown
UK Daily Mail
http://tinyurl.com/btsqze8
About time Greeks face the eject button from euro.
The Greek authorities cooked their books and spoofed their way past the gatekeeper.
Boot them out and arrest Goldman Sachs for fraud,
This is an interesting read
Iceland’s Example to the World
http://www.hermes-press.com/iceland_index.htm
@ bonbon
re Vernadsky
Vernadsky was a remarkable genius and visionary in my view. I have some material from him; but not much. If you can give links or such I would be obliged.
ps; as far as I know it was Eduard Suess who coined ‘biosphere’ in the 19th Ct. Vernadsky later used the term and did much to give the concept a scientific basis.
So the Greeks will vote again; I predict this time there will be a decisive victory for the left under the Syriza group. For those who chide me for using the term ‘left’, let me clarify: I mean it in the sense of those who place human beings and human society and civilisation before financiers and debt. Those who will oppose austerity and the destruction of the Greek state and nation. Also I predict the next Greek government will not take Greece out of the Euro or out of Europe; but will represent the beginning of the European popular revolt… Read more »