When the family starts talking more about the doctors than the patient, then you know you have a serious problem. Have you noticed that, when a patient is really sick and the prognosis is truly dire, the relations try to console themselves by discussing the quality of the medical staff? This is because, as the risk to the patient increases because the virulent nature of the disease or ailment becomes apparent, the chances of buying time have more to do with the dexterity of the doctors than the health of the patient.
Equally, when the patient is very ill, the family will latch onto the smallest bit of good news, a recovery here, a sign of vibrancy there, and try to convince themselves that this is the beginning of a change in fortune. This is natural human behaviour and anyone who has been through such an experience will recognise the pattern.
Last Friday, the patient — the Irish economy — revealed its current state, with the exchequer returns showing that tax revenues were running €500 million below target. Our economy is weakening again — and quickly. Yet all the attention was on the doctors.
Let’s think about the euro in its present form through the prism of a patient and doctor. At the moment, everyone is talking about the team of doctors led by Sarkozy and Merkel, the European Commission or the European Central Bank. It is very clear that the solution the doctors have proposed is insufficient and is more about enhancing the reputations and careers of the doctors than helping the patient.
However, the media is so full of people who are enamoured by the “doctor knows best” line that it will spin anything to point out that the “men in the white coats” are right. Therefore, we see in the last few days the media clutching at emergency procedures — such as the massive central bank injection of dollars last Wednesday — and seeing them as a cause for hope. We forget, at our peril, that emergency procedures are performed only when the patient is at a critical stage.
My own guess is that the central banks intervened last week after hitting the panic button. They did so because it was highly likely that last Thursday a major European bank was about to go under, causing a massive domino effect across the ruined European banking system. A European Lehman was on the cards. The doctors have bought themselves time, rather than delivered a solution.
Everyone knows that lending cheap dollars to the banking system, allowing that banking system to borrow money to pay off old debts, doesn’t make things better; it actually makes things worse. All you are doing is adding more debt to a balance sheet that has been destroyed by too much debt in the first place.
The mainstream media reported the extraordinarily bullish reaction of the financial markets to the emergency procedure as being indicative of success or a “corner being turned” — again.
But this is not accurate. The wild volatility of the markets is not a sign of confidence in the future but nervousness about what happens next.
So a panicked market focuses on the doctors and what they are saying — a speech by Sarkozy or an utterance by Merkel. However, we must remember that the patient is the economy, whose health is ailing because there is no growth. Without growth in Europe, the risk of default rises because the tax revenue necessary to pay off the debt is falling and therefore there isn’t enough money around. The remedy proposed is to raise taxes and cut expenditure, so this will cause the economy to falter. Thus, even less revenue flows into the coffers and therefore the debt spiral takes hold again.
Obviously in such a scenario, those institutions that hold the debt — mainly European banks — see their portfolio falling in value. As this happens, the mismatch that underpins all banks’ financing position becomes acutely problematic. The nub of the banking mismatch is that banks borrow short and lend long. This means they lend to you for 20 years in the guise of a mortgage, yet they borrow from your neighbour in the form of deposits that can vanish any day.
At best, the banks can try to “lock in” deposits by offering your neighbour a savings product for a year which means that your neighbour can’t take his money out.
But the truth is that most deposits can come and go as they please. If the banks have fewer deposits than they have lent out in loans, they have to borrow from other banks. So they depend on each other to keep liquidity flowing.
But if the banks lose faith in each other and stop trusting each other, because they feel that a bank may have too much worthless government stock on its balance sheet, they stop lending to each other. Rather than lend to other banks, they put their money on deposit with the central bank.
Last Friday, the use of the ECB’s deposit facility, which pays only 0.5 per cent interest rate, was reflected in an all-time high of over €313.763 billion, even higher than the €304.42 billion recorded the previous day.
This means that banks are depositing money at the ECB rather than with other banks, and therefore the other banks that need money are facing bankruptcy.
This is what has been happening in Europe all week and this is why it is likely a major bank was about to go bust last week.
Now we face into another week of turmoil. The doctors — Merkel and Sarkozy — have come up with the latest remedy, which is fiscal union.
But what they have come up with is not a fiscal union but simply an aggravated version of what we have now, which is all countries issuing their own bonds but with penalties from Brussels if we issue too much. For this they want us to vote on a new treaty.
Snap out of it, Angela. If you want our support, come up with something that helps the patient. The banks are bust, the economy is in a tailspin and you want more rules and regulations when what we need is growth.
Give us a break.
We are moving into phase three of this crisis, and it is time that we in Ireland realised what is proposed in Europe now will do nothing to arrest the collapse in our economy.
It is time to think of the patient and not the doctor.
[This might be posted twice? Moderator you,ve moved the article and deleted posts, so if it is I’m sorry] From Above: ‘Snap out of it, Angela. If you want our support, come up with something that helps the patient. The banks are bust, the economy is in a tailspin and you want more rules and regulations when what we need is growth. Give us a break.’ German handling of the crisis is like watching an attempt to take a wide angle-shot using a zoom lens; the resultant antics of European politicians resemble a 17th Century French farce. It would be… Read more »
.
Welcome to the United States of Germany The Insanity goes deep, they keep raising taxes and cut spending, and this is exactly the prussian policy dictate that causes deficits to grow! Funding is conditional on prussian austerity demands that is intensifying, despite recession to hit again all countries. The suggestion to boost and strengthen the IMF can be understood from the perspective of the ‘Golden-Rule’ that Merkel speaks of, only, it is a very different rule in deed as those who hold the Gold will rule. Technically, the ECB would find it very difficult to impose collateral demands against lending… Read more »
~~~~~~~~~snooze..~~~~~~~ ( where is germany on the map)…~~~~~~~snooze
The banking / financial system is smashed. In more normal times, you’d balance the books, do a cut here, a tax grab there and move on. In Ireland we have have insolvency due to broken banks. Not due to a broken economy – 70% of that was working well. Now that the 30% due to construction is wiped out, the rest is now being crushed by an international downturn. We cannot operate using classic book balancing methods aka austerity/ diet plans which usually kills off the excess to allow the rest to renew. The trouble is we do not know… Read more »
DMcW,
Exactly. But how to make up for 35+ years of no physical economic growth, in Europe and the USA, when most do not even know how to measure the physical economy? They always measure in monetary terms where chaos has everyone fascinated, mesmerized.
Its more a kind of post-traumatic-shock, rather than denial. As Tavistock “research” shows, susceptibility to any belief no matter how crazy increases with the trauma level. Example “austerity creates growth”.
Some here are snapping out of shock I notice. A healthy sign.
This is weeks late. Credit crunch no.2 has been underway since-mid November the libor and repo markets have been frozen or in disarray since then.MF Global – using the famed and proven Lehmans model – collapsed a while back. Unicredits been at the edge for a while – it posted a ‘surprise ‘ 10.5 billion loss recently that the media didn’t pick up on particularly since the Hungarian default. And Italy = unicredit. The markets did though, hence the bond yields. I only wonder how long the euro charade will go on? Like critically ill patient of the article above… Read more »
The ‘latest wheeze to save the Euro’ says Jeremy Paxman, hahaha.
Solidarity Why should I – You – need to worry about markets, rating agencies, investment bankers, Comex – btw. they are extremely short at the moment! – Forex, ECB, FED, SDR’s etc.? In Germany for example, the amount of people who have a vested interest in stock markets is in the low single digits, but the mainstream media exclusively serves them their daily fix of DAX news. At the same time, as per latest OECD report, the social divide in Germany never was any bigger, the gap between a small layer of rich and super rich and the majority of… Read more »
There is a point that is being raised regularly by the present government and it is this that the decisions that they are taking in terms of fiscal adjustment are being made to restore Ireland’s economic independence. This idea of economic independence is then usually followed up (by whichever spokesperson that is wheeled out) some rhetoric about how our national sovereignty has to be restored. The general view therefore amongst these elected representatives seems to suggest that if these austerity measures are implemented and if all this “pain” is accepted then we can at some point in the future expect… Read more »
Closer to home than India, and the great Ghandi who faced down the British Empire and the Raj, but much more recent, 1989. Ghandi’s mentor was Gandhar Tilak. Amazing how Germany “forgets” itself. The DDR was brought down in a spontaneous march from Leipzig, that no-one was prepared for, not the Stasi, and especially not Bonn. They used to meet at Thomas Church (Bach’s church) and an almost forgotten priest Father Führmann (kein Witz) spoke often. The crowd gathered one day, numbers building steadily, and faced down the Stasi, and the DDR army, who refused to shoot. This is a… Read more »
Why not organize an active Westphalian contingent to represent the interests of Ireland, meet with a Greek contingent committed to exactly this and next stop Germany, Portugal,…? Since elected figures are not representing national interest why not do it ourselves? I am sure common interest projects would spontaneously be proposed. If we need a bank use one that has been thoroughly glass-steagalled. National interest as the commitment to the full development of the other. I think it will be easy to find others who think this way. Fair-trade is easy then. No need to stop anywhere with this. It could… Read more »
GRAND LARCENY It is time to stock up on ammo and get some extra crispy calibers to defend your property and your rights! WHO THE FUCK DO THEY THINK THEY ARE? http://namawinelake.wordpress.com/2011/12/05/minister-publishes-legislation-detailing-new-e100-household-charge/ The annual charge is €100 but it seems you will be able to pay it in four instalments but the Bill doesn’t give full details of the instalment plan. You can expect the €100 flat charge to increase after 2012. The betting is that the charge will ultimately end up at close to 0.5% of the value of a property each year, in other words if your property… Read more »
BANK RUN!
Greece
Deposits early 2010: 237 bn
Until end of In August 2011 down 49 bn
September 2011 down 5.4 bn
October 2011: down 8.5 bn
On Newstalk 8AM news: The budget for the Irish Secret Service doubled to 1 million.
Irish Secret Service? Gimmi a fucking break….
HD855126 Exo Planet Super Earth 36 light years away in the galaxy of Velo has the same living habitat as our own planet ………..SO….if you don’t like the Euro gene they go to space where no man has gone before …and don’t forget to bring the missus and enough food.
How can you have growth when you have so much debt ? Central banks only get involved when the situation is almost out of control . Google ‘ Long Term Capital Management ‘ for a run down . The banks are bust and the leval of debt has reached breaking point which is why a certain Mr Geithner is worried and is telling the EU what to do . Even the ratings agencies are waking up and they are staffed with people who are not good enough for Wall Street . The banks are up to their eyeballs in debt… Read more »
Monster Monti finished the sentence this lady just could not bring herself to say.
Italian Welfare Minister Elsa Fornero breaks down in tears during austerity measures announcement
http://www.youtube.com/watch?v=MVRJ18oHsa8&feature=related
You people are nuts . You are now cutting disability benifit to fund bust and broken European / American banks ?
Have you ever heard investment bankers discussing their bonus ?
You are morally bankrupt .
Morning,
The German nature of the new EU architecture is likely to become very obvious in the next few months. It will be interesting to see if we are asked to vote again.
Best,
David
At the start they told us – Ireland has to ‘bail out’ the banks, it is was an ‘honourable thing’ to prevent massive losses to the EU bondholders. They told us it would ‘save the EU banking system’ and had full approval of the EU. They told us ‘it was the right thing to do’ and nobody would lend to us if we didn’t do it. Make no mistake, this action had full approval of the ECB and the EU. Now that the chickens have come home to roost, the policy destroyed faith in Ireland and Ireland is now bankrupt.… Read more »
As it seems o.k. to mention FG/Labour who after all were voted in, and have delivered a vacuum, I suggest looking here. No one in the Dail is calling for guns&ammo as seems to be implied by some commentators here.
http://www.sinnfein.ie/newsroom
They got it right. Clinging onto the financial system and all its murderous mesmerizing arithmetic is bad for your health.
Moon Wobble
A total lunar eclipse, a close encounter between Mercury and the moon, and a planetary tour de force are just some of the amazing sights skywatchers can see this month.
11th- 12th Dec – Communications …something happens
Sublime Factor of Production
http://www.qm21.com/moonwobble.html
Make a list of grievances just by scanning this blog. Then look at this list compiled by Franklin. Uncanny resemblance, point for point.
http://www.earlyamerica.com/earlyamerica/freedom/doi/text.html
Get a taste of empire. No matter how you complain it will continue. It knows no other way. It is starting to kill the old, weak, sick, and then it is coming for you.
Kenny is behaving like a Viceroy no different than Monster Monti of Goldman Sachs. FG to the core always ready to serve, yer highness.
This is just wrong. Cutting disabled people’s benifit and heat allowance so unsecured professional gamblers get paid out on horses that didnt win.
Capitalism breeds greed…
Nice quote on Nouriel Roubini’s blog by JFK which Id like to add here ““There will always be dissident voices heard in the land, expressing opposition without alternatives, finding fault but never favor, perceiving gloom on every side and seeking influence without responsibility…. …But today other voices are heard….voices preaching doctrines wholly unrelated to reality….which apparently assume that words will suffice without weapons, that vituperation is as good as victory….and that peace is a sign of weakness… …[T]hey see that debt as the greatest single threat to our security. At a time when we are steadily reducing the number of…employees… Read more »
Here’s the link to the articles its quoted in, on Roubini’s Economonitor by Dan Alpert. http://www.economonitor.com/danalperts2cents/2011/11/28/on-europe-perhaps-this-is-the-week-that-fewer-people-listen-to-nonsense/
HEATING ALLOWANCE: SEAI, for the purposes of a BER conducted on a dwelling, define the “Irish heating season” lasting for a period of 8 months per anum. This heating season begins in Oct. and ends on the last day of May. The non heating months are the obvious, June through the last day of Sept. However if you have experienced a summer here it reminds one of the quote by Mark Twain,”the coldest winter I ever spent in my life was the summer I spent in Ireland”, actually it was San Francisco but you get the drift. While the heating… Read more »
Might be of interest to some, the first newsletter of the World Economics Association:
http://www.worldeconomicsassociation.org/Newsletter/Issue1.pdf
1/2 the country is pickled in Alcohol, the rest are drugged by their rulers so they can’t think straight. And they call us conspiracy theorists!!
http://maxkeiser.com/2011/12/06/dont-forget-the-psilocybin-mushrooms-in-the-shamrocks/
wake up!!!
As for David’s article. Well people should just remove the need for any government dependency and they will be alright.. So AUSTERITY IS THE WAY TO GO, like it or not. don’t expect the globalists to save you, because the have the opposite agenda
Globalist Scientific and Technological Tyranny
Interesting comment from the London Daily Telegraph. http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100013647/sp-has-no-choice-euroland-risks-bankruptcy-on-currrent-policies/ { Euroland’s crisis is not about Greek pensions or Italian labour laws, but about a vast and catastrophically ill-designed edifice of interlocking bank debt and sovereign debt. You cannot separate the two. The sovereigns are destroying banks, and the banks in turn are destroying sovereigns. The two disasters are feeding on each other. This will continue until there is a circuit-breaker, both to act as lender of last resort and to end the slump. } On the way up, as the leveraging increased, the entire EU political establishment, completely ignored economic reality.… Read more »
Financial strike NOW…….
Simple and effective,do not pay or only pay 10 % of any Bank or state related bills.
Pay yourself and your families first….
Very Simple.
Do not expect solution’s from any Leader’s.Forget about them.
Look after your own priorities.
shelter
food
heat
clothes
education
security
etc..etc
Financial Strike NOW…
RR6
David suggests that ‘as the risk to the patient increases….. the chances of buying time have more to do with the dexterity of the doctors than the health of the patient.’ In fact, if there is something seriously wrong with the patient, his case is passed on to a consultant. Already consultants recognise that many serious illnesses have a genetic basis. They are interested in the family history of the complaint and increasingly seek guidance from analysis of the patient’s DNA. It is becoming feasible to treat some complaints with drugs that attach to a specific gene and with stem… Read more »
http://www.independent.ie/national-news/mortgage-gamble-2956132.html Another economic policy to boost property- what can you say? Memories of a goldfish (apologies to any goldfish reading). Thank God it won’t work.
I remember initially when I joined this great site we wrote a lot about ‘denial’ .Then that denial was in a different mindset . It was then about the Government and the Truth in Irish Banking and their efforts to deny the electorate access to the facts and it was also about the electorate and their disbelief in the facts . Now its about EU Heads of State , our new leaders and their plan to save themselves and sacrifice the Irish Electorate and its Constitution. So we had national eugenics and international eugenics .Which is easier ? What is… Read more »
Chai Steamer
I just returned from my local AMT Kiosk and was informed that the price of my daily cup has risen by 10% ….and thats before Xmas ….and before …devaluation …and before the onslaught of the rapid FG Inflation yet to arrive later next year ……how will I survive ?
Wat a disgusting spectacle!
This is STAGEMANAGED!
The “built in” back tracking on the disability allowance is a propaganda stunt!
I think we want David to preform an Impressionist act and open the next article .
No cutbacks for the Anglo Bank Bondholders.
The market was punishing the idiots for being stupid enough to trust Seanie Fitz.
And the corporatist federal state decided to introduce Marxism for multi-billionaires. The rest is misery.