Have you ever heard the expression a “Potemkin Village”? It is a Russian expression and derives from a large and extremely successful scam played by Marshall Potemkin — one of Catherine the Great’s many lovers.
In the late 18th century, the Russian elite was keen to pretend to the world that it was more powerful and more muscular than it actually was. As result, the court in St Petersburg decided to take foreign dignitaries and ambassadors down the River Dnieper to witness just how thankful the peasants of the newly occupied Ukraine were to their new, benign Russian overlords.
Knowing that the Westerners — the dignitaries were British, French and Prussian — wouldn’t expect a hoax, Potemkin constructed mobile villages, which he assembled at the turns of the river just before the royal barges carrying the foreigners came into view. What the foreigners would see on the riverbanks were excited, grateful peasants cheering on the royal Russian barges and showering Catherine the Great with compliments. When the barge went out of view, Potemkin would uproot the “village” and transport it, by night, further down the river to assemble it again ahead of the same royal barges when the barges continued down the river having docked overnight.
The foreigners went home marvelling at the strength and wisdom of the Russians, evidenced by the fact that even those whom the Russians conquered were fawning in their praise of their new masters such was the decency of the Russian occupation.
But the key to understanding the gullibility and the success of the Potemkin villages is that the foreigners wanted to believe, because they needed a success in Russia. It was 1787 after all. Monarchist America had become a republic and imperial France was teetering. Old certainties were crumbling for the old order. There was a feeling that a powerful monarchist Russia was needed in order to stop the “domino effect” of the Enlightenment, American Republicanism and war in Europe. In the event, George Washington and Maxim Robespierre put paid to their false hopes — the dominoes did topple.
Given the fear of revolutionary contagion, it’s easy to see why the dignitaries were predisposed to gullibility — because they didn’t want to face up to the consequences of what was actually happening on the ground. They wanted to see the world as they wanted it to be, not as it actually was. And if that meant believing in mobile villages, then so be it!
Now, fast-forward to Merrion Street today. The so-called Troika — complete with its peculiarly Russian-sounding name — is in town. And it will leave saying everything is hunky dory. We show it export figures and GDP figures — today’s Potemkin Villages — and it will go away happy, having taken into consideration nothing of the unemployment, emigration, negative equity or the fact that retail spending has collapsed. It will see what it wants to see.
The Troika doesn’t look at the real, nasty things because it, like the historic dignitaries in Russia, doesn’t want to. It wants to believe its own propaganda because it can’t face the prospect of failure. Remember, for the Troika, Ireland’s austerity programme must prevail because the prospect of the domino effect is too horrible for it to contemplate.
But the game is up. Let me tell you a dirty little secret: the Troika is redundant. Yes, redundant. The Irish IMF/EU deal is history. No matter what we do, events are overtaking us. The IMF/EU deal for Ireland will be torn up in the next three weeks and replaced with something quite, quite different.
The Troika has failed because the main aim of the Troika was not to fix Ireland but to ring-fence Ireland. We were/are a pawn in a much bigger game and that game is saving the euro. To save the euro, the Troika had to do two things. The first was to indicate that Ireland (and Greece and Portugal) was uniquely delinquent and could therefore be treated in isolation. However, this isolationist policy is designed as a type of financial quarantine to prevent contagion. If the Troika’s mission was to work, its putting Ireland into quarantine would have to strengthen the defences of European banks because, after all, we are being lent money to pay our creditors in order to ensure that the banks that are exposed to Ireland and Ireland’s banks don’t lose on their investments. So the aim of the EU/IMF was not to save Ireland but to make sure no one asked too many questions about what was lying deep inside the balance sheets of Europe’s banks.
But it hasn’t worked.
People are asking questions and they don’t like what they are hearing. The balance sheets of Europe’s banks are full of bad investments. This is making everyone scared. So banks have stopped lending to other banks because they don’t trust each other. After all, when everyone has been lying, I suppose that’s not too surprising. This is called a liquidity crunch. But the other problem is that when there is no liquidity and no one is prepared to lend, it poses huge problems for governments like Spain and Italy because they have to roll over enormous quantities of their national debt, retiring old stuff and replacing it with new stuff.
This is no problem when everyone is willing to lend to you — you just replace the maturity of the debt and reissue it. But when investors want cash and not promises, the game changes.
This sovereign debt crisis reinforces the sense of panic and it means that the only buyer of sovereign debt will be the European Central Bank. But this contravenes the ECB’s own rules and makes the Germans jittery because the Germans worry that their central bank will become a financial skip for Europe’s financial waste.
This is what contagion looks like. This is exactly what the Troika in Ireland was supposed to prevent and this is why the Troika has failed.
The “country quarantine” approach has failed. Contagion now abounds and infection is rampant. Any future bailout of the whole financial system could involve trillions of euro. This will not come without the political price of accelerated political integration. But now the irresistible force of increased political integration smashes into the immovable object of the citizens of Europe who do not want federalism. Expect referenda and then real fireworks will start.
Remember what happened to the country that constructed the Potemkin Villages? It was invaded by post-revolutionary, Napoleonic France which was precisely the type of political Armageddon that the little lie of the ‘villages’ was designed to prevent.
Respect David…… ……..In an effort to read today’s Independent article while on the hoof; a ‘Potemkin’ search yielded the article of 23 July 2000. Extracts include: ‘With inflation at over 5 per cent and deposit interest rates well below 3 per cent there is no incentive to save. We are now being penalised for saving, so is it any surprise that the savings ratio is falling? And the banks are lending the cash. Well, of course, they are, because their share prices are flagging and without high volume growth, profits will fall, increasing the chances either of management being sacked… Read more »
David, I remember during Lisbon you said it didn’t matter either way what way the vote went. Would you still back that assertion now?
Yes, it looks as though we’re living in very interesting times.I’d nearly be safe in stating that the Irish people will tell the government to ‘Foxtrot Oscar’ in the referenda being held on the same day as the Presidential Election. The government needs to be given a really good ‘kick in the pants’ in order to get them to wake up to the fact that the Irish People have had enough!!! If there are to be further referenda in the near future in relation to changes being made to the Lisbon Treaty then they should also be told in no… Read more »
Troika or not we have a deficit of 18 billion, this must be brought down to 3% of GDP by 2015 if not sooner. The only way to get rid of the troika is to pay them back and thats not going to happen . In 2013 the bailout money will run out and we will have to apply for a second bailout . The troika will be running our country for the next 10 years , I am happy about that rather than have Kenny/Gilmore do it. The troika will be good for Ireland , they are the kind… Read more »
Will the Troika be visiting Occupy Dame Street for a spot of tea?
Once DmcW reaches for his Potemkin metaphor, its time for us to put on our life jackets: http://www.davidmcwilliams.ie/2010/07/22/ireland-is-staring-down-the-barrel-of-bankruptcy/comment-page-2 Great article. The coverup hasn’t worked. Our stooges don’t represent the Irish people, they represent the betrayal of banks and the EMU of Irish people. We are in the disgraceful position of full export orders, booming agri sector, and growth at 0% because of the massive deflation caused by our banking guarantees and support of Trichet’s final solution bailout, full payback of bondholders. As Morgan Kelly has pointed out, we had a chance we’re it not for the banks. The Troika have… Read more »
Complimenti David, A very insightful analogy and right on the money especially from my perch here in Italy. Although I don’t have the detail, I believe that the real elephant in the room is not only a relatively small amount of “sovereign” clearly lost, but in reality, the counter party CDS’s totally hundreds of billions perhaps even more that mostly US finance houses are on the hook for should defaults commence to crystallise. Why else should there be such a violent reaction to Slovakia’s refusal to underwrite the EFSF? Perhaps some more informed contributors to this blog would like to… Read more »
subscribe.
Wooden Legs The Potemkin Village reminded me of Wall Street in New York and the city of Stockholm . The Potemkin Villages were made of wood that was easy to uplift and re-install elsewhere . Wall Street was a demarcation line for protection by the Dutch to protect themselves from the English and the other natives in USA and this is where the Stock Exchange is . Stockholm means an island of wood where the capital of Sweden was built . I am tempted to recall many stories by Dickens : http://dickens.ucsc.edu/OMF/gavin.html http://wordsworthsharing.com/index_files/dickenslegs.htm Wooden legs are worn by people who… Read more »
But the game is up. Let me tell you a dirty little secret: the Troika is redundant. Yes, redundant. The Irish IMF/EU deal is history. No matter what we do, events are overtaking us. The IMF/EU deal for Ireland will be torn up in the next three weeks and replaced with something quite, quite different.
Would love to know what this something diffenent is going to be. Any chance of expanding on it?
In 1380, at the battle of Kulikovo Polye, 60,000 Russians slashed and hacked at a force of 100,000 Mongols, defeating them and beginining the process of Russian statehood. In 1612, the Russians defeated a superior Polish force which had occupied the Kremlin (Russian for ‘citadel’ or ‘fortress’). In 1812, they absorbed another invasion (the largest the world had ever seen at that point) with Napoleons force eventually forced to make their humilitating retreat from a burnt out Moscow. In 1919, they fought off a Western military intervention which sought to stamp out Lenin and possibly see a return of the… Read more »
Anybody bother to listen to the comical solution to the mortgage crisis.Talk about muppets and balls.The muppets have the balls to suggest another 100 strong quango be set up to sort out the mess with about 100 different mortgages proposals and not one of them having any substance to solving anybody’s problem.Folks, the way the guys are seeing it is you made the mess and you pay for it. I thought the 50/50 ownership on a social housing basis sounded laughable.Would this option be open to the gobshite who paid €5 million for his pile in Killiney in 2007 only… Read more »
Further to my earlier comments I believe they will be distributing newly designed Trocaire boxes around the schools this Easter.They had them printed in China this year owing to the demise of our printing industry.They were being proof-read and no its not a mistake.The box now reads “Troika” and will be delivered to every household in the country.They are to be retained for ten years and the minimum yearly donation by every member of the household will be €10k.Is this possible.You better believe it is.
“There has bben great kindness shown to us and we should be grateful not spiteful like DMcW.” I’m hoping this comment is said tongue in cheek! The troika has not bailed us out. The troika gave us a loan because money markets knew what we were all denying, Ireland is bankrupt and cannot repay the debts of private institutions that it took on under threat from the ECB. When the troika leaves Ireland we will still owe the same amount of money as when they arrived but ireland will be poorer because of the savage austerity that has been inflicted… Read more »
David,
Another cracking article.
I agree on all of it.
Weird tonight on Newsnight how people can talk calmly about conjuring up €3 Trillion to support EFSF without ever mentioning inflation? I think we need to accept that inflation is a fact of life that people have had to live with since money was invented. 200 years ago one pound was enough to support a family for a week. After WW2 a message boy earned 30 shillings (€1.70) a week. in the ’60s a family man earning £1000 a year was comfortably off. Now the median family income is €30,000 so inflation has gone up by a factor of 25… Read more »
I am reminded of the old Soviet era joke, that explained how bureaucracy and nonsense was killing the Soviet economy….. “We pretend to work, and they pretend to pay us”. Well, in modern, shiny, sophisticated Ireland…. “We pretend to fix the economy, and they pretend that it is working”. “Our politicians pretend to know what they are doing, and we pretend that we are believing them”. “Our banks pretend to lend, and we pretend that we can trust them with our deposits.” The whole post-ponzi scheme system, is in shock, and we pretend that we can continue as normal. We… Read more »
There will be no referenda. None needed, lisbon is a self amending treaty. A simple majority is all that’s needed, see article 48. So, they can bypass all the countries that need referenda. Hence enda kenny’s asinine comment that he will not allow any amendment that requires a referendum here.
Gege,
Interesting comment above on Wall St built on a burial site.
Reminds me of the *Overlook hotel* built on an old Indian burial site in Kubrick’s movie *The Shining*.
Symbolic.
The monopoly capitalist system runs on the blood of economic exploitation.
Unfortunately though the form of the post modern exploitation its black magic is less visible to the viewer as it once was back in the day.
I want to dedicate this contribution to redriversix who has often written about what I have to say here. Looking beyond our emerald shores for a minute or two and considering the global situation in a general sense. I think we are at war. I think the economic crisis is World War 3. What is happening is not accidental or natural. The elites are waging war on humanity and civilisation. Their specific target at this time is the sovereignty of the Western nations. They are using the financial markets to bankrupt the nations as a prelude to introducing fundamental changes… Read more »
Stock Exchange
Its original meaning was : a place that was a timber market .
My questions is : did the beavers reincarnate into ‘traders ‘ ?
Tax Returns 2011
I am in practice since 1977 as an accountant and this year many sole trader clients cannot afford to pay to get their personal tax returns completed .Many are choosing not to do them for that reason .
I am attempting to accommodate their personal circumstances to achieve their obligations to Revenue .The level of despair about them is frightening and the hopelessness of their direction in life is deafening .
Its a defining moment in Time that has never happened before.
Morning,
I accept I am fond of the Potemkin Village image, but its still a good one:)
Best,
David
Its austerity all the way for the people of Ireland. The yes men of Fine Gael and labour have bottled it with the the EU masters. The good little taxpayers will do the govt bidding and be good little Europeans. The Greeks dont give a hoot as long as they are bailed out. We shouldnt be trying to cut any more out of the economy. I would cut out the waste and there is plenty of that in Ireland.We are governed by gobshites here and we have no political party that represents change real change and the guts to give… Read more »
I hink we might be better off with a new world order than the govts we have had in Ireland for the last 100 years
Just on that Global Forum thingy.
Interesting that half the participants took the Department of Foreign affairs offer of 3 nights accommodation.
Irish Times report:
“The Department of Foreign Affairs said participants took care of their own travel arrangements but were offered free hotel accommodation for three nights. About half took up the offer of accommodation in the D4 Hotel owned by developer Sean Dunne or the Burlington, while the rest paid for their own arrangements.”
http://www.irishtimes.com/newspaper/frontpage/2011/1013/1224305707910.html?via=mr
“Contagion now abounds and infection is rampant. Any future bailout of the whole financial system could involve trillions of euro. This will not come without the political price of accelerated political integration. But now the irresistible force of increased political integration smashes into the immovable object of the citizens of Europe who do not want federalism”
Anyone living in misgoverned PIIGS countries should grasp federalism like a drowning man grasps a lifebuoy!
Just to come back to how ‘great’ the UK is, got to look beyond….. “David Cameron has previously insisted that the government’s austerity programme will not result “in any increase in child poverty”. But today’s IFS report suggests that entirely the reverse is true: the coalition’s policies will lead to a dramatic rise in absolute poverty and relative poverty. The number of children in absolute poverty in 2015 is forecast to rise by 500,000 to 3 million, while the number in relative poverty (defined as households with less than 60 per cent of the median income) is estimated to rise… Read more »
Kilkenomics 2011
Any views on the subjects and contributors anyone??
Many thanks for your replies. There seems to be some people out there keeping an eye on what’s going on, but on having said that there are more than their fair share of detractors as well. Lucinda is a barrister.I personally can’t stand her. I consider her to be a smug bitch who thinks she knows everything and from my point of view she’s the the type of person you have to be wary of.If she says that something’s right it would be best to go away and check it out for yourselves. She’s one of the people I wouldn’t… Read more »
http://www.actionaid.org.uk/doc_lib/addicted_to_tax_havens.pdf As suspected, Ireland is number 3 tax haven in the world. Basically companies across the world in order to skip tax, set up a mailbox company in Dublin, and pipe their profits through the mailbox to avail of our low jealously guarded CT rate. Another dirty little secret has been revealed by Action Aid: After Delaware(USA) and the Netherlands we are No3 tax haven in the world, well ahead of the Cayman Islands. ” Ending tax haven secrecy: With financial turmoil continuing to stalk the global economy, the G20 summit in France this year must take the opportunity to… Read more »
The VOICE David Graeber said : “We are watching the beginnings of the defiant self-assertion of a new generation of Americans, a generation who are looking forward to finishing their education with no jobs, no future, but still saddled with enormous and unforgivable debt… Just as in Europe, we are seeing the results of colossal social failure. The occupiers are the very sort of people, brimming with ideas, whose energies a healthy society would be marshaling to improve life for everyone. Instead, they are using it to envision ways to bring the whole system down. Actually, Graeber is understating the… Read more »
Celtic Voice
http://www.youtube.com/watch?v=3I8sjxviAcA
Self employed got a paye prsi demand for August Oct 4, got a letter threatening me with the sherriff etc Oct 11 ( who says our public service are not efficient). Paid the bill Oct 12th. Put up two small signs outside my premises on light posts fined 150 euros again threatened with legal action. Got demand for water rates 1250 euros had receipts for 950 money was not applied to my account, no apology, just demmand for the balance. Vat is now due. (shit )Business down 30% since last year. Employ eight people full time. Worked twenty days in… Read more »
Nearly 3000 people have had their electricity or gas cut off in August last, highest on record. So much for change.
@LordJimbo & Adamb Thank you for your response re “Iran V U.S. I agree with you and as I said I hope I am wrong. “scared myself when I read it back”!!!!! But lets suppose for a minute…that the U.S annonces at a press conference that they have foiled a plot to kill the Saudi ambassador to America on U.S soil by Iran and that Iran was paying a Mexican drug cartel to carry this out. Now,we know that this claim is absolutely absurd.But it stokes anti-American sentiment in Iran and possible may release more funding from congress to expand… Read more »
Iran Theater I realize this platform is no place for geo strategic discussions, however, just briefly, I would remind to Diego Garcia. http://www.antiwar.com/orig/pilger.php?articleid=3702 Like Bahrain to a lesse degree it is one of the most important tactical assets for possible US aggression. In 2010 Chomsky wrote: According to a US Navy cargo manifest obtained by the Sunday Herald (Glasgow), the substantial military equipment Obama has dispatched includes 387 “bunker busters” used for blasting hardened underground structures. Planning for these “massive ordnance penetrators,” the most powerful bombs in the arsenal short of nuclear weapons, was initiated in the Bush administration, but… Read more »
@Realist, have to point you to the arguments against the CT tax haven scam on actionaid.org as they are too detailed to go into here. Re “For example if company makes the profit and pays 12.5% in Ireland it will have more profit left.” Totally disagree with thrust of your argument there. In my world it is precisely your argument there that has led to the bifurcation in US of 1%rich/99% disappeAring middle class. Why should the rich get away with paying so little tax? Re “Unsure will European big leaders succeed in making all European countries having the same… Read more »
For Ireland to have a future it must have growth and with that in mind let me tell you this ,that there is NO credible economic theory that supports the measures being pursued in Ireland at present. In the absence of any proposals that will generate growth, it leaves people, as I with nothing to invest in .I have no wish to plough money into some sort of European Bank bailout fund. I have no wish to be part of any scheme that will turn Ireland into a debt servicing hollowed out non-entity. So for know I will sit on… Read more »
Slavery in 21st Century Docu
http://english.aljazeera.net/programmes/slaverya21stcenturyevil/2011/10/201110108583163675.html
That CEO chap at 25 minutes in the film, ‘Motty’, reminds me of the other slave masters, Bankers, the very same sleazy eloquence and arrogance.
People like him do not even deserve a bullet, that would be way too quick and easy.
Hello Suds, http://www.abajournal.com/news/article/sec_accuses_goldman_sachs_of_selling_mortgage_investment_designed_to_fail/ A massive bonus comiong your way no doubt. Hello David, The reason no one in the financial establishment takes you serious is because you were born with a conscience and clearly likes to do business properly. Can I respectfully suggest that you attempt to take a different interpretation of the word success and ONLY THEN apply your capacity for analysis to the following: We (all of us) look at the world’s financial system and see failure but the people who operate it see success because the more they fuck it up the more money they accumulate. It’s… Read more »
State of the Nation and Martin McGuiness Does it feel funny to write this being a german? No not really, the coincidence that led to my german passport could have started equally in Palestine, Russia, China, what have you not, it does not matter. What matters is that I live here a very long time and became very fond of the people and the country, the real Ireland as I like to call it, not the Ireland presented to the world. The real Ireland has nothing to do with the Ireland one can read about in the propaganda press and… Read more »
sycophant that is … LOL ;-)
->GEORG
HOW IS IT some ARE ATTACKED …
AND SOME GET AWAY WITH NO DISCUSSION..?
MORALS? HA. DONT BE FOOLED THEY LOVE NONE.
IT IS NOT FOR RIGHT OR WRONG..PAST OR MONEY
IT IS ABOUT CONTROL!
Deco,
Spot on on the Ponzi play pretend, wool over eyes-wolfman jack ploys and cons.
The Global energy crisis will be solved when the Companies in charge of all worldwide resources come up with a plan that guarantee’s their place in the market.
And not a minute beforehand.
Nobody cares about refugees,they are just pawns to be used to frighten indigenous populations against immigration.
Solve global energy crisis….?,could translate in to solving global warming and that will never happen because there is always fear around global warming and fear suits big government.
I won’t be voting as I’m no longer registered, if I was I’d be temped by Messr Mc Guinness as the only option to give an up yours to the establishment as represented by Pravda/RTE
No Mr. Aynsley, fuck you! It won’t cease to exist… ever!
Mr Aynsley added: “The Anglo name will cease to exist from today and the recently merged institution of Anglo and INBS will be officially known by this new name.
http://www.independent.ie/business/irish/toxic-anglo-gets-a-makeover-to-the-all-new-irish-bank-resolution-corporation-2906769.html
No Mr. Aynsley, fuck you! It won’t cease to exist… ever!
Mr Aynsley added: “The Anglo name will cease to exist from today and the recently merged institution of Anglo and INBS will be officially known by this new name.
http://www.independent.ie/business/irish/toxic-anglo-gets-a-makeover-to-the-all-new-irish-bank-resolution-corporation-2906769.html
RR6,
thought since you have opinion formed that the homework would not be necessary and would be to hand.
Its very hard to follow replies/discussions on this site, am I the only one who finds it difficult, getting old, thank God.
I met two OAPs recently who were glad they were no longer young, a sad reflection on our current predicaments dont you think??