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Ireland's "Suicide Pact" With the E.U.

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Ireland's "Suicide Pact" With the E.U.

 

By Mike Whitney

 

November 18, 2010 "Information Clearing House" -- -Ireland could be the next Lehman Brothers. That's what has the markets worried. If Irish leaders refuse to accept a bailout from the EU's new European Financial Stability Facility (EFSF), then bondholders will be forced to take haircuts on their investments which will leave banks in Germany and France short of capital. Bonds yields will rise sharply slowing activity in the credit markets. An Irish default will trigger hundreds of billions of dollars in credit default swaps (CDS), which will push weaker counterparties into bankruptcy and domino through the financial system. Contagion will spread to Portugal, Greece, Spain and Italy widening bond yields and forcing governments to increase their borrowing at the ECB. Business activity will sputter, unemployment will rise, and growth will shrink. It will be a second financial meltdown.

 

But no one believes that will happen. Most people think that Ireland will "take its medicine" and spare bondholders any losses. Irish leaders would rather accept a decade of EU-imposed austerity measures and the loss of sovereignty, then leave the euro and start fresh. It's disappointing. The euro is not designed to meet the needs of the smaller, less industrialized countries like Ireland. They need their own, flexible currency to ease the effects of cyclical downturns. But Irish leaders are still captivated by the idea of a united Europe. So they will cast aside the independence they earned through centuries of struggle for a pipedream and the elusive promise of prosperity.

 

At present, the Irish government is underwriting the toxic debts of its main banks. Unfortunately, those debts far exceed the revenues of the state. According to BBC's Robert Peston, the liabilities are "equivalent to an oppressive 700% of GDP when banking, public sector and private sector debts are added together." So far, the ECB has helped to keep Irish banks operating by providing 130 billion euros of emergency liquidity. But the wholesale markets no longer accept Irish debt as collateral and bond yields are in nosebleed territory. Irish politicians still maintain they have sufficient funds to get through the middle of next year, but that does not include funding for the banks. In fact, if the ECB stopped lending to the banks today, the system would crash overnight.

 

So the situation is tense and getting tenser. Even so, everyone expects Ireland's Finance Minister Brian Lenihan to cave in and accept a bailout. That will shift all the losses onto Irish taxpayers.

 

But what would happen if Lenihan balked and decided to restructure the debt instead of borrowing the money from the EFSF?

Journalist Robert Peston mulls-over that posibility in a recent article for the BBC. Here's an excerpt:

 

"Anglo Irish Bank and Allied Irish Banks, would probably have to be declared insolvent. And...many billions of euros that Irish taxpayers have already pumped into these banks would have to be written off....

 

What would then be triggered would be enormous payments by underwriters of credit default swaps (CDSs), the debt insurance contracts taken out by lenders and speculators. These payments would generate enormous losses for the financial institutions, including banks, which provided the CDS cover....

 

Even without the CDS loss multiplier, the impact of debt haircuts would be painful for British and international banks. According to the Bank for International Settlements, total lending of non-Irish banks to Irish banks is around $170bn, of which British banks provided $42bn, German banks provided $46bn, US banks $25bn and French banks $21bn." ("Ireland: How much punishment for British and international banks?", Robert Peston, BBC)

 

If Ireland quits the euro, all hell will break loose. The government will have to issue a new currency knowing that their debts will still be denominated in the higher priced euro. That will increase their debt-load. And, they'll be blocked from the raising capital via the bond markets until they've settled old claims. At best, it would take decade or more to dig out and to reestablish their credibility with the markets. On the other hand, they would have shed the euro straitjacket and reestablished their sovereignty. That's got to be worth something, but how much is it really worth?

 

Journalist Peter Oborne takes a look at the sovereignty issue in a recent article in the Telegraph. Here's an excerpt:

 

"It cannot be denied that Ireland has lost its status as a sovereign nation. Thanks to its disastrous entanglement with the euro, it has lost any independence in domestic, foreign and above all economic policy. The Irish nation is the creature of Brussels and the European Central Bank. The Irish prime minister has effectively been turned into a pro-consul dispatched to Dublin from Brussels. Brian Lenihan, the finance minister, is like an overseas manager of a Brussels subsidiary. For those of us who love Ireland, this is miserable and demeaning – but it needs to be borne in mind that a similar fate awaits a number of other European countries. Greece already does what it is told by the IMF and the ECB; the same will shortly apply to Portugal and in due course Spain." ("Ireland has lost its sovereignty and is now the creature of Brussels – thanks to the euro", Peter Oborne, Telegraph)

 

Oborne is not alone in thinking that Ireland is making a mistake by staying in the EU. The Telegraph's Ed West sees things the same way, but describes the EU/Ireland alliance in even darker terms, as a "suicide pact":

 

"Ireland has a historical attachment to continental Europe, as liberator from British rule, but it perhaps goes even deeper than that, back to its monks’ preservation of Western civilization during the Dark Ages. Ireland, more than most countries, feels itself profoundly European and its Catholicism was always a part of that. It is not entirely a coincidence that as Christianity faded Ireland adopted a replacement ideology – the dream of Brussels. Or the world’s biggest suicide pact, as I think of it....

 

Why spend 800 years trying to overthrow the Brits just to come under the sway of the EU? Having said that, almost no one in Ireland goes anywhere as far as UKIP or many Tories in opposing the EU altogether....

 

The European Project was and is a Utopian idea, based not on practical logic but on an idealistic vision, and it has only one aim in mind – total political union. Along the way its architects have consistently lied to the public about its aims, especially so in the creation of a single currency, which logic suggests requires political unification." ("Ireland's smug, Euro-loving elite has led their country to ruins – 'Little Englanders' saved ours", Ed West, Telegraph)

 

The financial crisis has stripped away much of the pretense surrounding the 16-country EU. No one is blabbing about ending wars and shared prosperity anymore. The focus has shifted to belt tightening for workers and golden parachutes for bankers and bondholders. In other words, elites are waging the same relentless class war they always have, only this time it's behind the facade of European unity. Does Ireland really want to be a part of that charade?

 

It's time for Ireland to leave the EU and deliver a blow to the ill-conceived Uberstate. In fact, they should have left years ago.

 

 

 

http://www.informationclearinghouse.info/article26855.htm

 

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It's time for Ireland to leave the EU and deliver a blow to the ill-conceived Uberstate. In fact, they should have left years ago.

I agree. Ireland should leave, hyperinflate a little, and go back to growing sheep. This whole housing bubble/low tax/low interest rates thingy should be abandoned.

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I agree. Ireland should leave, hyperinflate a little, and go back to growing sheep. This whole housing bubble/low tax/low interest rates thingy should be abandoned.

 

Thanks for the suggestion, but having become one of the world's biggest exporters of pharmaceuticals, software, medical devices, PCs etc, growing sheep just doesn't have the same appeal...

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Thanks for the suggestion, but having become one of the world's biggest exporters of pharmaceuticals, software, medical devices, PCs etc, growing sheep just doesn't have the same appeal...

Fair enough. I just fear that all these pharmaceuticals will be needed to sedate the population over the fraud and misery their banksters have brought over them. The rest of the country's assets will be needed to pay the bonuses that the banksters will get in the coming years. Oh, and then there are the EUR (or Irish Pesos then?) 50 Bn - 70 Bn needed to backstop the banksters business.

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Ireland's "Suicide Pact" With the E.U.

The financial crisis has stripped away much of the pretense surrounding the 16-country EU. No one is blabbing about ending wars and shared prosperity anymore. The focus has shifted to belt tightening for workers and golden parachutes for bankers and bondholders. In other words, elites are waging the same relentless class war they always have, only this time it's behind the facade of European unity. Does Ireland really want to be a part of that charade?

if they drink from the poison chalice, it will be too late.

 

they should have forced a 5-10% haircut on bank bondholder, and forced bankers to invest their bonuses in their own toxic paper

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another brilliant piece by Mike Whitney

 

thanks for sharing

 

particularly liked

 

 

Why spend 800 years trying to overthrow the Brits just to come under the sway of the EU?

 

The European Project was and is a Utopian idea, based not on practical logic but on an idealistic vision, and it has only one aim in mind – total political union. Along the way its architects have consistently lied to the public about its aims, especially so in the creation of a single currency, which logic suggests requires political unification." ("Ireland's smug, Euro-loving elite has led their country to ruins – 'Little Englanders' saved ours", Ed West, Telegraph)

 

The financial crisis has stripped away much of the pretense surrounding the 16-country EU. No one is blabbing about ending wars and shared prosperity anymore. The focus has shifted to belt tightening for workers and golden parachutes for bankers and bondholders. In other words, elites are waging the same relentless class war they always have, only this time it's behind the facade of European unity. Does Ireland really want to be a part of that charade?

 

It's time for Ireland to leave the EU and deliver a blow to the ill-conceived Uberstate. In fact, they should have left years ago.

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Ireland's "Suicide Pact" With the E.U.

 

 

 

Oborne is not alone in thinking that Ireland is making a mistake by staying in the EU. The Telegraph's Ed West sees things the same way, but describes the EU/Ireland alliance in even darker terms, as a "suicide pact":

 

................................................................................

.................................................................................

.................

 

 

Why spend 800 years trying to overthrow the Brits just to come under the sway of the EU? Having said that, almost no one in Ireland goes anywhere as far as UKIP or many Tories in opposing the EU altogether....

 

 

 

 

http://www.informationclearinghouse.info/article26855.htm

 

If he can't get his historical facts correct then why should one take any notice of the rest of his article.

 

 

 

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Thanks for the suggestion, but having become one of the world's biggest exporters of pharmaceuticals, software, medical devices, PCs etc, growing sheep just doesn't have the same appeal...

It will do soon. Baaaa! :lol:

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Let's hope they don't get a brain drain. I mean, imagine all the banksters would leave! They better pay them big fat bonuses this year and the coming. No doubt, the Irish will.

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It will do soon. Baaaa! :lol:

May yourself or GF never fall on hard times. Maybe you're immature and will grow out of your arrogance, but it's not good and someday you might need to call on someone yourself.

MunsterK

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May yourself or GF never fall on hard times. Maybe you're immature and will grow out of your arrogance, but it's not good and someday you might need to call on someone yourself.

MunsterK

Munster,

 

IMO Ireland should not have bailed out their banks. IMO, all turd banks should go under spectacularly (that includes most UK/US/German banks too, so this is not an Irish thing).

 

Furthermore, I also think that it was a mistake of Ireland to join the Euro first place, in fact, the whole Euro concept is flawed since it got extended over a small fiscally responsible northern mainland Europe core (a grave mistake that now resurfaces and will severely damage the Euro one way or the other).

 

I take no pleasure whatsoever in the Irish misery. Instead, my sarcasm comes from that I see even more mistakes taking place now: the (Irish) banksters are kept alive (with bonuses surely??), and the Irish submit themselves to a (somewhat, at 5%) punishing scheme of a bailout in a hard currency environment.

 

The wider mistake is of course that this will change NOTHING, since the fire will now spread to Portugal, and after that to the largest PIIGS of them all.

 

It is all in vain (and worse). This is where my sarcasm is coming from.

 

EDIT: It just drives me mad watching this craziness. Indeed, IMO, Ireland would be better off long term if they let their banks sink and get out of the Euro ASAP. Similar for Greece and the other PIIGS who will follow in disaster. And Iceland was a precursor of all of this. They made this stupid mistake (of keeping the banksters alive) first.

 

EDIT2: What has to be done (in all these similar cases) is:

(1) Nationalize the banks.

(2) Severe haircuts for ALL creditors/depositors.

(3) Hyper-inflate a little/a lot.

(4) Introduce emergency business/personal(?) loans (from the state).

(5) Fire 70-80% of all banksters.

(6) Pay banksters minimum (state employee) wages.

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Munster,

 

IMO Ireland should not have bailed out their banks. IMO, all turd banks should go under spectacularly (that includes most UK/US/German banks too, so this is not an Irish thing).

MunsterK: I agree.

 

Furthermore, I also think that it was a mistake of Ireland to join the Euro first place, in fact, the whole Euro concept is flawed since it got extended over a small fiscally responsible northern mainland Europe core (a grave mistake that now resurfaces and will severely damage the Euro one way or the other).

MunsterK: I agree - We lost our sovereignty then....

I take no pleasure whatsoever in the Irish misery. Instead, my sarcasm comes from that I see even more mistakes taking place now: the (Irish) banksters are kept alive (with bonuses surely??), and the Irish submit themselves to a (somewhat, at 5%) punishing scheme of a bailout in a hard currency environment.

MunsterK: OK. I see it all around me right now and am struggling myself to get 2 business plans off the ground. I am seeing broken marriages, broken businesses, broken lives; though fortunately my own situation is good[ gr8 family, cash is tight but we're ok etc etc] but I'm feel a deep personal failure for my country and the idiots we have running it [off soap box].....

The wider mistake is of course that this will change NOTHING[Agreed], since the fire will now spread to Portugal, and after that to the largest PIIGS of them all.

 

It is all in vain (and worse). This is where my sarcasm is coming from.

 

 

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MunsterK: OK. I see it all around me right now and am struggling myself to get 2 business plans off the ground. I am seeing broken marriages, broken businesses, broken lives; though fortunately my own situation is good[ gr8 family, cash is tight but we're ok etc etc] but I'm feel a deep personal failure for my country and the idiots we have running it [off soap box].....

This is the problem: all the idiots stay in charge AND GET BONUSES. Just look at the counterparts (I mean banks) in the UK/US/Germany. In Germany, IIRC, HypoReal has gotten bailouts to the tune of EUR 140 Bn and is still paying their banksters millions in bonus. WTF?? I am so ANGRY.

 

EDIT: And that's with me not even being particularly affected yet! There needs to be political change soon. It is brewing, to say the least.

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This is the problem: all the idiots stay in charge AND GET BONUSES. Just look at the counterparts (I mean banks) in the UK/US/Germany. In Germany, IIRC, HypoReal has gotten bailouts to the tune of EUR 140 Bn and is still paying their banksters millions in bonus. WTF?? I am so ANGRY.

 

EDIT: And that's with me not even being particularly affected yet! There needs to be political change soon. It is brewing, to say the least.

This is the problem: all the idiots stay in charge AND GET BONUSES

 

By design the system identifies these "idiots" i term them "left brained crackers" and then PLACES them as the PUBLIC PUPPET show.

People need to wake up and realise they have the power for AUTONOMOUS rule and self governance DEMO-CRACY (mob Rule) is what they wanted and what you and i got.

WAKE UP PEOPLE.!!!!

ITS TIME.!!!!

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EDIT: And that's with me not even being particularly affected yet! There needs to be political change soon. It is brewing, to say the least.

 

 

Where do you see the evidence for this or are you referring to the US?

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Where do you see the evidence for this or are you referring to the US?

Our media is full of anger regarding our electoral system. It favours local politics - you have our houses of government and leaders, building hospitals/schools/infrastructure in rural parts of Ireland, just to get the vote of a single 'local' politician. It's a joke, and then you have the cosy relationships that foster unethical business practice. I suspect though that you may see a 'revolt' rather than an orderly change.

So, to answer your q; I see it 'brewing' in Ireland, but as I've experienced through my career. It's easy to talk about what needs to be done - value is seen when people have the courage to act..... so time will tell if pain turns to anger, and then on to change, real, meaningful change.

My problem is that I see no-one here that I would vote for!

MunsterK

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Our media is full of anger regarding our electoral system. It favours local politics - you have our houses of government and leaders, building hospitals/schools/infrastructure in rural parts of Ireland, just to get the vote of a single 'local' politician. It's a joke, and then you have the cosy relationships that foster unethical business practice. I suspect though that you may see a 'revolt' rather than an orderly change.

So, to answer your q; I see it 'brewing' in Ireland, but as I've experienced through my career. It's easy to talk about what needs to be done - value is seen when people have the courage to act..... so time will tell if pain turns to anger, and then on to change, real, meaningful change.

My problem is that I see no-one here that I would vote for!

MunsterK

'revolt'

Yes that is exactly what they want you to do and are facilitating this with their outrageous AUSTERITY measures.The very points you made in your previous post are proof to that fact i.e the extreme dire financial positions people have been "SEDUCED" into by their own "GREED" in most cases on the insane /nieve to say the least belief that they would become rich rich rich beyond their wildest dreams by swallowing the "ILLUSION" of a debt based money system and its endless spin offs.If people are stupid enough to revolt (which they will be ) because most are to stupid to see the big picture this will play straight into thier hands and curfews and martial military lockdowns.

Remember it was the "pen" that got them into this situation by virtue of seducement into fraudulent contracts etc.

So people need to use their same methods against them remember "THE PEN" is "MIGHTIER THAN THE SWORD" and (S)WORDS are where the intelligent man will find his "REMEDIES".

My problem is that I see no-one here that I would vote for

 

AN "INTELLIGENT" man would see through this charade by now.Look at posts on ids thread for more substance on this.

COLLECTIVISM and all ISM'S are a con.INDIVIDUAL and AUTONOMOUS rule is what the intelligent man will want.Not giving away his sovereign power to pirates.

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