Tag Archives: IMF

Know thyself, and know thine enemy.

The citizens are revolting


Chatting with the #occupiers of Dame Street has been interesting, if not very revealing.

What seems to be happening is that they:

  1. know that something is wrong and,
  2. know that they are not happy.

What then seems to happen is that the #occupiers then interpolate these two facts and then engage in a process of  confabulation wherein they explain these two facts using whatever schema that they believe explains the social reality of the world around them.

Consequently every one of them seem to have their own story, founded on their personal prejudices, that is internally consistent  with their view of the world. There are some commonalities. At lot of mentions of the reintroduction of a gold standard, and plenty of discussion on how the IMF is raping the country. These thoughts are probably emerging from the Seomra Spraoí contingent of the Anarcho-Communist community, who remember the Argentinian default so well.
They are obviously wrong about a gold standard, there is nothing intrinsically valuable about gold beyond our desire for it. The only benefit is that it stems inflation, and reintroducing it would copper fasten the wealth of those who have it now, and enforce an era of deflation (making those who are wealthy now, wealthier, year after year).

And they are wrong about the IMF. The IMF want to see a European solution to a European problem (and they are lending to us at the lowest long term rates). The ECB want their money back (they have lent 104 Billion of short term money to the insolvent Irish banks @ 1.25 % – 3 cheers for Super Mario)

It is the oligarchs from the European Commission who are the enemy. They own the euro (and have allowed the Germans to fuck it up). And in the words of Brian Hayse they need a “win”. They need to salvage some form of victory from this mess. The EU civil servants have been completely undermined by the council of ministers from the start of this crisis. They need to show that their policies work somewhere. They can’t “win” in Greece, nor in Portugal. So they have to win in Ireland.

Ireland following their policy of perpetual poverty through decades of deflation will show the rest of Europe that at a higher, almost moral level, the commission is right after all.

Our permanent government is facilitating them.

Our elected government are too economically illiterate to raise objections.

Which is why we need the #occupiers. Their lack of coherence would suggest that they will accomplish little directly.

But, there are second order effects to consider. If our government are too economically illiterate to counter the arguments emerging from their civil servants. And if their civil servants are entirely in thrall to the European Commission then who is left to counter the proposals of the commission.

And parse the words of István Székel carefully. What they propose is perpetual poverty driven by decades of deflation. They that Ireland  will collapse it’s expenditure, but will not tackle the underlying perversities in the property sector that has undermined the constitution of the country.

For as long as property assets remain over priced (and they are still over priced) then they (as non-traded factors) will undermine our trading competitiveness.  But to allow a resetting of the property sector would demand a fresh injection of capital into the banks. Allowing the private and business rental sectors to hit their real economic level would require that rents would collapse: undermining NAMA,the buy-to-let housing sector (which by strange coincidence is dominated by civil servants with second homes), and so the banks would be hit by another wave of foreclosures.

The Brussels oligarchs want to avoid realising these losses and allow the slow inflation of the Eurozone to eat into them (which will take a generation). But with our leaders incapable of leading then we are defenceless.

Every set of oligarchs are conservative. They are the ones whom the current system suits, hence they fear change. They therefore fear revolt, and change is all they really fear. Highly visual dissent causes them pause for though. The Irish are remarkable. Every country that has ever required an IMF bailout has rioted, except us. While Irish people hurting Irish people for the sake of European money will never be useful, in the absence of real governmental leadership, public dissent – of a peaceful kind – will be all that protects us from the powerful


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Leadership, Ireland, and the Budget.

Before  we joined the Euro, twenty odd years ago, with the Maastricht Treaty and European Monetary Union  we, along with many of our European neighbours joined with each other to create the Euro.

When we joined, we all agreed to the terms of the growth and stability pact because everybody recognised that we all had a share in our common welfare.

Now that the Euro is suffering a crisis it is inevitable that our partners are involved. Our budget is as it would have been had the IMF not come in. We are cutting €6 Billion from the budget because not doing do would make our difficult situation worse.

Over the last decade, all parties promised the electorate the sun, the moon, and the stars. Political parties used surveys, and focus groups, and pollsters to figure out what the voters wanted, and then  fought about who was going to give the biggest piece of pie, and to whom.

That failure to recognise the cold, hard, unpalatable facts meant that there was nobody in the political arena who called for less. No one to say  “The government can’t do everything”.

The failure in our political leadership was never in having the moral courage to say “No”. We ignored the elephant in the corner, we were offered instead more and more. And we were delighted to take it.

What is frightening, is that the opposition parties haven’t seemed to learn from the Government’s mistakes.

They still offer us the politics of 2002, offering an ‘easier’ way, a ‘softer’ way. Just a fallacy, hoping that the electorate are angry enough with Fianna Fáil that they won’t care about change so long as change occurs.

Even if that change is a backwards step

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Ireland, our Budget, and the Bond Markets

The bond markets are irrelevant now that the IMF are in the game.

When the IMF offer funds it is as a funder of last resort.

Realistically, no other lender will touch a country so long as an IMF funding programme is in place as the presence of the IMF suggests that the country is financially unstable.

The budget being planned now is the budget which would have been planned even if the IMF was not involved (as we have to deal with a budget deficit of 19 Billion, or 11.5%) and that gap can’t be narrowed by wishful thinking.

I believe that most of these ‘negotiations’ are just political bullshit.

There is a problem. The scope of the problem has to be ascertained. The scale of the funding requirements have to be calculated. All of which if fact finding (and you can’t negotiate the facts)

Which means that the interest rate is all that’s left. But the ESEF lends at 5% (not negotiable – see Germany, again). So this is all a play to ensure that Euro stays stuck together, something I’m increasingly less convinced of.

Any deal, which is done now, will be inevitably renegotiated in the future. The terms don’t matter that much because either so much will change that they’ll be irrelevant, or nothing will change and they’ll be shown to be unviable, where they are unviable, and there will be a controlled debt forgiveness programme (where the Germans will transfer Irish debts onto their books).

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