Spotted this just after today’s Ireland post.
I reckon NC’s UK and US readers and others will have got the idea of ‘extend and pretend’ , aka ‘forbearance’ already; always good to see it getting called out again though.
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Kaminska (from the linked article) said: “Of course, as we now know, that halfway-house of forbearance (instead of say, full-on principal forgiveness) didn’t really work out too well for Ireland’s banks in the interim — because it neither dealt with the problem nor managed to freeze affairs for long enough to come through the other side of the recession.”
Kaminska gets the banksters’ strategy all wrong.
Was it the bankster’s strategy to wait for “the other side of the recession” when housing prices would recover? It is undoubtedly true that, if housing prices were to recover, then the losses would disappear. But do you really believe that was ever the banksters’ plan?
I don’t. I believe the banks, from the very get-go, had an entirely different strategy, and that was to “freeze affairs” until the losses could be transferred onto Irish, European and American taxpayers.
And in this strategy, given the IMF/EU deal Ireland’s PM Brian Cowen and his neoliberal guru, Brian Lenihan, acceded to just this week, it appears the banksters have been successful.
Take a look at how neoliberalism has worked over the past 30 years and you will see this same pattern play out over and over and over again.
Well you are right. It’s matter of ‘which banksters’. And it’s not the local ones.
Who are ‘banksters’? Are they people working in the banking industry? Bank shareholders? Bank management staff?
Oh I think you know who they are. After all, you invariably side with them in your comments here on Naked Capitalism.
But if there is any doubt, take a look at this video (I think it was Paul Repstock who furnished the link) beginning at minute 40:00 and running through minute 1:10:00. It exposes the behind-the-scenes machinations of the banksters and puts them in historical context. I found the actual quotes from various internal memos of the American Bankers’ Association, explaining how they intended to manipulate and exploit the “inferior social stratum of society,” to be most revealing of the sort of sociopaths that constitute the ranks of the banksters.
I genuinely do not know what the term refers to. It seems to refer to in this last comment to a certain (minority?) of senior managers in the banking industry?
I do not side with anyone in banking, clerks, shareholders, bank managers. No sir. I would like to see Glass Steagall come back strong.
Really. How quaint.
“….The final, unpalatable, zero-tolerance truth is that hedge-fund managers, bankers, cynical architects, and insecurity-exploiting designers are far more damaging to the unstylized life of a city than all the junkies, prostitutes, panhandlers, urban cowboys, bag ladies, homeless, and graffiti kids they replace…..”
A A Gill
The fact of the matter is that all banksters and their ilk, and especially the ones that should be bankrupt and in jail, ruin everything for everyone, most especially for themselves. They are for the most part ignorant scum…
Best regards,
Econolicious
How about senior bondholders of banks?
I’m not a fan of FTAlphaville, but Kaminska seems by far the best reporter over there. I wonder what her background is?? She does a good job generally though. Not so kiss-ass to the banks like her FT cohorts.
It’s the principal that truly matters – as we banks are fond of saying. Honor your promise to pay or we’ll shred you into itty bitty pieces and feed you to our hunting hounds. If we can’t get it from you individually we’ll take it via taxes. One way or the other you’re gonna pay. Count on it.
http://www.youtube.com/watch?v=peX4dBEF0Vg
Thanks for the link sounds like what happened in Iceland.
This may be of interest
http://golemxiv-credo.blogspot.com/2010/11/who-bankrupted-ireland.html
You have to post a bit of the good parts, otherwise no one reads the link.
———–
Ireland also houses a very large chunk of the world’s Special Investment Vehicles (SIV’s) which are the shell companies which house trillions and trillions of dollars and Euros and pounds worth of Collateralized Debt Obligations (CDOs). These are what Warren Buffett described as “weapons of financial mass destruction'” And they are in their own way as hard to find and disarm as the ones we had a fraudulent war over. Anyway I digress.
These CDOs, in turn, house an equal or greater nominal value of Credit Default Swaps (CDS) written upon the CDOs. I can’t tell you the figures because only the Irish Stock exchange has the otherwise completely confidential paper work and I have serious doubts (from what I have been told in the last week by an insider with first hand knowledge) that the Irish regulator and stock exchange have much of a clue themselves.
Mostly gs people set up/run the Irish Financial system. Check on some IRA leaders comments, sorry you’ll have to google them yourselves. I think if you looked around the eu world financial system you would find most gs people in charge. Shock Doctrine.
If the speculation is right that the real amount required is north of 300m euros, then this means the end of the euro. There is also no way that saving a few billions out of the budget is going to make any difference to this, if it really is that big a hole.
I am not persuaded that leaving the eurozone is really going to much better their situation. Import prices will soar as a result. No-one will lend. So their state is not going to be a good one in any case, there will probably in that case be even more of a crash in living standards. I would emigrate, and they will too, everyone who can, and that will not help.
It is a real mess.
Where will 5 million Irish emigrate? I heard the Turks already moved into all the empty space in W. Europe, and since that went better than WW1, they are probably there to stay.
But I hear jobs are a problem.
The US hasn’t re-located the Statue of Liberty to our southern border yet, so maybe Ireland comes our direction once again. But NYC is much more crowded than it used to be. There is still Chicago of course and there may be a little room in the Irish part of town that is wedged between the Italian and Greek parts. But you had better hurry. More space is available east into Indiana, and Notre Dame has a football team to make everyone feel at home. The steel mills in the area aren’t hiring right now of course, so bring some savings to tide you over until that ever changes. Detroit is opening up and they are working on an ag economic plan for the city. So maybe potato farming opportunity there.
But then one of these years Americans may want to emigrate somewhere, so maybe it would be smart to wait and see if we can figure out a good place to go.
But all Irish banks passed all the recent stress tests?
How come they are in trouble now.
This EU thing is starting to look more and more like the good old URSS. Shame on them.
In the NY Times Ireland article there is this cute switcheroo:
“[Prime Minister Brian Cowen] said the four-year plan would raise money mainly by taxing those who earn more, while going easier on those who have less. . . Under the measures, Ireland’s tax net would be widened to take in some low-income workers who currently pay no tax, and a series of new taxes would be imposed on certain residential properties, as well as on 120,000 people who receive public sector pensions.”
Perhaps the working class can eat babies
Fledermaus,
You might find this cartoon appropriate.
Of course, the low corporate tax rates aren’t going to get raised one bit. Not even to 15%, much less higher to be on the level with the rest of Europe.
Just from what I could tell when I read the details, this “shared sacrifice” is only for those who did not make it big running the banks and developing the housing during the boom. And also the Irish Corporate tax of 12.5%, with lots of legal loopholes to drop it lower (the Dutch Sandwich and then to the Maldives following Google’s example is sacred.
Not really, the whole population lived high on the boom. They did not cause it, its true, it was a combination of the bank management and their elected representatives, but huge swathes of ordinary people started companies, got salaries and bonuses out of it. Like Iceland for that matter, the wealth, or the illusion of wealth, did get spread around quite a bit. Don’t think that in any of these countries it is only a few thousand who have participated in any way, its not.
It probably is true however that those who benefited least during the boom will lose relatively most during the coming crunch, that’s how it usually goes.
Ireland is bad enough. On a macro-scale the permeation of Ireland’s malaise throughout Europe will have profound impacts on the U.S. economy – sooner or later.
We are not isolated from this. We are substantially joined at the hip.
To wit…..
“Europe receives nearly a quarter of all U.S exports.”
http://www.masterseek.com/p/13/84/USA-export-markets.htm
Looks to me like the entire continent underwent a bubble save one country, which I think was Germany. From what I understand, there are 300,000 new homes in Ireland unoccupied or in various stages of construction. This is a total loss, as the population wouldn’t absorb this many homes for years. An overbuilt market, a fraction of that size in DFW back in the 1980’s devastated the local market for several years and DFW was a rapidly growing area through it all. I doubt another 1 million people will be moving into a nation put into debt peonage any time soon.
Yes, with one qualification. You say ‘a nation put into debt peonage’. This ought to say ‘a nation that has put itself into debt peonage’. No-one made it do it.
The interesting public policy economic question that underlies much of the debate about this is when a region should be part of a currency union.
No-one seems to think that California or Illinois would be better off if they ran their own currencies. But lots of people think that Ireland would be if it had never given up the punt for the euro, and they seem to think that things would be far better for the Irish if they left the euro and went back to the punt.
Why? And when should a region have the same currency as another, and when not?
The Irish RE bubble was the work of, no joke, about a dozen speculators (this is per a link from Richard Smith, I might be able to track this down if you insist). Now they presumably had a wee assist from overly friendly banks. But blaming a nation for the failure of well placed private sector actors simply isn’t accurate. No one attributes to “the nation” the success of the US IT sector, for instance. It works both ways.