News Updates: Irish Parliament Abdicates Legislation, Who are the Bond-Holders? EU Propaganda Junkets

Open Europe
Press Summary Archive
11 October 2010
http://www.openeurope.org.uk/media-centre/summary.aspx?id=1204

The Irish edition of the Sunday Times reported that Edmund Honohan, Master of the Irish High Court, has accused the Irish Parliament of failing to assert Irish legislation over new laws from Brussels and delegating much of the workload involved in scrutinising EU law to civil servants.


http://www.swp.ie/editorial/who-are-bond-holders/3669
Who are the Bond-holders?
SWP / Kieran Allen, 08/10/2010

‘We must re-assure the bondholders about the economy’. This line is trotted out daily in the Irish media. But who are these bondholders? The strange feature of current debates is that the Irish people never get told to whom we are supposed to pay all these debts […]

Last Saturday the Financial Times published data on bondholders for Irish government debt. The figures relate to July 2010 when European banks were asked to provide information to the Committee of European Banking Supervisors as part of a stress test. Although the data is a few months old, we may reasonably assume that the pattern has not changed when interest rates shot up to 6.5%. It should be noted that the figures below pertain only to Irish state debt. We still do not know who the bondholders of Anglo-Irish or the wider banking system because this is supposed to be ‘commercially secret’ information. Read it carefully and you will get an insight into the shocking skulduggery that is going on here.

TOP 10 BANKS WHO HOLD IRISH GOVERNMENT BONDS

    1. Royal bank of Scotland £4.3 billion
    2. Allied Irish banks €4.1 billion
    3. Bank of Ireland €1.2 billion
    4. Credit Agricole €929 million
    5. HSBC $816 million
    6. Danske Bank €655 million
    7. BNP Paribas €571 million
    8. Groupe BPCE €491 million
    9. Societe Generale €453 million
    10. Banco BP1 €408 million

The Royal Bank of Scotland is owned by the British government and Peter Sutherland was one of its directors until 2009. Sutherland often lectures the Irish population on the need for cutbacks – but he never reveals this link. The big surprise, however, is that the two biggest bondholders are Irish Banks. The people of Ireland have already put €7 billion in these two banks – but they then screw us twice by lending back our own money at higher interest rates. Imagine working class taxpayers delivering billions at the front door of the bank and then the directors scurrying around the back door to lend us back our own money and to call for more sacrifices. It is time to end this madness now.


http://synonblog.dailymail.co.uk/2010/10/is-this-how-the-eu-got-a-yes-to-lisbon-from-the-irish.html
Is this how the EU got a Yes to Lisbon from the Irish?
Daily Mail Ireland Online / Mary Ellen Synon, 7 October 2010

The European Commission has just flown 15 Irish journalists to Brussels for a two-day ‘information visit’. Or as those of us who know Brussels and talk straight would put it, for a two-day, two-night taxpayer-funded propaganda junket at a four-star hotel.

Ireland and the other eurozone countries might be suffering savage spending cuts, but the EU self-publicity budget thrives: in 2008 the Open Europe think-tank calculated that the EU was spending at least €2 billion a year on ‘information’.

Much of it bent, which is to say, propaganda. The commission actually admits that its information is bent. One of its publications declares: ‘Genuine communication by the European Union cannot be reduced to the mere provision of information.’

The EU propaganda machine pumps money into lobby groups that support ‘ever closer union’. They push propaganda into schools. And almost more than anything else, they target the Press. Journalists are offered ‘free’ trips and training (yes, just like Scientology offers training). The EU gives out cash prizes to on-message journalists.

A parliamentary Press official told me this week that a large number of Irish news organisations are given free flights to Strasbourg to cover the parliament, plus €360 in cash for expenses. (The Irish Daily Mail takes none of these taxpayer-funded handouts.)

 

[…]I got myself into the middle of it to hear what it was the commission and parliament propaganda machine would say to these 15 EU-innocents coming from Dublin. I cut the hotel and the other freebies – I live in Brussels – and stuck to the meetings. Meanwhile the journalists piled off their EU taxpayer-funded €377-a-head flight and into their EU taxpayer-funded rooms at the Hotel Manos Stephanie (’the Louis XV furniture, marble lobby and plentiful antiques set a standard of elegance rarely encountered,’ the hotel brags, and so it should since the rate is listed at €295 a night for a single room).

I said ‘No, thanks’ to the swish free lunch (well, not free to the taxpayers: it cost taxpayers €30 for each journo) in the private dining room at the European Parliament on Tuesday. It wasn’t hard to say No. The truth is I get gag-reflex when someone offers me taxpayer-funded food. I can never get that line from Abraham Lincoln out of my head, about the lure of ‘the same old serpent that says you work and I eat’.

I only wanted to be there to see how the propaganda machine would seek to mislead. For example: one theme that turned up in briefings on the economy was that the euro had nothing to do with Ireland’s economic disaster, nor indeed with any economic disaster anywhere in Europe.

Yet it was the low interest rates of the early years of the euro that set fire to our property bubble. It was the illusion of eurozone convergence that allowed our banks to suck in billions from saver-countries such as Germany.

The propaganda orthodoxy in the EU will admit no such damage. What the Irish journalists were given this week was the Bart Simpson excuse for the damage done by the euro: ‘I didn’t do it. Nobody saw me.’ This wasn’t information, it was a propaganda pitch.

[…] One of the meetings the Press officers had arranged was a session with five Irish members of the European Parliament.
[…] I thought I’d try to put the concerns of these politicians about the economy into Brussels-perspective. Remember, we were talking to politicians who will bank a half-million euros just from their salaries over the course of this parliament. Last year I added up some of the perks they get on top, everything from daily allowances to business-class air travel to medical allowances to free disposable contact lenses to reimbursement for 60 sessions a year of mud baths. Being an MEP is a lotto win. How do you stay in sympathy with the unemployed in West Dublin with a life like that?

So I asked the five MEPs to justify the decision last week by the parliament’s budget committee to increase the MEPs’ entertainment budget for 2011 by 85 per cent. How could they justify that, given the suffering of people across Europe?

The five said they’d heard about no such thing. Mr de Rossa even denied there was an entertainment budget for MEPs. He suggested that newspapers had made up the story.

Since I was one of the journalists who had reported the story, I knew it had not been made up. I’d had my information from Marta Andreasen, an MEP who is a professional accountant. More to the point, she is a member of the parliament’s Budget Committee.

Here are the figures, as from this professional accountant: the MEPs’ entertainment budget for next year has jumped from €1,105,200 to €

2,047,450. Yet the five Irish MEPs at this propaganda-fest denied it in front of 15 Dublin journalists plus me. Unless I could identify the exact budget line for them right then, the MEPs said they wouldn’t admit such a thing could have happened.

The other journalists, unused to the ways of the parliament, couldn’t make anything of it. But I will give credit to Mairéad McGuinness, who, despite being indignant about my suggestion, had her staff check it. She came back to me a couple of hours later with a piece of paper showing the figures for a budget line labelled ‘Entertainment and representation expenses’. There it was: the huge jump in the entertainment budget that the Irish MEPs had all earlier denied could exist.

Half the eurozone is bleeding to death, but the MEPs will take a jump next year of 85 per cent for their ‘entertainment’.

[…]When Miss Day brought her comments around to the new so-called European External Action Service (the euphemism for the new EU diplomatic corps which is going to lead to the closing of many Irish embassies around the world), she assured the Dublin journalists that this vast army of diplomats and embassies would in fact be ‘revenue neutral, except for the first year.’

I waited for someone to ask, ‘But what about the first year, then?’ None of them did. I realised that even the sharp ones weren’t used to listening to eurocrats’ slimy-speak. If they’d asked (I didn’t, it was 6 pm and I was losing the will to go on), and if she’d given a straight answer, the Irish journalists would have learned the shocking truth.

What her propaganda pitch didn’t mention about Catherine Ashton’s new empire was that the new service is in raging cost-overrun. It is going to head for at least ¤33 million over its ¤455 million budget this year already – and it hasn’t even been launched yet.

Thirty-three million over budget in one year, and that is just called a failure to be ‘revenue neutral’. As I said, eurocrats’ slimy-speak. It’s the painful torture of a life in Brussels.

The EU-innocents last night boarded their flight back to Dublin. Before they left, I asked three of them if they’d felt their trip was a good use of taxpayers’ money. All three agreed it was.

I may ask them again after they see the tax increases that Finance Minister Brian Lenihan has planned for them in the next Budget. How strange that some journalists haven’t figured it out yet: there really is no such thing as a free lunch. Just like there’s no such thing as EU ‘information’.

For Your Information: Ireland, EU, Eurozone, Banks & Economy – News & Analysis

Ghosts of debt and jobs will haunt economy
The Irish Times – Tuesday, December 29, 2009
http://www.irishtimes.com/newspaper/opinion/2009/1229/1224261354227.html
Morgan Kelly
OPINION : By 2015, Iceland will almost certainly be a lot better off than Ireland because it dealt decisively with its banks.

For grand corruption, though, we will have to look to Nama. By allowing the banks to dictate the terms of their bailout, the bank rescue was turned into the most lucrative and audacious Tiger Kidnapping in the history of the State, with the difference that, like the sheriff in Blazing Saddles, the bankers held themselves hostage.

Bad banks like Nama were tried on a large scale in the early 1930s in the US, Austria and Germany; and proved to be profoundly corrupt and corrupting institutions, whose primary purpose was to funnel money to politically connected businesses. The German bank is best remembered for setting up what we would now call a special purpose vehicle to fund the presidential election campaign of the odious Paul Hindenberg.

Bad banks do not just happen to be corrupt and anti-democratic institutions, it is what they are designed to be. Effectively, bad banks give governments the power to choose which of a country’s most powerful oligarchs will be forced into bankruptcy, and which will be resuscitated to emerge even more powerful than before.

Nama will get to pick which of the fattest hogs of Irish development will be sliced up and fed, at taxpayer expense, to better connected hogs (remember that Nama has been allocated at least €6.5 billion, considerably more than the Government saved by draconian budget cuts, to “lend” to favoured clients).

While Nama may have momentous political consequences, it has already failed economically: the Irish banks are still zombies, reliant on transfusions of European Central Bank funding to survive until losses on mortgages and business loans finally wipe them out. In the next few months we will discover if the State bankrupts itself by nationalising the banks; or if it has the intelligence to free itself from bank losses by turning the foreign creditors of banks into their owners, as Iceland has just done with Kaupthing bank.

It is ironic that by 2015, having devalued its currency and dealt decisively with its banks, Iceland will almost certainly be a lot better off than Ireland.


Why the eurozone has a tough decade to come
Financial Times – January 6 2010
http://www.ft.com/cms/s/0/54cc3b20-fa62-11de-beed-00144feab49a.html
Martin Wolf

What would have happened during the financial crisis if the euro had not existed? The short answer is that there would have been currency crises among its members. The currencies of Greece, Ireland, Italy, Portugal and Spain would surely have fallen sharply against the old D-Mark. That is the outcome the creators of the eurozone wished to avoid. They have been successful. But, if the exchange rate cannot adjust, something else must instead. That “something else” is the economies of peripheral eurozone member countries. They are locked into competitive disinflation against Germany, the world’s foremost exporter of very high-quality manufactures. I wish them luck.
[…]
Where does that leave peripheral countries today? In structural recession, is the answer. At some point, they have to slash fiscal deficits. Without monetary or exchange rate offsets, that seems sure to worsen the recession already caused by the collapse in their bubble-fuelled private spending. Worse, in the boom years, these countries lost competitiveness within the eurozone. That was also inherent in the system. The interest rates set by the European Central Bank, aimed at balancing supply and demand in the zone, were too low for bubble-fuelled countries. With inflation in sectors producing non-tradeables relatively high, real interest rates were also relatively low in these countries. A loss of external competitiveness and strong domestic demand expanded external deficits. These generated the demand needed by core countries with excess capacity. To add insult to injury, since the core country is highly competitive globally and the eurozone has a robust external position and a sound currency, the euro itself has soared in value.

This leaves peripheral countries in a trap: they cannot readily generate an external surplus; they cannot easily restart private sector borrowing; and they cannot easily sustain present fiscal deficits. Mass emigration would be a possibility, but surely not a recommendation. Mass immigration of wealthy foreigners, to live in now-cheap properties, would be far better. Yet, at worst, a lengthy slump might be needed to grind out a reduction in nominal prices and wages. Ireland seems to have accepted such a future. Spain and Greece have not. Moreover, the affected country would also suffer debt deflation: with falling nominal prices and wages, the real burden of debt denominated in euros will rise. A wave of defaults – private and even public – threaten.

The crisis in the eurozone’s periphery is not an accident: it is inherent in the system. The weaker members have to find an escape from the trap they are in. They will receive little help: the zone has no willing spender of last resort; and the euro itself is also very strong. But they must succeed. When the eurozone was created, a huge literature emerged on whether it was an optimal currency union. We know now it was not. We are about to find out whether this matters.


Are we about to see the end of the much-vaunted eurozone?
The Observer – Sunday 3 January 2010
http://www.guardian.co.uk/commentisfree/2010/jan/03/peter-oborne-end-of-eurozone
Peter Oborne
In putting financial considerations before social ones, the governments of Europe have ensured that things can only get worse

It is nearly 20 years since the Conservative chancellor of the exchequer Norman Lamont made his notorious remark that unemployment was a “price worth paying” for the restoration of economic stability. Lamont was at once condemned for his comments, made at the height of Britain’s ill-fated membership of the Exchange Rate Mechanism. The progressive left universally denounced him as arrogant, brutal and out of touch. And yet, only two decades later, the European left has made the identical calculation. The imposition of the euro, and the rigid economic policy a single currency implies, is having socially catastrophic effects across much of Europe on a scale that dwarfs Britain’s suffering in the 1990s.

Consider the facts. In Spain, unemployment has already reached a gut-wrenching 19.3%. But unemployment for those between 16-24 is a catastrophic 42%. In Greece, youth unemployment is 25%, in Ireland 28.4% and Italy 26.9%. Marginal eurozone countries such as Greece, Spain and Ireland are not just in recession. They are in depression – and so long as they remain inside the euro there is no exit.

Before their decision to abandon economic sovereignty and sign up to the euro, policymakers had a tried and tested response to the kind of global setback of the last two years – depreciate the currency and loosen fiscal and monetary policy[…] But inside the euro, individual countries are stripped of the ability to manage their own economies. That is why the global recession has been far, far more devastating for some eurozone members than would otherwise have been the case – in just the same way that membership of the ERM inflicted wholly unnecessary damage on the British economy in the early 1990s.

The European single currency amounts to an experiment in social and economic engineering on a scale only very rarely before encountered in world history. The great question is whether it will work. There is a universal belief among the European political and economic elite that the euro will continue, no matter how much damage it inflicts or how many jobs it costs.
[…]
I believe that this heartless analysis is mistaken, and that the eurozone will in due course collapse (as Karl Marx might well have remarked) under the weight of its own contradictions. Economically, the euro can be spotted a mile off: it is a classic bankers’ ramp. It is designed to do all the things that bankers have historically wanted: create efficient markets, drive down the cost of labour, impose price stability, eliminate trade barriers, confound national boundaries and maximise corporate profits. Bankers don’t care much about youth unemployment in Madrid or home repossessions in Lisbon or riots on the streets of Athens. They worry about the bottom line and the euro has been very good for the bottom line, with stock markets up by an obscene 50% over the last eight months.


Should we divorce the euro?
The Sunday Business Post – 10 January 2010
http://www.sbpost.ie/commentandanalysis/should-we-divorce-the-euro-46642.html
David McWilliams

Joining a currency union is the economic equivalent of a marriage. If a country decides to give up its currency and get into bed with another currency, it would seem ludicrous to entertain this move without being sure that the union was suitable. As we all know, there is a difference between fancying someone and making the thing last.

To avoid single currency arrangements going sour, there is also a ‘matchmaker’ in economic theory. The economic matchmaker goes by the typically incomprehensible name of the ‘optimal currency area theory’. This theory is a checklist of economic attributes which need to line up in order for a monetary union to work.

For a currency union to work for a country, the most important thing is that the country trades overwhelmingly with the other members of the monetary union.

This ensures that all the countries in the union move roughly in the same economic cycle. It is also important that the structures of the respective economies are broadly similar, so that one country doesn’t experience a huge boom, while the rest are just motoring along nicely.

Having similar structures in banking and housing, for example, will imply that a country should not suffer a monumental bust, while the others are merely experiencing a normal recession. Equally, it is important that there is significant movement of people within the currency union – like there is in the US between its states – so that, if a country does slump, its citizens can move to find work in another member country.

In general, for a currency union to work, there should also be a single fiscal policy so that, when one area of the currency slumps, the rest of the union’s taxes go some way to ease the problems in the region in difficulty. This is how the currency unions in the US, Canada and Australia work.

Guess what? None of these attributes was in place when Ireland joined the EU economic and monetary union (EMU) and the euro. So it is clear that we didn’t join for economic reasons. So why did we join? It seems that we were too insecure to behave logically and this national insecurity – particularly among our senior mandarins – prevented us from having a debate.
[…]
The reason we should ask these questions is that it is clear the euro has been a disaster for Ireland, and will ensure our slump lasts considerably longer than it has to. When we look at other countries, we see that, of the three entrants into the then EEC in 1973,we are the only ones using the euro. However, we trade less with other eurozone countries than either Denmark or Britain.


The Irish Credit Bubble
University College Dublin Centre for Economic Research Working Papers Series – WP09/32 – December 2009
http://www.ucd.ie/t4cms/wp09.32.pdf
Google Cache (Web Page)
Morgan Kelly

While NAMA is intended to repair, for now, the damage to the asset side of Irish bank balance sheets from developer loans, their liability side appears unsustainable. The aggressive expansion of Irish bank lending was funded mostly in international wholesale markets, where Irish banks were able to borrow at low rates. From being almost entirely funded by domestic deposits in 1997, by 2008 over half of Irish bank lending was funded by wholesale borrowers through bonds and inter-bank borrowing. This well of easy credit has now run dry. In the words of Bank of England Governor Mervyn King: “But the age of innocence—when banks lent to each other unsecured for three months or longer at only a slight premium to expected policy rates—will not quickly, or ever, return.” As foreign lenders have become nervous of Irish banks, their place has increasingly been taken by borrowing from the European Central Bank and short-term borrowing in the inter-bank market. Payments from NAMA will allow Irish banks to reduce their borrowing by a trivial amount.

Without continued government guarantees of their borrowing and, more problematically, continued ECB forbearance, the operations of the Irish banks do not appear viable.
[…]
By pushing itself close to, and quite possibly beyond, the limits of its fiscal capacity, the Irish state has succeeded in rescuing Irish banks from their losses on developer loans. Despite this, these banks remain as zombies entirely reliant on continued Irish government guarantees and ECB forbearance, and committed solely to reducing their own debts.

While bank capital levels are, probably, adequate for the markedly smaller scale of their future lending, we will see below that even fairly modest losses on their mortgage portfolios will be sufficient to wipe out most or all of that capital. Having exhausted its resources in rescuing the Irish banks from the first wave of developer losses, the Irish state can do nothing but watch as the second wave of mortgage defaults sweeps in and drowns them. In other words, it is starting to appear that the Irish banking system is too big to save. As mortgage losses crystallise, the Irish government’s ill conceived project of insulating bank bond-holders from any losses on their investments is sliding beyond the means of its taxpayers.

The mounting losses of its banking system are facing the Irish state with a stark choice. It can attempt a NAMA II for mortgage losses that will end in a bond market strike or a sovereign default. Or it can, probably with the assistance of the IMF and EU, organise a resolution that shares property losses with bank creditors through a partial debt for equity swap. It is easy for governments everywhere to forget that their states are not wholly controlled subsidiaries of their banks but separate entities; and a resolution that transfers bank losses from the Irish taxpayer to bank bond holders will leave Ireland with a low level of debt that, even after several years of deficits, it can easily afford.

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