Monday, 7 March 2011

Skinning the tiger


Shortly before the Irish general election last month, which saw the worst defeat of a sitting government since the formation of the Free State in 1921, a letter appeared in the Irish Times, saying that the title of the European anthem should be changed from Ode to Joy to Owed to Germany. It’s good to see that at least some people in Ireland preserve a sense of humour, even if it’s in the shade of an economic gallows.

It’s become the fashion to blame those irresponsible bankers for the woes that have overtaken the world economy since 2008 that we are overlooking the fact that stupid and short-sighted politicians bear a far deeper responsibility. The business cycle is part of our economic life; it always has and it always will. It really should be repeated endlessly: that which goes up must inevitably come down.

People are so easily deluded, forever trapped in the short-term. We should be immune to arses like Gordon Brown, the former British Chancellor and Prime Minister, who announced “an end to boom and bust”, or Bertie Ahern, the former Irish Taoiseach, who said that the “boom can only get boomier”; but we are not; sadly we are not.

There are so many lessons in the Irish farce, which has seen a country that struggled centuries for dignity and independence subject to a new kind of fiscal colonialism, forced to accept the indignity of an EU-IMF bailout, forced to accept that it no longer has sovereign management of its own economic affairs. Where now is the tiger economy? That’s easy: it’s been shot and skinned, its hide hanging on the wall of the IMF.

Bankers do what bankers do, which is to take risks. Politicians do what politicians do, which is to exercise caution. But when politicians join bankers in playing at risk one ends in the Irish Bubble. I make no apology for this expression, echoes of England’s infamous eighteenth century South Sea Bubble, though I may be in danger of downplaying the stupidity involved; for at least the English government of the day did not underwrite the speculators.

So, exercising no restraint at all, believing that the ups would be ups for ever, the Irish government panicked when property prices started to slide, leaving the banks hopelessly exposed. An emergency meeting was held in September 2008, in which Brian Lenihan, then Finance Minister, offered the bankers guarantees not just over deposits but also most debts. Debt, in other words, was nationalised. Taxpayers, in still more words, were defrauded, patsies for the politicians. Amazingly the state took on a potential liability more than two and a half times the size of the national economy. The boom got bustier.

Where has all Ireland’s capital gone, long time passing? Again the answer is easy; look around the place, see all those ghost estates, homes that nobody wants, builders can’t complete and buyers can’t afford. Liquidity has turned to stone, and there it is likely to remain, at least until the bulldozers return the sites to pasture.

I read in The Economist that when the IMF delegation arrived in Dublin last November to rescue the politicians from their monumental stupidity that the Irish Times ran a lachrymose editorial, asking if this is what the heroes of the 1916 Easter Rising had died for. It continued by observing that “The true ignominy…is that we ourselves have squandered our sovereignty.”

Indeed they have: in embracing the European Union as the universal panacea, in embracing the euro, that one size fits all currency, in embracing the finances of Berlin that have no place at all in the finances of Dublin. Now with credit almost impossible to get, Ireland’s membership of the single currency means that it lacks the flexibility to manage the situation with its own internal fiscal tools. In place of the tigers have come some rather desperate looking cattle. Oh, for the power of prophecy.

Then Pharaoh said to Joseph: “Behold, in my dream I stood on the bank of the river. Suddenly seven cows came up out of the river, fine looking and fat; and they fed in the meadow. Then behold, seven other cows came up after them, poor and very ugly and gaunt, such ugliness as I have never seen in all the land of Egypt. And the gaunt and ugly cows ate up the first seven, the fat cows. When they had eaten them up, no one would have known that they had eaten them, for they were just as ugly as at the beginning. So I awoke. Also I saw in my dream, and suddenly seven heads came up on one stalk, full and good. Then behold, seven heads, withered, thin, and blighted by the east wind, sprang up after them. And the thin heads devoured the seven good heads. So I told this to the magicians, but there was no one who could explain it to me.”

“Never mind all that”, Joseph replied, “the boom can only get boomier.”

27 comments:

  1. Deutschland!,Deutschland!,Uber Alles!

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  2. Those pesky leprechauns! If any people should have been suspicious of fairy gold it is the Irish. And how is it that even the Greeks were caught out by strangers bearing gifts? The world is topsy turvy and all our legends inside out.

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  3. Are you aware of the theory that Joseph's years of fat & lean have been associated with a very large volcanic eruption in Iceland that ejected an ash plume that left traces all over the Northern Hemisphere? The theory goes that aerosols and dust punched high into the atmosphere interfered with monsoonal rains feeding the headwaters of the Nile, causing a temporary failure of the annual floods. Seems plausible.

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  4. The only sane way out for the Irish is to default and leave the Euro. Just what are the Franco-Germans going to do to them? They could make a start by cutting their corporation tax rate to zero.

    The Franco-Germans may think they are on top but history shows that they are a bunch of losers. They have been since about 1814!

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  5. Anthony, put it this way: England has been around for over fifteen hundred years; Germany for just over a hundred.

    I do, however, have a certain pessimism about the future, not just for my country but for the other nation states of Europe caught in the belly of the European Union, that appalling transnational Behemoth. If you think the Germans are any more confident about their own future as a nation you are very much mistaken. If you read German you might have a look at Deutschland schafft sich ab - Germany abolishes itself - , a book published last year. I think I’ll make reference to this on an upcoming blog on Prussia.

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  6. Calvin, no, I wasn't aware of that. It does not surprise me, though; I've heard of other historical events related to some natural catastrophe or other.

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  7. New book on the meltdown:

    http://www.boingboing.net/2011/03/07/the-monster-the-frau.html

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  8. AFB: "There'll always be an England" to which Anthony said "Geographically".

    Fraid not, either of you, as once we are subsumed totally England will be known as Region UK under the NUTS programme. Level 1 then breaks it down into sub-regions: North East UKC, North West UKED, South East UKJ etc. Level 2 breaks that down, for example, Tees Valley & Durham is UKC1, Northumberland and Tyne & Wear is UKC2.

    It goes right down the 'area tree' even down to parishes!

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  9. "Deutschland schafft sich ab" is indeed one of the biggest best-sellers of the year 2010. However, it is practically entirely dedicated to racial decay (slightly disguised to please some phony political correctness desires).

    I don't believe Germans are afraid about any sudden economical downturn any time soon (at least not one comparable to the Irish crisis).

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  10. At the rate of a mosque a month, ALL western Europe will cease to exist in it's present form, only Nationalism can save you now. Do not let the communist Labour Goverment piss off those Fifteen hundred years of history. I am well aware of what mass immigration has done to Deutschland ,same as England, France, Netherlands, Sweden etc. It seems that Switzerland is making the greatest effort to resist in Western Europe.

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  11. @MJ: Only beacuse the worlds Zionist unite to keep Central Europe under their yolk of oppression.

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  12. I would wish know more about the situation of Ireland but I d not know nothing, sounds like they are in financial troubles, we are in the make of be out of underdevelopment, what I can say, time and patience, slow but in a good way. Hugs. Mario.

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  13. WfW, or Airstrip One, I suppose, an outpost of Eurasia. :-( Big Rumpey is watching you. :-)

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  14. Jean Paul, I would have said it was more about the decay of culture, of national identity, rather than race. But, yes, you are quite right: it has nothing to do with economics.

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  15. Anthony, we actually have a Communist Conservative-LibDem government just at the moment. :-) The history of nationalism in Europe over the past century is far from good. I'm English and a patriot, not a nationalist; and, yes, there is a huge difference.

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  16. Mario, it's pretty much the same in Portugal, Greece and Spain, weak economies that should never have been joined to a strong central currency.

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  17. You might also enjoy Plunder!

    http://plunderthecrimeofourtime.com/

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  18. Calvin, you are a treasure. Your True Grit link caused huge amusement among my set. :-)

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  19. Ana, currently, it is impossible to speak openly about race in Germany. So, you go with things line "leitkulture" (which sounds like mainstream culture), genes, genes of this ethnic group or the other, and intelligence related to genes.

    Everywhere you see the XIX century German racist rearing his ugly head.

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  20. Glad you liked it! This one isn't so funny - but it did win the Oscar for this year's best documentary:

    http://www.sonyclassics.com/insidejob/

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  21. Jean Paul, I see. Many thanks. My new post is on Prussia. I would value any comment you have.

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  22. Calvin, I'm beginning to rely on you for this sort of thing. :-)

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