Friday, 20 December 2013

The Fool, The Maoist and The Big Fat Lie

European Commission President José Manuel Barroso is a man of almost ferocious attachment to bad ideas. 
He has made a career of it, from his days as a brutally stupid Maoist to his incompetent, bumbling Presidency of the Imperial Commision but even with his track record it is still astounding to hear this europerv blame Ireland for the troubles of the shoddy, ill thought out and worse regulated euro.

When the incompetent ECB was left in charge of the currency, which was a political football and not an economic means of exchange, the results were always going to be bloody. As it turned out with interest rates designed set to suit Germany ravaged by Kohl's precipitous and impoverishing union with the East, it was the fast growing edges of the Zone, particularly Ireland that got the flensing.

In Febuary 2000 Martin Feldstein, an economist with a hefty and serious track record including a spell as Chair of Reagan's Council of Economic advisors predicted that the low interest rates set by the ECB would result in a disastrous over heating of the fast paced Irish economy (here). No one in the ECB, particularly the wining-and-dining numpty appointed as a compromise President of the silly institution, Jean Claude Trichet, either read the article or took as much as a pfennig's notice. 

As newly cheap money poured into Ireland's loan market and the next-election obsessed Bertie Ahern drove the boom boomier (I paraphrase the former Taoiseach) Irish inflation made interest rates effectively negative: it paid to borrow. With the price of money warped and distorted, risk could no longer be assessed and was ignored. That is always what happens with long-term too-low interest rates.

There was no brakes on the runaway train. As Ireland's borrowings exceeded the nations savings, foreign banks, mostly German, stepped in with banker's heroin: short term paper. By 2006 Irish banks, certain that with no exchange rate issues there was no risk, were taking in €120 BILLION short term euro bonds per year. The ECB, with a duty under the Maastricht Treaty to monitor and control such international capital flows was oblivious. 

The euro created the boom, the euro was its blood, bone and flesh. That boom made the bust. When that bust happened Ireland's Government guaranteed the country's banks, damming every Irish person with the cost of the ECB's failures but saving Germany's banking system. There is a vast, separate exploration of the weekend of 29th September 2008 and the lies told then to be made but the alternative courses, leaving all or some banks to fail must have looked more expensive to Brian Lenihan.

The reaction from the glass tower in Frankfurt? The vicious blackmailing of a sovereign government into paying every last junior bond holder, every gambler, their losses. Rightly the quite and conservative Colm Carthy of Bord Snip fame has repeatedly described the actions of the ECB as being openly hostile to Ireland.

Now Barroso, a man promoted at several 100 levels above his competence (sub-under-toilet cleaner?) has decided to put the boot in. 

Ireland is to blame for the Euro woes.

Ireland caused the the problems for all 17 countries

Irish tax payers MUST continue to pick up the massive tab caused by ECB incompetence because there will be no retrospective funding of the Bank intervention.

In his studied and haughty hostility  euronasty Barroso has done us a massive favour. He has blown away every illusion, every fluffy cloud Kenny and Noonan could puff. Now the naked face of where we are and who is our enemy is clear.

When the Government put money into the banks that money was created by the Irish Central Bank acting as an agent of the ECB. This is called the Emergency Liquidity Assistance. Barroso believes we will keep paying back that now €51 BILLION ELA debt to our Central Bank, who will promptly burn the money to satisfy the ECB's isdeas about inflation and moral hazard. Neither apply. The €51 billion is trivial in comparsion the the Eurozone money measurements, even the tighter M1. Moral hazard should apply to the incompetent ECB, not the Irish people who had NO way of stopping the trainwreck the Euro sponsored.

I have news for José Manuel Barroso.

We are not as stupid as our elected politicians. 
We won't pay because it is not our debt and neither the Imperial Commission nor the ECB have any way of extracting money from a free and determined people. We left a bigger, stronger much better organised empire before and we can do it faster and harder than the europervs can dream.

Thanks for starting the rebellion José!

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