Saturday, 18 December 2010

Listening to common sense

Slí Eile: Sometimes we don't like listening to one of our own. Hence, expertise from outside is used to reassure us. Take David McWilliams. The mainstream dismisses him as not for real. He has been banging on about the impossibility of solving our debt crisis and kick-starting the economy. His recipe is straightforward - decouple soverign and bank debt default and start out again. See here. He argues that:
That figure explains why the IMF is here. It is not here to bail us out; it is here to bail them out. The bailout is a bailout for the banks of Germany and France and the Irish taxpayer foots the bill. It is that simple. And where will the EU and IMF money come from? It will be borrowed from the very investment banks that will be bailed out. So they will get interest payments from us, in order that we pay for their mistakes.
But, David is not the only one saying this. Take the Economist here. It says:
Even so, that Iceland’s economy has done little worse than Ireland’s is still a triumph. It has been tough with its creditors and disregarded some international norms—and recovered. Ireland has stood by its banks to the benefit of the wider European banking system. Its reward has been “rescue” loans at an interest rate that makes it hard to fix its finances. The next Irish government may look at Iceland and decide to play hardball with Europe.
And finally, don't miss a brilliant demolition of the Austerity nonsense here


Rory O'Farrell said...

Unfortunately the EU want 'deleveraging' rather than allowing bankruptcies and debt write downs.

I think this is a major problem for us. If we simply forced some necessary bankruptcies and/or wrote off debt companies could start afresh without the huge debt overhand. That is, kill off the zombie firms that suck the life out of the good firms. Or some otherwise good firms are being dragged down by some bad decisions during the boom. As things stand where private debt is written off the cost is borne by the state due to the guarantee.

Deleveraging will take years, and I for one am growing a bit fed up of this recession.

Mike Hall said...

Good heavens, another good post within 24hrs!

Enjoyed the video. With regard to the $2 trillion 'hole' mentioned, that is now being pushed onto the 'bottom 40%' (tho' I suspect bottom 70% or so might be more accurate going forward), this is, of course, entirely a 'political' decision by our bought/incompetent 'public' representatives (sic) & their likewise advisers in support of the 'rentier' classes.

Not only can the rich of the world more than amply afford to fill this hole themselves - - they can stump up some 'back pay' for the last decades of productivity where their share doubled & ours stagnated or diminshed.

I'd be happy with, oh, $20 trillion invested in measures to transform our energy sources to near zero greenhouse gas technologies.