Ireland's troubles can be blamed on its government

The "Celtic Tiger" has gone astray and is now seriously considering a bailout from the EU or more widely.   Such a bailout will be embarrassing for a country and economy that was booming and considered a successful role model for economic growth.   However, whilst it looks like  "just another government bailing out banks" let's understand why this has happened, and why the Irish government is bothering to save the banks.

First is that the Irish banks were flooded with cheap credit because of the Euro.  Unlike other fiat currencies, the supply of Euro is set not by a national central bank, but the European Central Bank, which is largely driven by the three major Euro economies - Germany, France and Italy.  Monetary policy in the age of fiat currencies is driven by management of inflation, so it has been economic growth and inflation in Germany primarily, but also the other large economies that has driven interest rates with the Euro.  For Ireland, which has had economic success partly on the back of economic reform and low rates of company tax, this has meant inflation of assets and consumer prices. 

In an age of national fiat currencies, governments tighten monetary policy to reduce the supply of credit and control inflation (although the only inflation measured is consumer prices, which neglects inflationary speculation of property).   Ireland had no such instruments, so "enjoyed" a boom fueled by cheap credit.  That cheap credit fueled a bubble of investment, largely related to property.  Many companies relocated because of the lower corporation tax, and Ireland's infrastructure improved significantly (telecommunications, electricity, water, roads and airports all upgraded significantly, as well as public transport in Dublin).  Ireland's government borrowed to fund this and expenditure on health, education and welfare.

The bubble can be blamed on three key sets of players.  Firstly, the European Central Bank for continuing to maintain low interest rates for the Euro, expanding credit and helping to fuel loose credit for Irish banks.   Secondly, Irish banks for taking these cues to lend and fuel the property boom.   Lending was imprudent, not by all banks, but by enough to create a bubble of bad debt not only for property, but businesses based on the wider economic bubble.   Thirdly, the borrowers.  Those people and businesses who chose to ride the wave of the property bubble.  They sought quick capital gains, they borrowed on the basis of the same chimera.

Yet when things started to look shaky elsewhere, the Irish Government made the most foolish move of all, it decided to prevent a run on Irish banks by providing a government guarantee for all deposits, debts and investments.   The purpose being to shore up the banking system by attracting investment and deposits from elsewhere, the result being to make Irish banks far less interested in being prudent and shifted the liability from bank shareholders and debtors to Irish taxpayers.

Now that bubble has burst, and the Irish government is to get a €100 billion bailout from the EU.  A bailout that is worth a staggering €16400 per person.

Meanwhile, the Irish government is to engage in further austerity, cutting spending significantly.   The Austrian government has already complained about the low corporation tax wanting Ireland to be forced to increase taxes (which make it more competitive against the many higher tax Eurozone economies).   The Irish government has been resisting this quite rightly.

It has been suggested the Irish government should abandon this guarantee of the banks and abandon the Euro.  Allister Heath says it shows the treaty on the Euro is worthless.   Of course the dimwitted Labour Party in the UK says it is the fault of the Irish government's austerity measures from last year, which is a bit like blaming a heart attack on the stress of going to the doctor.    It is claiming the UK could face the same crisis, demonstrating how astonishingly out of its depth it really is.

Sadly the medicine Ireland needs is to abandon the Euro, maintain its low tax policies and swallow the price collapse in property, and the end of several of its banks.  The government probably has to guarantee bank deposits up to a certain level, but withdraw its guarantee for future deposits or liabilities for banks it does not own, and privatise the ones it does.   It needs a new relationship with the EU which is not one of dependency, but one which only embrace the open flow of goods, services , investment and people. 

However, it has wider repercussions whatever happens.  Some in the Eurozone say the real need is to strengthen EU control of national fiscal and taxation policies, that in fact the crisis in Eurozone countries can only be managed by a more centralised EU - which would be an economic disaster and politically unpalatable.    The alternative of the end of the Euro has already been described by EU Council President as risking the end of the EU.

Frankly, bring it on.  The EU has been the transformation of a sound project to remove barriers between European countries into a statist socialist monolithic unaccountable super-state which seeks to regulate (and tax if it could) European citizens into a pablum of mediocre non-competitiveness with each other.   The more it is in crisis, the better it will be in the long run for European citizens, or rather the ones that don't work for the EU and aren't the recipients of its ill gotten largesse.

The Irish will resist pressure for Brussels to control its government spending and taxation policy, the stronger Eurozone countries will get fed up bailing out those others who have been profligate with government spending.   Something has to give.

An average couple announce engagement

and the British media become airheads.

The tabloids I can expect, but the Daily Telegraph, Times, the Independent, the Guardian, the BBC, all fawning over what is, at best, a state funded celebrity event.

The Guardian isn't allowing comments on its website, and my comment on the Daily Telegraph was heavily edited even though all I was saying was that it is empty headed banal celebrity worshipping of people who have done nothing remarkable in their lives.

Even the brainless fawning of celebrity culture is at least usually about people with some talent in music, sport, thespianism or the like.  This is nothing but the glorification of people because of who their parents are.

Now let's be clear, William and Kate are at worst benign suckers on the state tit, although he does have a real job for now.   However, it would be a tremendous step forward if they simply said "we are getting married in a small private ceremony with our families", and got on with their otherwise dull lives.

William is likely, one day, to have the dreary constitutional function ably performed by his grandmother, of signing off on legislation passed by Parliament, regardless of what it does to the rights of British citizens. 

Given the reaction of the proletariat and the media (a story that writes itself and allows otherwise intelligent adults to get fascinated about minutiae), I doubt Britain will mature enough to move on and demand a constitution that preserves its freedoms, rather than reinforces prejudices that what matters the most is who your family is, not what you do.

Mr Barroso can go to hell

So the  European Commission President Mr. Jose Manuel Barroso (who, believe it or not, is more free market oriented than most in that entity) is upset that some Member States are opposing the expansion of the EC's budget, which means that a 2011 budget has not been approved which might mean the EC works on a month by month basis.

How sad.

Tough.  Time to wake up to the real world.

When he says "Those that think they have won a victory over 'Brussels' have shot themselves in the foot. They should know that they have dealt a blow to people all over Europe and in the developing world"

He is so wrong.   People all over Europe don't want to pay more to your unaccountable, unaudited monolith of  bureaucracy and socialism.  

Taxpayers are already reaping what has been sowed as overspending by their national governments has created mountains of national debt, and continued deficit spending that is growing those mountains.   They all face spending cuts in national budgets, and many also face tax increases.  

On what planet does Mr Barroso think Europeans will be disappointed if they pay more for his bureaucracy and its socialist inspired programmes (which are basically subsidies for inefficient farmers or development assistance for former Soviet bloc economies)?

No.  It is time for European taxpayers to stand up, to tell their feather-bedded MEPs in Brussels a big no to more spending.  

The most the European Commission ought to expect next year is a ZERO budget increase, which would be the case if it went to month by month approvals hopefully.

What I'd like to see are cuts, of the kind that would help match the savings of many Member States cutting spending.   33% next year would be a good start.  The same again the following two years, and by then what's left is enough to fund the windup of the European Commission into a small monitoring team to ensure barriers on free trade and investment within Europe are maintained.  Those who will complain the most will be some thousands of people in Brussels who will need to find real jobs, thousands of farmers who will face having to sell goods for a living rather than live off of subsidies and those who seek the lucre of EC construction projects in the east and south.

A touch of North Korea for New Zealand

I can tell from first hand experience, that this story from Not PC, is philosophically and ethically identical to how north Korea sees its citizens.

You are owned by the state, your property is the property of the state if it so wishes, the state is sovereign.   You are to take this as an honour more than anything else.

Moreover, individuals whose greatest achievement is stringing together some sentences in Microsoft Word dare tell those who have worldwide acclaim for REAL achievement (and his wife) that their property is somehow more special if the party state sees it as special for the nation.

The NZ Herald reported: "Ministry for Culture and Heritage chief executive Lewis Holden said today its focus was on getting the watch back because of its heritage and historic importance to New Zealand."

So a collective nation carries "importance", like it has a collective brain, and therefore Holden (now there is a name with heritage for some) must get zee watch back!! It is too important for the people, the party, the state, the nation for filthy foreigners to get their hands on it.

The appropriate response to this is a two fingered obscenity.

Yet one could ask the Minister and the government if it approves of such nationalisation of private property of the family of famous achieving New Zealanders.

Of course the real reason any of this is happening is a family feud, whereby the progeny of Sir Edmund Hillary are upset that mum is selling the watches.  Who is right? I am not in a position to say, it should  be a matter for the courts. What should only be a dispute about chattels among relatives now has the state stomping in, invited of course, by the same progeny (after all, they deserve more than simple property law to mediate such disputes) to nationalise the disputed property.

There hasn't, of course, been a peep from the government, in any party, just going to show, once again, that ACT can't even raise a peep when its alleged principles are sold out like, well any politician really.

Aung San Suu Kyi's moment and maybe hope for Burma

Burma has been misgoverned for nearly 50 years.  It started with General Ne Win's coup in 1962 and the "Burmese Way of Socialism" led by the radical Marxist-Buddhist Burma Socialist Programme Party.  It combined the economic illiteracy of centrally planned Marxism-Leninism, with racism, superstition and heavy authoritarianism.   The country stagnated and protests gathered so that the State Law and Order Restoration Council (SLORC) was established after another coup in 1989, with brutal suppression of dissent.  Elections held in 1990 saw the National League of Democracy, led by Aung Sang Suu Kyi, win the majority of seats in the national assembly, which was promptly ignored as she was put under house arrest.  Burma was renamed Myanmar and continued to be one of the hermit states, ignoring the criticism internally and externally, whilst doing business will all those that have similar standards of concern for freedom and individual rights (China, Iran, North Korea).

It's important to not think of Burma's reign of repression as only starting when Aung San Suu Kyi was put under house arrest - Burma has been suffering for most of its post-independence existence, including many years when the Soviet Union was its friend, along with Pakistan.   Burma has suffered from policies that expelled foreigners, but restricted movements and speech of local people.  Ethnic minorities were suppressed or ignored.   Mass uncompensated nationalisation cost the economy badly, so that it has stagnated for decades.   Only the government is allowed to broadcast or publish.   It was widely noted how the government ignored pleas to allow humanitarian aid in after Cyclone Nargis - a government that prohibits others helping its citizens is completely devoid of any moral claim to exist.   Burma has been following socialism for decades, and has demonstrated wonderfully how a regime exists for itself, and to treat the population as either slaves or a nuisance to its warped vision.

Aung Sang Suu Kyi's release may be a prelude to reincarcerating her if she is seen to "cause trouble", which may explain her low key statements in the past few hours.   However, her release whilst not covered in Burmese media, is widely known throughout Burma via foreign media outlets such as the BBC World Service and Voice of America services in Burmese on shortwave (yes a media largely forgotten but critical for people in any dictatorship).

The regime may seek to achieve some reconciliation and abandon isolation, or it may simply be biding time to let everyone know who is boss.   The great hope can be that the people of Burma stand up, and the slithering entities who keep this despicable regime in power turn their back on it.   If only they had the weapons to protect themselves and rid themselves of the scum who think they own their lives. 

Perhaps Aung Sang Suu Kyi's bravery, calm and strength will give the people of this impoverished land the strength to stand up and overturn the mediocre bullies who are contemptible.   All strength to her and those Burmese who want to say enough, and to hell with the traders of many countries (included the French company Total) who happily do business with murderers.