But how long will the ECB continue to prop us up? And what type of Irish economy is being propped up by the ECB? Is it a vibrant, competitive economy or simply a financial concubine happy to be drip-fed European money without any idea of what it will do when the master tires of this set-up?’
As a result of these imbalances no one will lend money to our banks because they don’t trust them. Financial markets are based on trust and once that is shattered it is almost impossible to get it back.’
‘It is against this background that we are experiencing the total disconnect between the political class and the economic reality.’
‘Recession comes from running out of money’
I dunno. I am more of the viewpoint recession comes from providing credit in a way which makes business codependent on access to more and more debt and like a Ponzi scheme until it falls apart on top of the non ponzi scheme economy and destructs into being a recession.
Whose ‘confidence’ are you referring too? The money lenders who are owed money, the ‘insiders’ confidence? Cos anyone outside the inner loop with unfettered access to political power and wink and nod loans what confidence worries are there here except making sure you stay in with the contacts who make the decisions to lend you the money and this confidence is all about who you are in the inside loop and nothing more. its now revealed the developers got massive loans only having to show up at the bank in person.
DMcW’s article put me in mind of a Hutton article from before the British election:
It’s funny (or maybe not) how so much of it applies just the same to ireland.
“The electorate is not dumb. We know the wealth of the last two decades was fairy dust. We know bankers don’t know how to help enterprise. We know the country has to make its living differently in future. We know that requires a mix of belt-tightening and huge investment. We do not see why the public services we rely on should be emasculated while the business and banking leaders who caused the crisis lead lives of unearned opulence. We would like to hear our political leaders talk in these terms. We want the next government to begin the work.
So far it’s been a phoney electoral war. Let’s hope it gets better fast.”
And here, instead of ‘Quantitative Easing’ you could read ‘Nama’ (alright, maybe without the ref to share prices):
“Any lingering doubts as to the truth of this should be dispelled by the astonishing story of quantitative easing, all £200bn of it. If any other central bank printed £200bn and injected it into the banking system over 12 months, you might expect some part to find its way to business. Indeed, when the programme began, this is what the Bank of England hoped. What actually happened is that quantitative easing cash is going where cash has gone over the last 20 years – to support property and share prices – because that is what the UK financial system is set up to do.
“Quantitative easing has become the most flagrantly regressive public policy intervention in modern times. It has enriched the wealthy further by putting a floor under especially high-priced property, boosted share prices and done nothing for small- and medium-sized business.”