Wednesday, July 20, 2011


So is tomorrow D-Day for the Euro? The day the eurozone fights back against the axis forces of the bond markets and the rating agencies? Probably not. The Taoiseach doesn't think that tomorrow's emergency summit about Greece will be 'the be-all-and-end-all'. He might be right. Then again, he could be horribly wrong.

We are now entering the 'unstoppable force meets the immovable object' phase of the unfolding euro/sovereign debt/dollar crisis. Whilst most of Europe's politicians would really rather park the issue until after their holidays in August, reality just keeps delaying their departure (well maybe not in Ireland). In the normal course of previous crises politicians, the markets, and the global economy kind-of-more-or-less muddled through. Though not this time. As blogger George Washington wisely notes, by bailing out American and European (and Irish) banks during the 2008/09 crisis, our democractically elected governments have simply 'transferred massive debts (from fraudulent and stupid gambling activities) from the balance sheets of the banks to the balance sheets of the country'. The buck has stopped. There is no more muddle room.

So things could get nasty - very quickly. We are already experiencing the psychological consequences of when the powerful feel incompetent. David DiSalvo recently analysed how powerful people react when they feel incompetent and powerless: they take it out on the rest of us. And there's certainly no denying that the financial markets are powerful. We're feeling their wrath. But it's only a foretaste. Indeed, I increasingly have the impression of the ECB's Jean Claude Trichet that he is acting like a Mafia consigliere: making lots of threatening noises on behalf of his 'boss' - the capo di tutti capi, i.e.: the bond markets.

Thanks to our participation in the euro - and our supine attitude towards the ECB - this is one 'Emergency' Ireland cannot sit out on the sidelines. In fact, we're at the front of the landing craft, filled with the other eurozone countries, and we're about to hit the beach...

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