Monday, September 20, 2010


...from a variety of sources about the continuing problems of "united" Europe. The greatest evils the world has ever seen derive from individuals convincing majorities that the world can be fabricated, hammered, and shoehorned into some normative system. Compare and contrast these systems with the founding of the United States (relative to what it appears to be at the present).

Anyway, the men of Newport Beach have sounded the bell, and now all eyes are focused on Europe's slow motion crash.

The brutal truth is that Portugal lost competitiveness on a grand scale on joining EMU and has never been able to get it back. Convergence never came.

Ireland has shown what happens when you grasp the fiscal nettle, slashing public wages by 13pc – to applause from EU elites – without offsetting monetary and exchange stimulus. Irish bonds have spiked even higher to a post-EMU record 6.38pc.

This was triggered by two client notes: Barclays said Ireland may need the IMF's help; Citigroup's Willem Buiter said Ireland "may not be able to make whole" creditors of both sovereign debt and the bank. Dr Buiter has also said a default by Greece is "a high probability event".

Two years into its purge, Ireland has a budget deficit near 20pc of GDP. It is 12pc if you strip out the bank rescues, but the reason why the bad debts of Anglo Irish keep spiralling upwards is that the economy keeps spiralling downwards. House prices have fallen 35pc. Nominal GDP has contracted 19pc.

"Ireland's debt is ballooning, while its capacity to pay has collapsed," said Simon Johnson, ex-chief economist at the IMF. He said the country has made a Faustian pact with Europe, able to draw ECB loans worth 75pc of GDP so long as Irish taxpayers shield European creditors.

In any case, the IMF itself has become the problem, operating as an arm of EU ideology under Dominique Strauss-Kahn. It


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