Update: Although ultimately it will not change matters, Irish workers demonstrated their displeasure with their political leaders' enslavement to foreign bondholders Saturday. Activist Brian Denny said at the rally that attracted between 50,000 and 100,000 at the Dublin GPO, the bailout was "an example of monopoly finance capital effectively running the country." That point was reinforced by the latest Wikileaks disclosure of US diplomatic cables, which show politicians all over the world reacting to the opinion of "markets", a pseudonym for bankers, hedge fund managers, billionaire investors, and currency speculators. The deal reached with the EU late Sunday means the Irish government will have to pay 5.8% on its loan as well as pay €17.5bn to the banks for the privilege of demonstrating its "fiscal responsibility". Irish workers are upset with their union leaders for going along with the government's austerity measures. Trade union representatives were heckled on stage for their collaboration. The chart below shows global capital does not have a lot of confidence in the EU bailout preventing an Irish default. Credit swaps can be thought of as insurance against a Irish bond default, and the cost of the insurance is increasing. This development is only overshadowed by the cost of insuring Greek debt in the form of credit default swaps that has surged to €1million.
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| credit: Martin Weiss @ marketoracle.com |
{29.11.10}Ireland, once the "Celtic Tiger" no too long ago, was put through two years of austerity measures to cure its sovereign debt problem (that originated in the private banks' financing of a Irish real estate bubble) without success. Resort to €85bn more debt from the IMF and the European Central Bank (German capitalists) on condition of even more stringent economic measures proved necessary. Greece is currently on just this sort of toxic economic life support. Some candid economists like Paul Krugman
are pointing out austerity only handicaps an economy's ability to repay. Eventually bond default may occur which will require bondholders to take a "haircut" as debt restructuring is quaintly called by financiers. Either that previously unthinkable event takes place or the entire Euro structure could break apart as member nations drop out of the single currency to reduce crushing debt via devaluation of sovereign currency. Iceland was able to devalue its own currency and force bondholders (plutocrats) to share in the pain, something which Ireland has not done so far. Understanding the world wide financial system is not an easy subject. And even if you took economic or business courses in college, those probably did not discuss the international debt/money banking system in the way Damon Vrable does in his video series entitled,
"Debunking Money". It's an eye-opening chalk talk with a disturbing message. Full of football distraction? Give it a view.
