News & Analysis
Irish Central Bank: Raise Taxes Now
The Governor of the Central Bank, Dr. Patrick Honohan, said that Irish people will have to pay more tax to help fill the gap in the public finances. "On the tax situation, I fully agree with [EU economics commissioner] Olli Rehn," Dr. Honohan told an audience of bankers at the International Institute of Finance in Washington. He had just explained that the tax-to-GDP ratio in Ireland must increase. "There is no credible way of correcting the public finances that doesn't require a higher tax ratio," he said. However, he believed people jumped too quickly to the conclusion that Mr. Rehn advocates higher corporate tax in Ireland. "I think such a policy is very far from being present," Dr. Honohan said. "The Government have made their position on corporation profits tax very clear. – Irish Times
Dominant Social Theme: The Irish will pay and pay. It's good for them.
Free-Market Analysis: We have been arguing for a while that austerity is a promotion and that the real idea behind it is to ensure the EU doesn't go under as a regional entity and also, just as important, that the European middle-classes lose even more ground. Sub dominant social theme: "You better concentrate on paying taxes while we work at perfecting society here in Brussels."
While we've been suspicious of austerity for a while as an elite promotion, Dr. Patrick Honohan's recent statements (see article excerpt above) seem to confirm it. They are certainly predictable. The central banker is concerned about the opinion of his peers when it comes to Irish solvency. "There is no credible way of correcting the public finances that doesn't require a higher tax ratio," he intones. Not under current circumstances, anyway.
Well how about this? Leave the EU and deregulate where possible. After that disband the government except for a minimal core dealing with poverty issues. Begin the transition to gold backed money and shut down the central bank. Devalue as part of the process. In about a month, Ireland would be back on its feet, figuratively speaking, we estimate. Even if it didn't work, you'd have half of Brussels camping out in Dublin with "new ideas" to get Ireland off the hook. But that's not what is going to happen if the Honorable Honohan has his way. There's nothing to do but raise taxes. Can't default after all. The banking community would be most disgruntled.
The Economist, predictably, stands behind Honohan. The magazine has published a gloomy assessment of Ireland that comes to the same conclusions. What a coincidence! The moment is critical, the magazine intones. (So many EU crises that we lose track!) Here's how the article begins:
How now Brian Cowen? ... Ireland's prime minister struggles to reassure investors and voters ... It is "a critical moment", says Garret FitzGerald, a former Irish prime minister. As the Irish people brace themselves for even more fiscal austerity, the challenge for the political class, Mr. FitzGerald suggests, is to put country before party so as to ensure that Ireland avoids Greece's fate—a loss of economic sovereignty and a euro-zone bail-out. To do this Brian Cowen, the prime minister, must take some more tough decisions, and soon ... Olli Rehn, the EU's economics commissioner, has said that they must include sector-specific adjustment measures. By January, when the government is due to resume borrowing, Mr. Cowen needs to have done enough to convince bond investors that there is a credible plan in place to bring the budget deficit down to 3% of GDP by 2014.
We really wonder how long the Irish are going to tolerate this. The Economist tells us that household wealth has dropped by a third and that the real-estate and building sector has virtually dried up. Honohan's take: "During the property boom, 13 per cent of the Irish work force was involved in construction, twice the percentage before the boom. 'Now, of course, it has collapsed,' Dr. Honohan said. 'The banks just imported funds on a large, large scale.'"
When exactly will the Irish realize they've been rolled? The Irish voted twice on the Lisbon treaty, defeating it the first time by a margin of 53.4 per cent to 46.6 percent before finally ratifying it – and giving the EU nation-like powers. The second time around the pressure must have been intense, but even as the Irish voted their economy was falling down about their ears. The idea was that the EU would help Ireland cushion the economic blows. Did that really happen?
Not from what we can tell. Ireland has been held up approvingly by EU pooh-bahs as a country that has not shirked to drink its medicine. The Irish, the story goes, have realized that their own profligacy caused the current predicament and each Irishman and lass is now dedicated to belt-tightening until the banks are paid off and the economy is stabilized.
Does this perspective have some truth to it? Our take is that the EU elites poured money into the PIGS to smooth the way toward a more perfect union. It's almost uncanny, in fact, how quickly EU economies collapsed once the Lisbon Treaty was finally ratified. It's what the Greeks are upset about, we imagine, and the Spanish as well. If we are correct on this point, there are plenty of Europeans who feel a bit like they are victims of a bait-and-switch. They gave up sovereignty for financial security and ended up with neither.
Austerity, as it has been described, is mostly focused on a reduction of the public sector. But from our point of view it is a middle-class killer, generally. The whole EU experiment is about increasing elite control over the European population. And the best way to do it is via further impoverishment and increased regulation, both of which the EU is providing aplenty. The power elite seeks closer world governance and the pesky EU countries with their defiant national histories stood in the way of global consolidation. The stakes, in fact, are very high for investors as well as EU citizens, and certainly it is possible that the Eurocrats at the behest of their elite bosses will pull it off.
Conclusion: On the other hand, continually worsening conditions and the truth-telling of the Internet may finally undermine the austerity promotion. Certainly, we will be surprised if the austerity project moves ahead smoothly either in Ireland or elsewhere. We expect considerable bumps in the road as it becomes clearer what exactly "austerity" entails and for whom. In this regard, Honohan has been most enlightening.
Posted by Jeff M. on 10/12/10 06:49 AM
Shame on Ireland did they really think the tribes of Europe were going to make this last.I'm an ugly american i always scratched my head about this so called euro social planning with governments and banks.
The watering hole is getting crowded and the predators are waiting in the bush this is going to get ugly. My country has tremendous problems and an unpayable debt but europe is explosive. Americans aren't as savvy they like soap operas G-d help us all see ya.
Posted by Denis Jaisson on 10/12/10 07:54 AM
The Daily Bell: "We have been arguing (...) that the real idea behind it (austerity) is to ensure (...) that the European middle-classes lose even more ground..."
One way to achieve this is to deprive said "middle-classes" from their income " or to reduce the latter. This the System has done by opening the borders to foreign qualified workers, after performing PR work of course, that had to do with racism, colonial debt, lack of skilled manpower*, etc...
And how does the Daily Bell stand with respect to the free jobs market and worldwide competition for skilled jobs ' your children compete for management or engineering jobs with Chinese, Mexican or African students who will take half the money if they can stay away from shiet-hole Homeland, dear reader? This we know from previous discussion which incline me to suggest a better name for our beloved... "Chicago Bell"!
* One lacks manpower RELATIVELY to the wages which one offers (!)
Posted by Skip Robinson on 10/12/10 08:29 AM
I often wonder if a major repealing of drug laws and other consenting adult legislation would have on society. Gambling is already legal in Ireland so that wouldn't help them. We're finally in stagflation, as libertarians have warned for 35 years, and there just isn't any good way out of it. It cannot help business to raise taxes and it is business that really needs the help if we are again going to see acceptable levels of employment.
Posted by Finn on 10/12/10 08:33 AM
Welcome to the take over hell that America has been suffering since 1913. When all the dots are connected by the citizens of the world, what will their collective action be?
Posted by Onebornfree on 10/12/10 08:58 AM
This is great news! It guarantees an increase in freely entered into, black and grey market [read "free market"] private transactions between individuals.
onebornfree @ yahoo dot com
Posted by Bionic Mosquito on 10/12/10 10:52 AM
DB: "Well how about this? Leave the EU and deregulate where possible. After that disband the government except for a minimal core dealing with poverty issues. Begin the transition to gold backed money and shut down the central bank. Devalue as part of the process. In about a month, Ireland would be back on its feet, figuratively speaking, we estimate."
LOL – three years ago, if left alone, the economies of the world would have done fine. A quick (yes painful) crash and it would have been over. We would not be living in caves, with no power and food. Human action would have quickly worked to resolve whatever came. Productive capacity would not have disappeared. Different forms of transactions and payments would have developed as necessary.
But resolving the mess isn't the objective, at least not alone. If it was, the suggestions made by DB would have found their way into policy. The banks and politicians must be saved, that is imperative. For this, provide liquidity to the system and put the burden on the people.
The people will not tolerate this, as the Greeks, Irish, and others are showing. The system will break up, as it must. Three cheers to all for hurrying it along!
Posted by Plan B Economics on 10/12/10 11:10 AM
Sounds like the fall of the Roman Empire, when a failing state raised taxes on landowners.
Didn't help Rome then...won't help Ireland now.
Click to view link
Posted by Eric on 10/12/10 11:22 AM
"When all the dots are connected by the citizens of the world, what will their collective action be?"
If history is any guide, individuals will revolt and evil empires will fall. Good governments have a nasty tendency to grow until they become evil empires. First they exploit external resources, then they exploit internal resources, then they compress incompressible individual rights (such as witch hunts on "terrorists") and one day the proverbial po-po hits the windmill.
The Irish should take a cue from the Icelanders " tell the EU-crats they are using bankers to spice up their green ale (like worms in tequila).
Posted by Ethnic Dish on 10/12/10 12:29 PM
If I understand correctly, austerity is a reducing of money spent on the public sector. Is this not what you advocate when you talk about a dismantling of the state? According to Wikipedia:
"In economics, austerity is a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided. Austerity policies are often used by governments to reduce their deficit spending while sometimes coupled with increases in taxes to pay back creditors to reduce debt."
A clear difference I see between austerity and what you recommend is the increase in taxes to pay off debt. However, you and the EU both appear to agree on the decreased public spending. ;)
In the words of Bon Jovi: "Woah, oh, we're half way there..."
Reply from The Daily Bell
We have dealt with this issue before. There are plenty of ways to deal with the current "crisis." The austerity or bankruptcy choice is a phony one in our opinion.
Posted by Linda Maddox on 10/12/10 12:38 PM
The truth-telling internet is saving our country in the United States. If it wasn't for the internet we wouldn't know half of what we know. The media is leaning to the left for the Dems! My newspaper is on the left. This is why Obama wants to control the internet. Shut down the Conservative talk radio hosts, the conservatives like Hannity. Hannity was the only one telling the truth about Obama during the election.
In the Unted States we have been standing up to the Obama policies! They haven't been listening, that is why we have had tea parties, townhalls. We will start taking our country back Nov 2.
Posted by Finn on 10/12/10 01:50 PM
You forgot one thing they also Click to view linkN FOR COVER!!!
It'll be interesting to see in what form people revolt. I think this time 'round it will be multi-faceted. People will revolt by abandoning their debts and giving the finger to the "man", and then there will be the mobs.
It's the mobs that worry me. It will only promote draconian legislative response that could make life a living hell. As it stands most people are acting like "domesticated animals". I hate to say it but everyone's just kinda looking around wondering what's going to happen next.
When the herd stampedes, get the HELL out of the way!!!
Posted by Capt. A. on 10/12/10 02:06 PM
The Daily Bell says, " ... After that disband the government except for a minimal core dealing with poverty issues."
Explicate further please, DB!
I'm ALWAYS leery in the use of the word "except," especially when related to "minimal core" issues. One might infer that The Bell advocates that government (force for better or worse, usually the latter) is still necessary to solve "poverty issues!" I'd be remiss if I didn't suggest that the "private sector" possesses any and all necessary measures to deal with poverty issues with regard to instigating "voluntary" measures. The use of government is NOT necessary!
Believing in "free market principles promulgated by The DB," why is it necessary to incorporate "government" to oversee this economic issue referred to as poverty? The slippery slope continues...
Principaute de Monaco
GMT 2:00 CET
Reply from The Daily Bell
We were trying to suggest a situation that could actually be adopted. We don't think it is realistic to advise the Irish to shut down their government. Do you think they would? Of course, as you observe, we are aware of what government is and how it operates.
As a free-market publication we suggest anarcho-capitalist solutions all the time. But we are allowed, in our estimation, to suggest minarchist solutions as well within a given rhetorical construct - and without endlessly qualifying our remarks.
Posted by Richard Lamb on 10/12/10 02:15 PM
I've told my wife for months (years) that we need a good dose of hard times. Now we have a coming election where the winner will lose. Bringing balance back into the society, where do you economize first? There is no good answer for a Politician.
It would be so much better to pull the plug on the mis-mash and liquidate all the corruption. Some humility would remain, and a new beginning is at hand. Simple, no? Will it happen, no!!
Too bad. A new start could work miracles.
Posted by Finn on 10/12/10 03:24 PM
Well, here's what the French are doing anyway according to Click to view link....
Click to view link
Even as everyone in America seems to have anywhere between 2 and 4 opinions on Fraudclosure now that the topic is firmly planted in the MSM newsflow, things in Europe are not looking any better, even though most people there shun McMansions for their grandmothers' houses. Enter France, where an ongoing national strike (into its fourth day) wes just extended by another 24 hours, and 3,500,000 people seem to have no interest in returning to work with any sense of urgency. Apparently the severity and penetration of the strike is much greater than (under)reported on US media, as seen by the following email from Goldman's Natacha Valla to clients, which explains why things may soon turn much worse.
A crucial (fourth) general strike is unfolding in France today against the pensions reform. I got many emails inquiring on how things looked like on the ground down here. In short:
1. Early to tell, but at this stage, mobilisation sounds quite significant (already 500 000 in the streets at mid-day). 3 million will be, once again, the magic number.
2. A key new dimension is the participation of high schools, which increases the risk of escalation. Transportation and refineries are also significantly hit.
3. Beyond the reform itself, discontent is mounting because the government is perceived to be "forcing" the reform through the Parliament (the debate was cut short at the Assembly, and the vote on key points re. retiring age. " on Monday " was accelerated at the Senate, where the debate is still expected to last until the week-end).
4. A few "grves reconductibles" (renewed strikes) have already been announced.
5. The government already restated it wouldn't make any further concessions...
Reply from The Daily Bell
Thanks for this update.
Posted by Tawny on 10/12/10 04:15 PM
Re sovereignty and legal status, I have long been puzzled by our situation in the USA. We are told that we are still under the 'original jurisdiction' Constitution, but the government is clearly unconstitutional in many many ways, such as the monetary unit, the Fed, the usurpation by the federal govt. of many powers delegated to the states, the growth of the power of the acting president of the country, etc. etc. etc. In fact (de facto) the country has morphed into its polar opposite, or close to it, and yet we are told that we are still under the Constitution and living in the country Jefferson et. al. created.
Some legal researchers in the US (and perhaps England and other countries, not sure) have put forth a theory, or theories/conjectures, re the matter of 'under what jurisdiction ARE we, in and out of court' and are we REALLY under the Constitution at all, given the plethora of unconstitutional laws and practices currently in effect... what's really going on.... etc.
And, if we're not under the Constitution/ original jurisdiction, then what, legally, is our status, and the country's status, in the eyes of those who hold the 'reins of power'? One would think this would be a deeply interesting question to us all, but it is a 'ho-hum' matter to virtually all with whom I attempt to discuss it, incl. my email pals 'in the movement.'
An email friend sent me a video on the rise of the corporation since the passage of the 14th Amendment. Below I have pasted my questions to him, in which I briefly summarize the theories I find very interesting. I'd be interested in any comments on this from the DB and/or readers.
Also, I wonder if any of this research might be relevant to possible surreptitious changes in governments in other countries, such as Great Britain (prior to or after the creation of the EU). Someone sent me a video presenting an English speaker going into very similar info as regards the actual situation in England but I am not sure I could find it now as I did not save it to a folder, and it has been a long time since I received it.
An interesting and possibly related matter is the separate legal status of the DISTRICT OF COLUMBIA and THE CITY OF LONDON and perhaps also THE VATICAN.
Also possibly related is that 'all's fair in love and war' and that under emergency law or rule, it might 'legally' be deemed 'fair'- expedient, necessary to the 'preservation of the public peace' " to withhold such disturbing info from the citizenry.
'My people perish from lack of knowledge' seems to be nowhere so accurate and relevant a statement as when it comes to the average, even the average educated, person's carefully maintained (by the 'powers that be')ignorance of law and economics as currently practiced.
Here is the quotation from my email to my friend...
"J. " Does this long video go into the theory that (since the 14th Amendment passage " which might btw have been the act of a de facto rather than a de jure post-Civil War 'Congress') we have (unwittingly) been brought/induced, as US CITIZENS/PERSONS into a parallel, corporate, sub-rosa, non- or extra-Constitutional jurisdiction (ostensibly voluntarily and in exchange for being in various govt.'entitlement'/ benefit/privilege/opportunity programs such as SSI, unemployment insurance, etc.) This is a 'citizen-subject' rather than 'sovereign citizen' legal status. (the governing body of law is corporate/admiralty rather than the law of private rights).
Another factor seems to be the on-going continuous emergency, which suspends civil law and changes form of govt. to a de facto military dictatorship under the president as military commander in chief. He can make law by fiat/utterance (EOs being an example), as can some of his chosen delegates, such as judges.
Another factor is the hodge-podging of distinct bodies of law " those concerning private rights, corporate law, and admiralty law " and martial law/rule " into 'one form of action'- which disguises which jurisdiction one is under, in and out of court.
Just wondering if you have looked into any of this research/theory and if the video you sent goes into any of it."
Posted by Gdub on 10/12/10 05:18 PM
We should disband the Fed and eliminate the IRS and get some type of commodity backed system in the United States. More and more people in the United States are looking at the nations being put into forced austerity by the IMF and wonder why they should be having their money plowed back into a zombie cartel instead of the monies going back to their nation.
Heck why not all the citizens say to the banks "Whoops it seems as though we are broke and will have to reorganize and you will not be included". I also hope we in the United States gain a sack and break up the Federal government. We meed to have a smaller sustainable government. I am referring everyone I come into contact with to visit your site because of your excellent post and knowledgeable feed back from your readers.
Reply from The Daily Bell
Posted by Gdub on 10/12/10 05:43 PM
@Tawny Follow this link. I think the person you are referring to is John his picture is on the right hand side announcing his appearances. Click to view link
Posted by John Blenkins on 10/13/10 04:01 AM
received this today and thought it should be posted far and wide
"Yes, I can offer an explanation for the fraud that's probably pretty close to the truth. But it's not a simple explanation and I can't do it justice in this reply.
In essence, it's all about the money. The government passed laws that allowed the banks to 1) take a note and mortgage from a borrower whereby the borrower agreed to repay the bank the sum borrowed plus interest for 20 to 30 years; and then 2) immediately sell the note and/or mortgage for full face value as a "security" to some third party. Thus, the bank could claim to have loaned you $200,000 to buy your new house; you would agree to pay the bank something like $500,000 over the course of the next 30 years; then the bank would quickly sell your note/mortgage to a third party for $200,000 and thereby recover all of the funds it allegedly loaned in the first place. By means of this scheme, the bank stands to be PAID TWICE on your loan. The third party pays $200,000 within days or weeks of the original $200,000 so the bank is fully repaid on the principal before you even make your first mortgage payment. Then, the ban gets paid again, by you, as you cough up $500,000 in "principal and interest" over the next 30 years.
The problem is that once the bank sells the Note, it no longer has a right to collect any mortgage payments on your house. Once it sells the mortgage, it has no right to foreclose'even if it still holds the original Note.
All of this is fairly obvious, once you start to think about it.
The mystery is who is the third party that bought the Note and/or Mortgage because that's the party who has standing to foreclose. But that third party doesn't have any interest in foreclosing. Why? Because that third party is using your Note and/or Mortgage as a SECURITY in a bank vault. Thanks to fractional reserve banking if that third party pays $200,000 for your Note and puts in his bank vault he can lend at least ten times the face value of that "security". Thus, if the third party buys the Note for $200,000, he can lend (at least) $2 million over the next year. If he charges 10% interest on his $2 million, he can collect $200,000 in interest every year from then on. That's a 100% Return On Investment per year, every year that he retains your Note in his vault.
Over the life of your 30-year Note, it's entirely possible that the third party will generate a profit equal to THIRTY TIMES the value of the Note and the value of the house your bought with money from the bank. That's why the third party has no interest in foreclosing on your house. If they foreclose and take possession of your home, they'd have to sell it to a new buyer and generate a new mortgage that might generate an interest/profit of $10,000 per year. But, if they keep your original Note/mortgage in their vault, they might make $200,000 in interest/profit per year. It's contrary to their interests to foreclose. If this third party were properly approached, they might be glad to let you live in the house for $20 a month to they could keep making $200,000 a year.
What makes your Note so valuable? YOUR SIGNATURE.
Thus, your mere signature on a piece of paper can conceivably pay for THIRTY HOMES just like the one you're trying to buy. And they don't offer to give you even one of those thirty homes for free. Instead, over the life of your note/mortgage, you're going to pay $500,000 for your $200,000 home.
And you'll be paying the $500,000 to a bank that's engaged in the fraud of collecting funds from you when it no longer has the Note/mortgage that give it standing to do so.
The whole damn process is a massive, institutionalized extortion racket. It's a crime. It's a felony. People have been foreclosing on homes without authority to do so. They've been ruining the lives of adults and traumatizing children. And it's all for mo' money, mo' money, mo' money. And it's all be sanctioned by our own government.
This is certainly one of the most politically and socially explosive issues of our time. Millions of Americans have been robbed of their homes by banksters that had no standing to even collect a mortgage payment.
I hope this explanation was helpful. This explanation is incomplete and probably contains some errors. But so far as I can tell, that explanation is roughly what's happening".
Reply from The Daily Bell
Posted by John Blenkins on 10/13/10 04:33 AM
@Tawny,This might help
Click to view link
Posted by John Blenkins on 10/13/10 06:46 AM
Unfortunately i doubt this will be the last toxic debt discloser
of Irish banks or many others not least insurance companies and pension funds.If you take my post of 4:01:00 AM, who holds what liabilities in this fraud? At present the are on institutions books
as assets doing the "GOOD" work of fractional reserve ponzi embezzlement.This same Alice in wonderland topsy turvy accounting npractices that give our bankers there bonuses.The more people they F%*$ the better the reward.Nice work if you can get it. So the Irish to be squeezed again,there will be a further pain once the smoke has cleared from this last theft. YOU know the drill they play we PAY.