“The weakest link? Maybe it’s best not to ask that too loudly.”

The Irish Times‘ Arthur Beesley has been asking some ‘stupid’ questions in Brussels about the Irish Government’s plan for the Anglo-Irish Bank and its dependence on Europe.  From the Irish Times

Investor types who lend billions to Ireland want final figures for the Anglo wind-down; the Government can’t provide same yet, its credibility over the bank is in some doubt anyway and Europe anxiously wants the brouhaha to quickly go away.

But will it? Can it? When people do talk here about Ireland it’s whispery stuff and great seriousness is implied. So too is the sense that the reliance of Ireland’s banks on the State is increasingly seen as a point of significant weakness in the wider European scene.

The weakest link? Maybe it’s best not to ask that too loudly.

Crucial to the focus on Ireland is the lingering fear of an EU-wide double-dip recession and worry that the outbreak of another banking crisis could undermine the nascent but fragile recovery of its wider economy. With 23 million people unemployed in the EU, almost 16 million of them in euro-zone countries, any slip back into recession would be very costly indeed.

Thus the system is on high alert. Spain felt the heat before the holiday season, but came back from the brink. Now it’s Dublin’s turn.

Read the whole thing.

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  • Alias

    It’s actually the eurosystem’s dependence on Ireland, not vice versa. It is Ireland that has bailed out the eurosystem by retrospectively guaranteeing several hundred billion worth of eurosystem loans that are owed by eurosystem banks in Ireland to eurosystem banks elsewhere in the eurosystem. Those eurosystem banks lent their money recklessly to other eurosystem banks, and would have lost it if the government didn’t bail them out at the direct expense of the Irish taxpayer. The government talks of giving billions to eurosystem banks in Ireland but makes no mention of those billions going from eurosystem banks in Ireland to other eurosystem banks elsewhere in the eurosystem in the form of debt repayment.

    The Irish taxpayers would not have lost a cent as a result of reckless lending by eurosystem banks to each other if the government did not put the EU interest before the national interest as it is constitutionally obligated to do as a result of the Maastricht treaty becoming part of that constitution, and bow to the EC’s (and the ECB’s) declaration that the government must apply systemic risk to all eurosystem banks and thereby prevent contagion in eurosystem banks in one region from spreading to eurosystem banks in other regions so those loans would have defaulted to the member states wherein those lending eurosystem banks were located (Germany, France).

    Irish depositors would not have lost a cent either since those banks had more than enough assets to meet their liabilities to the depositors before the government ensured that the liabilities to the eurosystem banks must be included and that would mean that the banks didn’t then have enough assets to meet their liabilities to depositors.

    So it’s all about bailing out the eurosystem at the direct expense of the national interest, and that has been the game plan since the start.

  • A.N.Other

    The desire to drag Europe into the equation, belongs in the victimhood camp; whether or not this was your intention.

    What is important is the underling psychopathology that allowed crony capitalism to flourish; from whence we get our
    significant property crash et al…And from whence also came the failure to develop any significant comparative advantage during the boom times; that wouldhave allowed the country to export its way out of trouble.

    The Gerrmans did not feel the need to play the property market; accordingly their economy is now in a relatively healthy position.

  • Why did I not appreciate that?

    And to think, in my innocence, I had assumed that mad lending practices, an overinflated and irresponsible property boom (as in Spain, but engineered for party political advantage), and some very dodgy dealings at top levels in Irish banking might, just might have played a significant part.

  • jtwo

    How come Spain also had a massive bust but Santander emerged as one of the worlds’s strongest banks?

    Maybe something do with its government choosing to have an effective system of banking regulation and oversight?

  • Greenflag

    A.N Other ,

    Alias never drags Wall St or the US economy or it’s economically ruinous wars into the world economic ‘equation’. It’s as if the EU is Beelzebub central 🙁

    The ‘underlying psychopathology ‘ that allowed crony capitalism in Ireland to flourish owes it’s existence to the neo conservative deregulatory era ushered in in the United States by Friedman & Co in the Reagan era and by Thatcher in the UK . It’s no coincidence that both regimes indulged in ‘overseas’ wars or hyped up war mongering when both these leaders faced local economies struggling with stagflation and the accompanying political unpopularity .

    As the wealth gap continues to grow apace in the US and as it’s elected politicians are seen as increasingly unable to prevent or slow down the emisseration of the middle class then the prospects of a new ‘class ‘ war will be raised . The UK will have an easier and quicker rush to the barricades as memories of Maggie are dug up .

    As the USA continues to pour hundreds of billions of dollars into holes in the ground in Iraq and Afghanistan and else where around the world -rich Americans are preparing for a future where they will live behind fortified gates with armed guards protecting their children from kidnapping. The UK and Ireland .

    Capitalism American style is failing before the world’s eyes .

    In a 30 year long heist Wall St and the financial sector aided and abetted by the American Congress -both Houses and both parties have looted the American ‘middle class’ of it’s modest dreams and ambitions for it’s children . Americans now face a future where there is no economic security for hundreds of millions . It can only be a matter of time before that fact will spur another ‘revolution’ . Whether it will be from the extreme right or left is not yet clear.

    While Ireland will have it’s problems and it’s solutions if the elephant in the room (the USA) goes under for a second dip still a possibility then both the UK and Ireland and the rest of the ‘developed’ and developing world will be dragged under.

  • Greenflag

    Actually of all the developed nations Canada weathered the financial services led meltdown the best mainly due to it’s ‘old fashioned ‘ conservative banking regulations being kept in place and because it’s regulators appear to have regulated and unlike their American counterparts not been seduced or bribed by the financial sector sociopaths of Wall St .

    Unfortunately Canada is now affected by the emerging Third World colossus to it’s south . You can’t do much when you wake up some fine morning and find your neighbour has morphed into something like a reincarnation of the Weimar Republic or a giant version of banana republic with 300 million people (15 million rich and 285 million if not paupers then making steady headway in that direction 🙁