Economic Crisis Blogburst 3: Take the money or open the box?

Apart from John’s piece, one thing anyone should get a hold of after ten this morning when it goes up, is the economic crisis panel from this morning’s Morning Ireland broadcast.

IN particular, Aine Lawlor’s lacerating interview with Brian Lenihan, who seems to be slowly capitulating to the international pressure, and which concluded with the rhetorical question: “Does that mean the government, the soldiers of destiny have failed us.”

Okay, here’s the best of the rest this morning…

– The heavy mob have already started arriving

– A far from smug assessment from David McWilliams (who might be forgiven for being such)…

Here are the numbers. As of yesterday, the ECB was sitting on assets of e1,878bn. These are government bonds and bank IOUs which the ECB takes as collateral for the cash it lends to the banks. Interestingly, the Irish central bank’s assets total €185bn.

So, the Irish central bank’s assets are about 10pc of the ECB’s. An unusual situation for a country that is only forecast to add 1.72pc of eurozone GDP in 2010.

If we look deeper, we see that the ECB has lent a total of €516bn to commercial banks within the entire eurozone. The Irish central bank has lent €165bn to banks based here. (Our GDP for 2010 is forecast to be €155bn.) So of all money lent to banks in the eurozone, 31pc is lent to banks based in Ireland.

What does all of this tell us?

That the Irish banking system is bust. But more importantly, the amount of money that is passing through the books of our central bank is completely unsustainable to a country of our size.

– It’s a theme reprised by Dan Hannan at the Telegraph with a little added Eurosceptical advice

Its (the ECB’s) policy of cheap money was arguably excessive even for the core European economies; for Ireland, it amounted to catastrophically pro-cyclical monetary policy. A credit bubble was inflated; the bust, when it came, was commensurately painful.

– Dan O’Brien on how the bailout is likely to happen

– Sinn Fein Keep Left blog from about a week back saying ‘burn the bondholders’… Oh, and Sammy Wilson tells us that Gerry is not the Messiah but a very naughty boy

– Lisa O’Connell has a recording of David McWilliams on the Germany money trap

– And Hugh Green notes that even now Ireland is in the throws of one of its oldest self deluding psychological trick:

…by confining our ideas about what is going on merely to the area of a range of potential decisions taken by government officials supplemented by the recommendations of assorted experts, are we not unconsciously engaging in a profound declaration that ‘we are where we are’?

And a good take from World By Storm questioning why the whole ‘economic sovereignty’ issue has been quite so overcooked (only making it that much more embarrassing for the government when it crosses its own imaginary red line?

– Last word to Fine Gael Brian Hayes TD who informed Newstalk listeners that “It’s hard to listen to Frank [Fahey of FF] because he’s talking shit”

So now it is up to Mr Lenihan to decide (although it sounds like it is no longer his decision to make): Take the money or open the (Pandora’s) box?