A prediction of the banking crisis (from 1998)…

Courtesy of Tom Prendeville…

  • Anon

    I’m not sure it qualifies as a prediction. He appears to confuse “phoney loans” with the fractual reserve system and fiat money.

  • Well, at least it looks authentic. Two features of that clip which suggests its authenticity as a genuinely not recent clip are
    (a) the £ sign on the bucket
    (b) smoking in a pub

    Unfortunately, it does not look like the real “smoking gun” that we would like to have had. The banking collapse was really about banks, whose balance sheets became too big.

    Is anybody aware of an Irish politician who advised to vote against the Maastricht treaty?

  • Greenflag

    O that god the gift would gie us -to see ourselves as others see us . Here ‘s a 5 minute piece on how the Irish Government brought down the ‘world ‘ economy . Does it get Wall St off the hook ? Certainly makes Biffo & Co look like world champion suckers 🙁 British , German and American ‘experts ‘ add in their ‘evidence’ . Who could have predicted it eh ? Little Ireland brings world banking to edge of abyss .

    Sean Lemass should be alive ;(?

    http://www.npr.org/blogs/money/2010/11/23/131538931/how-the-irish-bank-bailout-shook-the-world

  • JJ Malloy

    Ha yes Ireland is the cause of the world crisis!

  • Greenflag

    JJ Malloy ,

    What’s interesting in the above is that the Simon Johnson in the above piece now is negative on the Irish plan. At the time the Irish government’s bank guarantee was announced he was in favour 🙁

    From his Blog baselinescenario.com 6 October 2008:
    “The second major piece of news also had some substantial positive elements. Apparently with their banks under considerable pressure, the Irish government issued a blanket guarantee for all bank obligations.

    We like the boldness of this move. If you are guaranteeing interbank deposits, this is implicitly guaranteeing bondholders (who are more senior creditors). But the blanket is easy to communicate and to understand.”
    And as a policy recommendation from the same date:

    “1. With authorities continuing to struggle to communicate effectively on the safety of deposits, a temporary blanket guarantee becomes more appealing, in the US and elsewhere, as a clear signal.

    Also, when your neighbors (with the same currency) introduce such a guarantee, it is hard to avoid doing the same.”

    (This explains the British Government aping the Irish Government’s move and as everybody knows including Mr Johnson the British ‘pound’ and the Irish ‘euro’ were the same currency ?

    At this stage I’m beginning to believe that an Irish default could topple the entire house of cards that is the world’s currency markets and force the leaders of the world’s remaining democratic government’s to reform the world’s banking system and break up the biggest banks who now virtually dictate to elected politicians .

    Where is Dean Swift when we need him 🙁 ?

    The emisseration of the Irish middle classes has been preceded by the ongoing emisseration of the american and british equivalents . It has also also proceeded although not as fast in Germany and France where it is now biting at the heels of the bottom layers of society .
    The western world’s economies are dividing rapidly into three major classes -a small extremely rich wealthy 5 to 10% who take in 85% plus of all incomes -a 20 to 25 % secure upper middle class who are still bought into support of the top 10% . The remaining 65% are made up of the new downwardly mobile former middle class (35%) who if they haven’t lost their ‘place ‘ can be sure their children (if they have bothered to have any) will almost never rise out of the bottom of the economic pyramid. As for the 20% at the bottom ? They are there to provide those who still remain in the middle class an example of what can happen to them if they ‘fail’ to show the proper respect that the new masters of the economic universe have determined is required i.e lower pay -fewer benefits – smaller or no pensions and a proper education and first rate health care only for the healthy wealthy and the lucky .

    Communists in the late 19th century always expected that the ‘red revolution’ would take place in either England or Germany first and then spread throughout the world. Where exactly the ‘world revolution’ against the IMF and the anti social international banking sector will take place is not yet discernible but may be not too far over the horizon . A Spanish and/or Italian or British ‘collapse could be the tipping point for the next black swan in economic history .

  • Coll Ciotach

    Greenflag – funnily enough Hilaire Belloc predicted Ireland to be the country to establish distributism in his book the Servile State – some irony there

  • Alias

    That’s a turn-up for the books. I haven’t seen that guy in over 30 years since I moved away from the area of Dublin where we both grew up. Another old pal of mine gave him that eye by accidentally hitting him with a dart. Great pal back then, and interesting that we’re both eurosceptics, avid nationalists, and banking cynics now.

  • Munsterview

    JJ Malloy 29 November 2010 at 6:25 pm : Ha yes Ireland is the cause of the world crisis!

    Do not knock it JJ, we did it before and with greater consequences !

    The Orange Order by causing the British Army Officer Class Curragh Mutiny, the importation of arms for rebellion and their stated intent to set up a breakway section of Ireland, whatever of the British Government view, let the Kaiser and German Government to conclude that Great Britian was on the point of regional break up and armed insurrection, hence leading him to conclude that the time had come to realise his ambitions for Germany.

    In short the Orange Order can be blamed for starting the First World War !

  • Greenflag

    Nah MV ,

    The very observant Baldrick gave the definitive cause for WWI in Blackadder

    ‘I heard that it started when a bloke called Archie Duke shot an ostrich because he was hungry.”‘

    The OO is not an ostrich and can’t be eaten so I can’t agree with your analysis . The fact that both creatures may habitually have their heads in the sand notwithstanding . And now FF are looking every which way to find a hole big enough to stick their heads into as this election nears .

    Ostriches , OO and FF 🙁

    Baldrick for Taoiseach at this stage ;)?

  • Munsterview

    Baldrick for Taoiseach at this stage ?

    Nah…..even Baldrick is not that thick….. he would see through that one !

  • Alias

    Incidentally, Mr Fealty failed to notice that Tom Prenderville failed to predict the end of the Punt despite the Maastricht Treaty 6 years before. The problem with fractional-reserve banking thereafter wouldn’t be a run on the banks but that the amount of money in circulation wouldn’t be related to the amount of money on deposit in domestic eurosystem banks, so the situation is now akin to fantasy-reserve banking. That’s the expansionist monetary policies of the ECB.

  • Munsterview

    Alias,
    A wee word on ‘quantative easing’ if you please and how likely is that for a EU solution on the USA scale

  • Alias

    Well, let’s go back to fractional-reserve banking and then get to qualitative easing. The Irish Central Bank is now a part of the ECB since Ireland surrendered sovereignty over its monetary system to the EU when it withdrew its own currency. Unlike 12 years ago, the Irish Central Bank doesn’t have any control over the money supply in Ireland. That is now regulated by the European Central Bank.

    Since all lenders and borrowers are actually insolvent under fractional-reserve banking, the Central Bank acts as the lender of last resort should a bank run occur on a particular bank. That role now defaults to the ECB, who have duly provided the Irish Central Bank with circa 160 billion of funds to prop-up the eurosystem banks that are based in Ireland. That is already qualitative easing, so the question is will the ECB engage in quantitative easing? Well, what else would you call monetizing the debt via the ECB’s purchase of Irish government bonds?

    Naturally, the EU would like to dump its responsibility to lend to its own eurosystem banks in the last resort onto the taxpayers of EuroZone states since it created a currency wherein the German constitution prevented those debts of other Member States defaulting to Germany as they would do since they default to the ECB and then default to the ECB’s shareholders and so default to Germany as an ECB shareholder. Germany’s Federal Constitutional Court will decide on that in February, so if all goes well then I would expect that the EU will sort of the legalities and the ECB will metaphorically order the printing presses, wouldn’t you?

    That said, I’m not an economist so your view is as good as mine.

  • Munsterview

    Alias

    Thanks, I have a book on my library shelves or rather had, given to me around twenty years ago by the author, a Southern US minister that predicted all this financial meltdown, but for around 96……2000 if memory serves me right.

    All his predictions about the dollar are right so far….. he however go on to forecast a complete societal breakdown about a decade after the first financial house collapses. I have been closely following the Rare Earth Minerals situation closely, Japan has only a month to six weeks supply then manufacture of everything from computers to cars production come to a standstill. China also has the US by the short and curleys on this one.

    With 85 / 90% of rare earth held, who needs money to deal. China can name it’s own price !

  • Alias

    Below is a link to the most recent consolidated financial statement of the eurosystem that should show the folly of relying on the ECB as a lender of last resort. Why? Because it is itself massively overleveraged and in no position to bail-out other eurosystem overleveraged banks on the scale that it will soon be required to do. It has liabilities of 1,878,979 million euro and capital reserves of 78,191 million euro, so that is a leverage ratio of 24. That’s a higher leverage ratio than any major Irish bank had before they were bailed-out!

    http://sdw.ecb.europa.eu/reports.do?node=100000129