Tangents

In the run up to the recent election here in Ireland I accused the ECB of playing deflationary chicken with the Irish economy. That is to say that the only tool they had allowed to be used to “correct” the Irish economy was to effectively induce a period of deflation in the economy. And this is playing chicken as there’s a strong possibility of losing control of that deflation and killing the economy entirely. It’s liking bleeding a patient and discovering one has gone too far.

Well in an excellent piece on the Econonomist Free Exchange blog they accuse the ECB of doing just that, but doing it with the entire Eurozone:
Who killed the euro zone?

An institution that professes itself terrified of inflation has undertaken a policy programme that actively inflated the debt of Eurozone members and turned the attention of the markets on that sovereign debt to the point where the bond market is now broken.

We hear a lot of talk of the break up of the Euro, the death of the currency, but it is the institution that wields the most power, the ECB, that may be recast in the fire.

The damage done by the Prime Time Investigates programme continues to reverberate, giving rise to some “culture war” brush fires in the process. The defaming of Fr Reynolds was completely outrageous and the the Prime Time Investigates team completely and utterly failed the standards set by the likes of Mary Rafferty who in the teeth of sustained opposition wrested verifiable stories and facts from a systematic cover-up and a veil of painful silence.

Mary Rafferty in particular did this with the help of excellent work by a highly professional team including Eoin O’Sullivan of Trinity. The laxity of standards of the Mission to Prey production will be examined by the investigations in train so I’m not getting into that in any depth, in the meantime I highly recommend a read of Vincent Browne’s critical take on the affair in the Sunday Business Post (27/11/11).

But I want to take a moment here to point out what I believe is a calculated untruth that is being propagated by defenders of the institutional Church. Read the rest of this entry »

Update: BBC’s Rupert Wingfield-Hayes had an item on From Our Own Correspondent reporting from Bahrain this morning on BBC Radio 4 and the World Service on the plight the doctors being persecuted there:

http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/9521963.stm

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Just sharing two further, disturbing stories on the maltreatment and alleged torture of Bahraini medics published today:

Bahrain doctors tortured into confessing, say families
By Rupert Wingfield-Hayes BBC News, Bahrain
http://www.bbc.co.uk/news/world-middle-east-13851761

Bahraini leadership faces new claims that torture took place in hospital
By Alistair Dawber, The Independent, London
http://www.independent.co.uk/news/world/middle-east/bahraini-leadership-faces-new-claims-that-torture-took-place-in-hospital-2299944.html

I know I’m being a bit of a tiresome one man band on the Bahrain issue but the story managed to gain some traction.

• On Tuesday Maureen O’Sullivan questioned Eamon Gilmore on Holohan’s attendance at the RCSI graduation ceremony and the probity of that.
• On Wednesday Prof MX FitzGerald wrote a letter to the Irish Times voicing his disgust and disappointment with Irish medical organistaions: http://www.irishtimes.com/newspaper/letters/2011/0622/1224299383224.html
• Which sparked a debate on RTÉ Radio One’s Liveline programme including a contribution from Prof Damian McCormack. I was on air briefly. A very interesting and enlightening piece form the Liveline team. One retired consultant called in to say he was returning his degrees in protest. You can listen here: http://www.rte.ie/radio1/player_av.html?0,null,200,http://dynamic.rte.ie/quickaxs/209-r1-liveline.smil
• Today’s Irish Times includes further coverage and two letters, one from myself: http://www.irishtimes.com/newspaper/world/2011/0623/1224299455606.html

On Sunday I expressed my fear that there was too little attention being paid to the potential for a disastrous outcome to what was being celebrated as a turning point in Egypt. While some were trying to temper the call for Mubarak to go by raising the spectre of an Iranian-style outcome to the current  crisis, I pointed out that a successful clampdown could result in a descent into a form of hellish civil war seen in Algeria in the 90′s.

The horrific scenes on the streets yesterday and last night broke my heart. Under vicious attack from pro-Mubarak thugs, who appeared to have the backing of the State, if not under the direct direction of the regime, the demonstrators of Tahrir sq have been sucked into a situation of violence of the Mubarak’s making. This is a trap to cement the army’s position. Robert Springborg on the Foreign Policy’s Middle East Channel reckons that this means the end of the anti-regime protest’s aspirations. His pieceis well worth a read. I hope he’s wrong but there’s a clear logic to what he says that is reflected in the surreal goings on being relayed live to the world by Al Jazeera.

If this is the case, those who saw in the protesters a shadow of the Shah and the events of 1979 will sigh with relief while pointing to the Potemkin village of progress the army will construct. While there are countries that have slowly grown a civil society and civilian government in the shadow of the army before emerging strong democracies (Turkey or Chile for example), the bitter truth is that if the regime and army really are engineering a defeat of the people like this, it will open the door to extremism unseen before in Egypt.

And this is precisely what the Quilliam Foundation is warning against in a briefing note [PDF] issued today.The British think-tank which deals with Islamic extremism, explicitly likens the situation to that of Algeria in the wake of the 1992 elections:

“The situation in Egypt is now reminiscent of events in Algeria in 1992.”

The scenario that they outline is one of:

• peaceful pro-reform demonstrations being discredited
• faith in democratic reform being lost (reinforcing the message broadcast after the Hamas victory next door during the PA elections)
• the west losing influence amongst the people for failing them in their moment of potential victory
• violent extremists winning the argument, becoming emboldened and dragging the country down a spiral of violent action and reaction as happened in Algeria.

If the regime and the army really are on the verge of extinguishing the protests through trickery and instability, the role of West is heightened. A democratic transparent Egypt is a better partner in the Middle East than one fractured and humiliated.

The Dáil dissolves today and the nation will embark on a trip through the electoral fairground with all its accompanying rides and sideshows. The IMF/ECB “bailout” will certainly be one of the most popular rollercoasters to ride as it channels so much energy, naturally enough. The “bailout” of course has such a severe and immediate impact on how we live as a society, function as an economy and continue as a state, that that is as it should be.
However, given the mutterings of renegotiation of interest rates and the rumours of bondholders finally taking a hit on their involvement in the banks I wonder if the whole “bailout” is designed to require redesign.

In other words with no monetary tools available to adjust the Irish economy such as inflating debt away, devaluing the currency etc, the ECB and IMF are playing a game of chicken and are relying on the economy to go through a period of internal deflation up to a point before throttling back on the price we pay for their support. The “internal deflation” policy is an explicit policy of the ECB etc, true, but I wonder just how much they have planned a step down on the “bailout’s” punitive terms after a certain period in order to encourage deflation initially before reviving the economic prospects somewhat after a period. If they have designed the package to do that then aren’t they playing chicken with the economy?

A multiple choice question for you today. How dead are Obama’s plans for, and influence, in the Middle East?

-Dead

-Very Dead

-Extremely Dead.

Obama’s been so completely caught out on pro-democracy movement in Arab states it’s mind-boggling. Nobody is mentioning the US during the protests, no US flags are being burned; in Egypt much like Tunisia, it’s an Egyptian movement to reclaim an Egyptian future. Washington seems baffled with little to say other than “calm down, please.” And those noises are being totally ignored as Egyptians seize their moment. In truth the character of events is self-defining, no US intervention is going to sway events too much right now; a popular democratic movement is difficult manipulate from afar unlike an autocrat in recipt of aid. This is beyond America’s influence.

Meanwhile in the Occupied Territories the Palestine Papers show George Mitchell and the Obama administration threw the Bush administration Roadmap in the bin after the Palestinians had met their obligations under the first phase. They absolved the Israelis of meeting their parallel obligations to cease building settlements as part of the same first phase. Mitchell told Erekat it wasn’t an agreement in any legal sense and pretty much to get over it, that the new talks meant new parameters, parameters like allowing Israel to continues the development of illegal settlements. There won’t be another attempt at restarting the peace process for some time if it means a repeat of the last round of talks which amounted to little more than humiliation of the Palestinian leadership and even more rapid settlement expansion once the building freeze was lifted. Whatever incarnation it takes next, the US will not be the chief broker. The PA and Abbas are now  making a unilateral move to gain the recognition of their final status aims in the international community but one wonders will Ramallah be shaken as Tunis and Cairo have been?

I remember reading plenty of opinion in the run up the 2000 election that Bush would be less prone to bowing to Israel than Gore on the peace process and more realist in his approach, but I thought that post 9/11 he fell in with the “security” agenda of Netanyahu more than Gore might have. It’s still pretty surprising to see Obama undermine the small amount that Bush actually did on that peace process and I wonder if any US President will see an agreement between the Palestinians and Israel inked under his (or her) guidance. When Obama claimed to have pressed the Reset button on relations with the Arab world after his Cairo speech did he in fact mistakenly press the Sleep button?

Now there’s revolution in Cairo and the peace process is dead and the US’s words have never mattered less between Casablanca and Muscat. As the neighbourhood teeters and pursues a logic of its own, that Nobel is an embarrassment. And for Israel these must be deeply troubling times.

Egypt really is on a knife edge at the moment. You would hope of course that the popular outcome is achieved with little violence. Reading blogs on politics in the Middle East for the past few months (like the  excellent Arabist blog) shone a light on the anxieties building up in these societies and given the example of Tunisia, the speed with which Egyptian protests have mushroomed is no surprise at all. There’s clearly been a very large build up of tension in that country: a strata of informed people with hopes for the future, a middle class frustrated by the suffocating atmosphere and in particular the huge amount of speculation and anger building around the prospect of Mubarak’s son being lined up for succession, have been parallelled by a history of protest and opposition. Tunisia was like a light illuminating a way that was very much anticipated.

Now reading the newspapers you’ll spot several columnists warning of the situation developing like Iran post-79. These writers don’t have a positive contribution to proffer on just how Egyptians should handle their frustration and repression. Instead it’s the same reactionary, pro-”stability” canards being rolled out again. Some of these reactionary columns come dressed in the clothes of a form of Western Liberalism that fears any Arab world which does not aspire to their post-Fukuyama end of history liberal democracies and dreads a moral universe informed by Islam rather than Kant. But they do not stray too far from the more caustically realist Cassandras in their acquiescence in the crushing, humiliating reality of “stable” Arab states dominated by aging autocrats.

The true dark possibility that I fear, however, more resembles Algeria post-92 which is a far far worse spectre. There the regime reaction to the FIS’s clear course towards power following their dominance of the first round of the general election led to the second round being cancelled and a nightmarish civil war matched only by Lebanon’s in the region. But of course Algeria was never substantially on the radar of the US so that nightmare isn’t a part of the idiot columnists’ mental universe and they don’t consider the horrors of a military regime holding on as happened in Algeria. Luckily Egypt doesn’t have the equivalent of the GIA. At least not yet. Just Hamas on it’s border and a peace process killed by Israel. But then the GIA didn’t begin it’s campaign of carnage until the FIS had been outlawed and repression made the order of the day. The sooner Mubarak’s gone the better for everyone. Even the US.

Where’s the logic in trying to re-capitalise AIB to the tune of €1 Billion when it currently has a market capitalisation of less that €500 million? The €1billion in private funds is simply not going to happen, no way. So the Irish government is going to end up owning a majority stake in AIB (€1b vers >€500m of stock) or let it go to the wall.

Stop beating around the bush, just nationalise it. That way you don’t have to pump in the potential black hole in cash, you can just assume ultimate responsibility for the debts and allow the bank to operate as if it never had toxic assets, that is, making loans to those who are worthwhile. Then you can allow those debts that are assumed to be toxic to either unwind themselves over time without the bank going to the wall or you can shift them into a holding bank/ company.

Nationalising removes the legal obligation of the bank to the shareholders that would remain if the government attempted to “insure” the bad debts (as though the government can afford to do that at the moment). €340 million? Just buy the damn thing Lenihan, it would be in the best interests of bank customers and the taxpayers. This goes for BoI too.
Or that’s how I see it.