# Morgan Kelly's latest article



## ccbkd (7 May 2011)

[broken link removed]

Yikes!! Its over....we're finished


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## Howitzer (7 May 2011)

Kelly's been on the money for a long time now. He's pretty much the only commentator with any credibility at this stage. Anyone disagreeing with his views better have something good to back up their position. Ex-teachers, estate agents and career politicos need not apply.


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## tiger (7 May 2011)

I agree with the idea that if we can get the budget to balance, our position for negotiation becomes alot stronger, but that will only happen with massive public spending/sector cuts which will not happen quickly.


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## onq (8 May 2011)

Kelly's article is a sobering assessment of the financial reality that is Ireland today.
The sooner we cut our public wage bill the better but let's not be too hasty.
Forcing precipitous change will cause more long term economic damage.

Cuts are not the only answer.
Investing in indigenous businesses to grow export-led jobs is necessary.
The realignment of both existing and new indigenous businesses towards export is indicated.

But we also need advice and stimuli to allow this to happen and direct efforts to best effect.
We're not just looking for more investment here, but links to viable markets abroad.

FWIW

ONQ


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## thedaras (9 May 2011)

I would tend to believe Morgan Kellys assessment..we are in big trouble.

We are just not hearing about how many job losses there are,for example;
David Marshalls (Hairdresser,in business 30 plus years) Gone,
Maxwell motors,which was a big dealership closed last week.

There are so many small businesses going bust that we are not aware of, the future is bleak.


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## onq (9 May 2011)

We don't need doom and gloom from Morgan Kelly - we need someone to start charting a course for us and implementing it.
The development principle that sustained us through the boom is the one to adopt now.
"Businesses come and businesses go".
We need more coming than going.

But what we really need is a new bank, run by intelligent people, not the croney pseudo-capitalists we were saddeld with before.

A new bank is needed to restart our indigenous economy.
A new bank is needed to generate profits by engaging in inter-bank trading.
A new bank is needed to show the world that Ireland can be trusted and can do business in financial terms.

Our two sad old banks cannot do this for us.

The current incumbents are STILL dysfunctional and still possess much of the discredited top echelons that got them into the mess we are all in.
Not other international banks will touch these banks, which si why we need a new one, a credible one, a solvent one - one that could make a profit.
As for the two zombie banks - let them struggle on, tainted by their key, culpable personnel and their so-called intelligentsia with half a brain between them.

 We need a new bank.

And we all, the world over, need to start taxing banks and stock exchanges on EVERY transaction, a Tobin tax for as long as we need it to get us out of this mess.

ONQ


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## horusd (9 May 2011)

I listened to professor Honohan on the News at One yesterday. He (as usual) came across as highly credible and his critique of Kelly's article gave an almost completely different picture. 

Two professors totally at odd's with each other, one of them, the one in the driving seat, is prepared to discuss it and submit to intense questioning, whilst the other shoots off a bombshell article, laced with personal attacks on Honohan and runs for cover in the hallowed halls of UCD. 

Honohan claims Kelly's assessment is deeply flawed, Kelly needs to answer these criticisms. Kelly's suggestion of an immediate balanced budget is overly simplistic and impossible. He probably know this. He has credibilty because he called it right in the past. This doesn't guarantee he's right now. He really needs to grow up. If he can't or won't defend his opinions he should keep them to himself. It's churlish and petulant to act as he does.


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## Howitzer (9 May 2011)

onq said:


> We don't need doom and gloom from Morgan Kelly - we need someone to start charting a course for us and implementing it.
> The development principle that sustained us through the boom is the one to adopt now.
> "Businesses come and businesses go".
> We need more coming than going.
> ...


So where will this new bank get it's money from?


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## Shawady (9 May 2011)

onq said:


> The sooner we cut our public wage bill the better but let's not be too hasty.
> 
> ONQ


 
If only that was the problem.
If we do what Kelly suggests you are looking at massive cuts in all social welfare rates, probably around 35 - 40%. Seeing that no party wants to take even €8 off the old age pesnion, will they knock €80 off it? thats what you are looking at.


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## ccbkd (9 May 2011)

horusd said:


> I listened to professor Honohan on the News at One yesterday. He (as usual) came across as highly credible and his critique of Kelly's article gave an almost completely different picture.
> 
> Two professors totally at odd's with each other, one of them, the one in the driving seat, is prepared to discuss it and submit to intense questioning, whilst the other shoots off a bombshell article, laced with personal attacks on Honohan and runs for cover in the hallowed halls of UCD.
> 
> Honohan claims Kelly's assessment is deeply flawed, Kelly needs to answer these criticisms. Kelly's suggestion of an immediate balanced budget is overly simplistic and impossible. He probably know this. He has credibilty because he called it right in the past. This doesn't guarantee he's right now. He really needs to grow up. If he can't or won't defend his opinions he should keep them to himself. It's churlish and petulant to act as he does.


 
I don't belive Honohan, he is too closely linked to the ECB to be impartial, Morgan Kelly is de facto the voice of the Irish financial dissident and to date he has called everything correctly..you can buy into Honohan's eloquent rhetoric if you wish in the same way that people bought into lenihan's rubbish "we have turned the corner" etc...It is simple we are seeing the slow unwinding of the financial ideology of Neo-Liberalism, a model we whole heartly endorsed " we are closer to Boston than Berlin" etc.....


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## Smart_Saver (9 May 2011)

ccbkd said:


> I don't belive Honohan, he is too closely linked to the ECB to be impartial, Morgan Kelly is de facto the voice of the Irish financial dissident and to date he has called everything correctly..you can buy into Honohan's eloquent rhetoric if you wish in the same way that people bought into lenihan's rubbish "we have turned the corner" etc...It is simple we are seeing the slow unwinding of the financial ideology of Neo-Liberalism, a model we whole heartly endorsed " we are closer to Boston than Berlin" etc.....


 
Professor Kelly needs to backup the claims made in his article on national TV. Patrick Honohan did on radio and refuted the same comments. The article itslef is scandalous - bordering on the slanderous and possibly libellous.  
Morgan Kelly may also be right in his predictions but surely he may also be wrong. I heard a rumour that he was treated badly on RTE before and becasue of that he refuses to do any more live debates or broadcasts. But he has to come out of his office now after writing this latest article to substantiate his arguments.


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## horusd (9 May 2011)

ccbkd said:


> I don't belive Honohan, he is too closely linked to the ECB to be impartial, Morgan Kelly is de facto the voice of the Irish financial dissident and to date he has called everything correctly..you can buy into Honohan's eloquent rhetoric if you wish in the same way that people bought into lenihan's rubbish "we have turned the corner" etc...It is simple we are seeing the slow unwinding of the financial ideology of Neo-Liberalism, a model we whole heartly endorsed " we are closer to Boston than Berlin" etc.....


 
Then let Kelly defend his position. Let him respect the public enough to go head to head with Honohan. He may be right. Let him be tested as anyone who posts on AAM may have their positons tested/questioned. In short, let him put up or shut up. If Honohan is engaging in "elequent rethoric" then let Kelly demonstrate it. At least Honohan is willing to face the public and not hurl from the ditches.

PS: I wonder does Kelly think:

1. His arguments are so obviously true, that they require no justification.

2. His reputation, integrity & wisdom alone allows him to stand above any mere criticism or deign to reply to commentary.

3. Or, some other reason exists as to why he feels he has a right to express such damning criticism yet answer no questions himself.

At the very least, Kelly should give reasons for his Grand Silence . He is deeply dis-respectful of a worried people. He adds to the worry and anxiety and runs.  The_ IT_ should refuse to publish anything else from him  unless he agrees to public scrutiny. He owes us this at the minimum..


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## Howitzer (9 May 2011)

horusd said:


> He owes us this at the minimum..


Why?

At the end of the day it was an opinion piece.


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## ccbkd (9 May 2011)

horusd said:


> Then let Kelly defend his position. Let him respect the public enough to go head to head with Honohan. He may be right. Let him be tested as anyone who posts on AAM may have their positons tested/questioned. In short, let him put up or shut up. If Honohan is engaging in "elequent rethoric" then let Kelly demonstrate it. At least Honohan is willing to face the public and not hurl from the ditches.
> 
> PS: I wonder does Kelly think:
> 
> ...


 
I get the impression that most people were profoundly depressed by his article, I know I was! what follows now is predictable; sections of the media and Establishment will of course refute M.Kelly's article, people will generally buy into the majors players' arguments against  M.Kelly and we will be stumble onwards toward default and economic ruin and in four years time we will all reflect on just how prescient the article was... 


"All truth passes through three stages. First, it is _ridiculed, _second it is _violently opposed,_ and third, it is accepted as _self-evident." Arthur Schopenhauer_


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## shnaek (9 May 2011)

I don't think we can dismiss Kelly's views just because he won't argue them in public. We can discuss those views here without mentioning Kelly or Honahan. The essence of the article is that we should give the ECB the two fingers and balance our budget tomorrow, but this won't happen so in 2 years we are going to be defaulting\bankrupt and screwed. He also points out that there is no political party there to take over once FG and Labour are wiped out after this happens. 
It is a pessimistic view alright, but probably quite accurate. If it is accurate, then we need to go about sorting the problem out in so far as we can. I guess we'll see the governments hand as it comes closer to the budget.


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## Teatime (9 May 2011)

horusd said:


> Honohan claims Kelly's assessment is deeply flawed, Kelly needs to answer these criticisms. Kelly's suggestion of an immediate balanced budget is overly simplistic and impossible. He probably know this. He has credibilty because he called it right in the past. This doesn't guarantee he's right now. He really needs to grow up. If he can't or won't defend his opinions he should keep them to himself. It's churlish and petulant to act as he does.



Which part of Kelly's article do you think is wrong? There is no right or wrong here - there is just our best move. For me a private banking debt default and an immediate balanced budget is our best move. It will be very tough but its better than a slow death.

What Kelly has done is got people talking about this move at a high level.


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## Smart_Saver (9 May 2011)

shnaek said:


> I don't think we can dismiss Kelly's views just because he won't argue them in public. We can discuss those views here without mentioning Kelly or Honahan. The essence of the article is that we should give the ECB the two fingers and balance our budget tomorrow, but this won't happen so in 2 years we are going to be defaulting\bankrupt and screwed. He also points out that there is no political party there to take over once FG and Labour are wiped out after this happens.
> It is a pessimistic view alright, but probably quite accurate. If it is accurate, then we need to go about sorting the problem out in so far as we can. I guess we'll see the governments hand as it comes closer to the budget.


 
No one is dismissing his views however you cannot expect everyone to bow down and kneel just because he has written (how was it put earlier..."*An opinion*"). 
As well you say it's a pessimistic view - but you also use the important word - the word "*IF*". And frankly we don't know "*if*" it's true because it hasn't come to pass yet. So it's speculation and one scneario.

But everyone seems to want to buy it just because it was written by Morgan Kelly and no one is allowed to ask him where he got his facts or why he has chosen to commit himself to writing this as the ultimate likely scenario.


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## Sunny (9 May 2011)

The problem is that Morgan Kelly is seen by some people as some sort of Messiah or at least a Prophet! He actually talks a lot of sense and I would agree with some of his points, but it is an opinion piece. As pointed out, his figures do not stand up to scrutiny or should at least come with a health warning. His idea of walking away from the EU/IMF/ECB makes Sinn Fein's economic policies look almost conservative.


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## shanegl (9 May 2011)

horusd said:


> I listened to professor Honohan on the News at One yesterday. He (as usual) came across as highly credible and his critique of Kelly's article gave an almost completely different picture.
> 
> Two professors totally at odd's with each other, one of them, the one in the driving seat, is prepared to discuss it and submit to intense questioning, whilst the other shoots off a bombshell article, laced with personal attacks on Honohan and runs for cover in the hallowed halls of UCD.
> 
> Honohan claims Kelly's assessment is deeply flawed, Kelly needs to answer these criticisms. Kelly's suggestion of an immediate balanced budget is overly simplistic and impossible. He probably know this. He has credibilty because he called it right in the past. This doesn't guarantee he's right now. He really needs to grow up. If he can't or won't defend his opinions he should keep them to himself. It's churlish and petulant to act as he does.



You must have listened to a different interview because he sounded like a nervous joke to me.


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## horusd (9 May 2011)

Kelly has an opinion, fine. He might even be partially or substantially right. But his opinions has had serious repercussions, not least for the reputation of Honohan, but also the country in general. His facts and conclusions are disputed. In writing the article, in expressing his opinions, he enters the public fray.  And in his role as the hottest economist amongst a multitude of celeb economists,  his opinion has an impact and he has a duty to explain them. This is not some celebrity chef arguing over the recipe for meatloaf, it directly impacts on people's lives. If he doesn't know this, he should know it. If he wants to scrap with Holohan or anyone else, let him do so on the pitch and meet his critics face-on. His recommendation for a balanced budget is ludicrous and would send the country into free-fall and massive social unrest. If he is so convinced he's right, thenlet him  defend his position and argue it out, or get off the stage and let people who actually want to engage in a democratic debate, take the role on. As Sunny points out he's no Messiah.


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## Howitzer (9 May 2011)

horusd said:


> If he is so convinced he's right, thenlet him  defend his position and argue it out, or get off the stage and let people who actually want to engage in a democratic debate, take the role on. As Sunny points out he's no Messiah.


In so far as the running of the country is concerned there is no such thing as democratic debate. The people in certain positions make decisions and that's that.


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## serotoninsid (9 May 2011)

GoMayoGo said:


> But everyone seems to want to buy it just because it was written by Morgan Kelly and no one is allowed to ask him where he got his facts or why he has chosen to commit himself to writing this as the ultimate likely scenario.


I couldn't give a fiddlers who wrote it - but is it not what a lot of us wanted in the first place( ie. go tell the ECB to go fish - its not a sovereign issue - it's a private banking issue)?
Isn't it what the Icelanders did?
Isn't it what WE would do if we were given the opportunity to vote on it (which won't happen of course).
I worked a paye job all through the past ten years. I didn't benefit from the boom - nor had I any involvement in what irish Private institutions were doing - and they certainly weren't acting on my behalf - and of course that is the case for 95% of the rest of the population.


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## horusd (9 May 2011)

Howitzer said:


> In so far as the running of the country is concerned there is no such thing as democratic debate. The people in certain positions make decisions and that's that.



Those in positions are elected. Kelly feels he has something to say of such massive import that every few months he writes something significant. He obviously cares about the issues involved. He feels the need to speak out, nobody is presumably holding a gun to his head. He clearly wants a change of policy and is warning damnation if not. The logical step is to engage and prove his points so that the changes he wants can ever see the light of day. 


The man is no fool. He hardly expects that an opinion piece is going to do it, he surely knows that to effect change he will need to defend his ideas, so it begs the question, what is he at? Causing a debate ? Well, that's happened as it did before. so what's new? Another few months will pass and the Oracle of Delphi will speak again. To what end?


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## Teatime (9 May 2011)

horusd said:


> The logical step is to engage and prove his points so that the changes he wants can ever see the light of day.



But which points do you think he needs to prove?


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## LittlePiggy (9 May 2011)

The main thing I took from the article was that we should be reducing our spend so that we can finance public expenditure without borrowing. Thats a simple point that nobody can argue with. I disagree that we should go and give the EU finger and then start cutting expenditure, that sounds like a disaster in waiting. I would rather do the cutting first and then see what options we have.


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## Smart_Saver (9 May 2011)

Teatime said:


> But which points do you think he needs to prove?


 
There are a whole load of claims made in that article.
Here's some.

_*"Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”*_

2 questions straight away. Who is this source and why has Brian Lenihan never spoke of this ?

*"The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way."*

Another pretty big claim. Where is the information source for this ? From reading it you get the impression that Morgan Kelly was aware of everything that was happening at the exact centre.

*"The IMF found itself outmanoeuvred by ECB negotiators, their low opinion of whom they are not at pains to conceal. More importantly, the IMF was forced by the obduracy of Geithner and the spinelessness, or worse, of the Irish to lend their imprimatur, and €30 billion of their capital, to a deal that its negotiators privately admit will end in Irish bankruptcy."*

Another big statement slamming the IMF. Where is all this information coming from ?
In the end Horusd is correct - if Professor Kelly wants to encourage a change in direction he needs to come forward and be prepared to stand by his opinions and not just close the office door once more.


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## michaelm (9 May 2011)

horusd said:


> The man is no fool. He hardly expects that an opinion piece is going to do it, he surely knows that to effect change he will need to defend his ideas, so it begs the question, what is he at? Causing a debate ? Well, that's happened as it did before. so what's new? Another few months will pass and the Oracle of Delphi will speak again. To what end?


I like the above quote.  Just he right amount of disdain.  I agree, Kelly should defend his ideas, if he cares about such.


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## horusd (9 May 2011)

Teatime said:


> But which points do you think he needs to prove?


 
There are three things that are relevant to Kelly's argument:

1. Objective numerical facts. Monetary amounts, interest rates,and other objective numerical data.

2. Objective historical facts. Who said what to who when, who decided what, who did what,when, how etc . Again, objectively true data noting a sequence of actual events.

3. Opinions of the meanings, priorities,"mistakes", "correct decisions", relative values and interpretations etc of 1 & 2.

*All of these are in dispute.* Kelly speaks to the court of public opinion as the prosecuter, judge and expert witness. But refuses to be questioned, refuses to back-up 1 & 2 and thus he cannot establish 3. Any judge worth his salt would chuck this argument out. Kelly may be right, but as long as he cannot be tested on his argument, his rightness or otherwise cannot be a given. If I said the time was 6.15 pm and you said no it was not, it was 7.20pm, but you refused to let me look at the clock, or explain how you know, or why you think it's 7.20pm would you believe me or would you think now that's all very odd?


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## JoeB (9 May 2011)

Well, what aspects of the article does Honohan claim are false?

Does he deny a conflict of interest by being legally bound to carry out the ECB decisions.. versus his position as economic advisor to a country that sits on the opposite side of the negotiation table to the ECB? Which side does he sit on, both sides? Is that possible?
(I know he doesn't sit, but if he did it'd be on the ECB side)


What about cutting off Lenihan at the ankles? What authority does Honohan have to annouce that Ireland needs a bailout? Does he speak for Ireland?, or Gov.ie? Does he deny that he was the first to announce a bailout? How is that different from me announcing a bailout need?, other than he can use his position to appear credible. Perhaps we did need a bailpout, but I think our finance minister should annouce these things, or at least a member of government.
edited to add.. is Honohan governor of the Irish central bank?.. if so I suppose that is a suitable position to comment on Irish finances. If not (i.e only ex Governor) then what was he doing?


Does he think we can afford to pay back 200 to 250 billion?


We're left in an impossible situation where we don't know who to believe.


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## Smart_Saver (9 May 2011)

shanegl said:


> This post will be deleted if not edited immediately, you wouldn't ask a journalist to name his sources if it was just another run of the mill report. Why should Kelly start naming names? Because it suits you not to believe him?


 
This is the third time Morgan Kelly has taken this route. Each time after his opinion is published he retires back to his office without doing any post interview or offer of justification for the likely outcomes or predictions he claims. 

But the national swell of day to day opinion is rocked after each report and the confidence of the nation takes another battering. 

I fail to see the point of it anymore. What is he trying to prove or achieve?


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## UFC (10 May 2011)

GoMayoGo said:


> What is he trying to prove or achieve?



Give his honest assessment of the scale of our problems?

You don't really believe the people in power are doing what's best for Ireland? Surely you're not that naive...


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## Sunny (10 May 2011)

UFC said:


> Give his honest assessment of the scale of our problems?
> 
> You don't really believe the people in power are doing what's best for Ireland? Surely you're not that naive...


 
No it's a big conspiracy involving the FF/Greens/FG/Labour in co-operation with the Central Bank and the Judiciary to protect wealthy developers, bankers and bondholders.

To accuse Honohan who is not a career civil servant or banker and who is one of Ireland's most internationally respected economic experts of what amounts to treason is ridiculous. Kelly could have disagreed with the policies without the personal attack on Honohan. Maybe Kelly thinks he should have been made head of the Central Bank and he would have gone to the ECB and said 'it is Kelly's way or no way'. Writing opinion pieces is like being in opposition in the Dail. Easy to criticise and have great populist ideas. Things change when it comes to putting these wonderful ideas into practice. Writing that we should tell the ECB and the IMF where to go might make him feel better but I can guarantee you that make Kelly Minister of Finance tomorrow and he would change his tune.

I should point out that there are large parts of the article that are well written and it is a very interesting piece. I would also believe him when he talks about the negotiations with the IMF/EU and the intervention of the US and the rest of the G7. It was always suspected that this was the case.


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## Bronte (10 May 2011)

Sunny said:


> No it's a big conspiracy involving the FF/Greens/FG/Labour in co-operation with the Central Bank/IMF/EU/G7 and the Judiciary to protect wealthy developers, bankers and bondholders and to protect the status quo of those at the top at the expense of those at the bottom.


 
Who cares what the economist Morgan Kelly says, he could be right, he could be wrong, Honohan could be right, he could be wrong. Was Lenihan right or was he wrong. Does the IMF know what to do, does the EU, do the G7 countries. At some stage one of them will be right and the others wrong. Because if you call it one way for a sufficient amount of time at some stage you will call it correctly. Basically a type of gambling. Just in this case they are gambling with Irish, Portuguese and Greek livelihoods.


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## Teatime (10 May 2011)

horusd said:


> There are three things that are relevant to Kelly's argument:
> 
> 1. Objective numerical facts. Monetary amounts, interest rates,and other objective numerical data.
> 
> ...



I agree that he does personalise the issue to add drama and I am unsure how he can be finding out who said what at vital meetings but I agree with the main thrust of his argument:

1) Private bank debt will make our soverign debt unmanageable
2) we need to default on private debt
3) we need to balance budget because nobody will loan to use post-default


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## ccbkd (10 May 2011)

GoMayoGo said:


> This is the third time Morgan Kelly has taken this route. Each time after his opinion is published he retires back to his office without doing any post interview or offer of justification for the likely outcomes or predictions he claims.
> 
> But the national swell of day to day opinion is rocked after each report and the confidence of the nation takes another battering.
> 
> I fail to see the point of it anymore. What is he trying to prove or achieve?


 
He is an academic dissident who has examined the facts and is giving his subjective opinion, The Job of the Intellectual is to act with integrity and question authority..he has sparked a national debate about our current financial crisis across all media formats. We have been feed enough drivel from the dept of finance and previous finance minister to last a lifetime, Morgan Kelly's opinion whether you like it or not has caused alot discomfort to Honohan and his cohorts, at least now these people know they are accountable in the court of public opinion thanks largely to the prophetic articles by Kelly.


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## monagt (10 May 2011)

The question now is "Is he right AGAIN?"

He does not act as a celebrity economist like some (and this not a go at McWilliams or Lee who were also 'right on the money' and deserve a lot of respect) rather he is more serious on his pronouncements.

If we listened instead of attacking these guys we would not be in the mess we are in.


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## Gekko (10 May 2011)

I predict that United will lose to Blackburn and Blackpool and as a result Chelsea will win the Premier League title.

There's a tiny chance of the above happening, but if it does I'll suddenly be a sports betting guru whose view will be gospel to some people.

Doesn't make me any more qualified than the next chancer to call results.

Kelly's article is off the wall stuff in my view.  His proposals aren't a runner, so why write about them?


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## ccbkd (10 May 2011)

Gekko said:


> I predict that United will lose to Blackburn and Blackpool and as a result Chelsea will win the Premier League title.
> 
> There's a tiny chance of the above happening, but if it does I'll suddenly be a sports betting guru whose view will be gospel to some people.
> 
> ...


 
Give a good logical argument why his arguments "off the wall". In my opinion the Irish Government and EU do not know what the next move is, they are stumbling from crisis to crisis..The current situation will inevitably led first to greek default, Irish default and then portugal and then perhaps Spain. Remember capitalism is  like all things in life a constantly evolving process and the latest instalment generally referred to as "Neo-Liberalism" has failed, and failed abysmally. The process of a unified common currency in Europe is simply ludicrous and unworkable and in my opinion it is "off the wall" stuff and again this is self-evident in current crisis and needs no further argument, the economic and cultural characteristic of the the constituent parts are just too different for a common fiscal policy.


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## Teatime (10 May 2011)

Gekko said:


> Kelly's article is off the wall stuff in my view.  His proposals aren't a runner, so why write about them?



You're entitled to your opinion but I would value Kelly's ecomonic credibility more than yours. I do think his proposals are our best play at this time.

Is the Kelly debate taking over from the Public v Private debate? Do public servants believe they have more to lose from Kelly's default and budget adjustment plan?


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## JoeB (11 May 2011)

The US is often held up as an example of disperate states coming together, with vastly different economies, and cultures too I suppose. Not having spent much time in the US I can't be certain, but i reckon down south is very different to up north, and Calafornia is very different to rural Alibama or whatever.

They do have a federal budget though.. does Europe?
States can raise their own taxes, as can European countries.

So how does it work there?,.. simply because they had a gold standard for most of their existence? (if so, the US may collaspe under their current huge debt burden, paid for by the printing press, which is legal for them). Apparently the US was close to becoming just another failed union at some points in it's history.


They also have different criminal laws, .. like Europe, with spamspamspam being semi-legal for example in some states, and subject to long prison sentences in others. (Of course they also have over-riding federal laws, which Europe doesn't seem to have)


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## MrMan (11 May 2011)

ccbkd said:


> Give a good logical argument why his arguments "off the wall". In my opinion the Irish Government and EU do not know what the next move is, they are stumbling from crisis to crisis..The current situation will inevitably led first to greek default, Irish default and then portugal and then perhaps Spain. Remember capitalism is  like all things in life a constantly evolving process and the latest instalment generally referred to as "Neo-Liberalism" has failed, and failed abysmally. The process of a unified common currency in Europe is simply ludicrous and unworkable and in my opinion it is "off the wall" stuff and again this is self-evident in current crisis and needs no further argument, the economic and cultural characteristic of the the constituent parts are just too different for a common fiscal policy.



Why should he give a good logical argument about Kellys views, surely Gekko could be using his job as an 'intellectual' to spark debate. 
It would be nice for everyone if debate actually included the person who instigated it.


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## ccbkd (11 May 2011)

MrMan said:


> Why should he give a good logical argument about Kellys views, surely Gekko could be using his job as an 'intellectual' to spark debate.
> It would be nice for everyone if debate actually included the person who instigated it.


 
Top sentance is well, just ridiculous! the majority of AAMer clearly want Morgan Kelly's argument to be proved false by debate or other opinion.. so far we get John Bruton's clearly pro-banking statement in yesterday's Irish times... the opinions on blogs below piece are generally scathing. I have seen nothing else from any other economist yet that clearly knocks out Kelly's argument..the tiresome arguments on offer here do little to presuade.


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## shnaek (11 May 2011)

It amazes me how much Kelly is being attacked, just like McWilliams and Lee etc used to be attacked back in the day. Not only that, but people still believe the vested interests - politicians and bankers - over independent thinkers! Just adds to my belief that Ireland is screwed.


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## ccbkd (11 May 2011)

shnaek said:


> It amazes me how much Kelly is being attacked, just like McWilliams and Lee etc used to be attacked back in the day. Not only that, but people still believe the vested interests - politicians and bankers - over independent thinkers! Just adds to my belief that Ireland is screwed.


 
Totally Agree!


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## Sunny (11 May 2011)

Who is attacking Kelly? I haven't seen anyone come out and have a pop at him. I have seen people come out and point out that his solution of telling the IMF and the EU where to go is not exactly realistic. And Kelly knows this himself. Do you think if you made Kelly Governer of the Central Bank tomorrow of Finance Minister, that is the first thing he would do? 

If that's what people want, we should have elected Sinn Fein.


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## Ceist Beag (11 May 2011)

I haven't see anyone on here saying they believe the politicians and bankers over Kelly? And I don't think he is being attacked - posters are merely looking for further detail on the opinion put forward by Kelly. For example, to those who think what he says makes sense, what exactly do you think would happen in Ireland if the government were to hold a budget in the morning to balance out the difference between spending and revenue in one go? First of all how would this be achieved? Would it mean putting loads of PS staff out of work? If so they go on the dole queue yeah? Kelly makes it sound like a simple economic problem but it's so much more than that - this is why I don't give his opinion the same credibility some of you seem to be giving it.


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## shnaek (12 May 2011)

I think people still haven't woken up to the fact that the country is in serious trouble. Kelly's articles provide the shocks that Irish people need to wake us from our slumber. There are those who continue to believe that you can talk down an economy. But at the end of the day the people to listen to are the people whose money is on the line. And those people are no longer lending to Ireland. The sooner we as a nation wake up to the fact that we are in serious trouble, the better. And to that end Kelly et al are doing us a big favour.


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## horusd (12 May 2011)

shnaek said:


> I think people still haven't woken up to the fact that the country is in serious trouble. *Kelly's articles provide the shocks that Irish people need to wake us from our slumber*. There are those who continue to believe that you can talk down an economy. But at the end of the day the people to listen to are the people whose money is on the line. And those people are no longer lending to Ireland. The sooner we as a nation wake up to the fact that we are in serious trouble, the better. And to that end Kelly et al are doing us a big favour.


 

I don't think anyone is slumbering. I think a lot of people are scared out of their wits, and Kelly doesn't help and isn't doing anyone, least of all Joe and Joanne Public, a favour. 

He speaks, terrifies a lot of people and then refuses to engage in debate or defend his position, or add anything further to the debate apart from haranguing people like Honohan who have to do a job. 

Don't get me wrong, Kelly often makes sense, and he might be substantially right in his assessments, but if he really wanted to do us a favour, then he either needs to explain his thinking and defend it, or shut up and stop hurling from the sidelines. That's cheap, easy and useless in the context of a national crisis.


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## 44brendan (12 May 2011)

On a fundamental basis Prof Kelly's arguments and proposals are difficult to dispute. Yes we must at some stage default on our debt as there is no prospect of repaying 200/250B or carrying a long term interest bill on this level of debt. Also it is certainly essential that if we were to approach the markets we do so with a balanced budget. However what Prof Kelly fails to take into account is the human and financial consequences to the broad populace and the economy of implementing such a strategy. It is clear that in order to achieve a balanced budget there would need to be significant cuts in the PS wages bill. Also SW payments would need to be severely cut and finally taxes would need to be increased to cover the balance. However in taking these actions the consequences would also have reprecussions on the tax take as well as impoverishing a significant element of the population. From an economic perspective this is not an issue as economics purely deals with figures and not the human casulties of any actions taken (Milton Friedman & Chicago School followed these principles). 
In summary we are ultimately heading towards a default. However the ECB/IMF are fully aware of this and a structured default (if such a thing is possible) does appear to be a better option than a pre-empative one. Those in favour of taking Prof Kelly's advice should also be prepared to both anticipate and deal with the consequences of such actions. Otherwise we end up with recommendations that work only from an economic perspective but factor out the social issues. Balance must prevail in taking any decisions.


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## Sunny (12 May 2011)

A calm well thought out article

[broken link removed]


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## horusd (12 May 2011)

Great article Sunny. Altho on a personal level, I would like to see the EU & ECB share the burden of debt that Ireland (immorally in my view) has had to bear, and which all the EU benefits from in terms of stability. The scale of this problem is so vast, I really don't see us as being able to manage it alone, and the very stability that has been gained, risks being lost in a structured or chaotic default


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## Sunny (12 May 2011)

horusd said:


> Great article Sunny. Altho on a personal level, I would like to see the EU & ECB share the burden of debt that Ireland (immorally in my view) has had to bear, and which all the EU benefits from in terms of stability. The scale of this problem is so vast, I really don't see us as being able to manage it alone, and the very stability that has been gained, risks being lost in a structured or chaotic default


 
I agree but I suppose Europe will just turn around and say they are providing us with funds at a 50% discount to the market and the ECB are providing unlimited funds to our banks at a ridiculous level. As the article says, we will be in a much stronger position when we don't need to borrow €20 billion a year to run the country.

Personally I think there will be a limited debt restructuring but not until at least 2013.


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## ccbkd (12 May 2011)

Vincent Browne's guests last night included Joe Durkin and Constantin Gurdgiev, Gurdgiev was in total agreement with Morgan Kelly's finding and I thought he made ESRI's Joe Durkin look foolish with his forensic analyst of Durkin's Rose-tinted figures, Gurdgiev has a very good grasp of figures and is formidable advocate, I suppose you could say he was vicariously advocating Kelly's case. I think we are in deep deep trouble and so too is the Euro zone.


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## elcato (12 May 2011)

> Vincent Browne's guests last night included Joe Durkin and Constantin  Gurdgiev, Gurdgiev was in total agreement with Morgan Kelly's finding  and I thought he made ESRI's Joe Durkin look foolish with his forensic  analyst of Durkin's Rose-tinted figures, Gurdgiev has a very good grasp  of figures and is formidable advocate, I suppose you could say he was  vicariously advocating Kelly's case. I think we are in deep deep trouble  and so too is the Euro zone.


I watched this for two minutes and couldn't listen anymore. One point Gurdgiev made was that NAMA was worth nothing. Grain of salt etc


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## JoeB (12 May 2011)

I thought NAMA was worth nothing... i.e,    it's self funding.

They borrowed 80 billion say, to purchase 160 billion worth of bad loans, which are worth 80 billion now, and which they paid 80 billion for.

Very simple figures there (not trying to sound condenscending, what I mean is simplified figures),.. but Nama is worth nothing in the sense that if all loans were paid back the money received would repay Nama borrowings, and so it'd be a break even point.

Nama spend some money on admistration.. we are probably overpaying for this, but only a drop in the ocean compared to 80 billion I'd imagine.

The danger is that Nama doesn't receive 80 billion for the loans it's paid 80 billion for,.. in which case NAMA is worth less than nothing to the Irish taxpayer.


So is this what Gurdgiev meant?


edited to add: perhaps you meant that NAMA will show a profit?, in which case it's worth the profit to the Irish Taxpayer.. 

I'd be surprised to see a profit.. I reckon such profits will be siphoned off to pay fat cats.


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## Chris (12 May 2011)

JoeBallantin said:


> I thought NAMA was worth nothing... i.e,    it's self funding.
> 
> They borrowed 80 billion say, to purchase 160 billion worth of bad loans, which are worth 80 billion now, and which they paid 80 billion for.
> 
> Very simple figures there (not trying to sound condenscending, what I mean is simplified figures),.. but Nama is worth nothing in the sense that if all loans were paid back the money received would repay Nama borrowings, and so it'd be a break even point.



The total amount of loans bought up by NAMA so far is about €30b, and the underlying valuations were based on Q3 2009. Since then real estate prices have dropped at least another 10%, so NAMA would already be in the red.


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## dockingtrade (12 May 2011)

Sunny said:


> Personally I think there will be a limited debt restructuring but not until at least 2013.


 
Can you explain what this means?
Is it a bad thing?
I hear "experts" say a restructuring is a default, why is this so. If u owe 100k over 10 years and u cant pay it and you restructure the loan to pay over 20 years surely thats not a default.
The EU say they wont allow a bank to fail or a country to default if this is the case whats all the fuss about, when it comes to wont it be just sorted out?


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## Gekko (12 May 2011)

ccbkd said:


> Give a good logical argument why his arguments "off the wall". In my opinion the Irish Government and EU do not know what the next move is, they are stumbling from crisis to crisis..The current situation will inevitably led first to greek default, Irish default and then portugal and then perhaps Spain. Remember capitalism is like all things in life a constantly evolving process and the latest instalment generally referred to as "Neo-Liberalism" has failed, and failed abysmally. The process of a unified common currency in Europe is simply ludicrous and unworkable and in my opinion it is "off the wall" stuff and again this is self-evident in current crisis and needs no further argument, the economic and cultural characteristic of the the constituent parts are just too different for a common fiscal policy.


 


Teatime said:


> You're entitled to your opinion but I would value Kelly's ecomonic credibility more than yours. I do think his proposals are our best play at this time.
> 
> Is the Kelly debate taking over from the Public v Private debate? Do public servants believe they have more to lose from Kelly's default and budget adjustment plan?


 
I never claimed that my opinions were more credible than Kelly's.

But I do not believe that it's feasible to impose an €18 billion current account adjustment in one year. Workers would simply refuse to repay their debts because they could no longer afford to do so. The economy would collapse.

The solution to our problems is to finance the bailout over (say) 50 years a la war financing and for the Eurozone countries to fundraise collectively with Eurobonds.


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## ccbkd (12 May 2011)

Gekko said:


> I never claimed that my opinions were more credible than Kelly's.
> 
> But I do not believe that it's feasible to impose an €18 billion current account adjustment in one year. Workers would simply refuse to repay their debts because they could no longer afford to do so. The economy would collapse.
> 
> The solution to our problems is to finance the bailout over (say) 50 years a la war financing and for the Eurozone countries to fundraise collectively with Eurobonds.


 
Cough!! Splutter..Gasp! War Financing!! Despite the moral implications of such a statement I wonder who will we declare war on..The residents of the Isle of Man.


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## horusd (12 May 2011)

ccbkd said:


> Cough!! Splutter..Gasp! War Financing!! Despite the moral implications of such a statement I wonder who will we declare war on..The residents of the Isle of Man.


 

  I think he means war bonds or a kind of Marshall plan. Given there's a fair bit of money in the country, the gov.t could do worse than offering a bond with a guaranteed decent return!


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## MrMan (13 May 2011)

ccbkd said:


> Top sentance is well, just ridiculous! the majority of AAMer clearly want Morgan Kelly's argument to be proved false by debate or other opinion.. so far we get John Bruton's clearly pro-banking statement in yesterday's Irish times... the opinions on blogs below piece are generally scathing. I have seen nothing else from any other economist yet that clearly knocks out Kelly's argument..the tiresome arguments on offer here do little to presuade.



I know it is; it is a summary of your post #35. 

I don't care which person has the right answers, but I would hope that people like Kelly would like to help during the crisis, rather than be proved right again after it. 
I don't expect anyone on AAM to provide a better argument than Kelly, it's just that if it is a solid argument then why can't he answer questions on it himself?


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## elcato (13 May 2011)

> I thought NAMA was worth nothing... i.e,    it's self funding.
> 
> They borrowed 80 billion say, to purchase 160 billion worth of bad  loans, which are worth 80 billion now, and which they paid 80 billion  for.


Forget about what NAMA has paid for anything. If NAMA sells all it has in the morning they would get some money from their assets. He (Gurdy) was pointing out that NAMA would generate nothing so write off anything that could be salvaged. For what it's worth the other guy was painting all to be rosy and I don't agree with that either.


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## Complainer (13 May 2011)

horusd said:


> I think he means war bonds or a kind of Marshall plan. Given there's a fair bit of money in the country, the gov.t could do worse than offering a bond with a guaranteed decent return!


Like this one? http://www.finance.gov.ie/viewdoc.asp?DocID=6292


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## horusd (13 May 2011)

Complainer said:


> Like this one? http://www.finance.gov.ie/viewdoc.asp?DocID=6292



Eh, no Complainer, not that one.  I said one with a decent rate of return.


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## DrMoriarty (13 May 2011)

And the answer is...
[broken link removed]


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## Teatime (13 May 2011)

shnaek said:


> I think people still haven't woken up to the fact that the country is in serious trouble. Kelly's articles provide the shocks that Irish people need to wake us from our slumber.



I do believe most people are slumbering or in denial. Well the people who have kept their jobs or haven't emigrated yet. They just think the problem will go away if they ignore it. Maybe its the best approach but I dont think so.


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## Sunny (13 May 2011)

Teatime said:


> I do believe most people are slumbering or in denial. Well the people who have kept their jobs or haven't emigrated yet. They just think the problem will go away if they ignore it. Maybe its the best approach but I dont think so.



And those people live in a little bubble where they dont have friends or family that have taken paycuts or lost jobs? They live in a bubble where the news media everyday doesn't cover the economic doom and gloom? They live in a bubble where they know their jobs are safe?


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## ccbkd (14 May 2011)

If anyone wants a good laugh or a blood boiling experience in sheen ignorance and irrational arrogance you should check out Morgan Kelly's appearances on primetime (Youtube) in 2007 with Jim power from Friends last and Brendan Keenan's appearance in 2008 after bank gaurantee, God Keenan and Power now look like seriously daft uncredible individuals, and Kelly is at his prophetic best! Human irrationality truly is an amazing thing!


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## DrMoriarty (14 May 2011)

Here's the former, and here's the latter.


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