Defaulting banks - where will it stop?

[Jan Klimkowski]

Riots & War?

Is the Spooky One finding interviewees who mention war?

http://www.telegraph.co.uk/finance/globa...warns.html

Help Ireland or it will exit euro, economist warns

A leading Irish economist has called on Dublin to threaten withdrawal from the euro unless Europe's big powers do more to rescue Ireland's economy.

By Ambrose Evans-Pritchard
Last Updated: 10:17PM GMT 18 Jan 2009

"This is war: countries have to defend themselves," said David McWilliams, a former official at the Irish central bank.

"It is essential that we go to Europe and say we have a serious problem. We say, either we default or we pull out of Europe," he told RTE radio.

"If Ireland continues hurtling down this road, which is close to default, the whole of Europe will be badly affected. The credibility of the euro will be badly affected. Then Spain might default, Italy and Greece," he said.

Mr McWilliams, a former UBS director and now prominent broadcaster, has broken the ultimate taboo by evoking threats to precipitate an EMU crisis, which would risk a chain reaction across the eurozone's southern belt, where yield spreads on state bonds are already flashing warning signals. The comments reflect growing bitterness in Dublin over the way the country has been treated after voting against the EU's Lisbon Treaty.

"If we have a single currency there are obligations and responsibilities on both sides. The idea that Germany and France can just hang us out to dry, as has been the talk in the last couple of days should not be taken lying down," he said.

Mr McWilliams cited the example of New York's threat to default in 1975. President Gerald Ford "blinked" at the 11th hour and backed a bail-out to prevent broader damage.

As yet, there is no public support for withdrawal from the euro. A Quantum poll published by the Irish Independent yesterday found that 97pc reject such a radical move. Three-quarters are in favour of a national government, an idea floated by Unilever's ex-chief Niall Fitzgerald.

"The economic disaster we are facing is unlike anything which has happened in my lifetime. It is a national crisis and needs a government of national unity," Mr Fitzgerald said.

Mr McWilliams said EMU was preventing Irish recovery. "The only way we can win this war is by becoming, once again, an export country. We can do what we are doing now, which is to reduce our wages, throw more people on the dole and suffer a long contraction. The other model is what the British are doing. Britain is letting sterling fall so that the problem becomes someone else's. But we, of course, have ruled this out by our euro membership.
"We are paying twice for the euro: once on the exchange rate and once more on the interest rate," he said.

"By keeping with the current policy, the state is ensuring that Ireland turns itself into a large debt-repayment machine. Is this the sort of strategy to win wars? " he said.

No future? One of Johnny Rotten's favourite phrases, methinks.

http://www.reuters.com/article/latestCri...USLF215588

FEATURE-Riots expose roots of anger on EU's edges

Sun Jan 18, 2009 7:04pm EST

By Patrick Lannin

RIGA, Jan 19 (Reuters) - Standing in the X-ray room of the gleaming private clinic he opened last year, Leons Platacis is an incongruous champion for youths who rioted in Latvia last week, part of a wave of European protests.

The Latvian businessman, who set up the clinic with his doctor wife, said it is managing to grow despite increasingly cautious banks, whose refusal to lend created a cash squeeze that has forced him to lay off five of his 20 staff.

But he is frustrated. Not only with the bankers -- now mainly the offshoots of large Scandinavian parents -- but also the government of the Baltic state, forced last year to accept a 7.5 billion euro ($9.94 billion) IMF and EU rescue package.

Platacis and others like him in European Union countries from Greece to Bulgaria show how the economic crisis has dashed hopes for prosperity among the middle-classes and young people, compounding resentment of governments already exposed by perceived nepotism, arrogance and corruption.

"We now have a situation like at the end of the Soviet period," he told Reuters, gesticulating as nurses outside escorted visitors along the freshly decorated hallways.

"It is them and us. We are not a united society with a clear vision and leaders we can trust."

The Latvian capital was one of several where youths last week went on the rampage after a peaceful protest against the centre-right government, in power since the start of 2008.

Platacis said he disagreed with their actions but understood their motives.

Riots in the Bulgarian capital on Wednesday followed Latvia's on Tuesday, and on Friday police in Lithuania used tear gas as people threw stones and bottles at parliament to protest against higher taxes and lower spending.

As in Greece, where two weeks of protests in December forced a government reshuffle, the street demonstrations have been mainly driven by young people angered by entrenched systems which seem to deny them any prospect of progress.

"We protest because we do not like the life in the country, we do not like the government, the whole bureaucracy," said Oksana Cherkishyan, 20, a student in Bulgaria, the European Union's poorest member and according to Transparency International its most corrupt.

Others are still hoping migration will boost their chances of employment: "My job prospects here are not too good -- more likely abroad,"said psychology student Orsolya Voros, 20, in Hungary.

High youth unemployment was a main driver for unrest in Greece, initially sparked by the police shooting of a youth in a traditionally rowdy Athens suburb.

General unemployment runs just above the EU average at 7.4 percent in Greece, but the figure is 21.2 percent for the 15-24 age group and 10.5 percent for those aged 25-34.

"The explosion conceals a compressed desperation," wrote Greek psychology professor Fotini Tsalikoglou in left-leaning newspaper Ta Nea on Dec. 8. "Many young people live with the unbearable knowledge that there is no future."