Meet the New Owners - Part 1: The Germans

With Irish bond yields having shot through the roof this morning, jumping from  5.744% to 6.046% and still climbing (BTW - I used a Bloomberg link; I feel so grown up!), I thought now would be a good time to look at Ireland's  various and many new potential owners. Today we start with the leading candidates to reposses this misty land, the Germans:

The Germans

Your debts are how big?

First, let me say that I will resist all the obvious puns and jokes- no talk of Reichs, or panzers, or blitzkriegs; not even as metaphors. In truth, the Germans today are frankly the polar opposite of the taciturn, expansionist, martial image much mocked by 1960's British sit-coms. The 21st century German is highly reluctant to engage in armed foreign adventures, and when they do; well let's just say they no longer display that hard Prussian backbone - they are, after all, the only army whose soldiers have actually gained weight in Afghanistan.

No, today's German is more interested in saving than in sallying forth - and that's where their power lies. While we in Ireland were splurging the cash, using Lamborghinis as garden sheds, burning Manolo Blahniks as a cheap energy source, or occasionally filling our pools, Scrooge McDuck style, with gold coins, Angela was saving - like the cold, calculating monster she is!

What sort of people are these Germans, I wonder, who save in times of plenty rather than engaging in perfectly healthy cash bathing? What sort of inhuman automatons display such disturbing levels of responsibility and forward planning? Look at you there, smug and secure with your steins of beer and low bond-yields:

Who's laughing now, Ireland?

Well we, the proud people of Ireland will accept your help, Germany, but I hope you realise how lucky you are, being given a very important part in the Irish economic miracle. I hope you realise that you're the ones who will benefit in the long run, being able to tap into such dynamic sectors of the Irish economy as building and property development. I bet your Siemens and your Kuehne & Nagel and your Puma's look pretty pathetic now, right, next to the might of heroes like Bernard McNamara and Sean Dunne.

Eh, sorry, what was that Angela? You might not actually give us any money?

Ah, well now, Angela, let's not be hasty! I'm sure Ireland has a lot to offer Germany, em, you know, economically like - the billions of Euro you give us, and the political fall-out for you among the German voters: I'm sure it will be well worth it!

No?

Ok, Angela you want to play hardball? Fine! - if Ireland goes down, we bring the Euro with us, possibly fatally wounding European integration - and that will mean you Germans have wasted the last 50 years on a European project that went nowhere. So you have no choice, Angela, you have to help us!

That's right Germans - your savings are going to be paying my pension!

Woo-hoo! The weakest link - sweetest spot on the chain!

But yes, we know Germany - you told us so!

Bread and Games - Soon to be Minus the Bread

Last night, Ireland shuffled down another step on the slow descent into financial Hades, as Standard & Poor's cut our credit rating from AA to AA -. Despite the fact that the rating agencies seem to base their grading system on the Sports Day awards ceremony of a Junior Infants class (Ah, the memories! "Don't cry Aitor, you get the "Good Hustle" Trophy for trying your best!), the - (minus) in Ireland's rating is more telling than the somewhat empty AA.

I can't really pretend to know how this whole bond market thingy-majig works, but what I can tell you is that this latest downgrade means the cost of Ireland's bank bailout will probably rise from €30-35 bn to €45-50 bn.

As you can imagine, this is the story on everyone's lips.

Right behind the Rose of Tralee winner.

And the stupid cat-in-a-bin story in England.

And the obviously pressing national importance of Senator Ivor Callely's resignation from Fianna Fail following chronic address amnesia.

But after those stories, everyone is talking about it.

If only: it barely featured on Tonight with Vincent Browne last night, and was given a passing mention on the RTE news this morning. It was left in the dust as "the most texted about news story" on Newstalk (admittedly, it is on the front page of the Independent).

No one here seems ready to admit that Ireland is on a serious hiding to nowhere. We have not turned a corner, reached the bottom, or started the recovery.The people of this island go about their daily lives, grumbling about the extra taxes they have to pay, or the decrease in services, without ever asking: " Who is responsible? And what can I do to change things?" They go on expecting that things are going to get better, when they are just about to turn infinitesimally worse.

Occasionally, the more volatile citizens will phone Liveline, where there anger can be carefully managed before being dismissed by the state broadcaster.

But that's it - a few angry words over a greedy Senator, some hysterical caterwauling over a cat. The slow dissolution of Ireland's financial reputation, and our stamping with the label of "Top-European Debt Monkey" - that's a little hard to follow. There's too many distractions, too many pop news stories that catch the eye; the bread and games are too enticing.

Only problem is that, soon, our Irish Caesars won't be able to give us any bread. And, to strangle the metaphor further, we will have fiddled while they let Rome burn.

Endgame Ireland

Ladies and gentlemen, start your fans...as a noxious substance is about to hit them. We are in endgame, in my learned opinion ( how learned you ask? Well I've read at least 3 books on economics, one of which was quite expensive. Expensive automatically means its better).

Ok, so I'm not learned. But many other people are, and they are beginning to notice things like the head of our Central Bank, Patrick Honohan, referring to the spreads on our bonds (vs the German rate, now a 3% difference) as ridiculous. In other words, when we go to borrow money from foreigners (bloody foreigners, coming over here and lending us money!) we have to pay interest rates which are "ridiculous". This is now an actual economic term in Ireland.

A number of problems are about to rear their ugly heads. A bank guarantee offered by the Irish government is going to run out at the end of September, when we will get to see whether investors truly trust the banks. I'm betting that they don't. Whats more, the debts of the stinkiest of Irish banks, the nationalised Anglo-Irish, are currently considered separate to the state's balance sheet, as the EU sees these debts as viable business assets. But that might (indeed, almost certainly) will change. When that happens, Irish debt will reach around 112% of GNP. That's right, we'll be Greece without the sun or the millenia of civilisation.

But don't worry people, our government has two clever ideas. The first is that they've gone on holidays. Hooray for holidays!

The second: let me introduce you to our crack suicide squad. Suicide squad, deploy!