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Iceland,
Dubai, Greece – and now Ireland? Will the Emerald Isle be the next
domino to fall as a consequence of too much debt accumulated during the
boom-years?
It may be
hard to believe, but Ireland is even more bankrupt than Illinois and probably
even California. Due to the serial bailouts of its insolvent banking
system, the Irish government’s budget deficit is a staggering and
clearly unsustainable 32% of the country’s GDP.
Bank
depositors have already taken flight. The Wall Street Journal
reported yesterday that Ireland’s “banks are showing
strains” because “a wave of big businesses and other institutions
have pulled deposits out of Irish lenders, preferring to place them with
safer-seeming banks in the UK and continental Europe”. As
“a wave” of depositors leaves with their money, there is no
question that Irish banks are on the brink of collapse, which means European
banks stand to lose billions in an Irish bank debacle, further eroding their
own financial condition.
For
example, UK banks have $222 billion of exposure to Ireland, of which
“about $42 billion” according to the WSJ is “to
Ireland’s battered banking sector”. German banks have $206
billion exposure to Ireland, of which $46 billion, the WSJ estimates, is to
Irish banks. When France, Spain and the other EU countries are added
in, European bank exposure to Ireland could run well over $100 billion, and
probably does because EU officials are now talking about a €100 billion
($136 billion) rescue package for Ireland – hmmm, I mean a rescue
package for European banks because that is who will really benefit. So
where is this money coming from? The ECB will create it – as the
saying goes – ‘out of thin air’.
The ECB
already demonstrated last May during the height of the Greek debt crisis that
it will bend to the will of EU politicians. The ECB started buying
Greek government debt back then, breaking a long-standing promise not to do
so. In the process, it also violated the most fundamental building
block upon which it was formed – namely, that the ECB would remain
independent of political control like the Bundesbank,
the model upon which the ECB was to be based.
So barely
six months after bailing out Greece with a massive giveaway that placed a
burden on the rest of the EU and called into question the fundamental worth
of the euro, EU officials are again facing the disintegration on the fringes
of the cockamamie empire of Brussels’ bureaucrats. Another
European domino is ready to fall, and after it topples, a lot more are lined
up around the globe, including the biggest debtor of them all – the US
government.
James Turk
Free Gold Money
Report
Article originally published by the Free
Gold Money Report.
James Turk is the founder
of the Free Gold Money Report and of GoldMoney.com. He is also the co-author
of The Coming Collapse of the Dollar (www.dollarcollapse.com).. Copyright
© by James Turk. All rights
reserved.
Copyright © 2008. All rights reserved.
Edited by James Turk
This material is prepared for general circulation and may not have
regard to the particular circumstances or needs of any specific person who
reads it. The information contained in this report has been compiled from
sources believed to be reliable, but no representations or warranty, express
or implied, is made as to its accuracy, completeness or correctness. All
opinions and estimates contained in this report reflect the writer's
judgement as of the date of this report, are subject to change without notice
and are provided in good faith but without legal responsibility.
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