Economically for example the US has more debt and liabilities than any other nation in the history of the earth. This is true in absolute terms and relative terms, to the size of its own economy compared to the global economy. The debt and liability of the U.S.massively exceeds those of all the rest of the world combined. Yet you will never hear their Government use it, against their own people like the Irish Government uses it to threaten its own people into reversing a referendum of less than a year ago on a EU treaty or imposing draconian legislation, that will kill thousands of its own people with the ensuing hardship created by cutbacks and taxes, to finance a bank bailout called NAMA.
The “centerpiece” of Minsky's economics was on “financial instability”. The basis of Minsky's theory was that international financial markets are not only vulnerable to producing excessive debt when stripped of regulation but that they also produce the most-destructive kind of debt fro most ordinary people. He divided up types of debt into three categories of borrowers, whom he referred to as “hedge borrowers”, “speculative borrowers”, and “Ponzi borrowers”.
(a)“Hedge borrowers” or “safe borrowers”, have incomes which are sufficient to repay both the interest and the principal.
(b) “Speculative borrowers” only have cash flow sufficient to pay the interest but will only be capable of repaying the principal if the loan itself can be successfully used to generate additional income.
(c) Borrowers, designated “Ponzi borrowers” or “insane borrowers” who have neither the assets or cash-flow to even pay either the principal or interest. They rely on the loan money generating capital gains, just to be able to service the debt while they would require spectacular gains to ever repay the principal of the loan.
Minsky's three categories of debtors applied to the Irish economy, would be the “housing bubble”, the “Ponzi scheme” perpetrated by 'financial advisers; on the back of that bubble in the markets. The “safe borrowers” were those few who had normal mortgages and would have no problem repaying their loans.
The “speculative borrowers” were those who were involved in interest-only mortgages and would only have sufficient resources to pay the interest on the mortgage. Repayment of principal would only be accomplished when the borrower would realize a capital gains on the property purchased. Until this occurred, these people were entirely dependent on being able to refinance this debt to remain solvent. A minor financial problem or a downturn in the market would be sufficient to push them out the door.
The third category, of “insane borrowers”, were those reckless almost suicidal mortgages ever devised by an evil minded banker: The “I-am-going-to-foreclose-on-you-and-take-your-property” loan. With loans like these the repayment schedule did not even pay the amount of accruing interest. Instead, right from the start these unpaid interest loans, immediately began to be added to the principal.
These were loans born of a plan to fail. In theory rental income from the property was a possible means of staying solvent, since being “insane” to enter such a mortgage, few sane borrowers chose that route. Ofen those who found renters for their property used that rental income to keep their loan semi solvent but, they would use that income to leverage themselves into another loan increasing risk of further default.
These greed, media created consumers, still believe the lies of the Gombeens, with their agents in every strata of modern Irish society, that Cowen and his bankster-buddies will create another “Celtic Tiger”, where markets will keep going up forever. It is the economic equivalent that the Law of Gravity no longer applies. It is not rational it isn't even theoretically possible.
Critics of the “theories” of the Irish Government's fiscal management via NAMA, Taxes, welfare cutbacks, health cutbacks say they are ludicrously, simplistic propoganda. Their “economic model” is no more than another “Glorified Ponzi scheme” or another attempt at a“Celtic Tiger MK.2, Ponzi scheme economy” , which is being used, to dupe ordinary people into an international bank bailout of their rich masters.The advent of an even greater impending debt-implosion aggravated by their policies is now a reality for many of their credit card consumers.
The often-used analogy of a person who jumps off the roof of a hundred-floor building is quoted. As the “Gombeen” plunges past a window on the 50th floor, he is heard to remark, “Things are great, so far.” This has been the Irish corporate media for quite some time now. Sadly the reality is that statistics for suicide are up and thousands fear they will loose their lives, without proper healthcare and savage cutbacks.
Returning again to Minsky, what is becoming daily more clear is that Minsky's economics are not just a very useful tool to observe and understand the Irish economy right now, but a compelling alternative to the Cowen lie of no other realistic option to NAMA.
More and more of the total wealth of the Irish economy is being concentrated in fewer hands, mostly international bankers hands. The professional political media liars and apologists who justify this perpetual pattern of stealing from the poor, to bail out the rich, point to obscene pools of wealth accumulated by gombeen oligarchs, as being “supportive” of economic growth in the future.
Minsky's model, which is acquiring greater credibility with each passing day, refutes this . This becomes clearer as we move from Minsky's analysis of a “static model” to the “dynamic". Minsky, observed that the “insane borrowers” or “Ponzi borrowers” are those buying into the hype and spin of “economic euphoria” like the Celtic Tiger. These people who piled into a market in the latter stages of the gombeen hyped Celtic tiger, were engaging in the worst type of borrowing, but they did so at the worst possible time, egged on by a compliant Irish media, with their politicians at the beck and call of banks, who were in reality, glorified unregulated hedgefunds.
Thus, the huge pools of gombeen wealth, which are glorified by the economic charlatans who dominate the Irish media, designate NAMA and cutbacks as being “helpful” and “essential” to the Irish economy's well being. The entire reason why NAMA, financed by the taxpayers and the poor with cutbacks, have been required to step in with an obscene large mass infusion of Irish taxpayer's “liquidity” today, is that at the very time when lending by the Gombeen oligarchs would provide the greatest economic benefit to the Irish economy, these filthy-rich gombeens, threaten to.cut off all funding of the economy.
The reality, which was vividly demonstrated recently for all of ireland to see, is that allowing these Gombeens to amass evern more obscene fortunes, does not make the Irish economy “stronger and healthier”. Obviously not, it does the exact opposite but the corporate media will spin it to Irish people, quoting the political liars and slogans of "no realistic alternative",sprinkled with large doses of fear.
The greedy gombeens flooded the Irish economy with excessive soft money at the worst possible time, while now starving it of capital when it needs it most. These increasing pools of wealth in fewer hands ensures that the Gombeens will do it again in the future, to produce more and more extreme “booms” and “busts” in the Irish economy. There will be plenty more NAMA's in Ireland. Why wouldn't there be, its the best racket around, with a population indoctrinated by a corporate media on its knees, too scared to stand up.
From a political point of view, given that gombeens own almost all Irish politicians, through campaign bribes, etc., changing the current cycle of ever larger “booms” and “busts” in Ireland will be difficult. People sooner or later will be forced to get up off their knees and stand up to these bankers, gombeen politicians, newspaper editors and their agents before their country is dismantled piece by piece.
Minsky argued that Keynes’s doctrine and works, actually amounted to a powerful argument, that the current system was by its very nature, unstable and prone to collapse. Far from evolving towards some magical state of balance, the current system would inevitably do the opposite. It would slide over a cliff.
Minsky’s solution, however, is something the political gombeens and their media whores in Ireland don't want ordinary irish people to learn. Should they however see through their gombeen crafted smoke and mirrors, they already have their Minsky revisionists at work to further deceive and enslave the plain people of Ireland in further hardship. Cuts, taxes the liars claim, is the only way out, to subsidize failed banks debts, while the ordinary people remain fully accountable, for their own mortgages and fostered debt.
Minsky, further argued for a “bubble-up” approach, sending money to the poor and unskilled first. The government should become the “employer of last resort,” he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who could supply child care, clean the streets, provide services that would give a visible return on their money, being available to everyone.
it would sharply reduce welfare by guaranteeing a job for anyone who was able to work. Such a program would help the poor and would put a floor beneath everyone's wages, preventing salaries of more skilled workers from falling and sending benefits up the socio-economic ladder not dubiously drip down, from a central bank or unregulated gombeens.
While Irish economists may be acknowledging some of Minsky’s points on financial instability, it’s safe to say that the policymakers are a long way from such an expanded role by the Irish government. A full-employment programme would be far too close to socialism for the comfort of Ireland's gombeen politicians. No, they already have their revisionists working on Minsky, to deceive, just as they had them at work on the real history of the Irish republic. Meantime the government is this week rushing through the legislation before ordinary citizens waken up and wise up.
