September 14, 2008

England's difficulty ruins Ireland's opportunity

Posted in International Economy · 50 comments ·

In spite of an impressive ability to paper over the cracks of an empty economy, Britain’s hot-air boom is sinking – and ours with it.

Years ago, the state of a country’s railways gave you a good idea of the health of a country’s economy. Today, the leading barometer is a country’s airports. You can tell a lot about the business culture of a country by spending time in its main airport.

The airport is the first impression travellers get of a country. If it is big, well planned and spacious, you can be quite sure that the country invests significant sums in public infrastructure. Furthermore, the condition of the airport reflects the ambition of the country and its relative place in the global pecking order.

A comparison between the dilapidation of JFK in New York and the gleaming silver and steel citadel that is Shanghai’s new airport tells you all you need to know about which country is on the way up and which one is in relative decline.

Suffice it to say, Dublin Airport writes its own script – and by extension our script – when it comes to infrastructure investment, ambition and planning. All that returning emigrants have to do is take one look at the airport and they know there will still be tailbacks in Abbeyleix. There is no greater testimony to our underwhelming national ambition than Dublin Airport after ten years of plenty.

But this article isn’t about us. It’s about Britain – our biggest trade partner and home to 690,000 Irish-born people. Observing the chaotic bustle of Heathrow – hours after Britain’s third largest travel company XL went bust – is a good place to start. Heathrow encapsulates the contradiction of modern Britain. Despite all the queues, the half-built partitions and the sea of part-time, minimum-wage contract workers that seem to run the place, it miraculously works.

Heathrow is the world’s busiest airport. It creaks under the sheer weight of numbers and yet, somehow, it muddles through. However, the half-baked approach to capacity and planning sheds light on the rest of the British economy.

Apart from banking, property and entertainment, there is very little going on in Britain. The great industries that gave Britain its competitive edge over the years have disappeared. In comparison to Germany, France or even Italy, Britain is denuded of manufacturing. Over the past ten years, this state of affairs was regarded as a great asset.

Many commentators postulated that Britain was a model modern economy, where services trumped industry and where a mobile workforce was sufficiently flexible to compete. In the areas of entertainment and finance, there is little doubt that Britain is a world leader. The City of London is a significantly bigger financial centre than New York, even if there are precious few British banks operating there.

The model the British adopted in the City is termed, the ‘Wimbledon Model’. Like the lawn tennis tournament, the British host the show and take the kudos for it, even though British players rarely feature in the last 16.

The City is analogous. The big British banks are dwarfed by international names like Goldman Sachs and Merrill Lynch. Yet this hardly matters because the revenue, jobs and salaries stay in London, creating the cash and effervescence to keep it in pole position as a global cultural centre. In entertainment, the Premier League largely copies the City’s approach.

In the past few weeks, we’ve seen Manchester City taken over by an immensely wealthy Arab investor. Ever since Roman Abramovich arrived on the scene, English clubs have been open to the highest bidder. Manchester Utd, Liverpool and now Man City are all owned by foreign investors.

On the pitch too, the Premier League has become a global talent show, with English players making up fractions of many of the top teams. And, as evidenced by Gianfranco Zola’s appointment as West Ham manager last Friday, many top teams are managed by foreign professionals. But it works. The Premier League is the most lucrative league around, and Man United are the world’s largest sporting brand.

In youth culture, the British music industry remains enormously influential, and the ability of the country to create world-beating bands decade after decade is still truly phenomenal.

Equally, in television, Britain exports its drama and formats all around the globe. It is significant that the most feted British entrepreneur of the past few years is not a innovative manufacturer such as James Dyson, but a man who tinkers with television formats and insults people in the process, Simon Cowell.

Up until recently, this service economy worked; unemployment fell to historically low levels and the demand for workers prompted a massive influx of over one million immigrants from Poland alone.

However, the upswing was fuelled by massive debts and the ever-recurring British weakness – a housing boom. The British economy turned itself into, yet again, a large debt-laden casino. The more debt the locals incurred, the more they spent and the more the resulting ‘feel good factor’ reinforced the notion that this time it would be different.

Politically, as well, the Blair boom came with the sweetener of positive spin. Government PR gurus made sure that the population was inured to bad news – whether it be the truth about weapons of mass destruction or the reality of ever more debt.

Obviously, with sterling floating freely on the foreign exchange markets, this boom led to the currency rising rapidly against the euro, which put the remnants of Britain’s industrial heritage under severe cost pressure. By making imports cheaper, the strong sterling policy condemned Britain to its now perennial trade deficit.

The overwhelming problem with the British model of economics is that it is fatally prone to asset price bubbles. Without the anchor of a strong manufacturing base, every time the ‘feel good factor’ re-emerges, the price of houses goes through the roof and, each and every time, the people think this time it’s different. The banks get in on the act and a credit free-for-all ensues.

Now that the housing market is tanking, along with sterling, the nation appears to be in denial. For example, the chancellor, Alistair Darling, has come under ferocious attack for suggesting that the recession could be the worst that Britain has seen in 60 years. Rather than reward him for his honesty, people have accused the chancellor of irresponsibility.

What is more responsible than telling people the truth? Yet this is where the country has ended up after years of spin and overdrafts. Unfortunately for Ireland, and contrary to the old slogan, ‘England’s difficulty, Ireland’s opportunity’, we always benefit when Britain is economically strong.

Trade links ensure that Irish exporters do well. Irish investors in property make paper gains which they can realise if they get their timing right. A strong sterling makes British imports expensive and acts as a disincentive to shop across the border. Most significantly, a strong England – and a vibrant London in particular – gives thousands of Irish people job and career opportunities that they might not have in Ireland.

Today, we and the ‘auld enemy’ face recession together. The real shock, after nearly a century of independence, is just how similar we still are, and just how dependent we remain.

  1. Philip

    Is this just a longer term cycle of rise and fall of cultures we are witnessing here? English was the language of commerce for decades and so US, UK and anyone else who spoke english just grew. Anglophiles and all that implied meant they were ahead of the curve in commerce. Also, we do have to remember that infrastructure lifecycles are about 20-30 years before the cost of maintenance becomes inordinate. The english speaking economies had it all in the 60s,70s & 80s.

    As the global coverage intensified, the manufacturing moved to lower cost economies and denuded the older parent economies – this was easier for english speaking economies than for Germany, France etc. who let’s face it are very good at ringfencing their own economies with handouts etc.-something which english speaking folks were conned into believing was ALWAYS a bad thing to do courtesy of the Milton Freidman economics that dominated over the last 20 plus years. So with it has dissappeared the notion of public investment.

    Really I think the english speaking world has been drugged into believing in the something for nothing ideoligy. None of the governments represent their people but the corporates that put them in office. You reap what you sow.

    David, a most pertiment article as always.

  2. Deco

    David. Once again an article that cuts straight to the point and if frighteningly relevant. Britain is in serious trouble. New Labour had no new ideas on employment except to keep the consumption bubble going. And nobody said anything in the British media about this. The Financial Times told English people in the early 1990s that the idea that English could become weatlhy from buying and selling houses to each other was utterly ridiculous, and nonsensical. This was proven correct after 1992. And then ten years later New Labour drive the British economy through the same series of mistakes again. And even worse the British financial instutitions suffer a bout of amnesia and get involved in reckless lending. And even worse, the British population fully believe the nonsense and also get involved.
    Regarding the health of the Irish economy, and Dublin Airport I have made a few observations. I flew into Dublin Airport from Frankfurt one August Friday, with Aer Lingus. Normally the plane would be filled. This time there were loads of empty seats in the busiest flight of the week. In the business section there were three rows os seats, and two passengers. Thats 18 seats, and 16 of those seats empty. Aer Lingus are in trouble. As usual everything in Frankfurt worked well. Every area was clean. All the signs were in English and in German. There were congested areas. Then I arrived at Dublin. The passport area check was not as thorough as in Germany – in Germany the passport is swiped and the police officer is informed instantly if you have committed any criminal offences in either jurisdiction. The police officer is also informed if you really exist. In Dublin the police just look at the photo and that is about it. People who look like they are from the Third World get asked questions. But as a system is rather ineffective. And there is no police check when you leave Ireland to see if you have committed a criminal offence before leaving. It is no wonder solicitors who break the law and owe the banks millions can get to Bulgaria etc.. and remain at large. The screen which provided information concerning the relevant luggage conveyor belt provided incorrect information. So as to add to the confusion. This was later updated – But there was no announcement of the public address system !!
    Dublin Airport has a plan for a new terminal. And construction has started. We know that this means nothing, because this is a normal action to reassure people that progress is coming. However based on what I seen on what chould have been a very busy evening I am becomming sceptical of the whole project. For one thing, oil is getting more expensive. And already as a result of business cutbacks, and increased oil costs, I can see the number of passengers in Dublin Airport decreasing. In ten years time Ryanair will not be flying as many ludicrous Irish ‘tourists’ to hen parties/stag parties to cheap destinations for cheap beer. It will at some stage been seen as immature and selfish. Flying men to play golf in Portugual etc… might also become stupid. Aer Lingus will not be flying as many people to New York to do the Christmas shopping either. Chances are some of them will go to Prague instead and try and return in the same day that they left. And there might not be the volume for the second Dublin Airport terminal. But Frankfurt on the other hand is a long haul hub destination connected to a well designed railway system. The Germans once again take the users experience of the system and try to make it an enjoyable experience. Same with the cars and with the airport. In Ireland, the passengers are informed that after they have endured all the nonsense, that if they want any enjoyable experience, then their only option is to go to the pub. (and get fleeced even more). This philosophy suits our slipshod state sector management perfectly !!!
    I see that John McGuinness is saying as much that the entire government spending of the last five years was waste, and needs to be immediately fixed. 100% correct. And thankfully one politician has the coruage to state the obvious. Every worker in the private sector, and the part of the public sector that actually does the work of the public sector, must surely be in agreement. It will be interesting to see if Cowen, Lenihan, Harney, Coughlan, etc.. have the same courage.

  3. Deco

    I have just read in the Sunday Business Post, that the government is going to pump the economy via the local authorities. Very clever move. When things get bad in this country the politicians at the centre of power direct the people to their local government. Effectively we will now have a third force in banking in Ireland now. After years of debate. And many committees. But this will only exist for the explicit purpose of inducing people to buy residential property. This is the politicos trying to use tax money to revive the residential property market. Most taxpayers think that these people are responsible to the entire economy. But it turns out that they are really only responsible for the property industry.
    Where are the local authorities going to get the massive sums of money to sustain this ? They will have to borrow from somewhere (no indications provided yet). In essence the cabinet has decided that the state should be in the NINJA lending business. This despite the fact that it has probably already bankrupted several Irish Building societies (Permanent TSB, Friends First, Irish Nationwide being the most likely candidates, I presume). All the jobs announcements in the past week have been on the basis of favourable tax conditions. This is currently the only are of growth in the Irish economy. It is that serious. And the cabinet are playing monopoly and trying to steer the country towards the Freddie and Fannie type economics that has just collapsed in a heap in the US.
    This is no great news for the large sections of people in Irish manufacturing who export to Britain, who are enduring cost increases, revenue decreases, sustained competition from continental and British competitors who have reduced their costs, and competition for resources from the state sector at home. The decrease in the value of sterling is a disaster for large sections of the Irish economy. Even the ex-Taoiseach would understand issues concerning the value of sterling and how much money you get when you get it exchanged in a bank in Dublin !!!!

  4. Johnny Dunne

    “The real shock, after nearly a century of independence, is just how similar we still are, and just how dependent we remain.”

    In 1960, 90% of Ireland’s exports went to the UK, this was before we attracted and kept multinationals with low taxes which now account for 90% of the country’s exports. Nearly 50 years later, over 50% of our €13 billion in exports from indigenous companies goes to the UK. Now in recession and the euro’s strength against sterling (20% within a year STG/EUR from 0.67 to 0.80), is there a real chance of the majority of Irish exporters growing their market share in a very competitive tightening market ?

    The government and advisors look at the macro picture ie exports from Irish companies are targeted to grow by €4 billion within 3 years. This may happen but it could be mainly from “outward” direct investment from the large PLCs and established private companies (ie Kerry, Kingspan, Glen Dimpex..)

    ‘Practical fiscal supports’ need to be provided to many of the small and medium businesses exporting or else we will have a lot of these companies closing in Ireland and having to leave to survive elsewhere ??

  5. Lorcan Roche Kelly

    Philip, your comment reminded me of an interesting report I read recently, link included below.

    It highlights the correlation between economic progress in EU area states over the past decade and the population fluency in english.

    According to the report’s authors some of this correlation can be attributed to english’s use as the language of innovation, the language of the internet and the language of technology.

    So, not having english is a serious handicap when a state is trying, like most EU states, to improve economic growth through innovation and education.

    I agree with the reports view on the innovation and education route to sustainable economic progress, but I also agree with you Philip that our place in the english speaking world has not always been to our advantage.

    We have imported Milton Friedman’s economic ideas without due regard to their ‘fit’ with our circumstances. If we were all Swedish speakers it would be likely that we would have a more ‘social’ economic model, if we all still spoke Irish we might have had to find our own model.

    Alot of ‘if’ in the paragraph above, which may imply that I’m trying to apportion blame for past mistakes. I’m not. Friedman, for all his failings, has been good for Ireland. But his time in the sun is waning, and we now need to look elsewhere for economic and social solutions. We’ll probably just ‘muddle through’, but it might be good for us to learn some other languages so we can be exposed to ideas from outside the Anglo-American vice in which we are so perfectly caught.

    Whatever policy is adopted, there is one certainty. We, as taxpayers, will be paying for it. The era of low taxation and small government is over. A new New World Order is coming, and it’s main task will be paying for the mistakes of the New World Order.

  6. Well Put David , the auld enemy and been just the same after almost a hundred years!, This is why Ireland has to change to deal now with this new dynamic. The ‘schooling ‘ we have got politically and economically the last decade and a half , while working on the American ideology of consumerism we are seeing now without a home base we do not have the actual resources to pay back these fundamentals
    Its time to see Federal Centered Government does not work efficiently ,in order to have a sustainable economy you need infrastructure at the very bottom on the ground. In my small market down with it’ micro economy has had industrial units built under tax breaks lying idle for over two years in trafficked areas. With developers paying interest on these units why not lower the asking rental and get in clients. Or better still , local councils to encourage active development could fine these owners for dormancy.
    The new markets towards the east can be developed on line with communication systems and the environmental issues and products could be encouraged.
    In the next local elections, every blogger here should stand in their respected districts , you’d see the main streamers pulling out their big machinery in panic. And the public will vote . We need banks for the purpose of commerce we do not need them any more to buy shares in buildings for us, let the people working the markets work these things out between them.
    We can get our selves out of this cycle by adapting and reassessing we have a small size population to work with.Let these ‘established banks fall, they are tied after all to the school next door for the last hundred years, We can today do more trade with the middle east and Asia , so why sell into Europe or America, and let’s show why we wanted independence from the U.K. in the first place.
    I could give you links to where to get a car that runs on water ,or a battery only but I’m sure you all have these links already.
    Our Economic ,political and climatically conditions are changing now virtually by the day . My partner goes back to teach physiology in university in Spain next Monday for €24,000.00 and looks after her daughter and Mother too.But at least she has sun shine. We can change the current system, read Ron Paul, The Revolution and to think Americans through Television are getting McCaine to vote for !

  7. Garry

    Well said Deco, It looks like our government are being unspeakably stupid… establishing a Fannie And Freddie type operation here just weeks after the US Versions were rescued with as yet unknown consequences for the US National Debt. Do they not read the newspapers?

    At least the US versions lasted 70 years (the last 40 in their present form) and were aimed (initially) at helping the little guy after the great depression, the guys who the banks wouldnt let in the door, let alone lend to. These days, our recession is only starting, the banks will still lend to anyone, they just wont loan the crazy salary multiples needed today to buy property here… The credit crunch is just a return to prudent lending practices (where the borrower will be able to pay it back and the lender wont go bust). The US F&F have been plagued with problems for years largely because they were run as private companies (from exceutive’s payoffs etc) viewpoint but as public outfits from an accounting/reporting viewpoint… the worst of both worlds

    We do not need a government sponsored mortgage bank right now …
    1) property prices are falling and property will become affordable again within a couple of years.
    2) Its being billed as necessary to kick start the construction economy but there is a massive supply overhang so even if people buy, there is no chance of re inflating the construction boom…
    3) its just allowing developers sell some of their existing stock and making them and the banks a bit happier.
    4) Also by setting up a government sponsored loans for just property it keeps the focus on property as the only game in town…
    5) And if that is not bad enough, they want to drag local government into it, our tribunals should tell us giving local politicians discretionary powers here is a recipe for further corruption.
    6) The amounts of money are staggering consider the ‘value’ of the inventory on daft 75000 properties, lets say an average value of 250k and you get to see it adds up pretty quickly. A more realistic value is 150k each but sure if its public money who cares, lets keep everyone happy, make it 300k!!!

    This recession has the potential to get a lot worse ………. please don’t blow the public finances on this! should a bank fail, we may need a government sponsored bank to provide credit to exporters, the government should be keeping their powder dry till we get an idea how bad the global situation is.

    But the 3 amigos who run the country, now want to take on massive public debt just to provide a few property developers with the last few suckers to buy their overpriced crap.

    The consequences are all too predictable….the average Irish citizen is drowned in private debt, add massive public debt to this with an aging population and things will get really really nasty a decade from now.

    It is absolutely heartbreaking to see our country being destroyed by either gross incompetence or corruption at the highest levels. They should be ashamed of themselves.

  8. B

    Fianna Fail are on familiar territory. Bankruping the country for a failed ideology is old hat to the children of the revolution.

  9. Aidan

    I read a very intersting investment article on britain, britain was also nearly bankrupt in the 70s because of the oil crisis, according to this article the 80s recovery was not really due to thatchers reforms, it was due to north sea oil and the revenues it brought in, north sea oil is in decline and britain has returned once more to an importer of oil which has caused its current account to go into deficit. For some reason i think alot of brits will look to move over here with the common language and travel area.

  10. Malcolm McClure

    David said: “The big British banks are dwarfed by international names like Goldman Sachs and Merrill Lynch.”Hmmm. We’ll see in the morning how many are left.
    At the end of the season how many clubs in the premiership will still be 100% British owned? Ashley just offered to sell the Magpies–where’s the Sundance Kid when we need him?

  11. martin

    The thing is I quite like Dublin Airport. I particularly find the security staff friendly, polite and helpful. Ok, Frankfurt might be cleaner, but scratch the surface and ask if the workers there are any happier than their Irish counterparts. Wages are lower and taxes much higher. Out of 3000 gross, a German worker is lucky to come out with 1500 net. German burocracy is huge-the State is everywhere and you feel this, as Deco mentions, the minute they check your passport. I spend a lot of time in Germany and from my experience morale is pretty low there. Surely there is a better middle way than both extremes.

  12. Yeah, Deco has it in one.You arrive in most european countries-bar Ireland-and they can swipe your passport and get the full picture.
    Can you imagine the fun(and the cost) if Martin Cullen etc. took charge of introducing the technology here..
    It is frightening how incompetent the organs of the state really are-and the waste this inadequacy creates.
    The Fianna Fail plan to save both the builders (and in turn the banks) goes one better than the US government´s bail out of Freddie & Fannie.
    Purchasing part of the equity in every overpriced property on the market (as proposed) equates with the US bail in certain respects-but much worse it simply tranfers a huge swathe of freshly borrowed/or taxpayers money, to the already obscenely wealthy developers to avoid the necessary correction in the market which David and any economist will tell you is required reguardless of the pain for the banking system.!
    The american plan does not shore up the builders in such a blatant manner.
    If irish punters reinter the irish property market simply because the are offered the opportunity to buy “Half” a house or “80%” of a house, while the local authority owns the rest until some future date when they hopes the yoke on first time buyers eventually lightens enough for them to start buying out the full equity. They are in fact borrowing twice to pay for a grossly overpriced property.
    It equates to a two tier mortgage.Start paying for the first one now and in what- twenty-thirty years, when you have reached the crest of the mountain-go back down and start all over again with re-paying the local authority.?
    Only a government joined by umbiblical cord to the developers could contrive such an outlandish scheme.We await budget day with great anticipation.!

  13. Smith’s legacy? Regulate. Regulate. Regulate.

  14. MK

    Hi David,

    I dont think you can really judge a country by its airports. Whilst definitely an interesting place to observe economics of a country or a city, its not the building and infrastructure that counts, as the look and feel and capacity of that is dependent on many things which are not directly reflective of an economy and also how recently it was built. I would look at smaller people-based aspects, such as what passengers are doing whilst they wait, what they are buying, the taxi ranks, what shops there are there, the prices, the quality, etc. Where people are flying too and for what reason. Are they in fact happy, the locals? Again not 100% reflective of an economy but its always interesting being a people watcher.

    Being in a beautiful airport does not tell us one iota about the country as a whole. Its is a micro-universe, a subset. Many countries in fact create facades of their airports to show off their country. They build good roads towards them (even we are guilty of that!), invest in large empty buildings, etc. Some airports are built and ran with large state backing and run at a perennial recurring loss, some dont. So its apples to oranges. In some cases old apples to new oranges. Look at the people. I know you do anyway as most of us do as there is nothing else to do in most airports.

    In terms of Britain, our neighbours, I fully agree that their financial distict, The City in London, has been a huge boon to them and remains so. For example, Russian businesses have been using it extensively in recent times which is an example of how it is an international financial hub. Britain has used it and has set up tax, reporting, labour market, planning (Canary Wharf, city airport) and other attributes to continue to promote it and facilitate it. In fact, The City has remained in spite of places like Heathrow, rather than because of them. And the trickle multiplier effect spreads throughout London and the country as a whole. It is money for nothing. But they have used their tradition and expertise. Think of it as an IFSC, but started decades before. The UK would be a lot lot worse off if they didnt have the city. It underpins a lot.

    But in terms of the UK, we have to mention Oil (as someone correctly else pointed out) and an aspect overlooked by your article (despite tankers queing up on the runway to refuel planes). ;-) The UK has benefitted enormously by having substantial quanties of its own oil and perhaps to a lesser extent gas. Its easy to spot the positive benefits of petrodollars on the likes of Abu Dhabi, Bahrain, Qatar, Dubai, etc. But we do have economies right under our noses and closer to home that are supported and greatly helped by their own energy ‘bonanzas’, such as the UK, Norway and Holland (gas). All coming from the North Sea, which to me should be a european resource rather than owned by a particular country, but thats another debate. The UK has been bouyed more than it would have were it not for its oil. With Oil plus City, who needs manufacturing. There will always be some, lots. UK had a very stong traditional basis in it. Made in Britain was a mark of quality – once. But that was before tade became more globalised. The UK did particularly bad in some areas of manufacturing, such as automotive. But the culture lives on in boutqie manufacturing exemplied in Formula 1. Most of the teams operate out of the UK.

    As a small country next to the UK (we even share geography with it on our island of Ireland!), and with our cultural links (some forced!), we are always going to have some part of our economy linked to the UK. We should have. We are 5m people, they are 60m. That is a market that is always going to be there. Not only for trade and our services and products, but also for our people who can freely go there and work and seek opportunities. Many of which can be greater than here. Yes, if the UK’s economy is booming that provides us with more opportunties, but even in bad times there are still opportunties there.

    > Today, we and the ‘auld enemy’ face recession together. The real shock, after nearly a century of independence, is just how similar we still are, and just how dependent we remain.

    Being such close neighbours and intertwined, we have links, but interdependent links. Its not as if we are getting anything handed to us on a plate. We have to compete like anybody else. As for economies, there is a global problem affecting Europe and the US. This is a global storm, with asia least affected so far. Our economy is as much in line with Spain as it is with the UK. So overall, I do not think that the current situation in our relationship and comparability to the UK should be a ‘shock’. This is all normal.

    > It is absolutely heartbreaking to see our country being destroyed by either gross incompetence or corruption at the highest levels. They should be ashamed of themselves.

    Perhaps the incompetence is more widespread than just our political leaders, of which our enlightened population has voted back in! I think more and more people should be looking at themselves, what they are doing on a daily basis. Our problems are ingrained perhaps in our natiobal pscyhe. We still have the ‘ah sure, that will do’ attitude. Quality output is bereft in mainly places of functions. The problems are endemic, every where you go, a 4 year old is able to spot things that are being done in the wrong way. In terms of corruption, its also endemic. Its embedded culturally. Its just the level of corruption when the tip of an iceberg comes to light. Just look at the tax defaulter list. Everyone and all walks of life are there, from bar owners, hairdressers, brick layers, builders, accountants, solicitors, teachers, bankers, take-away owners, local authorities, you name it!


  15. dave parry

    The UK is in a much better position than the large continental economies’.France and Italy have not created a private sector job in 40 years.Watch their manufacturing wither as govt subsidies’ dry up.

  16. Philip

    Was reading Paul Gillespie’s column in the Sat Irish Times “Saving us from Mother England”. Argued our Lisbon No vote may be responsible for pushing us irrevocably closer to our larger island neighbour. I think this case of tying ourselves to a falling anchor is evidence of our unquestioning dependance on the “Auld Enemy”. We speak the same language and they offer greater opportunities but we forget that historically they are a culture that are perhaps one of the best at fostering dependence as a basis of their power.

    You will always be working for them and you will find harder to develop and FF have made that more inevitable with their policies.

  17. Lorcan Roche Kelly

    MK > I think more and more people should be looking at themselves, what they are doing on a daily basis.

    Isn’t that the elephant in the room? House prices went up because we bought them. The developers priced their product at the top end of our elastic limit. To do anything else would have made no economic sense. We blame the banks for giving us the huge mortgages to pay for the houses, but we were the ones signing the contracts. Noboby held a gun to anybody’s head.

    We certainly have nobody but ourselves to blame for the levels of unsecured debt we carry. Our hubris didn’t allow us to fall behind the Jones’ in consumption of consumer baubles. I hope it will not prevent us learning from our mistakes.

    It is not our ‘right’ to drive a new car, or even to own a home. It is something that has to be earned. If we choose bet that our future earnings are secure and then choose to spend them now, we are gambling. If the gamble doesn’t pay off we have to accept that we’ll loose our stake. After all, we never really owned the house or car, the future did. It is convenient to blame the bookmakers (banks), but we are all culpable.

    As for incompetence among our ‘leaders’, there are strong arguments in favour of this view. As Laurence Peter once said “Democracy is a process by which the people are free to choose the man who will get the blame.” So feel free to blame. But do not use this as an excuse to refrain from action.

    Good news on the Airport Economic Index in the medium term. T2 is on track to open in april 2010, so we’re only going to have 18 months of austerity before prosperity returns.

  18. ImNotAnEconomistBut..

    You say there is “not a lot going on in the UK” but the fact is its a G7 nation, its the financial capital of the world, and it still has significant international clout, despite its latterly lunatic and American-inspired foreign policy. I agree that at the best of times Heathrow is a mess, and yes, Airports do give you a sense of the extended national conditions (by which measure the UK’s motto should be “we apologise for the inconvenience”), but you can get a bus or train from the Airport to anywhere in the country and its actually connected directly to the metro and extensive motorway systems. Plus its one of five airports in the Capital, who’s planners had the good sense not to try to squeeze everything in to one location.

    I’ve always found this offhand everyday characterisation of England and the English as the old enemy, and our generally unfavorable disposition towards them as something that really shows Ireland has a lot of growing up to do. We seem to have a National Inferiority Complex, main directed across the Irish sea, and I’m fairly sure that this was a significant factor in the spending madness of the last few years. Even amongst educated and intelligent Irish people living in Ireland that I know, there is a definite air of smugness at any misfortune that happens to all things British (or English: the Irish still don’t necessarily distinguish in my experience) be it a bank falling over or the national football team losing. Strange, as the Brits love the Irish and even cheer on Irish teams in international competitions (after their own team has been knocked out, obviously). I can’t EVER imagine that happening in Ireland. Still, we lap up UK TV, send our kids to UK Universities (the most mediocre of which is as good as the best we have to offer)

    Anyway, I digress. That was not my point, this was: Britain is whether we like it or not, is not our rival, its a partner. The sooner we start to think of it in that way, the better. Garret Fitzgerald put it quite well in the IT the other day when he said that independance is fine and all, but if you have a much more powerful neighbour, you better get your relationship with them on the straight and narrow, even if that means compromise in the eyes of nationalist zealots. This country still has a lot to benefit from the fact that we have an intimate relationship with the UK. We need to start thinking about this as an advantage, and as being just as important a component as our relationship with the US and with the wider EU.

    Be under no illusion either that as bad as conditions get in the coming months and years in the UK, they will be much worse in Ireland.

  19. Ed

    For me, an Airport is an important indicator of a nations technical abilities – a clean well run Airport normally equates to a sense of order and by extension, to a disciplined workforce, which in turn equates to an nation’s ability to provide quality products and/or services.
    Dublin airport has been such a mess over the years that I, where possible, discourage customers from coming here and instead, I go to them. I once had a French prospective customer come over and he wasn’t impressed by what he saw at our main airport, but then he thought that we didn’t have a standing army. I took him down to the Phoenix park – a great asset as it is well maintained – to evaluate a product in the open and over the trees came two air corps helicopters in perfect unison as they changed height while crossing the park – that did it – I got an order.
    I’ve been meaning to send the boys in the air corps a bottle of champagne, but I don’t know if it’s allowed.

  20. Philip

    Just to stir the pot

    1) The idea of an English/Irish partnership is nonsense. Partnership implies balance of offering. Ireland is just too small. That is not to say the relationship should not be useful to both sides – but be assured, Ireland is the minor player to be added or dismissed at England’s whim- we are seen as a usefull resource and there is cordiality and it would be delusional to think otherwise. The seed for the Irish inferiority complex is all too clear. One knows one’s place and it irks many and it probably creates a psychosis that one should not be too quick to dismiss as immature.

    2) I do not subscribe completely to the notion that people only have themselves to blame. Welcome to humanity! It’s not just an Irish phenomenon. People DO gamble and HAVE to assume future income just to have a family and a career. This is the basis of forming a nation of people and communities. Security is key. I hold the central banks/ banks/government 99% responsible for allowing the over issuance of credit. They effectively printed money and pushed it using very sophisticated marketing techniques. I had the good fortune of paying off my mortgage years ago and the subsequent amount calls I got to “release equity” must have cost them 100s of euro in misspent effort. I eventually had to tell them to go an &^% off to get them off my back. The guff was amazing…lost opportunity/wasting value etc etc. Its a classic case of the people not being served by their government by ensuring a reasonably secure working environment. At best it’s a statement of how naive the government and their advisors were.

  21. Lorcan Roche Kelly


    No harm in stirring the pot!

    I am not saying that we are responsible for the credit crisis. In my opinion the blame lies almost fully at the door of the banks and, in turn, the banking regulators. The long period of low interest rates and increased competition meant the banks could no longer gain a suitable return on their (our) capital from the traditional lending market.

    So some clever banker invented derivatives. Then sold them to other banks. They took on bad loans because they knew they could then be sold on, spreading the risk. Just in case anybody was worried they gave this toxic debt AAA ratings. All was rosey in the garden, until the damn chickens started to come home to roost.

    Not too sure about blaming the government. (I should point out I have no political interests, in an effort to forestall the cries of ‘Shill’). The regulator should have seen what was going on, but up until now they seem to be capable of little more than the occasional tut-tut from Dame Street.

    Meanwhile we all filled our bellies from the trough of cheap credit. That trough is now empty and we all have to go on a diet, but we are left with massive personal debt indigestion. Blaming the government for our discomfort is like blaming the government for allowing alcohol to be sold when we wake up with a hangover.

    There is no such thing as a free lunch as those who listened to the ‘release equity’ phone call are finding out. I do have sympathy for them, but I do not see that they are blameless.

  22. MikeinGlasgow

    Hi Dave:

    I’m a big fan but I think you are being a little over-simplistic here. First off, England and Britain are not interchangeable terms. Hell England and London are hardly interchangeable terms at this stage. London’s mirco-economy has had no real affect north of the proverbial Watford gap. Like all great tours, what happens in London stays in London. Up here in the real world in sunny Glasgow, house prices are still rising. Read that again if you will, to relive the halcyon glow of the words “house” and “rising” in the same sentence. You see Scotland never did get to share in the spoils of London’s insanely over-heating property market. You can still buy a castle (not a Barrett castle), a real castle with 100 acres and a Moath for the price of a Kensington Villa up here. Can you say that of any location in Ireland? Are prices rising anywhere on the Emerald Isle right now. I think not.

    A lot of this insanity was driven by a Dublin centric confidence that only delusion could breed. I regularly do business in the south of France where I check the property listings in the Cannes shore-front estate agents and try not to burst out laughing. Not because the 7 bedroom property over-looking the Med with yaught birthing rights and two pools are expensive…no what made me laugh and still does is…it’s not half as expensive as Dalkey !! So the French have kept their heads, the Scots and Germans have kept their heads. It appears to be a fight to the death between the Dalkey Set and the Kensington set. The problem is though that London had 8M people to play the trickle down wealth fantasy game with. The Dalkey set on the other hand had to con the whole country of Ireland into it, to gain the same critical mass.

    Still on a more positive note, I drove past Bono’s house last thursday and things seem to be OK on his end. That is, his house outside Cannes not Dalkey. Game set and match Dalkey. New Balls for the peasants.

    ps. When push comes to shove the oil is owned by Scotland.

  23. Stephen Kenny

    Dave Parry
    In my view you are quite wrong about the strength of the UK economy, when compared to France or Italy.
    North Sea oil as been a benefit (it was comparatively huge in the 1980s, much less so in the 1990s – low oil price & other things), but since about 1999 net private borrowing (i.e. total outstanding borrowing minus total savings) has increased by about £8bn a month. Every month.
    To put that in some sort of context, UK retail spending is about £17bn a month. It has accounted for about 15%-20% of UK GDP every year since then (take the amount, multiply by about 2 – see John Maynard Keynes etc).
    It has done two interesting things:
    Firstly, over that 9 year period, it’s made business decisions favour, very significantly, speculative investment, because it was those businesses that were generating the by far the highest profits. Put yourself in the lenders seat and it becomes obvious why.
    Secondly, It’s radically restructured people’s lives. Even given this huge amount of extra money, most people are still stretched, and you could argue, need it just to make ends meet.

    To put it in some sort of historical context: There isn’t one.

  24. Stephen Kenny

    You might be being a little optimistic I think. Average Scottish property prices are about £155k, about 15% less than the UK peak of £183k. Given that UK prices have more than doubled during this boom, the growth is possibly less (I don’t know the base), and possibly not.
    It might be worth bearing in mind that England and Scotland have very different employment structures, with over 53% of Scottish people of working age being reliant on the state, compared to about 41% in England – ‘Public Sector’ employment is rather meaningless in these days of outsourcing, and off-balance sheet transfers masquerading as privatisation. This will probably give Scotland an advantage, certainly in the short-term, as the private sector starts to take a kicking.
    As for the direction of prices, whatever Scottish prices are doing – slightly mixed reports, but generally positive – they certainly aren’t anywhere near the 10.5% fall in UK prices in the year to August!

    • MikeinGlasgow

      Hi Stephen:

      First off let me clarify that I am 100% Irish beef so there is no nationalist zeal on my behalf of the Scots here. Having said that, you will allow me to ignore the sleight of the Irish accusing the Scots of having a large public sector..:-) But your figures are out by some considerable margin, Sources of data BBC August 2008

      please see august figs on BBC site

      The Avg house in the UK is 219K not 183K as you suggest.
      When you compare Scotland to the UK average, it is 30% below.
      Pretty much the figure most believe the market will drop by.
      Glasgow on the other hand is 37% below the UK average at 139K.
      But the real driver of the intial madness comes from Kensington just as it did from Kilinney. When you compare Glasgow prices (and there are some very nice properties in the European City of Architecture) ….wait for it . Glasgow comes in at 63pc below the London price.

      Now lets look at Dublin. Avg Dublin house price 377 euros ( 300K pounds). Or 20% below London prices. 63% vs 20%. You guys are in trouble. Go figure. With an estimated 250K empty properties in Ireland, there’s hardly a shortage driving the price. We’re all grown ups here, we know what the vested interests were allowed do under FF stewardship.

      Is it any wonder I bump into young Irish emmigrant nurses in the pubs here who can’t afford to buy in Ireland. And before we all start getting uppity about Dublin being a European capital etc etc, Basically Glasgow is like Dublin was 10 years ago, It’s got all of the Sushi style bar marlarkey, boutique hotels, a thriving music scene (we still produce bands worth listening to) and an enviable arts scene..not to mention a thriving pub, restaurant and cafe culture…but it hasn’t sold its soul to the developers. Skyscapers in Dublin 4 and Bongo taking a wrecking ball to the Quays…the credit crisis may well be the best thing that ever happened to Dublin. Bongo sould hold off for 12 months and then convert the Dublin Financial Centre into a themed hotel. He’ll get it for a song. AIB had Lehemans on speed dial up til yesterday.

      I would be hard pushed to find the oul Dublin Bord failte promotes these days, and I say that with a heavy heart, believe me.

  25. Art

    David, spot on.

    The UK and US have been stupidly congratulating themselves for years for not having manufacturing industries any more.

    France has the same population as Britain and yet consider the home grown industries from car makers, shipbuilders, aircraft manufacturers, space rockets etc. What a great can-do attitude. Their government and engineers recently built the most graceful and tallest bridge in the world, the milieu viaduct. But the British said they designed it because an English Architect was involved. Anyone that knows anything about large bridge design knows that the architects input is largely an irrelevance.

    A visit to Saint Nazaire is worth it to prove how exciting and lucrative manufacturing can be. Its an ugly town in the north west of France, it was completely destroyed by RAF bombs in the second world war and poorly rebuilt, (as an aside the subject of the bombing raid was unharmed). I was there this summer and instead of following the English tourists around the remains of the huge German u-boat base I took a tour of the adjacent ship yard along with some people from Germany, India and Korea. No British tourists were interested in coming along, I presume they prefer to tour past monuments which remind them of how strong they once were. The ship yard is enormous and a bus was necessary to bring us between the different buildings, we weren’t allowed in some to keep the welding techniques etc a secret. At present they are constructing 4 Cruise ships (at the same time) each costing 800 million Euro each, thats a total of 3.2 Billion Euro that they will be invoicing over the next 18 months! Across the motorway from the ship yard is a huge Airbus factory which I didn’t have time to tour (the tour was only in French). And it proves that we can compete in manufacturing with the Chinese, in certain sectors anyway.

  26. Stephen Kenny

    Just one thing I’d add to your piece: In your description of UK unemployment, you’ve fallen for some of that spin you mentioned. UK unemployment is another symbol, this time of the power of spin. Ask anyone and they’ll tell you that the UK has low unemployment. Politicians say it, the papers say it, everyone says it! It’s still basically wrong.
    There was one of those famous 11 day scandals, sometime around the turn of the millennium. It seems that a guy who worked for a job centre was complaining that he was being pressured into transferring people from the unemployment register on to the incapacity benefit register. The government hotly denied it, everyone got very upset over their Sunday breakfasts, and the story went away.
    It turns out that while the unemployment figures were falling, to tumultuous applause, the incapacity register was rising from 0.5m in 1997, to 2.7m 2007.
    When it was raised recently, the government blamed the doctors.

  27. MK

    Lorcan Roche Kelly> Isn’t that the elephant in the room? House prices went up because we bought them. The developers priced their product at the top end of our elastic limit. To do anything else would have made no economic sense. We blame the banks for giving us the huge mortgages to pay for the houses, but we were the ones signing the contracts. Noboby held a gun to anybody’s head.

    Well, this is not exactly the case and I think you reverted later. True, no-one is forced to take out a loan. However, when finance is being offered in a loose fashion, many to take it up. The analogy I use is a free bar. You are not forced to drink, but many do, and why not, it was ‘money for nothing’. Consumers were flipping at the lower end. Commercial properties were flipped, 300m in scale consortiums were flipping, Lehman (a “Sam Last”) was flipping, all the owners of Eircom were flipping. It was a credit binge beyond sense and beyond longevity and stability. Not only in Ireland but in many geographies. As you correcty point out later, if better systems had been in place by banks, central banks, removal of goverment property supports, etc, it could have made our bubble less of a problem than it is. Likewise if the rating agencies had mis-labeled risk products as triple-AAA’s, the contagion wouldnt have had a ‘virus-like’ host.

    > If we choose bet that our future earnings are secure and then choose to spend them now, we are gambling. If the gamble doesn’t pay off we have to accept that we’ll loose our stake.

    But loans in general are not all gambles. Loans based on the premise that to pay it off a property must rise by X% pa, every year where X is large and unsustainable will at some point fail. The oft-mentioned ponzi scheme. It cant self-sustain. But loans are a useful tool ever since the year dot when one tribe had a resource that the other wanted. They paid for it, all thats changed over the millenia is that in this case the resource is money/capital. Electronic or paper. Loans are needed, but its just how we handle them, regulate them etc. Back to the alcohol analogy, alcohol is fine in and of itself, it does not cause people to get drunk, to binge or in some cases (Lehman’s) to have alcohol posoining. When it is limited, controlled, etc, there is nothing wrong with an aperetif, or a chardonnay with a dinner.

    > When push comes to shove the oil is owned by Scotland.

    Scotland perhaps should have moved for independence 2 decades ago to avail of the Oil benefit. A lot of the oil benefit is already gone. London has received most of the benefits. Okay, Aberdeen is getting some as well. What are the reserves up there like at the moment? According to production peaked in 1999 and has since reduced by 60% (Average oil production in January 2008 was 1.2 million barrels per day compared to the 1999 peak of 2.9 million barrels per day).

    Derivatives may be the real elephant and if this line from is true:

    “That triggered expectations the investment bank was heading into bankruptcy and prompted a rare emergency trading session to allow Wall Street dealers in the $455 trillion derivatives market to reduce their exposure to the firm.”

    Maybe its time I started sowing the carrots and spuds. 455 trillion .. I hope that isnt all debt, as global GDP is only 54 trillion. That’s nearly 10 years ‘income’. Oops.


  28. Lorcan Roche Kelly

    Mk > First, the good news. $455 trillion is the size of the derivatives market, but only about 10% of that is made of credit derivatives.

    The bad news is that means a $45 trillion elephant in the room. The worse news is that a lot of derivatives are OTC, meaning they are not exchange listed. So not only do we have a $45 trillion elephant, we also have a $X trillion invisible elephant.

    Perhaps I was wrong to use the word ‘gamble’ to describe current spending of future income. But most people who borrow either do not know what a risk-reward ratio is, or choose to ignore the risk element of the equation.

    I agree that credit is an indespensible tool in any economic model, but we have lost sight of how we should use the credit available.

  29. Malcolm McClure

    David said “In the areas of entertainment and finance, there is little doubt that Britain is a world leader.” The citadel of British finance is the London Stock Exchange, home of the fabulous Footsie, the basis of all those tracker funds.
    Trouble is that LSE was in the process of jumping into bed with Lehman Bros to establish an electronic ‘Dark Liquidity Pool’ exchange called Baikal, due to commence early next year.
    Dark liquidity pools are off-market trading networks where large orders can be executed anonymously, without divulging prices to public exchanges. Off-market trading has always existed in the form of over-the-counter transactions, but the technology now exists to bring investors together electronically in anonymity. Dark liquidity in European equities is growing rapidly, according to the LSE, and currently accounts for around €12 billion, or nearly $19 billion, in daily trading value.
    On traditional exchanges, buying a large block of shares typically causes the market price of a stock to rise, while selling a large block causes it to fall. Institutional investors, like hedge funds, have been seeking new ways to cut execution costs, especially as they increasingly use algorithmic trading, slicing orders into small parts and trading rapidly according to computer programs.
    So how exactly is the ordinary Joe Bloggs investor supposed to make an educated guess at the true value of any share if all this is going on behind the scenes? And this is being encouraged by the LSE which considers itself the ultimate symbol of financial rectitude?

  30. Garry

    Amidst all the gloom, yesterdays news on Lehman contains some good news for the Irish taxpayer.

    As the US government refused to bail Lehman out, it means letting banks fail is now a viable option for consideration by every small government faced with the same situation. F&F had to be rescued, they were government sponsored enterprises with an implicit US government guarantee. Should the US and UK be rescuing every bank as a matter of policy; tremendous pressure would be brought to bear on us if we were faced with a similar situation with a so called Irish bank… (so called as ownership is distributed between global shareholders)

    Of course this puts the ball back with our central bank and government, and forces them to actually make decisions but at least the “too big to fail” argument cant be applied lazily; it can now be argued that they are “too big to bail”.

    Now that the US is employing discretion, we can also!

  31. Philip

    I still feel this is fundamentally the fall of English speaking cultures. But I need to be more specific – English Monoglot speaking cultures. From an early age, the kids are fed a diet of televised rubbish which dislocates them from their local cultures and communities. In the more advanced economies where the mother tongue is not english, their kids would be developing a mastery of the language from their teens onwards. A non-contaminated mindset which can speak the global language of commerce and still keep one’s feet on the local ground. That’s the model you are after.

    Is it any wonder then that Germany, France, Japan, the Scandanavian countries etc are the really successful countries. I had a humbling experience is to attend a technical course in germany held in english by a german to a mostly german audience. Who’s at a disadvantage there?

    I would guess that 90% of the idiots responsible for the financial nonsense that has emerged over the last 20 years or so are monoglot english speakers – all fed from an early age on a diet of dewey eyed hollywood/ disney bubblegum philosophy. These people are always looking for the happy ending – never realising that there is real work involved in getting there in the first place. Science fact is replaced by science fiction.

    Someone made a comment on how glum looking germans can be and the cloying nature of their bureacracy. Might I suggest that maybe they see something many of us english monoglots have not. Smiling for no apparent reason is an act of idiocy – particularly when there is considerable room for improvement.

    End of rant :)

  32. MK

    Lorcan Roche Kelly> The bad news is that means a $45 trillion elephant in the room. The worse news is that a lot of derivatives are OTC, meaning they are not exchange listed. So not only do we have a $45 trillion elephant, we also have a $X trillion invisible elephant.

    Well thats just it – its an unknown quantity. I have heard estimated figures quoted elsewhere of 110 trillion or so, or was that 150 trillion? It can only be estimates at best as these are not kept track of. Paulson and co are scrambling to keep the financial system in place, some of the smaller cards in the house of cards are falling. There is a lot of strain on the pyramid. Sentiment and attitude could break it further.

    I agree with you about risk-reward ….

    Would one solution in the US be intervention of government in terms of asset prices, setting valuations based on a formula and essentially making it illegal to seel at below cost. The government wouldnt have to put in a cent. Property movements may slow but it would crystallize an asset price base. Or is such an idea just completely off the wall?

    David McW, will you be proferring any solutions for Ireland and for the world? In a globalised economic system such as we have, we are inter-dependent, with the UK, with the US, with Europe and with Asia. What solutions can be applied?


  33. newname

    Lorcan Roche Kelly

    As if any spew that comes from the Washington Post has much merit of truth.
    here is just one example of their crap pumping.

    I mean, Please, do you really believe everything you read in the papers?. Oh no wait a minute, the Washington Post printed it so it must be true.

  34. “The US Treasury has well and truly re-established moral hazard – the idea that banks should pay for their sins – by refusing to use taxpayers’ money to support Lehman.

    And make no mistake, this is a huge insolvency filing, the biggest in US corporate history, with $613bn or £340bn owed to creditors – equivalent to around a quarter of UK economic output.”
    No heads rolling in irish banks?

  35. Philip

    24000 workers to be laid off from HP over the coming 12months or so. Impact in Ireland’s 4000 is unknown. That’s about 10-20Bn of revenue (based on 1M/Employee) estimated to be wiped out. As a result of loosing 24000 salaries at 80K each would be 2bn loss to local economies…given that gets spent 10 times over, we are heading to 20bn impact…This is real money that drives real lives – not the funny Elephantastic derivatives whose fees buy Ferraris for cheeky shorting rich kid speculators.

    Question: how to save real lives while letting this paper nonsense fizzle. Are we really saying the productive world must freeze until all this wrangling among the financiers gets sorted? Is not the fundamental difference between this crash and the one in the 30s that banks are leading the crash – not the company stocks/equities which are the real productive nature of the world. The wealth creating fundamentals are sound. The method of representing that wealth is profoundly damaged and we are letting “something for nothing” guys get away with perpetuating the nonsense. That’s the real elephant!!

    • Observer

      With respect Phil,

      I know some people who used to work for HP in Dublin (before they moved out to Leixlip) and they were paid tuppence.

      €20K was what Technical Service Desk employees were earning for level 1 and elsewhere it is €25k!

      The work was just as hard they said for so little money……….. for the record also there weren’t many Irish there also after the new year in 2007 compared to previously.

      Since I last spoke to them it hadn’t really changed that much.

      There are probably only half or less than that who really work for HP officially in Ireland.

      The rest are HP in name only and Out-sourced labour to keep costs down.

  36. Lorcan Roche Kelly

    Philip > Dell have also given a warning today that their markets are ‘softening’. Share price dropped 10% on the news. More job-cuts seem likely.

    The problem with this paper nonsense is that our banks and credit market are biult on it. As the paper asssets disappear back to the ether from whence they emerged, banks that are in too deep are going to become insolvent. Leading to the consequences much highlighted in these pages.

    The 1930s solution was the establishment of Freddie Mac (and Fannis Mae to give the impression of competition) by the US government to allow the credit market to continue. Wheather the will exists to take credit back under government control remains to be seen.

    Mk > Asset price fixing would have to be done on a global scale. It would work to stabilise the markets because then the markets would no longer exist. It’s a valid solution, but I doubt it would fly in any power circle.

    Newname > I used the washington post because it is a reputable paper. Sorry if you don’t agree.

  37. Philip

    Lorcan> No disagreement there. Would MK’s idea work if international exchange rates were locked. We need some frame of reference even temporarily.

    Why not turn off the trading system or slow it down? Take the reactive panic out of it?

  38. Lorcan Roche Kelly

    Philip > Why not turn off the trading system or slow it down? Take the reactive panic out of it?

    Ask the Russians. They did it today, after their stock market lost 17% in a panic sell-off.

  39. Stephen Kenny

    Quoted property prices are so bizarre, at the moment. I got my figures from the Nationwide:
    who also provided the 10.9% fall, and the Scottish figure.

    I think that there’s a lot more to property prices in an area than a desire, or not, to sell it’s soul to our developer brethren of questionable repute.
    Why does one area boom, where another does less so, is the question. If we could answer that, we’d shed ourselves of our last vestiges of decency, and jump into the next boom early, and make a killing. Whatever it is, I would hazard it’s a little more than intent.

    The state dependancy figure is interesting. In the global list, Scotland comes in 3rd, behind N.Ireland, and Wales. England and the Republic are about on a par in the early 40s%, as is Germany. It’s a subject that I find fascinating (mainly because accuracy, and meaning, are so uncertain), but don’t usually discuss (I know, I know, I brought it up!!) as it can lead to ‘warm trans-national debate’.


  40. Observer

    Well this is getting scary.

    I transfered all my money out of the Halifax which was disappointing as they were a decent services bank that are still only quite new in Ireland.

    No-one has a Visa Debit card or free withdrawals and good credit interest on your income.

    Very Sad

  41. Rob

    okay bit of a rant coming up here but I think the postings so far I have read on this article have been some of the best I’ve seen on this site. I’m very much with Lorcan and Philip on their ideas.

    With regards to Lorcan I think the essential premise is that you get the Government you deserve. Lets face it FF got voted in because Irish people showed their greed and said to hell with it I want to be rich too. In one way they/we can’t be blamed. A country that in reality underwent its first serious boom ever lost the run of itself. The culling of banks etc. that may follow might serve to actually politicise Irish people and in effect question what kind of society we want/need. In effect a serious realigment now make actually wake people up and mature us as a whole.

    Philip’s argument is quite sophisticated regarding languages which I find very interesting. For example I was probably one of the very few doing Latin for the Leaving in 1989 yet it gave me a terrific insight into the modern languages of Europe and came in very useful and has always helped me pick up bits of portugese, italian, spanish, french later and still. However the language was seen as a dead duck and not useful. I would really have seen Latin as one of the best things a young mind can be exposed too yet nobody but a handful clamoured (a latin word by the way) for its retention (also a latin derivative…okay i’ll stop now..). Such an educational tool for a European is beyond doubt. It is also scientific in its structure (the Romans didn’t really do exceptions too well..a rigid grammar was laid down, like their roads).

    Regarding Irish and perhaps Irish culture, as a lover of the language and presently studying part-time I think it presents quite an insight in the Irsh mindset. For example the use of dúns, lios’ etc as fortresses was quite extensive all over Ireland. As were kings, there were rí i ngach áit. In fact the High-King was often only that in name with bare allegiance shown by the other kings.This shows that the Irish mindset was and still is, get what you can, while you can and protect your locality i.e. modern day County Councillors. We don’t really have a modern concept of society as such in Ireland and this I believe has lead to the styming of great infrastructual projects, i.e. a good idea for the whole is floated, it either fails to win support or is so badly mangled by vested interests (re-zoning etc.) that it doesn’t work. In essence the true Irish/Gael culture is alive and kicking, don’t support a national idea unless it works for your locale.

    The present crisis may/may not effect this thinking. In some ways Cowen et al may have run out of rope. Any use of taxpayers money to shore up their builder buddies would be a disgrace and an affront to the taxpayer as well as a removal of funds from the public purse. The only solution as I see it which Parlon and his buddies are studiously avoiding is let the market fall where it will. I find it hilarious that when prices were rocketing they were screaming ‘no market intervantion’, Tá an bhróg ar an gcos eile anois! Okay rant críochnaithe.

  42. Judging by the stock market carnage in Ireland in the last 48 hours the two biggest banks are on a Lehman trajectory(Is it conceivable.?).
    At the current share prices, their property loan portfolios have been fully discounted, so why dont they just bite the bullet,take over the derelict housing sites from the developers,sell off the immovable stock at an appropriate discount(40% or more) and lets get Ireland Inc. someways back on the road to realism.!!

  43. Deco

    I am completely dismayed at the response of the country’s politicians. The Government parties seem to be taking the policy of blaming everything on psycology. Are there are policies in the making ? or are we going to see psychology lessons for the net few months.
    And the opposition seem unable to contain their delight. This proves that neither half of the house are fit to run the country. Maybe we should just ask the IDA to run the country (again) seeing that we are in a mess (again).
    1. The state sector is going to have to rationalize itself and make sure that the taxation burden is reduced.
    2. Sheltered sectors of the Irish economy are going to have to stop ripping the rest of us off.
    3. Irish people are going to face up to the fact that substance addiction is not a way of addressing a crisis. Mainly this involves alcohol.
    4. The monstrosity that is the HSE is going to have to go on a slimfast plan. Urgently. Too much flab, and not enough movement from the entire body.
    5. The government is going to have to sign into law a protection scheme for depositors to stop the bank runs. Irish people are panicing, and the government are hurling insults at them. With the fruits of years of labour at stake, people put their own scepticism before politicians promises.
    6. The Irish policy makers cannot control what happens on Wall Street. But they can control their own policy framework. They can control state policy for productivity, for local infrastructure, etc..
    7. The top level in the state sector will have to take a 10% pay cut.

    The real issue is whether or not the real economy is good enough that everybody can keep their jobs and keep paying their mortgages for the next five ten years. I think that the people can be trusted. But their politicians might want to stop pandering to vested interests and peddlling irrelevant theories on what is happening.
    We need an intelligent policy framework. None is coming from our politicians. Maybe the IDA might just tell them what needs to be done to keep everything afloat ???

    • This evening on RTE´s “Farming news” the government and their quango “Coillte” are busy offering to buy wood /young trees from farmers who have joined their lucrative(for farmers) plantation scheme, and offering them more sizable grants out of taxpayers money to plant more-and they dont even have a profitable market for the stuff-and probably never will.! Its unbelievable how much taxpayers money gets spent supporting sectional interests in Ireland.

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