December 24, 2008

Botched bank job is the economics of Noddyland

Posted in Banks · 418 comments ·

Head on a plateBrian Lenihan is the Marie Antoinette of Irish politics. He has just done a deal with the management of the Irish banks which even the bewigged last queen of France (bred into the regime, like Lenihan) would not have tried to get away with.

Not only should he lose his political head for it, the entire regime is likely to fall as a consequence. This recapitalisation is Fianna Fail’s “let them eat cake” moment and the electorate will not allow them to survive it.

This botched recapitalisation is based on the economics of Noddyland. It is cronyism of the highest order and will plunge Ireland into a much longer recession than is necessary. Furthermore, the fact that the financial delinquents who run the banks have been rewarded for the economic vandalism that they instigated sends a signal to every foreign investor that Ireland is a banana republic.

The management of the Irish banks has played our Marie Antoinette like a fiddle. In poker terms, at the beginning of this process when the guarantee was announced, Marie Antoinette Lenihan held a full house against the banks, who were dealt a pair of threes. He was in an unassailable position and could have directed policy as he wished. Instead he prevaricated, with the upshot that the management beat him hands down. Not only have they kept their jobs but they’ve just snaffled an enormous subsidy from the taxpayer as well.

The banks’ top brass have engineered a deal whereby their multi-million euro salaries will be paid for by people on the minimum wage!

To make matters worse, Marie Antoinette is out there telling us that we, not they, have got a good deal. This is an appalling stitch-up and amounts to “stroke politics” of Congolese proportions.

The extent of the stroke is obvious if we compare the terms of the deal that we have been forced to do with the banks with the terms of any deal the international financial markets are prepared to do with them.

Just think about the value of the banks: The taxpayer has lent €4bn to the two main Irish banks at an interest rate of 8pc, in return for 25pc voting rights. According to the market, both main banks were only worth €3bn on Sunday, 25pc less than the government’s loan to them. And the banks’ management and boards are still in place.

So why is Marie Antoinette, acting in our name, trying to right the wrongs of a small, incompetent cabal? Rather than make these incompetents accountable, he has rewarded the very financial delinquents who got us into this mess in the first place. We can only assume that he is being advised very badly. Merrill Lynch is his adviser. This is a bankrupt bank, remember. So our State is being advised by people from a bank that could not even look after its own money, let alone anyone else’s! Could it possibly be that Merrill Lynch is more interested in future fees from the management of big banks when it comes to further borrowing than it is in the immediate fortunes of the country?

Something else stinks in this deal. For example, why give the banks money at 8pc when you know that 8pc comes nowhere near the rate which the market is charging these banks? Last weekend, you could have bought Bank of Ireland preference shares with a 14pc yield.

Marie Antoinette Lenihan, on the other hand, thinks that we should lend to them at 8pc! Why? Does he know something we don’t? Does he think that the bad loans in Bank of Ireland will be considerably less than the market does? No, he knows nothing more than the average Joe Soap. In fact, despite all his advice, this dreadful deal reveals a man out of his depth. He has just been conned by the banks’ management, who have told him the situation is so dire that they can’t survive if they have to repay at a rate higher than 8pc.

Remember, these are lads who said up to last week that their capital position was so robust that they did not need any money from the State. So, turning economics on its head, Marie Antoinette has risked taxpayers’ money at an interest rate that even the most idiotic investor wouldn’t entertain. This is a sick joke, but the joke is on us.

Now, having established that you have been robbed blind, let’s look at the pathetic economics of the deal. For a recapitalisation to be successful, bad debts have to be written down to zero immediately. This is costly and this is why the State needs to raise a lot of money rapidly to cover the mess. Equally, a “bad bank” needs to be set up like a financial skip, into which all those bad loans and rubbish on the “good” banks’ balance sheets can be thrown. The cost of the skip should be paid for by the “good” banks, because they have been the ones given a reprieve.

Such an approach, adopted by Sweden in 1992/3, clears the air and allows the good banks to start lending again. In this way, the recession is cut short by taking the pain up front and allowing the system to right itself. We have chosen the worst of all worlds. Marie Antoinette has condemned us to a long recession and he seems pitifully oblivious to this fact.

We are following the Japanese approach, which saw Japan plunge itself into a decade-long downturn.

First, no one is held accountable and the managers are given a subsidy rather than a penalty for bad behaviour. Second, the bad loans will not be written down — banks will use the State’s money to roll over debt service on bad loans, hoping that the recovery will miraculously arrive on its own. Third, the money advanced today will simply be swallowed up by the huge bad loans on the banks’ books — all of which were lent by the present management — who, lest we forget, have held onto their jobs.

The numbers are frightening. The Irish banks have a loan book of €450bn, of which probably at least 6-8pc will go bad in the recession. This means a total problem of over €30bn, and quite obviously the €7bn recapitalisation for AIB, Bank of Ireland and Anglo is only a drop in the ocean.

Make no mistake about it: our money will disappear in the next 12 months. Irish bank shares will continue to fall steadily as the extent of the dire loan book is revealed and we, the taxpayers, will be asked to stump up again and again.

The long recession will make a mockery of Fianna Fail; and when they are hammered in the polls, they will trace the tipping point back to this Christmas week and Lenihan’s “let them eat cake” idiocy.

  1. Brian

    You have in this column reccommended the bank guarantee, and a recapitlisation. Is it that the terms of the recapitalisation are so ridiculously bad? You sound genuinely angry in this article. Is that it now? No more solutions for this corrupted country?

  2. Malcolm McClure

    David: Some of us who have been following the bank collapse closely had been hoping that things couldn’t get much worse, and that it was time to write off the negative and reinforce what few strands of positive news that came over the horizon. You consistently bring us back to Earth again, reassuring us that things are even worse than we thought and the Straits will become even more Dire in the new year.

    However, we haven’t a clue how all this is going to play out globally. I think its still a lot of whistling in the wind, by Lenihan and everyone else. In present circumstances, how on Earth can he pull €7 billions, like a rabbit out of a hat? You imply that it is already a done deal. Surely it requires votes of approval in the Dail and /or Senate? It requires loans to be raised against assets held by Hermes? Can someone please talk us through the actual process and timing of realizing this significant national commitment? My guess is that it will take weeks if not months to deliver.

  3. This is no better than a junkie getting a free fix from the dealer. A short term fix. A mere treatment of the symptom not the cure.

    The banking system in Ireland was no better than a Ponzi scheme. Sadly the investors who will lose the most are those least likely to be able to afford it, the low paid, unemployed and elderly who had no say and indeed no benefit from the building boom.

  4. The key is responsibility. If the government make individuals, i.e. head of banks or regulator, accountable for their actions then it makes sense that they in turn will be held responsible for any of their bad decisions. There is no chance that the government will be looking to take any sort of accountability (this is a global economic problem, remember). It’s not going to happen, just plod along, throw a few billion at the problem and roll off home. Hope and pray that something changes and then take credit for it.

  5. sue

    It is now time for the people to take action and say “enough is enough”. I propose we organise a shoe throwing protest outside leinster house to regiter our disgust. Anyone interested in joining me?

    • Ire_in_exile

      Molotov cocktails more like…

    • ger

      time for a new political party, otherwise all this is just people letting off steam, time for change we can truly believe in.

    • Angelina


      A shoe throwing rebellion may attract some media attention, but may I suggest clogs with studs. I, for one, would be a willing participant except I live in Vancouver, Canada, unable to afford an Irish home, a perk for the privileged few. Go for it, time this Island of Saints and Scholars got a wake up call!

  6. Ger Kennedy


    Why dont you tell us how you really feel?

    Anglo Irish Shares today sez it all really. They will have to announce “further measures” before their EGM in Jan. More Irish taxpayers money pissed down the toilet no doubt.

    How did so many well educated and nominally smart people get it so badly wrong? It really is a very strange phenomenon.

    Anyway, have a good Christmas and New Year.


    PS How about them “fundamentals” then?

  7. b

    For once I have nothing to add. Putting money into Anglo Irish Bank is rewarding failure, hlping your mates out of a mess of their own making and making a complete mockery of Ireland and its people. It is a banana republic and the minister has to go. Along with his mates.

  8. the mediator


    This isn’t incompetence, this is corruption of the highest order. Don’t listen to what they say, watch what they do.
    It is now obvious that Lenihan etc are acting not on our behalf but on behalf of their real paymasters. Lenihan
    purposely wishes to transfer whatever wealth remains to his buddies/cronies in the banks and big business.

    Over the next few weeks and months things are going to start happening. They will not be mistakes, they will
    be purposely done to ensure an outcome whereby we the people give over our futures to wolves and thieves.

    We need to watch whats happening and not listen to the mass media etc… who will put forward a version of events
    that ties in with the Lenihans and the Fitzpatricks of this world.

    David you think that Lenihan is incompetent / I think he is simply doing his masters bidding…

  9. Ire_in_exile

    Merry Crisis and a hopeless new Fear.

  10. The Dude


    you left out one word


  11. ger

    david, you are all over the place, one minute praising the government for their economic recovery plan, then saying they will fall – there is no consistency, frankly i am at a loss at what you stand for.

  12. Nessa Childers

    There are mixed signals coming from the government. Ryan this morning says basically heads will roll in the new year. Cowen in the Indo says it must be left to the Banks to do this. Does anyone know what is going on? I am the Labour candidate for Euro East, which has been affected by recession to a greater degree then any other part of the country. I would prefer if there was some ray of hope out there even if this government must stay. However the lack of mandate they have is a serious issue in itself. Hope and confidence are the lifeblood of the human spirit and of economies.

  13. Ciaran


    I share your anger in particular with regards the management not been sacked in both the banks and regulatory bodies that have stood over a circa 90% fall in the share price of the banks and a complete mess of bad debt they have created. This is a classic case of ‘Rewarding Bad Behaviour’ and is something that can only happen in Ireland. I have little doubt that the chiefs in AIB & BOI have some serious skeletons in their closets just like the Fitzpatick did in Anglo. This is probably one of the reasons they are so reluctant to step down themselve as they will be found out!

    I’ve had enough of the charade that is going on in the banking sector and government inaction on the issue. I see Eamon Ryan spoke out this morning saying that there will be a change of managment in the New Year and hinted at similar action in The Financial Regulator so fair play to him but of course this should have been done anyway a long time ago.

    Keep the pressure on David and hopefully the penny will finally drop at government level.


  14. David,

    Your best article of the year. Keep up the good work. BTW … it’s not just the bank bosses who should take a hit ; so should all their underlings and the layers of henchmen under them. I see the average Goldman Sachs salary has fallen 45% to (gulp) 350K ; something equivalent should happen here, perhaps to an even greater degree.


  15. Furrylugs

    D’ye know David. You can’t do any more. You’ve correctly warned “Them” about the bubble, the banks and just about everything else from an economic viewpoint over the last few years. Your kids have had to listen to the Taoiseach telling you to commit suicide. You’ve appeared time and again on national TV only to be subsequently ridiculed.

    Go away and enjoy Christmas. Then head off to Harvard or somewhere you’ll be appreciated. When you’re awarded the Nobel for the treatise on why Ireland was the epitomy of the collapse of capitalism as we know it, you could mention the backroom team here.

    Merry Christmas to all and thanks for having me.



  16. colin

    The problem with this country is that nearly everyone is at some kind of stroke themselves. This means no one has the integrity to stand up and shout “STOP”.

    The solution is emigrate. This country is going down the tubes.

    Get out a pen and paper, draw a line down the centre and on one side write a list of things that you like about living in ireland, and on the other side write a list of things that you don’t like about living in ireland. When you’re finished writing, you should be able to draw your own conclusions.

    I have.

  17. Declan F

    Resign Brians…just resign………disgraceful….there will be riots on the streets of Dublin before the end of 2009. Total disgust and ignorance….the Banana Republic is alive and well.

  18. John ALLEN

    Government’s National Crime Forum Apr 1998 – Included in my written submissions to this public forum, by written invitation ,at Civic Buildings Limerick was my professional distrust and condemnation of Irish Bank Management ( and filmed and directed and produced by me ) entitled ‘ The Green Deception ‘ .I acted in the prevention of a serious crime against Bank of Ireland Dublin in 1992 and the bank criminalised me in that process.They also professionally advised me in writing to sue the fraud squad ( police ) for false imprisonment .Subsequently in my trial the justice directed an aquital and following that the fraud squad examined my case again and sent a file to the director of public prosecution against three of the senior bank of ireland officials in dublin – the press never reported my actions against the bank or my submissions to the above forum.Everything in my submissions have now come true when at the time everything was done to stop my revelations of what was going on .
    I became subsequently the first trusted professional advisor to work with CAB ( not for ) on a new case on behalf of a Criminal ( new client ) that resulted in the first agreement ever made by CAB and others followed subsequently in due course.I am a qualified accountant and tax advisor .
    I wrote a book on philosophy and ireland ( behind a fascade of corruption ) in 2006 that was really telling the foreboding delema we now find ourselves in .For me I have been living like as it were ‘ an enemy of the state ‘ because of what the bank of ireland did to me .The Taoiseach and Minister are surrounded by a big wall of corruption.We are living in very very dangerous times within our nation and the international community.In an earlier blog of dmcw I confirmed i wrote to the Minister Lenehan and Secretary of Bank of Ireland .There has been no response to date .

    • b

      As usual there is nothing to back up anything that JOHN ALLEN says.

      Nothing in Google, no video on Youtube. Nothing on the public record. Just wild accusations and self delusion. You must be in the same accounting body as the Drumcondra Ditherer because there are records of accountants that can be searched and you ain’t there.

      You are making wild and pretty much baseless accusations against a legal entity using a false name. Yet again you are pushing a personal vendetta that refers to either itself or your crazy book.

      Lets keep this on topic and in the real world. The minister has used our money to bail out a bank that has failed. The bank is in hock to his friends who pay for his keep. If the bank is allowed to fail like any other company would if it lost all of its stock market value then these friends would lose their helicopters.

      We have now had the public coffers doors kicked in, the money taken and given to those who lit the fire under and profited most from the boom.

      The minister and his entire government including the turncoat shysters in the Greens should go TODAY.

      We are totally screwed by these idiots and are totally unprepared for the carnage that will kick off as soon as the turkey leftovers have run out.

    • Barry

      If you google john allen philosphy ireland the first result is -

      John Allen (Archbishop of Dublin) – Original Catholic Encyclopedia
      22 Dec 2008 … John Allen (Archbishop of Dublin): Archbishop of Dublin, canonist, and Chancellor of Ireland (1476-1534).

      Surely some mistake…..?? ;)

      I make no apology for trying to add some lightness to this awful situation……

      Bye, Barry

  19. Ire_in_Exile

    I agree with Paddythepig, probably the best DmcW article this year, certainly the most hard hitting…
    Indeed, it is an extraordinary challenge to the establishment, and at great personal risk because these current idiots hold great power and influence and they can use it if you go against them.
    That is the reason it has all ended up in such a calamity, the ruling class in Ireland, specifically since CJH have progressed on fear alone. There are, no doubt, many honest individuals who knew it was all nonsense long ago but did not have the moral courage to stand up and shout “Stop” for fear of ending their career.
    Thus we have a collection of cowards and traitors and opportunists and the whole system is based on falsehood, backscratching cronyism and corruption, and they make moves now to protect themselves while the whole country runs fast into oblivion and the honest, hardworking and conscientious suffer the most.
    It is a scandal, and it has to stop- hard and quick.
    There will be appreciation of David in future years for having taken this uncompromising stance when it was needed most.
    Well done. It is the first and most important step.

    I give my personal thanks also to David and all the contributers for some superb information and indeed entertainment on this forum in 2008, I look forward to more in ’09.

    Best festive greetings and wishes to all,

    Ire In Exile.

  20. Deco

    David you are right – the state are buying a pig in a pole. Nobody knows the real state of ANIB. It has already been proven that their accounts are suspect with the loans scandal. Therefore saving ANIB from bankruptcy is a waste of time. The goverment has still not audited ANIB. They have not sent in the revenue to find every single asset. This is necessary. Every department has to justfy it’s expenditure. But with banks the government jumps in, without knowing what is really there. I have one suggestion – attach the ANIB buildings to the preference share capital. So if ANIB goes bankrupt, the state can at least kick out ANIB, and hand the building over to the IDA, Forfas, the universities or a government semi-state needing office space.

    There is a new scandal brewing concerning the e-voting machines (another Noel Dempsey ‘brainwave’). This was on the radio earlier (definitely not RTE or TodayFM). Apparently they are in storage under a 25 year lease(destroying them or giving them away for nothing would actually have been cheaper). And the people who received the storage contracts are all related to the relevant county returning officers. This reeks of corruption. It wouldn’t happen in Florida under Jebb Bush !!! Another rotten disgrace. It is no wonder this country is bankrupt. Nepotism and cronyism again rampant in Ireland – killing our societal concept, creating poverty, and destroying any sense of civil decency in the citizenry. We have no money for vaccinations, but money is allocated for leasing storage space for useless, malfunctioning machines, at the taxpayers expense.

    This is how the Irish public sector does high tech – the high tech solution costs much more than the manual method !!!

  21. Deco

    Colin <>

    Not everyone. But practically everyone in authority is fiddling somewhere. We have wholescale institutional cronyism and corruption. The real problem is that the legal framework is rotten. Basically we need to agitate for reform, and up the ante when we get ignored.

  22. Deco

    Colin [ The problem with this country is that nearly everyone is at some kind of stroke themselves. This means no one has the integrity to stand up and shout “STOP”. ]
    My last comment was in response to your comment in brackets

  23. Deco

    Wonderful – even politicians are now reading this bulletin board. Nessa Childers – if you say you are who you are – will you please stand up and ask for resignations in these banks, and the elimination of the top three layers of the six reckless banks ? We need to fix Ireland’s corrupt incestuous commercial culture.

  24. Declan Osler

    Can shareholders sue the management and BoDs for failing to fulfill their fiduciary responsibilities?

    • Nessa Childers

      Sharehholders can call and EGM, if they form a large enough group, and remove the BOD. We have no tradition of shareholder activism in this country.
      And yes, we have called for accountability in banks etc but until the Government changes, (three years?) we can just keep up pressure.

      • Absolute nonsense , We do not have to wait three years , what we need is a few back benchers to find their back bone and just get up and walk .If we wait three years we are just giving into this corruption and Ireland will be financially and morally bankrupt .
        Your Dad was a good man in his day and I am glad to see you have left the Greens , you should maybe get a few F.F TD’s to sit on your couch for a few sessions , maybe then to help them get a proper sleep they will do the right thing

        • Nessa Childers

          I think you will find that most of FF are so desperate to remain in power that they will hang on to the death. Unfortunatly it will be ours, econonmically of course. (witness Ahern’d belated resignation) None will appear on my couch until they have lost their seats either! We call it ‘narciissitic injury’……
          I maintain that if they had the national interest at heart they would go to the country. In my father’s day there was a sense of this. He once said to me in the early seventies that FF were beginnning to think they were the state rather then a Party in it. And that was after a mere 16 years in Government.
          I also tsuspect that the Banker’s know things that make them a potential liability if ‘removed’ by the Minister. However, perhaps that is too dramatic.
          I am researching the Companies Act 2003 in the attempt to understand why such things as Directors Compliance Satements have never been enacted into law. There also is a case for EU involvment in our regulatory systems, David has suggested also that we must have people from outside the country on the Boards to avoid the banking version of the Stockholm syndrome. An afflication suffered by the Green’s I fear. However Ryan’s statements contradict Cowen. This is interesting.

  25. John ALLEN

    b- I qualified as a CPA in 1977 and member of Institute of Taxation in 1978 and as an Auditor in 1978 / first chairman and founder of cpa mid west society – I resigned as being a cpa member in 2004 for personal reasons -my submissions to national crime forum are acknowledged appears in that official report – you can ask the garda commissionser fachtna murphy what i wrote earlier if i am telling the truth ok?

  26. Robert

    David — You’ve hit the nail on the head with this article and I commend you for it.

    Basically the Irish taxpayer is being robbed of billions of euro by the very people who have screwing the Irish people (mainly the young) in this banana republic throughout the last 10-15 years.

    Let’s make another thing clear — If the level of bad debt is 6-8 %, or around €30 billion as you state, then the taxpayer will be paying back every cent — and hence, as I stated the other day, the corrupt banks and builders (the sort you’d find all together in a tent at the Galway Races) will get off scot free. The only ones who won’t be losing their jobs will be in the banking sector. Nothing turned my stomach worse than reading the likes of Cowen justifying the money provided to Anglo Irish Bank in particular.

    Whilst all this is going on we have a Judge (Aingeal Ni Chonduin) telling people who are less than 5 grand in debt that they “are at the door of jail right now”. It’s sick what is going on in this banana republic. []

    This “deal” with the banks has shown us that the €500 million “investment fund” announced last week was just a little sweetener before the bitter pill of what we’ve had to swallow over Sunday night-Monday morning.

    The more I think of this the more you see how well planned and co-ordinated this whole scam by the two Brians and the Bankers really was. Absolutely no vote or debate in the Dail will occur on this craziness (not that the gobshite backbenchers in FF would vote against it) with this announcement just days before Christmas and just days after TDs take a 40 day break (or is it “preparatory time”? . . .as the Chief Whip calls it!)

    On a separate note — Why is it that you think that FF will be hammered at the polls? The Irish people keep voting for them. This is the party of Haughey, Flynn, Lawlor, Burke, Lenihan (both of them) & Ahern — and yet people keep voting for them. There are people on your website who will totally agree with what you say and guess what . . .they voted FF in May 2007 (probably just as their SSIA election bribe was maturing).

    I despair of the majority of the thick electorate in this country.

    Wishing you and your family a very happy Christmas.

    • Excellent point. As a few of us said after the last post we’ve already guaranteed each bank to the hilt. Recapitalisation is a spun phrase for “bailout cash”. The first of many installments. The onus is on B Lenihan to give us a clear and unvarnished strategy in Jan 2009 or our economy and institutions will be irreparably harmed, even beyond their own misachievements.

  27. Well David , now I think your pen may in time prove mightier than the sword. You have a few bloggers who actually know what is going on , the rest of the adult population ( for the moment ) are justing sitting back saying , well what can we do ?
    What We can do is start picking on back benchers let them know they won’t get more than close family votes the next time they run and pressure them into accepting the truth of this corruption.
    As I have said here before we need a new political party to get away from this bunch of dishonest back slappers.
    Bring on 2009 , first week on the trading floor you will see Anglo going into single digit , What will Brian do then , ?
    Well on current form we more than likely will see another u turn .
    If only we were an Africian country we could get the Army to throw out these gangsters.
    Any way , Enjoy your Turkey every one here …and John Allen just take the blue tablets , you’ll be ok then

  28. matthew mac gabhann

    Each individual of each banks management should be personally sued for gross negligence and every penny that they and their family have should be taken from them.
    They have stood over a 90 to 100% decrease in their companies share price. I have invested a large proportion of my life savings in the banks. And now all my hard work through my life has been virtually wiped out.
    How could these guys stand over giving €80 per square mile for a strip of land in Dublin? If that is not gross negligence, then I don’t know what is.
    I will never get my money back, but the least that can happen is that she should be legally held responsible for such gross negligence. Would any other profession get away with this?

  29. Declan Osler

    Lets organize legal action against all the management and Directors for gross negligence.

  30. Jayz, DMcW is getting more annoyed with each passing day. Perhaps he’s offered to help and been given the usual FF brush-off. Well, B Lenihan is in control of ANIB now, he’s made the decision to guarantee their deposits and inter-bank loans so if it goes south we’ll only have Lenihan and FF to blame. I still think he can cauterise some of the wound and reaffirm some confidence by going after developer assets & deposits.

    Here’s a few predictions for 2009. Richard Bruton to take over from Enda in FG and provide some real opposition. A motion of no-confidence in the government being passed if the banking crisis gets worse. Strong opposition to the government’s Lisbon campaign from Ganley and cohorts. The aforementioned Bruton to campaign against Lisbon. Basically, Irish politics needs a shake up and if we can’t achieve it under the current circumstances we may as well emigrate.

    Merry Christmas to all the posters here and of course DMcW himself who through his cyber-door open to us. 2008 has been rough but the comments here have been wildly entertaining and stimulating. To single people out would be insulting to the insight and passion which is evident here. By the standards of Arlo Guthrie’s famous song “Alices Restaraunt Massacre” we’re already a movement. Let’s make it count…

  31. juicylucy

    hi everyone

    just a quick word:

    I think guys like Brian Lenihan and alot of the other politicians are making decisions too cover their own asses.

    I don’t listen to what people say, I just study their ACTIONS.

    The finance ministers actions tell me that he is involved with the banks, maybe he has a huge amount of his own money invested in the banks in some back handed approach eg:

    Maybe that 87million loan taken by the Anglo Chairman is half of Brian’s loan, but since they are “friends” and both need to cover each other, this has lead to the Anglo Chairman taking the fall. Trust me, one guy doesn’t take out an 87million loan, he is taking the cover for a large group of his buddies, who will in turn take care of him.

    I don’t listen to what people say, I study their ACTIONS, cause their ACTIONS tell you everything.

    The politicians are just as corrupt as the banks, they are one and the same.

  32. John Q. Public

    This time next year we could be looking at a re-recapitalisation of the banks but there will be no money left in the pension reserve fund. matthew mac gabhann the public need to rally against the current leadership in government and financial institutions, let’s demonstrate!
    We should appeal to the World bank and the IMF now to at least analyse our current predicament so that we don’t have to go begging to them in a years’ time.

  33. Deco

    Brendan W – I agree with you.The Greens are too concerned with their merks and perks to make a stand on anything. A few PR gestures concerning reform. And that is about it. There is no point in hoping that the Greens will bring in banking reform. Santy will bring the Green Party their toy windmills, and that is happiness for them.

    You are correct about Anglo going to a single digit. The liquidation sale epidemnic in the retail sector will see commercial property loans defaulting all over the place. And ANIB – who boasted of their high market penetration will be left high and dry. And then Lenihan will be left holding an exploding bomb, called ANIB. If Lenihan could only realise that ANIB will finish his career in politics. (unfortunately, because short selling is banned by that muppet called P.Neary, we are not allowed make a few bob at ANIB’s expense. It is said that short selling bans, are only effective in delaying the inevitable.)

    Nessa – interesting point concerning the shareholders – where are the shareholder revolts ? Where are the shareholders of these banks ? Are they hiding from embarrassment ? Or too busy in the bars around Kildare Street trying to lobby for favourable policies ?

    Our best hope is that there will be more Joe Behans in Fianna Fail, and that the party backbeches will kick up an internal powerstruggle, with Cowen and Co. completely undermined. This would possibly see all those incompetent ministers sent to the backenches. And it would lead to an improvement. Otherwise we will have three years of Japanese style face saving exercises, no reform, and a massive debt at the end of it all.

    I wish everybody on this board a very Happy and Joyful Christmas !
    I have been educated and entertained by the opinions of my fellow contributors, in the last few months. And I really enjoy the open discussions, the intellectual freshness, direct arguments on this board. There is nothing else like it in Ireland.

    Thank you David for your television broadcasts – I was one of those who took notice of your warnings concerning the property bubble, and stayed away from it. I am grateful to you for this.
    And we are all very grateful to you for your bulletin board, so that we can make commentary, and read each other’s commentary. You have been a true patriot – calling on your fellow citizens to exercise their grey matter, whilst the polical, media and economic establishment have been calling on the citizens to obliterate their grey matter. But the one with the better grasp of facts and principles always will triumph in the end.

    “You must be the change you wish to see in the world” – Mahatma Gandhi.

  34. This problem just illustrates that without reform of the 1920′s era governance system that produces second-rate politicians who are prisoners of vested interests, the positive potential of the Irish economy, will never be fully realised – - just wonder about the land rezoning system that creates an artificial scarcity of land in a country that is 4% urbanised and more expensive houses than in France that is 28% urbanised.

    The “masterstroke” of Sept 30th, should have been deferred for 2-3 days to sort out the mess.

    Everyone was of course conflicted; Cowen and the Central Bank had been sideline cheerleaders of bank lending policy during the boom and had to protect their own interests but for example, why was it necessary to guarantee the liabilities of Irish Nationwide, which had a €12 billion loan book with 80% exposed to commercial property – - 45% of it in the UK?

    As to the dénouement, it’s very simple: the hierarchy of responsibility from the top was from political leadership to regulators and bankers.

    So in the absence of resignations from politicians and regulators, why would the bankers offer themselves up as sacrificial lambs, while the others lacked legitimacy to push the issue?

    The Irish system is one where the buck stops nowhere and anyone who believes that Brian Cowen or his crutch John Gormley, will change that system, are idiots.

    It sadly would take riots in the streets or near economic collapse, to achieve significant reform.

    • I’d actually prefer a US style presidency at this stage. I’d prefer us to get to vote on a single person who outlines a clear set of issues, solutions and then appoints a cabinet to govern the country from those they believe best fit to do the job. Fergus FInlay made some great points about the over long Christmas holidays for TD’s being tied to their need to satisfy the obscure demands of their constituencies. The perception that the clinic is as important as the country. Running the country and pandering to constituents are two separate jobs. By asking our elected representatives to do both we promote parish pump politics. Ocassionally it embarasses us on the world stage like Willie O’Dee’s admission that he went to speak to Michael Dell to “plead on behalf of Limerick”.

      Begging and local politics all brought to the world stage courtesy of the Irish electoral system.

  35. John ALLEN

    brendan w – it’s the truth

  36. Tim

    So, ……. why are so many people, and nearly everyone in the media (apart from Gene Kerrigan), blaming the teachers, nurses, gardai for the mess? Scapegoat the public sector wage bill, again! Teachers on €35K blamed for what bankers on €35 MILLION did.

    Bananna Republic, alright!

    • I agree with you. This is becoming ridiculous. A gross oversimiplification where everybody in the public sector is scapegoated by angry private sector workers who simply don’t understand that Ireland isn’t the only country where shoddy management and financial extravagance has sent everyone up shit creek. I agree that the power wielded by the public sector unions is disturbing but if there’s an attitudinal problem that requires correction then that should be tackled rather than some of the shameful anti-public sector BS that’s being perpetrated by some of the media.

      There are a few problems in the public sector in this country IMHO:
      1) political appointments at the top of the civil service and in oversight/regulatory quangos.
      2) ministerial and top public sector pay and expenses (particularly expenses)
      3) Well-intentioned “process” that ultimately reduce efficiency and pesonal initiative.
      4) the difficulty in firing staff for incompetence.
      5) the lack of true performance related pay.

      The first 2 points could be sorted out by any government wtih the balls to do so.
      Far from “hiding out” in the public sector I know many civil servants who’d be happy with more stringent performance analysis and related pay increases within their organisations.
      Point 3 indicates the problem in a public sector clearout as advocated by some media figures. It’s extremely unlikely such a clearout would improve the civil service so it would be an act of hubris.

      Also, public sector pay has been small by comparison with the rip-off rates charged throughout the construction sector. There were a lot more millionaires (on paper or otherwise) who had a trade rather than a public sector job in this country.

      As for the media… Kevin Myers (one of our most principled media commentators) complained that he’d taken a 10% pay cut whereas the public sector got a 2.5 pc rise. While the pay rise is certainly problematic in these hard times it’s a bit disingenuous for one of the highest paid people in the Irish media to attack public sector employees who receive less than half his salary. His comments are endemic. Many in the media are having their pay frozen or being asked to take wage cuts. Their ire is being borne out in their columns and “reportage” which are irresponsible and trying to whip up a frenzy of hate towards public sector employees. It’s irresponsible journalism.

  37. Tim

    The “profits up, wages down” brigade are doing their job very well.

    See the connections: migrant workers – low paid workers – nurses – teachers – pensioners – schoolchildren.

    Targets, all.

    ….. and the rich continue to get richer, at ordinary people’s expense.

  38. Lorcan

    David, well done on yet another great article.

    Nothing much to add to the comments, agree with much of what has been said.

    Peaceful Christmas to all, and a prosperous New Year.

    Any out there who, like me, have a vested interest in Santa’s location might enjoy this.

    Now, laptop off, with all intention of a few days of excess. Might be a while before we see their likes again!

  39. Peter Atkinson

    Nero fiddles as Rome burns comes to mind.When all else fails bugger off to Kosova and make a big statement.A bit like the pigs ear he made of the dioxin scare.His presence in Kosova,with his track record, was more likely to spark off another ethnic conflict in the region.When will he get the message.It’s all over for you Brian.Bertie saw this mess coming and obviously saw you coming too.Change your name to Patsie Cowen.If we had an army we would have had a coup d’etat by now.

  40. I guess people need their faces rubbed into it before they wake up.
    Everything is alright till it’s not. When you are from a certain class you imagine that is your place and neither the (have and the have not) twain shall you meet.
    However, strange things happen when the upper echelons cut the rungs below and you find yourself where you think you do not belong.
    Time to realize the upper echelons have been letting (who they consider) the lower class eat cake.
    It’s time now. Time to stop the bull-shit. There’s only one solution- equality.

  41. the mediator

    Hi All

    Wishing you all a happy holy and peaceful Christmas.
    May god bless us – I think we’ll be needing it in 2009.

  42. leerich247

    Folks – Can I throw something out there for you to chew over and btw David, another excellent article as always! The question is; does democracy really work in Ireland? Would we not be better off in a dictatorship? I think that Ireland is simply too small for democracy to work? Everybody knows, somebody who knows somebody! You get it? Check out a great article by Kevin Myers in the Dec 24th edition of the Indo – Then you will know what i mean!

    The government through lack of policy is just as responsible as the banks for the mess we are in. Hence no heads roll. The stick that broke the camels back was the 100% mortgage, nobody said “stop”. Did I hear Cowen or McCreevy shout stop when all the loot was rolling into the Dept. of Finance? Did you hell. Fact, we voted for these fannies. Next time around get out and use your vote.

    By the way do you ever see Dan McLoughlin on TV these days? Bet he is too ashamed. The worst economist to ever work for BOI.

  43. Gentlemen and fine ladies , I hope you have all survived over this Christmas day , I am next year putting my decades of travel and hindsight to use and with the few euro I do legal own, I am getting an A 4 sheet done up with my reasons for been Elected . And i will run independent I will be Against , cronyism , or who your father or grandfather were, I will not take expenses for doing my elected privileged position, I will ask who signed off on the 11,000 curtains and that 50K toilet for miss second in charge coughlan, and who agreed to pay 1.3 million for the glass house sweet and paper show inside the gates of our leaders house .
    At least I know I have a student of Edward Bernays on this forum , shittte Miss Childers could a slow moving politicians daughter who ended up with the states press before been put up in our Phoneix . Park.
    We don’t need dicators like bully Biffo we need straight knowledge and individuals who take honor in achievement , not selfish rewards.
    From our Lady Pres , down they all have monopoly houses along with the beds they sleep in. Over 90,000 was taken Daily while Our , sorry The Dail sat and given out in expenses ! Sorry do we not pay them more than the prime minister of Britian ?Forget about how much the likes of Ivan or Garrateh or Charlie were given nor mind Ahern or Reynolds
    There is no Moral Reason why ,they should not be challenged Independently , My Man from Wexford , all he’s done since been Elected , buy a bigger estate BMW . Oh and of course now SITS on even more committees .
    It was a joke to laugh about , while drunk in Ireland, but now I’m off the stuff for well over 14 months I don’t think it’s funny the way our health, roads, schools , power,bank and law is been run. It’s all rotten and from within a small select few …ah sure didn’t his grand father get shot by the Bristish , while your ould fella got drunk down in Kilkenny ?….. Who gives a toss, We are in the year 2008 , and ryan air take us to England now and Aer lingus did take 300 pounds for the same trip before .
    If even Ten from here went and ran in your own home areas , we would at least rattle their cages , And what will it cost to do this , no doubt Lorcan will post those figures for us all to see within a day or two, but before we Enter 2009.
    Lets do it , We could be …The McWilliamites ! and if it comes to getting the printing done my self I’m get my China Girlfriend to print them up In Schenzen …And I hope customs let that late ( or next years Santa ) box come into to mature hands.

  44. oh P.S. Lorcan you keep it real , Norad for a minute I thought it was Adams fund raisers !

  45. Hi Folks, Hope u all had/are having a good one!

    What strikes me as peculiar is the distinct lack of urgency in all of this. Cowen and Co. appear to be either stalling things or politely waiting for a response from the banks. In the real world decisive leadership and action is what is called for. These traits seem to be lacking in this administration and it is no surprise to me as our political masters are no more than overpaid chancers for the most part.

    Allowing the banks to fob us off while they wait for outside factors to positively influence their dire situation is not acceptable and downright disrespectful to our elected reps and hence our citizens. Brian Boru would be spinning.

    ‘Fools rushing in’ would no doubt be the claptrap defense of Cowen and Co. but we would indeed be fools to believe Cowen at this stage. FF have sold the future of this country to feather the nests of themselves and their ‘patriotic’elitist friends. I refuse to emigrate again instead I will stay and fight them and their self serving interests.

    Emigration is what this government now wants. It has served as a vent for frustration and anger that has always prevented the plebs from taking power back from the incompetants. However, things may now be different as there is nowhere for the discontented (who are many) to go. The UK, USA, Europe are not in the market for our labour. So this gov will have to earn their bloated salaries in the coming years as they attempt to appease the growing number of malcontents who dont believe their weasel words.

    Happy New Year!

    • alan

      At home in Ballinteer on this bright and pleasant Stephens Day morning, it is business as usual in terms of the multiple developers helicopters clattering overhead en route to another festival of bacchalanian indulgence and in your face demonstration of vulgarity on their part. Having been there last year, it was mildly amusing to see these individuals (all well known) disembarking their choppers with their dolly birds, financial advisers and local politician buddies in tow. Given what we now know a year later, it’s quite stunning to hear the cavalcade of helicopters appear just as substantial this year. Two fingers to the rest of us I guess.

      Oh for a few stinger missiles. I despair.

  46. b

    Lenihan did the same kind of sly cosy deal that Michael Woods did with the Church on Child abuse. The Church promised the sun, the moon and the stars and to this day has failed to pay what they said they would pay.

    The banks have forced up the cost of living and then when they can’t get any more money to gamble with and gouge us with they hold out their grubby paws and demand money.

    Their threats to small business regardless whether the business needs to borrow or not are totaly unacceptable. They forced the government to guarantee all our deposits because if they needed to take our money they would have to cover their own asses. Take as in the same way a thief takes money out of your wallet.

    Someone who steals money physically is a thief. Someone who hides 87 million is disappointing. Says a lot.

    We have been had. The joke is on us. These people should be led from their offices in handcuffs. Not bailed out by a weak politician.

  47. AndrewGMooney

    I thought David would sign off 08 with his optmimistic ‘Ireland Inc Gets Innovative’ and save a post like this to go with the New Year’s hangover!

    As winter turns to spring, there’ll be revelations of more surprises and ‘disappointing’ behaviour of the 87 million variety. With suitably aristocratic disdain from Lenihan for those who continue to question the ancien regime of FF.

    Looking forward to David’s take on the descent into chaos that will be 2009, once the Obama honeymoon is over and things really kick off….


  48. b

    It would be interesting to see the notes from the Dail debate about the bailout… Oh. Sorry. No vote, no consultation and therefore no debate nor voice of reason.

    Some democracy we have! The Dail is yet again bypassed because it is too inconvenient for the minister, done over Christmas and without debate nor legistlation.

    We now know the Government works for Merril Lynch. We are just an inconvenience to be silenced or jailed if we step out of line.

  49. Fred

    Interesting to see someone bringing up the Greens suffering from Stockholm Syndrome. Let’s be real, it’s not just them, we as a nation have been in thrall to Fianna Fail led governments for decades and have been suffering from a collective form of Stockholm Syndrome.

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