January 14, 2009

Cold facts of how we could be 'Iceland inside the euro'

Posted in Debt · 452 comments ·

Ireland ReposessedCould the unthinkable come to pass here? Could Ireland default on its sovereign debt? The answer is yes. Such a disaster is now quite possible. In the same way as a family can end up losing the house, the car, everything, a country, too, can fail to make its repayments. At the moment, such thoughts are heresy; but so, too, was questioning the property boom a mere four or five years ago.

Back in 2003 or 2004 when people questioned the property boom and its driver, the debt splurge by the bankers, we were ridiculed and dismissed. We were labelled mavericks. We were told that it was “dangerous” to even suggest such things because we might “talk down the economy”.

I remember being labelled “unpatriotic” by a politician in 2004 following an appearance on ‘Prime Time’ when I described the property market as a “scam” operated by “an unholy alliance of bankers and property developers”.

We now know that this is exactly what it was, it was a scam perpetrated by a small minority who made fortunes, aided and abetted by a frenzied population caught in a mania and presided over by Fianna Fail. It is extraordinary that the party which lays claim to the Rising, could end up advocating property purchases in Bulgaria using borrowed money as the highest form of national patriotism, but that’s where we got to!

So the moral of that tawdry story is that “thinking the unthinkable” while not popular, is necessary. If we are forewarned, we are forearmed. Make no mistake about it; it is entirely possible that Ireland will default on its sovereign debts. We are hurtling in that direction. Foreign investors are on notice and last week, they demanded a huge interest rate premium from Ireland before they gave us cash. We paid 4.7pc to borrow money on Thursday last. In contrast, Germany paid 3.2pc. This implies an Irish interest rate premium of over 40pc for two states that are in the same currency union. So lenders are worried that Ireland will not be able to pay its way.

Surely you will assert that there is a big difference between being worried and turning off the taps altogether? Well yes, you are right, but consider what has happened here. If you look at things objectively, Ireland should be in a much better position than practically any European country. Our national debt is extremely low, our budget deficit projections are very poor; but so, too, are many countries and in contrast to the rest of the EU, Ireland seems to be concerned about government spending and is talking about putting in place a series of cutbacks. So why, in the eyes of foreign lenders, should we be any more delinquent than the others?

The answer is that although the State behaved itself in the boom and did not borrow, the rest of us went mad. We borrowed for every hare-brained property scheme imaginable. Our banks and the bosses, who are still in their jobs, destroyed the national balance sheet by borrowing money abroad to fund this nonsense. We also decided to pay ourselves better than all our competitors, not because we were more productive but because we were more profligate. The geniuses at the Department of Finance creamed off tax revenues from the top of this frothy borrowed brew, mistaking an overdraft for a tax bonanza.

When this borrowing splurge stopped abruptly last year because the credit markets shut down, the Government was faced with the choice: does it allow the banks to collapse because they were so borrowed that they couldn’t finance themselves or does it guarantee the banks, buy time and see whether it can put a plan B in place? Had the Government allowed banks to go bust in October, there would have been a run on the other banks, leading to a collapse of the system and we would have been “Iceland inside the euro”.

But amazingly it didn’t put plan B into action, it never came up with a plan B and now the banks are again in dire straits. Although the guarantee means that they might not default, their delinquency has contaminated the sovereign debt and now the market thinks that the banks will bring the State down with them.

Consider the position of Anglo. If Anglo goes bust, because people withdraw their deposits, the State will have to write a large cheque. That cheque could be as big as €30bn if the assets in the bank’s balance sheet are as bad as many fear. Will Ireland be able to write this cheque? Will we be able, at short notice, to borrow that much cash? Furthermore, will Irish workers stick around to pay the tax associated with such a rise in our national debt?

After all, we the Irish citizens are volunteers, not prisoners and can emigrate to escape the pleasure of paying higher taxes for developers’ greed. Therefore, it is not hard to envisage a situation where we default, particularly as we can’t even finance day-to-day expenditure without borrowing for God’s sake!

Bad and all as it might sound, if we were to default, we would not be unique. To see what can happen to delinquent borrowers in a monetary union, we have to turn the clocks back and re-read a bit of financial history.

It is 1975; flares, Richie Ryan, Eddie Gallagher and the Horslips are in the news. The US is in recession. The Detroit car industry, like today, is going to the wall. The oil price shock is still reverberating around the world and the ensuing recession has weakened the Ford administration more than Watergate.

More importantly, in light of Ireland’s current predicament, New York City in 1975 was in crisis and on the verge of default.

Lenders simply stopped lending to the Big Apple. Years of profligacy, which were financed in good times, suddenly caused investors to panic. New York City was about to default on its bonds and Gerald Ford told the city to “drop dead” when it asked for a bailout. Ford argued that the US government would never contemplate bailing out New York, as it would undermine the credibility of the dollar. However, in a ‘volte face’ of epic proportions, Ford blinked first and the City was bailed out with a federal loan.

To avoid a similar situation threatening the euro, the Commission imposed the 3pc budget deficit rule on all euro countries so that no country could undermine the currency. What would happen if we were to test this? Would the EU bail us out rather than countenance a sovereign default that might destabilise the euro? Could we renegotiate Lisbon along such lines? Could we go to the ECB and look for a bailout?

This might be better for us and for the EU as a whole, however politically unethical it might seem. After all, do they want an “Iceland inside the euro”? That’s what it looks like they are going to get! We’ve tested Europe’s patience once, are we about to do it again in a much more dramatic fashion?

I am not suggesting that we should resort to political blackmail, but if you have ever seen a bankrupt man trying to save his skin, you know that he’ll do, say or sell anything. Similarly, a country facing default will behave accordingly.

That’s just the way it goes!

  1. Colin

    ‘will Irish workers stick around to pay the tax associated with such a rise in our national debt?’
    The answer is no.

    How about bringing in a new tax, called Property tax. Those who have done well during the tiger years can foot the bill instead of PAYE workers. Lets get farmers to pay land tax. They can choose to pay the tax and keep their precious land or not pay the tax and have their land taken off them.

    The owners of residential properties can pay an annual amount depending on the size of their house and location (join the 21st century and introduce proper postal codes) e.g. house area = 2000 sq ft in Ailsbury has annual bill of €10,000, same house area in Malahide has €5000 annual bill, same house area in new estate in Mullingar has €2500 annual bill , same house area in Malin Head has €500 annual bill. Larger Houses pay more, smaller houses pay less.

    • Colette

      Yes, that might be a good idea in Ireland’s case. Here in the U.S. and especially in a state like New York, property taxes are commonplace, albeit a bit high. Such a revenue stream might be the answer to at least some of Ireland’s current financial problems.

      • Colin

        Thanks Colette, apart from 2 retorts to my proposal, the silence has been deafening. Seems like everyone here is an “I’m allright Jack” type or is due an inheritence from a farm / large property in the years to come.

        I believe Income tax should be lowered, Property tax introduced, such that modest homeowners on average income do not end up paying more tax. I want Sean Dunne and his cohorts taxed on what they own. I want pensioners sitting on valuable assets to stop playing the victim, and realise they are sponging off the rest of us. Why do people want to die rich anyway? Don’t they know they can’t take it with them?

        • jim

          Colin just a few quick pointers. 1. people who done well have sold their properties already[nothing left to tax] 2.farmers placed overcapicity [land] in euro appoved reps schemes etc and are taxed under approved cap policies etc.3.suggest you read up on rateable valuations pros/cons.in connection with your property tax suggestion.i.e 21st centuary. 4.pensioners have on average spent 50 years working for the country paying their taxes etc.and as such deserve whatever respect we have.If they have disposable assets its down to the fact that they did’nt squander them and as such increases the countries net worth and credit rating.5.most people here are well informed,thoughtful,and generally up to speed on economic matters,even if they take the piss every now and then.You will find when you read the posts that people here are anything but alright,but very concerned for the future.Looking forward to reading more of your suggestions in future.

        • Colin

          Jim, I appreciate your response and all responses. I view this forum as a learning tool, but also as a democratic platform for anyone who thinks their ideas hold merit, regardless of whether they have a PhD in economics or not.

          A few of my own quick pointers

          1. People who have done well by selling their properties are in a small minority, i’m sure. The owners of land banks on the periphery of Dublin and elsewhere will be caught by the tax, or will have to sell it on at a loss – either way the developer loses and the rest of us win.
          2. Farmers are asset rich, so tax the asset.
          3. I don’t have time to read up since I’m holding down a day job at the moment which I deem more worthy of effort and concentration.
          4. I don’t consider it disrespectful to point out to the pensioners the truth. I’m all for helping little old ladies cross the road in case you’re wondering.
          5. You don’t know the personal financial circumstances of contributors here anymore than I do. I used the word seems, which you’ll agree is different to saying certainly.

        • Liam

          taxing farmers on the value of their property would make sense if they had the means to pay. Clearly they do not. Please look at the figures for farm incomes. e.g. Tillage,average €20 EUR per acre. Land is effectively the farmers “job”. If they have a taxable income they are liable for income tax at a higher rate than PAYE. Why are you interested in bankrupting them? They are not responsible for the financial crisis.

    • AndrewGMooney

      Colin, your proposal is entirely sensible and workable. All it requires is a functioning Goverment prepared to ‘share the pain’ across the board rather than pander to their nefarious client base.

      I read many excellent comments on this site, but I don’t reply to them all as it’s hard to balance coming back to the site with milking the cows, bringing in the turf and the all the other things in the daily life of a hedge fund manager.

      • Malcolm McClure

        AndrewGMooney: Maybe you’ve milked a Holstein, but did you ever milk Wittgenstein?

        “Whereof one cannot speak, thereof one must be silent,”

        “My propositions serve as elucidations in the following way:
        anyone who understands them eventually recognizes them as
        nonsensical, when he has used them — as steps — to climb
        up beyond them. (He must, so to speak, throw away the ladder
        after he has climbed up it.)” — Ludwig Wittgenstein, Tractatus

        ‘Nonsense’ became the hinge of Wittgensteinian interpretative discussion during the last decade of the 20th century. Beyond the bounds of language lies nonsense – propositions which cannot picture anything – and Wittgenstein bans traditional metaphysics to that area. The quandary arises concerning the question of what it is that inhabits that realm of nonsense, since Wittgenstein does seem to be saying that there is something there to be shown (rather than said) and does, indeed, characterize it as the ‘mystical’. The traditional readings of the Tractatus accepted, with varying degrees of discomfort, the existence of that which is unsayable, that which cannot be put into words, the nonsensical.’

        Substitute economic booms for metaphysics and we are describing the nonsensical essence of economic theory;– the government guarantee and its subsequent nationalization of ANIB reflects Lenihan kicking away Wittgenstein’s Ladder.

        Perhaps John Allen is on to something?

        • Colin

          Can you translate allenish for me please? break it down into simple words please.

        • “Can you translate allenish for me please? break it down into simple words please”
          @Colin >>>>> A………L………L…….E……..N………I……..S………H………

          Its the John Allen morse code breakdown !!

  2. Nostradamnusalltohell

    David, are there any other options? Just curious.

    we as commenters will otherwise all get into a frenzy on this which is clearly a black and white issue. I mean, do we default, or don’t we. i do recall from the 80s there being a chap on the Late Late who Gay Byrne invited to present a similar idea, when the state had borrowed so much, that we should default. We didn’t. imagine if we had, we’d well deserve a banana republic name tag.

    My question is : is THIS the moment, when we get to do this? Clearly, this is a one shot deal, and if Ireland Inc. gets into trouble again in the future, we won’t be able to do it. And in fact, it will mean that we will be forever viewed with suspiscion by bankers worldwide.

    I think, David, that you are saying, priority one is to our families, they’re going to be in debt, we can’t expect them to pay for this decade of profligacy, let’s retreat and lick our wounds. Ireland will rise again.

    The assumptions are that we WILL rise again, and while we are not going to be a low cost centre of manufacturing in Europe (there are far too many other well developed, non-defaulting, stable options for MNCs) we will start Ireland Inc up again, like Donald Trump back from bankruptcy and be bigger than ever. Through, if I understand the summary of your most recent book, turning Ireland into a brand that sells itself to our diaspora, a bit like Israel becoming a First World nation with nukes from a desert in 50 years.

    The assumption is also that the most educated and qualified people will not all emigrate en masse on leaving school / university, and that there is something that will keep us in our Celtic kibbutzes scraping earth from rocks and licking moisture off the window panes for sustenance for a decade or so until we are able to catch up with the rest of the world.

    I also think that you are saying that the ECB will blink, and JC Trichet will nationalise Ireland to keep the boat from rocking too much. Maybe, I dunno, i have to say, I have fairly simple views on all this.

    But if the ECB does NOT blink, and we are NOT bailed out one way or another, and in fact Ireland is the example made to Europe that ANIB clearly should have been to Irish banking, well then our black swan has gobbled us up.

    So, I think like any good argument, we analyse the assumptions and see if they make sense, rather than continue to offer opposing / supporting views.

    Assumptions :

    The ECB will pay any price to keep consensus.
    JC Trichet is like B Lenihan, he’ll write any oul cheque going to stop the baby crying.
    Ireland at an international level is like FF at national level, fierce cute hoors altogether who have no intention of paying for their mistakes
    Ireland debt-free will get its act together in keepign top talent, encouraging entrepreneurship and tackling social ills whereas ireland with debt it took on willingly will not.

    I think that hiding the drink from the alcoholic is not the best option, we need something more than pity and tolerance from those whom we have let down financially.

    but I don’t think like an economist

  3. VincentH

    The pension reserve fund was the bit of dosh in the credit union along with the gold reserve. Leastwise that was how I saw it. And not some pot of cream set aside to pay to keep some to the style that they became used to. So why on earth use it to prop up banks when the return on the fund was bigger than the cost of a bond. and if it comes to that why not give it in at the bottom and reduce the loans of all by say 5000 or so. Then at least all would see some good out of all of this.
    I am sick of hearing all the jargon, hearing all the trenched positions licked of some stone 20/50/70 years ago. Of hearing that the 80′s were really bad, when the reality was for some only.
    What we are seeing at the moment is the dept of Finance dusting off the MacElligott papers, papers which might well have been written by those who designed the Highland Clearances for they are little more than a script for emigration.
    As to your Plan B, there was not a plan A. There was a midnight visit by a bunch of bankers. And that more than anything else is why the Bond costs are higher, as the Gov’ has give to the Markets forewarning of future requirements. It has asked for a two year unlimited overdraft. How can you blame them for asking a bit more.
    Overall I think that they are going at this thing arseways. The problem began at the bottom and can only be solved from the bottom. The bottom does not play ducks and drakes, it spends and saves a bit. Leveraging is something used to move the washing machine. There is no point slotting finance in higher up. We did this in the 30′s with the land thing and froze the economy below those with 250 acres somewhere around 1750. How many of you remember small farmers using bloody pitchforks.

  4. John ALLEN

    Orchard Stewardship – I believe we should make decisions about our debts that are within our remit and discard the ‘bad apples’ from the pit and retain our national confidence as a country debt free thus giving hope to our citizens .To do this it means Dump Anglo and categorise it a Leper and discard it from our shores as St Patrick did .To Bail out Anglo is the same as creating Gaza Land in our West Land ( Ireland ) .
    The significance of the forthcoming EGM on friday must not be underestimated and every effort must be made to WIN and be seen to Punish the Bord of Directors .We MUST act NOW.If we Fail we are Doomed for rest of lifes shuld we remain within the State .
    I believe DMCW is confused by comparing NY with Anglo . ANIB is a plc and an independent entity with no management role in it by the ~Taxpayers therefore the Taxpayer should not have to pay the Bill for the corruption caused by the Management of ANIB.
    Until we are able to believe in ourselves and realise we have an easier ,cheaper and debt free solution option we are Doomed .We need to be able to release ourselves from the Domineering ANIB and learn to say ‘NOOOOOOOO’ full stop.
    Germans are simply FED UP with Ireland and they have their own problems and rising .The Germans will Scoot Ireland from Euro without blinking if by having us inside causes them to have to pay higher premiums for their National Borrowings .
    Failure to allow ANIB become Bankrupt and Punish the Bord of Director will definately condemn us to leaving the Euro for a long time.

  5. And Declan Ganley can pay the debt. Let’s get out of Europe altogether and grow our own vegatables. There are more ostriches in Ireland runnign free (or rather with their heads in the sand) than in Dublin zoo.

    The speculators will have a field day shorting Irish debt by selling the Credit Default Swaps, driving the price down (interest rates on the Irish bonds higher), then selling the debt for a killing.

    The great property bubble has burst, but the great government bond bubble is only starting.

  6. John ALLEN

    I received a written response from the Office of the Director of Corporate Enforcement re : Anglo Irish Bank EGM as follows :

    ‘On behalf of the Director of Corporate Enforcement ,I refer to your fax of the 13th January in relation to the above matter .
    As entities licensed by the Financial Regulator ,banks , together with their directors and senior executives ,are expected to uphold the very highest standards of probity in the interests of maintaining public confidence in the banking institutions of the State .
    The Directors Office examines all alleged or suspected breaches of Companies Acts , and where circumstances warrant , appropriate action is taken within the limit of the legal and other resources which are available to him.
    In the specific context of the forthcoming EGM at Anglo , the Director notes your comments and suggestions , in particular your request that they be represented at this Meeting.The Director will take whatever action he deems appropriate in this regard .

    Y/S Marian Mc Dermot PA to the Director ‘

  7. Philip

    Face it, EU is crumbling. I give it 6 months.

    I agree that Germany must be looking hard at their DMs and thinking what’s in it for them.

    Russia know how to play the freeze game and they are a major and significant diversion in the overall scheme. It shows that the EU still has too many voices. It simply cannot focus.

    Ireland ? Not too sure how it will retain its independant status. Things are happening too fast.

  8. Furrylugs

    Two things strike me here with this chilling article, this article being a summation of discussions held on this site for some time now.

    One is that, should the EMU shore up Ireland Inc for the greater good of the Euro, a furious Bundesbank will take the scalpel to Irish financial services prior to any bailout in the form of “Observers”. They will insist on external governance to protect the rest of Europe.

    The second is my pet topic insofar as the Government here has allowed wealth to accumulate in one sector of the State to the general detriment of the rump thus violating Article 45 of the Constitution. The EMU version of this is the 3% limit on debt.

    If Ireland were, cynically and ruthlessly, to attempt a trade off between Lisbon 2 on one hand and solvency on the other, there could be no referendum. The risk of failure would be too high. The powerbrokers in Brussels would need a cast iron guarantee before recommending an aid package.

    The “Final Argument” could be along the lines of “yes we screwed up but so did the ECB regulatory function in not protecting us, the plain States of Europe, from this American driven meltdown, so can we have reparation please? We had double digit growth until the EMU failed to protect us”. In return, we’ll use emergency powers in response to the financial situation to impose Lisbon 2.

    But as Nostra says above, I don’t think like an economist either.

  9. John ALLEN

    furrylugs – what are your views on what i wrote above?

    • Furrylugs

      My apologies for the late reply. I was quite busy today but the real reason is that I had to think long and hard about your course of action. From the previous posting we were led to believe that CAB would consider a communication from a citizen. To your eternal credit, and I take your posts at face value, you actioned that.
      I don’t expect you will get the hearing you have been trying for over the years but at least the communication is logged.
      I will continue this conversation elsewhere with you.

  10. The Eye

    Blood on the streets…

  11. I made some predictions too David, a little later than you- in April 2007. They envisage a frightening but logical outcome of the final meltdown and deepening recession. they are a little more detailed on the shape of the conflict and social upheaval, but I guess you could have written the story yourself-except that you kept to the “Property Bubble” topic, and did not enter in to its inevitable consequences.
    Judging by the public service unions threat of all out strike/ confrontation discussed in todays papers-my video is going to be Nostradamus like-uncannily accurate!:


  12. ste

    This country and it’s inhabitants have a serious persecution complex that also needs to be addressed. We like to throw the blame at the banks, the regulatory system, the politicians, europe, builders etc and while there are some EXTREMELY valid points around this it has to be pointed out that the few million or so that voted for these politicians also bought houses from the developers using money from the banks (some clearly lied about earnings to get larger loans).

    When will the individual be held accountable? People know more about buying property in Cape Verde than where their tax money goes in their own country.

  13. MK1

    Hi David,

    Ireland is not near default – yet. If you use an analogy of LTV, we are in debt by 30% or so (of GDP) so have some headroom to borrow up to 60%. However, we DO have to change things, and even the Government recognises this. Current state spending has to be aligned with current tax revenues. The EU (euro) may let us off with borrowing above the 3% for 2008 and 2009 and even 2010 if the trend at that stage is in the right direction. eg: 5%, 7%, 4% …..

    The EMU/euro rules in practice are thus: a country can ‘break’ the 3% borrowing rule and the 60% of GDP borrowed rule IF it is heading in the right direction and has bona fide intentions. France, Germany, Netherlands, Denmark (iirc) all have. Belgium used to be way above the 60% and may still be, I havent checked recently.

    One mistake we have made is with our bank guarantee by the state, and its that which we are paying for in the marketplace with the 4.2%’s and the 4.7%’s etc.

    So, Ireland would be better partially “defaulting” on that guarantee (the loan part and not on the deposit part) than with its state ‘gilt-edged’ bonds. Do we have to live up to the state guarantee loan part? Cant we negotiate on any that do come up?

    I have advocated from the begining, that the pain of this credit-bubble debacle should lie with those that benefited and are still benefitting from it, and one of those beneficiaries are the banks. Even if its ALL, or nearly all, of our banks which are ill, we have to lance that boil. So far, we have protected the banks as we fear they ARE the system. They arent. There are other banks in the EU/EMU that can provide banking services.

    So far, not one bank has gone, so its still all far to cosy, moral hazard is embedded. The banks should come begging for capital, be nationalised and then hit them hard with a “hot poker”, with slashes, slashes everywhere. Close down where necessary.

    A 5-year old can see the logic of the above ……. (if explained using a Thomas the Tank Engine analogy) – Sir Topham Hat has to get off the gravy train!


    • Malcolm McClure

      MK1: “cozy moral hazard is embedded.” Too true. But contrary to their posture, there is nothing the D4 crowd would like better than for the State to nationalize the banks.

      Why have the shares gone to rock bottom? Because D4 sold out months ago. Why has there been no recovery? Because D4 knows there is too much hopeless debt embedded throughout the Irish bank loan books to make them worth buying at any price.

      D4 is waiting until the Government nationalizes the banks, swallows the debt (on behalf of taxpayers for generations unborn) and repackages the useful parts for resale – debt-free–back to the same D4 coterie.

      That’s what I call the real moral hazard.

      Let’s follow the money trail instead. When the big sell-off was happening early last year, where did all the cash proceeds go? There is a high likelihood that it wasn’t left on deposit in Irish banks. for obvious reasons. Where else could it go? Not into property, for obvious reasons. Not into stocks and shares, for obvious reasons. Probably not in a suitcase or under the bed, although some went there. Too risky.
      No, my guess is that hedge fund lines of communication were opened and it mostly ended up by electronic transfer outside the jurisdiction.

      Thus there will be an electronic trail of this money that should be easily traceable by the CFO using Money-laundering laws.
      I think they should seize the lot of it.

      The CFO should walk unannounced early one morning into all financial institutions and seize all international transfer records for the past two years. If the banks and funds have nothing to hide then it won’t do the system lasting harm. If they do, then its ‘Goodnight Irene’.

      • Deco

        The D4 banks – 40% foreign owned. Just a scheme for oligopolistic price setting, extortion, and irresponsible careerism. Patriotic ? I doubt it.

        The workforce of Waterford Crystal consists of real people trying to make their community work. That is real patriotism. Real people trying to make real lives.

        We should be concentrating on getting people, not banks through this crisis. The banks are a waste of time.

        Then we have clowns like Dan Boyle, telling us that we need bankrupt banks more than we need the industrial base. And the Irish Times spent a decade telling us that our bankers were profiles in courage, and that the Irish Financial sector was in “safe pair of hands” types personas. The IT seems to take the advertising penny and peddle nonsense.

        There is an urgent need for institutional reform in this country. But it seems to get continually swept under the carpet, or turned into an expensive scam for moving money from taxpayers to layers.

        There seems to be a class based aspect to the entire scam. The professionals seem to throw ethics out the window. It is like as if the professional classes, are watching us in a “valley of the squiting windows”. They are all doing fine, watching the ordinary naive citizen walking by. They examine the citizen for potential out of sheer opportunism and greed. And seem to stay silent behind a curtain (regulatory framework) which is completely transparent, and built around them.

        As David stated in a previous article – We need an Obama figure. And he is right – we need an Obama to resolve this. We need a reformer. The nearest equivalent that I can find is Shane Ross.

        The Valley of the Squiting Windows was a book that criticism of a society which could be both sly and friendly. It used to be heavily doused with Institutional Catholicism in the 1950s. Then it became Socialistic in the 1970s and 80s. In the 1990s it became Consumer Capitalistic. It seems to be the one continuum in Irish life. It was probably Fascistic in the 1930s. It seems to be a tendency towards inhumanity and contempt for your fellow citizen, and very obedient to power. It seems that this is still the case, with reference to the professional associations, that control “regulation” of the Economic Rent Infrastructure.

        We must recreate our society as fairer, more respectful, more transparent, less hierarchical, and much more open with regard to the behaviour of authority. That is how Western Civilization will learn to save itself from it’s own excesses.

      • jim

        Im starting to warm to you,your spot onn with the money trail.Its there.The names will shock the state to its core.p.sss Dont rule out the foreign property trail ,think emerging markets and brown envelopes also Anglo’s increased exposure in us/uk might provide a usefull roadmap[jan 06 might be a good starting point]

    • Barry

      Excellent post-spot on. I come from a long line of Bankers but am a Public servant on 55K. If I have to take some pain-then it must also affect those who propelled us into this mess.

      Can I ask you or David -if its not possible to back out of Loan Guarantee scheme then is it not true to say that we had to bail out Anglo? If it fell-would we not be liable for all its debts??

  14. gadfly55

    One question, how do I transfer my savings in Euro out of this country, before we are compelled to withdraw because of failure to comply with criteria of Stability Pact? The cowboys and cowgirl dynastic FF scions of cute whoorism are heading for Little Big Horn and it’s time to Dance with the Wolves.

  15. Deco

    David – you are giving us a warning.
    1) Various comments about taxing the speculator class, are in the category ‘closing the door, after the horse has bolted’. The speculator class, as Joe Higgins terms them, are hiding out in Playa de Lagos, drinking champers, playing golf and backslapping each other. We need the CAB and the Fraud squad to get to the bottom of the speculator racket and the brown envelope culture. The Tribunals have failed. Perhaps they were designed to fail ? But in any case, this needs to the resolved. The Dail is responsible for dealing with this issue.

    2) Colin – farmers are workers, too. In fact, as workers, they do an awful lot of work, doing long hours in crappy Irish weather, often for no money. Some do well, but a lot are just scraping by, with regular jobs to keep them going. Most importantly agricultural production is about the only part of the economy that is trying to keep up output. This feeds raw materials into a form of industrial production that has no intention of outsourcing. Agricultural production is essential to the economy, and as things stand in large swathes of rural Ireland, agricultural production is of marginal economic worth. The various tribunals have established that the farmers did not profit from the “brown envelope” planning decisions. In fact the few farmers brought before the tribunals seem to be the only witnesses prepared to provide full evidence, up front without “Ray-Burke” tactics. We need to encourage and nurture anybody who produces something real, and stop facilitating ‘wheeler-dealers’.

    3) Dodgy banks should be dropped. Give them no money. There is no economic argument in favour of saving ANIB, INBS or PTSB. They are capitalist enterprises. They should be forced to defend themselves. The banks are still having parties, junkets, bonuses for managers, and prestige sponsorship deals. I just wonder how many bankers, are using money from their bankrupt capital bases, are engaged in the bidding process to get their bums on the seats of the Corporate suites in Landsdowne Road. We know for certain that they didn’t sell their corporate suites in Croke Park. They are still in a world of triviality. These people have still not learnt about “capitalist consequences to capitalist failure”. These careerists accepted capitalist consequences when they squeezed the decklanders into paying more for housing, and were giving themselves massive bonuses, and undeclared loans. Now let them take consequences for their actions, when their actions are irresponsible.
    AIB, Rabo, NIB and the Credit union network will survive for certain. The Irish banking sector is not in danger. The banks that are in trouble are all heavy risk takers. We did not compensate Eircom shareholders, and we should not bail out ANIB careerists either.
    4) As David pointed out, we are fighting for our productive base, especially our industrial base. We have failed to bring down costs. Competition Law is unimplemented in large sections of economic life in ireland. You won’t see NTR being asked about one price increase after another.
    5) We need to ask questions about the organization of the public sector. Forget the pay issue for front line workers. The structure is bloated with un-necessary hierarchies that report to nobody, and are accountable for nothing. The entire public sector is overstaffed with managers, consultants, and various “titleholders”. And these are expensive, non-producers. Many of them are completely unqualified for their responsibilities. They make ludicrious decisions, wasting millions upon millions of euros. Problem is that they know a massive amount of ‘institutional’ dirt – which points directly back to the political parties – all of them. So sacking them would bring down the entire facade of the public sector. 17% of the headcount of the HSE is management. The HSE is firstly a system of patronage for nepotism – and secondly a health service. Mary Harney, and Prof Drumm are incapable of fixing the problem.
    6) We need to streamline the entire government. The government needs to look at the entire bill incurred by the government, and all the tendering operations. Some of them, like the “E-voting” machines represent a complete waste of money. It would reduce the bill substantially. We also need the government to govern the country, and stop being squeezed between competing careerists in ICTU and IBEC. IBEC are a vested interest in preventing Ireland reducing it’s high cost of living and prohibitive cost base.

    • Colin

      If the speculators own land, then they must pay the tax.

      If I want to have a go at farming, I’d need a few million euros before I can start thinking about it. This is obscene.

      • Liam

        You may not have noticed how quickly the land prices are plumetting. This is a tiny market as very little land is traded and most of the land that was sold at high prices was bought by builders,businesspeople & the small minority of farmers who sold land for roads etc. Sorry to hear you can’t buy a farm but I can’t either and I’m not whinging.

  16. AndrewGMooney

    Fantastic article which hopefully gives the ‘powers-that-be’ the absolute heebie jeebies. My only concern is that David McWilliams will be subjected to various media ‘psy-ops’, as before, to try and stop him pressing the fire alarm in this theatre of the absurd. But I’m sure he has the bollix to deal with any playground bullies.

    Brian Lenihan. Into the office you get. And take that book out of your pants, this is going to hurt!

    Instead of wasting precious time ineptly playing poker with a bunch of really, seriously dodgy corporate bankers, with absolutely no patriotic interest in the outcome: Lenihan should have been canvassing this catastrophic outcome within the EMU and EU fraternities. He was stripped naked by the bankers in single session. I’m sure they had a good aul laff on the golf course the next day. Instead of telling the bankers to put their silly pistols down because he had a guillotine in the backroom: He collapsed in craven submission.

    This is not a man to be running a lock-in gambling den of a pub in East London, never mind a Sovereign Country. Plan B? Blame it on the Brits. How novel. It’s worked in the past, surely worth another punt?

    The debacle of Sean-Fitz and Neary is an almost too unbearably tragic-comic denouement to this horror story. The Guarantee should NOT have been given until a thorough search was done for any hidden cans of worms. Such searches should have been a matter of course for the ‘regulators’ so don’t give me any of this ‘Sudden Sunday Emergency’ stuff.

    Of course, the consequences land on Cowen’s desk, even if it is one in a hotel in Tokyo or wherever the eejit is. Taoiseach? Not for much longer. Maybe just stay there as Ambassador to Japan or something.

    I’m not going to do another Basil Fawlty. I won’t mention the Germans again. The whole EMU project will COLLAPSE if people don’t come to their senses. Ireland is not Greece. It has powerful neighbours and friends such as Britain and America, even if the relationship with one is scarred by centuries of idiotic strife. It has massive negotiating leverage if there’s anyone with a strategic brain in Dublin prepared to use it. But who are the candidates?
    Don’t worry: I won’t comment again. I’ve had my say…….almost.

    Msg 4 John ALLEN.

    Everyone else just move on to something ‘important’ as this is ‘off-topic’ and inappropriate and I will have to sit on the naughty step again, etc. However, it does have a lot to do with the current crisis situation, but it’s ‘in code‘. Malcolm thinks I’m a spy. An MI5 ‘plant’ on this site. S’funny!

    In a ‘past-life’ which I have intermittent recollection of: I was captured by another Celtic tribe during a fierce battle. I was only 14 at the time. I was taken from the heartland of ‘Ireland’ to the western coast and sold into slavery. I was taken by Viking warlords to ‘Ultima Thule‘, now known as ‘Iceland‘, across ’De mensura orbis terrae’. After years of slavery, I was granted my freedom as reward for shrewd political counsel to my overlord. I became a Visionary. I was considered an oracle. I contributed to the Eddas.

    The singer, Bjork, was and is also part of the story, but she has asked me not to reveal too much detail in public. She visits regularly to brainstorm ideas for her new albums. I am English, Irish, Icelandic, Interplanetary and Interdimensional. Here are the lyrics from a song from ‘way back then‘. It was an ancient Irish lullaby, which I remembered my Mother singing to me as a babe. I could not remember the ancient language my Mother sang in, so I had to rewrite the words, but I always remembered her voice. This alone sustained me through my ordeals:

    “Bíum bíum bambaló, Bambaló og dillydallied.Vini mínum vagga ég í ró
    En úti biður andlit á glugga
    Þegar fjöllin fimbulhá. Fylla brjóst þitt heitri þrá, Leika skal ég langspil á
    Það mun þinn hugan hugga
    Bíum bíum bambaló, Bambaló og dillydallied.Vini mínum vagga ég í ró
    En úti biður andlit á glugga
    Þegar veður geisa grimm, Grúfir yfir hríðin dimm, Kveiki ég á kertum fimm
    Burt flæmi skammdegisskugga

    A mod-ren group ‘Sigur Rós’ do an eerie version of this ancient song. This translates into modern ‘English’ as follows:

    “My little friend I lull to rest. But outside, a face looms at the window
    When the mighty mountains, Fill your chest with burning desire,
    I will play the langspil, and soothe your mind
    My little friend I lull to rest, But outside, a face looms at the window
    When the cruel storms rage, and the dark blizzard crouches above,
    I shall light five candles and drive away the winter shadows”

    I sang this once in a pub in Durrow, but I got strange looks. No one seemed to understand the history, the roots, the culture! It drove me scatty. Anyways, I will begin my first ever ‘concert performance’ with a re-interpretation of this classic when I finally reveal myself to the world live on stage in Dublin (or Birmingham) at 20:12, 20/12, in the year 2012AD.

    I post about the current Icelandic situation on a site called ‘Iceland Weather Report’ under the name ‘Perturbed of Malvern Wells’. But not very often. Their government and banking elite realises I am a REVOLUTIONARY who intends to destroy them for their corruption. They have banned me from all the Baugur shops in Britain, which isn’t very nice. They are in cahoots with the British, Irish and American Governments trying to stop me taking control. But everything changes next week when Obama takes over. He listens to me. Very intently.

    Go well! Be well! Blessed Be! So mote it be!

  17. well – I for one have been following this colum for sometime and more often than not, david has been right. You all remember last year we had the country bumpkin imbeciles in Fianna Fail telling us to ‘stop talking down’ the economy, rather than realise what was going on. We had Tom Parlon telling us there was ‘great value in property’, only to see prices plummet further.

    I work in bonds / currencies, and what i can tell you all is the following. ireland’s CDS – credit default swap – is trading around 200 basis points, mcdonalds is trading at 50… this tells you all you need to know – we are being viewed by the international capital markets as a basket case waiting to happen. Unless drastic, and I mean DRASTIC action is taken, we are on a one way ticket to penury, big time. What to do – cut wages and salaries in the overpaid public sector, let anglo fall on its arse, and get exporting again.

    But seeing as no one seems to act in the national interest, I am going to look after my own ass, and that means taking all my savings out of the banks, keeping them in euro cash notes or buying gold, because what david is assuming is that europeans actually have the cash to bail us out, and this is not necessarily the case. Which means we risk being thrown out of the European currency, meaning the savings in your bank will be worth half what they were previously. Don’t say you were not warned.

  18. The Eye

    Its Jail for Sean Fitz and Neary …..Treason

  19. McGoo

    Iceland suffered a sudden collapse in the value of it’s currency, and no-one will lend it any money.

    We will not become “Iceland inside the euro” because :

    1. The value of the euro is not going to suddenly collapse (devalue, possibly, but not collapse).
    2. The ECB will bail out Ireland out by lending to us. They’ll demand lots in return, but they will do it.

    Apart from quite rightly saying “I told you so”, I don’t really see where David is going with this article, or yesterdays one.

  20. Lorcan

    Sorry about the philosophical aside, but I’m in that kind of mood today.

    I’m currently reading a Christography by Joseph Ratzinger (a very very intelligent man, don’t knock him until you’ve tried him). In it he makes a very good point about the human condition.

    “…what preoccupies [man] is the hiddenness of the future that awaits him. Man wants to tear aside the curtain; he wants to know what is going to happen, so that he can avoid perdition and set out toward salvation.
    Religions do not aim merely to answer the question about our provenance; all religions try in one way or another to lift the veil of the future”

    Just transpose the word ‘economists’ for ‘religions’.

    David > We were told that it was “dangerous” to even suggest such things because we might “talk down the economy”.

    The word ‘confidence’ is used so much these days that I’m starting to think it is the opposite of recession. But ‘confidence’ and ‘fear’ are two sides of the same coin. They are both based on a view of the future that is still firmly behind the “curtain”. Confidence is usually a trick and fear is often irrational.

    The future is unknown, and always will be. That is the nature of it. Ireland may well end up bankrupted by the banks by christmas. By the same token we may be reading back over these posts in a years time and wonder what all the fuss was about because everything turned out ok.

    In times of crisis, like the one we’re in now, more radical ideas get more credence than they would in times of confidence. Would a General Eoin O’Duffy have garnered any support two years ok? How much more would he get now? Radicalism, in all it’s forms, should be oposed at all times.

    Will Ireland default? I think the question should be, will Ireland be allowed to default? Greece will probably give us our answer by the summer. It’s is, though, a possible, but unlikely scenario.

    But David is right, the current borrowing level is unsustainable. Especially when the borrowing is to fund the national current account. Bit like the difference between using your credit card to do the weekly shopping and getting a mortgage to buy your house. The credit card solution is ok in the very short term, but sustain it for any length and you’ll eventually have to pay for all that eaten bread. Which will mean you will have weeks when you have to pay for your groceries twice, and only have them once.

    That is where we find ourselves, and the longer we continue to buy the natonal groceries on the credit card the more we will have to pay for them in the future. Cost cuts are never popular, but we have to take them. There is no option. The government giving itself a pay rise through increased taxes will only further exacerbate our problems.

    As for blaming for banks, I am starting to think that this may not all be their fault. Much as I would like to, I would be a fool to blame Mr. Benson or Mr. Hedges if I succumbed to lung cancer. There is a large element of ‘personal responsbilty’ that has to be taken by all of us. It is always a bitter pill to swallow, and so it is one we try to avoid. It comes back to my earlier point about radicalistion, it is easier for us to support leaders who blame others than to accept our own fair portion of that pie.

    • L

      Might be worth reading a bit about people like Thomas Jefferson and Thomas Paine. Although I am sure that you already have. Radicalism is not something that one should blindly oppose.

      In saying that we should hang in there with this euro business. The benefits could be great in the long run but will require serious belt tightening in the short run.

      One further avenue to explore is that we could use our exchange rate problem as a bargaining device within the eu. A yes vote to lisbon will improve our relationship with europe. It is probably going too far to suggest that we could reduce our corporation tax further but in this time of crisis we could have the opportunity for other bargaining moves in the areas of taxation, trade etc.

      We should not impose the costs of belt-tightening on the sick, the poor and other vulnerable people in society. That means protecting front line services in the case of healthcare. Yes some of the economics definitely borders on religion and we should be wary of those that use words such as cleanse and purge. Things will work out fine in the end if we make the right decisions.

      • Lorcan

        You are right L, all new ideas are radical by their very nature. Perhaps I should have describe the threat as a polarizing one. Any solution to the economic crisis will have to be inclusive. The downturn will be very democratic. Plenty of recession for all.

    • Deco

      There was a certain element of the “lemming” mentality in Ireland, to be true. But the way banks threw money at competiting bidders for extremely expensive prices in South Dublin was ridiculous. Bear in mind that the upbringing of senior bank officials, was almost prejeduced to the point where they beleived that a pile in Foxrock was cheap now matter how much paper was being transferred.

      And let’s face it – Irish Management in both the public sector and the private sector has failed !!!

  21. PaddyThePig


    Let’s sort out our ridiculous over-spending first, before we lose the run of ourselves thinking we should to go eyeball to eyeball with the EU. This cost-cutting activity will be of benefit to Ireland in the long run ; we will be a leaner and more productive country overall. Pretending that the EU should have sheltered us from ourselves, and then adopting the ‘Jackie Healy Rae’ school of economic bribery is not the way to go.

    As the taxpayer is now either directly or indirectly propping up our banks, an Bord Snip needs to morph into An Bord Slash, and go to work on the banks. I don’t buy into the supposed reform of one or two fatcats who have thusfar fallen on their swords, in disgrace. They are simply being replaced by others of the same ilk, on the same inflated money, with the same discredited attitudes. The banks as a whole need to slash their internal costs, to reduce the burden on the taxpayer. The Government, as custodians of these failed enterprises, should be forcing this issue.

    It’s not difficult. Cut costs, become productive, and start anew. This is what would happen in any other business, and banks and Governments are no different.


  22. The Eye

    Great point Lorcan we need to learn how to vote may i suggest you check out Carroll Quigley.

  23. Sarajane

    How can the gap between spending and revenue be closed while the Euro is so overvalued V sterling?.The result of this so far has been to destroy the labour market and push up welfare spending in a vicious circle.Quit the euro and exports and tax returns when combined with a spending freeze for 5 years will balance the budget.Otherwise, the economy will only survive through mass emigration .Nostradamus,he late Raymond Crotty was the chap who appeared on the Late Late Show in the Eighties who advocated defaulting on our foreign debt.The most prosperous nations in Europe are not part of the Euro.Think Norway, Scotland, South of England, Denmark and Switzerland!.The costs for services such as Doctors and Dentists is the highest in Europe.Like Cowen , Ireland PLC is hopelessly flabby.

  24. Philip

    I wonder would Dell stay if we created the NeuPunt and dumped the Euro? Say this currency replacement happened next week?

    NeuPunt would be 1:1Euro and rapidly drop to 10:1.

    Suddenly, Dell’s 7Euro/hr drops to 0.7/hr. Waterford Wedgewood output costs buttons. Cheaper than Duralex glasses from France.

    Input costs from fossil fuels would soar…but that drives the green revolution.

    Personal debt remains the same and if one member leaves to work abroad for a couple of years that’s paid off in jig time.

    Imports will be dear.

    PS can stay where they are.

    Those with the big money will flee for a while…but those low costs are mighty tempting…

    Poland & China would not know what hit it. :)

    OK…What am I getting badly wrong ? Input costs are a big issue. What else?

  25. Lorcan

    90 mins ago I thought that Ireland may be safe. Now, 90 mins into the future I read this:


    Cowen even mentioning the IMF has got to be one of his dumbest moves so far.

    Or perhaps it is a political one. If the IMF roll into town they will cut the PS to ribbons. But then, coming back to my earlier point, Mr. Cowen can let the IMF do his dirty work for him.

    “I’d love to keep the public service, but Mr. IMF says we can’t, not my fault though…”

    The confidence/fear index is getting loaded on the fear-side today..

  26. Looks like we don’t have to worry now as all the very nice junior ministers the group of ‘twenty’ well if push comes to shove they will leave their jobs for the good of the country , while they maybe doing nothing now these ‘loyal ‘ Men will retire also to the golfing greens to save us taxpayers a few Euro.
    What’s more scary is we are not out of janunary yet and while our political elite are still on their Christmas Holidays figures are coming into the general view showing us how messed up our fiscial sector really is.
    I was talking with a Kitchen fitter in Kilkenny last evening and he will let you stay in his Spanish small appartment for a week if you give him 8 grand for a fitting your new kitchen !… We are just over pricing ourselves .
    I will wait for the day when Ordinary tax payers stop playing the part of the cultichie fool with our heads in the sands

  27. The Eye

    Cowen will Go to IMF .. IMF we want terms and conditions my guess is goodbye ESB, Air Lingus, Toll Roads, Water all sold off slash public sector by 40%.
    One thing you can always be sure of Cowen has no balls and will afterthought his way to his pension.

  28. the mediator


    I have to agree with most of your comments – 4.7% is an extremely heavy premium to be paying for
    issuing Euro denominated sovereign debt. The big problem is the bank guarantee in terms of
    1. Its depth – the government overstepped the mark in terms of its willingness to cover all of the banks future liabilities
    2. Its width – including flaky banks like Anglo was and is the biggest problem

    Dare I say it David but unfortunately you may be fingered by some fools in the future bacause of your link with the above
    who don’t understand that you advocated it only as a 1st step.

    Philip, I too don’t see how we can keep our independent status, in my humble opinion
    this financial crisis and its attendant consequences have been engineered (allowed to happen) so
    that we and other sovereign states will find ourselves in the position of either giving up our sovereignty
    or becoming economic basket cases. See the following article for where we’re headed.


    If the people of Ireland have to choose between penury and joining the kissenger club I know they’ll go for the club.

    Another point David/fellow bloggers

    There are larger forces at work here than just economic. Economics are a tool which can achieve certain ends. I think David
    that if you start to look at the bigger picture then some of the seriously daft decisions which were taken in recent years by our government
    and their continued failure to take the solutions you and others have been proposing may not be so daft if the end they and their masters are
    seeking is considered.

    Example – Its almost impossible to imagine Lisbon 2 being rejected now…

  29. The Eye

    The Mediator…. this is a total set up its called economic warfare please refer to Carroll Quigley. Lets change the Irish Harp for the Star of David.

  30. alan

    Can someone clarify the following in relation to the government covering Anglo under the state guarantee scheme -

    If I recall correctly, the 1.5BN which the government initially committed to funding does not get drawn down until late January with the other two banks (if they need the funds) at the end of March?

    My point being, given what we now know about the scale of malpractice and the extent of a steaming pile of dung which this place is, is it not to late to step back from guaranteeing this specific bank?

    Were this possible, presumably the bank goes into liquidation (?) since it cannot roll over its own debt and the collective debt owed by the speculators / developers who owe it billions gets sold on at a discount to other international banks / hedge funds? These guys then agressively seek to recover as much as they can?

    Can the Anglo genie be put back in the bottle?

    • Malcolm McClure

      alan: ‘Fraid the genie probably can’t be put back in the bottle. Its a fair question you put, and it would have occured even to Lenihan by now if it were practicable.
      My guess is that all these dud loans are so interlinked through subterfuge loan escalation exchanges by all the Irish banks that, like Lehman Brothers, they all collapse if one goes down. At least this is how the picture has been painted by the bankers for Lenihan, it seems.
      It’s all smoking wreckage, not even covered by a tarp yet.

      Lenihan: Don’t nationalize. Shut down all banks as bankrupt. Pay depositors up to €50,000. After a week left closed for the shock to set in, invite backroom staff to retain their jobs by keeping the ATMs functioning. Roll all home mortgages into a mortgage bank. Roll all other loans into a Dud Loan Bank.
      Pay off creditors who loaned cash to the banks after the guarantee was established. To all other creditors just say “Go sue the debtors to the Dud Loan Bank”.
      After stability is established sell any assets left as a going concern.

  31. John ALLEN

    Anglo – bank executives who run their institutions into the ground ‘must be fired’ to help pull an economy out of recession says Robert Feldman / Morgan Stanleys in Tokyo Japan yesterday while speaking at Enterprise Ireland business briefing / he also called on them to be punished if they break the law and be jailed /
    lets foscus on that in the forum and the upcoming egm of anglo on friday

  32. Deco

    On the cover of the American Investor Magazine “Fortune” is a very interesting headline
    [Sending Wall Street to Jail - They took your money. They wrecked the economy.Now it's payback time ].

    Now, Mary Harney – any chance that you might want to push state policy closer to Boston, in regard to punishment of corrupt behaviour ?? Can we have the US approach to corporate law enforcement – with Neary and pals pulled through the courts ?? Or do you only ‘do’ American free market economics when it comes to the health service etc, but persist in sustaining the old boys networks, in Irish business.

  33. John ALLEN

    Anglo – Shares in anglo are rising that would indicate that inside decisions have been made before the egm and that the gov must already have decided to Nationalise the incorrigible bank thus bankrupting the nation forever by an extra €30bn at least .It would also indicate that there is no evidence of breach of company law that can be found for inspection and that maybe no policing authority will investigate if crime was commited outside the company law .PS pensions may now be decimating as we speak .

  34. Ed

    “Our national debt is extremely low” – the government loves to peddle that one, but did they not, in effect, flip our massive personal debt into national debt by giving that 100% guarantee – it’s the 1980s all over again, except, back then, we knew what the debt was – this time round, we have to take the word of some dodgy bankers to tell us where we stand. It would fill you with confidence!

  35. alan

    Shares in Anglo are down 15% to 28 cents today…

  36. @ John Shares in Anglo are Falling , must be your screen !

  37. John ALLEN

    Anglo – I was reading tuesdays performance in newspaper …lol

  38. Ed

    Colin, you think that more tax is the answer – property tax in particular. What about people like Michael O’leary, he’s paid high taxes on his earnings already – are you suggesting that he’s to be taxed again and again because he bought some farm or other. Taxes are fine if government could be trusted to spend them wisely, but look at where we’re at, after unprecedented revenue intakes.

    To quote Churchill – “We contend that for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle “

    • Colin

      Michael O’Leary is the exception, not the rule. How many Michael O’Leary types are there in Ireland?

      Can we go with the principle that those who benefited from Celtic tiger years should stump up for these tough times we find ourselves in now- not those who weren’t able to afford their own home.

  39. g

    I find it the greatest of ironies that the man calling on us to do our patriotic duty is a senior member of a political party which has all but destroyed the Irish State. I am certainly one of those looking at sunnier climes. We, the people, have been utterly failed by the government who have proven themselves incapable of running a relatively young democracy. I was not one of those who bought countless properties, although under pressure from my peers to ‘get on the ladder’ (what lunacy) I resisted because I knew the bubble had to burst.

    The bubble has yet to really burst. Money men and agents are talking up the housing market, listen to RTE radio one this morning or offering shameless incentives as in Co. Wicklow, but like King Lear, these very same people who fuelled this madness, refuse to fill people in on the reality – the game is up for all of them and especially for those who bought big. But then its always been hard to convince people of something when their salary depends on them not understanding.

    House prices are sliding now but depsite government and other efforts to keep the system inflated, they will crash in 6 months time once the full consequences of what has taken place in the Irish banking system, the global credit crunch together with rising unemployment become clearer. This system was unsustainable in the good times not to mind now. The tower of greed like Babylon itself will come crashing.

    After the smoke clears, from what will be the greatest debacle ever to hit the State, we can truly do our patriotic duty and dump out Fianna Fail for at least 40 years and build ourselves a new Republic for all the people and not just the greedy few.

  40. Paul

    “Some day a real rain will come”

    Here is hoping, that when the smoke does clear, we have changed, and gotten rid of the “cute hoores” who only look out for their cronies, and that tribal “to hell with the rest” attitude will be gone from politics. We may even be able to call them Public Servants again.

    • g

      the self-centered approach, me over everyone else, is probably the greatest example of the anti-democratic, profit over people approach adopted by the business elite in this country, and a central tenet of western capitalism in its current form.

      the business elite grew rich screwing us all, threw charity fundraisers for people in third world countries who we will very soon resemble and now cry poor mouth or seek legal loop holes from paying back what they borrowed. what a world.

  41. Deco

    Another one of the PIGIS are in trouble…
    Note the similarities between IRL and ESP.
    Housing crash. The Euro. The ECB. Idiotic politicians staging one PR stunt after another. A media that seems to be ignorant in economics. A low debt ratio to GDP, that is now sliding in the wrong direction. Leveraged households. Over-leveraged banks. A shrinking industrial base. But in fairness the Spaniards have an agreeable cost of living – Ireland has this this bosses of IBEC/ICTU endorsed Economic Rent Infrastructure nonsense. We are apparently one notch above Spain. This equates to three weeks behind them in the slow motion trajectory of disastrous events. The writer blames the Euro, when really the fault lies at the politicians were found out to be both economically and intellectually challenged. The Euro is not really the problem – the problem was that certain politicians welcomed reckless lending, as evidence that their were economics Einsteins, and started lecturing the ungrateful masses. We know now, that they were economic dunces and pretenders. (as was GB in GB !!)

    Maybe we should have two Euros – call the first the EuroMark (because “Guenther” will be it’s main backer). And we can call the other the PIGIS-ManEURO ? In honour of the wasteful bigmouthed reckless politicians who got us, and our fellow PIGIS members, into this mess (you know Berlosconi, ‘Bertosconi’, Zapatero, etc..).

    It is extremely likely we are now heading to a mini-Budget, before 1 February. Which is well in advance of my original forecast of a budget before April Fools Day 2009. Things are happening very fast. There will be massive hikes in things like car tax, petrol tax etc. for the Greens. And a property tax (that will not apply to unfinished developments -because FF can’t “bite the hand that feeds”).

    I have a suggestion. Reduce the toll road fees. Reduce public transport fares. Reduce the cost of government services.Throw the Competition Law book at entire protected sectors of the Irish economy, like the professions, and various self regulating industries. And start to prune the hierarchies within the public sector. And cut the salaries of what is left. Leave the lower two ranks in exactly the same numbers as presently exist. The public sector is both overmanaged – and badly managed. And we need to put an end to the nonsense-and liberate the people there to actually work, instead of having them restrained by nonsense.

    This would act as a stimulus to the competitive economy, would reduce the tax base, while simultaneously fixing the public finances. It would be the type of measure that would keep the multinationals here.

  42. Josey

    Buy gold, buy gold, buy gold…….

    • the mediator


      In practice it is not that easy to actually buy gold and to take delivery. Also it is only an option for those with a lot of money/wealth
      not for people with a few grand spare

      also in the event of a breakdown gold is too valuable to be tradable – imagine going into a shop with an €800 note to buy bread and milk.

      if things are going to be that bad you’d be better off storing food, energy (diesel or kerosene) etc…

      • Josey

        actually it is that is to take delivery of Gold…..go to gold.ie where I bought it, you can get coins in 1 ounce, 1/2 ounce and 1/4 ounce weights. So these smaller sizes are easier to trade.

        As for a total break down…….God forbid, yes Gold might be useless and yes storing food, growing food in our back gardens will be necessary, I think it would be prudent to plan for worst case scenarios.

        I know this might seem OTT and negative but when you are prepared mentally you can start making improvements.

        So in the event of hyper inflation a la Weimar Republic, Gold is at least a safe haven, if not it’s merely a good investment……..”as good as gold”

  43. g

    from today’s irish examiner, quoting dermot aherne

    “We can’t go on spending the way we have been spending – we have to cut our cloth to suit our measure. At the risk of being unpopular we have to make decisions that will sustain this country for the next few decades,” he said. ”

    it’s interesting that they can make these kind of decisions and yet they refused to control the banks with their out of control lending and investing, refused to cap house prices at realistic levels, refused to restrict developers who are sinking the country with the debts they can’t pay back, so the government play is a massive role in what they allowed to happen and now we (the PAYE worker in particular) have to pay – it is ludicrous not to mind outrageous.

    Furthermore in the US Obama is giving the middle class (which includes the working class) a tax break, he is also pumping money into building programmes etc to reduce unemployment and stimulate the economy, our government has increased taxes and is cutting spending!! Do they seriously think that people will spend if their taxes increase, I will cut back much further if that happens, and if the tax increase is considerable, I will book a one way ticket off this insane island.

  44. Furrylugs

    Looks like the Boys across the water get their ideas here.


    DMcW will have to write a little red book soon.

  45. brian


    Earlier today you made a point about the Bankers pitching up for the corporate suites at Lansdowne Road, I may appear naive but what is the real value of these boxes, nobody left for the boys to be “courting” once the new stadium is ready.

    At least the people in the ground can express their love to the bankers once the Daily Mail or the Sunday World point out the respective boxes.

    Sure the boys will all be at the hurrah hurrah guffaw guffaw at each other over whose box is bigger, like the way they use take out full page adverts in business sections showing off all the Monster Debts , sorry deals they were winning from each other.

    They dont seem to do that anymore , so what do they do in these Corporate banks now ?

    Will they first out the door , as is happening at Barclays Capital in London ?

    Must be strange for anyone under 30 working in a corporate banking environment, left college at 21 and have had 8 years of gravy, only known big deal after deal, bonus after bonus, promotions, apartment, then a house, maybe another house and an apartment in Bulgaria.

    Living the dream….

  46. Barry

    Once we agreed to Loan guarantee for Anglo-did we not then have to bail it out? If it fell-are we not now liable for its loans??

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