Could 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!
There is something somewhat innocent about the comment on FF. At the end of all this you will find that most of you will be gone to Oz/SA/NZ or the UK and FF with its support will still stand. Dislike of FF is colouring useful economic Irish comment. You are making it way to easy.
The angsty, when/if we were in control BS, plays to every FF reader of this blog and confirms exactly the why FF. Every so often, moral, spits itself into someones comment, and continence fairly soon.
When will the clear eyed idea of a State, with fingers closing to a fist.
Isn’t it absurd that the myth still abounds? The unattested assumption in the government-led-media-spin that all Irish people grew wealthier during the boom? That all Irish people were “drunk on property”?
{Luckily, I did not accept the spin – I still drive the 1997 car I bought in 2002 ( and it’s still running perfectly and I do not care what the neighbours see on the reg. plate!)}
Most ordinary people did not do this : they just carried on living, even though their purchasing power dropped as profits rose and, so-called, “pay-increases” remained beneath inflation while “extra productivity” was delivered by employees for these, so-called, “cost-of-living-increases” (even though they were not in line with inflation!).
Most people simply plastered over the cracks of their drop in purchasing power by availing of cheap credit – borrowed money.
Then, the cheap money rose in price with interest rates.
Then, the money-lending dried up.
The cracks appeared when they could no longer be plastered over with the cheap, borrowed money.
But the borrowed money still is owed and must be paid back to the lender………… ooops!
CRASH!
…. and Lisbon 2 should still not be passed: Articles 113-118 (or so) promote the free market model of privatising public services across the EU – could have been written by Mary Harney, it is so much in favour of it.
This model has FAILED.
Its a shit model alright, the fundamental issue with nationalised organisations though is (yet again) cronyism, muppets given sweet jobs despite having little or no track record. Is there a 3rd way?
agree, but we’ll have to create something between the two, we as a species and the planet as whole are depending on it because the road we are currently hurtling down will end in destruction.
VincentH, your so right – now that the country has serious problems they’ll be even more determined to keep their place at the trough. In fact, when all you dissenters have gone, they could even edge towards an overall majority – just like the 50s, they’ll decide who works and who emigrates. The PS has always been their constituency ,so watch their hesitation to implement any cuts in numbers – pay possibly, but numbers only as a last resort. Remember all the reforms that we were promised and all they did was expand it further.
David,
I’m confused. Finfacts and the Irish Times are reporting the cost of last Thursday’s bond issue at 4.07% ; is 4.7% a typo, or am I missing something?
Colin, silly suggestion. Lots of PAYE workers are trying to finance their homes, and would be badly penalised under your scheme. A taxation scheme on investment properties though, scaling upwards according to the number owned, should be considered. It’s a pity your primary reaction is to lump more taxes on people, especially on their homes, instead of cutting costs. And no, I’m not a farmer, and will not be inheriting wads of cash.
Paddy.
With interest rates falling, homeowners have more money in their pocket every month. I can’t see interest rates rocketing for a long time yet. The money is there for property tax. You could have a threshold of 1500 sq feet, where homeowners below that size don’t pay a cent, then use an increasing scale for larger house sizes. Let’s get the trophy house owners paying their share.
Also, its important to reward the prudent and the poor who for one reason or another didn’t buy property. Let’s create a new culture where owning property is not the be all and end all of irish life.
Let’s bring down VAT rates and Income tax for those earning less than €100,000 with the introduction of Property Tax. What’s silly about that?
Wages (and benefits) are also stagnating, and falling for many workers, offsetting interest rate falls – that’s if they hold onto a job at all. Many people won’t have the money to pay your tax. I’m also sure there will be thousands of hard-working PAYE workers in homes of greater than 1500 sq feet, who don’t deserve an additional tax on their home. People with a home of 1490 square feet will pay nothing under your scheme. Those who don’t own a home, but who do have other assets, would pay nothing at all.
On a philosophical level, I also disagree with taxing a home, which (despite it being grossly abused during the Celtic Tiger years) is a noble and good thing for people to aspire to, and invest in. Investment property is another kettle of fish ; it should be taxed, if only to incentivise against the pricing out of first time buyers. Also, in a true meritocracy, we should not penalise people who achieve genuine success (though not the sort of bare-knuckled ponzi scheme we have fostered in Ireland in the past 10 years) who then choose to invest the fruits of their success in a family home. Bad idea.
Also, have you costed your proposed VAT and income tax reductions, especially in the light of the current defecit? I doubt it. How much would you collect from your property tax, how much would you forfeit with your VAT and income tax concessions, and how would this affect the defecit?
Paddy
It is precisely that attitude of needing to own your own home that helped cause the property bubble.
Please read today’s headline in indo regarding mortgage savings.
On a philosophical level, why not extend your argument of not taxing good things to everything that is good? Why stop at bricks and mortar? And why are your own bricks and mortar good?
People who didn’t buy property are worried about their jobs too. Does this mean their rent should be lowered?
As for 1500 sq feet, its flexible, ok, try 1750 sq feet threshold.
Regarding costings, ahem, the dog ate it – but please refer to my answer at the top of this blog.
It was the indiscriminate expansion of credit that contributed to all asset bubbles, not just the property bubble. The desire to create a home is healthy, and should not be subject to penalty (certainly in a healthy and sustainable financial environment). Ireland, sadly, in the last 10 years, abused this principle, and instead transformed it’s housing market into a casino (which is why I suggest your idea would better apply to investor properties).
On the philosophical level, if two things have to be taxed, one providing a necessity such as a decent home, the other being something more that is not essential and is frivolous or vain, and both provide equal potential returns, it is better to tax the latter. If you don’t think having a stable home is a good thing, fair enough ; though your concession to sub-1750 square feet houses makes me suspect that deep down you know that the creation and investment in family homes is actually a good thing. It fulfils a basic need for shelter, and provides a solid base for both the family and the individual.
Rent is subject to market forces, as are house prices. Both are falling.
You haven’t costed your proposal. Just as I thought. You have no idea how it would integrate with the financial position as a whole. If you did this, and gave more considered thought to what truly merits financial penalty, your ideas would have greater credibility – at least in my eyes.
Paddy.
Paddy, your family can shelter in rented accomodation also – ask the Germans about it, it seems pretty dandy to a lot of them.
You are confusing pride in owning your own home with shelter for your family. The two are not the same.
Lets talk about principles before the nuts and bolts of costings. Less of your egotism also please.
I might think owning a nice armani suit may be a good think, and by your logic, I should not have to pay VAT on it because I believe its a good thing (not frivilous in my eyes). You do not decide what’s a good thing or what’s not a good thing.
Colin, it was you yourself making value judgement of what is a good thing or a bad thing (by negatively judging the desire to own a home) , and lamenting the fact that people weren’t buying into your ideas. You hadn’t thought it through, and you haven’t a clue what they’d cost, or what their impact would be. You seem to be hell bent on taxing homes, mostly it appears out of self-interest than any public or social interest. Quite ironic you accuse everyone else of an ‘I’m alright Jack’ attitude.
If a person wants to rent a home, fine ; but you know, I wouldn’t dream of penalising them for it. If society’s needs (and not your individual needs or mine) are truly better served by everyone owning an Armani suit or a Ferrari, ahead of owning a home, grand, I’d cut the VAT as you suggest. I’m all for the common good.
Paddy
Paddy,
Getting Irish people to consider introducing property tax is like asking turkeys to consider voting for Christmas. I’m happy with the reaction I’ve got so far and to be honest, it hasn’t surprised me.
My interest is not self interest as I do see myself buying my own pad in the future and will be quite happy to pay property tax on it as I’ll consider it fair. The jist of the idea is in taxing large homes in wealthy neighbourhoods more than small terraced housing in Moyross. I believe its fair, and revenue raised could mean those on average incomes pay less income tax and everyone pays less VAT. We’ll have to agree to disagree I suppose.
This forum is as much about ideas as numbers, therefore I reserve the right not to trawl through the number crunching.
Just one last point, cheap credit was available, I agree, but did Bertie Ahern or your local Bank Manager personally call around to you and put a gun to your head and tell you that you must have your own property and must take out a mortgage?
Now, where’s my keys for the ferrari?…. I must have left them somewhere
Colin,
Something you might consider. The Irish interest in owning a home is not necessarily a bad thing ; a population with an interest in making a home would be healthy, certainly in a responsible and sustainable economic environment. The real issue for me was actually the obsession with making quick and easy money, fueled by a reckless and now bankrupt banking sector, found an outlet in Irish people’s desire to own a home. Even if your property tax was applied, and Irish people did not have this interest in owning a home, the cheap and easy money available would have found at outlet in some other bubble, in some other asset class.
For my own part, purchasing my own home was actually the best investment I ever made. Not so much from a financial point of view, but from a ‘home’ point of view, where I was able to invest time and effort in something that belonged to my family, and where I spent the majority of my time. It certainly beat the hell out of living in over-priced, and under-maintained rental property. And that is the point I was trying to get across in terms of taxation ; basically that I considered the creation of a home as one of the more positive things a person can undertake (regardless of scale), and that I felt it should be not be discouraged. Actually, under your scheme I would pay nothing, so my reservations were not based on my personal financial situation.
Which is also why I emphasised rental property tax as a desirable disincentive to investors, who in purchasing rental properties, frequently price first-time-buyers out of purchasing their own home, usually motivated by greed and self-interest.
Those who check out my comments here from time to time would know Bertie any myself would not exactly be cut from the same cloth, to put it mildly. Ditto the bank manager, though I did go a begging to get a mortgage once upon a time – thankfully before things got way out of hand – so I suppose I should be somewhat grateful for that.
We’ll agree to disagree as you say. Good luck with the house ; if you’re lucky in a few years, it might cost less than a Ferrari.
Paddy.
Lads, BBC2 NI right now, has a documantary on Lemann Brothers/”The City” – maybe hit the record on the old SKY Plus so you can cover both it and Primetime?
heard by all accounts that the BBC documentary with Evans In the City was excellent, part 2 next week
Dear David,
If we were to default on soverign debt, where for examlpe would this leave a humble saver with Post Office Saving Certs, which are Government Guarenteed?
Greatly appreciate a reply,
thanks
Max Keiser
I have just watched Primetime. I wish I didn’t.
We hurtled through mind boggling statistics disguised by jackanory graphics to set the scene. The Bard would be horrified.
Miriam O’Callaghan dismissed an accelerating George Lee with a throwaway “the last thing people want to hear is another economist” – not a quote but it’s what I heard. George all alone with no other heavyweights. You know to whom I allude. One FF apologist auctioneer from Cowens back door, yer man from the ESRI trying to say they forecast it all (George wasn’t impressed) and a sensible person trying to talk reality about the indignity of being thrown on the dole.
The first half went to the dressing room with the expectation that DMcW would appear to shred the situation with customary home truths.
No such luck
We were obliged to digest the aspirations of some (allegedly) fortunate bright young things who were going to save the country and a twittering humanoid exhorting positivity.
Give me this blog any day.
I seen that alright. I regard the entire episode as a piece of spin. { well….yes…..clehury…we ohr in a recession…but is there any positive news out there ….}. Miriam let herself down badly. George Lee mentioned cost problems in the Irish economy, and nobody else seemed to even notice….the ESRI dummy was no use to the discussion….reminded my a bit of Neary….though nobody could be as arrogant as Neary.
Things I learned as a result of the program.
1) Portlaoise is the crossroads of Ireland, and it is banjaxed. In fact it would seem that the Midlands is particularly banjaxed. The good news is that all those unemployed people now have to compete with rich bank careerists for a bailout. And it seems that the bankers get whatever they want.
2) A lot of people are eating humble pie, because they joined in the Lemming rush. There are people who could not get themselves into enough debt fast enough-like yer man from PortLaoise with the flatscreen TV, latest hi-tech. And then he had to cycle to get the welfare. And he described himself as a “member of the Brian Cowen fan club”. The thing is that people are free to choose their level of scepticism about authority. If you beleive in authority, you get made a complete into a loser in life. You are a free citizen, and can choose what to believe as fact, and what to regard as horse-manure. Maybe now people will work their own intelligence, and stop thinking that something has to be fact, because it was described as fact by The Irish Times, Ryan Tubridy, or TV3.
3) The “Framework” is just a PR stunt. A kind of a promise list to everybody.
4) Nobody will face up to the cost issue. Or anybody that mentions the cost of living problem here gets quickly shot down on public television.
5) If you lose your job in construction, then you need to move up the value chain and try R&D.
6) An auctioneer in Portloaise thinks that farmers, trying to make a living from cattle are going to be the floor in the property market. What if they have no savings, and cannot get loans ? Really the said auctioneer is only concerned about his own income stream. Making a living from having sheep graze land is much tougher, than shoving a brown envelop to a local councillor. This means they won’t buy the land until it is at rock bottom. There is a labour shortage in agriculture. Young people left it, to become plasterers etc.. And now like every other sector involving manual labour, Poles and Lithuanians get the jobs, because they are more serious about their work.
7) Lots of people on government pay, who hold titles is fancy quangos, are extremely keen that young high tech graduates entreprenuers try to start up new businesses. This is the R&D strategy. They won’t do it themselves. They seem to talk about it as if it was as easy as buying an apartment in Naas in 2006 with no deposit. They never mention all the failed dreams along the way. Or of the fact that Ireland is an expensive country to run a business with rates, regulations, high ESB, etc… exactly the types of charges and stealth taxes that keep all the quango suits in high paid BS producing roles.
8) No mention of the banks role in causing the mess, except by George Lee. Which probably means they will be lobbying to keep him off the next show. And he was stopped by the ESRI when he was on his rant about the banks. Are the ESRI there to divert people’s attention away from the banks ??
9) It seems that it is totally acceptable to be an architect or a plaster during the boom, charge the highest rates in Europe for your work, and then splash out on drink, 4WD jeeps, and horseracing, etc.. When they run out of money, go find somebody else to blame. The government are to blame for some issues. But personal responsibility seems to be a foreign concept. Until we have a culture of accepting personal responsibility in how we contributed, went along with or were complicit in all this BS, we will be incapable of fixing it.
10) Losing manufacturing jobs is a serious concern and is draining the life out of our towns and cities, much more than the latest retail therapy centre will ever fix. It would seem that in the leafy suburbs nobody cares. Yet in towns like Portlaoise there is just this disintegration. Coughlan is not up to the job, and must take responsibility, along with Harney and Martin for the disintegration of our manufacturing base.
11) The government are not available for comment.
12) Auctioneers are still trying to lie to us, still providing a positive spin. They still think want people to think that what is good for the property market is good for the economy.
I think in the context of your articles, and your analysis, that you should have been asked to attend, David. There are massive similarities between the debates we seen tonight and the 1980s. Only back then people were far more modest. We seem to be caught in the same quagmire with regard to letting the bad parts of the economy disintegrate, and being resourceful with the good parts.
Irish cronyism will prevent any recovery.
“Irish cronyism will prevent any recovery.”
Only if we let it Deco.
A young Post PHD researcher I know lost their contract in an Irish university and was snapped up within 24 hours by an Australian one. Knowledge economy my arse!
This person works in a key area and lectured all over the world. All their funding was pulled and they are now lost to the economy.
Who knows how many jobs or innovations would have come out of it.
Instead we are minding shitty little E-Voting machines for no good reason and giving Mister Beverly Flynn money to rule over Castlebar. The list is endless and it makes me sick.
We should be more angry and Cowan and his fat mates should be out on their arses and living on the street.
We are in deep shit and the vast majority don’t even know it. Its very sad. we have been telling these losers in power for years and all we got was to be told to go and commit suicide. Ahern should be made to attend the funeral of EVERY person who takes their own life because they lose their jobs or get snowed under and can’t take the burdon of their Fianna Fail sponsored debts.
We need an election and we need one NOW.
All of us in our own way in contributing to this blog are angry “b”. We try to contain ourselves and put forward seasoned arguments. We even learn to tolerate or understand diverse intellects such as John ALLEN fot the good of free speech. Generally speaking we limit our comments to expertise or personal experience. You are obviously a passionate man and a lover of Ireland. That is to your credit.
I would respectfully ask you to refrain from generalising topics and in particular suicide. Mr Aherns faux pas will come back to haunt him but those who have had personal experience find it a traumatic subject.
In our (amateur) analysis of the economy, we must be mindful of the passing reader who may be seeking positives.
Not a lecture, just a word to the wise.
With Respect.
Having being profoundly affected by suicide myself I take the criticism. I would however like to highlight the pain that people are going through and the difficultes they will face with monumental debt and no work to service this. Services are being cut or have never been provided and I feel that the people who need it the most will not get these services be it counselling or whatever. Think of this when we give 1.5 billion flippantly to Anglo Irish Bank.
Suicide is a profound call for help. This help is not being offered to individuals and their needs and voices go unheard.
I have also been profoundly affected by corrupt individuals in Ireland going back to the 1980s. These people crop up again and again and again and are untouchable. There are things I cannot comment on that I won’t comment on but I have seen more first hand than I let on.
I don’t think that there are positives to be had out of this. We have been well and truly had and I am afraid that what is happening now is the result and not the cause. The cause was the 12-15 years of reckless lending and Government spending that was encapsuled by the attitude of the then Taoiseach when he made his ill fated comment.
I think Ahern, the good Catholic he leads us to belive he is should atone for his sins and be made meet and see the pain and trauma his lunatic policies and pretend prosperity brings to real people in real lives.
As for calling contributors to this blog amateurs I would point out that the professional MBAs that ran Anglo, GM, and Wall Street ran them all into the ground so I have no time for so called experts.
We have to get real. We have to bite the bullet and we have to get answers. We are getting an almighty kicking and it is the perception that the ruling class do not seem to care nor seem to want to bear responsability for their actions. The damage was done from 1997-2007 and the recession is the lancing of the boil not the cause of our woes. The time to step up to the plate was when the money was flooding in. Now is too late. We had no leadership and they derided and poured scorn on talker downers.
I am sorry if I offended. I appreciate the feedback.
b, speaking for myself, you didn’t cause any offence. i enjoy reading your entries like everyone else i’m sure. nothing wrong with writing with passion about what you believe to be the current state of the nation.
keep up the posts with that sprinkling of humour you throw in.
that was an appalling comment by Ahern and is worth remembering to my mind, i think people are able to discern that the writer was offending anyone.
what we need now is passion and a memory and the will to act – a new political party should be formed on the back of this dreadful economic and political experience, put the frustration to use and create a new Republic, the French did it 5 times, I think its worth a try, out of the ashes of this year something new may come, but the politcal, private school culture will have to change radically or we will be back on a similar site years later talking of the lost opportunites of 2009.
whatever frustration you may have about Beverly, Bertie, Cowen or Coughlan, they all went door to door and got themselves elected, it isn’t neurosurgery, you knock on doors, present your platform and hope to get elected. Only way to resolve this situation is to do likewise, otherwise all this is just people venting.
As the man said ‘the best lacked interest, the worst were full of passionate intensity’!!!!
wasn’t offending anyone (apologies)
excellent, concur with all your points, rather than pointing the way out, we need a deep analysis of all those who got us to this point so this thing can be sorted and not repeated, those in power would wish us to move on quickly because they are so culpable. we had our own ‘Lewinsky’ with a Taoiseach too busy preparing for Tribunals when he should have been diversifying and protecting the economy – don’t tell me the mandarins in the Civil Service hadn’t produced a ministerial dossier entitled ‘Subprime crisis to strike Irish economy’ or ‘Multinationals to upsticks for lower wage economies’ – the dog in the street could have seen this coming and yet we hear the bullshit language ‘no one could have predicted this’. Our economy was all about the quick, sneaky buck, an economy like the old house of cards cliche which got blown away from world economic realpolitick, it was over extended, drug on debt and we got nailed. I don’t want to hear any more sanctimious criticisms of the US way of doing business, because we followed exactly the same line but unlike the US we don’t have 300 million people nor the ability to borrow billions to get ourselves out of this, we have no industry and no leadership just a dependent economy run by overweight solicitors and accountants who inherited their seats and propped up by people who don’t think about anything but their broken footpath and bad pint.
I too watched Primetime, and feel that the ‘self fulfilling prophecy’ that is now our economic disaster must inevitably end as David predicts.. I am very nervous.. Should I remove cash from the bank?
Don’t panic yet Diletta but keep logged on here. There’s some smart lads and lasses weighing up the craic all the time.
Furrylugs, hear, hear!
I found it painful to watch. George is one STRONG character to keep doing what he does, knowing what he knows about what they are always gonna do to him!
He struck me as more animated, more urgent, more vehement tonight, than usual – I am sure that his voice jumped an octave on a few occasions while trying to bring some rationale to the table.
No-one in the studio was listening.
A gang of the usual “plants” on both panels; with George not excluded from the show only because it would look really dodgey if they did not include their own, RTE, Economic correspondent.
I got the impression that at last he had a platform. Big striped suit, good shirt but spotty tie. nevertheless, we just wanted a lightweight little chat, didn’t we Miriam. Miriam used to be lethal across the water but like everyone else over her, the system has got to her. Mark Little should apply for the Seoige Show.
here here, appalling from Little, but no surprise there, his books are woeful and to his utter disgrace he took on Noam Chomksy in an aggressive and confrontational manner in 2006 and looked like the kid he is.
I suspect Lee is just exasperated that the stuff he has been saying has finally come to fruition, moreover, to hear the real estate individual talking up an appalling situation was the last straw for ‘the lone voice in the wilderness’. Lee was just getting going when O’Callaghan slide tackled him – appalling but then no surprise there, this is the same person fawning over Bertie in an interview on her show, saying the women were lining up with their phone numbers for him – no conflict of interest there. Typical RTE moral outrage now, moral cowardice for as long as I am alive!
Tim, I agree.
I think Prime time was a waste of time. The country is in an economic crisis and RTE present a programme, which, in my opinion did not reflect the extent of the problem or the urgent need for strong leadership and a strong economic plan.
George Lee was very good, however, he didn’t get enough time on camera.
@ Furrylugs But isn’t Miriam worth her two grand a week clothes allowance ? Surley , I thought the cartoon for u tube was in a way , some parody from RTE’s present position , there Gravy Train is pulling in too , now where did I leave my Tu Wan Chi Code ?
Nah.
Give me Sharon Ní Bheoláin any day. Real Queen of the Dead thing going on there with the wardrobe.
Furrylugs, By the way ……. the bright young man (I’m sure) depicted in the report with the computer/virtual reality/animated doll is onto a looser, unless he does something very different. There is NO use for what was demonstrated tonight. I watched an episode of “Dragons’ Den” (the REAL one!) a few months back where an entrepreneur brought something similar to the dragons, seeking investment – they blew it out of the water.
Good use of technology, but no commercial benefit.
Do the researchers at RTE not even watch their competitors’ programming on BBC? Did they miss this? Were they too stupid to see the connection between the two pieces?
Are we paying peanuts to monkeys in the lower echelons of our “Public Service Broadcaster”?
….. or ….. do they think that the rest of US are monkeys?
Little service done for the public by tonight’s broadcast, apart from George’s contribution (which was not permitted to be “fulsome”).
It seems beyond the reasoning of the ‘experts’ in the ESRI, etc.. that it is cheaper, and of more use to society, to keep an existing job, than to try to start a new one from scratch.
Once again the young are encouraged by safe lazy people in 45-60 age bracket to take risks, and apply themselves. So that they can be taxed with PAYE, PRSI, rates, charges, etc.. in order to sustain what Shane Dempsey called the “veneer” of the Irish economy. This is continuation of abuse of a generation. It is absolutely sick. Once again an attempt is made to use young people, and exploit their naivity at the was the entire system in Ireland (both public and private) is rigged by hierarchies of cronies and lazy useless careerists – who hand out advice to the younger generation.
Yeats was right when he said that Ireland was a sow that ate her own farrow !! It happened in the 1950s, with people sending the money home to their relations, and now in homeless in British cities. It happened in the 1980s. It happened during the boom, in Deckland. And now, we are getting ready to see it again.
Have a good think about what you have just quoted Deco because you have just spelled out what is cyclically wrong in this Republic. Occasionally some contributor here hits the nail on the head better than out host and that Yeats quote just about sums up the malaise rampant in this country.
Good man.
Joyce was the one that wrote “Ireland is the sow that eats her farrow.”
/pedant
maybe the machine that produces hot air will save the nation, there is enough of it in the Dail to power the world’s economic grid!!
Tim,
I can only refer you to the Monty Python sketch about “The machine that goes “Ping”>
http://www.youtube.com/watch?v=arCITMfxvEc
Furry, thanks a million for the gift….. I have been a fan for many years and love that clip! Everyone should see it – antidote, in a way!
This must be how the Health Service Executive is run – In fact FF politicians would probably consider this scenario a model of efficiency.
Any more reaction and I’ll start up the “Ping” party.
Welcome Robert.
The HSE is the bggest quango going. It is managed like a big organization for patronage. Prof Drumm is surrounded with cronies. It seems that many opportunites were created to create new layers of nonsense, so as to push problems away from the people at the top. The HSE has a head count that consists of 17% management. (we can only assume that it costs over 35% of the total wage bill of the HSE). It is both over managed, and badly managed. A case study of how not to run a health service. It is loaded with nepotists. Nobody is accountable for anything. Then there is the PD element in the HSE – with PD appointees popping up everywhere in the HSE – except at the front line, where they might be actually of use.
We need to rationalize the entire hierarchy of management in the HSE. The nuns did a better job running the health service, and they only had one layer of management. [which reported directly to the local authority]. If we did this, we would save the taxpayer a fortune, without any drop in frontline services. Why is this not happening ???
@ Tim well if you were not out doing two jobs and spending so much time here, you would have noticed before this evening that RTE is simply a badly run P.R. for F.F. ,..they got the Britts out so are hardly going to watch their television , not a very republic thing that would be … as for SKY , now there is One Massive Con
Brendan W, that’s true …….. but if I don not try to dip in here as often as possible, where would I learn anything about the reality of the situation.
I will admit that, although I have read this site for a long time, and only recently started interacting, I am spending too much time here; however, I cannot find any better way right now, of trying to “bi ullamh” so that I can protect my family than working hard and keeping up to date here. It’s my duty as a husband and father. I will make it up to my family later, when we are safe.
we need an independent media along the lines of Democracy Now with Amy Goodman (just google it)
To be serious for a moment Tim, I was asked to evaluate a seedbed company once. Not too long ago. There were two really hot IT lads and their mate who had a really dominant personality and not much else. He proceeded, without much aplomb, to insist that his particular GPS innovation was cutting edge. he had believed all the waffle he was told by so-called enterprise angels.
When I pointed out that GooGle was providing the same service in the US, shortly to arrive here, fuses started to pop.
As with the lad with the wiggly doll tonight, we need the Duncan Ballintines (Or O’Learys) of this world to boost business. Not the inane clowns we’ve allowed to rise to the top of the cesspool.
Anybody with any talent in this country – ends up having to go elsewhere to be taken seriously. Willie Walsh saved Aer Lingus, and Ahern disposed of him in a real nasty fashion. Because people were begining to say – we should have Willie Walsh running the country. Now WW is running British Airways. And Aer Lingus is fighting off a takeover bid.
This country has produced people of great ability. People of great position, and mediocre ability, have been extremely successful in driving them out. They represent competition.
Christ said it best ‘a prophet is never appreciated in his own house, among his family or in his own land’ – those in positions of power and privilege from the local town to city, solicitors office to Taoiseach fear those who employ their brains for the betterment of the people – they see a threat not an asset. First hand experience of it. Remember what Bertie said about Walsh and co about being motivated by profit……..hmmmmm…….and the bankers?? the heads of Aer Lingus, FAS? All socialists like Bertie himself I suppose
Gait analysis. If you can do it with the doll you can do it with a person. In particular a person with a physical disability in order to analyse the movement and set out a physiotherapy course to build up muscles to compensate. One example. Yes, his doll was a noddy example. And he might make more money selling it as a toy, close to chistmas (perhaps Pat could feature it on the late late toy show?).
Any idea has possibility, the key is to have the creativity to come up with and explore the possibilities, and the gumption to keep going after many many dead ends.
Furrylugs, agreed. But, you know what bothers me most about all of this? (not just that element of the show).
They are becoming even MORE brazen; they are becoming even MORE insultingly condescending in their “spin”; they are, at this point, saying, “Yeah, we are lying to you – we know it and you know it – so, what are you gonna do about it? Huh? NOTHING! We thought so!”
Rats in a barrel Tim, have only one way to go.
Maybe, furrylugs, but I remember, as a 10 year old kid, growing up on a farm, learning how to stick a pitch-fork in the rat in the barrell of grain. The rat used to squirm and bite the prong of the fork – then he died.
I have worked all my life – not gonna stop now.
I have seen tough times before now – will probably see them again, after this one.
Resilliance aside, we have to figure out how to stop these people from hi-jacking our lives and our children’s lives.
We know that they are doing this ……… we just have not found a way to stop it, YET.
Must be time for bed. I just got a message that I’m posting too quickly, slow down.
Right, slan libh. Back on message tomorrow morning.
Oiche Mhaith.
Furrylugs, ….. agus codhlagh snamh!
Sleep swimming??
play on Samh ….. we used to joke about it when REM had “Night Swimming”…… never mind me, furrylugs.
Lads, and ladies, should I bin this article as trash, or should i throw a few euro into this stock.
“Oftentimes in serious downturns, such as we are seeing now, it is value methodologies that get kicked in the teeth. That does not alter the fact that we believe AIB is a well run company, and could emerge from this stronger as some weaker competitors are thinned out”
http://seekingalpha.com/article/114684-allied-irish-too-good-to-be-true.
brian, …. remember Walshe?
I’d suggest Lorcan is your man for that tomorrow morning??
Hold tough Brian.
I may or may not be your man, but I would do nothing for the moment.
If you wait for the earnings report (March) you will be too late to capitalise, but you do still have plenty of time to do some due diligence.
In making your decision, remember that past performance is just that. PAST performnce.
The entire market is in a state of flux at the moment and does get gittery on any news. (just look at Greece today after S&P downgraded the national rating).
Is there value at AIB? According to all the measures I normally use, it is an instabuy. But I’m staying away. I find that when governments get involved, things tend to get messy. And particularly in AIBs case, after the Tony Spollen affair in the late 1990s I am unsure how much I would trust them. Remember there is a new financial regulator coming in, and from what I hear he is going to be an ‘outside’ man. Let him poke around for a while before you back any horses.
Oh, and don’t forget, the short-selling ban is being lifted by the FSA in the UK on Friday, which might effect all financial shares. AIB is down 25c today to €2.02. by Monday evening it will have lost another 15-20%. Possibly.
Lorcan, so, …… you are trading on our livelihoods? Is that what you do for a living? (wont write what I was gonna).
“by Monday evening it will have lost another 15-20%. Possibly.”
Guess I misunderestimated that one…
Hope you sat on your hands Brian.
Deco, ” … and no knave brought to book”. Yeats had it right in the early 20th century ………. he is STILL right today. Applause, Sir!
no tim, should i remember walshe ? as in Willie at BA ?
AIB and overcharching bank customers with bank charges.
Enough of the banter its time for the end game.Welcome to the dance David.Suggestion. 1. Agreement to be reached by the heads of state of all countries in the euro union that all bonds issued by soverign governments in the euro zone will be averaged on a 10 year cycle.e.g.germany.s 3.2 Irelands 4.7 = 3.95.average. Ireland pays 3.95 for its loans,Germany pays 3.95 for its loans etc.These loans to be administered by an expanded,existing globalisation fund,which would integrate social cohesion funds and all other funds under one umbrella supported and contributed to by all the members states for the future.We dont need to play chicken with europe i.e.New York scenario,but its time the euro as a currency stood up and be counted.If the German pension funds et al made profits from our property bubble then they can share the pain as well as the gain.If the Poles wants our manafacturing then they can pay for it.If they want a lisbon or whatever agreement it will be based on mutual wellbeing and we will have no Irelands ,Spains, or Greeks hung out to dry.This is a vision for Europe and not some 21st centuary version of Animal Farm where were all equal but some are more equal than others.Im sorry the trade off would be a more rigorous adherence to the 3% pact but our crowd needs supervision and our people needs more stability in their lives.All this stress and money worry will have to stop.Time to bang heads together around the table in Brussels.Time the gloves came off.Time to draw a line under this for Europe, accept our previous failings and aim for a better future.We are the biggest economic powerhouse on the face of the planet.
nest of vipers.
The Germans will claim (correctly) that they should not be forced to pay more for borrowing, when other countries (the PIGIS) were being governed by irresponsible elements who spent the years 2002-2007 whipping up a property market frenzy.
The greatest untold truth about this country is that the Irish concept of management has failed. It has failed in the public sector (HSE, CIE, ESB, E-voting, Crime, etc..). This we have observed for the last five years.
And now we can see that the Irish concept of management in the private sector is also failing. The IBEC lobby group, which acts to sustain price fixing needs to be brought to into line with the free market. And the professional class ‘we set our own rates’ (usually the most expensive in Europe) have also to be knocked into the free market – with no more market rigging.
The Germans having a better concept of management (just look at the infrastructure, or the private sector companies) should not be forced to pay for our incompetence. The onus/responsibility is on us to improve Irish management practices by refusing to bail out incompetence. That means no money for ANIB, INBS etc.. And no gaurantee.
As was pointed out earlier Gernany absorbed 12 Liverpools on reunification.A united european approach to monetary policy would easily absorb “pigis” as you call them and work it through the system over a 10 year cycle.I expect the union would be investing a far greater amount in terms of infrastructural development,r&d,communications etc over this period.Dont forget this is not just about Germany as important as it is but all countries in the union putting their collective shoulders to the wheel.Germany would benifit as much as anyone from the stability and security of a of a stable trading market within europe.Germans are as fearfull as any at the moment as can be seen by Merkle’s recent 50 billion u-turn.France has as much to gain as Germany and so onn.If the euro was to weaken on the back of absorbing pigis in the short term,then the pressure is back on the British and US et al in terms of export competitiveness.Remember we might have a small gun but were part of a massive army.
Let’s imagine a scenario where the Irish govt cannot back the banks deposits – what should the punter do now to protect him/herself? It was pretty obvious what to do during the property bubble (sell or don’t buy). Yes, I want to protect my own ass. Fianna Fail have screwed me long enough.
Any suggestions appreciated. Gold bonds? Foreign bank deposits?
Aussie dollars simple as that.Now lets move onn ;;-]]]
It seems that the ex-Taoiseach accumulated a 200 grand bill for “make up” when in office. We should ask for the money to be returned, back to the taxpayer. This is absolutely absurd.
http://www.independent.ie/national-news/leader-sitting-pretty-without-spending–a-cent-on-makeup-1602073.html
€200,000 for makeup
€220,000 for renovating office across from Leinster house
http://www.independent.ie/national-news/outrage-over-8364220000-bill-for-berties-new-dail-office-1422457.html
Applying for tribunal costs to be paid
http://www.irishtimes.com/newspaper/ireland/2008/1013/1223680464875.html
Massive salary as Taoiseach, now massive salary as former Taoiseach and TD, with official driver and pension
Eve of Renewal – tomorrow is the Moment we are waiting for namely the EGM of Anglo – lets focus on the practical thoughts we should expect to see happening and how we can win what we seek .Should the Gov win then we lose and we really have trouble before our eyes.Today is a Moment in our nations history of a pending Great Change ahead that will determine much the direction where we are really going and if we can do it peacefully .To allow the Gov recapitalise Anglo is Treason and must be Stopped Now. To lose we will be as a nation in dept ‘each and every one of us ‘ for the rest of our lives.There is too much to lose if we lose and we must not allow that happen.
Those chosen few who will attend the Forum should bring their black pens and note books and record history as they see it and post it on this site in due course.
The Moment has arrived and today we have our last free thoughts to express what we really feel before the WAR tomorrow .This time and to morrows time may be the same or may be different and if it is different is it what we wanted it to be .Empower ourselves Now .
This would seem to be a good starting point for an agenda John.
http://www.irishexaminer.com/irishexaminer/pages/story.aspx-qqqg=business-qqqm=business-qqqa=business-qqqid=82002-qqqx=1.asp
Related to the need for change I was speaking with a friend in FG last night. I’m largely apolitical and vote independent whenever I can. I was wondering why FG weren’t going for the jugular and why Enda was still leader. The government is shaky so surely the opposition should be using every opportunity to expose the credibility gap. God knows, DMcW is having no problem in doing so.
The answer he gave me was that while many saw Richard Bruton as a very capable leader and someone who could give the government a bloody nose on economic issues he has something of an image problem. He’s perceived as being “an intellectual” and he has “no interest in cumann’s and all the apparatus of local politics”. So there you have it. The importance of the parish pump has been a recurring theme from David and posters. When the opposition in the Dail absents themselves from making the strongest possible challenge and ensuring governmental accountability we’re left with wily economic commentators like DMcW and Shane Ross.
We’re obsessed with the minutiae of parochial life. The petty rivalries and the need for local pacification through gifts and trinkets from our elected representatives. Ireland is a sow who ate her own farrow, then ate her neighbour’s out of spite.
Love that old chestnut where Cowen goes out to Japan and saves the day with a few new jobs great spin meanwhile the penny is just starting to drop back home that we are really in the tank. We should march on leinster house now and get rid of these cowboys only problem is Kenny is even worse.
True words The Eye,
The Govt. Spinners and Pr’s bluffers getting this news out as if its got any real worth.
“NEW CONTRACTS and export sales in Japan valued at €46 million, as well as 150 new jobs in Japanese companies with offices in Cork and Dublin, were announced in Tokyo yesterday.”
70 business leaders with him on the trip and this is all they could drum up in business ?
2 jobs, and about 660k in orders per business leader.
This is a joke, and who is paying for this 5 day , no doubt 5 star all the way trip for the 70 business leaders and then Cowen’s entourage.
150 into 293,000 unemployed don’t go
Anglo – part of the objectives should include the following :
punish the bord of the bank
withdraw deposit guarantees from anglo
not to recapitalise the bank
claim from insurance of auditors their negligence if relevant
claim from professional insurance of anglo bord of dirs ( if they have insurance )
get more facts of directors financial incest activities
obtain all details of all quinns corporate feudal fiefdom connections with bank
any other matters that are deemed necessary
( thanks furrylugs )
I think that MC Hammer had a smaller entourage. Biffoons
Shane Dempsey, if what you were told about Richard Bruton goes mainstream and starts to get understood by those who buy our bonds, this country’s rating will go south for sure. I fear Anglo is just another symptom of this same disease that will soon make itself more manifest internationally if they fcek it up tomorrow.
I know what you mean. Technically, the responsibility for running the country falls to all our elected representatives. Strong opposition is vital in provoking debate and evolving new policy. I thought my friend was joking about Bruton but it turns out he was deadly serious. Think about it, there’s never been a better time to be in opposition as the economy is going down the tubes yet it’s hard to remember a single telling punch landed by Enda.
Shane: They’ve all given up hope and are hiding under the blankets. FG has given up. RTE Primetime has given up. The whole panoply of Government have descended into catatonic denial. Cowen is in bloody Japan for Gawd’s sake while the TDs are all making themselves as scarce as possible. Nobody knows what to do. Just leave the trium-potentate to sort it out and catch all the inevitable blame. Wait and see. Don’t stick yer neck out. Don’t rock the boat. Never mind. Turn a deaf ear. Invest in an auld ostrich farm where there is plenty of sand. In 1937, Roosevelt said “We have always known that heedless self-interest was bad morals; now we know it is bad economics.” They never learn.
Here on DMcW’s blog there are green shoots of interpretation that may help the curious find answers applicable their own circumstances. Hang in there. ‘Float like a butterfly. Sting like a bee.’
While I take Deco’s objections I was thinking along the same lines as Jim. While the moral aspect cannot be denied German exports were dependent on spendthrift trading partners.
Contributors might consider toning down their language as I misssed the last few days’ discussion as it was blocked by our IT filter – eg instead of writing “banker” write “b*anker”.
Miriam O’Callaghan cut off George Lee last night when he was getting interesting. Since I was watching it on tape after a couple of listens I could make out what he was saying over her, like in “The Conversation”. I wonder will Declan Lynch pick up on it on Sunday as he’s already noticed the national broadcaster’s loss of nerve when things get interesting. Seriously, if the Fin. Reg. can be hauled before an Oireachtas committee couldn’t RTE (and ESRI for that matter) for negligence if not complicity? Then Maureen could have a go at Miriam…
Despite all that’s been said over the last few weeks it occurred to me this morning: imagine the whole property thing kicked off again tomorrow would it be any different this time round? I’m not thinking about the dream-chasers but those anxious to get a foot on the ladder. There seems to be a fear here that if you don’t look after number one and your own circle you’ll get stitched up by everyone else.
As for DMcW’s suggestion that we abandon the Euro, having looked at his “Gen. Game” again I can remind those who might need a reminder that he isn’t just making it up as he goes along here. In the course of making a good case he points out that one of the benefits would be to reverse the the relative intergenerational fortunes of (unproductive) Jaggers and (productive) Jugglers/ Decklanders. Could we say then that you can’t fully understand him without it – like the Beatles and the White Album, say, or John and Yoko or Dev and the Treaty…? (Only joking, David!)
Hi ,
Can someone explain please why if the US bailed out NewYork it would would damage the dollar. Also ok so if Ireland defaulted, why particulary would this damage the euro currency ?
Why would Irelands default threaten the eurozone as a whole ?
It’s a good question.
The New York one is easy enough. It’s all about where the US got the money to bail out New York? Basically they printed it (or the electronic equivalent), thereby debasing the currency.
Ireland can’t print euro’s (I assume!), so that shouldn’t apply to an Irish default.
Of course, every time you hear about the Fed “injecting” aother billion quadrilion dollars into the markets, that’s just money that they’re creating out of thin air, so by now the US dollar should be worthless.
“Miriam O’Callaghan dismissed an accelerating George Lee with a throwaway “the last thing people want to hear is another economist”
Deco, Don’t be so naïve, everybody in Ireland has an agenda including Miriam.
a) she’s part of the way overpaid group in our society and the state collects her salary – very high risk???. b) She’s into FF, her brother ran for FF in the last elections and his canvassers were trading on her profile and cheeky isn’t the word – they asked, is this is a FF house? – I wont tell you my reply – but you get the picture.
I’ve heard the same about O’ Callaghan. What galls me is that she’s one of a clique of ridiculously overpaid public sector employees. Rather than get p!ssed off about nurses and primary school teachers I don’t understand why nobody has pointed out that we have anomalies (think Pat de Plank, G Ryan etc.) costing us several hundred thousand euro/year and yet RTE have been effectively useless in commenting on the instability of the Irish economy. I’ve nothing against these people in principle and they do provide a valuable public service but some belt tightening is needed.
They’re probably hoping we’ll forget about them, like the elephant in the room that nobody mentions.
Interesting balanced perspective from Ambrose Evans-Pritchard. He’s a notorious euro-sceptic and raises some provocative points:
‘John Whelan, head of the Irish Exporters Association, said the strong euro puts100,000 jobs at risk this year.
“Most companies cannot make money selling into the UK at an exchange rate above 0.80 pence and today the euro is worth 0.91 pence. Currency hedges will run out by March, and the small guys are feeling the full whack instantly,” he said. Mr Whelan said there was a feeling of betrayal that Britain did not join the euro alongside Ireland – or shortly after – despite Labour’s pledge to do so.”We thought Britain would join in 2003, but then Tony Blair lost his popularity in Iraq and never tried,” he said.
Finance Minister Brian Lenihan has even accused Britain of pursuing a ‘beggar-thy-neighbour strategy’.
I asked Alastair Darling about this and he said:”Bank gurantee? Payback: VAT. Pot calling kettle black. He’s toast”
Ambrose is, overall, optimistic about Ireland. ‘money quote’:
“It is a grim moment for the Celtic Tiger after achieving so much as a high-tech hub with an educated work-force and one of the most flexible economies in the world – all qualities that should help the country pull through in the end.”
http://www.telegraph.co.uk/finance/4241720/Ireland-plans-drastic-cuts-to-prevent-debt-crisis.html
regards.
Please correct me if I am wrong here:
Between “independence” in 1922 and our decision to join the ERM in 1979, Ireland’s exchange rate and interest rates were pegged to Sterling and the Bank of England, our former (and until 1979, continuing) monetary overlords.
Between 1979 and 1999, we were tied to the ERM, which allowed our Govt/Central Bank raise or lower interest rates up to 1.5% above or below the Deutchmark. Effectively, we swapped our colonial overlords for German overlords, a country with which at least we have no complicated post-colonial relationship.
Since 1999, we have been in the Euro, which means that the decisions of our Central Bank are pooled with those of the other eurozone Central Banks, albeit that our influence is very small and the Bundesbank is the really big player. That does not mean that we go unheard, but it should mean that we have the best people representing us when all those central banks get together. I believe I am 100% correct to say that we do not have such people representing us at the moment.
If we are to withdraw from the euro, as some genuinely interesting people on this forum suggest, and also some genuinely uneducated talking heads like Matt Cooper suggest, then my question is:
Do we go back to pretend “independence” where our monetary control is handed back to the Bank of England? Or do we completely break free from both the eurozone and sterling and for the first time set our own rates? Would the consequences of either “patriotic” move not be absolutely dire?
Anyone?
The UK is more fcuked than Ireland – or anyone else for that matter. They will join the eurozone pretty quickly. If the eurozone survives.
If the eurozone doesn’t survive, then I recommend you plant lots of potatoes on your windowsills and learn the ancient art of darning socks.
We were never independant. At the risk of again sounding real stupid (a usual theme for me actually), I brought up the NeuPunt idea just to put forward some immediate ways of cutting costs immediately. It was correctly shot down by highlighting the increase in national debt and the ramp in interest rates for your neu-punt loans. What it shows is that we are very interconnected to the world at large.
The snag is the fact that we hooked our wagon to a currency whose dominant culture is teutonic rather than anglo-american. We are in the wrong club. We’d probably be in a better position if we were linked to the dollar or Stg. i.e. our majority trading partners. We cannot act like germans simply because our socio/financial/economic fabric or whatever is incompatible. If German was a strong trading partner, we’d have been in the savers/ engineering oriented etc.
As it happens, it looks as though our incompatibility with the Euro will become more apparent as we try to fix the banks. Anglo will be bailed out and “saved” becasue not to do so will collapse the rest of them…(I think they are really trying to prevent a fallout to the rest of the sector as cross lending and the real value of property becomes exposed). We should have had the good bank/bad bank in position before they did anything with Anglo. This means the the sovereign debt will be pummelled.
Mediator gave us an interesting article on the Kissenger Club. I think this option should be explored with urgency combined with the Diaspora idea. The Moral Compass needs to become more visible as well articulated
Iceland – In Vestmannaeyer ( Westmann Islands or Irishman Islands ) off south east coast of Iceland civil servants have already been given official notice that their jobs are no longer required and more notices are to follow – these people are devasted and distraught and numb they have nowhere to turn to and nowhere to go they live on a small island and their small island economy is decimated in bits .Its wind swept and cold and barren with some sheep hanging from overhanging rocks with sparten grass .They are speachless and depressed .
They have a wicked hedonistic festival in Autumn though.
Hello Philip
Just a quick point – when I provided that article link it was with a view to showing where/how the global elites want this thing to play
out – I wasn’t advocating the NWO although as I said – because of the economic trouble we find ourselves in (and the directions we’ve taken in recent years)
we will have little choice in the matter. i just hope that when what I am talking about becomes manifest, that individuals here in dear old Ireland will
still have some wriggle room (ie freedom).
The continuous move away from national sovereignty to supranational systems of governance (The EU being the local example) is not a good thing in my opinion. As one moves the nexus of decisions further and further away from people then accountability becomes a forgotton work with the elites who govern from afar becoming
self governing and self regulating. The obvious end of all this will be that ordinary people will become little more than serfs (economic slaves) and the world will begin
to resemble the worst side of feudal Europe (Droit de seigneur) or worse.
Maybe the best way we can protest, make a point and maybe even get on the news is by getting the Boomtown Rats single Banana Republic to number one. The song is Irish, appropriate and will point out that we are still here, still connected and pissed off.
What do you guys think? Shame them! Buy the song, make it number one!
http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewAlbum?i=14415857&id=14415837&s=143449
i think bob has done enough on the other side of things without giving this kind of boost to his considerable earnings……….setting up a new political party would be more in order………
Can Richard Bruton and Enda give us a decent alternative?
Well – it depends on whether or not they can formulate a proper policy response. They is one thing that Fine Gael have finally realised – ANIB is a waste of state aid.
Hopefully FG getting tough on ANIB, will pressurize the government into acting in more intelligent manner. In other words being prepared to let ANIB collapse, and preserving public moneys for more important concerns like the future of the citizens, who contributed the money in the first place.
jim – well said i hope you are correct that would be the ideal in the meantime what price are we going to pay to get there for each and every taxpayer in the country and who will lose the most and is it worth it ? Our Politians are not behaving like Statemen more like cowards
Just heard of ” Jingle mail” a new term coined by people who work in banks about people handing their keys back to the banks via an envelope its now a very popular postage system.
When I worked in the bank (the reason I never borrow money) we used to get calls from car dealers who had customers drive up, open the door of the dealership and throw the keys at whoever was in the line of fire. We used to get a lot of abandoned cars in dealerships that customers assumed they could just drop back when the payments got too hot for them. This was in 2001-02 so God knows what horrors are lying beneath.
Expect more of this behaviour and more aggressive recovery techniques by banks and finance companies. Expect to see family cars half inched off the drive in the dead of night by repo men. Cars take from outside work etc.
The repo men and the banks have seen it all. Cars hidden at your ma’s place, cars hidden in behind another car that is not on finance, cars written off in mystery fires the list is endless.
80-90% of cars under 5 years old are on finance. Lose your job and your house and car(s) are up for grabs. And grab they will.
Lenihan and Tokyo Cowan are still on their school holidays while the real economy suffers. We are in hock up to our eyeballs and all we keep getting is some old bullshit about Social Partners (unelected I might add) and platitudes to keep us quiet while the pray it goes away.
As I keep banging on. The economy as a viable entity died when the cheap money started to pour in. We ignored the big bad world and pretended we all won the lottery. What is happening now is we have to pay it back. And we have the added bonus of mass unemploment at this critical time. The time for action was years ago. Anything “done” by the government is too little too late and in the wrong places. As usual.
F-
Election now!
spot on
Election now – but we need a new political party that is not tied to lobbyists and money men, time for new faces, fresh ideas
“Jingle mail” is a phrase from the US that refers to non-recourse mortgages.
The mortgagor (borrower) sees no point in keeping up payments on the house when its price is going down, and he posts in the keys (voluntary possession) because he knows the mortgagee (lender) can only recover against the house – if there’s a shortfall on the mortgage the lender has to suck it up, without “recourse” to the borrower’s other assets and income.
Non-recourse loans don’t exist in Ireland. If you post in the keys, you’re still stuck with the balance.
Oh shit.
I hope someone points out to those people who are handing their keys back to the bank that THEY STILL OWE THE MONEY.
The bank will sell the house for whatever it can get (wait for the “vulture” property supplements in the papers), but if it doesn’t get enough to clear the mortgage + sales costs, the mortgagee still owes the balance.
I have said this to a number of Irish people, and they simply don’t believe me.
So, if the bank sells your house for more than its worth, will they send you a cheque for the balance?
I mean mortgage and sales cost – not worth
If they sell it for more than the outstanding debt (plus various legal/selling costs), then yes, they’ll send you a cheque for the left over money. But that won’t happen, because they want to sell the house fast, so they’ll accept a low price.
How do we reduce the public sector pay bill ??
http://www.independent.ie/national-news/hse-chief–in-line-for-bonus-of-836480000-1602051.html
Clearly this is the most useless underperformer on the public payroll. He gets more than Gordon Brown plus Angela Merkel earn together. And Prof Drumm presides over a mess. Replace him with a nun. Give her a second hand micra, a weekly allowance and there would be immediate improvement. There we go 400K saved already. We can allocate that money to retraining Dell / Waterford Crystal workers !! Or helping the Samaritans deal with the increase in suicides. Yeah – put the money into helping the real economy and real people.
We can only hope that IBEC will endorse this as part of their campaign, to reduce the public sector pay bill.
disgusting
i interviewed a Cuban transplant specialist in Havana in 2003, who lived in a modest house, used an old motorbike to get to work in Havana Hospital and over dinner he said to me that Cuban medical staff find the idea of taking money from sick people incomprehensible.
During that research trip I came across two groups of medical students. One group was from Sweden, they were over studying various aspects of the Cuban health system i.e. the clinic provided free of charge to children from Chernobyl, eye operations performed on Latin Americans free of charge, the training of over 1500 students from around the world (including the US), free of charge with the only proviso being that you return to your home country and use your skills for the poor.
The second group was a bunch of medical students from an Irish university who were ‘on the piss’ to use their words, over celebrating their medical results – the scenes in the town of Trinidad that night were disgraceful.
A leading RTE broadcaster recently called Fidel Castro a dictator, alluding to his totalitarian state, Cuba may not be perfect, but its history of ending a brutal dictatorship and its policies of socialised medicine and education for all regardless of background are streets ahead of this little banana republic!!!!!!!!!!!
Id say alot of those people will jump ship to the UK loads of people are already getting out of Dodge City
very hard to run if you have negative equity from that wonderful house you bought
Deco …the Nun might even make it safe to be in a hospital
Anglo – if FG are successful stoping the recapitalisation I will vote them into office next time
As It was joked about: “the difference between Ireland and Iceland is one letter and only a matter of time.
Ski passes and cappuccinos are much more expensive than we were used to during the boom years.
Really!
To who?
For most it don’t make a ha’ worth of difference.
David you were spot on about the EURO taking a hit- that is: “The euro takes the ‘Ugly’ currency baton in 2009 that was held by the pound in 2008 and the dollar in 2007.”
However, Ireland could pay for a change over even if it was the best thing in the world to do.
It just gets ugly for the next five to ten years.
Rent the vegetable plot and relax.
What about this as a solution to public service spending? If the Government is so hell bent on reducing public service pay why don’t they pay every public servant exactly the same amount, say €30,000 per annum for a full time employee and pro rata per hours worked for part time and job sharing staff etc… I also include the high earners in the public service, those who earn up to €240,000 per annum – can anyone think what they might be doing for that kind of money? It isn’t much, believe me.
And since we’ll own the banks why not cut repayments in half for anyone who holds a mortgage on their primary residence. What about car loans? Half them also as we’ll need ours cars as there is no public transport available despite the boom. Personal loans with no interest – I think so! This sounds crazy doesn’t it? What is crazy is what has been happing in the cozy cartel of Government, Banks and Builders for the past ten years. The Government would not listen to people who said that we should look down the road to when the bad times rolled in – they were classed as cranks and told to commit suicide.
We’re in a situation where the taxpayer will underwrite the banks and mortgage the future of unborn generations. Its hard to fathom. I think it’s time that ordinary decent, hardworking people stood up, abandoned all former political allegiances and formed new movements to get us out of this mess. David McWilliams should lead the march on government buildings – I think people would follow.
Pat (Dublin), That wont work, I’m afraid.
Even if you cut their mortgages in half and their car repayments in half, no-one could afford to pay even those reduced amounts on a salary of €30K; €50, maybe.
Get rid of the salary scales that take teachers 23 years to get to the top and guards and nurses; pay the €50K from start to finish and I bet they will be glad.
Keep the fatcats on the same pay as everyone else – including the bankers who would, by definition, also be public servants by that stage.
the public sector reform nonsense is a giant distraction away from those who exposed Ireland’s economy and virtually bankrupted the State!!!
Stay focused on the bankers, developers and politicians, yes there are those like Drumm who are on massive salaries, they should be adjusted for sure, but the majority in the public sector are on crap wages in comparison, don’t get distracted, follow the money, the overspend on the roads, the voting machines, the waste in government departments, ministers expenses and entitlements, cosy property deals, the absurd housing situation, the failuire to diversify the economy, to move out of manufacturing, the failure to create indigenous industries, up skilling of workers through FAS, the failure to be a world leader in ‘Greening’ the economy, the failure to keeo inflation and costs down, the hit our tourism business has taken our over dependence of foreign multinationals, the failure to reduce our dependency on imports like oil – these are far more serious issues that reducing a few thousand in the public sector who actually provide a service unlike money men who just move figures around and contribute nothing in real terms.
Right now, it has been announced that 120 bus drivers are to be fired from Dublin bus, what a crime!!! What about the Green policy of getting people to use public transportation. Sack the Junior ministers and use the money to pay for those bus drivers, many of them who have mortgages, children, what a disgrace!!!!
Radio news at 8pm reporting that Anglo to be fully nationalised tonight.
Strange co-incidence this comes the day before the short-selling ban on banking shares is rescinded and an EGM.
That’s it then. Income Tax to go through the roof to pay for this. And nobody has been held accountable for this absolute disaster. Depressed beyond words.
A moment silence for the passing of Democracy in Ireland. We now know that the Government work for the banks and not us the fools that elected them.
that was never in doubt, read Chomsky, his quote democracy is the shadow business casts over politics.
they were quick to find billions for bankers but disadvantaged areas in Cork are extremely underresourced, not to mind Limerick and Dublin, no resources to lift those people out of poverty but plenty of green back for the scoundrels who have greatly worsened this economic crisis – disgraceful.
Full press release. Ryanair lining up the engines on the emigration fleet…
The Government has today decided, having consulted with the Board of Anglo Irish Bank Corporation plc (“Anglo”), to take steps that will enable the Bank to be taken into public ownership.
This decision has been taken after consultation with the Central Bank and the Financial Regulator which has confirmed that Anglo Irish Bank remains solvent.
Anglo Irish Bank is a major financial institution whose viability is of systemic importance to Ireland. Anglo has a balance sheet of some €100bn with a substantial deposit base which the State is determined to safeguard. The Government has made clear that it will ensure its continued viability. Anglo Irish Bank will continue to trade normally as a going concern, with appropriate Government support as necessary. All Anglo employees remain employed by the company.
The funding position of the bank has weakened and unacceptable practices that took place within it have caused serious reputational damage to the bank at a time when overall market sentiment towards it was negative. Accordingly the Government believes that the recapitalisation is not now the appropriate and effective means to secure its continued viability. Therefore the Government must move to the final and decisive step of public ownership.
The Government believes that the prospects for the institution are solidly underpinned in the new structure, with the benefit of state ownership and a renewed management and Board. In the current circumstances the State is the only available potential owner.
The recently appointed Chairman of the Board, Mr. Donal O’Connor, will stay on as Chairman. Anglo will be managed on an arms length basis as a commercial entity. A new Board will be appointed having regard to the need for appropriate continuity.
Shareholder rights will be respected in this process. The relevant legislation outlines a process for determining compensation as appropriate.
All customers of Anglo Irish Bank can be assured that the full amount of their deposits and savings are further safeguarded by this action. They can also be assured that they can and should continue transacting with Anglo as normal and there is no need for customers to take any steps as a result of this announcement. Anglo Irish Bank will communicate directly with all customers in the coming days.
Information will be available on the websites of Anglo Irish Bank, the Central Bank, the Financial Regulator, and the Department of Finance. Customers with particular queries may also phone Anglo Irish Bank or the Financial Regulator.
Creditors (including bondholders) of Anglo Irish Bank can be assured that it will continue to service its obligations and will repay its debts at maturity.
The Government has prepared legislation to put this decision into effect. This will be presented to the Houses of the Oireachtas on Tuesday.
Tomorrow before the markets open, it is expected that the Irish Stock Exchange and the UK Listing Authority will announce that Anglo shares will be suspended from listing on the Stock Exchanges.
The Minister said “I would again stress that this Government decision safeguards the interest of the depositors of Anglo, and the stability of the economy, given the significance of Anglo in this regard, as already recognised by the European Commission. The bank will continue to operate as normal and depositors and creditors should continue to transact as normal.”
Customers of all financial institutions can have confidence that the wider financial system in Ireland remains well capitalised and liquid and that the Irish authorities will be proactive to ensure that their interests are protected and their deposits and debts are secure.
The Government will ensure the continued viability of all systemic financial institutions.
The Government remains fully committed to the recapitalisation proposal already announced in relation to AIB and Bank of Ireland. These plans include injection of core tier 1 capital in the form of preference shares and underwriting of further core tier 1 capital issuance.
They don’t even know what it in Anglo “Asset”book. We are now about to see if the government can make a bigger mess of ANIB, than the nepotistic board of ANIB.
Once again, the Irish concept of Management – has failed – failed utterly.
10 years from now they will name streets after Shane Ross. And they will name sewer pipes after the idiots who are now going to “rescue” ANIB.
we seem incapable of managing our affairs in a mature fashion, idiots (the Greek definition meaning those who look solely after their own affairs regardless of the affect on others) went for the quick buck and in the process have endangered the entire State and denied resources to future generations. Something needs to be done, these people need to account for their dealings.
>Shareholder rights will be respected in this process. The relevant legislation outlines a process for determining compensation as appropriate.
Huh? They invested in a company, it wents bust as a result of bad (and possibly illegal) dealings, surely the shareholders should loose their entire investment?