February 18, 2009

Forgive debtors, dole out the penance and move on

Posted in Banks · 303 comments ·

There’s something very comforting about the idea of confession. It’s a great idea. When I was a kid I used to love the ritual of confession on a Saturday. A half dozen of us would traipse down to the empty, echoey church after ‘Football Focus’ on BBC. I remember the anxiety of waiting for my turn and counting the seconds as the penitent in front of me mumbled unspeakable acts to the priest who went through the motions. His hushed blessings were always drowned out by the giggling — that unique and uncontrollable giggling that the combination of church and six young boys can spark.

Then there was the ritual of comparing notes. “What did you get?” ” Jesus, six Hail Marys, a Hail Holy Queen and a pair of Our Fathers”. Fr Moore was always the hanging judge of the place, doling out heavy sentences for tiny misdemeanors such as Macaroon bar-thieving which everyone knew was “allowed” — and even expected at the age of 12. Anyway, the whole process of getting away with it and starting again before Mass on Sunday appealed to me as a child.

Over the years, many non-Catholic friends have slagged the very idea of confession, when they heard that all you have to do is go in and say sorry and you are absolved, but there is something wonderfully simple about this sacrament. If God can’t forgive sins what can he do? In fact, the very ability to forgive is what makes God, God. The Vatican also understands that confession offers hope. There is great energy in the second chance. Confession is crucial for continuity; absolution and forgiveness are essential for renewal and recovery.

This morning, all over Ireland, bankers are meeting their clients. At the table will be two bankers, the lad who lent the money and the lad who is trying to get it back. On the other side of the table is the sinner who has borrowed heavily and now can’t pay his debts. There might also be a liquidator there with the sinner, explaining to the bankers just how desperate the situation is. The first thing the bankers have to get their head around is that the “security” they were pledged against the loans last year isn’t worth the paper it is written on. The second thing they have to understand is that they are not getting their money back, not today, not tomorrow, not ever. The bankers have to start thinking like priests. They need to get into the forgiveness game.

Why, you might ask? Surely someone who was stupid enough to expand his or her business using borrowed money at the top of the boom doesn’t deserve forgiveness? Surely, they deserve punishment? Well in an ideal world retribution has its place, but now Ireland has to start talking about forgiveness. We need to soften our stance toward our debtors, not because of any moral requirement, but because it is the only way out of the situation.

In the meetings that are taking place all over the country as you read this, one man is terrified. There is one person at the table who is petrified of losing everything. He is not the debtor. He is the lender and at this stage, he has no place at the meeting.

Think about what is happening today. Many companies have seen their turnover halved in six months. There is no way they can pay back borrowings based on last year’s turnover metrics. But the lad who lent to them is snarling at them over the table demanding that they pay every penny. He is doing this because if they do not pay he will lose his job. Therefore, he digs his heels in. So he is thinking like a debt collector, not a priest.

If the company is told that it will have to work the next decade simply to pay back the bank, that company may simply choose to fold. What is the point in building anything now, if all the profits will simply go to the bank? Therefore, the bank loses everything, the business fails, the liquidator is called in, employees are laid off and something is destroyed. More importantly, the credit crunch gets tighter, not looser, and the prospect of more defaults increases as the negative impact of this company’s closure shunts on throughout the system.

What would a priest do in this situation? The priest’s job is to keep the flock together as much as possible and, particularly for a proselytising organisation like the Catholic Church, keeping the numbers up is the bottom line. So the priest would act like a businessman here and he would cut a deal. The banker has to think like a businessman or priest and give hope to the company or the individual. The banker has to appreciate the powerful psychology of the second chance. By cutting a deal, the banker gets something, the company survives and the debtor is energised to try again. Yes, there is a risk that the debtor just walks way laughing, but by keeping a hold over the debtor, which is firm but doesn’t strangle him, everyone gets a second chance.

The first thing the banks must do to achieve this mindset shift is get the lender out of the room. In the negotiations between the bank and the debtor, the lad who lent can’t be present. He has too much at stake and as a result of being both personally and professionally involved, he will not make the right decision. He wants all his money back so that he doesn’t look like an eejit. In so doing, the lender makes a bad situation worse.

When he is out of the room, the writedown lad can deal with the possible, not the fanciful. By forgiving, we can start again. And, counter-intuitively, the only way to get liquidity going again is to forgive debt.

There is nothing unusual about this. This is the process by which we grope our way to the bottom. We need to find the floor and the banks have to lead this operation. If they continue to behave as if nothing has changed and as if we can all pay back the billions we borrowed, we will not get out of this mess. Catholic Ireland needs to start thinking like a Catholic again. Central to this will be financial confession where the debtor shuffles into the confessional and, depending on his delinquency, is offered a penance. This way, we keep hope alive. The economic equivalent of two Hail Marys and an Our Father is doled out and we start again. The banks take the hit because it is they who lent the money in the first place. We draw a line under the problem and move on.

You won’t read this Catholic forgiveness stuff in economic textbooks but then again, there was always something very Protestant in free-market economics. Max Webber mightn’t like it, but debt forgiveness will be part and parcel of the recovery.

  1. Malcolm McClure

    It is entirely appropriate that David brings sin and forgiveness into our economic discussions as the Vatican recently restored the doctrine of Indulgences to the Catholic compendium of beliefs. See: http://www.nytimes.com/2009/02/10/nyregion/10indulgence.html
    One priest said: “Confessions have been down for years and the church is very worried about it. Indulgences are a way of reminding people of the importance of penance. The good news is we’re not selling them anymore,” –Thank heavens for some Good News these days! One wonders whether Seanie will be able to avail of a Plenary Indulgence to reduce the number of strokes he spends in the ‘Purgatory of the Long Rough’ on his favourite golf course.

    Anglo Irish Banker’s Prayer
    Our Biffo, Who art in Dail,
    Forgive us our Debts,
    But don’t expect us to forgive our Debtors,
    For Seanie Fitzpatrick’s sake

    • We have a combination of circumstances working together to bring us into recession. The most important one is going to be the banks ability to lend and this seems to be dictated by the markets having confidence in the banks. Isn’t it easy to fix? Well it probably is when your willing to except some unsavoury consequences, but i’d prefer to swollow them knowing that someting constructive is being done. However as time moves on confidence in the Irish financial system diminishes and this is not just the markets. It’s governments and multinational businesses. This could really hurt our job prospects and international investment.

      I’m asking myself why arn’t the two Brians taking the proper action? Well I wouldn’t like to say what i suspect, but what you are thinking may be correct. Is the governace of the country becoming blurred with the governance of the banks? and if so how long has this being going on?

      Another black hole is the extent of the bad debt in the country and what about the business the banks have done outside the country (have to include that). So we’ve put 3.5 billion each into BOI and AIB without knowing a thing about their debt. Well it may support them and their debt for a while, but the chicken will come home to roost and billions of tax payers money will have gone down the proverbial drain. But I could be wrong.

      Now look, Davids insight and suggestions are suddenly making a lot of sense.

      You’ve got to ask the question, “whey are there not more people like David in Government” or maybe why isn’t there any? The answer unfortunately may be that power, corrupts and it takes a very strong person to overcome this.

      Hope i’ve made a small and balanced contribution.


      • Tim

        Eddy, I think the most important thing in your post is the question of integrity and power. (“more people like David in Government”).

        I think it is a question that plagues many of us – PaulOMahonyCork, explicitly. Perhaps this question could be a sub-text for all of us to think about for a while and then return to post ideas about it. It goes to the very heart of how we would like to be governed, the very heart of our society, of who we wish to declare ourselves to be. Surely, few things are as important?

  2. Robert

    Completely disagree with you David.

    Those responsible for this mess should be jailed. Period.

    We keep on having bank scandals because we adopt this so called “forgiveness” attitude – From Ansbacher accounts to DIRT avoidance schemes (including a certain Flynn) to now effectively stealing a generations wealth and handing it to a bunch of property developers who then get their bribed politicians (either in or out of the ‘golden circle’) to raid the national pension fund to bail them out. Oh and for good measure get one-sixth of the working population (public sector employees) to pay for the raided pension fund.

    It’s despicable what has gone on and under no circumstances could I even see any merit in such a forgiveness proposal.

    It’s no coincidence that the countries most in difficulty are cathoic countries because Catholicism = Corruption.

    • gadfly55

      Seconded and agreed. Meet you at Parnell Square, Saturday. It’s time to put 100,000 on the street, as the French has shown us.

      • Robert

        People from all walks of life should be on the street. Enough is enough.

        This despicable government is attacking all sectors of society. Either they are doing it deliberately to precipitate a general election so they don’t have to clean up their own mess or they’re doing it because they are basically immoral and corrupt. A bit of both I’d say.

        • finbarr

          This despicable government are not attacking anyone, they are trying in their limited capacity to deal with the mess that bertie made. Benchmarking was despicable and it was back then we should have been on the streets. The Public service Unions are trying to pass this off as an attack on society. I dont agree entirely with how this government are doing it but public servants and the unions need a reality check and live in the same world the rest of the country has to. This world is full of unpredicability, layoffs and huge paycuts to the majority of the workforce. The Unions focusing on the high earners does not cut any ground with majority of Irelands workforce, whose average wage is less than their public counterparts before their enevitable paycuts …allowing they get to keep their jobs that is.

        • Robert

          What was diespicable about benchmarking?

          In 2008 – public servants (nurses, teachers & gardai) received a 2 % pay cut under benchmarking

          Between 1992 and 2002 some public servants received absolutely no pay review. Did you in any of these years?

          Reading Kevin Myers and listening to Matt Cooper does not constitute a balanced opinion.

          Presumably you’re a private sector worker – When you’re 65 you will receive the equivalent of over 11000 euros (in todays money) in your old age state pension when you will have contributed absolutely NOTHING towards it.

        • Tim

          finbarr, THOUSANDS of public sector workers are losing their jobs. Their pensions are not free, or cheap, as they have to pay into them for forty years, without a choice.

          Benchmarking was despicable, alright, but not for the reasons you seem to think so. It has facilitated government, senior civil servants and Union bosses to divide and conquer all low paid workers (public and private).

          Did you know, that the 2005 benchmarking body discounted public sector pay by 12% for their pensions?

          Did you know that our public service is not “bloated”, but the smallest, per capita, in Europe?

          Did you know that our public servants are NOT the best paid in Europe, but about 11th out of the 15 and, relative to cost of living, the WORST paid?

          Did you know that our investment in education and health is the LOWEST in Europe, apart from, ….. guess where? Lithuania.

          Do you know who told the BIGGEST lie about benchmarking? Senator Joe O’Toole, when he compared it to an ATM to try and get teachers to agree to that poison chalice – yes, Joe: he of the brother-in-law who got €33million euro for his farm in North Dublin (“Thornton Hall”) to be turned into the first “Super-prison” in Ireland; yes, Joe: he who claimed he knew nothing about that decision by government to give the money to his brother-in-law, despite the existence of at least two other suitable and cheaper sites for the prison.

          finbarr, Respectfully, you might like to re-think your decisions about who you listen to.

        • pera

          Hi Tim thanks for your posts which have helped me get a better understanding,

          I agree with you that the public sector is not particularly bloated in Ireland when it comes to numbers, although it might be bloated relative to the tax base, but that is besides the point in this case.

          What I am particularly curios about is that ireland is 11th out of 15 when it comes to pay. Would you have some further figures on this. To me it does seem that ireland has a huge gap between low and high paid people in the civil service. The range in HSE being 24k to 194k ( I guess that excludes consultants) That huge difference in public pay seems like somewhat of an anomaly coming from a government pay purse. So could it be that the amount of low paid workers is making ireland look low in the rankings. I just checked teachers as i could easily find the info. The scales went from 32k-62k. That is a very good salary compared to the nordic countries that I am more familliar with, where the scales would be more like this 33k-44k. And there does seem to be quite a few people on more than a 100k. Brian cowen seems to make considerably more than his european collegaues, who in some cases use the salary of the prime minister as the benchmark of the top salary of the public servants, which for the nordic countries would be in the order of 120-140k

        • Tim

          Hi pera, Please see my post to MK1 below for EU figures. Glad that you feel I have helped, but I am no expert, by any means. I am trying to learn and many people here are helping me to do that. I think that we all “bounce-off” eachother/challenge oneanother; every post is a help – including the angry ones.

          We need to know:
          1) What has happened;
          2) How people are reacting to what has happened;
          3) What to do about 1 and 2.

          Anything you can add, yourself, is more than welcome; it is required.

          Be confident; express your questions and ideas. I waited and read this site for too long before plucking up the courage to ask questions and comment.

          Jump in! Only very few of us have had detractors. and those issues have been resolved, more or less. So you have nothing to fear.

          Be passionate, do what research you can and BRING it here – we need you.

        • finbarr

          I have to disagree with so much in the way of figures I dont know where to begin..

          Benchmarking has cost this country hugely, we have the second highest minimum wage in Europe that destroying our capacity to compete, and you may not like Matt cooper but I dont restrict my listening/Rerading to those who agree with me. That way I get more accurate figures rather than pulling them out of the air. But I will quote one for you and tell you where it came from. The ESRI reported that the Irish civil service is bloated by 8000, This report was edited by Irish civil servants who censored our this part…
          As far as I know Matt Cooper does not work for the ESRI

    • CREST

      Philippines, Italy, Spain ,Ireland………….

    • I think you may have taken Davids article up the wrong way. He is using the idea of forgiveness as an example of how to put the county in a better position. Imagine that you owe a bank 700,000 euro and that this loan was twenty times your gross income for a year. Now remember that you are not the expert and have a significant disadvantage in experience towards the bank manager. The bank manager may know that your are HIGH risk, but you may not realise this to the same extent he does. So the blame does come down on the banks side more. If you buy a faultly camera, you have the right to a refund don’t you? Well your loan in a not to disimilar fashion is flaud.

      However through a level of forgiveness and reconcilliation on the banks part you may be able to work with the bank on a lesser liability. So you see forgiveness in banking is actually VERY important and important for the common good of our country.


    • G

      agree entirely with this post, those guilty of destroying the state should face jail, politicians included – easy David to philosphise on forgiveness from a position of comfort and wealth, but the decisions taken by a few people have broken the back of this country, justice not forgiveness is required.

  3. And then at some point in the future there will be a Holier than thou member of the banking community that will say the credit cris-ocaust was merely a fabric of our imagination and never happened.

  4. wills

    Hi David,

    David why do you contend that the banks are the way out of the crisis.
    The Banks are the contagion. The banks are under nefarious
    control. The evidence is writ large. The banks deliberately inflated
    the property bubble to fleece the people working the real
    economy. The individuals running the banks are duping the
    public. Tell me David, why is it that the majority of people
    are unable to explain fractional reserve lending. Surely you
    must be aware it s the practise of this mechanism by which
    bubbles are inflated. Creating money from debt is morally
    indefensible. Why is it David you remain silent on this.
    Are you turning a blind eye on the truth out of fear.
    You have a platform of significant respect and come
    from the eighties generation as i do and only know full
    to well the eingineered gigantic transfer of wealth that
    has been perbutrated on us. We were done in in the
    eighties made to emigrate by the same banking
    cronyism that is now looking for my taxpayers money
    to backstop this foul banking system under the rule
    of a very very sinister ruling elite using making
    money out of thin air to make bubbles to make slaves
    to smash independance of spirit to fuel corruption
    to bring this to an end and restore the utility of credit
    to the public out of private hands is the one and
    only talking point. Is this not obvious to you.

  5. gadfly55

    The Catholic boy’s delusion of forgiveness is it? Ah sure, Father, I firmly resolve, blah dee blah dee blah, whatever I have to say, and Bob’s your uncle and away we go again, sure isn’t bankruptcy a badge of honor in the good ol’ U S of A. but wait a minute, it’s those stern Northern Europeans of Protestant persuasion who are having all kinds of problems with Catholics or Orthodox southern Europeans who get carried away, knowing God loves all his children, especially prodigals who have been whipping it up lately, and are now truly sorry, etc. whatever. This is where David McWilliam should really keep his mind silent, and contemplate the wages of sin, and divine retribution, the the fires of eternal damnation because there is no easy way out for people who owe 1600 thousand of millions. Do we, the few sinners inhabiting this sub-Arctic isle, or a part thereof, deserve a special dispensation that frees us from the burdens heaped upon the mass of humanity struggling to provide basic and essential conditions for a dignified human life? Spend some time considered the mass of humanity, and the human condition represented in Slumdog Millionaire and then try convincing any reasonable person that Catholics have a special pass.

  6. [...] by David McWilliams, February 18th, 2009 Irish Independent This morning, all over Ireland, bankers are meeting their clients. At the table will be two bankers, the lad who lent the money and the lad who is trying to get it back. On the other side of the table is the sinner who has borrowed heavily and now can’t pay his debts. There might also be a liquidator there with the sinner, explaining to the bankers just how desperate the situation is. The first thing the bankers have to get their head around is that the “security” they were pledged against the loans last year isn’t worth the paper it is written on. The second thing they have to understand is that they are not getting their money back, not today, not tomorrow, not ever. The bankers have to start thinking like priests. They need to get into the forgiveness game. Why, you might ask? Surely someone who was stupid enough to expand his or her business using borrowed money at the top of the boom doesn’t deserve forgiveness? Surely, they deserve punishment? Well in an ideal world retribution has its place, but now Ireland has to start talking about forgiveness. We need to soften our stance toward our debtors, not because of any moral requirement, but because it is the only way out of the situation.  Link to article [...]

  7. Before commenting on David’s latest sermon, I’d like to make a plea: let us hear no more negative remarks that compare RoI to so-called “banana republics”. I for one love bananas and banana-ism remarks are hurtful to many. It is a terrible insult to banana republics to put RoI in the same boat.

    Come out of hiding you magnificent 10, you used to be role models for Mr Cowen & Mr Lenihan. We have no interest in stringing you up – it’s enough to stick needles in your effigies. Hopefully most people have realised the folly of involving lawyers, the counter-productive nature of taking legal action against you.

    Public and political disgrace is another matter. The longer you stay away from confession the more brutal voices will be raised. If you hide away much longer, you may have to emigrate and take your children and grandchildren with you. I am persuaded that at least one very senior cabinet member is horribly involved with the Anglo scandal.

    Concerning David’s inspired invitation to use Roman Catholic confessional practice, I love the way this will bring out into the open interesting differences exist among critics of the disaster. He has thrown down a gauntlet: are you for revenge or recovery, punishment or revival?

    I’m reminded of the end of Wagner’s Ring. Brunnhilde starts with
    “Peace with your cries
    of useless lament!
    For you have all betrayed me;
    for vengeance here I am come…”

    and went on…
    “He truest of all men,
    betrayed me,
    that I in grief might grow wise!

    and finally…
    “Brunnhilde greets you as wife!” [The betrayed woman, who'd given up the gods for a human fate, was so consumed by love that she conquered her will to hate.]

    The music at the end of the Ring says it all. Redemption is what it’s all about…

    We so need redeeming behaviour from redeemed hearts. I too suggest we cannot afford to see a funeral cortège of destroyed businesses.

    How people respond to David’s piece will reveal a lot. Thank you very much for an inspired strategy. I’m jealous of your skill.

    • Johnny Dunne

      I agree Paul we cannot destroy many viable businesses just because they are over extended and their market has fallen of a cliff !

      David, keep the article’s coming about proposing ‘solutions’ because a lot of the ‘huffing and puffing’ in the media just wastes energy when we should be trying to keep as many jobs as possible and create new ones where possible….

      In the bigger scheme of things in the international markets, we employ relatively few people so it mightn’t take as much ‘effort’ and using of the ‘noggin’ as you say to turn the tide and target 100k or 200k new jobs over the next few years !?!

  8. wills

    Hi Paulomahoney,

    Davids article has just been misunderstood by Paulomahony. Davids
    article is not as you describe it aka gauntlet revealing opposites etc
    etc blah blah. I notice in you pov you speak as if you and david
    are in some sort of superior zen economic mind state looking
    over squabbling comments. Do you think the Bankers should
    be bestowed mercy. Are you saying such should be our fate and
    turn a blind eye.

  9. wills

    Hi David,

    The banking system is deliberately making this crisis and
    David wants to do business with them.

  10. mespilroadflats

    I just wonder who the 10 apostles in the Golden Circle of Faith are….

  11. David , macaroon stealing ‘was allowed’ only to the privileged , if you were in rags or tinker clothes this was still ‘classed’ as stealing and as such is wrong even when your peers allow it.
    Forgiveness can be given where remorse is shown and those around the sinner can see the difference in the man. This will not happen here simply because of our twisted Catholic culture and the fact we are all in some form or other sinners , no examples have to be made as stated above we have had our Dirt and Charlie accounts , enough is enough the country for it’s population should not have the level of corruption we have.
    We Need A New Mandate The Media can be used to give the General Public the Truth if it means breaking it down to how many beers they owe the State then that’s what should be done. I know within my own circle already two trades men who fancied them selves as developers and these men have ended their lives over the worry of owing loans on the Houses they now can’t sell, this cannot be allowed to continue the law its self has become an ASS when our elected can’t ask a Banker a servant of the people a question !.
    The Sins of our Bankers can’t be simply forgiven with a few Hail Mary’s we need to strip them of their pensions and fine them their bank bonuses from the last two years, or since they have families and may even have health problems, then Jail for ten years,. That’s not even a bad option as on good behavior that sentence would be halved and while there you could have a wide screen TV and a mobile just like our Celebrity Criminals have already these days.
    Ireland is very quickly becoming The Joke of Europe , Amen

  12. wills

    Hi David,

    Davids Article is economic reportage treason.
    Carrying your proposal to its logical conclusion
    then for us means it was all an accident. The
    bankers are not responsible for this minor
    indiscretion of economic pathology.

  13. My Lost Generation

    What about the Inquisition? For banking heresy.
    …quoniam punitio non refertur primo & per se in correctionem & bonum eius qui punitur, sed in bonum publicum ut alij terreantur, & a malis committendis avocentur
    “… for punishment does not take place primarily and per se for the correction and good of the person punished, but for the public good in order that others may become terrified and weaned away from the evils they would commit.”

  14. Mise Eire

    It`s kind of an opium solution: those who got high on easy credit would be up for it allright. And there might even be the odd worker out there who`d rather keep his job than watch his employer drown in debt, and his colleagues line up beside him at the dole office…

    I`m not into vengeance or the idea of paralysing the lot of us for the sins of – even – a fair few. So I`ll go along with the idea of forgiveness, as long as you put the 25-30 year olds with young families & mortgages based on bubble prices first.

    Still, the pre-condition for a good confession is that
    a) the sinners take some initiative in the matter, and
    b) the truth be “told”, as opposed to “drip-fed”.
    Seanie doesn`t seem to want to look at a… (or is he just obeying his lawyers)
    The government doesn`t seem to want to look at b… (or are they just obeying their advisors?)

    in the meantime

    until the guaranteed banks`balance sheets are publicly summarized into understandable – or even “manageable” categories, we all live in fear, and mistrust of the political would-be “priests”, and ongoing speculation on the international markets which seem remote to the average punter, but are impacting on all our skins.

    At least some positive suggestions spring eternal in David`s column… even if it`s a rollercoaster Roisin is on these days.

    For what died….?

  15. Mr Mc Clure,

    Please note that the article you cite is full of inaccuracies. The Catholic Church has never ‘abolished’ indulgences:


    • Malcolm McClure

      Catholic Observer: Perhaps it was only the paid indulgences to release third parties from Purgatory that were abolished? The sinner who gains indulgences is not allowed to repudiate his debt of sin, but is provided with the means of paying it. The Church therefore enables him to meet his obligations through various actions, including spending substantial money on good works. Nowadays it requires the Pope’s personal indulgence to release a third party from Purgatory.

      As this is an economics forum and national debts are money not sin, perhaps the IMF will show up as the men in black who help us find ways to repay our our debts. This may not be necessary if the ECB pontiff issues a plenary Indulgence to all indebted nations.

  16. Garry

    Whatever works David, The way I see if, youre forgiving debt so building can start again and life can move on, get something moving in the country, maybe the end justifies the means.

    Yeah there may well be an argument for various levels of debt forgiveness… But the Americans have a term for unintended consequences in covert operations … blowback…. worth considering what these could be given the covert nature of the nationalization of Anglo Irish Bank and the debt forgiveness granted to the “golden circle”.

    Funny I havent heard the term used in the context of economists and central bankers yet but I think its kind of appropriate. Maybe we’ll get a bit of “Shock and Awe” too :)

  17. Tim

    David, Thanks for the article. Certainly, the banks should do the deal you suggest with the debtors (drop the interest, reduce the monthly repayments, extend the term – whatever it takes) and, thereby, 1) Help us to keep companies running and maintaining jobs and b) Help us to keep people in their family homes.

    If the banks refuse/neglect [remember sins of commission and sins of omission? ; )], to give these people a break, they must be forced to. This can be done by legislation in Dail Eireann being passed to take back the €7bn and use it, as I suggested in an earlier post under a previous article, giving it to the banks only THROUGH the defaulters/ those likely to default.

    I think your suggestion (since the government did not recapitalise the banks in the manner I suggested) is a very sensible one.

    Wills, Paul, et al, ……. I do not see any suggestion in David’s article that errant bankers should be forgiven, only the suggestion that they should forgive those whom they “lead into an occasion of sin”, as it were.

    I still want the crooks punished, and they should be, as they are never remorseful and I intend to turn up to the national protest on Saturday at 2pm at Parnell Square (so fitting).

    On the subject of naming the 10 boyos, I urge caution, for a brief period only; remember Mary Harney’s public comment about “jailing” CJ Haughy saved him from High Court proceedings?

    We MUST bring these guys to justice, so play the game along for now and don’t hand them a “Get out of jail free” card by naming an shaming before we get them. They were “playing Monopoly” with our economy and lost. Let us not play that game, now, and lose the justice they deserve.

    Thus endeth the epistle.

    • Robert


      Who exactly in Government is going to publish legislation “If the banks refuse/neglect”?

      • Tim

        Robert, “If the banks refuse/neglect”, there will be riots on the streets. We cannot continue to close businesses and lay people off and evict people from their homes without expecting revolt.

        The people of Iceland forced the hand of government – why wouldn’t we be able to?

  18. Macca,

    If you had learned the Bible instead of all that other stuff, you would know Matthew 18:23-35 – one guy is forgiven ten thousand talents and goes after someone for a hundred denarii – it’s like fifty billion and a hundred thousand – sound familiar? Anyway, the guy who is forgiven the big amount is thrown into jail and tortured because of his lack of forgiveness; which is the way a lot of people are feeling about our banks at the moment.

    Incidentally, I don’t see many dour northern European Protestants amongst the PIGS.

  19. wills

    Hi David.

    Is it wise to forgive those who remain un-apologetic
    for their banking malpractice and re-enter into working
    relations with them without shuting the money out
    of thin air fraud down only to get stung by it again
    and again and again.

  20. VincentH

    Your government debt owner lost the instant those flights went into the towers. Nothing since is in the normal country. Where did you expect the injection of funds from the ‘war’ to go, and the game playing of the 150 per barrel.
    Inflation is not some moral visitation, it is a product with all and every market, and evil only when it bites into your personal capital.

    And two bites. it will concentrate, anything beyond 100 is foolish.

  21. My Lost Generation

    In the States or France they dont seem to forgive that easily. Irish people would only do so because they are ‘irish’ and beyond everything they really cannot do otherwise because the country is genuinely screwed, any link between these two conditions…?

  22. Tim

    Folks, for anyone still interested, I have combined the “Top 5″s submitted, as requested by Ruairi under the last article, into ONE post for easier analysys. It is back there, if anyone is interested in some light reading! I think we should keep relevant posts there for now, just to keep lines of demarcation clear on our Host’s blog.

  23. I think we touched on this a few blogs ago. Lets say, for example, that the people that bought family homes during the bubble were identified and the bubble element was marked down from the mortgage. Take a nominal figure of 20%. Just erase the bubble price hike, so to speak.
    What affect would that amnesty have on the economy overall?
    Over to the economists.

    • Fergal73

      Furrylugs, that sounds like a good idea, but imagine implementing it? You would have to also identify who sold and bought during the bubble. After all, if you bought in 1982 for IEP 10k, and sold in 2004 for EUR400K to then move to a EUR500K house, should you be compensated with a 20%?

      Also, for people like me, who recognised that there was a bubble, or were simply priced out – and rented for the bubble years not see any kind of compensation?

      • Tim

        Fergal73, I think, though I would not prsume to speak for hin, that Furrylugs is taliking about people who have “skin in the game” and need some relief.
        We HAVE to relieve the FEAR that is out there and ley people spend again, so that companies can survive/jobs can be sustained.

        The media have played on the fear so much, that people who HAVE money, are afraid to spend it.

        This has got to stop.

        • Colin_in_exile


          Please explain what “skin in the game” means. I’ve never heard anyone use it in my life.

          Aren’t you going to keep house prices artificially high if you compensate owners with 20%?

          I couldn’t buy a house because I couldn’t afford to. Don’t we need house prices to fall as much as possible as soon as possible, then slowly (sustainably) increase?

      • Fergus ,
        the simple questions you pose makes it a stupidly unworkable idea unless we engage with DMcWs local forgiveness model above. Set out a year where people were duped. Say 2005/6. The start of the bubble. End with Christmas 2008.
        Two years ago I said to the other half that the King of the Hill, being a local auctioneer and FF head, wouldn’t be changing his annual 4×4 for quite some time met with ” what are ye on about, sure he’s sorted”
        Now they’re putting me in a big earthenware pot.
        Mainly thanks to the insight on this site.
        The great thing is that so many new people are contributing on here. There’s some experts, who back off to allow dialogue, but when they comment it’s worth taking a step back and analysing what has been said.

        It’s quite obvious without names to whom I refer.

        Should the “Circle” close down the Internet , as happened in N Korea, draw your own conclusions.

  24. While on the subject of forgiveness , I forgive you Tim as now that I have looked back a page I saw the copy and paste job you done and now that the Top 5 ( odd ) points have been placed together I see at least your heart is in it . Just step back on the posts , your hits fill up outlook reading

    • Tim

      BrendanW, I accept; thank you. You know, I found the same with my outlook, so I turned it off by “unsubscribing”. I do not need to be alerted to new posts anymore, because there are so many. That was only useful to me, months ago, when there were few posts and I was only reading, before I plucked up the courage to start posting here myself. Surely, though, I am not the most prolific poster?

      Anyway, olive-branch accepted, graciously.

  25. If a couple of Hail Marys will forgive the small town developer or over stretched yuppie, looks like the Government is in for a recitation of the whole Bible….


  26. goinghome

    Getting the lender out of the way and cutting a deal for the company or individual who was misled by ‘experts’ is good enough. Using the analogy of the grieving process, many of us are in the throes of the anger stage directed towards the lenders and their powerful facilitators, buffered from loss with impunity. Therefore the prayer, not quite of holy absolution, that resonates with me right now is this one;


    Dear Lord (God/Yahweh/Buddha/Bob/Nobody):
    We beseech You, O merciful One, to bring comfort to those who suffer today for whatever reason You, Nature, or the World Bank has deemed appropriate. We realize, O heavenly Father, that You cannot cure all the sick at once – that would surely empty out the hospitals the good nuns have established in Your name. And we accept that You, the Omniscient One, cannot eliminate all the evil in the world, for that would surely put Thee out of a job.

    Rather, dear Lord, we ask that You inflict every member of the House of Representatives with horrible, incurable cancers of the brain, penis, and hand (though not necessarily in that order). We ask, Our Loving Father, that every senator from the South be rendered addicted to drugs and find himself locked away for life. We beseech You to make the children of every senator in the Mountain Time Zone gay – really gay. Put the children of senators from the East in a wheel chair and the children of senators from the West in a public school. We implore, Most Merciful One, just as You turned Lot’s wife into a pillar of salt, that You turn the rich – all the rich – into paupers and homeless, wiping out their entire savings, assets, and mutual funds. Remove from them their positions of power, and yea, may they walk through the valley and into the darkness of a welfare office. Condemn them to a life of flipping burgers and dodging bill collectors. Let them hear the wailing of the innocents as they sit in the middle seat of row 43 in coach and let them feel the gnashing of teeth that are abscessed and rotted like the 108 million who have no dental coverage.

    Heavenly Father, we pray that all white leaders (especially the alumni of Bob Jones University) who believe black people have it good these days be risen from their sleep tomorrow morning with their skin as black as a stretch limo so that they might enjoy the riches and reap the bountiful fruit of being black in America. We humbly request that Your anointed ones, the bishops of the Holy Roman Catholic Church, be smitten with ovaries and unplanned pregnancies and a pamphlet about the rhythm method.

    Finally, dear Lord, we call upon You to have Jack Welch swim the Hudson he has polluted, to force Hollywood’s executives to sit and watch their own movies over and over and over, to have Jesse Helms kissed on the limp by a man of his own gender, to make Chris Matthews go mute, to let the air – quickly – out of Bill O’ Reilly, and to turn to ash all who are responsible for those who smoke in my office. Oh, yes, and unleash with a fury a plague of locusts to nest in the toupee of the Senate Minority Leader from the great state of Mississippi.

    May You hear our prayers and grant them, O King of Kings, Who sits on high and watches over us as best you can, considered what screwups we are. Grant us some relief from our misery and suffering, as we know that the men You shall smite will be swift in their efforts to rid themselves of their misfortune, which in turn may rid us of ours.

    With this we pray, in the name of the Father, and of the Son, and of the Holy-Spirit-Who-used-to-be-a-Ghost, Amen. -

  27. mccool

    I think David has a very valid point in what he is saying in his latest article.

    We should not forget that it is small to medium sized businesses that are the back bone of the country and that they really generate the bulk of the country’s wealth that allows the country to operate.

    Over the past number of years Ireland has lost all competitiveness due to increases in wages and over heads. Many companies are facing financial difficulties due to down turn in business and stuck on fixed rates which now way above the variable rate which looked the best route a few years ago. There has to be flexibility with the banks at least changing businesses to variable with out penalties or with limited penalties.

    This along with other measures would help keep businesses operating and keep employees in work. I have 45 employees and am currently negotiating with a bank in changing to variable which would make a huge difference to our company. I just hope that senior bank officials are looking at this site and can see the merit in David’s thoughts.

    I really like this site and enjoy reviewing comments but keep it real and please concentrate on solving the problem and stop blaming. There will be plenty of time for the blame game once we ride out this storm

    • fordprefect

      We need more efficent business. Many are throwing money in a hole because high sales were flattering them and hiding the holes below the water line.

      We need enforcement of credit terms and we need business to work on cashflow and not lean so heavily on borrowing. You buy the goods you pay for the goods in the agreed terms. Not three months late after tying up staff in complete crap chasing you for money.

      Lean, agile business is the name of the game. This high overhead, high cost and lax cashflow thing is going to kill a lot of businesses here. Also the lack of reinvestment in the business by paying directors monumental salaries relative to the size of the business coupled with high borrowing to pay for these inflated salaries is a disgrace. Pure greed.

      Trouble is that the example from the top is not there. It is acceptable to take the piss from government level down as regards payments so why should the rest of us be any different.

  28. StephenKenny

    Leaving aside the moral hazard, the law of unintended consequences, and the signals that this would give to property investors and mortgage holders, the fundamental problem with this idea is that it just wouldn’t work.
    Let’s just imagine for one moment that this is done, and let’s fast forward to the day when it’s all complete.
    We all get up on this great and glorious morning, open the curtains, and look out over a land where there’re no defaulting mortgages.
    Then what do we do? What happens next?
    Sit down at the breakfast table and open the paper. There’re 100,000 cheap houses, suddenly, with mortgages on easy terms. Your mouth starts to salivate at the thought of picking up one of these fantastic bargains. If you’re smart, you’ll realise that there’re about 1,000,000 other people doing just the same thing, and not bothering to get dressed, you leg it down the the estate agents.

    Banker. You get into work, and find everyone grinning like a bunch of escaped lunatics. At the 10 o’clock meeting the head of mortgage sales is so excited he’s visibly vibrating. The quality of assets on the banks books are suddenly great, the bailout money is just sitting around doing nothing, and there’s a queue down the street, of people, in their dressing gowns, clutching mortgage applications.

    If a bank has to chose between lending to an early stage business, and giving a mortgage, it’ll chose the mortgage every time. With an early stage, not only do the bankers have absolutely no idea how they work, but they run the risk of losing all the money they’ve lent. With a mortgage, even if prices fall 60% and the owner defaults, they still have 40%.

    Nothing’s changed. Nothing. We’re still the property obsessed idiots we were 18 months ago.
    God help us, the developers would start building again.

    Finally, the word “forgiveness” implies a sort of ‘get out of jail free’ card. The collapse in bank assets would be crystalised, and another massive bailout by the taxpayer would be required. Once in place, they’d be frantically trying to do business, and the only business they’re interested in is secured lending.

    It would last 6 month, personal debt levels would go ballistic, government debt levels would already be stratospheric, and we’d get a really bizarre feeling of deja vu, as 2007 came into view, again. But worse. Much.

    Sometimes, when you don’t know what to do, it’s best not to do anything.

  29. Tim

    Martin Mansergh, on “Tonight with Vincent Browne”:

    “Brian Cowen, as Minister for Finance, has dined with Bankers many times; that’s part of his job”.

    So, there!

    A bank, surely, is just a private sector, for-profit-business. Many, here, have suggested that a bank should, rather, be viewed as an essential utility, such as water and energy (and I see merit in that view).

    Why, on earth, would it be “part of” the job of a minister of the government to “dine” with the bosses of such private sector companies? Surely, his job SHOULD be responsible stewardship of the entire economy of his country, for the overall well-being of the ENTIRE people of his country?

    It occurs to me that Public Service governmental positions in Ireland are sought for a different purpose to those in America. Over there, ridiculously wealthy people “step-in” to politics for a while to “give back” to their society, at a MUCH lower income than they were earning in their previous jobs. Here, people join the political career ladder in order to enrich themselves, but starting from a relatively low base income. Any former bankers in the Dail? Plenty of former teachers there. (Just a comment on teachers in terms of relative income; not attacking teachers – those who teach my children are wonderful people on pretty low salaries for their qualifications and the work they do, so don’t think I am “Teacher-bashing” here – far from!).

  30. mccool

    michael manseragh today quoted de valera in the 1930′s saying “no man
    is worth more than 1000 pound” and he compares this to 500,000 in
    todays money. After using all the inflation calctalors available on line i come up 1000
    pound in 1930 the same as 50,000 in todays money.

  31. DarraghD

    @gadfly55, like yourself Gadfly, I’ll be having my say this Saturday. I’m all for forgiveness but at the same time there are those amongst us who are ultimately so drenched in filthy sin and corruption and who are so utterly beyond redemption or conversion. You wouldn’t offer Hitler or Osama Bin Laden a confession, and I intend to use my presence on Saturday to do whatever I have to, to make sure that this government get the message that some of those amongst us are unfit for purgatory and need to be given the ultimtate unconvertable sanction.

    It’s time to call time on all this messing lads and sort it out for once and for all…

  32. Tim,
    I thank you for taking the trouble to put the lists of proposed action in one place on the previous thread. I think I’ll work on presenting it in a more digestible form…

    I must say I’m taken aback by your…

    “I still want the crooks punished, and they should be, as they are never remorseful and I intend to turn up to the national protest on Saturday at 2pm at Parnell Square (so fitting).”

    I wasn’t expecting that. Also when you followed up by urging caution – in case it would be hard to charge culprits (my word) with criminal acts (or civil action) – I was perplexed and confused. Were you letting off steam? Of course you were, and I’d be disappointed if you weren’t incredibly angry. But do you mean to say that you favour legal proceedings?

    I’ll bore people if I repeat again my hope that lawyers will not be enriched by such action. Public scrutiny, in the form of a parliamentary committee, open to all media, would be our best way to ensure this sort of behaviour never happens again.

    I’ll support the proposal that aims to confiscate profits made on property development but suspect those profits will prove to be unavailable, and debt remission appropriate.

    To those rushing to punish bankers: whose job is it to ensure we live in a safe society, with security for our children and grandchildren? You all know and agree, it’s our democratically elected government, to whom we delegate that responsibility. Let’s remember the state is there to protect citizens and the organs of state were temporarily entrusted to Fianna Fail throughout these years. Today it emerges that Mr Cowen, as minister for finance, made important decisions that may well have symbolically, and actually, cemented the culture of inordinate risk taking.

    I have nothing against risk takers. I admire them and the magnificent achievements of entrepreneurial capitalism. In this respect I am an unreconstructed Marxist, who once read Das Kapital Vols 1-3 for breakfast. But when the state is commandeered for the purpose of insider trading on a grand scale, the time for a revolution is come.

    I have been hoping Mr Cowen will understand that the country has need of a new contract between citizen and state. I’ve been hoping he would metamorphose into a leader fit for purpose. Each day that passes with him defending the government’s record is one more nail in the coffin of my hope. By Saturday, there may be an irreversible process of collapse. I feel for the man. He seems totally out of his depth. His culpability may be sapping his strength. Right now, he’s dead on his feet.

    The internal contradictions of capitalism have advanced to the point where the market can no longer be trusted to operate – because the greed of the ruling class was not tempered by its politicians. [That's my story of the death knell of the capitalist system.] But are there sufficient honest people of influence in Ireland to take over? Politicians we citizens can rely on to maintain a sense of moral decency and rectitude.

    I fear not. And hope I’m wrong.

    As for me not understanding David McWilliams, I’d love to know whether David McWilliams thinks I’ve misrepresented his intention. If this was a normal blog, the author of the post would re-enter the fray at some stage. Thankfully I’m happy that I’ve done my best to read his intention.

    • Tim

      Paul, of course I am “letting off steam – I think that everyone here is, including you. We would not be here if we were not angry about what has happened and DISCERNING about where to go to seek information and answers.

      Do I want the last leg of the circle (lawyers) to become even more enriched by joining this debacle in a “Tribunal” situation? No. But, do I want the (already paid for and excellent) CAB and Fraud Squad to meet-out justice to crooked bankers? Yes. I do.

      I have a “legal-bent”, as it were, and these guys are criminals – make no mistake about it.

      As well as running a small computer business, I, also, teach computer studies to teenagers; some of them have been availing of the “Free-books-scheme” for all their years in school, because they/their parents cannot afford the basics. That grant has been cut, now, and next September, if the cuts stand, these teenagers will be cut off and we can pay more for them later in Mountjoy/Thornton Hall or in single-parent social wellfare payments. These kids/our society should suffer for the “sins” of bankers? No! My own children? No! “The Manic Street Preachers” have a pertinent song here: “If You Tolerate this, Then your Children will be Next”.

      Paul, if we are to recover from this crisis (instead of falling into armageddon – which, we might), we MUST remove those who caused it. They CANNOT be allowed to remain “in situ” to continue with their damaging, corrupt practices. Name and shame is not enough – they must be “culled” from the system they have gambled non and destroyed. They will only destroy the system again, if we leave them there.

      I admire your “goodness”, Paul. But, there are times when a cull is needed; I am reminded of our Nobel-Prize-winning poet’s words, here, from Seamus Heaney:

      “Prevention of cruelty talk cuts ice in towns,
      But, on well-run farms,
      Pests have to be kept-down”.

      I am sorry to have “perplexed” you. But I cannot abide filthy-stinkin’-rich “fat-cats” oppressing ordinary people.

    • Tim

      Paul, BTW, David does, occasionally intervene; in my experience, it is only when commentators get it VERY wrong and lose track. So, perhaps you are “balancing” me, at the moment. Perhaps that is a good thing? Don’t despair. We are all only here to throw out ideas, and “Try” to contribute. Let’s continue?

    • Fergal73

      Legal action if the state can show that laws were broken is entirely legitimate. Lawyers were enriched by the taxpayers by Tribunals (and typos!), not in criminal cases.

      No more tribunals! Imagine what the police could have done with EUR1Bn if invested in white collar crime units. They might have been able to nip this in the bud before it every got this big. Of course, that would have required a FF government that had the people of the nation as their primary interest rather than lining their pockets and that of the builders / developers / land owners / bankers….

  33. Tim

    mccool, I hope that you can “hold on”. You are a hero in our country; one of many, I know. People like you, if you manage to come through this ( and I do mean “manage”, because so many bosses are only in business to make profits instead of, just “staying in business to make a living and keep their loyal workers in jobs/ a living”), should be the people that this country honours.

    I am trying to give “work”/ an income to people I know who need it at the moment. Let’s all try our best to “hold on”. TOGETHER. It appears that we may have a banking system working against us and FOR the elite and, sorry to say, a “government” in cahoots with the bankers; we need to STOP them from doing that and HANG on together in spite of them. Let’s find a way for you to keep your 45 employees. There are so many bright people on this blog who impress me. Surely, we can generate enough ideas to help? Just, keep talking and trying. Please.

  34. Apologies to all for missing out on a huge tranche of the previous blog. I’ll piggy back Deco’s comments if I may. All good stuff.
    Personally I prefer Shakespeare to religous doctrine. Less smoting and smiting with deeper insight into the human condition.

    There is a tide in the affairs of men.
    Which, taken at the flood, leads on to fortune;
    Omitted, all the voyage of their life
    Is bound in shallows and in miseries.
    On such a full sea are we now afloat,
    And we must take the current when it serves,
    Or lose our ventures.

    So to action. It goes without saying that the culprits must be punished. To punish them they must be rooted out and punished or hounded from the State to exile. Like the tens of thousands who have no choice but to emigrate because of greed and traitorous behaviour. The fundamental shift in the three Pillars or democratic adherence to the Constitution cannot come about with the current set-up so I’ll be looking for that from Gilmours manifesto if he wants my vote when the Government falls in early April. Thats when we have to stump up 5bn in loan repayments. Where’s that coming from? Me Granny?

    “The fault, dear Brutus, is not in our stars,
    But in ourselves, that we are underlings.”

    I can’t be in Dublin because I’m flying overhead about lunchtime. Might pull the chain over Leinster house. Best of luck, all who go.

  35. Wouldn’t ye miss johnALLEN. No mystical insights.

  36. sean79

    It seems to me that during the celtic tiger years, the bankers, government and media put their own interests ahead of the wider Irish society by creating the narrative that consumerism/purchasing was good for the wider society and thus it was ok to take out loans that could not be certain of being paid back. However, the wider society took out those loans and are now blaming the above institutions for creating that narrative.

    Is it because of Ireland’s particular history (religious and relationship with Briton) that we went overboard with taking credit, buying new houses and spend spend spend because deep down we knew if it didn’t work out we could blame the ‘other’ for allowing this to happen. ‘We’ were the victims. Why are people not on the streets up in arms about the corruption in the banking system and failures in the regulatory authority. Is it because of some sort of national guilt? I think its about time Irish people started taking personal responsibility for their actions or lack thereof in all aspects of society. Responsibity for not standing up for ourselves and stop with this victim mentality already.

  37. sean79

    as we forgive those who sin against us…..

    I agree with Dvid that the banks should start forgiving but Irish people alsoo need to forgive – the banks, government etc for their actions during those years.. Then we can move on the road to recovery.

  38. SamB

    I completely agree with David. Without debt forgiveness, there will be no recovery.

    The borrowers will leave for shores that have embraced expansionist policies and are producing opportunities. The debts will be left to fester on the banks’ books. They (the banks) will be unable to lend into any uplift – mired, as they will be, in the “puddles of the past” (I know Furrylugs likes Shakespeare – but I prefer Paddy Kavanagh).

    Until there is new bank lending on a commercial basis, we are frozen in this depression – and depression it is!

    P.S. I see that the smell from the can of worms that is INBS is starting to make a few noses twitch. Wait for it – You ain’t seen nothin’ yet!

    • “I saw the danger and I passed, along the enchanted way”

      Good call SamB.

      An epitaph to the poor misfortunates that believed the absolute lies told to them by people that they trusted were regulated to give impartial advice.

  39. jim

    If it’s ok i’d like to park God up for a moment (he’s probably busy chatting G.Bush anyway).i’ve gone back and re-read the original Basle accord and compared the updates in Basle II accord re. Banking practice and regulation.I’ve also read a report published in the Central Bank dated 2004 re.housing,credit risk,etc which appears to identify and highlight in great detail the state of play in Ireland at that time.Remember the first draft of Basle II was also published in 2004.I’ve read a speech B. Cowen as then Minster for Finance made to SME’S to launch the toolkit cd re Basle II and near the end he say’s “put simply it means that Buisness will require less capital for larger credit”.This was 2006 and the cd was required for jan 07.The question that bothers me is “if the Regulatior’s office new all about Basle, and the Central Bank had already flagged problems in the property market in Ireland as early as 2004 and Cowen was at the helm at Finance in 2004,why was’nt the credit and property positions unwound and brought back into line with best practice going forward.Remember Ireland had to bring its accounts to some order for the launch of the euro a couple of years previously and I’m sure that the kicking the Punt had recieved prior to that was still fresh in the Regulators and Central Banks minds.Its also worth nothing that AIB and BOI were engaged from 04 through 06 in heavy lending and a battle for market share with ANIB et al.Jasus people the stark question is “was this mis-managed or stage managed”.Was it a case of the Banks making plenty of money,FF riding high on the back of this boom,the Regulator and Central Bank saying fu.k it .its the ECB’s problem its their fuc..ng currency,our loss of power is their headache.Where was it all going to end?,had anyone though it through?,had Finance projected forward any scenarios to assess risk and possible downsides.This is basic bread and butter stuff for any Economist.All these guys had pucks of experience,you are left with no alternative but to conclude that the people of Ireland have been conned.Im sorry David, GOD will have to wait in line to pass judgement on these people,the Irish people will have their case heard first.

  40. VincentH

    @ Jim. yes, surely some sort of economic war games were run by Finance.

  41. Mikey

    Football Focus? Saint and Greavsie maybe.

  42. Did you know that Sigmund Freud, the famous psychologist proclaimed that he figured out all about the human mind and psychology of people except he could not explain the Irish and their personality traits. No joking, look up ‘Freud and the Irish” on google.

    Are we beyond help?

  43. Good morning friends,
    I’ve been listening to RTE radio. If Willie O’Dea has lost the plot, there is no hope for this cabinet. He’s a politician skilled at listening to his grass roots, skilled at communicating with the concerns of his electorate. That is, I suggest, his greatest asset.

    Willie has just said that he’s against doing anything that risks compromising future prosecution of the 10 hidden men, if they’re guilty of doing anything illegal. He’s said he doesn’t mind whether the names are published or not. He’s indifferent to that. At least Dermot Ahern has said the names should be published.

    Keeping the names for public scrutiny means that the media can’t investigate the links between them and the politicians. It protects the politicians. I, for one, suspect there are big links between this government and these men who systematically misled the stock market. I won’t take the Taoiseach’s word for it. Mr Cowen and his cabinet now face a shift in the burden of proof. For me, they now need to prove it. Never again will I take anything they assert on trust.

    Now I come to my biggest concern and I’ve hesitated before writing what comes next.

    There is to be a public demonstration in Dublin on Saturday. You’ve all see the passion, the indignation, the frustration of people on here. People who come on here and express their views and demands are mild mannered. We are people who believe in the power of our ideas to influence people. We are the most educated people Ireland has ever had. And we are horrendously angered.

    I am afraid the demonstration on Saturday could become violent. To be blunt, there might well be a splinter group that sets off to burn down the building that houses the department of finance, or even the Dail. I feel I need to speak out and warn Willie O’Dea and his cabinet friends that words lead to action. People who heard Willie say that it didn’t matter to him whether the names came out or not – or who will read the report that he said that – will I predict feel more frustrated that before.

    There is always a tipping point, a straw that broke the camel’s back. There are two more full days before Saturday. Unless someone does something to show a convincingly complete transformation in the government’s attitude, the risk of violence will increase by the minute.

    The Gardai will be doing a risk assessment. Intelligent special branch officers will have their ears and feet on the ground. They will assess the situation by the hour and plan their deployment by the hour.

    There is a risk that trade union leaders may lose influence over their members. Wildcat strikes… Spontaneous protests.

    Everyone says that the most important thing is equity. It’s not fair that all those who created the crisis are getting off scott free. That’s the simplest expression I can give of the prevailing mood.

    This is not a theoretical exercise. People are losing their jobs every day. They all feel betrayed by the ruling class (that old Marxist term seems fit for today). Some of them will feel impelled to action and not know what action to take. It only takes a small group of people who appear to have a plan. They could exploit the situation and lead people into riot. It’s happened before. The vast majority of people will understand and stand idly by.

    This government does not have the confidence and support of the Irish people. It has lost the moral right to govern. It continues to give it away by the minute. All the government has colluded in creating this whole crisis. If only we were having a crisis because of international factors. But the international crisis has revealed something rotten in the state of Ireland.

    Enough said about the risk of violent rebellion. I hope the special branch is reading this. I hope someone in the Taoiseach’s office is reading all our contributions and reading the runes with fear or favour.

    Some sort of safety valve is badly needed. [ In my opinion, and I don't want to set a red herring running by saying this, Paisley provided that in Northern Ireland.] Who is our Fianna Fail Churchill?

    There is another interest I have. In a nutshell – this is a comprehensive crisis. Comprehensive conversations are called for. I suggest we need to find a way for people to pour out all their analysis and recommendations. Right now, we are sharing our views piecemeal, in bite sized bit. We need to see the whole menu on offer.

    On on-line book perhaps with contributors invited to write down all their business case for survival… I bet many writers wish they could spell out all their ideas, so that people could consider a fuller picture. Someone would need to curate such a publication. I hope there is a entrepreneurial publisher reading this, looking out for ideas that will enrich their reputation.

    We are a long way from becoming a cohesive group of thought leaders. I never meant to write about political economy. This is a huge distraction from my primary purpose. But I feel drawn to sacrificing my personal interest for the sake of survival.

    I don’t want to be saying afterwards, I thought you so…

    Thank you all very much.

  44. For the sake of transparency, I better declare an interest.

    I am working on a business idea which will involve seeking funding from government, and will require support from Willie O’Dea in his role in the Task Force for the mid-west region. Obviously I hope what I’ve written will not be held against me.

    The only reason I bother to criticise anyone is because I still have hope for them.

  45. MK1

    Hi David,

    I’m glad you are looking at the business credit bubble, because not only did excessive credit go on property, it also went into building many businesses which are equally unsustainable. And now that folly is coming home to roost.

    I realise that religion in our childhood can form many lasting memories, good and bad and even funny, but I’m not in favour of using religion of any kind as an analogy/metaphor to explain our economic situation. Its too ‘touchy’ and turns many off, including myself.

    One problem with religion, and the problem in your thesis, is that it is NOT the arbitator in this or most/any countries. Indeed, we have laws, police, armies, prisons, etc. If your analogy was watertight, we would have murderers queuing up at churches, synagogues and mosques, and other places of worship (Croke Park, Dundrum SC?) asking for forgiveness or equivalent, and carrying on. Life is NOT like that. Murderers when (and hopefully) caught go to p-r-i-s-o-n. 100 or 100,000 hail mary’s is not enough.

    And so it is with the lender. It is not a case of giving forgivess. It is not within their remit. Their job, the job of all banks, is to see their loan repaid. Yes, there is room for negitiation. The aim is to get the loan paid back, not to put the loanee out of business. That can be an extension of terms, ‘forgivess’ with payment holidays, reduced payments, etc. The key is that the loanee has to keep paying.

    One difficulty which can stymie any negotiation is back-to-back loans. If a business has borrowed 500k over 5 years, and the bank has used 5 year money to fund it, if the business then goes to a 10 year term, the bank will have to get the money from somewhere. And it may have difficulty doing so if its quota from the ECB is used up and other inter-bank lending is maxed out when taking into account its loan portfolio.

    But hopefully stressed loans such as these will be the easy ones to manage.

    The hard ones are where someone has 300m out and its a brownfield site and its producing no income to the loanee, and they are paying no interest at all, never mind capital back. This is where the big sh.it is hitting the fan. Only long term will any value come out of these.

    DavidMcW> The second thing they have to understand is that they are not getting their money back, not today, not tomorrow, not ever.

    Well, its hard to say the ‘not ever’ for definitive. For one thing, what is clear is that the money they may be getting back now, say for example close to zero, will improve at some stage. It may take a decade or two or less, but it will be better than now for any “non-performing loans”. Its gonna take time to work out. That deleveraging process just takes time and pain, perhaps lots of pain. But there will be some inherent value.

    We as a country have tough choices. We can nationalise the banks, take the assets for what they are in relation to the non-performing loans, and use the assets in the long-term. We can be aggressive but we need to think long-term. This is akin to the Swedish solution.

    Confessional boxes and acts of contrition dont work ……..


    ps: I was put-off buying/reading your book titled ‘The Pope’s Children’ because of the mere word pope in the title.

    ps2: I havent read any other replies yet !

    • A good clear response MK1 and I wouldn’t be a big religious head either though I can hack Davids article because he didn’t see what I saw, namely no “pull”, no choice and no chance so I had to hit the boat long ago. Now I’m back and no way will I allow this jungle politics continue. He was born lucky and made the best of it. Fair play.

      You say “WE” must do this that and the other. Bear with me. This is not an attack. “WE” infers a functioning system of democratic process or some semblance of due procedure. If we were reading about Irelands travails and cut, copied and pasted Ireland for Zimbabwe, it would be unbelievable.

      But I think thats where we are excluding a fall of government or the Gardai firing tear gas at disposessed people.

      It’s a reply but maybe not what you expected. I’m keenly aware that I don’t have the economic knowledge to make valid assessments and I don’t want to clog up the site with musings but having said that, the economics of pain are people like my 88yr old nan living 2/3 more years or dying because this pack of animals got it wrong.Please don’t take the tone in the wrong way.

  46. gadfly55

    The government is dominated by lawyers, quibbling lawyers who threaten paralysis of government whenever legal advice can be used to defer decision, clarity, transparency. The Greens ministers should be reminded of the Brendan Smith case and its implications for the FF-Labour coalition, and the collapse of the Labour Party. Dick Spring left it too late to demonstrate his integrity, once he had done the deal with the devil for the sake of office, blah dee blah dee blah. For the sake of expediency, for the sake of believing you, the minister, is actually capable of doing anything but fiddling while Rome burns. The game is up, Gormley and Ryan. It is time to go to the country, now, before any more wreckage erupts from total breakdown of stability from endless strikes. The people have no confidence in this government. Withdraw now, without further delay, and work to form a coalition on the left with a clear mandate for fair taxation at European levels for European public services.

  47. Malcolm McClure

    PaulOMahomy: Thank you for your thoughtful and toldful contributions. We are at a Darwinian moment in the history of philosophy, when a whole range of old ideas becomes extinct in a short space of time, to be replaced by sounder and fitter concepts that stayed quietly in the background while the brash upstarts of global communism and capitalism flourished, fought it out, and died. We are entering a Kuhnian paradigm shift in global attitudes, assisted by the very medium we use here. The Irish can make some contribution, but maybe we need to look farther afield to make sure we get our new model right. There are elements of Islam and Buddism that may deserve a place in a new foundation for our beliefs. Catholic exuberance and Protestant ethics also have important roles, as does a complete rethink about the place of drugs in all this. Followers of John Allen may want to include astrology, acupuncture and yoga.

    The discussion needs to be open, transparent, blameless and respectful of all shades of opinion. Perhaps international blogs that consider these questions already exist? It would be surprising if they didn’t, as intelligent people all over the world must be asking thes same questions.

  48. gadfly55

    By Christmas the European Commission and ECB will have effectively imposed conditions for funding of the Irish government bonds, because no private investors will touch them. Cowen is delaying the treaty vote to hold back the imposition of conditions , and allow the commission on taxation to maintain corporate and personal taxes in favour of the elite. Only disintegration of political stability through rolling strikes and mass demonstrations will dislodge the FF tribe under siege, who are digging in for the long haul, although they know the Greens can walk, and all come tumbling down. The independents are now holding on for the last minute because they too will be swept aside. The message must be, There is a Better Way, because many people are too cynical to believe anything is possible. Gilmore and Kenny must give voice to the anger of the people who want fairness, transparency and power restored to the majority. Nothing less is acceptable.

  49. But David, we need to know what the penance would be. What is the banking equivalent of ‘a few Hail Marys’? If it doesn’t include any transactions involving Euros we may have other problems. Not paying debts is an attractive proposition, but has longer term ramifications, most of which involve no money for us.

    • Caen

      Penance? The unaccountable and untouchable squander the future simply to satisfy a collective ego – they know not what they do.

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