February 22, 2009

My plan to save the country

Posted in Banks · 326 comments ·

OK, screw this! Let’s solve the problem and stop blaming others (there’s plenty of time for that); we must not let the country sink.

We -that is, my generation – don’t want to be the first Irish people who have had to emigrate twice in their working lifetime. Those who were born in the mid1960s to mid-1970s face the very real prospect of having emigrated in the 1980s and early 1990s, coming back in the late 1990s and early ‘noughties’, and now having to go away again. Some might argue there is nowhere to go in a global depression, yet we all know someone who will take his or her chances in a bigger pond than be stuck here, ruled by people who don’t seem to know what they are doing. It is clear that the government is completely out of control. It is also clear that this country is far too important to be left to those with their fake patriotism, which simply masks endemic cronyism. It is not about them, their careers or their political parties any more. It is about us, our lives, our parents’ retirement and our children’s prospects. If these people’s grasp of basic economics is so pathetically challenged that they cannot govern, then they should just go. Leave us alone, please. In the name of Ireland, go.

We need to rebuild, and most of us do not care who the builders are, as long as they do the right thing. Whether it’s Fianna Fáil, Fine Gael, Labour, whether it’s Brian Cowen, Enda Kenny or Eamon Gilmore -w e don’t care. Just do something, draw up a plan, tell us what we have to do and we’ll all go to work. The only way out of this is hard work – from all of us. We need to get back to basic commerce and play the game as it should be played.

Whether we like it or not, the economic recovery plan must start in the banks. As this column has argued from the start, shoving capital into contaminated banks is not the answer. In November, this column suggested that a solution was to isolate a ‘bad’ bank which, in turn, would create clean, ‘good’ banks. This is still the way to go. If the government is thinking in this direction, it is about bloody time. Why did they waste so much time, pay so many second-rate advisers and, by prevaricating, directly cause the loss of jobs?

Let’s focus on the issues. In the madness of the past few days, AIB’s profit warning, which was announced last Thursday, went unnoticed. It was the most significant news of the week.

Granted, the ‘golden circle’ got more airtime, but the AIB warning told us something about today, not yesterday. AIB -a bank with a chairman and chief executive who are scandalously still drawing salaries -admitted that its loss charge (ie its bad debts) for 2008 was €1.8 billion -o r 1.37 per cent of its loan book. This is up from a figure of €950 million estimated three months ago. The ‘mistake’ -the difference between the original bluff figure and last Thursday’s new estimate – was €850 million. Just to remind you, this represents 24 per cent of the bank’s recapitalisation of €3.5 billion announced two weeks ago. That means 24 per cent of the money -our money – poured in by the government has gone already! (How many A&E wards could we staff, or how many special needs teachers could we fund for our national school pupils, with this money?)

At this rate, AIB will have burned through all our cash in a matter of months just by sticking to the current rate of adjustments to its estimated bad debts. A few months ago, this column said that the bad debts for the whole banking system were likely to be €40 billion. This is 25 per cent of our GDP -just as it was in Japan during its 1990s bust. So what are we going to do about it? Here is a five-point plan to get us out of this.

1. Create a ‘financial skip’ and throw all the bad debts of all the banks into it. This bank will be given the mandate to work out the bad debts over ten years. It should be staffed by the best liquidators and recovery experts in the country. These are people who know how to get value out of an asset. They know, not how to lend, but how to sell. Today, everyone is talking about debts, but there are real assets in this financial skip and, over time, these assets -if managed properly – will become valuable. In effect, the new bank will be the Irish property market. It will control the price and control development.

2.The skip has to buy the assets from the banks. It must do this at a deep, deep discount. In reality, this figure could be as low as 20 per cent of the original price. Let us assume the bad bank needs a huge whack of cash; where are we going to get the stuff? Where could we get €40 billion?

3. Here’s where we play the EMU card. We go to the European Central Bank (ECB) and say: ‘‘You lend us the cash. We, after all, gave up our interest rate and exchange rate policy to join the euro, now you have to help us out. You have to prove that the EU is a community of nations, in reality. Show us some practical solidarity.

Otherwise we default and undermine the euro.”

In addition, the ECB is already committed to the Irish financial system. It is drip-feeding money into our contaminated banks every day, keeping them alive. We should suggest they lend us the money at 4 per cent for ten years. This is money that the ECB is spending on the financing of our banks anyway as the lender of last resort, so it should not matter to it. In fact, lending to the solution should be much smarter than lending to the problem.

The ECB would be crazy not to go for this. We then have money for ten years at 4 per cent with which to work out bad loans.

4.The old banks are now clean. They are free of contamination and they can go about raising money from the market, such as our own pension funds, through the normal channels, like rights issues. This means that they can start lending again to good businesses.

The old banks pay the new bad bank a fee for managing their old debts and dealing with their old clients. If the new bank charges 7 per cent for the service, the old banks need to provision for this charge over the next ten years. This means that their profits will be affected, and they must adjust their costs at the beginning of every year to account for the charge. But 7 per cent of €40 billion is manageable. It could operate like a bank tax.

The state then makes money on this plan -a s it would be getting the difference between what the bad bank charges and what the old, forgiven banks pay. So it gets tax revenue of 3 per cent of €40 billion every year -or €1.2 billion. You can build a lot of schools with that sort of bread. 5. Obviously all senior management of the banks must be fired right now to facilitate this financial renaissance.

So let’s get on with it. Stop protecting your mates. Stop borrowing from tomorrow to pay for yesterday. The government has not only the power but, more important, the responsibility to do the right thing. And don’t give the new jobs to your political friends who turn up at your ard fheis masquerading as objective experts, when everyone knows it’s their proximity to the party that gets them the gigs. This plan could save the country. Over to you, Mr Lenihan.

  1. Red5

    ‘The oldest and rarest Celtic bloodline in Europe was also literally decimated when the doors opened to any god knows what from god knows where, to arrive and form 10% of the population in a half a decade’.
    I’ve noticed comments like this tend to emerge on this forum in various guises now and again from different posters i.e. ‘ancient creative powers’. What is your point? Are you seriously trying to suggest that immigration and immigrants are responsible for the country’s desperate economic situation? Immigrants and globalisation didn’t force Irish ‘natives’ to max out on credit cards and lie about their incomes in order to get mortgages!
    Ironically, it’s Ireland’s insular (economically inbred class of elites) that has led to the current problems. Perhaps if we’d had a more diverse pool of talent to call upon, the country wouldn’t be floundering around with the imbeciles we have at the moment (an obvious result of cross-breeding – I didn’t mention Meath). To see the current batch of freaks argue in the Dail is a national embarrassment. The recent revelations of nepotism, corruption and ‘golden circles’ (as if this was new anyway in Irish society) just highlights that the country would be better off if our population mix was much more than the small 10% of difference that it is at the moment. More diversity, more experience.

    • VincentH

      ever wonder why ,Red5, a woman called Sayers ended up on the Blasket. And who was there before. You Pillock.

    • Ire_in_Exile

      @red5 If your politics are represented by your pen name then I have the pleasure to give you an unreserved drubbing.
      “Diversity” is a typical phoney media sound bite, that purports to serve some useful purpose for all, though there is no evidence of it in practice- anywhere.
      In all other applications “diverse” is a weakness not a strength.
      The 2nd part of my comment went on to explain how immigrants merely go on to be exploited by the economies of the host country- being offered none of the benefits except by cheesy media blurbs.
      There certainly is no blaming the immigrants themselves from me.
      It is largely a miserable existence for them, to be uprooted from their homes, families and traditions, and it has a hugely negative effect on their home countries, as only the fit and able are usually capable of leaving.
      It is a vastly complicated issue, and one that cannot be treated as a catch all trendy ethos- certainly not in the manner the left have embraced it as a golden answer to everything.
      It is not. Far from it- and I know what I am talking about as I have been an immigrant living in foreign countries for 20years. Immigrants in my view are victims as soon as they step out of their hold, and this should be something that is actively prevented not supported. If anyone genuinely cared about their plight.
      The more I learn about it the more I see immigration as being used as a deliberate and dubious political tool to create social confusion and demoralisation on the ground while above the money is stolen. The left hand all phoney benign and liberal “benefit to humanity” talk while the right hand robs the pockets.
      It is a diversion- a left supported diversion like so many loony left supported theories “to enhance/protect humanity” which actually merely act to allow brute force capitalism to thrive.

      Both sides have worked in sinister unison, with an uncanny efficiency, and all very cosy it was from 1968-2008 until the current facade has blown right off. To reveal the grim reality of it all. This would have been an perhaps an objectionable Kevin Myers type theory up until recently, but now we have evidence that the whole system, long term has been rotten and the world needs something new…Globalisation has failed and hopefully phoney Bono’s with their “give aid” campaigns while they themselves hawk off with their own loot will now be given shorts schrift….and that the man on the street considers the workings of the stock markets before he falls for cheap entertainment and corny ideals.

      • Fergal73

        Diversity is a strength in many fields.

        Investment Portfolio diversification is widely accepted as a strength. If you’d had 100% of your net value invested in Irish banking shares, I think you’d wish you’d been more diversified.

        The company I work for is a Plc with separate divisions, in 130 countries worldwide. The separate divisions have different lines of business, and the geographical diversification has in the past proven a strength.

        Genetically, diversity is a clear strength – that is one of the reasons that incest is taboo in almost every cultural and society.

        A little more diversification in the country might have avoided the situation where the Irish electorate were “staunch supporters” of Fianna Fail (or any other party) and actually voted with rational, logical thought rather than bloodline. “My father was Fianna Fail, and so was his father before him, so of course I am too” is a line I hope I never hear again. If you vote FF, do it for a logical reason (I can’t think of a single one).

        Diversity is a good thing. Monoculturalism leads to the Taliban, Christian oppression and blind following.

        • Ire_in_Exile

          Best reply is from David himself from the article above;

          “It is also clear that this country is far too important to be left to those with their fake patriotism, which simply masks endemic cronyism. It is not about them, their careers or their political parties any more. It is about us, our lives, our parents’ retirement and our children’s prospects. If these people’s grasp of basic economics is so pathetically challenged that they cannot govern, then they should just go. Leave us alone, please. In the name of Ireland, go.”

          I think the difference is clear.

  2. wills

    Ref: Garrys post “where are we in the global cycle” 2

    Hi bloggers,

    Already Obama is talking of buying American.
    Gordon brown is deliberately competitively, slyly devaluing the pound.
    Sarkozy in France is subsidizing the vehicle industry as in USA and Japan and everyone has a stimulus plan.
    This is good news. Now we can again control our own destiny and not be at the mercy of transnational
    elitist conglomerates.
    This means wto, nafta and eu have lost its teeth and hopefully will die a slow death.
    The G20 meeting this Summer will turn into a donnybrook as any pretence of free trade disappears as
    solutions to worldwide depression is short term.
    Unemployment by summer jumps to 15% across eu and usa.
    It wont be long and everyone will be a protectionist.
    All will be serving domestic markets to avoid collapse.
    All nations some more than others are facing facing a crisis of historic proportions.
    We now see the Eurozone and EU drifting into dissent and disunion potentially and the USA may cease to exist
    on defaulting on its debt,. 45 trillion.


    Sarkozy blames the Anglo-American business model and wants to limit businesses re-location from country
    Gordon Brown in England wants job priority for British workers ahead of foreigners including EU citizens.
    The Chinese want out of the dollar as Obama prepares an offensive against Chinas human rights and trade tactics.
    Russia blames the USA for the crisis and rightly so.

    The degenerative process in this phase of disintegration began in June 2002.
    That was the point of no return when i rates began to be lowered and when money and credit was expanded to
    smother deflation.
    This time the end of free trade will expedite the process over the next two years.
    2009 should begin more accelerated disintegration of the international financial system.
    2009 could be the big year of the crash but it will take a little longer i suspect perhaps 2010/11.

    I see wishful thinking in Europe. They expect to fare better than the USA.
    This will not be the case. European banks are as inso;vent as US banks if not more so.
    Germanys Gov, but not the people, want the Eurozone to stay together. They are sick and tired of supporting
    the rest of the zone, especially in Ireland, which for all intents and purposes is broke.
    France continues to stumble along in an insular manner, while selling off its gold.
    Then there are the Eastern European countries debt problems which western europe has to cover.
    Worldwide trade is about to come to a virtual halt and that means all of the above are in serious trouble.
    The G7 and G20 talks might just as well be called off its now everyone for himself.
    One best have 85%/1oo% of assets in gold and silver related assets.
    To only way to financially survive is with these two assets.
    Everything else will fall 60%
    This depression now underway is going to be hard.
    The fear of fiat money is spreading worldwide.
    Europeans see no visible hope leadership from G7, G20.
    Most agree political leadership do not reflect our views, expectations nor a grasp of the crisis at hand.
    The political and financial interests in Europe are no more responsive than they are in the USA. So that
    means eventually the public will be forced to do something about it.
    That means Europe will have the same problems as the USA. No-one is going to escape. The innocent will
    also pay for the crimes of the greedy.

    Now…….that i’ve covered the international scene and what Ireland now find itself having to contend with
    I will focus in on Ireland itself and get to the nuts and bolts of what has been done to my beloved county
    over the next coupla weeks……..

  3. Tim


    “some point in the future we get this capital back – as it will take several years and very severe defaults before the banks start eating into tax payer’s capital!”

    Have not the admissions by AIB and BOI, since recapitalisation, shown that our 7bn is already gone down the drain? That is taxpayers’ money, if I am not mistaken.

    Malcolm, I am not “scaremongering” – I only say what I believe; look at what is said about “competition” and the markets. It is a privatisation agenda.

    • JohnD15

      The eur7bn – when/if it goes in – will be as preference shares and will rank ahead of the eur15bn of so called loss absorbing capital which is already in the two banks. I say “if” because it seems the banks are presently losing deposits hand over fist, so the whole exercise could be academic if some reassurance does not come soon. very soon.

      • sportsforever

        I think you are correct but after a couple more bad years this 7billion would be all that is left. I also agree with your earlier email on the media, especially over here, the English press are hammering Ireland and appear to be taking great pleasure in highlighting the problems in ROI.

    • Malcolm McClure

      Tim: I just looked through your Articles 113 to 118 again and I still can’t see any mention of privatisation. Its mostly about health, safety, conservation, intellectual property, harmonisation to prevent unfair competitiion etc.
      All bog standard euro-aspirations. On competition, they just want fair competition, not favorable corporate tax levels as we have here. Is that the basis for your concern? Please explain.

      • Tim

        Malcolm, no, the corporate tax levels are not my concern; read it with these glasses: government-supplied/taxpayer-subsidised healthcare and education is not “fair-competition” with the private sector, so open up that market and let us in. Look that that Hotel/hospital/hotel in Sandyford Industrial Estate.

  4. erin

    It must be because I come from such a large Irish family most of whom emigrated two generations ago. I am really looking forward to seeing Ireland for the first time!
    Since I booked my trip with the local travel agent I have received three cold calls for car hire companies and accommodation in Ireland.

    I think that I will take SamB’s advice and travel to Dublin during my visit. Does anyone know if David is married? My Grandad said that he would be a very acceptable “catch”. I understand that he is a highly regarded media economist connected with government in Ireland.

    • Ruairi

      Erin, by any chance were your previous boyfriends’ names Bertie and Brian? If so, is your Ma’s name Gaia?

      This seduction of Redser by Lady Erin is Shakespearean indeed. Although I keep hearing O’Faoláin wafting in through my speakers . . . . . . .

  5. erin

    P.S. I may be on the wrong site – but Grandad did say an Irish financial blog was my best bet. This site is pretty scary though. I have been reading some of the other posts and Ireland seems to be very depressing – but then the ol’ guy says that all the Irish wars were merry and all the songs were sad, so it must be something in the psyche.

    Just in case though, wills – Where would you by gold bars? Could I buy them in Ireland and keep them in a Swiss bank?

  6. SamB

    Hi again, Erin.

    The biggest cost to any car rental company is the insurance. If you talk to some of the smaller Irish companies they will allow your own insurance company to cover the rental with a consequent reduction in their rate. However, I am not sure if this would apply to a US insurance company. Somehow I doubt that it would.

    I don’t think that many of the Pope’s Children know anything about safe periods. It not something that they have had much experience of for the past decade and a half. I think that you will find Ruairi’s definition the most apt at present.

    I can’t answer your query regarding David’s marital status – but there is no denying that he does have a certain rakish attraction.

    The cold caller is easier. Here’s how one guy dealt with the problem:


  7. Tim

    PaulOMahonyCork, I think that, in the short term (and maybe forever, we should, whether we “need to ” or not), we must return to our roots in terms of our excellent natural resources: agriculture and fishing. In the “big-picture” of global business, this would take alot of wrangling with the EU to regain control, but on a micro-level, I think we need to start planting now; maybe even allotment-style.

    Our people/families are going to continue to need food and there is a strong possibility looming that inward supply from other countries may become frought with difficulty.

    We have a generation of urban-dwellers who have left their agricultural roots (and I assume the same of the fishing community), but still retain the knowledge of how to produce from our soil (or the sea/freshwaters).

    Here is a simple idea to start with (and it is only a start, just to illustrate how simple this idea is):

    You know that bag of spuds you have in the press under the sink, or wherever? Look in the bag. Are last weeks spuds sprouting little shoots? Okay, take a couple of them out to your back garden and bury them. Watch what happens; nurture the plants that grow; watch what happens. Do the same with carrots, or anything else that grows – forget about your plush lawn (grass will not nourish you); dig it up and plant some food.

    Our banks may be toxic, but most of our country’s soil is VERY healthy; let’s us it. Don’t pay the privatised bin-collection service to dispose of last week’s “humble spud”; stick it in the ground. Grow something. It will bring you a modicum of joy, believe it, or not. Try it.

  8. Tim

    Folks, BTW, do not forget the “list” is there for your analysis at the end of the “crisis into opportunity” article.

    Also, correct me if I am wrong, but I think that David’s opening line on this article: “OK, screw this!”, is possibly the most important statement in the article: it means that he believes everything that the government has done this far is, at best, “pointless” and, at worst, “counter-productive”; I think it means that the government is doing ALL the WRONG things.

    “OK, screw this!” should be on a T-shirt because I think it may be the most accurate socio-political commentary of the last six months.

  9. wills

    Hi Bloggers,

    I would agree most definitely with Tims high regard for grow your
    food. Self sufficiency is the next growth industry for all and will
    offer great economic opportunity. Can i also say, the reason
    why English press going to town on burying Ireland 6 feet under
    in regards to Ireland is their true colors emerging on what they
    really think of the paddies now that they’ve bankrupted our nation.

    • sportsforever

      I dont think the English have bankrupted ireland. The irish have done it to themselves entirely – this one you can pin this on the Brits. That said London is “whipping up” things as D15 says and they are enjoying ireland´s pain in the process. They are using it to point to the euro failure and the success of sterling´s independence, and Scotland´s delusions of an arc of prosperity and of course just to have another poke at the paddies.

      • Tim

        sportsforever, you have a point, there.

        What if “the English” have been replaced? In Yeats’ time, by the merchant-class (c/f “September 1913″) and, in our time, by the bankers/landlords/developers/ and, God Help us, our own government “in-cahoots”?

        Rather Orwellian, isn’t it?

  10. wills

    HI Tim,

    Ok screw this perhaps also is Davids subconscious conceding indirectly
    that he is in the knowledge we are been deliberately screwed but he cant
    come out straight and declare it because he would compromise himself
    to a degree he feels not yet comfortable with.

  11. wills

    Hi Malcolm,

    You are anally retentive on Tims mention on the articles and
    missing the point and wasting your time. Better to be fixing
    on where your taxpayers money is been looted away too and
    the black hole in our economy thats goin to destroy your
    savings and God knows what else. I am sensing a tremendous
    amount of apathy here on this site tonight, seems like alot of
    people dont really see for real the freight train headed right
    for us,,,,,,,,

    • sportsforever


      Should I take my savings out of an Irish bank now or can I assume that if Ireland gets into trouble the EU ride to the rescue? The UK govt no longer guarantees the deposits of the irish banks so we are totally dependent on the Dublin guarantee.

    • Tim

      wills, please? I want as many people as possible to read those articles (in particular), but, of course, I would prefer if everyone with the right to vote would read the ENTIRE Treaty that they vote upon!

      Please, wills, Malcolm has made the effort – don’t knock him for doing his civic and democratic duty. (more than our current Taoiseach did, by the way – he told us to vote “Yes” to something he admitted he had not read!)

      Please leave Malcolm alone? We are all trying our best, here. Let’s not turn on eachother, but let’s HEAR ( “read”, I suppose, what everyone has to say).

  12. wills

    Hi sportsfever,

    “i dont think the british bankrupted Ireland”. Full stop is that it.
    No Explanation.

  13. wills

    Sportsfever you dont even know as to whether your savings
    are in danger in an irish bank but yet you post a dirge about the
    british not bankrupting ireland…..?!!!!!!!!!

  14. sportsforever

    Cool. My mistake, I missunderstood what you were saying.

  15. sportsforever

    I think it was you who first used the word “bankrupt” and of course I realise Ireland is not yet insolvent. My question is simply in the context of your very serious financial difficulties, would you leave your money on deposit with an Irish bank? will the EU bailout dublin if the sh;t hits the fan?

    • Tim

      Yes, I think so, but at a price. See my post last night, quoting Sarkosy:

      “If someone needs solidarity, they can count on their partners,” Mr. Sarkozy said at the conclusion of the economic summit meeting here. “Their partners also need to count on them to follow certain basic rules.”

      So, I take it from that, (but many consider me a bit “mad”, sportsforever) that the EU will be willing to bail us out if we respond positively to the blackmail of voting “Yes” on Lisbon2.

      Watch this space, I say. It’s gonna get VERY interesting!

  16. Tim

    wills, try to use some punctuation in your posts; then, people have less chance of misunderstanding your point (I think).

  17. SeanOC

    Sports person the short answer (at 1.30am) is “yes” on both counts and if I am wrong and we Irish do go down the toilet, the UK and others will follow shortly after – print that in the Guardian. Thats the wonderful and yet very scarry thing about fear, chain reactions, blah blah….anyway Im off to my leaba or bed as you say over there.

  18. jim

    Economics & Politics is at the heart of it all.Before I elaborate let me dispel this idea that international markets behave as some sort of watchdog,punishing errant companies or countries financially because they have strayed from sound Buisness practice or some orthodoxy i.e Keynes,Austrian school etc.Its much simpler than that,having spent most of my working life dealing with the markets,its fair to say the Markets are mostly a bunch of liars,chancers,bluffers and every class of a whore ,whose sole purpose is to make money by whatever scam or means availeable.So onn to Anglo Irish Bank where it all started for Ireland.A bunch of US and UK hedge funds and short sellers targeted Anglo for around Paddy’s day when the Markets were open but the Regulator’s office was closed and enlisted the help of some Dublin brokers.They made big money end off or so it seemed. Anglo was reeling and some of it.s biggest clients were raging,to quote ” them short sellers are not going to fu.k with our Bank and get away with it”,The clients met in a hotel and decided to take onn the short sellers with a fighting fund of some 500 million which could be leveraged up as required and the backing of a big name Sean Quinn (in april).Cowen had dinner with Anglo on the 24 April all off the reckord im sure( who knows what they discussed) Im sure Cowen was worried about the countries financial stability.Well we all know who won that battle i.e markets 1 Anglo o.EASY PICKINGS.Now that the Irish Banks ARE IN PLAY or so they say lets have a run at the rest for more easy pickings.Bear in mind the markets could only read the same published accounts as the rest of us.They knew AIB or BOI hadnt bought into US sub-prime so their only weakness could be Property exposure and if you burst that bubble before it has time to be unwound you can offset some of the sub-prime losses on your own books.It worked.Find some mark somewhere in the World to pay for the toxic shit,its only Buisness.Regulators need to be able and willing to suspend shares in Banks pending investigations when it appears someone is trying to play silly buggers with the stock.Shareholders and other related parties should be given the option of taking the Bank private if its deemed necessary.Some Banks are systemic to a country and should be afforded protection when necessary and the markets should be made aware of this so as to avoid confusion.AIB and BOI should not have tried to ape Anglos model and should have been happy with the profits they were making.Systemic Banks have by their very nature to be more conservative in terms of management and the type of shareholders they attract.People need to know their money is safe even if its making less profit.This is especially true for retired people who deserve security in old age and it sickens my heart to see the worry all this Buisness is causing these poor people.AIB and BOI shame on you,get your act together and start behaving in a more mature responsible way,the country cant and wont tolerate this behaviour from now onn.

  19. Ruairi


    Coming to a cinema near you. In more 3D than you would like unfortunately.

    Its a remake of a black & white classic from 1929 called the Big Bang.

    Some films aren’t meant to be remade Mr Greenspan :-( :-(

  20. Dilly

    The ISEQ looks like its heading for 1000 this morning.

  21. MK1

    Jim, the effects that short sellers have on markets is over-played. Yes, they can feed rumours and take profits from that, but the shares must be sold (borrowed) and bought (given back), and these participants would make nothing if the rumours are not semi-believable.

    What has been shown with the short-selling ban in the UK and Ireland is that the shares tanked anyway. AnIB, AIB, BOI having extended loan portfolio’s with falling asset matches was not a rumour – it was and is fact. Dont blame hedge funds or any market participant for shorting a financial stock when such facts were in the public domain and were growing.

    I’m not absolving hedge funds of sometimes nefarious practices btw. But there are many players in the market that are feeding off scraps, slight movements, etc, and hedge funds are just part of that kaleidescope. Its more to do with systemic market inefficiencies (mispricing, mis-valuing, sentiment driving moves, herd mentatlity, etc) than anything else.

    > Some films aren’t meant to be remade Mr Greenspan

    I heard an interview with a very sanguine Greenspan the other day. His hypothesis, not a new one, is that we are in a big mess, and the main fault are human failings, such as greed, herd and lemming effects, etc (although he didnt quite say it like that). And although we have things like 1929 and 2009, he maintains that we will continue to have these with our regulated capitalist model. Why? Well, he says there are no better alternatives. Humans are humans, they will want more. Regulation only stifles innovation, and capitalism. To have good times, we need to have the bad times and the market corrections, and the unemployed and the pain. Its all part of the equation.

    He is right in what he observes, but the question for us as a species, is there a better alternative? I think there is. Do we need starvation and unnecssary death (eg: 3rd world)? Do we need uber-wealth and needless material goods (1st world)? Do we need wars and yet more death? Do we need environmental, landscape, earth damage? Are we as a species clinically insane?

    My hypothesis is as follows. We are a smart species, YET, we are in so many ways dumb enough to have not relinquished the basics of our evolutionary past and we let them get the better of us. We are competitive, so we kill each other. We are competitive, so we dont care about poor people. And I could go on. On an economic system level, we are competitive, and pure capitalism is clearly observable as a system which will NEVER deliver full fairness. We mitigate against that with regulations, social re-balancing, etc, and each country has its own flavour and extent. But as a species, we have a very long long way to go …..

    I have a dream that we will get to a better place, a better land ….. but I wont see it in my lifetime.


    erin: are you for real? Morgan Kelly stalking here playing a game? Or Eddie Hobbs having a bit of fun? wrong forum …..

    • Ruairi

      @ MK1 Yes, our stage of consciousness is the issue and cause of all our troubles. Unfortunately we are going to need this tunnel of pain in order to hopefully emerge a wiser species. People make out that the present (and incoming issues) are the calamity but in fact the calamity has been building for years (we all know that on a micro-level from reading David’s blog and articles and on a macro-level from being Irish, and being at the brunt end of wars, also helping fight them for the |empire and then also mass emigration. So we know better than most how raw capitalism works.
      See http://www.greenuniversity.net/Ideas_to_Change_the_World/JaynesWilber.htm for an interesting read pointed to by Thomas J Elpel. I’ve quoted Thomas before @ http://www.greenuniversity.net/Ideas_to_Change_the_World/toc.html. This retreat to nationalism and protectionism is a natural reactionary step in the imperfect system of capitalism. I’m not saying what the perfect system is, but its obvious to anyone that the last 20 years of globalisation underpinned by US style capitalism has not worked so well.

      I have been unable to fathom for years now how its cheaper to throw out a kettle, car, stereo, tv etc than find someone to fix it. Of course I know, its financially cheaper for me. That’s simple. But it cannot be cheaper overall for the system. The management of waste and redirection into profitable inputs will be a major trend in our new world.

      Its like this: – How many of us know of perfect, less than 10 year old buildings that were knocked in the pursuit of ever-wilder dreams for that percious site? Who in conscience could destroy wealth like that? It wasn’t sustainable. Unfortunately, we rely on social structures (government usually) to impose ‘structure’ so that our mores can operate fluently. Instead, for much of the lifetime of this State, they have put structures in place that benefit the few.

      I’m not arguing against entrepreneurship and wealth. far from it. Like Malcolm McClure (I think), I believe in decorum and taste (and that actually points to sustainability in everything we do. If something is wrong today, its twice the headache tomorrow. Like a huge trade deficit.

  22. Philip

    Markets are starting to really starting to tank.

    I am beginning to think Wills and Tim may have a point. We are witnessing profound changes. The true end of post – 1930s societal structures.

    Specifically, Guys and Girls all, I think we are witnessing the end of the middle classes as we know it. They are the ones with the borrowed cash, the 2.1 kids and 2 cars and and and … basically aspirations of being rich. They are the ones who can afford the laptops and the internet access to access blogs and they are also educated enough to waffle (very articulately it must be said in many cases) at length.

    This is a blog for the middle classes. Most if not all are well educated and have middle class lifestyles. True some could be earning sub 20K and others over 100K and maybe the odd one into the 7 figures. But really, to be rich you need to be well into 8 figures.

    The lower class, poorly educated, under represented are screwed as usual. The really rich do not give a toss. The contented middle classes are about to get a jolt.

    We are 3 types of middle classes. The old traditional ones of the 1930s-1960s tradition (civil servants/ doctors/ bankers – usually well educated and classically trained) the thatcherite red braces brigade of the 80s (the rich illerati) and now the 2000s of India and China (and let’s be honest – the post 1995 Oirish). And they are all now getting a kick in the whatsits cos da real investors think we is not working hard enough.

    Middle Classes were the result of keeping a Tech Society rolling. It maintained the educational/health/financial structure to keep hitech and modern industry rolling (as we know it). It was fine as long as the output was greater than the input. But in fact it has been falling since the 70s as more people started aping the rich people with holidays/ entertainment etc.

    Middle classes are the staunch democratists as well. We all like to have a say…not realising that it’s all nonsense. We really have no say. It’s just a way of keeping them happy and contented. The poor among us never had democracy – they just took what they got. The rich….well as I said, they do not give a toss.

    This globalism was an interesting middle class experiment, but it was based on a con job o that greater levels of activity on a global scale was going to mean wealth for all. But, it really was a leveraging of overpaid middle classes against lower paid hungry wannabes. It worked for a while and now has run it;s course. There only so many Levi Jeans an average westerner can wear.

    We need to get back to self sufficiency and fast. This must be in Education and Land on a sustainable level. Growth is over. Malthus has won and it needs to be acknowledged. Middle classes need to come back to their communities and stop dreaming of an out of context lifestyle that really brings no fulfilment.

    • Garry

      So I’ll put you down as a vote for global recovery in 2010 then?

    • The Eye

      Agree with you on a lot of your points philip, however the “lower class” as you call them have been over protected as in the state pays everything for them up to a point whereby its a way of life and there isn’t a days work in half of them a lot of dole bunnys need a big kick up the arse, I dont mean the unfortunates who worked during the boom and got shafted,They need all the support and help they can get, I mean the culture of “fella does nixers Im on da housing” types, experts in daytime T.V breding out of control.
      Put their kids in a state run creche and get them out to work for their wonga.

    • Malcolm McClure

      Philip said: “Growth is over. Malthus has won and it needs to be acknowledged.”

      I think he is right for exactly the reason he gives. A stable society is balanced by the decimation caused by military conflict. Ireland, through its neutrality, avoided military conflict but was able to dispose of the excess population (created by an embargo on contraception) through emigration. Improved prosperity has concentrated people around cities that were never planned to cope with such numbers. Population density was increased further by immigration. Our native food resources have been unable to keep up with population increase, so the need to import food and other goods at great additional expense has driven up wages, house prices, hours worked and everything else. As Philip correctly points out this is a purely malthusian result.

      It is a process that is happening in most other countries too, so this is the real cause of the global financial crisis rather than the shenanigans of the bankers, which just exacerbated that underlying weakness.

      Cheap food rather than cheap finance will be the cure of the crisis. Did someone mention planting those sprouting spuds?

  23. MK1

    David is right (when he wrote before that), the reputational damage that the shenanigans at AnIB (Fitzpatrick’s/other directors loans, Quinn/circle of 10) is doing to Ireland Teo is costing us in ways immeasurable and imperceptible.

    I’ve looked up a few company law items in relation to applying them to the AnIB debacle. I’m no law expert, but in about 30 seconds I found these:

    For Directors loans, the 1990 act, Section 41 (among others) should require that ALL director transactions are published in the accounts:
    “accounts prepared by any company … shall contain the particulars of … any transaction or arrangement of a kind described in section 31 entered into by the company for a person who at any time during the relevant period was a director of the company or of its holding company or was connected with such a director”

    Loans to buy shares are NOT allowed according to Section 60 if the 1963 act (and are only allowed if declared):
    “it shall not be lawful for a company to give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company, or, where the company is a subsidiary company, in its holding company.”

    See here:
    and here:

    Dear ODCE/Garda Commisioner/DPP/CAB, when are yiz gonna move on these? Every day and hour delayed is costing us all, including yourselves (children and extended family).

    Help us and yourselves to Lance The Carbuncle on the Boil ……..


    • Garry

      Cronyism, Corruption and Criminality…. all being protected by Fianna Fail…… The lady working in London who answered what is the perception of the Irish Financial institutions abroad on Q&A last night summed it up perfectly.

      Now I know the 3 C’s are not absent anywhere else

      30 years ago it was “Would you like a pint or a transfer Garda?” Today its “Fair play to you, Willie”

  24. The Eye

    As a low life slimey Estate agent, I am very busy doing valuations, I enter peoples lives before anyone else does, different types of people, what is so shocking for me is every first valuation I do is a divorce and every second one is a small business owner getting ready to wrap up and get out of Ireland.

    Why are we trying to fix the roof of our economy when the foundations are about to crumble?

    • G

      interesting insight, divorce, closing businesses, emigration, where are the champions, the leaders, the men and women to take things on?

  25. Ire_in_Exile

    Re: the Middle classes.
    Excellent post on an interesting subject, and no doubt this will need to be explored much further as a social collapse now ensues. The middle classes have been in demand traditionally for their education/intelligence. But this is no longer the case! Globalisation is a get rich quick scheme that requires just a few brights at the top and one mass of dumb humanity below.
    Shrewd business acumen at the thin end and a great heaving mass of consumer automaton at the other. No need anymore for the balance of a middleman. It is perhaps even dangerous!
    The demand for skill/talent/intelligence is ever decreasing as technology replaces these requirements.
    The Elite class have boxed their loot offside, and the lower classes never had any loot beyond what they spent that day…so indeed the middleclass are now in the most dire straits.

    Reminds me however of that Hollyhead boat in the 1980s which had labourers off to Kilburn on one side and graduate students on the other, all mixed in to a strange fate of poverty, each were however determined to maintain their status by ignoring the others existence.
    It’ll be the middle classes mostly on that emigration boat now.

    Excellent points and information also.
    But as I’ve said before, the financial collapse is not a result of incompetence and mismanagement, the leaders of it have all stuffed their pockets- and so much of the money has gone offshore.
    So It is very much criminal in it’s nature.
    All that anyone should be really crying out for now is for prosecutions!
    There will never be any recovery if the perpetrators are allowed to get away with it. Simple.

    • Dilly

      “Reminds me however of that Hollyhead boat in the 1980s which had labourers off to Kilburn on one side and graduate students on the other, all mixed in to a strange fate of poverty, each were however determined to maintain their status by ignoring the others existence.
      It’ll be the middle classes mostly on that emigration boat now.”

      This is so true, my brothers were on that boat, one a stone mason, the other a doctor, but they both had to leave Ireland to find work, neither of them came back, well maybe for the odd holiday, but thats it.

  26. Josey

    A brave new World my commrads. A technocracy is coming with a ruling elite and the slave class will replace the middle and working classes. Neo-fudalism how a ye!!!

  27. mishco

    The (un)touchables have swooped!

  28. Malcolm McClure

    There were several very well informed posts this morning from Blueangel, Jim, MK1, Philip and The Eye. All pointing to the main problems a Recovery Plan will have to deal with. In the context of government support and regulation of financial services, a recent speech by Paul Volker, former Fed Chairman and member of President Obama’s economic advisory team is worth paraphrasing:

    “In the future, we are going to need a financial system that is not going to be so prone to crisis–different from that which has developed in the last 20 years. What do I mean by different? I think a primary characteristic of the system ought to be a strong, traditional, commercial banking-type system.
    Probably we ought to have some very large institutions whose primary purpose is a kind of fiduciary responsibility to service consumers, individuals, businesses and governments by providing outlets for their money and by providing credit. They ought to be the core of the credit and financial system.
    The government will support these institutions, which in turn implies a closer supervision and regulation. So those institutions should not engage in highly risky entrepreneurial activity. That’s not their job because it brings into question the stability of the institution. It’s not consistent with avoiding conflict of interest.

    Institutions have arisen in the United States and the UK that combine hedge funds, equity funds, large proprietary trading with commercial banks; they have enormous conflicts of interest that contribute to their instability. So let’s get rid of that. Let’s have big and small commercial banks and protect them — it’s the service part of the financial system.

    Then we have the other part that I’ll call the capital market system, which by and large isn’t directly dealing with customers. They’re dealing with each other. They’re trading. They’re about hedge funds and equity funds. These have a function in providing fluid markets and innovating and providing some flexibility, so they don’t need to be so highly regulated. They’re not at the core of the system, unless they get really big. If they get really big then you have to regulate them, too. But I don’t think we need to have close regulation of every peewee hedge fund in the world.

    So you have this dual financial system with divergent motivations that implies a lot about regulation and national governments. If you’re going to have an open system, you have got to get much more cooperation and coordination from different countries. I think that’s possible, given what we’re going through.

    You’ve got to do something about the infrastructure of the system and you have to worry about the credit rating agencies. The banks were relying on credit rating agencies while putting these big packages of securities together and selling them. They had practically given up credit departments in their own institutions that were sophisticated and well-developed. We have to look at the accounting system. We have to look at the system for dealing with derivatives and how they’re settled. So there are a lot of systemic issues.”

    This will take time to sort out, but where America leads, the world including Ireland will follow.

    • jim

      Malcolm you’ve got it it one,new sheriff in the US will clean up the system after Bush,Greenspan and all that rouges gallery will be consigned to History,thank God and good riddance I say.

  29. The Eye

    Hi bloggers, Im 35 If I pay €9,000 a month gross for the next 30 years, I can have a pension the same as the Financial regulator.

    Who would want a private sector job?

  30. StephenKenny

    Ire_in_Exile & others.

    On the subject of the middle classes, if you have a hour, this is very interesting: http://www.youtube.com/watch?v=akVL7QY0S8A

    Elizabeth Warren is the chair of the Congressional Oversight Panel created to oversee the U.S. banking bailout, formally known as the Troubled Assets Relief Program.

    I would argue that there is no global conspiracy, it is just a route that comes with what some describe as the ‘decadence’ phase in the cycle of civilisation.

    There’re a number of views of this cycle, and here’s one
    1. The age of outburst (or pioneers)
    2. The age of conquests
    3. The age of commerce
    4. The age of affluence
    5. The age of intellect
    6. The age of decadence
    7. The age of decline and collapse

    Where are we on this? Many would argue that the 1960s saw the start of the period of decadence, and we are now in 7.

    If, as Elizabeth Warren is predicting, we are looking at the collapse of the middle class, then, if history is anything to go by, the ‘elite’ would be extremely foolish not to do all they can do stop this happen happening. The middle class, after all, is the economic backbone of an economy.

    • jim

      Stephen history is made and written every day,no magic formula,just follow the money like CAB does and dont be distracted by fanciful theories,leave that to the hollywood script writers.

      • StephenKenny

        Such theories are drawn from experience and observation. They are created, partly, in an effort to aid prediction. In this case, where will the money go? We have long ago left the realm of economics, for that of political economy, and that is more than a simple trail than cash.

        I would also suggest that nothing from Hollywood has, or ever will, match the goings on that we have been watching recently. No one would ever believe it. The book & documentary ‘Smartest Guys in the Room’ (the story of Enron), although compelling, does not tell the whole story. The sheer, brute, greed of the traders, for example, is difficult to get across, and ‘Smartest Guys’ fails.

        I would recommend the Elizabeth Warren lecture. As a top member of the Obama administration, her concerns are prescient, and very vivid. It is a lecture full of statistical and numerical evidence in support of her contention. From it can be drawn a view of our futures. (She’s also a very engaging lecturer).

        • Malcolm McClure

          StephenKenny: Elizabeth Warren’s lecture is worth watching through. Thanks for the link.

        • jim

          Excellent link to Warren lecture, thank you,its interesting how her family with 2 children have fared since 1970.Its my contention that equity release loans on homes from about 1965/66 exactly mirrors most of her graphs.there is a clear co-relation between the two.On a side note it I was gobsmacked to hear that a greater no. of children would witness their parents filing for bankruptcy than divorce.Did’nt see that one coming.wow.

  31. The Eye

    Stephen I suspect that’s the plan, welcome to the E.U.S.S.R because some animals are more equal than others!! and No means Yes.

  32. Tim

    Folks, I have only just now caught Kerrigan’s article from latest Sindo; I think it is an important piece:


    • Deco

      Well said.

      Once we had one CJH. Now we have an entire ‘school’ of them. And they seem to back one another up.

      Gardai have raided the head offices of Anglo Irish Bank. This is the first time ever the priveleged of Ireland have faced so much scrutiny.

      Maybe Kerrigan is helping push this society towards more accountability.

      We have many empty values at the top of Irish society, and they are costing society as a whole, dearly.

      • jim

        Deco time to round up Haughey’s pup’s.I woul’nt even ask them to swear on the Bible when they go to court.It would be an affront to all who hold that volume sacried.

      • Ruairi

        But isn’t this 2 months and more after the horse has bolted? A cynical move to assuage the sweaty classes? Why did their duty have to be painstakingly pointed out to them? Does anyone think there’s as much ‘evidence’ now in HQ as there would have been in days1-3 etc?

        This is a politically inspired PR assuagement of the masses. And while they’red digesting their finds, we back off a little. Why did it take Cowen to initiate/approve Garda duty?

  33. Malcolm McClure

    Things are starting to happen. The Fraud Squad has moved in on Anglo Irish HQ.

  34. Maybe the ODCE reads this blog too. Either way, this was provided a bit of light entertainment this morning.

    • drick

      I was never much of a fan of kerrigan but he has nailed it here. On his point about the Guards, will these same Guards who are protesting themselves defend the parasites in the goverment when the people seek retribution?? I hope not!!

      • Tim

        drick, ….. really? How could you NOT be a fan of Kerrigan? I think he “nails it” all the time.

        I cannot forget his line from a few years ago:

        “when the down-turn comes, JUST WATCH HEALTH AND EDUCATION GET IT IN THE NECK”!

  35. Immunity to Irish Crime is hard to win and in good time those Bankers who have abused the commercial laws to make a gain and leave the taxpayer dry will be convicted .There are two important points of law not mentioned by reporters and on the this blog and they are :

    1 Intention to commit a crime : and

    2 Extended Form of Fraudulent Preference .

    The above basically mean that should a jury be satisfied that there was an intention to be in breach of any Irish Law that the intent should stand and that whatever forms are used to say otherwise are ignored ; and

    If the Directors of Banks construct their evidence knowingly that what they do will positively inflict damage to a third party outside the bank ( is taxpayer ) then those Directors may be held responsible and liable .

  36. Ire_in_Exile

    Hoorah! a raid on Anglo HQ!
    Perhaps vis a vis my rant yesterday all is not lost!
    Most encouraging news! Hope very much to see more! :-)

  37. SamB

    Raid by Corporate Enforcement – It’s just playing to the gallery, again. It’s all they have ever done… all mouth and no trousers! Throw a few A circus for the masses.

    Listen to Peter Sutherland – and act on it. Trouble is …. when we need leaders, we have none.

    • drick

      they have had plenty of time to prepare for this raid, another load of b****x from our failed goverment, perhaps they are raiding the wrong place. chaing shadows up dark alleys. they should start at the top ,our friend biffo!!!!!!!!!! or will he escape like CJH in true irish tradition.

    • Tim

      SamB, ….. again, with the “Peter Sutherland” rubbish! Watch out for the “snake-in-the-grass”!

  38. No Leadership :

    Just stop and think for one moment …..the era to prevaritique in politics continues ………….only the clowns play

  39. Only when they raid the homes does the real music begin play

  40. mediator

    Hi All

    Some interesting posts above.

    @Philip – Your last post seems to indicate that you’re starting to take a macro view as opposed to the micro stuff this site is fixated on. Regarding the middles classes – they are the backbone of modern societies when they go, so too does society and we will be back with the type of social structure that was prevalent in pre revolutionary France. In the US and other Armys they break you down before they can remake you as a soldier (ie as they want you to be), same logic goes for societies – if you wish to remake society first you have to break it down and its people with it. – Join the dots…


    Many of you have expressed skepticism re any of whats currently going on having been planned by some uber masters of the universe types, I’d like to make a couple of points in that regard.

    1. You don’t actually need thousands or even hundreds of people to be in on a plan in order to effect it – for example the housing boom in Ireland and the Credit boom in the globalised market only needed the senior decision makers to make a couple of small changes in order to facilitate the creation of cheap credit and easy access to same – the result is massive debt and generations of the middle classes in debt slavery. The same goes for almost all of the major happenings in the world – small decisions can have enormous consequences.

    2. The evidence on Globalisation is starting to come in. It was sold to the masses as the way to increased wealth and prosperity for 1st world nations and a way to facilitate 3rd world nations to develop. What a crock!! It has resulted in further wealth transfers in first world countries from the masses to the super wealthy while simultaneously eviscerating many first world countries abilities in the areas of manufacturing, technology, organisation etc…It has also further impoverished the thrid world. Bottom line is that we are now as individuals and nations completely un self sufficient which means we have no control over our destiny. We have allowed ourselves to become disempowered.

    3. Regarding Finance and Money – It’s based on alchemy – the creation of something from nothing. The ability to do this is all that is needed to exert control.

    4. There are no easy solutions to this, in my opinion what is happening is “supposed to happen”. At the end of this process we will be even more dependent, more fearful, weaker and in no position to make decisions that are in our self interest.

    I have a challenge for all of you – over the next couple of months, instead of looking at what is happening as being chaotic and instead of thinking to yourself that the politicians and bankers etc…are actually trying to effect real change and to improve our democracy/financial system etc…

    Shift your focus and follow whats happening (not the commentry from the likes of RTE) and see if it fits in with what I’ve written and what some other posters such as Wills, Gadfly etc have written.

    Should be interesting…

  41. DarraghD

    So Rentokil have been sent in this morning to find the cockroachs!

    I used to wonder did our host David ever read our comments here and I got my answer this morning when I logged into my e-mail and was surprised to have received a mail from him humoursly imploring me to lift my spirits and put my shoulder to our national cart with the decidely square looking wheels, so here goes!

    I’ll turn my back to the doom and gloom for a minute and sure I’ll share with you all what I’m doing to trunch my way through the recession and what I’m going in terms of making a contribution, for poor auld Mother Ireland…

    I’m lucky and unlucky in a sense that while the country was going through the Celtic Tiger, I was earning my entrepreneurial battle scars, going through not one business failures but two, between 2005 and 2007. These experiences were not in vain though, they taught me more about myself than any other event in my life. I made good business contacts with guys who are successful entrepreneurs, I learnt lessons, wit h their input and direction, that no university could teach you, and somehow, I’m working with those same folks now in a recession and I’m now on my third venture and I have met with success, after learning the mistakes quick and cheap, from ventures (1) and (2). When I say I have met with success, I mean I’m not losing money and am self employed and earning a decent wage for myself.

    What I’m suggesting is that we need to put together some sort of a national forum for people who want to run their own businesses, who are prepared to walk the walk when it comes to starting up enterprises. There is no reason why I had to fail twice, other than lack of support, and lack of funding. When I found support through contacts that I met, things suddently started falling into place.

    This is where the future actually is I think, in terms of our future economic growth, it’s new products and new technological solutions, it’s new web based trading opportunities and new ideas and concepts. It isn’t above us as a nation, but I think we have to get our heads around the idea that we have to support each other.

    I visualise what we need to do here, as being very similar to those rare occasions we used to see on Star Trek years ago, when the USS Enterprise got into trouble with the Romulan’s. Captain Picard, seeing trouble ahead, had to separate the saucer section of the spaceship, from the “primary hull”, when a battle for life or death became imminent.

    Right now, our government are akin to the “saucer section” of the spaceship, the part of the vessel that has to be deliberately and strategicallly parked a couple of light years from the battle site, so the more agile and versatile “primary hull”, can go in and get the job done.

    Our indigenious entrepreneurs in Ireland are our “primary hull”, the structure that will can roll up the sleves and simply get the job done. The trouble at the moment I think is that the our “primary hull” and saucer section” are currently being pulled into a black hole. It’s time to “stick her into warp drive”, pull out of this black hole we are being pulled into, put down the saucer section in a safe little corner of the galaxy a few short light years away, and come back with the primary hull and get the job done.

    Getting off the Enterprise for a minute and back to Paddy’s Green Shamrock Shore, “getting the job done”, means getting a forum for enterprise going in this country and get people working together, let good ideas emerge and match up trading opportunities with people who are willing to take ownership of implementing them, start creating jobs and get people spending again.

    My opinion remains that we need a new government to do this, I just don’t think this government “gets” how simple this actually is…

  42. Philip

    It’s not the fraud squad I’d be sending in. I have in mind another squad.

    Things may be a real mess in this country…but you know what? Relatively speaking and in spite of our weenieness and remoteness, we are not that bad. We still take a disproportionate level of FDI and we take 20% of all new Pharma Jobs in Europe (according to a recent report today). In other words, we are in the thick of a global crisis and our own dirty washing (considerable as it is) is not that unprecedented in a global context.

    The huge mismatch between our small productive capacity and the massive buying power of the currency we use is a problem. You cannot have guys here doing 1 euro an hour worth of work (as priced in a global market) for 10s of Euro and expect a business to keep going. But that’s just one aspect of the problem.

    The other aspect of the problem is that financial houses/ hedge funds etc just do what they do at a global level – without prejudice. Malcolm, that Paul Volker speech is shedding light on what happens to your ill-gotten euro (the 10s of Euro you got for 1 euro’s worth of work). You stash that away in a bank that will a) be trying to sell you loans to buy that price inflated pile of bricks and b) allow that same money to be used to finance an operation somewhere else that’ll produce the 1 Euro of worth for the 1 Euro of effort – just so you can get a better bang for your savings and buy things more cheaply. The background trading (which has different objectives from the retail side) is just accelerating the inevitable.

    The above 2 aspects have been ignored for the last 20 years. The productive capacity (as embodied mostly in the middle classes) has been overfarmed without been given a chance to renew itself. The half ar$ed attempts to engage innovation to fix this gap failed to recognise the dynamics of an aging society where only a part of it re-educated itself to be bankers and outsourcers leaving an increasing number impoverished but sated with cheaper credit. Productivity merely fell and the “evil” hedge funders etc did their thing. Something had to snap.

    I claim that growth ecovery by 2010 or 15 or whatever is a complete nonsense. The game as you knew it for the last 20 years is over. Stability is all I’d hope for by 2010 and afterwards a manageable slow decline while we get our re-education and sustainability house in order. I think it’ll take 20 years and you know what? I think it’ll be an exciting time intellectually and spiritually and some serious innovation might then emerge in a less hyped manner. We may indeed witness the disconnect between economic growth from financial growth.

    To understand just how bad innovation is now and how trivia has taken over….Horizon BBC2 reported last week that 1Billion/year was spent on Nuclear Fusion Research globally….less than the total spent on Ringtones in the UK annually. Says it all.

    • Garry

      I claim that growth recovery by 2010 or 15 or whatever is a complete nonsense. The game as you knew it for the last 20 years is over. Stability is all I’d hope for by 2010 and afterwards ………..

      I think this is key……..to guess correctly what the global situation will be and position accordingly….

      Theres 3 possibilities that i can see,

      Option 1 is as above
      Option 2 a successful reboot, everyone says “Phew, that was close”, and it all cranks up again maybe with a loaf of bread being 10 euros, house prices only double what they are now
      Option 3 is a partial reboot which works in some places but not in others

      I tend to favour Option 1 but with the theory that the banks that we have bailed out will be the landlords of the future…. so ultimately people who bought at the peak struggle along, eventually miss repayments and end up living in the house as a tenant to the bank.. Not a conspiracy, just an acknowledgment that the guy with the money has the flexibility to play the game as it unravels, whereas the guy with the debt can be played. If a steady decline is the prognosis then thats an income stream..

      But the other options are still alive…and there is a natural tendancy to assume that the current situation will go on forever…A lot of people did that with the boom so its only natural to assume people will do the same with this…. Obama apparently is promising things will get better next year which to me sounds like he has some confidence in this or else he is needlessly giving a hostage to fortune.

      Would love to get arguments for and against particularly the other options

      • Tim

        Garry, there remain, still, many of us, who bought houses before the 1995 “Boom”, who have not fuelled the lies, just lived normal frugal lives and did not get “drunk-on-debt/property”, despite the media spin that “we all did it, so we are all to blame and we’re all caught”. We are not.

        Some of us have zero credit card debt, small mortgages and normal cars that we owe nothing for.

        We are being forced to pay for those who lost the run of themselves, but we are well-positioned to help. We were not greedy or avaricious, just “ordinary” working people. Perhaps, if those who made mistakes look closely enough, they might learn from those mistakes and “take a leaf out” of the book and the next generation will be better.

  43. Deco

    Maybe we might similar visits to IFRSA / CBoI or Ernst & Young ??
    I wonder will the head offices of ILP get a raid over that 7.* “deposit” that “matured” in less than 48 hours. I reckon ILP are in serious danger of being at the receiving end of a civil class action suit from disgruntled Anglo Investors. Afterall that giant deposit manoevre at year end requires explanation.

    The fact that the Minister for Justice sent the fraud squad into a bank that is state ownership indicates that the government do not beleive a word that they are being told by the management of ANIB.

    • jim

      The IL&P 7 billion was a common practice among Bankers to “MANAGE” OR BALANCE BOOKS AT YEAR ENDS. Hence the “GOOD MAN WILLIE” comment recorded on the phone from the Regulator to Willie mc Ateer at Anglo.Why the Fu.k,Fu.k AND Fu.k were Anglo getting call from Lehman bro’s.et al to avail of a similar facility.Why the hell do you think AIB fund managers had large deposits in Anglo,will we ask Fr.Ted.The dogs on the street knew the racket that was going onn with this lite touch Regulation.Wild west cowboy’s playing with their new gun the Euro,not caring it was the Life blood of whole Economies and real lives.Somebody ring the Magnificent Seven there a City to be cleaned up.:-))

    • Ruairi

      True Deco. Or they’re playing Mr Angry like Gordon Brown. Angry, but always after the fact………

  44. Ire_in_Exile

    @all …just received this e-mail circuler…

    The financial crisis explained in simple terms

    Linda is the proprietor of a bar in Cork. In order to increase sales,
    she decides to allow her loyal customers – most of whom are unemployed
    alcoholics – to drink now but pay later. She keeps track of the drinks
    consumed on a ledger (thereby granting the customers loans).

    Word gets around and as a result increasing numbers of customers flood
    into Linda’s bar.

    Taking advantage of her customers’ freedom from immediate payment
    constraints, Linda increases her prices for wine and beer, the
    most-consumed beverages. Her sales volume increases massively.

    A young and dynamic customer service consultant at the local bank
    recognizes these customer debts as valuable future assets and increases
    Linda’s borrowing limit.

    He sees no reason for undue concern since he has the debts of the
    alcoholics as collateral.

    At the bank’s corporate headquarters, expert bankers transform these
    customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These
    securities are then traded on markets worldwide. No one really
    understands what these abbreviations mean and how the securities are
    guaranteed. Nevertheless, as their prices continuously climb, the
    securities become top-selling items.

    One day, although the prices are still climbing, a risk manager
    (subsequently of course fired due to his negativity) of the bank decides
    that the time has come to demand payment of the debts incurred by the
    drinkers at Linda’s bar.

    However they cannot pay back the debts.

    Linda cannot fulfill her loan obligations and claims bankruptcy.

    DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better,
    stabilizing in price after dropping by 80 %.

    The suppliers of Linda’s bar, having granted her generous payment due
    dates and having invested in the securities, are faced with a new
    situation. Her wine supplier claims bankruptcy, her beer supplier is
    taken over by a competitor.

    The bank is saved by the Government following dramatic round-the-clock
    consultations by leaders from the governing political parties (and
    vested interests).

    The funds required for this purpose are obtained by a tax levied on the

    Finally an explanation I understand……………….

    • Tim

      Ire, I am VERY concerned about the supply chains, too. If they have little or no liquidity, or access to overdrafts, the chain WILL break-down.

  45. wills


    Hi Ire in Exile,

    Keep it up with your unique voice through you postings.
    Goto above url for an excellent overall explanation on the nuts and bolts to the
    scam enemies within are doing to those who are weak, susceptible to persuasion,
    brainwashed, abused, lost, abandoned, bullied, terrorized, suppressed to which
    i’ve noticed your postings are already been subjected to, i will not mention names
    but ire do not be put of. This site invites free expression and with that comes the usual
    snide sly clever slurs.

    • Ire_in_Exile

      Thank you Wills for the comment and link.
      Put off? certainly not,
      Actually I am ever encouraged by this blog that my own privately held and once lonely “new World order” cynicism, treated until recently as unusual, vague or downright heretical is now commonplace.
      Though I do wonder how long it will be before this forum is closed down?
      There are already far too many ideas formulating without control!
      Is it not already a dangerous hotbed for the authorities?
      Not least from the postings of our host who puts in a regular direct challenge to the establishment at his own personal risk. (How cushy his future would be if he was to merely trumpet the standard line)

      • Tim

        True, Ire. But, if I can answer one of your questions, it is this:

        “Though I do wonder how long it will be before this forum is closed down?”

        It is taking a long time for two reasons:

        1) Those in power are luddites;

        2) Those that those in power pay (with OUR money) to advise them are “unfit for purpose”.

  46. wills


    Good evening Bloggers.

    Anglo is a bridgehead in servitude to the financial oligarchies that
    run the City of London.

    Anglo was financed by the City of London to drown Ireland in Credit.

    The plugged has been pulled on Anglo by the ruling elite.

    Anglo has served its function and drowned Ireland in Credit.

    The raid on anglo is a sanitization of any evidence pointing toward the real story.

  47. wills

    Hi Bloggers.

    Try not to waste postings on discussing the cover story in relation to Anglo.

    ANGLO is the sacrifice to quell the masses anger.

    ANGLO raid is a diversion………………….

    ANGLO is toast.

  48. Ruairi

    Is it possible the ODCE/ CAB/ Gardai were looking for Anglo’s HQ for the last few months and only got tipped off by the teachers protesting outside? Why on earth woudl they have not been sooner? Maybe they were looking for that malicious rapparee Pollack that goes by the moniker of DRIVING LICENCE………….

    Wills, 100% correct. Anglo blitzkrieg is a diversion. Most of us don’t give one SH1T about Anglo in our daily lives. Or we didn’t until we inherited it.

    Meanwhile, while we look in the empty stable, the metaphorical Shergar is being manhandled into another banker’s attaché and deposited elsewhere for safe keeping.

    RTE? You might as well be watching ‘Reeling in the Years’ folks

  49. Ruairi

    Some large companies, when performing due diligence prior to a takeover would also resort to competitive intelligence, ethical and non.

    Cowen & Lenihan, despite legal training, Lenihan in particular wearing his badge most proudly, choose to dig deep after they have bought the lame duck. Who does this? People have walked planks for less.

  50. StephenKenny

    All this talk about banks … how many of the 30,000+ millionaires are in banking, as opposed to property? It would be interesting to know.

    • Tim

      stephen, one banker, on an annual salary of €2.9million last year, is a multi-millionaire, every year – Goggin; how many others? Count them.

      • StephenKenny

        I’m possibly too cynical Tim, but the last 10-15 years has taught me that whenever the state and/or media is making a splash, effectively saying ‘Look over here, quick, look here’, it is wise to look over ‘there’ instead – they’re probably trying to divert your attention from something else.

        • Tim

          Stephen, I continue to find avenues of agreement between us; I am pleased by this. I admire many of your posts – even the few I cannot agree with, yet. I have not referred to the program on television that you mention as “The News” for about eight years (when I observed the “hatchet-job” it perpetrated upon teachers trying to indicate what IS now happening; remember the ASTI being the pariah?) – in my house, we call it “The Spin”. Be assured, you are not alone; ….. many of us ARE “looking OVER THERE”.

          Our problem has been, and continues to be, that we have little influence over the media. MONEY influences the media, because those outlets have “balance-sheets”, too.

          Even the, supposedly innocuous, “Letters to the Editor” of newspapers are censored.

        • Ire_in_Exile

          I think this discussion is extremely important.
          It is one of the real areas of change- people cannot trust the media anymore as an independent voice that speaks on their behalf.
          The media is as guilty in the Irish boom/bust debacle as any banker.
          They have been partners in crime.

          But it is truly scary when,

          1) The media (worldwide) have a single agenda, and propagate/censor information accordingly.

          2) The broad masses are so saturated by corny media tinsel that they can no longer tell the difference between fiction and reality and they couldn’t care less regardless.

          But as Tim mentioned earlier newer forms of communication such as this forum have the potential to even out the balance- if they remain open!?

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