March 4, 2009

We bet the lot on casino capitalism ... and lost

Posted in Euro · 305 comments ·

cartoon_indo_288254d‘What happens in Vegas, stays in Vegas.” So says the official advertising slogan for America’s den of iniquity. Knowing this “knowing” slogan, I was expecting something slightly more risqué than the overwhelming smell of waffles and pancakes, which greeted me at Las Vegas Airport.

Granted, there are those stick insects that hang out in the Ice Bar who might regard scoffing down sticky chocolate smeared pancakes as the most lewd and depraved thing known to humanity. But for most of us, something more hardcore might be expected here in America’s centre of sin.

Whatever your weakness, it is clear that self-restraint is not high on the agenda in Vegas. In fact, if one word can describe this place it is gratification, instant gratification.

This town is a microcosm of much that has gone wrong economically with the US (which is why I am here making a documentary). Vegas is loud, brash, overdrawn and in recession. The economy here is crashing.

Nevada has the third-highest rate of unemployment in the Union and house prices are plummeting. Up to 8,000 casino workers have been laid off since January and business is down everywhere.

Like Ireland, Vegas boomed in the past 10 years, construction sucked in workers from all over the US and Mexico and it heralded low taxes and the spirit of the individual. Like Ireland, Vegas engaged in Casino Capitalism based on short-term gains gambling with other people’s money. It bet the house on construction and lost.

Today, the place is full of the same ghost estates that blight our land, built miles away from the city with no transport links. These are houses built for the new service workers of Vegas — workers who are now unemployed. This is now the foreclosure capital of the South West, a state that has gone from boom to bust in a matter of a year. This morning, the third Nevada-based bank this year has gone bust.

Things are grim in the vice capital of the US, but it differs from Ireland in one crucial aspect. This difference will cushion the blow of the recession, allowing Nevada to recover more quickly. If it were an independent country, faced with a recession, Nevada would devalue its currency and trade its way out of this crisis, allowing hotel room prices in Vegas to plummet relative to California and attract in more Californian tourists in process.

But it can’t. It is a state of the United States of America. The downside is that Nevada can’t devalue; the upside is that it gets huge transfers from the federal government to pay for its unemployed in the same way that Wexford gets transfers from the Dublin government to pay for the rise in unemployment in Enniscorthy.

As a result, the impact of the recession in Nevada will be more cushioned than it otherwise would be if Nevada were an independent state within the dollar zone.

Now look at Ireland. Ireland is an independent state within the Eurozone. Because there is no central European budget where we might get federal transfers, we have to suffer this recession with a hard currency, without any offsetting budgetary help. How dumb is that?

Ireland has abandoned macroeconomics and is now being run by mantras, which allow our leaders to avoid honestly assessing our situation.

Ideally, we would devalue our currency and print money to get us out of this mess. We should also increase government investment, not reduce it. This is after all the core of macroeconomic theory as I learnt it.

When you have a liquidity problem where the people are hoarding, not spending, the state takes up the reins and spends. This is what every country did in the 1930s and goes to the heart of the response to the crisis which President Obama unveiled last week. But the Irish government is trapped, we have got ourselves into a stupid situation whereby we can neither devalue nor spend excessively. Therefore, our present European arrangement is the worst of all worlds.

But we are going to vote on Europe again this year with Lisbon II, so what should we do?

Less Europe and an ability to devalue our currency would help enormously but so too would more Europe and fiscal federalism where real political and budgetary integration accompanies monetary union and free trade.

This implies that the best policy for Ireland is either to dilute our commitment to Europe or enhance it greatly! Both outcomes are better than keeping the present status quo of being full members of the euro in a half-constructed political union. This is a disaster. So something has to give.

The financial markets have twigged this Irish dilemma and are betting that Germany will not tolerate more European integration, which the Germans could rightly see as yet another attempt to extort from the German taxpayer money to pay for Ireland’s sins. This is why the market which measures the risk of an Irish default, known as the credit default swap market, is suggesting that a default in Ireland is likely.

However, as against that, the political class in Europe and in Germany in particular, by proposing a European bond, is moving gradually towards more muscular political integration backed up by these monetary measures.

At the moment Germany, while admittedly footing the EU bill, gains tremendously from the EU because it can export its goods freely in the union, without having to worry too much about the budgetary implication of an EU-wide recession. So German trade benefits are amplified in a Euro boom but its fiscal downsides are capped in a recession. So it is win, win for Germany.

Granted it is the largest contributor to the Euro budget but this budget is modest when compared to a national budget and the national responsibility of proper EU governance.

Thus this crisis is not just a challenge to Ireland but it is also a challenge to Europe. We can improve our lot by taking either radical option.

We would be better off being the most ardent pro-Europeans or by being the first to leave the currency union! Equally, we know that if we stay as we are, we will have a much longer recession than is warranted, which is political and social suicide.

In short, we have to make big adult choices. In contrast, here in the land of the Elvis impersonators, Casino Capitalism is a grown-ups Disneyland, which will be paid for by the croupier in the form of Uncle Sam. Unfortunately, in our Irish version of Casino Capitalism, the punter always pays.

We are in a situation where we have to make a move. We can’t stay as we are.

In biblical terms, Ireland needs the Wisdom of Solomon; lamentably all we are faced with is the Life of Brian.

  1. This article reminds me of Dun Aengus where the outer half of the ring fort was lost into the sea – when that happened it was not erosion – it was something far greater more like another Age of Mismanagement – we are only left with dull gray lifeless limestone when they in another age beamed with the blue of royalty and strobbing gyrating disco/ laser lights displaying positive energy .
    Now we must ask ourselves what landmark will be left to show to remind a future mankind that we had once a celtic tiger and where might that be?

  2. MK1

    Hi David,

    Vegas has gone through several booms and busts over the years and will continue to do so. Gambling will continue so it wont go away.

    > Because there is no central European budget where we might get federal transfers, we have to suffer this recession with a hard currency, without any offsetting budgetary help. Ideally, we would devalue our currency and print money to get us out of this mess.

    But we do get ‘federal’ European transfers, on an equity basis and when we deserve it. Remember all those roads the EU funded 85% for, the cohesion funds, and yes, we are still getting CAP. Ireland has done very well thank you very much in terms of monies received from the EU over the decades. We still have a qualifying BMW region (with not many BMW’s in it!). Others will argue that we gave away our fish resources to the EU and lost out. Maybe. But in terms of the EU project as it panned out, Ireland has been a quantifiable net receiver. And the only reason we dont get the money now (or yet) is because we are rich in comparison with the other 25 and dont when benchmarked need it yet.

    Whats effecting the EU-15, is in fact the expansion to the EU-25 under Nice II (remember that). When we voted for the expansion back then, it meant that there would be a slew of countries in line for help long before any of the original EU-15 could even be considered. So, yes, we will get EU funds again ONCE we are in a worse position than Latvia, etc. We voted for this. I think most of the political parties advocated it as well. Go figure. Nice was a mistake in my mind, as it was too much expansion to take on too quickly. Expansion should have been more gradual and that mistake will bite into the EU now.

    > We should also increase government investment, not reduce it. This is after all the core of macroeconomic theory as I learnt it.

    Yes, but what that theory also states is that government spending is in line (the same order) with government income. So in a nicely gently rolling changing situation, in small percentages, government borrowing can be used to stimulate an economy when there is a gentle contraction. But not many theorteical books cover seismic shocks to financial systems and economies on the scale we are seeing and in a manner where all pain can be avoided. Oil crises could not be prevented. And credit bubble recovery is difficult. Yes, you are right, normally we would expand government spending, borrowing to do so and we’d be hunky dory. But we are not in that position. 20 billion is far too much to borrow in one year.

    > Lisbon-II (closer or further)

    The thing is we can only vote on whats in front of us. Will Lisbon-II make any major difference to the EU project as it stands? Not majorly, apart from giving more power to the centre. How that will help the small satellite countries is not at all clear. And the option of leaving the Euro. Well, like a retiring footballer, its always best to retire at the peak of your abilities. We could leave the Euro if it was totally optional and we were in a very good position. But we’re not. We are weak, decimated, reeling in this storm. The euro is a steadying effect, an anchor if you will. It may keep us back at times, but it faces us into the storm, it helps enormously.

    Maybe we should place 1% of our tax money and try our luck on the Casino wheels in Vegas …. place it all on the Green Zero, it seems apt! ;-)


  3. big_fredi

    The problem I see is that Irish economy is not European.

    Basically Europeans pay high taxes and make the companies pay high taxes to create a social state where everybody has access to a wide range of public services mainly free and paid from that bag where all those taxes go. That’s where that money that Europe would use to bail Ireland would come from. So basically you’ll get European taxpayers money to pay for Irish sins.

    For example, Irish people prefer to receive a children allowance as money in the pocket rather than let the state (or a number of private companies competing and paid by the state) create a network of public creches or having free health services for the under 16s. Indeed the Irish health system is a clear example of how far Ireland is from Europe.

    Will Europe have to pay the tax revenue holes created by Ireland’s low corporate tax (while they have to suffer the lost of the tax revenues from those companies)? or will Europe have to pay because the Taioseach wants to be better paid than any other member state’s first minister with a money his country doesn’t have?. Say about the health system… will have the German or french doctors (worse paid than the Irish) have to pay their taxes to keep their Irish colleagues with their high salaries?

    BTW, devaluate the money is just a fake of gaining competitiveness. They real way to do it is increase productivity and contain or reduce costs (including salaries) but I haven’t heard much about how a culture of low salary increases and increasing productivity will be put in place in Ireland. Without that, don’t bother to go to Europe and beg for money, because it will be worthless.

  4. wills

    Hi David.

    There is only one solution to the economic peril we are all faced with and it’s not borrowing more and its
    not taxing more to fix up our deficit to be able to borrow more and what any fancy terms one wants
    to dress it up with this is what is underway. In re-organising our economy we
    must start with fixing what brought the mess we’re in about. This leads us
    too one thing, CREDIT PRODUCTION. We must use CREDIT PRODUCTION
    as a utility if we are serious about fixing our economy.

  5. wills

    Hi David.

    Using CREDIT PRODUCTION AS A UTILITY ensures excess is minimized.
    It protects the community against it’s on vice when it comes to greed
    and reckless spending.

  6. wills

    Hi David.

    A real economy, an economy in equity and continuous growth will
    never happen on the basis of using CREDIT PRODUCTION
    outside of it’s utility function/status.

  7. wills

    Hi David.


  8. Garry

    Good to see a new angle on this… A while ago, i asked about comparing Detroit and Portland… 2 regions in the US with very different outcomes… and theres vegas… In all cases its not just the structure that counts its how the local economy and politicians works within the structure that is equally as important.

    Just one comment on this quote from the article

    “This implies that the best policy for Ireland is either to dilute our commitment to Europe or enhance it greatly! Both outcomes are better than keeping the present status quo of being full members of the euro in a half-constructed political union.”

    Yes absolutely…. I’m in the enhance it camp just for the record.
    The present situation where Irelans is a begrudging member of the EU and eurozone. It might appeal to some people here but it is self defeating… Take Lisbon, we had various idiots spouting shite about conscription etc. in our “debate” on Lisbon. As Ive said here repeatedly, if theres 27 people trying to agree on something and 1 idiot keeps bringing up stupid irrelevant arguments to stop a reasonable agreement and waste the other peoples time, ways will always be found to work around the idiot…

    If the idiot then comes begging to the other 26 looking for them to agree to give him a bailout after pissing everyone off for years whinging about some imagined grievance, then its almost funny. What’s German for F… Off, we might be hearing it soon

    Vote yes to Lisbon… Vote anti government in the local elections and vote whatever way ye want in the Euro elections


    Ireland is as financially bankrupt as Peru or Brazil.With unemployment increasing by 1,000 per day we will have 700,000 out of work within a year.We are finished.

  10. roc

    “Ireland has abandoned macroeconomics and is now being run by mantras”

    That is an astute observation.

    Perhaps our media could adopt this mantra wholeheartedly to try and counteract the phenomenon.

    Then, maybe we can all move on to high quality analysis. Media commentators included.

  11. Credit Unions is our next casino to shut doors as we know it to be

  12. lff12

    Is it just me or is Cowen now trying to actually wind down Ireland Inc? While every other economy in the developed world is trying to stimulate business and activity and spending, Cowen seems intent on shutting it all down? How many hundreds of 1000s have to lose their jobs before it becomes clear that Ireland cannot afford to pay 3 times the rate of social welfare than what is paid in the UK, many cases exceeding the minimum wage?

  13. wills


  14. The Eye

    This country is a basket case, any public servant is a millionaire if you consider their index linked pension, they are the new rich, the only people who can borrow, will they move to Howth or Dalkey next?

  15. gadfly55

    You should be here today David, to see the capitulation of the government to the necessity of another budget adjustment of tax rises on everybody and spending slashes on public expenditure. Eventually the government will cut public pay and social welfare payments. Please desist from your macroeconomic training in inflation, devaluation, etc. because there is no way out of the eurozone, although Krugman has already lumped us in with Iceland and Estonia. Cowen is the personification of misery, and get more miserable but not contrite by the day, although Lenihan invited the opposition to have a look at the Finance books, as though that might concentrate their minds on bending the FF and Brian’s way or the highway. You can be sure we will run to the embrace of the ECB to protect us from those nasty Anglo-Americans who intend to debase the euro from replacing the dollar as reserve currency. Lenihan publicly refers to those in the City of London who are betting against Ireland in taking positions on default of Irish Government Bonds, probably the same nasties who took short positions on Irish banks, those silly billies, what did they know. When you are there, pay attention to those who eagerly seek the end times, and deny evolution, science, etc. and listen to Limbaugh. Consider the problem of people who are devoted to fundamentalism in all its guises.

  16. G

    Hi David

    I was in Vegas for a week (too long) in 2004, I saw the issues you highlighted in your article above. The wasteful expenditure, the opulent but soulless hotels, elderly cocktail waitresses busting it for a dollar tip, the ready supply of prostitutes, the porn littering the streets during the day and night etc etc.

    Indeed the whole concept of Las Vegas seemed insane, arrogant not to mind environmentally idiotic – a fitting metaphor for capitalism as a whole.

    I flew out and saw the ‘service houses’ but thought that gambling would keep the show on the road, the 8000 lay-offs is an interesting indication, the Casino’s are just cutting their costs but should survive and yes, being part of the United States is a great get out jail card.

    However in the midst of the seedy and sheer tackiness of the place, I had a positive experience. This big spender was 14 dollars up and was given some advice by the man running the table.

    He said: ‘kid, you and your girl seem like nice people, why don’t you take your money and buy her dinner because these places were built on people winning’ – that summed up Casino Capitalism for me right there and then.

  17. gadfly55

    This nonsense about pensions is proof that we, as a nation, are completely daft. Pat Kenny has once again shown his bias by providing air-time for a so-called expert to explain what it would cost now, to earn a garda pension, now on a finishing salary of 52000 after 30 years service.This does not compare the pension investment in the private sector necessary for the previous 30 years with tax relief to earn a similar pension, now. If you had invested 6.5% of your salary from 1975, to 2005 in an endowment policy,with a salary starting at 12000, and finishing at 48000 at the time of the greatest growth in financial history, with tax relief, you would have been paid out 500,000, regardless of whether you lived or died. The problem with state pensions is that you are only paid if you live long enough. The lump sum payable at retirement effectively pays you back for your investment, and the state then pays year by year, having had use of your money, for up to 40 years. Most public servants must work for 40 years to qualify for a full pension. The question should be asked in the Dail as to how much is actually spent on public service pensions per year, and what is the current average number of years people survive in their pensionable years. Of course, it is much easier to attack public servants and suits the private sector when their investments collapse, but they could have kept the money in the bank and earned interest with no risk.

  18. wills

    Hi David.

    The economy collapsing is the ponzi/bubble economy.

    How did it burst,,,,,,,,,…?

    The banks stopped lending. The banks suckered the running of
    the economy onto their CREDIT OUT OF THIN AIR PRODUCTION.
    They then pull the plug. Collapse the economy. Consolidate. Buy
    up real assets for pennies on the euro. Re-open credit lines and
    start over.

  19. gadfly55

    YOu mean these place were built on people losing, or people believing they were lucky,

  20. wills



  21. wills

    Hi David.

    Gordon brown today sky news lunchtime

    “this whole thing started with a banking failure………”

  22. Deco

    The Las Vegas Mindset is a what has been wrong with this country for the last twenty years. Even before we got money in this country we were yearning for the gambler lifestyle. Is that not why CJH got 40% of the vote despite him being a crook (though useless candidates in other parties also helped the scoundrel).

    We have behaved like a bunch of aristocratic, status obsessed high-rolling buffoons in a Casino.We were proud. What exactly we were proud of, I have still not resolved. Therefore, I assume, proud of nothing.

    Which brings us to where we are now – still proud, and still with nothing to be proud of. The assumed way of dealing with this is to invent some sort of scam for Irish people to feel proud of again. Humility is just inconceivable. Well I choose humility. And freinds, beleive me it is liberating. Humility is the first step towards fixing this sociieties stupid mentality and psychological delusions.

    Which is exactly where gamblers anonymous, alcoholics anonymous, etc. start – recognition of the problem, and some humility. Humility must start at the top.

  23. Deco

    Basil Fawlty would do better than Brown..

  24. G

    should clarify – apologies -

    He said: ‘kid, you and your girl seem like nice people, why don’t you take your money and buy her dinner because these places weren’t built on people winning’ – that summed up Casino Capitalism for me right there and then.

  25. Philip

    They may as well get out a referendum tomorrow and get Lisbon II voted in asap. May as well try and get inside the tent and work the system.
    The option of leaving the EU and the Euro is not on. As MK1 says, we are not retiring at our peak and it would back water us big time.

    Another option might be mandatory conscription into the army. May as well start getting people off the streets and getting them doing something useful.
    Ship them to the blue berets, act as the fallback should CIE/ Dublin Bus strike.

    Any more wacky ideas?

    I am fed up watching a well rehearsed story unfold. We know what is going to happen. Just have no clue what one can do next.

  26. G

    @ Deco – ‘pride before the fall – put a beggar on horseback and he will ride to the devil etc……….’

  27. Garry

    Now that would be ironic…. conscription but into the Irish army to keep people occupied not some EU imperialist warmongering Lisbon blah blah

    what to do next…. its obvious…. maximum wage for everyone who gets paid by the government…… keep overall employment as high as possible, put people doing useful work…. e.g. we can have 166 TD’s taking an average of 200k or we can have 166TDs plus another 860 people not drawing the dole and earning 30k each. And repeat

    There should be no first class seats in the lifeboats

  28. DarraghD

    Paddy is smarter though than them lads in Vegas! Ocean’s required eleven people to rob the bank in Vegas, Paddy could do it with his Golden Circle of ten!

  29. MarkC

    I wish to God some what you say seeps through into not only the governments consciousness but also that of the general public.

    I’m so sick of hearing how lucky we are that we’re not Iceland and how the euro is so great.

    Balls it is! The euro contributed to his mess when we coudln’t set our own interest rates and is now compounding the misery because we can’t devalue.

    It is lunacy! And we’ve got our politicians and sheep-like electorate to thank. Wake up people! If Europe doens’t help us then we need to help ourselves and leave the euro!

  30. Ruairi

    “In biblical terms, Ireland needs the Wisdom of Solomon; lamentably all we are faced with is the Life of Brian.”

    As a member of the Popular Front of Judea, all one of our membership takes extreme offence at this sideswipe at our political goals and visions ;-{ !!

    On a calmer note, this piece of prose lyrically points to the junction that David presents us with and the ‘opportunity’ it actually presents for our ‘leadership?’ to give Ireland a good old shakeout and reconstruct it. Or further turn the clientelist screw, as the case may be.

    Quoted from

    As we move deeper into what President Obama called in his Inaugural address “this winter of our hardship,” some inspiration might not be unwelcome. During the years I lived in the Findhorn community in northern Scotland, our work itself was inspiring. But we often found inspiration of another sort when we were visited by Sir George Trevelyan, one of the founders of the adult education movement in Britain. Sir George had a gift for oratory, and his lectures were studies in eloquence, graced with poems that he recited from memory. It was always thrilling to hear him speak.

    One of his favorite passages that he introduced to us was from the play A Sleep of Prisoners by Christopher Fry, an English playwright. First produced in 1951, it tells the story of a group of soldiers who are prisoners of war held in an empty church at night. In the play, one of the characters, Sergeant Meadows says:

    The human heart can go the lengths of God.
    Dark and cold we may be, but this
    Is no winter now. The frozen misery
    of centuries breaks, cracks, begins to move;
    The thunder is the thunder of the floes,
    The thaw, the flood, the upstart Spring.
    Thank God our Time is now when wrong
    Comes up to face us everywhere,
    Never leave us till we take
    The longest stride of soul men ever took.
    Affairs are now soul size.
    The enterprise
    Is exploration into God.
    Where are you making for? It takes
    So many thousand years to wake
    But will you wake for pity’s sake?

    For Sir George, this poem encapsulated the times in which we live. I agree. And its sentiments are no less true now than they were nearly forty years ago when I first heard them. Down the years, many of its passages have rung in my memory and have been an inspiration.

    The human heart can go the lengths of God. What an amazing statement this is. In a way it is at the heart of the incarnational worldview I wrote about last month. It says that as human beings, as individuals with bodies and personalities and all the foibles and challenges of earthly life, there is nothing of God that is closed to us. We have in ourselves the dimensions of the Sacred. Our humanity does not separate us from that great Mystery but rather folds us into it. Wherever God loves, our hearts can follow. And that is everywhere. In a world still dangerously riven with hatred, strife, fear and anger, it is good to know we have such a power within us. If our hearts can go the length of God, then there is hope and promise we can go the lengths of the differences between us.

    Thank God our time is now when wrong comes up to face us everywhere. In an interview when asked how he felt becoming President at a time of major crisis, President Obama said that it was such times that made public service meaningful. In his address to both houses of Congress last night, he revisited this theme, saying, “Those of us gathered here tonight have been called to govern in extraordinary times. It is a tremendous burden, but also a great privilege, one that has been entrusted to few generations of Americans, for in our hands lies the ability to shape our world, for good or for ill.”

    No one wishes for crisis, but when crises come, they can call forth our best impulses, those of compassion, courage, creativity, and community. And if there are crimes and evils hidden in the dark places of our society and the darker places of our consciousnesses, all the better they come to the surface to be seen, understood, confronted, and healed. If our generation is called to bear a burden of that healing, it is a powerful calling and honor and one within our capability.

    But the playwright is saying more than that crisis brings forth the best in us or gives thanks that evil is being brought into the light. The full quote is asking that this wrong, coming up to face us everywhere, “never leave us till we take the longest stride of soul men ever took.” It’s not the crisis or the confrontation with wrongness that is most important but that we have the opportunity, the impetus, to take that long soul-stride, to stride the “lengths of God.” In short, to fulfill the potential of our human hearts. Rather than being beaten down by crisis, by evil, by the wrongs of the world, or the challenges and fears of the moment, we need to find that spaciousness of love and hope and vision that can truly transform things. And we can, for that spaciousness is in us, accessible to beings like us that can “go the lengths of God.”

    The nineteenth century American poet, Sam Walter Foss, wrote in his work ,The Coming American, “Bring me men to match my mountains, Bring me men to match my plains…” The American Rockies inspired awe with their majesty and ruggedness, and the vastness of the American plains offered an unmatched spaciousness and fruitfulness. They were symbols of the challenges and opportunities of a new world, calling to an adventurous and creative spirit. Generations of Americans responded.

    But now a poet might write, “Bring me souls to match this world. Bring me hearts to match its life.” It is no mere continent that lies before us now but the earth itself with all its rich diversity and wonder of life and all humanity upon it. The global challenges we face are as unknown a terrain as the American continent was to the pioneers of two hundred years ago, daunting and yet capable of inspiring our creative spirit. But to meet these challenges we shall have to let our hearts go “the lengths of God” and find in us the source of our power to create wholeness. As Fry says, “affairs are now soul size.” So let us be men and women to match our souls.

    The enterprise is exploration into God. Yes, it is. It is an exploration into the sacredness within all things great and small around us and within us. But it’s also an exploration into ourselves and into each other in new ways, honoring ways, respectful ways, loving ways, incarnational ways. We need spirit, but we also need a vision of love for the life of the earth that let’s us cherish it as home. For that life-human life, plant life, animal life, earth life-is all within the length of God.

    Where are you making for? This is the question of our time. What is our vision? What kind of world do we want, for ourselves, for our children, for our children’s children? What kind of world do we want for the fish and the birds, the beasts and the insects, the forests and the meadows, the crops that feed us and the flowers that bring us beauty? I believe we want to create a world large enough to be a soul home for us and for all beings, loving and large enough to give expression to the soul of the world itself, spacious and whole enough to express the lengths of God. And I believe we can. The capacity to do so is innate in us. If affairs are soul size, we can meet them because we are soul size, too.

    It takes so many thousand years to wake but will you wake for pity’s sake? This is the call. To wake to ourselves and our incarnations. To wake to each other. To wake to our world as home. To wake to our hearts that can go the lengths of God.

    David Spangler

  31. Malcolm McClure

    What on Earth is McWilliams doing in Las Vegas?

    David! thou shouldst be with us at this hour:
    Ireland hath need of thee: she is a fen
    Of stagnant waters: altar, sword, and pen,
    Fireside, the heroic wealth of hall and bower,
    Have forfeited their ancient Irish dower
    Of inward happiness. We are selfish men;
    O raise us up, return to us again,
    And give us manners, virtue, freedom, power!
    Thy soul was like a Star, and dwelt apart;
    Thou hadst a voice whose sound was like the sea:
    Pure as the naked heavens, majestic, free,
    So didst thou travel on life’s common way,
    In cheerful godliness; and yet thy heart
    The lowliest duties on herself did lay.

    ( With apologies to Wm Wordsworth.)

  32. National Bankruptcies :

    Britain owes $15,000 per capita

    USA owes $36,000 per capita

    Japan owes $157,000 per capita

    What does Ireland Inc owe ?

  33. Now we must ask ourselves what landmark will be left to show to remind a future mankind that we had once a celtic tiger and where might that be?

    How about the dozens of wind turbines lying idle because the lack of demand made them uneconomical to bring on line? Some of them with the blades fallen off due to lack of maintenence?
    An Irish Ozymandias, so to speak.

  34. jim

    Let’s be quite clear,the Euro is not the problem,it never was.The problem is the structures that were put in place when we joined the Euro.By that I mean the structures in the Regulators Office,Central Bank and Financial Ombudsman.The light touch,nod and wink,blind eye,self promoting,hush hush,lack of necessary expertese,inside information,no accountability and the rest of this fatally flawed regime that allowed Bankers/developers and all sort of Financial Traders to exploit the Euro,its interest rates,economic strength etc.for pure greed and power and self advancement.Remember Ireland when it joined the Euro did not have to put the type of prudent policies in place to prevent a run on its currency ,it was no longer tasked alone in defending its currency as had happened previously with the Punt.Charlie mc Creevey was constantly in battle with Europe with the type of policies being pursued by Ireland and the Bas.ard used what was up to then and export driven growth of the Celtic Tiger to mask the type of cowboy.gambler,galway tent,crony capitalist ,Fianna Fail ,media bought,gombeen approved,gobshite implemented,agenda manipulated,election engineered and party handled,spin doctored,voter hoodwinked,economic treasonous,policies that have us where we are today.This seemingly endless cleaning up by one FF leader after another has gone onn for too long.The country can no longer afford these people runnning the affairs of State.Cowen should go back to opposition and take the time there to implement change in FF.The country cannot afford to have a driver at the wheel constantly looking back over his shoulder.The Greens should realise that they are in the car,jump now before its too late.Dail,Euro,Local elections in June.That will be a good starting point for the revovery.Anyone with me?.

  35. The Eye

    I agree Jim but everything the gov do will be arseways. I think this country really is Godforsaken.

  36. Philip

    I am fed up reading an unfolding story which gets played out for real about 1 month later.
    Given the wonderful prescient abilities of this blog (and I say this without sarcasm), can we figure out
    a solution that does not reference the EU, Government, Banks etc. These institutions seem to be headed south.

    If I were Brian, I would fire up mandatory conscription to soak up our bright talent. A few years smartening up,
    doing a few gigs for the UN and overriding PS strikes ;). End Neutrality would be something else I’d do and realise we
    depend on others for our security.

    • Garry

      no idea Philip but my gut instinct is the only solutions are at a very macro or very local level, the bits in the middle (governemnt and eu) are becoming less relevant to solving the problem. their role should be in minimizing the pain.

      macro as the key relationship is between the US and China, everything else will flow from that and local as its up to individuals and small groups of people to help themselves

      doesnt sound great but thats my 2 cents

  37. Philip

    Arragh!! This Blog reads latest first….Sorry for repeats.

  38. coldblow

    It’s hard work, but if you print it out first then you have a real job on your hands trying
    to read it! Maybe like the Athlone one way system it might be quietly dropped after a
    decent interval! hint hint

  39. pera

    well said jim. Without the Euro things would have probably been even worse
    1: when economy was booming, they would havev pointed to low interest rate in euro zone and said that to be competetive ireland needs to have the same interest rate
    2: they would have claimed that Ireland was a special case, as noted the boom was going to get boomier
    3: when euro zone started to increase interest rate. some vested interests would probably have pointed out that interest rates should go even lower to encourage the most important industry in the country and to bring the boom to the next level, since Ireland is a special case

    This is ofcourse to simplify. If Ireland had not been in the euro. International markets might not have lent Ireland (the banks ) so much money if they kept the interest rates low, but then again Iceland solved that problem by increasing their interest rate to attract capital.

    But I do have enough confidence in this government to believe that they would have been able somehow get into an even worse position if they had not been in the euro. they would have had completely free hands to do their wheeling and dealing

  40. Mise Eire

    There is an alternative to currency devaluation, which is selective – i.e. discerning – deflation.
    It involves thinking about what things are worth to us, and how much we are willing to pay – or not to pay.
    It`s happening guys, haven`t you noticed?
    Devaluation is just a temporary hoodwinking of the population. Actually it`s stroke politics. Deflation needs real thought & hard work.


    Sometimes those long plane-rides don`t help clear thought. Schizophrenia is the most serious of all mental illnesses and let`s hope the country doesn`t go that way (again) on Lisbon II.

    We should try to learn a bit from Germany, other than eying how much of it`s budget we might tip into the auld C(ommon) A(g) P(olicy) – or the new Bank support mechanisms???… Try considering that it`s well within our reach to be a proud, after being a severely humbled nation. And realizing that we have to a lot of work ourselves, with any support from neighbours & allies welcome, appreciated and TO BE PLAYED FOR, to get out of this.

    Isn`t David coming back to make Eamon Gilmore taoiseach next week?

  41. The Celtic Tiger debate is over , it was a credit pumped charade. The economic vacuum as a result of its inevitable demise is now clear.
    The only counter argument, that the people in government who significantly responsible for its creation, can now state, is that the current economic malaise is a global one.
    It is certainly true that the global economic contraction , expedited the eradication of the Irish wealth facade, but create the facade it did not.
    And put Ireland in an economic deterioration far worse than any other western country, it did not either.
    I don’t believe any intelligent observer could dispute this reality, although this is a comment section on David McWilliam’s articles , it has become more of a forum of Ideas.
    It is encouraging that the reality of the economic situation does not seem to be lost on anyone here, and it is important that Idea’s are offered and debated.
    With current exchequer figures published it seems , Idea’s are all we have left. In light of that,
    Economic Rescue
    1.New Government
    To give any credibility to the proposition, that the people significantly responsible for leading Ireland into to this, unprecedented economic catastrophe, have any competence or capability to lead us out of it, is naivety in the extreme. The alternative parties do not offer much hope either, but they would in the very least be politically less compromised than the current incumbents. Ideally , the way we elect our national government would be severed from how we elect our local representatives to parliament, it would create a greater opportunity, to have really competent, experienced and impressive candidates on the ballot, and would give each citizen an opportunity to vote directly for their preference. Any current alternative will be a seasoned career Dail occupant , unavoidably connected to the cronyism and political compromise that the current electoral system requires.

    2.Radical Reform of the Public Service
    Any independent observer can attest to the gross inefficiencies, in the Irish public Sector, such inefficiencies are not new, a rare positive here, is that there is now an opportunity for radical reform. We need a new framework, a directly accountable, transparent system and a new culture of efficiency in the Irish public sector. I fully appreciate the fact, that many individuals within the public sector are most efficient, but overall the figures speak for themselves

    3.Reduction of Public expenditure
    In conjunction with 2 above , quite simply Ireland needs to restore its parity with other developed countries with regard to the cost of providing public services. All but the most essential services need to be cut, it needs to be radical, equitable and it needs to be rapid. Clearly this decision has been made for government already.

    4.Tax reform
    We need to raise taxes, the previous model worked with the unsustainable government revenues from the credit pumped construction & property charade. In the long run, culturally I believe a low tax Economy has to be our goal but as it stands, it is beyond the political debate, it is again a decision that has been made for government already.
    Taxation needs to increase now.

    5. Banks
    This is arguably the most difficult situation economically, there are so many significant domestic and international factors to take into consideration . It is unprecedented , it contradicts almost every axiom of fairness, equity and basic economic efficiency, not to allow the market deal with each banks in a reflex commensurate with each banks level of corruption and incompetence. I believe that there is a lot of Mantra analysis here, we are a very small economy, It would not be unprecedented , to create a new banks and do so by a temporary takeover of both AIB and BOI eradicating all senior management, taking all speculative property debt off their balance sheet into a separate asset management entity, and then commit the proposed levels of recapitilisation, with entirely new management and temporarily imposed objectives in terms of supplying credit to otherwise sustainable domestic business. (It is important to note that many business’s in Ireland complaining of a lack of credit are unsustainable regardless of credit or not, it is after all the provision of credit to unsustainable enterprise that has created the current economic mess)

    6. Counter cyclical economics
    It is irrelevant at this stage to discuss how different our position would be if we had an economically competent government that practiced counter cyclical economics and acted to deflate the construction/property bubble. But the most labour intensive capital investments that will create national assets for deacades to come must began. If this country is really on the fast track to 2nd world status , we might as well borrow the money and build up our capital assets. The entrepreneurial nature of Irish people means that once we have a country fully equipped to 21st century standards,to do business with the outside world, business will be done. There are countless micro examples of this such as Stockbyte, Fineos….. . Additionally investments to deal with the impending environmental challenges need to be taken .Such investments need to be made and made now , and in so doing will be counter cyclical to the public expenditure reduction and the overall economic contraction. There needs to be a sophisticated process of identifying capital investments to fulfill “knowledge economy”, Environmental and current counter unemployment objectives. The global economy is in contraction, in this downtime we need to make the capital investments , to offest unemployment and achieve our long term sustainable economic goals. Such is the nature of the current situation , the further risks of borrowing this money for such investment , is minimal. If we are going down , lets go down having put capital assets on this Island that can be used for the decades to come.
    It would be a lot more reassuring to see 8 billion going into such investments than into the hands of Messr’s Sheey and Goggin.

    Right now, we must ask ourselves , what do we do in Ireland? Fortunately in answering that question , it is obvious, that they’re is a lot of industrial areas we co “do”. We are never going to undercut China (or many others) in manufacturing cost’s. We are never going to supply global industry with much in the way of Raw materials, but we can compete with anyone, in terms of our human capital. Again fortunately we are a small country living in a small world. In the digital age there is an array of activity that could be conducted in Ireland and traded all over the globe. It is beyond the scope of this to get into real detail, but I am sure anyone here can propose many different examples of such enterprise. Of course and again with current government, the mantra’s abound here “Knowledge Economy…..”. There has been little or no serious investment in actually achieving this, it is after all, the “knowledge” economy, so an unprecedented detailed global market knowledge of appropriate investment opportunities is required. A clearly specified and target focused national effort is needed, it is I believe our only chance, but we have a good chance of actually achieving this when (and we have to believe it will or else lets give up) the global economy rebounds
    On a micro level there are countless examples of such successin Ireland already, Stockbyte, Fineos (both on!) and indeed many others, are all companies that achieved huge growth independent of the credit pumped construction charade, that so many other “entrepreneurs” proffessed. We need investment and a comprehensive rapidly deployed policy to create dominant industries of such companies that in aggregate will become our Irish economy.
    Additionally we should be trying , possibly in terms of public private investment, to create our own Irish Global Industry leaders. As documented by the success of the Scandinavians in this regard.

    This is the only way I see forward ,

    constructive criticism of the ideas expressed are most welcome

  42. wills

    Hi phillip.

    I’ve been postig a solution for weeks…..

    Return credit production to it’s rightful place as a PUBLIC UTILITY. thank you

  43. wills

    Hi bloggers..

    Credit in use as a PUBLIC UTILITY does not mean providing
    credit to unsustainable enterprises etc etc….,,,,

    It’s not a difficult concept.. bizarre to how it’s so misunderstood.

    I beginning to think the pop of Ireland are programmed leprechauns
    who see credit as an intrinsically valuable resource.

  44. wills

    with you on the shift into human capital as motor to a prosperous economy,
    I reckon we should grab with both hands the new knowledge based economy
    and leave the industrial to the chinese and indians. I see Ireland brilliantly
    positioned to gear up and seize the day on a knowledge based economy
    to which CREDIT AS A PUBLIC UTILITY FITS LIKE a hand in a glove.

  45. Tim

    gadfly55, completely correct; the spin in the media is ridiculous and has been so for quite some time. You are correct, of course, about the 40 years of contribution required for “full pension”, which is calculated as 40/80ths of finishing salary. If you retire at 60, you only get 35/80ths, and so on (unless you pay extra to “top-up”). There is also the 1.5% “Widows and orphans” contribution on top of that 6.5% in order for spouses and children to receive half your pension, 20/80ths of salary after you die – and that, only for ten years.

    Most of the spin calculations in the media ignore the 40 year requirement, the massive penalties applied for fewer years than 40 AND, I am certain they calculate the private sector cost based on the fact that most private workers do not open a pension until they are in their 40′s, so OF COURSE the pensions they buy are going to be really expensive, because they only have about half the number of years in which to contribute to make up for NOT having contributed since they were 20 years old.

  46. Deco

    Furrylugs – you asked a very important question “Now we must ask ourselves what landmark will be left to show to remind a future mankind that we had once a celtic tiger and where might that be?”

    How about THE BINGE SYRINGE ??
    The Spire to symbolize the Quagmire.
    A monument to pointless waste.

  47. Actually Deco, that was johnAllens poser I was replying to. I’m sadly lacking that level of intellectual assessment. Mea Culpa

  48. Deco

    Wills – how can a society which regards the obliteration of it’s brain cells in as an act of national identification, on a repeated basis expect to have a long term future in the knowledge economy.

    Just look inside the A&E of your local hospital. We have too many bad habits to expect to hold it together as a knowledge based economy.

    Unless we clean up our act. Which is impossible considering all the alcoholics in the Dail !!!

    • Malcolm McClure

      Deco: I was watching the important Dail economic debate at about 5:30 yesterday and the House was empty save for about a dozen scattered souls. Bruton and Lenihan were talking to each other across the chamber, not in the tones of a national emergency but with the sad countenances of a couple of punters whose horses had fallen at the last fence. All that was lacking was the consolation pint at their elbows.
      Joan Burton then made a rambling speech, once she had worked out where she was supposed to be in her scattered papers. Being charitable, maybe she’d had a few stiffeners beforehand, but it looked more like sheer incompetence. What a shower to be guiding us through these critical times.

  49. Deco

    I know this might sound heretical in some quarters, but I think serious consideration should be give to scrqapping the minimum wage. Replace it with a new set of workers rights concerning the treatment of workers, and the right of a worker to request their employer to review their boss’ position with respect to any infringement of Labour Law.. That way workers would be protected, but any remaining disincentive to hiring people in this economy would be removed.

    In any case it should be considered. We are losing thousands of jobs every week. And it has to stop soon. It is endangering our industrial base.

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