April 1, 2009

Bad bank plan is risky business for taxpayer

Posted in Banks · 135 comments ·

ECB CartoonWhy should we pay now for the sins of our bankers? Why should we cough up any more to support these institutions that have, through their own greed and outrageous misconduct, brought the economy to the brink?

In recent days these are the sorts of questions people are asking, not just here but all over the world. Before we sort out the mess, we need to go back to basics and define what exactly it is that a bank does. This might appear obvious but, given how the present management of Irish banks turned them into casinos, it is not always clear.

One way of looking at the banking mess is to divide the banks’ role into two functions. The first and most crucial is to provide credit to us, in the same way as an electricity company provides electricity. This is the basic business of banking, it allows us to pay bills, to set up accounts to do our day to day financial stuff without too much hassle, and for this we are prepared to pay a fee.Let’s call this the “utility” side of banking.

The second part is the one which has got us all into this mess. We can call this the “speculative” side of banking. This is the weak link. The banks used our money to double up and bet on the property market and all sorts of other assets. Now that the bet has gone sour, their balance sheets are in tatters.

So what are we to do? How do we quarantine the bad loans so that the core business of banking can resume? And how can we minimise the cost to the taxpayer, making the banks — not us — responsible for their bad decisions? The stakes couldn’t be higher. If we get this right, we might lay the foundations for some recovery. If we get this wrong, we are doomed.

One approach is to decide whether we can avoid taking the hit now. If you believe that we have not yet seen the bottom of the property market and that when that point is reached, the property market will very gradually recover, not to the ridiculous levels of 2006 but to somewhere above today, then it makes sense to borrow today to tide you over. The reason this approach has value is that it avoids the taxpayer getting caught buying assets today from the banks that might be even cheaper tomorrow.

At the moment, there seems to be a consensus emerging in the Department of Finance to buy everything from the banks today, put all the stuff into a “financial skip” and then, over the course of the next 10 years, manage these properties as an asset management company. The aim is to buy the distressed property today at “market” prices and to pay for this by issuing a government bond. Given that the calculations of just how bad the toxic loans on the bank’s balance sheet varies from €40bn or €50bn to €100bn, this is going to be very expensive for the taxpayer at a time when we do not have the cash. And nor do we know where the floor in property might be.

This is known as the Swedish or “bad bank” model. However, as this column has pointed out in the past, there is one seismic difference between the Ireland of today and the Sweden of 1992. The Swedes underpinned their banking bailout with a huge 40pc devaluation of their currency, allowing inflation to rise and so the resulting uplift in property values was swift because it was facilitated by a new softer currency. Their “bad banks” offloaded properties in the recovery and paid back the taxpayer, at a profit, reasonably quickly.

Without the devaluation of the currency and the printing of money in Sweden, the bad bank idea might not have worked so well. In fact, the risk is that it does not work at all and we, the taxpayer, end up not only bailing out the banks but bailing out the bankers and developers; they’d be off the hook and we’d be left carrying the can. So without a devaluation to ease the pain, what can we do now to ensure that we don’t end up with a bunch of toxic assets that an asset management company can’t sell?

Maybe we should think about getting the banks to actively work for us, locking them in to clean up their own mess.

Let’s say the worse case scenario comes to pass and there is close to €100bn of bad debts in the Irish system. Instead of buying the assets now and risking buying too early and too expensively, we could set up the asset management company with a contract to dispose of the banks’ assets over time.

The State could borrow the €100bn from the ECB at 4pc but charge the banks 10pc for this money and a 0.5pc fee, payable to the asset management company to enable it to function. The 6pc difference between the rate at which the State borrows from the ECB and the rate the banks pay the State to take the assets, goes straight into the coffers to build roads, hospitals and the like. This is €6bn that the banks pay the State from their profits over the lifetime of the asset management company.

Now we are moving towards a situation where the State doesn’t need to nationalise the banks and thereby take on more liabilities. It actually gets paid for looking after the bad debts of the banks. It can also take warrants, if it wants to, in bank shares, so that we the people get paid twice.

Therefore instead of costing us money, we could actually make money by getting the bankers to work for us.

In essence all we are doing is using the ECB, as the guardians of the European banking system and ultimately the controller of the monetary union, to show financial solidarity. We joined a monetary union in good faith and now we should call on the monetary union in the spirit of the European family of nations for a bit of help. This won’t cost them or us a cent.

  1. Tim

    wills, whaddya think?

    • wills

      well tim, i hope it is ok to suggest that perhaps david is on side with the credit/utility paradigm, maybe…!!! and if he is it is a sign to continue to be upbeat,.

      as most of us are on the ‘ol blog here, despite the on going lunacy around us all,. apart from the posters in sunnier climes…,

      Would agree with david on seperating utility banking from casino gambling banking. This is a mega point, in my estimations anyway,.

      …as most here proably are aware, the undoing of the Glass Seagal act in ’99, i think and then the fixing of the commodities act in 2000, by larry summers, ushered in the blurring of the lines between main street and investment banking and shut down the restrictions on derivative betting and sunk us into the multi multi trillion dollar black hole credit cruncher. So…

      I fully agree with david on keeping utility banking seperate to investment banking side,.. but i think he needs to go further here,..

      I recommend returning utility banking back into public hands. David i think held back on going there,.. as of yet anyhows,… the thing is, in my judgement, banking in private hands as an option has been used and it is now proven to be madness,.. when this all settles and if we go back to the status quo another financial instrument will be invented and we are all off to the races again,. mk1 is spot on, we are practicing toddler banking and its been so since its inception in 1694 setting up bank of england, worlds first private central bank and introducing a tyrannical plutocracy.

      So, i believe that restoring the issuance of credit into public ownership and running it in a professional way, not hippy dippy stuff, which our forefathers wanted of us, means unlocking the world out of a tyrannical military plutocracy, and this is the underlying story here that remains unreported and needs to be tackled,.. this hidden regime will not pass the keys of credit issuance back to the people,…. this is where things get very interesting,…..

  2. Tim

    David, “Therefore instead of costing us money, we could actually make money by getting the bankers to work for us.”

    Now, I like the sound of that! However, for this to work, we would have to fire all the current bank bosses and there does not seem to be the political will to do this – au contraire!

    This idea seems a bit like the one where the County Councils mortgage the council houses to its tenants – the agree a price for the house the tenant is living in and allow the tenant to purchase the house over time. In essence, it appears to me, that you are suggesting a “virtual” Nationalisation, without quite doing it in reality – just forcing it by rules/legislation.

    If the government were to force the banks to do as you suggest, I think you would end up with a system within the banks that functions in similar fashion to the County Council “mortgage” purchase scheme for tenants.

    This is a good and working scheme: despite all the rubbish in the media about public service workers, there are no problems with the manner in which they operate this scheme, that I am aware of – no defaults or high court reposession orders there.

    Why not have these same public servants with experience of running this scheme, replace the bad bankers and run with your idea?

    Their track record is, certainly, a helluvalot better than that of the private sector bankers.

    • wills


      fully agree, there is zero political will to do this, not just in Ireland though i think. One cant help but be amazed by how the banking brigade are getting away with what we are witnessing going on..! it can only be explained away by the simple fact that there is a more powerful something other than gov and the banking pirates know it and use it to getaway with it. Power to hire out a contract killer,. winks and nods ending in false leaks to the papers… etc etc,… a web of intrigue holding the spider at its center,… scaring the bejeepers out of any one who attempts to fix this banking racket.

  3. Ruairi

    David, I like how it reads.

    This is a continuation of the Irish guarantee by pushing that guarantee further up the line and rightly using the strength of the monetary union to clean up our debts while maintaining the strength of the nation state. This is a crossroads for the nation state and the monetary union. Do the corporations win out or do they take the rough with the smooth like the rest of us?

    This is sellable to the Irish people. This, alongside a future levy partial refund for those who prove they had no property loans in these daft times (or more appropriately refunds that put the 2009 levy payments back into the progressive tax system), would ensure that we had a fair society with opportunities for wealth creation and protection for wiser people.

    This article is the veritable ‘seeing the wood from the trees’ and is the key message to be hammered home by backbenchers and opposition. Safeguards to ensure the taxpayer is at arm’s length from problems not of their making while whipping the bank’s speculative arm to within an inch of their lives.

    Only a traitor to the Irish taxpayer would implement policies that didn’t carry the spirit of this article. That’s the message to drive home.

  4. Tim

    Ruairi, “David, this is the PD fee market virus that has stained Irish politics considerably since its birth and PD wannabees in FF have allowed that ideology to continue to punch above its mandated weight by using left of centre and traditional FF votes to push through this failed vision of Western society.”

    I agree; our problem soon, however, is that this is the same ideology that the Lisbon Treaty sucks us into: globalised free market. Articles 113-118. So, do we vote yes to get the ECB to save us from the damage this ideology has conspired to cause, or do we vote no to try and free ourselves from being locked into the next crisis – and it WILL come, because the ideologues are hell-bent on reviving the same old system.

    I have been trying to discern from the treaty itself, but am thusfar unsuccessful, if there is any truth to the “No” campaign’s assertion that a “yes” will mean that we agree to never again being allowed to vote in a referndum on any future changes the EU bureaucrats want to introduce.

    Can anyone help with this, please?

    • Yes Tim join up to Libertas I am trying to get Declan also to get candidates out also for the local elections.
      With regard to promoting these council officials to run the banks , you must have had a few beers before you logged in !

      • Tim

        BrendanW, Hi Brendan! I so look forward to your arrival!

        The council officials could not, possibly, do a worse job than the private sector bankers. I think you will agree.

        And, yes, I HAVE had a few beers. Irrelevant.

        Ganley is, of course, very interesting to me. His approach attracts me and is highly seductive. However, Declan has a few question-marks haging over him, regarding his funding and his American Military interests and what that agenda is doing in Europe. If it is true that the bankers on Wall Street (which it may be) run America and Ganley is one of them, the we must ask ourselves: “Do we want Wall Street running Europe?”.

        Too many “wheels-within-wheels” there, Brendan.

        Though the current EU project is not to my liking, the neocon agenda is not to my liking, either.

        • Deco

          I think that we are losing focus here.

          The issue about the Lisbon Treaty should be about the Lisbon Treaty.

          It should not be about Dick Roche, Ganley, Martin Cullen, Ditherer, Harney becomming the next EU commisioner, or anything else.

          The only politicians that I have heard analyze the Treaty in public are
          i) Tony Benn in Britain, and
          ii) Jens-Peter Bonde from Denmark.
          Interestingly enough, both are egalitarean left wingers and men of principle. I want EU co-operation. But it should come from consensus, and not from an increasingly unaccountable, centralized, bureacratic body loaded with hidden agendas. I also find it absurd that some countries nominate their ‘representatives’ based on list systems – which are more about jockeying for power in party organization hierarchies than being in contact with the people. And it should depend on the peopl in all countries exercising a conscience and electing capable representatives and not clowns like Mary Lou, Brian Crowley or Gay Mitchell.

          Our politicians all seem to be talking a load of old guff. Next time around some of them will have read it. But just don’t ask them to explain it – then the fun will begin ;-)

          • We are losing focus ?…Not all of us I’m t total for 18 months had to after selling my house and buying my pent house I thought I’d never spend what was left ,..but you do and Now Today just even reading the names of our Irish politicians I connect them with celebrity and this is an endemic problem in Ireland for why is the girl gun slinger or Brian with his flowing locks or Gay and the way he may smile at you , what have these muppets of our political stage really got to offer any of us really ?
            Tim’s leader even paid another old school mate to read up on it and that con artist couldn’t comment on anything past page 2 ! ….
            All we have to do is FIRE the Lot of Them Politicans and Bankers as we can’t take them out any other (legal ) way .
            There are drug dealers on our streets today with more economic savy than Goggins Fitzy and Fingers put together
            Lets start calling spades Spades , if we are appartently one of the youngest economic countries in Europe , Why are we been screwed by sixty and seventy years old men ?……. utter Madness

  5. Malcolm McClure

    David , I’m not sure that I’m following your argument when you say: “Instead of buying the assets now and risking buying too early and too expensively, we could set up the asset management company with a contract to dispose of the banks’ assets over time.”
    I was under the impression that these “assets” were in fact the toxic debts that the banks had been unable to securitize. It’s whistling in the wind to think that these will recover substantial value any time soon.
    It’s simply unrealistic to think banks would pay 10% interest a year to encourage the government to take over the toxic debts at any price.
    Banks have not yet owned up to how seriously in debt they are, presumably to cover what remains of their manhood with a fig-leaf. Until they do, we cannot determine what is the least damaging thing to do next.
    Since Obama seems unlikely to brand ireland a tax haven, and the g20 seem likely to outlaw all the other tax havens around the world, then a lot homeless money could be arriving on these shores tomorrow evening.

  6. jim

    The first man that came into my head when I read about the 6% charge to the Banks over the 4% rate from the ECB plus 0.5% admin charges was none other than Henry George (1839-1893).Henry believed that a single rate land value tax should be introduced,thus replacing all other taxes.He concluded that this would reduce the impact of the Economic rent paid on land and free up Capital to be used for more productive and innovative uses.Now while the global Economy has moved onn from Henry’s day, the idea he proposed has merit,if it could be implemented with other measures to meet the demands of the present Ecomomy.OK Seamus pray tell !!!! …..Well if you consider the Banks in Ireland at present ,most of their so called toxic debt is in fact the result of property based speculation,so the 6% charge by the Government could be considered a tax on this property portfolio.If the forthcomming Budget was to include another 6% land value tax with the provisio that personal or paye taxes would be reduced by ?% then this would reduce the burden on Employers,Innovators,job creators etc… and place the burden squarley on the shoulders of non productive land which always leads to speculation and increased Economic rent to the general Economy.Bear in mind that Im talking about actual land and not what’s built on it.These measures would help remove the roulette wheel of land speculation from the Banks casino, reduce Economic rent and free up Capital to be used for more productive ventures.These measures would in fact lead to a redistribution of wealth away from the narrow confines of land hoarders to the more democratic productive sector and improve compeditiveness by reducing wage demands through less taxes on workers.

    • coldblow

      I’d never heard of Henry George but Wikipedia has an interesting entry, and states among other things that Hong Kong gets up to 35% of its revenue from a land tax (it also mentions S. Korea, Taiwan and Singapore). George’s ideas were also at the heart of the proposed Liberal legislation in 1909 (or whenever) that sparked teh row that led to the reform of the House of Lords.

      At the risk of boring people yet again, this fits in remarkably closely with Crotty’s take on things (he must have drawn on George’s ideas). In fact he’d see George’s prescription as more pertinent to this country than the US or other developed economies since land has been “limiting” here (and land values higher in relation to GNP than anywhere else) and in other colonized countries, where it has always been used inefficiently in accordance with the “paradox of property”, whereas it’s capital that has been limiting in the former. Crotty proposed rectifying the system of factor prices so that the benefits were shared fairly.

      Here’s what he proposed in summary:
      - tax land (urban and rural) up to the point where property in land ceases to have any vlaue so land would be freely available against the payment of taxes
      - tax bank deposits at the rate approx. of the difference between the rate paid by the banks on deposits and the rate charged in loans, forcing a scaled down banking system to direct savings where they could be most productively used
      - scrap all other existing taxes
      - demolish monopolies in trade and the professions
      - reduce State activity expenditure drastically
      - scrap public sector capital formation (financed by national debt expansion)
      - repudiate the national debt

      Very radical I admit, but maybe it could be introduced piecemeal or partly implemented. Maybe now isn’t the time for it (or maybe it is?) – I don’t know. Or maybe it’s something to bear in mind if things break down in a major way (God forbid).

      I don’t give up on this, do I? Someone will have to beat it out of me!

      As for David’s ideas here and elsewhere, I suppose lots of reasons could be found why they can’t work but I’d echo other comments here to the effect that he has a vision of what might be possible while others seem to be waiting for events and then reacting to them.

      • Garry

        The national debt thing is reprehensible, unless the debt has been imposed on a people by a foreign power or corrupt domestic elite. In the domestic case, evidence would need to be given to the banks that that elite have paid a high price for their corruption.

        The demolish monolopies and public service curtailment is aspirational while the tax is specific.

        Sounds like the only people who can make long term investments are the banks..

        Just a thought where would pensions sit in this? If youre income from the land is less than the tax, what happens? Im reading it as nobody ever owns anything, they pay a rent to the state

  7. jim

    In conjunction with the above I would recommend that proper Regulation be put in place for Banks that are systemically important to the Irish Economy so as to prevent the Emergence of other gambling to replace the land roulette wheel.The Banks have enough on their plates supporting Enterprise,Industry,SME’s.Science etc to justify their existance and viability without the misplaced greed that panders to the wrong type of shareholders.Im sure there are enough speculative “Banks” out there to cater for the foolish amongst us who like to gamble with their personal wealth.These type of Banks should be regulated to the point where they can cause no harm to a Nations Economyand shoul carry a health risk similar to cigarrettes.

  8. DMCW – David assumes that the ECB is the guardian of the European banking system .I totally disagree .If I want to make a complaint to ECB about any Criminal Irish Bank or their paid Managers they dismiss the claim because it is outside their remit and lies solely within the ‘Irish Political Cartel and The Golden Circle’.

  9. VincentH

    Why not use the money to set up new Banks. Why not allow the current lot go to the wall, It would provide the devaluation you want and with little fuss. All we are doing at the moment is filling gaps for each call made and providing good Euro for devalued dollar.

  10. David McWilliams,
    What I love about your writing is the clarity. And the way in which you present your ideas in the form of a story that we can buy into.

    This time you tap into one of our core experiences: we’ve put money into the banks in order to get the economy moving again and, instead, we’ve got no such result. So it feels like money down the drain. So why would we want to put any more into the hands of the same people?

    For this reason (and others) we are all looking for a different way.

    You suggest such a different way forward. Because I have lost confidence in almost everyone else, I’m inclined to trust your instincts. After all, you couldn’t make half as much a mess of it as the government has done so far.

    However, we have formidable foes. The government is not a neutral party there to be swayed by the democratic debate. It is an active party to the manipulation of the economy for the benefit of a tiny group.

    The government has deliberately depressed the economy over recent months. Today we’ll see further evidence of Mr Lenihan’s success. The public finances deteriorate by the second, as a result of the government.

    So, when it comes to budget day, the government will say ‘there is nothing else we can do. Look how bad things are. You have to let us put things right…’ And so on.

    The government has only one thing on its mind: how can we stay in government? How can we ensure we last to term? How can we ensure sufficient social ‘rest’ that our clique can cling to power.

    Unless you can persuade Fianna Fail that your plan will keep them in power, there is no chance the government will back it, I suggest.

    However intelligent, logical, inspired your proposal, it has no chance of being considered carefully by the current government: their sole interest is politics, and politics means preventing the inside story of how they set up a facilitatory financial regime from coming out.

    The full story will come out in time, but Mr Lenihan & Cowen are playing a blinder for the team that wants the public kept confused.

    David, you’re an ideas man, an honest ideas man. Ideas change nothing. Ideas only become powerful when people get behind them. It’s alliances we need to change our society. Those of us who love the inspiration you give us need to put aside our egos and build alliances for change.

    And we’ll need to be out in the pubs, the markets, the schools, the dole queues… talking with other citizens, creating alliances and taking a few very clear demands to the point where we say “Enough” “Do our will, or Go, now…”

    I realise this isn’t a straightforward political forum. I’m not economic enough perhaps, but let me thank you David, again, for rescuing me from the temptation to give up. What ever happens I’ll be all right – no doomsday senario will hurt me. Because I have my mental health. Health is wealth.

  11. [...] I’ve written this to David McWilliams… PaulOMahonyCork | 02 Apr 2009 8:08 am [...]

  12. severelyltd

    I keep hearing arguments that being in the EU and having the euro is the only thing that will save us from this economic mess in the long run. I have always taught that if we had stayed more independent we would not have gotten into this mess in the first place as we could regulate our own currency. The ability to fix our own interest rates and devalue the currency compared to the rest of Europe would make economic life turbulent but a lot easier, in the long run. The complete mismanagement of our finances by the Government has taken us to the edge of a cliff with the threat from them that if Lisbon is not passed the second time we will be marginalised in Europe and therefore doomed. I have yet to hear one good argument as to how harmonising and expanding Europe will benefit us, from what I can see the Euro has only damaged our country and our identity and turned us into an ugly people. I am not an anarchist or a nationalist, I believe in common sense, and If something ain’t broke then don’t fix it. We are in a dire situation with a Government that operates with blinkered vision. Not only will they not acknowledge their mistakes , they will double down by borrowing more. History has taught us that this will not work. They have thrown good money after bad and sold our grandchildren to the banks with indentured slavery and taxes. When your property prices are the highest in the world there is only one direction they can go in the future. A college professor in China earns €500 a year and a house in Germany costs €30,000. What is so special about us? Nothing that I can think off. can You?
    The world economic crisis I believe was triggered by the US who’s debt frankly got to the level that could no longer be managed or sustained, i.e the interest payments could or would not be met. This works on a macro and micro economic level and is the basis for confidence. When the root cause is tackled then confidence may return. The Irish government will borrow more to sustain a level of spending that was never sustainable , very much like the US. Bearing in mind that we don’t have an imperialistic army to bully countries with economical I think that Ireland needs to lead the way with rationalisation. How any public servant including the Taoiseach can earn more than €100K quite frankly is beyond me. In next weeks budget the average worker will be asked to stump the bill for the mistakes made by the government and their close friends the banks, triple and quadruple taxation the order of the day. We will be told to tighten our belts and put our shoulder to the wheel while they are still lining their pockets. Creating a bank to deal with toxic assets is the same as re-arranging the deck chairs on the titanic as far as I can see. Hyper-inflation or a paradigm shift in world economics with a new world order and global currency are probably the only way out of this mess without it turning into a bloodbath that I can see.

    Sorry for the rant.

    • gadfly55

      Dan O’Brien told Pat Kenny yesterday there is no bottom to the recession. NOw that th G20 has ended without anything more than general aspirations, and certainly no agreement about regulation of shadow banking system, we can expect to be thrown into prolonged and agonising depression, where there is no bottom to deflation, and bankruptcy is inevitable. NO way to pay interest, no hope of paying principal. Out of business, kaput. Stand on the soup line, and live in a cardboard box.

      • Ruairi

        Keep an eye on cardboard sales as an indicator of the recovery. Smurfit Kappa etc. The minute cardboard production goes up, start buying depressed shares like crazy :-D

        Mental Note: – Buy a good quality printer in the deepening recession in order to print up some Yoyos. . .

        Ah! The Recovery> sounds bucolic in its leisurely sweetness .. .

    • It wasn’t a rant at all. It was bang on the money. It’s disgusting the way the Government and banks have behaved. Thank God I’m not actually in Ireland and have not actually personally been taken advantage of by them (not forgetting, people did have the ‘choice’ to resist the loans and materialism etc.), or I don’t know what I would do.

    • Colin_in_exile


      I agree with you, nothing special at all, although when you have the likes of Robopaddy flying out to Bulgaria to buy blocks of apartments, its easy to get carried away.

      If you are an insider, it was in your interest to have house prices continuing to go up, regardless of how immoral it is to ask young people to fork out on a mortgage more than 10 times their principle salary to have their own place. There were no marches organised about this rotten situation, and now Ireland is reaping what it sowed. People adopted the “I’m allright Jack” delusion, and now they’re suddenly realising “They’re Not Alright at all now”.


      You are spot on also, people did have the choice to resist the loans and materialism. My personal financial situation dictated to me that I wasn’t offerred a choice, but even if I was, I would not have chosen to join the “Hubris Classes”, its vulgarity was so unashamed.

      • Ruairi

        Ditto Colin_in_exile,

        you might join meself and Malcolm McClure so. We might take advantage of ‘the bother’ (quaint name for the Irish Depression, yis heard it here first) and trade up to a 7 year old car.

  13. gadfly55

    Where do the banks get the money, or from whom, to pay the 10%? The ordinary peasant of course. Wind them up, let the state buy the assets, or whoever, at knockdown prices. Start a utilities bank with the savings now guaranteed, which won’t be guaranteed after September 2010, then what. The banks and developers must take the hits, not the ECB, nor the peasants.

    • Deco

      That is a perfect suggestion. I have sat baffled at what constitutes management in the public sector. I asked myself “could there be anything more useless ?” And then along come the D4 bankers.

      All the collective stupidity, nepotism, and ineptutude in the Irish public sector management never managed to create a massive debt hole the size of the one the banks have created. The banks really are in a league of their own.

      There is a thing called ‘capitalist consequences for capitalist failure’. It is fair enough I think. What use is it to the poor sod lining up for a FAS course whether or not Anglo Irish Bank gets saved, and continues to sponsor golf tournaments and buy premium tickets for the Bertie Bowl lite – appropriately enough located in D4 ? This is about priorities. The care and maintenance of the common people is of key importance. So a bunch of gamblers overrated their own intelligence and crashed a bank. That should not make the rest of the population poorer as a result.

  14. Philip

    If you were to accuse any of the government or its associates of anything which amounted to a whiff of corruption or incompetence you’d be sued for libel, defamation , the works. So in the eyes of the law, our government have never ever been involved in anything dodgy or of rigging the market to suit their friends. If you must know, the taxpayer is their friend and the current mess is caused by factors completely beyond their control.

    The media cannot engage with the government in any direct manner. All questions have to be prepared and handed over to the those representing the interviewees. This accounts for the frustratingly uninteresting dialogues in Morning Ireland, Primetime etc.

    So, as a nation, we stand muffled with our hands tied behind our backs in a tradition of doffing the caps to our betters and putting up with a lot of blatant nonsense. And those go getters who become councillers etc. just decide that you either keep putting up with it or join them. Better to be in the tent pi$$ing out rather than trying to pee in. Shure, ’tis no wonder we whinge a lot.

    DMcW is really trying to manage upwards, trying his best to sell something that may not be as damaging as the way it is now heading. Best of luck. The correct answer has always been to let the banks burn along with all the fools whole bet their farms on it – but the story is that the banks (our betters) are the economic backbone of the country and this concept is not a trivial one to shoot down in the eyes of most of us here. So obfuscation results.

    And to think that Cowen and the lads have tried to mimic Obama with the modern way of linking to the people with a system purchased from America and hosted there as well. This act of itself says all there needs to be said about how this government cherishes its own talent.


    The key to Sweden’s recovery was it’s ability to devalue it’s currency.When we devalued in 1986 and 1992, the economy made a quick recovery.An English economist speaking on yesterday’s (wed) news at one said that Ireland will suffer a permanent depression due to present policies and that we must start taxing land.The social welfare system will bankrupt us within 18 months.Ditch the Euro-it is the only way.Wake up people.

  16. Unemployment – I have been informed that the monthly increased figures for Limerick are : Jan 2009 Feb 2009 March

    6,000 11,000 20,000
    ( projected )

    • Philip

      And you are hinting that the doo doo will hit the fan on 10th April. I wonder what the time dynamics of shock and anger are? If I were a government employee, counciller, TD, i’d be getting very worried. Backbenchers must be starting to make some serious noises and it has yet to hit the media. And there’s more of it in a lot of other parts of the country.

    • Yes and now The Sunday Business Post has Cancelled it Property Expo for 2009 and why ?…..simple answer …No One wants to rent an exhibition stall …. We should now flogg our 40,000 un used homes to the Dubai Arabs ( a place to relax away from the scorching sun ! )

  17. pera

    I dont understand how ditching the Euro is going to help. There was a huge borrowing by the banks in the interbank market between 2002-2008, so that the rate is now 1.6 in loans to deposit. So you might be tempted to conclude that all the money that entered this country in those years came from foreign sources.

    If you want to ditch the Euro and devalue, I suggest we all check if the there is a loophole in the terms and conditions on the loan agreements the banks signed, or in reality the government guarantee. That will allow the government to transfer all the money that was lent to them Euro to the new Irish pound. I dont think Iceland had that opportunity. So Ireland will still owe a huge amount of money in Euro or dollar and not in the new currency, leaving ireland with an even bigger debt in real terms.

    Considering how long it has taken rich nations to even consider/starting to forgive part of the debts to developing nations. And in many cases that debt was placed on developing nations, in unfair manners with lots of strings attached. So I would not think that nations would be that eager to convert their loans or forgive part of them, and if so there would definetely be severe strings attached. Would you forgive the debt of a friend if you saw that your friend spent 3 times as much money as you, especially if you had the option of forgiving the debt of a friend who had barely enough money for food

    Another aspect of devaluation would be the social conseequences. I am aware that Ireland has chosen to have a system more in line with the US when it comes to the distribution of wealth and, and it can be seen that Ireland has 20% living under the european poverty line, whereas the the norm in europe would be around 10% (at least a year ago) This policy can further be seen in the wage range in public sector, where wages range from 15-20k to 300k. So even the government encourages this differenatiation in peoples living standard. With the devaluation even more people will be moved under the European poverty line, as energy and imported goods will be more expensive,and take a larger chunk out of peoples wages.

    Ireland might not be competetive against China and Poland, but neither are any other Western country, who in addition has higher taxes, higher employers prsi, higher corporation taxes, better unemployment benefits

    Or i might have misunderstood something fundamental about the devaluations scenario, but with the current situation, I do not see how it is going to help. Correct me if I am wrong

  18. Property Taxes – I believe there is some merit in this with a proviso that you are given services in return .In France the average annual cost per building is €2,000 60% by the owner and 40% by the occupier .
    The problem is we are not seen as a nation of law makers and consequently we like to break down what is not built properly .Trust as a nation has broken down .
    The Government are ignoring all ideas from this site and hold their own political agenda with a poisoned sword pointing to the masses .

  19. Euro Devaluation – I believe the ECB will devalue the Euro ‘in their seperate entities ‘ , this means that the Irish Euro will take the lowest value but so will our loans …………now that would not be too bad and we then might be allowed to restore our competitivness once more .This sounds like a pianless option .

    • pera

      Well I suppose it could be an idea, but again it would depend on where ireland has borrowed all its money, but in that situation I doubt that anyone would lend any money to Ireland, without a huge reward, as further devaluation is likely to happen.

      competetiveness: Who are you competing with?

  20. Garry – thats a good point .In France people who had property and who had little or no cash to pay their tax bills had to sell their land to pay their bills .Remember for fiscal practical purposes France is an operational Communist Machine …..and we are heading that way too .

  21. Philip

    We have to pay our debts. That’s the end of it. Squirming out of it by offering fluff for real cash is not an option. A NeuPunt would be fluff.

    The problem facing us is who pays.

    Government want the taxpayer to pay. Odd. Surely it needs to be the guys who incurred the debt. DMcW is offering an option – he’s really playing like a bank that wants to avoid a foreclosure of a house. Me? I think foreclosure is the only option. Bankruptcy admin asap, flog the assets as best we can and move on. It may be the end of FF and that fundamentally is the snag facing us.

    • Ruairi

      We may not have to pay our debts in the real sense. At least not those who mostly should bear the pain.


      A mass devaluation of currencies and subsequent asset inflation period could be on the way.

      All of the signs are already there anyway. With quantitative easing and buying up the toxic debts with the funny money. And they make Sean Garland out to be a crook for ‘allegedly’ similar behaviour on a minor scale. Most likely more American lies anyway.

      Quantitative easing is like collateral damage. Mutton dressed as lamb. A crime against the sheep.

  22. Devaluation – My point is the Irish choice of devaluation if chosen properly or better still decided for us by ECB will initially happen with the minimum of damages .Essentially , our spending power and loan commitments devalue together at same time .The point is that we can continue to repay our new devalued loans in ‘Irish Euros’ not ‘Euros’ or new punts .Seperately I believe the Euro as we know it now will have to devalue ‘in seperate sovereign pieces ‘ so each find their true market price .The US $ and Chinese will force that to happen no matter what .Perhaps the Geman Euro alone or with th french Euro will remain the strongest in the basket .

    • pera

      Hi John,

      I think philip put it more directly than me. I dont think Ireland can dictate its loan should be devalued. If the value of the “irish Euros” fell by 20%, you are in principle asking other countries and institutions to write off 20% of their debt, because they would probably want to keep their loans in the “german euro”

      and then the question comes, why should they sponsor Ireland with 20% of the loans, when there are plenty of countries that give a higher ROI by forgiving that amount of loans (both in economical and moral terms)

      I dont think it is for us to dictate the terms of our loans, but I think we might be moving to the bad state scenario, in which case I think there will be more options when it comes to getting debt forgiven, but I suspect that PS pay will be brought to below german level in that case, which might be a bit traumatic for many

  23. Deco

    Sorry pals – been snowed under with work, and I missed being able to provide comment.

    @severelyltd – you hit the nail on the head. “What is so special about us ?” We have constructed a mental model that tells us we are special. That mental model is built on arrogance, and little much else. Irish pride needs to be put in it’s place – now that it has brought about a massive calamity. We had a generation of pride – now it seems we have had the fall. The fact that the country was delusional was bad enough, were it not for the certainty that was attached to the believing fools. People really did believe this nonsense. And it seemed that the further up the social ladder you went, the stronger the conviction. The closer you went to the corridors of power and money, the louder the mantra was chanted. “We have arrived”. It was all nonsense. It should be called “Peak Arrogance.IE” ! The generation that grew up on Charlie Haughey’s Island were deluded of any solid grounding – instead it was all about arrogance, expenditure, and crookedness. Ireland was made in the likeness in The Great Rogue.

    The lesson was simple for everyone. In Ireland, the official story is often a joke. So you may as well make that official – only you would get frowned upon for saying it. But it is correct. Examine any official commentary on any crisis in the last ten years and you will see it is loaded with double meaning and deceit. And that is because the people in authority in Ireland, are there on the basis of a range of factors – none of which have anything to do with their ability to do what is required of them.

    Time to reform Ireland. And first step to doing that is to throw the arrogance (and other substances) out of the nation’s head, and start thinking clearly. Basically, we have no choice.

    • AH Deco , have the same problem my self not enough hours in the day for the workload at my desks….
      Your right about the ‘official story’ I’d love to have a chat with the bright spark who thought of the tag line for Bertie boy ( I cash me cheques ) Ahearn ……A Lot Done More to do !

  24. Devalue – I also said that the ECB could decide to allow each soverign state to allow The Market to decide their prices ie ‘ Irish Euros’ – like all markets the money markets can be dictated and in this case by The ECB . Some one Wins and Loses …we will win win win here ……..and therafter a new paradigm must be sorted out …from a new position of Strength.

    • Philip

      John, that approach is the same as having a new currency. It would be the end of the EU and we are back to the fluff principle NewPunts. The only way a devaluation will really work is if it happens at a global scale and services and other commodities rise to allow original debts to inflate away. You cannot inflate away debts incurred in a currency (euro) made foreign by having Irish Euro and I am not at all in favour of middlemen making stacks of moolah on currency transactions.

  25. Philip – I agree .My point is if we( as taxpayers ) can Devalue our cash asset and our loan liabilities the ordinary tax payer wont be penalised by internal loss of purchase power due to say a Euro Loan to repay .And if the Gov Toxic Debt can be traded out by another mechanism .

    • Garry

      This talk of switching currencies is like an alcholic talking about switching from pints to half litres so he can have his few ‘pints’ cheaper.

      The alco thinks he’ll pull a fast one by changing the game, but my money is on the publican.

  26. Garry – dont be surprised …he just might beat the Publican . Someone always wins .

  27. Dilly

    One of my friends just handed me a ‘Banana Dollar’ and said it is the new Irish currency. Someone, with too much time on their hands made up fake notes, with bananas on them. I suppose you just have to laugh at this stage, if you didn’t you would cry.

    On an unrelated subject, I just sold my place, for a reasonable price of 120k, this is the price it should have been selling at for the last six or seven years, so I am happy as I am making a couple of grand, which is nice. I bought it a good few years back, my neighbour is also selling up. He bought his place roughly five years before me and would be still making at least 40k profit on the place at this price, but, is kicking up a stink and refusing to sell. I would understand if he had other debts, but I know that he does not. I think he is still stuck in the Boom, and cannot get his head around that its gone, or is this maybe just pride getting in the way, and clouding his judgment ?.

    • Colin_in_exile


      You’re neighbour is conflicted. You said “my neighbour is also selling up”, followed by “is kicking up a stink and refusing to sell”. He’s either selling or he isn’t. He’s either creating a pantomime or he isn’t. He’s either a greedy shyster or he isn’t.

      Conflicted people need a strong dose of reality to sort them out.

      • Colin_in_exile

        Should be Your neighbour, not You’re.

      • Dilly

        He is annoyed that I accepted the current market price, that I did not stick my heels in, and try to rip off some first time buyer. Yes, he is refusing to sell at today’s prices, but, he is the sort of person you would only have a pint with, you would not do business with this guy. He still thinks Bertie Ahern is a great leader.

        • Dilly

          “He’s either selling or he isn’t. He’s either creating a pantomime or he isn’t. He’s either a greedy shyster or he isn’t.”

          This is Ireland you are talking about, nothing is black and white, it is all grey.

        • Colin_in_exile

          What you find acceptable as a price is, quite frankly, none of his business.

          Let him sell at next year’s prices, which will be even lower than todays. Yes……. hubris is still alive and well and prospering in Ireland today.

          Another example of the Irish trying to rip off eachother, when will this nonsense end?

          Its like my mechanic friend, who gets an earful from his competitors complaining about his lower prices hurting their business.

    • Ruairi

      To whom it may concern: -

      That wasn’t me printing the funny money. I’m still waiting for the high-end printer market to bottom out.

    • coldblow

      We sold our place in mid-December to move down country, taking a big drop as we had to move but in retrospect it was an excellent price (so I’d be one of MK1′s 95% of winners, on that count alone). We haven’t bought again yet, not because we are waiting for the market to bottom (I refuse to play that game) but because we still haven’t found the right place, on the school bus route etc (as herself doesn’t drive). As we hadn’t paid much in 95 we did well out of it, although there’s always the feeling that the bank balance will be vaporized by hyper-inflation or some other financial act of god. When she told me the agents’ valuation a couple of years ago I just blocked it from my mind and I can’t even remember now – it was a ludicrous figure plus I could see it costing us a fortune in stamp duty and fees if we bought an equivalent “property” (I hate that f****** word!!).

      I caught up with David’s Pope’s Children over Christmas and the excesses depicted in the book thoroughly depressed me, and for the first time in my life I felt ashamed to be Irish (by ancestry). Now, we were advised to set our price guideline on a neighbouring “property” just round the corner and undercut it by 5k. It had been on the market for nearly a year before we put ours on. We sold in 2 weeks. I note from the web that they still haven’t sold and have dropped a further 45k since. It would be overstating it to say that I feel a certain guilt, shame or squeamishness from being involved in it – uneasiness is probably the best word for it.

  28. G20 Summit

    Les dirigeants des principales puissances mondiales se sont entendus sur un certain nombre de points visant à refonder le système financier. Les moyens des institutions internationales seront accrus, les rémunérations des traders mieux encadrées, la réglementation financière renforcée, et une liste des paradis fiscaux sera publiée. Une victoire pour la France.

    Monaco…..what happens next ?


    Before and after the introduction of the Euro we in Ireland had another currency that we traded in Europe and only in the agricultural commodities .We had identified a segment of the trading community that was in danger at the time and this mechanism allowed them ( the farmers ) to become prosperous.It was a good decision then .That currency was The Green Pound.
    Today, we need to identify ‘something’ be it a commodity , a defined community grouping , a manufactured product , an idea ( trade marks ) ,a service or a dogma of thoughts and beliefs that we can assign a paper value of exchange that can enjoy favourable advantages both fiscal and monetary .The possibilities are endless .
    Ideas such as ‘ Fish’ , Land and Sea Resources Explorations Traders , Waterford Glass , Superior Trade Mark Services , Amish Communities .
    We can also consider the non trading community and give them new values .
    In essence our society is on a variable speed and the centre of the atom of economic activity is Time .There a fast and slow time and we must chose which we want to live by and do it .Then we must learn how to put a value on it that allows that to sustain itself independently.We need to plan our society to cater for all of this and with network corridors of communications .
    Money as it is has no value because Time has destroyed it .We must make time and the more time we make then good values follows.

  29. Prime time Part 1 finished on a final note that rhymed ‘bankruptcy’….the ending silence was deafening .

    Prime Time Part 2 commenced with ‘a tear’ on a pending pension crisis for everyone.

    What’s next?…..Indeed.

    Can a soccer match be arranged in the future with North Korea?

    • Colin_in_exile

      OK, here’s my take on pensions.

      Pensions should be abloished. Why? It is immoral to ask the younger working population to support an older non-working population who happen to be well able to work in most circumstances.

      Trapattoni is a fine example, 70 years of age, still working, still fit, still prepared to contribute.

      Too many people are looking forward to being retired, doing nothing, sitting around all day and still expecting to have the same standard of living, with just as high an income. Its simply absurd.

      Tim, whatever happened Tom Kitt’s investigation into raising the retirement age? The trail went very cold on that one. It must be at least 5 years since he announced he was going to look into it.

      • Tim

        Colin_in_exile, I do not know what happened to Kitt’s investigation or, indeed, why he is so out-of-favour. I do know that the retirement age was raised for some public servants (new-entrants) from April 2004, incorporating SEVERE penalties in their pensions if they retire earlier than 67 years of age and/or fewer than 40 years contributions – penalties of up to 24%-30% pension loss. This would be quite a blow on a pension of 40/80ths of salary.

        For some reason, this could not be applied to Gardai and they are FORCED to retire; did you see that court case that one member took in the past few months because he did not want to retire and the court ruled against him? Also, the increased retirement age does not seem to apply to the private sector at all. I will ask Kitt what happened and let you know if I find anything more.

        • Colin_in_exile

          Thanks Tim,

          I guess the Ditherer was crossed. Seems a pity, because of all the FF Cabinet, Kitt looked the most presentable and was the best communicator.

          That reminds me, who is Hanafin’s hairdresser? The work is appalling!

          Gardai would get a severe bout of blue flu if their retirement (ahem, excuse me, double jobbing) age was raised. Yes, I followed the case, and was extremely disappointed with the verdict. Something about young gardai not getting promotions as early if this went through? It could only happen in Ireland.

  30. MK1

    Hi David,

    > Why should we pay now for the sins of our bankers? Why should we cough up any more to support these institutions that have, through their own greed and outrageous misconduct, brought the economy to the brink?

    We are already paying for their ‘sins’. But our problems are not the sole responsibility of a few nefarious banking miscreants. That is misleading. The problem is endemic, instutitionalised, systemic, regulation and government. Its equally as valid to ask, why support the bankers as to why support the government responsible. These ‘sinners’ are equal. Ironically, we now have the political kettle calling the banking pot black!

    > divide the banks’ role into two functions. The first and most crucial is to provide credit to us, it allows us to pay bills, to set up accounts to do our day to day financial stuff without too much hassle, and for this we are prepared to pay a fee. Let’s call this the “utility” side of banking. The second part is the one which has got us all into this mess. We can call this the “speculative” side of banking.

    No David, that is an altogether incorrect view of what banking is. Yes, banking provides credit in many different ways and to many different entities. But that is not to cover the day-to-day stuff of the consumer in retail banking. Banks take deposits, paying usually at lower than central bank (in our case ECB) rates, and can loan out money up to 12 times (according to Basle I and more for Basle II) what it retains in profits (tier 1 capital), using the deposits plus borrowings from the central bank, and at a rate above what it pays. Its a licence to ‘print money’, if ran properly and prudently. You cant lose if you are a bank.

    > How do we quarantine the bad loans so that the core business of banking can resume?

    We nationalise as the banks are at the brink of going bust (which they must be anyway since they are accepting 3.5 billion in capital, the same banks that didnt need any capital a few months ago!), give the shareholders nothing, clawback excessive profits made during the ‘celtic pyramid’ and sweat out the assets. We carry out root and branch reform of the banks, culling many staff, we implement complete cultural change. Lance the Boil! Simple.

    > If we get this wrong, we are doomed.

    We have got it wrong so far …..

    > there seems to be a consensus emerging in the Department of Finance to buy everything from the banks today, put all the stuff into a “financial skip” and then, over the course of the next 10 years, manage these properties as an asset management company.

    Thats a “saving the banks at all costs” policy to the detriment of the taxpayer. In other words, us gombeens will be saving the banks proverbials. If being stupid is a consensus then we are indeed doomed!

    > the calculations of just how bad the toxic loans on the bank’s balance sheet varies from €40bn or €50bn to €100bn

    No one knows or can know. Its like trying to predict the winner of the english national at Aintree. It will be a horse, yes, but we just dont know the number on it.

    > This is known as the Swedish or “bad bank” model. However, as this column has pointed out in the past, there is one seismic difference between the Ireland of today and the Sweden of 1992. The Swedes underpinned their banking bailout with a huge 40pc devaluation of their currency

    Also the scale of the problem. Theirs was a bad loan bailout of 4% of GDP. Ours will be???? The underwriting of the nationalised Anglo Irish Bank is more than that. The cost in basis points on government bonds due to that excess risk is probably already pushed us well beyond the 4%, and counting. All too often I have heard of the ‘lest follow the Swedish model’ but that was a small squall compared to the storm we are being buffetted in now.

    > In fact, the risk is that it does not work at all and we, the taxpayer, end up not only bailing out the banks but bailing out the bankers and developers;

    I think I and many are on record saying this last Sept!

    > Maybe we should think about getting the banks to actively work for us, locking them in

    or locking them up …. and the partners in ‘crime’ with them, ie: the government. Who is going to take a case (the DPP??) against the former minister for Finance for wreckless governance?

    > The State could borrow the €100bn from the ECB at 4pc

    At the moment the state is de facto borrowing on ECB paper (ie: Irish government bonds denominated in Euro’s) but it could not borrow 100 billion. That is way beyond its league. That is why S&P have downgraded Ireland. We have lived beyond our means in terms of private borrowing and the scale of the problem is beyond what the government can readily fund.

    > The 6pc difference … goes straight into the coffers to build roads, hospitals

    This is pie in the sky stuff David, I’m afraid.

    > we could actually make money by getting the bankers to work for us.

    No, the only way the bankers work for the country in this scenario is where they extract more profit from the country. But its a zero-sum game if you know your game theory. The banks are conduits – they DO NOT produce anything. Understand this sensei and you will be at one with the universe. We cant make them work/produce for us.

    > We joined a monetary union in good faith and now we should call on the monetary union in the spirit of the European family of nations for a bit of help. This won’t cost them or us a cent.

    The ECB is helping us out, as is the Commission and the EU. Many EU countries are being helped out, in fact we all are. Of course, it would have helped if all EU countries were a part of the euro. Maybe that’s what Lisbon-III should be about. The UK can decide if its really in or out. Perhaps an EEA arrangement suits it better.

    But this is costing is more than a cent each, a lot more. The credit bubble can only end in pain. And pain is being felt. Look at the dole queue. Businesses going bust, etc. Thats cents. What we do need is people in power that make sense. I dont see it.


    • Malcolm McClure

      MK1: I agree with everything you have clearly expressed above. Even accepting that David is writing a popular commentary on economic affairs, intended to be accessible to the ‘Man on the Santry omnibus’ it needs to be said that his long-suffering MotSo deserves a deeper level of contemplation.
      My mental image of MotSo is of an aging Bord na Mona accountant, nearing retirement, who has just learned that his pension contributions have been decimated. His other savings, invested in ANIB and BoI shares are equally worthless. His house, bought a few years ago when he was promoted from the bog to head office, with 100% mortgage, is now worth half what he paid for it. His children have decided to emigrate. His wife wants a new kitchen. His pal Bertie is swanning over in the Caribbean with other cronies.
      Travel broadens the mind and provides new perspectives, as well as opportunities to enhance earnings and profile, but it can distract from the hole in the roof. –BTW… Ms McW is a saint, deserving of all our prayers.

  31. Philip

    We have been taking the wrong approach here. We are buying shares which have a high risk of tanking. Rather than buy banks that are completely shagged but Iceland and buy a huge interest in their geothermal plants. Let’s bundle Iceland and Ireland together. Have them buy our assets at knock down prices. Then let us keep our Euro and they their Kroner and we can buy for all using Euro and export for all using Kroner. The small matter of the treaty needed to make this happen?? This is a synergy agreement that could dig us out of a lot of holes and put us in pole position for green energy very rapidly.

  32. Philip

    Another idea would be that ireland declares war on America. We get invaded and we surrender. That way Obama gets more kudos for saving the world from the emerald peril and the dreaded diaspora (which to be honest sounds like a bad cold).

    • Ruairi

      If David picks up this ball and runs with it, God help us.

      I say they bomb the West first. Its too beautiful compared to my precious Midlands which is all denuded and boggy. We need loads of EU funds here. And Jackeen subsidies too. All we can get, thanks.

  33. Gobble or Wobble – there is a simple way for the Electorate to show example to the elected government ‘How to Govern’. It is a practice in France known as ‘ sequestration ‘. To understand it better you imagine a ‘Creche’ and if your babies are not happy there then you ask the management to leave or place them in a re-education room while you run the show and when and if the management have shown process of good management then they are allowed to return to normal duties .
    In France Company Management have been sequestrated in recent weeks.

  34. Handel – the Germans love the Symphony Musical Octaves and believe that their sounds resonate better within a purpose built building as in an Opera Husse and preferably in Berlin .It’s tradition does not die neither do they want it to .Their mindset is perfect nothing less is acceptable.Their wood is hand picked and is finely crafted to precision and accuracy to allow the breath of the instrument express only the best and bring out a life that before was never thought possible.
    The ECB is liken to their Opera Husse and they will not allow Die Deutsch Euro ( marked x ) leave the room in an imperfect way as in quantitative easing because that will reduce the quality of their crafted instrument.
    The US$ is simply a piece of paper so long as it has a security tag to it and no other bench mark applies and is managed together as one unit from the same Federal Reserve.So QE is an easy option but not for the Euro .
    For this reason I believe there will be no QE for Die Deutsch Euro and instead what will happen is that all soverign units ‘will float’ seperately to find their price/value.Otherwise it is a gamble for Germany.

  35. John Q. Public

    How do you ‘manage’ a toxic debt? If you take for example an apartment block in Tallaght laying empty and unused or a quarter of a new housing estate in Kildare empty and unused, it’s builder has the problem of it not selling. The ‘Bad bank’ takes over the problem from the original bank that lent to the builder. All the ‘bad bank’ can do in this situation is to sell off this property way below the market price (if it can) and make back the difference in the interest it charges over say 25 years to Joe Soap. If the ‘bad bank’ could break even over a few decades in this area of toxic debts that would be worthwhile but there are other forms of toxic debt.
    The flip side to this would be an initial devaluation of neighbouring apartment blocks crippling other builders and negative equity to a lot of people. But so what a house is not an investment, it’s a home.

    • Philip

      This reminds me of the so called broken windows syndrome. If the bank is going to sit on a load of houses/property and no one is living in them (one broken window will lead to wanton vandalism), they will fall into disrepair and be worth nothing. Who maintains the garden? the grounds of apartments where no management fees are paid and so on.

      Far better to keep people living in these properties. Have them pay a rent to the bank which is part property tax and part bank admin fee. The bank will have to pay the full tax is not in use so they can be kept repaired. I am sure there are better mechanisms. But we need to keep these places ticking over and the bank has its assets preserved and the occupier will get 1st option to buy. A property tax applied in this manner could be responsible for keeping communities ticking over and maintaining bank assets until things get better.

      We need to move from the Toxic asset concept for the totality of all potential bad debt. Let the toxic stuff only focus on the true write offs – that which no matter what you do are gonners -such as failed mines or oil fields etc..

  36. wills


    If the derivative black hole credit crunch had not burst irelands ponzi
    credit bubble gangster paradise something else was going too.

    It was an economic nightmare,self made, waiting to happen.

    Not every resident of the rep. of ireland participated in the great
    ponzi ireland inc smash and grab.

    Not every resident of the rep. of ireland is responsible unto the great ponzi ireland inc smash and grab aftermath clean up expense.

    Who is reponsible…….?

    Who is responsible for the economic fiasco……?

    How is it that irelands competitiveness some many people sacrificed hard for to happen, was squandered and frittered away so flippantly.

    I suggest the following……

    Those of us who took part in any excessive profiteering is complicit
    in the financial mess and the celtic tigers competitiveness going up in smoke,. the degree of this treasonous behaviour measured by the extent of ones profiteering from the top down.

    It is economics 101,… if the taking of excessive profits occurs, prices go up… so competitiveness vaporizes and recessionary times follow,.. derivatives black hole or not.

    So, anyone who crossed the ponzi ireland inc line and helped
    themselves to more than they had earned in real terms, and they
    all know who they are, i charge you with the responsibility of footing
    the financial mess clean up bill.,, and

    ….you go and plug the holes up….

    …and get your stinking paws of my tax earnings you treasonous bast@rd.

    • MK1

      wills> Those of us who took part in any excessive profiteering is complicit in the financial mess

      Herein lies the problem. Yes, there were those that excessively made money without doing that much work by ‘flipping’, whether property, residential, land, commercial or indeed businesses. Excessive credit allowed easy profits to be made.

      However, the money made, the products and services bought, etc, flowed through the economy, it touched on us all (nearly) whether we liked it or not. That corner shop did well because of the money spent in it, that pub, that restaurant, that GAA club, that petrol station (if it stayed as one), that solicitor, that architect, those painters, those travel companies, that website, that gardener, that creche, that Garda, that Teacher, that ESB worker, that newspaper journalist, that RTE worker, that ad exec, that consultant, that food company, that pizza place, etc, etc, etc.

      Money came into the country figuratively speaking in buckets, even in ship loads, and it went around the country, wafting into the pockets of those that least expected it. If we extract all of those that in some small way benefitted from the credit-binge money sloshing through the economy, we will identify 95% of our population – maybe. I dont know the exact figure. But it is the majority.

      Now granted, many got the ‘benefit’ without participating or requesting it, without involved in the excessive credit, without flipping and were against it, yet it would be hard to avoid any of the ‘benefit’. Hands up who has completely? Rockall residents dont count! ;-) And also, some got a lot lot less than others. But still they did get some. So where to draw the line.

      I’m all for excessive profits and salaries/bonuses over the last 5 years being clawed back in a draconian tax. It would be a tax on wealth perhaps although some may have it spent and fritterred away.


      • wills


        brillliant comment on my post….
        getting to the hard cold ugly fact,…
        who are guilty and who are guiltless,…

        those who ate at the table of excessive profit know who they are.
        those who refused to eat at the table of excessive profit know who they are.

        I know which choice i made,. and stuck too,..

        • wills


          in relation to drawing the line on complicty….

          i would kindly suggest, in the final analysis this eating
          of the forbidden excessive profit fruit comes down to ones
          own self honesty and conscience.

          • wills


            on your last point, if ive read it correctly, on who pays
            the financial mess bill, how is it shared out,. i assert
            across the rolling mountain tops of my emerald isle that
            the bill is paid for by those who have the money to pay it,.
            and this would be the thieves who robbed the till,. and they
            all know who they are, from the top, down.

      • Add ‘that drug dealer’ to the list, with all the substance that went up people’s noses in the Celtic Tiger ‘boom’ times.

      • Tim

        MK1, “Hands up who has completely?”

        Most of the people on fixed incomes/state pensions/income did not benefit at all, unless you are erroneously counting count the so-called “cost of living increases”, which typically were beneath inflation.

        These Irish people were baffled by the media and government constantly telling them that “We are all so wealthy” and “The country is awash with money” because they never saw the celtic tiger; It was mostly for buisiness bosses, if you ask me.

        Still, your point is a good one, just don’t cast the net so wide.

    • Tim

      wills, bang-on!

  37. Tim

    Folks, how about this for a paradigm-shift: “Negative equity” means nothing if you switch to viewing your house as a home for your family, instead of a rung on a ladder/an asset to capitalise on/a profit-making scheme for the lazy.

    Then, begin to regard a business as a means of providing a working living for its employees instead of a means of using those expendable employees to create profit-for-profit’s-sake.

    Any chance?

    • Philip

      The latter point is actually very pertinent. Ask your typical Irish business what their mission was and you usually got an answer (said in a way that simultaneously questioned your sanity) of make effen money. Fortunately, I learned my business knowhow from a Dane – he told me how to see money as one outcome – a necessary one, but far from a sufficient one. Without people and their hard earned knowledge, you remain a caveman. And these vikings dominate the wind turbine industry.

      • Tim

        Philip, ahhhh, what about the “former”?

        Will you “not address” it? Or will you not consider it “worth addressing”? I consider this to be the MOST pertinent point.

        It is the BIGGEST mistake that most people made.

        We MUST address it, I think. We have been, really, avoiding it.

        We mustn’t.

        We HAVE to look at it.

        • Philip

          Am no good at addressing this one. This is one for the psychiatrist. As the ad says, the value of shares can go down as well as up. etc etc. A house is just a house – and a home if you want it that way. It reflects poor education and ignorance and impatience and a profound lack of self respect – yet another aspect of the Irish psyche. I blame all you teachers :)

          • Philip

            Actually joking aside, I think kids schooling here has a lot to answer for. Our exam system is geared around getting a job to get money rather than teaching people how to use money and resources to further their life development. Self actualisation in this country was about having an middle class life and having enough so you can be safely lazy. The latter spawned the temptation of easy money from flipping investments. We lack a concept on ongoing development. Which is sort of odd when I consider that Irish people tend to be a reasonably spiritual/ mystical lot – something that gives you that perserverence to see things to the end. Maybe I am mistaken.

          • Tim

            Mea culpa? I better ask my good friend Seanie to help me fix the problem I caused ; )

    • wills


      if anything about this ponzi tyranny makes me sick to the pit
      of my stomach, it is the transmuting of a home into an investment to make a profit for profit sake. It has destroyed our country this financial perversion and it is high time for this murderous abuse of credit production to be tackled and eliminated exorcised if necessary, and let the healing of our community begin.

  38. paddythepig

    Utter utter utter utter crud, David. The Ballsbridge brigade must love you. For a one-off 6 billion charge, the Irish taxpayer is supposed to take on a potential 100 billion writedown risk. Why can’t the banks manage this risk themselves? We’re supposed to take on this garbage, all so the D4 set can continue to hold the purse-strings, and decide who gets a loan and who doesn’t, and in some cases who gets a job and who doesn’t. No thanks.

    On the plus side, Bertie is now a football pundit, after his latest appearance on the Roy Keane documentary on TV3. The man has the neck of a giraffe. There are still chaps out there who believe the recession was down to ‘dem evil PDs’ ; in their living rooms, Bertie’s poster is still up on the wall beside the picture of Dev, and the Virgin Mary. There are a few of these strange creatures patrolling this site.

    The Prime Time special on unemployment was a thumbnail sketch of what is wrong with the country. Some hardy souls were dragged on to talk about life on the dole – asking for a re-evaluation of when the ‘back to work allowance’ is paid for those attempting to set up their own business, having being laid off. I applaud their initiative.

    Then, we had a chap from the ESRI, and the FAS economist, both of whom scratch themselves for a living – for big money. The FAS lad told us we need to invest in ‘skills and training’. The salaries to pay this pair of chin-scratchers would pay many a ‘back to work allowance’.

    When the Government eventually throws these bluffers (and some of their own) out on their ear, and gives enterprising people a piece of the pie instead, a seed will be sown that might eventually turn this country around. Until then, it’s downhill all the way.


    • wills


      The innovators and enterprising, this time around must remain
      very cautious, this d4 cabal ponzi organism hides in the host of
      the innovative and when the moment is right, kills the host and plunders the loot,.. which is what the ponzi parasite been doig last 1o years. This time the parasite needs to be eliminated.

    • Tim

      I agree with paddy – and regular posters will know: that’s not often.

  39. JohnD15


    Once again Daithi does a 180 U turn!!! Rubbishing his self proclaimed “financial skip” plan. I happen to agree that it is unworkable as I have said before on this site – but it is McWilliams habit of changing his tune which I find amusing.

    Wait for his next volte-face – probably David´s love affair with an annual property tax. This govt´s eagerness to introduce this residential tax is only matched by my determination never to pay it – just as no one paid it in the 80s and 90s.

  40. jim

    Sometimes the devil is in the detail,like for example in the case of Anglo Irish Bank.and the owners of the 5.7 billion subordinated bonds.Subordinate Bond holders usually fall between the Main Bond holders and the shareholders when getting paid if the shit hits the fan,and as such represent a lesser risk than shareholders but a higer risk than the Main Bond holders.Subordinate Bonds are usually issued to give a higher return than Main Bond holders and are usually for a shorter time .In other words Banks use these for short term funding for various reasons.Im always curious as to the type of people who invest in these subordinate Bonds,having a short maturity timeframe and a slightly higher yield.Im sure the holders of these Bonds could use them as collateral for various reasons (maybe even backed up by Insurances or even exotic Credit Default Swaps if the fancy took ya).These people must have been very nervous before the Bank Guarantee went into place,and now that things have evolved as they have re.Anglo sure they must be booking their Holidays in the relaxed Knowledge that their few bob is safe.Its hard to tell if any of these Bonds is due to mature before the Guarantee expires,my feeling on the matter is the owners will have a nice little fund there to snap up some deflated assets in time to come ,well at least the one’s who had not used their Bonds as collateral on loans that will go bad.The question’s are “who owns these Bonds”,”what and when was the yield agreed”" when do they mature and get paid back”and probably from a Public point of view do Mr.Linehan and Revenue etc.etc. get all the details including Names of Bond Holders…..Im sure it will provide a usefull insight into the type of people who were prepared to lend money to Anglo,and who knows we could even put them on a mailing list (with their permission of course) and canvass them to invest in this Smart Economy that has been bandied about of late.Although my gut tells me that these people know all about Smart Economies and have been investing in them all through the Celtic Tiger years,I mean how smart do you need to get, to be able to afford to loan money to a Bank.Jasus loan money to a Bank how liquid do you need to be for that….As a side issue I wonder could we tap them up for a loan to go with our Budget, just to get us over the hump so to speak,sure dont they know WERE GOOD FOR IT ,WE ALWAYS WERE.

    • Philip

      Jim, thanks for explaining the mechanism for the D4 escape route. What is very annoying is the complete lack of visibility of who the taxpayer is guaranteeing. The “Who” is more important than the “What”. They’re the guys with the signatures on the documents.

  41. Irish Leaders – today I hope we will all witness again the reclaiming once more the new real leaders of Ireland ( Munster ) and the overthrow once more of D4 Brigade ( Leinster ) ……another great moment of change in Ireland.

    • Philip

      You have nailed yer colours to the mast now. I may as well do so as well, keep it in the pale I say and the lads in D8. :)

  42. Famine – Our Recession started exactly 150years since the Famine .It would be interesting to correlate economic data between those years to learn why ?

    • Malcolm McClure

      John Allen: Try to get your facts exactly right. The famine was 164 to 160 years ago, Th Revival was 150 years ago with weeping, wailing and gnashing of teeth. Perhaps thats the astrological cycle you are thinking of.

  43. What I do know is that I was not around then when my great grandfather arrived to Ireland as a settler and I am around now to watch all the recent new settlers in Ireland .My point is there must be an economic cyclical pattern to learn from and this must be explored.

  44. Rugby Sequestration – Munster has reclaimed to be the Irish Team. In the same breath DMCW’s Party can sequestrate the political process and show new leadership .

    • Tim

      John ALLEN, I will offer my services as minister for education and science in the DMcW Party. I will not require either ministerial salary or car – just what I have already. I will not draw a salary any higher than the highest paid teacher I employ and neither will the principals. I will dedicate myself to focussing on the children and their teachers in the system, instead of the bureaucrats and the renters of pre-fabs; I will stop the NCCA from playing around with the curicculum and diluting it, dumbing it down; I will return to the “3 Rs” at Primary level and deliver literate and numerate children to the Secondary teachers to build on. I will restore class size to the much better 1972 level to start with, and better if we can afford it. I will raise Ireland’s level of investment in our children’s education from our current disgraceful level of 2nd worst in the OECD. I will restore the free books scheme grant for poor children immediately, so that they will not suffer shame and humiliation in front of their peers next September. I will make certain that the St Vincent de Paul will never again have to pay for the psychological assessment of a disturbed child. I will ensure that every school has the science laboratory and apparatus and lab assistant necessary to teach the science courses to the children BEFORE they are forced to teach the course.

      Voila, my manifesto.

  45. DMCW Party – Sequestration primary process has begun I second you Tim and I am sure the motion will be passed.Lets build a Winning Team that always will come first and scores the best .
    I am sitting at the table listening and I have no doubt that this matter will continue tomorrow .I hope everyone joins in to make all this possible.

  46. Tim

    Folks, I asked the Minister for Ed and Sci to examine my cost-neutral proposal below to save jobs, class sizes for our children and allow teachers who feel unable to continue with their task to retire; His answer – received by snail mail – I have re-typed in full for you as an example of what we are dealing with, the brick wall against which we are banging our heads. Make of it what you will …… (don’t get mad, Robert – just keep strategising).

    My email-follow-up to my conversation with him at the Ard Fheis:

    “Essentially, the problem is this:

    Education Cut: 1) Supension of early retirement Pilot scheme;
    Education Cut: 2) Increase in Pupil:Teacher Ratio.

    1) , above “traps” older people within the Teaching Profession who want to leave it (and, probably, should leave because the three strands of the scheme allow people to leave who are ecperiencing professional difficulties, cannot keep up with modern trends and technology, or are over quota, anyway).

    These people tend to be paid at the top end of the common basic pay-scale, which is approx €70K.

    2), above will “push-out” of the Teaching Profession, young people who want to remain working in it, are usually vibrant and enthusiastic. Many may end up on the dole, thus, drawing money from the exchequer for nothing, while they could be teaching tomorrow’s workers.

    My suggestion is this: a) Allow the older Teachers to retire and the exchequer pays out HALF their finishing salary as pension – approx €35k, instead of €70k (apart from the initial-once-off “lump-sum”, this is great saving.

    b) Allow the young and vibrant Teacher to keep their job (perhaps by reverting to the 18:1 Pupil:Teacher ratio – but that may ne be required if those who leave at “a)” are sufficient in number) and they are paid approx €35k on the scale.

    This would give us more “half-price” Teachers in the system, fewer “full-price” Teachers (converted to half-price by retiring) and Zero teachers on the dole.

    I hope my explanation of my idea is adequate, Pat.

    Kind regards,

    Below is the response I received yesterday, in the post. All comments within { } are mine, and not in his letter (BTW, can you work out the maths on how a kid who does the leaving cert at 17 or 18 years of age gets 35 years contributions to pension by the age of 50/55 after spending 3/4 years in college to qualify to apply for a teaching job? I’m sure you can – even if he CAN’T!

    “Please quote our ref number on all correspondence
    Our Ref: 0901437/SR

    1st {hand-written} April 2009

    Dear Mr. Nelligan

    Thank you for your recent letter concerning school teachers.

    It had been my Department’s hope to run the early retirement scheme for the 2008/2009 school year. However, like other programmes under the Department’s remit, the continuance of the pilot scheme is subject to available resources and to changes in Government policy. {teachers traded a 3% pay rise for this “pilot scheme” in the early ’90s, by the way}. While the scheme has proven to be a useful management tool in the school system in the past, the current budgetary constraints mean that sometimes difficult decisions must be taken in order to meet the economic challenges faced by the country.

    Teachers have 2 other forms of retirement before normal pension age open to them – retirement under the 55/35 rule and cost-neutral early retirement. Under the 55/35 year rule a teacher, other than a new entrant appointed after 1 April 2004, who has reached the age of 55 years and has at least 35 years of actual pensionable service {and contributions}, may retire voluntarily {on 35/80ths of their salary}. There is no actuarial reduction in benefits and credit for certain pre-service training is given in order to assist teachers to reach the 35 year threshold for retirement. Under cost-neutral early retirement, a teacher aged 50 years or over (55 years in the case of new entrants appointed after 1 April 2004) has the option of an immediate cost-neutral early retirement pension and lump sum on resignation. The cost-neutral early retirement benefits are actuarily reduced to take account of the early payment of the lump sum and the longer period over which the pension would be paid.

    I hope this information is of assistance to you.

    Yours sincerely

    Batt {hand-written or stamp}
    Batt O’Keefe TD
    Minister for Education and Science”

    • Ok Tim ,I got one of the local drug dealers to do your sums ,.55- 35 = 20. Therefore these teachers are The Cream as to go though college these ‘Teachers’ done their leaving at 16 ?…
      And Your going to change this from within ,..Best of Luck Tim, best of lck indeed

      • Tim

        BrendanW, your drug-dealers can do the maths, alright. So, I assume they also know that the 50 year old retirement is a “no-no”.

        What I assume they do not know is that the majority of male teachers do not reach 70 years of age, for some unknown reason. For the govt, this is good, as it means that we will never collect all that we pay into our pension, even with the extra payment for the “spouses and children’s scheme” (used to be called “Widows and orphans”, but the profession has become feminised – about 84% – more compliant and less likely to demand better wages and conditions from their employer). Wer pay an extra 1.5% of salary for 40 years so that our wives can get a quarter of finishing salary as a pension when we die, but that finishes after 10 years, so if I die at the average of 67 years for a male teacher, and my wife lives to be 71 years, she will get nothing that I have paid for over 40 years. 8% of income, for 40 years ….. can your boys do the maths on that and see that it is a rip-off? It is “defined benefit”, alright. “defined-limited” would be more accurate – but people like to believe the “spin” of IBEC that PS workers have the “Rolls-Royce” pensions. If I can afford to retire in 20 years time (I am 42 today: “Happy Birthday to me”!), I will get 24/80ths of €66k, or €19,800 a year because I did not start paying for my pension till I was 38 years old. (How many people think of their pension in their 20s?). That’s NOT a “Rolls-Royce” pension!
        Mickey Fingers got €27.6 million – THAT’S a “Rolls-Royce” pension, for ya!

        • jim

          Happy birthday Tim and my present to you is that after Tuesday its seems that you will be able to retire at 50 with half salary and you can collect you lump sum and pension at 60.Remember lump sum at 60 just in case you might spend it on something foolish, ye young lads of 42 still need watching.

          • Tim

            thanks jim. I will get feic-all at 50, though – only started paying into it a few years ago. “Young lads”, I’m not so sure, but, having played the 6th Years V teachers basketball match on Friday (and WON! again, never lost it), for a charity fund raiser to keep the TYP and LCA course running in my school next year ‘ cause the government cut the funds, and I spent today stiff and sore – Oh, believe me! – running around on a basketball court for an hour with 17 year-olds is not easy!

          • Tim

            BTW, jim …. after Tuesday, I am screwed!

            Watch this space: frontline public servants are an easy target; as are children/social welfare recipients/disabled.

            If you drive to get to your workplace, smoke, drink, work and own your house, I think you will suffer big-time.

  47. Tim

    Furrylugs, please return. You were wrong about leaving this forum to “heavyweights” alone – we need them, yes, but we need you, too.

    Lorcan, where are you?

    Folks, I think that we ALL need to maintain stamina of contribution here. Do NOT fall into the trap of “instant gratification” and drop out because you don’t receive that “feed” here.

    Some are manifesting tremedous tenacity here: MK1, Ruairi, John Allen, Malcolm McLure, jim, coldblow, goinghome, BrendanW, Philip, gadfly55, Garry, pera, Dilly, colin-in-exile, PaulOMahony …. etc.

    Let’s keep at it!

    Ideas count – even if their fruits are not immediately perceived.

    No-one else is propagating these notions expressed here ……

    We need you all: let’s keep at it.

    Whaddaya gotta lose?

    • Tim

      wills, of course, wills; sorry! (how many other worthy contributors have I forgotten? ….. Ooops, I should not make such lists at the risk of alienating GREAT people …… sorry!)

      • Tim

        Deco, can you imagine that I left you out of that? Jeez!

        I am NEVER making such a list again. You are too important to me to allow a mistake like that.

        I suppose, my point is that we need evrybody here and more – let’s keep trying.

        Someone will spark the idea that will lead to another that will lead to a plan that will lead to a solution to our collective problem.

        Let’s keep at it.

      • wills

        tim if you knew me in real life you would be surprised by the thickness of my skin,.. ‘ive suffered the tortures of the damned sir, the tortures of the damned’…

  48. Tim


    Hit that link, folks.

    One of the presenters, Claire (Byrne, I think), has fallen into the trap of having bought a house in 2007, so she might listen to the likes of us.

    Newstalk106 is a reasonable, non-governmental, news station.

    It receives none of your annual TV licence fee, yet it survives.

    Perhaps, you might consider telling them what you are telling US?

    There is the link for you,.

  49. MK1

    Hi Tim,

    Newstalk: problem is would they air any “issues” related to Denis O’Brien? Probably not. Newstalk are not free. RTE is beholden to the government of the day (rather than being protected by non-changeable legislation, the judiciary or an independent president). Others have equivalent ‘ties’ and limits, not only to owners but also to advertisers. Oh for a free and non-beholden press/media. Be wary of what you read.

    > 35/80ths of their salary

    One of the costs of pensions is that the costs will rise as teachers salaries rise. The actuarial math is relatively straight forward but for many PS schemes, they are not funded (by the contributions). ie: Person A pays in X, person A is likely to draw out much more than ‘what X produced in long-term investment’. Pensions for PS and the private sector is a ‘time-bomb’ as our demographics population pyramid flattens out, more dependents, etc. One likely solution is an increase in the pension age as people live longer and are ‘more fit’ for ‘less physical work’.

    Here’s an interesting thought: women are living longer than men, so if they want equality, real equality, shouldnt they retire later than men by an equivalent amount?


  50. noonep

    Retiring at 50!, we we need to keep people working longer, not retiring early. see Waddell and Burton Review for the UK DWP, http://occmed.oxfordjournals.org/cgi/content/full/57/3/229

    When the welfare state was set up after WW2, there were 20 folk in work paying for every one person on pension. It’s now between 2-4 folk in work paying for every 1 person on pension!! This is unsustainable and socially devisive.

    There is extreme pressure on ill-health retirement as a financially advantageous way and easy way for management to exit the dispossed, disgruntled and disengaged folk from the public service. But this is also unsustainable as these pensions have to be paid out of yearly budget allocations and effect service delivery. Just look at the UK local authorities who abused IHR as a means of letting folk go in the late 1980′s to mid 1990′s.

    Good work is good for you and we need to keep folk enconomically productive for longer and this includes pension reform so folk can make choices about a bit of paid work and a bit of pension. Only 25% of the 2.7 million receiving incapacity benefit in the UK have medical conditions that explain fully their incapacity for work.

    Of IB recipients 75% have some capacity for work and 33% want to work. These 75% are essentially people with manageable health problems given the right support, opportunities & encouragement. The chronicity and long-term incapacity are not inevitable. Beliefs play a pivotal role in propagating and perpetuating these illnesses and social factors dominate.

    Just look at the U.S and see the 80 yr olds working in B&Q or walmart.

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