April 22, 2009

Banks giving us two fingers don't deserve State bailout

Posted in Banks · 387 comments ·

Is the bank tail wagging the Irish economy dog? It is certainly beginning to feel like that. Not content to wreck the economy in the first place, the banks’ managements have now embarked on a “silent takeover” of economic policy.

The most egregious aspect in all this is that they are being allowed to run the show by the Government. This spectacle of bank bosses apparently writing the script is why hundreds of thousands of ordinary people see the proximity between the big developers, the Fianna Fail party and the banks as one and the same cabal.

It is not up to us to change our view, it is up to the Government to change it for us by showing that they are prepared to treat the banks like any other industry. Otherwise, what conclusion does the minister expect us to draw?

It is not that we don’t understand the magnitude of the challenges facing the economy. We know we are in deep and that, like it or not, we all have to shoulder some of the pain. We realise that our banks have enormous problems and that the power of the State, if it can be exercised, should be used to prevent a financial collapse.

In principle, we understand that the State must be involved, but, at best, we want the banks to be working for us. At the moment it is impossible not to draw the conclusion that we are working for them.

The most conspicuous example of this banking dominance is the creation of the National Asset Management Agency side by side with the blanket guarantee of all bank liabilities. This means that the banks have both a safety net and a parachute, while the rest of the economy is left without any means of protection. This disparity is the root of many people’s incomprehension and, ultimately, anger.

Think about the contrast between the treatment of the delinquent banks and bankers and the rest of us. If you are in the business of making things for sale on the international markets — the lifeblood of a trading economy — you are faced with every possible obstacle. You need to trade in an overvalued exchange rate, which is getting stronger. You most probably have had your working capital and overdraft cut back severely by the same banks that are now availing of the NAMA and the guarantee. Your tax rates have increased and the cost of labour has also gone up as income tax has risen.

You are facing deflation everywhere, yet the interest rates on your debts remain significantly higher than the interest rate being charged to the banks for the credit in the first place. You, who employ people, are being squeezed. The banks are being subsidised at every turn and you are being penalised at every juncture.

This is not an economic policy, but a silent takeover. The banks are now the biggest liability we have and keeping them alive at all costs — which was, on balance, the right thing to do a few months ago — is beginning to look like the least beneficial route. The guarantee, of which I was a big supporter, was supposed to be introduced to give the banks time to find a solution to their problems. You give them time, there will be no run on deposits and then they come up with solutions, you force their hand, you are the boss. Instead, our Government allowed themselves to be run around by the banks that benefited from the guarantee — without extracting any concessions.

The banks are still giving the State the two fingers. Having both the NAMA and the guarantee gives absolutely no incentive for the banks to get their house in order.

To rectify this dilemma at the heart of monetary policy and to make sure we don’t end up with a zombie banking system, now that the NAMA has been set up, the State has got to rescind the guarantee.

It should limit the guarantee to depositors. The debt holders will be okay so long as the banks don’t go bust, which they shouldn’t with the NAMA in place. The State has no business using our money to bail out or protect in any way the equity or subordinated debt holders.

Subordinated debt is a risky asset, which was bought by rich mates of the banks. These are rich men’s IOUs. Bank of Ireland alone issued €15bn of these IOUs. They should not be underwritten by taxpayers. This is a classic example of poor people subsidising millionaires. It is wrong.

If the guarantee is not rescinded as soon as the NAMA is set up the whole thing will be an oligarch’s bonanza because the taxpayer is on the hook for the €450bn in bank liabilities and the €90bn bad debts. This is paying for the banking system twice. Once you take out their bad debts, the banks should be able to go to the market and finance themselves. If they cannot, they should not be in business.

Yesterday, AIB — the bank that has constantly said it has no problems — admitted that it was in big trouble. Well, thanks lads for the confession, but we figured that out years ago. Have you examined your share price recently? It goes without saying that there has been absolutely no change at the top in AIB — the chairman and the chief executive are still there. This would not happen in any other country and because they are still in their jobs, foreign investors won’t touch us with a bargepole.

Can the minister not see that they are taking the mickey out of him and us? Maybe he can, but because the Government is too close to the developers and bankers, he is doing nothing.

The time to choose has come. The minister has to choose between the ordinary people and the powerful elite. If the guarantee is not rescinded when the NAMA is set up, we will know that he’s on the side of the elite.

In which case, he and his government deserve everything they get at the polls.

  1. roc

    Here’s a great article with insights into what David is talking about above – An IMF perspective on trying to get the governments who come to them for help to properly squeeze their oligarch mates and favoured rich associates instead of the ordinary populace.


    … The fact is that this advice goes absolutely contrary to everything Fianna Fail and Fianna Gael have ever stood for… But what is becoming clear is the horrific consequences of this primary aspect of our political culture…

    • Tim

      roc, emmm, thanks for the link and it is, indeed, a great article; it really scares me, though, and this is why:

      He gives the example of Russia’s private sector debt as an example of how bad things can get – $490 Billion.

      That is just about, only, the amount that govt/Irish people have guaranteed our banks for.

      The problem is this (and please, please, correct me, if I am wronge here):

      Our private sector, corporate (non-banking) debt is in the order of €1,600 Billion.

      Russia had less than a third of that, and the IMF economist cites it as a problematic exemplar???!!!


      • roc

        Yep, that’s the figure. Or, 400,000 euro for every man, woman and child on the Island. The question must be asked consequently, whether the business and consumption levels that are propped up on this debt are sustainable and/or have any real lasting economic value… Are the businesses and consumption propped up by this debt, of the type that we and our children will reap the rewards of for years to come? I think not… That is the problem with the Keynesian philosophy. It is a ‘static’ analysis, thus does not account for economic quantities in the future. This is why war and burying cash makes economic sense to a Keynesian.

        How and ever, all the talk that I am hearing is about ‘getting the banks to lend again’. The question begs itself – why? If a business is truly viable it will be able to generate its own cash, or convince wealthy private individuals in its vision for creating a value that investors and customers can have faith in. No?

        Let’s get back to basics. To quote the article of the IMF chief above…

        “But inevitably, emerging-market oligarchs get carried away; they waste money and build massive business empires on a mountain of debt. Local banks, sometimes pressured by the government, become too willing to extend credit to the elite and to those who depend on them. Overborrowing always ends badly, whether for an individual, a company, or a country.”

      • roc

        And I just want to add to that by pointing out that when it is banks (influenced by the political establishment) who decide what warrants investment, one must then jump to their tune and become a ‘personification’ of their values. For this reason, banks, influenced by the political establishment, are responsible for the impulse and arrangement of the productive forces of a country (and the world in an age of globalisation). This is pure hegemony. Let’s try and be done with it (of course trying to mitigate against the pain of transition).

  2. wills


    !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! B U L L S E Y E !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  3. Aidan

    ok so the luanatics really are running the asylum.
    Problem is how do we get them out ???

  4. mcsean2163


    Hear! Hear!

  5. Mother of Three

    How do we contact the IMF and ask them to come in and sort us out? It is clear that our overpaid, inept politians are completely incapable of running the country. Your article as always is excellent and explains what is happening clearly.

    • eamonnc

      You really do not want the IMF to come in. Get hold of a copy of Shock Doctrine by Naomi Klein to see what they’re really about.

      • wills

        you better believe it……..!!!!!!!!!!!!!!!!!!!

        • G

          here here, nightmare international organisation, that and the world bank, and we know what banks are capable of, we as a people have to sort this out, but we are not there yet, getting there though………….

    • Tim

      Mother of Three, good to see you back! I wonder, though, why you did not take heed when so many contributors here answered your question the last time you asked it?

      They told you the same things as eamonnc, wills and G have told you here, again.

      I recall that I suggested, at the time of your last question about it, that the IMF might not be so bad, since I have a family friend who is involved in it and someone (sorry for not being able to recall who) had said that the IMF “knows nothing about Ireland” and I said that the IMF knows all about us, sure isn’t Tommy McLoughlin in it – born and bred in Drumcondra?

      The replies I received taught me that, regardless of the nationality of any of the people who work for it, the IMF moves in to a country when it is in dire straits and DECIMATES it, entirely, for at least a generation with its SAVAGE cuts.

      We have to do this ourselves, or the suffering of our children will be greater.

  6. finbarr

    The difficulty is people like the Labour party and Sinn fein, whom have no ability to run the country will end up filling the vacuum caouse by any backlash. This will definitely bring us back to the 80′s. We need talented people with acumen to survive this and to move forward. Pity Enda Kenny comes across as a bit of a pratt, a more telented intelligent opposition leader would haved stopped this by now.
    Who is for a meritocracy?

  7. Garry

    I really like the demand to remove the guarantee on debts as part of the price for setting up NAMA.

  8. Tim

    David, I agree, but I do not think that you go far enough.

    Yes, the guarantee should be rescinded with the inception of NAMA; however:

    Before the guarantee is lifted, while we still hold sway with the guarantee, the boyos must be fired – you intimate this, but do not go as far as actually saying it.

    wills wrote last night about the bankers being caught with their pants down; I laughed so loudly, I thought I would wake my children from their sleep! Then I felt guilty for laughing because the matter is so serious and people have been suffering and fearful and are so, tonight too, as we read this: jobs lost, income gone, pensions gone, threat of losing their homes, fear for their children – this is very real for ordinary decent citizens of our country, our neighbours, our friends, our family members and ourselves.

    I will extend wills’ metaphor a little here:

    By guaranteeing the banks, we pulled up their pants for them.

    By creating NAMA, we will give them a belt to hold their pants up.

    If not careful, we will end up giving them the “braces” as well, of nationalisation.

    Before the “belt and braces” happens, we MUST get rid of the CEOs and Chairmen of these banks, while we still hold sway with the guarantee we are giving them.

    Yes, David, take away the guarantee when NAMA is set up, but make sure the boyos are fired first. Watch their liathroidi disappear up into their abdomens with fear and shock when they are fired and realise they will never again get €2 million a year in wages; €28 million pension and whatever else “undisclosed” perks.

    Then, perhaps, the “foreign investors” might stop using the barge-pole DMcW mentions.

    There has been too much prevarication in the media about this; even on this site, intelligent, articulate and moderate contributors have argued that “now is not the time for punishment”, or “revenge is not the issue”, “time enough for heads to roll later – we must fix the problem first”;

    Well, now, as this article intimates, these boyos ARE the problem.

    They must go – Krugman sees that, even from as far away as New York.

    Does Brian have the liathroidi to fire them?

    • roc

      It’s not the boyos that are the problem. It’s the culture. There’s a certain game in town and there has been for a long time. There are various types of players in this game… There are the ‘serious’ fellows with the PhDs and the exemplary records… there are the ‘spoofers’ who talk things up, bullshit proudly, and spark off initiatives that line pockets all round while nothing of value is created for the future… and then there are the legions of meek, self-effacing minions, who imitate their superiors, are wholly at their disposal, and tell them that they are great fellows… There’s a certain talk, a certain attitude, and a lot of bullshit and ill-health (mental and physical) if you poke under the surface.

      What’s really needed is a general recognition of the pathology of this state of affairs by all concerned, especially by those in positions of power… but also by those gearing up, salivating all over themselves to replace them.

      Seriously, all it would really take is a proper recognition of what is implied by public service, public responsibilty, and the difference between the political phenomena that is representation of interest, and representation of the overall public good.

      But yeah, I have a pain in my hole with the current incumbents. Come the revolution, I’d be all for throwing them on the trucks (as SW puts it)

      • Tim

        roc, that just lets the boyos off the hook, as it were, and I cannot accept it. The crony-culture is there, yes; but it can be resisted by people with morals. You did not join it, nor did I, nor anyone here on this site, probably.

        Please do not write it as if they “had no choice”, because “its the culture”.

        They had a choice, roc, and they made it.

        That choice has now hurt everybody.

        They must be removed from the positions of power they currently hold so that they can never do it again. (and that means taking the millions back off them, as well).

        • Yes but to go with Roc Tim, who’s belling the cat. Who’s stepping into the breach. More of the above?
          I’ve said before. We’re a peripheral country of small but well educated populace led by delusional fools who played with the big boys and got burnt.We simply have to get to a line that we understand and can deal with. Then build from there. The credit unions are of more systemic value at the moment to small local business.Up to now, we have more or less escaped the spotlight but Krugman has stuck a big pink flag smack on top of us.
          What is now of systemic importance to the Republic of Ireland is a surgical incision to remove what is a small rot. Get rid of it, bandage the wound with the ECB and institute correct governance to instil confidence.

    • wills

      Love the ‘metaphor’ embellishing here tim, brilliant,
      and on the money…!!!!

  9. shtove

    “Is the bank tail wagging the Irish economy dog? It is certainly beginning to feel like that.”

    Sweet divine …! That’s been clear for years.

    Wise heads were shaken when AIB was let off the hook in the mid ’90s over the offshore accounts felonies.

    In the end, we will all wonder why the Swedish model wasn’t followed, and followed aggressively.

    Time to fire bankers. Time to prosecute bankers.

  10. jim

    There is only 1 solution to solve all the underlying problems in Ireland,and it is this (my heartfelt opinion)….Nationalise all the Institutions i.e.. AIB,BOI,IL&P,INBS,EBS.(Anglo already done).Set up NAMA to deal with all property related loans,excluding Residential Mortgages.Re-float the following when cleaned up 6 Banks of equal size in terms of Capital and branch network etc.(re-named and re-branded) under clear and workable Regulation,with new Management.The sales proceeds from same can be used to offset any losses by NAMA,which can be supplemented by a Bank levy and proceeds from Taxing future profits of the Banks.Newly constituted Central Bank to oversee all Financial Functions within the State( no falling between different stools and buck passing).No institution to be allowed to grow to large to fail,(too large to fail = too large to exist).All Banks to be issued with clear guidelines regarding the Euro as our Currency and any abuse of same will carry heavy penalties.Failure to Regulate the Euro by the Cenral Bank will mean instant dismissal without pay to all culpable Management.No Political interference in the Banking system outside of acceptable Governance criteria.

  11. G

    There ain’t nothing silent about this takeover my friend.

    We are heading not for the great clash of civilisations, but the great internal clash of our society, things are slowly reaching boiling point, there has to be a reaction to all this, I give it 12-18 months and then you will see things.

    Only the beginning, the slide into something more serious, you can almost feel it in the air.

    • Gary

      The latest budget spin regarding long term severance payments, parachute payment for junior ministers, bail out of the banks, the crappy health service, Bertie pathetic excuses and forgetful memory in the Mahon tribunal, the greedy property boom, negative equity homes, loss of jobs. The list goes on and on. There is certainly something in the air.

      Lets hope the government have the cope on and hand the guy with the petrol canister a fire extinguisher not a match.

  12. wills


    TIME to go in with the handcuffs and make arrests.

    There is a criminal banking – corporate – gov – syndicate running the affairs of this Republic.

    A Financial fascist order enmeshed into a gangster feudal pyramid superstructure and self interest reigns supreme over the minions
    hard labours preserving the masters in their ivory Leer Jets.

  13. jim

    6 or 7 months was plenty of time for these Bankers to get their act together and put forward solutions.The fact that things have got worse means they either cannot or will not do anything that affects their own narrow self-interest.Time for Cowen to get in there and sort it out and earn the money He’s getting paid.Cowen works for the Country first and foremost.Were way past time for fucking about with these clowns and conmen.Cowen cannot oversee the failure of this Country by pandering any longer to these money grabbers.Cowen is answerable to the People and their Constitution and the penalties for abusing same a very clear.When Anglo was Nationalised the World did’nt end, in fact Anglo managed to gather up all the Credit Union deposits,some 11 billion if Im remembering correctly.There’e a lot of Investors all over the World looking for a safe place for their deposit’s,so why dont we provide such a place.The European Commission and ECB will back us to the hilt if we can show that we have cleaned up our Financial System.

  14. jim

    On a side issue I hope John Allen took my referring to Him as a Celtic Git in good humour as no offence was intended.If He was offended I apologise without reservation,as I have grown quite fond on John’s take on Life as we think we know it.Looking forward to reading more of His observations as He steer’s His poor old Neidin around this present Morass.

  15. How the hell do you request email notifications without actually making a comment (as I don’t have one at this juncture)? Thanks, Adam.

  16. Garry

    Just read Lenihans response http://www.independent.ie/opinion/analysis/states-priority-is-helping-economy-not-the-developers-1716678.html

    A lot of bluster about credibility…and meaningless commitments to not let developers off the hook… No attempt made at serious analysis of the situation, or to core point of the article, the banks are now running us… indeed the comment that the government are working very hard to restore the banks credibility shows who is working for who at this stage…

    Sure give me 75k from every man, woman, and child in Ireland and a guarantee from each of them to make good up to 400k of my debts and I’ll loan money to business.
    The thing is, even with that our banks wont!

    International markets are not the only ones who require credibility.

    An example of Lehihans credibility…. Last budget was started with a committment to stop paying long service increments and pensions to serving TD’s. A very clear unambiguous statement… which he has backtracked from over the last few days.

    The excuse this time was Lenihan meant to say “going forward” at the end… Thats pathetic; its like a child promising “I’ll be good” and then muttering “next year” under their breath.

    • Did ye see the ship cartoon? “Go with the flow”.
      Be a good little economist and we’ll award you with one of these new honours.

      • Garry

        :) whoever does those cartoons is excellent

        I have a new suggestion for what Lenihan should call NAMA

        Never Accept McWilliams Advice :)

        • Oh very trite. I hope David picks up that one. It could go national.

          • Garry

            havent heard David on RTE in a while reckon after this reprimand from the minister RTE will interpret NAMA as Never Allow McWilliams Airtime

            Lets hope it doesnt get as far as — Now All Malcontents Arrested

            Im in top form today!

    • cozzy121

      Christ, the man will spend more effort on trying to reject DMcW’s suggestions than actually trying to make an decision as Finance Minister that he doesn’t have to back-track on a few days/minutes later! Why the hell doesn’t he grow some back bone and reduce the voucherless, expense junket that the dail has become!

  17. Dun Aengus – even the sea gulls on the cliffs know what is arriving from USA and to listen to them it is very noisy indeed .They all have so much to say and every story is worse than the next so much so they almost cannot remember which nest is actually theirs thus resulting in some of them acting like cuckoos and others doing surregate care maintenance.Even the lobster pot men notice a fall in their catch and some have taken to selling their potware on donedeal.ie .The reason apparently is that the lobsters remain coveted under their favourite rock for fear of venturing around the local bed because they have noticed foreign debris arriving and darkening the waters around them.They all know something but the dogs on the street in Dublin dont realise what is arriving yet or so they say or are in Denial .This is the real problem because no precautions have been taken to protect any sudden dangers and when the danger does arrive it may be too late.
    It appears that the new scientific biffo principle is : that the volume of the extra white shit discharged by the sea gulls on dun aengus is equal to the volume of displaced dull brains in Leinster House …..eureka …..This answers why there were ministerial changes in appointments as well as a reduction in numbers capable of doing their jobs properly.
    The political propaganda seems to be :

    Danger = N+1000 ( and many british soap operas to watch still )

    Where N is the probability of actual arrival time plus a thousand years time

    The Quill ( sea gulls ) Principle is :

    Danger = NOW ( less all the Time Lost doing Nothing )

  18. severelyltd

    What amazes me is that there have been no major writedown’s by the Irish financial institutions. The dogs on the street know that property prices have been set back at least ten years but the banks and the government seem to believe that the next boom is just around the corner. Every move that the government has made recently is to protect the interests of the elite and the banks and no one else. I feel like they are trying to bring a horse (Irish Public) to water , but at the end of the day they cannot make us drink it. Just from my own perceptive looking at asking prices in Cork. There has been ZERO reduction in effective asking prices for commercial or residential property. I read a statistic that 30% of people aged 20-35 are living with their parents. Theses are people that would buy if prices were realistic. Getting people to buy at ANY price is the only way to get liquidity back into the market. I was looking at buying over the last few years but now I think you would need a hole in your head the size of the Elysian (illusion)Tower to buy anything in the next 3 -5 years. The net effect is that this pain is going to be dragged out to 10 years when it could have been sorted out in 2-3. You either agree with the government or you don’t . Someone replied in my last post that if you disagreed that you should take whatever money you have out of government backed banks. This I did. And it felt good. Am I a traitor or a patroit? time will tell.


    Let’s see how many dummies in the Irish electorate vote FF in June.You get the politicans-that you vote for.The late Ray Crotty was blackballed by the establishment and you David are suffering the same fate.If emigration does not resume on a similar level to the eighties ,then we will suffer financial oblivion within a year.The uselessness of the opposition and their obsession with Brussels is depressing.Quit the Euro while we still can.

  20. Peter Schum

    Watched Obama’s speech last Tuesday. Thought it was reasonably good and gave a good overview of what he is doing & why he is doing it. The main thing which gives him credibility at this point is that fact that he can disassociate himself form the sins of the past administration. I think FF are starting to do some of the right things although I fear they are not doing enough to stimulate confidence and get money flowing, which could lead to further increase in levels of unemployment and a general deterioration in the economy for the foreseeable future. One of the main challenges facing Ireland will be the cost of borrowing. One factor which could have the greatest influence on this is international opinion of our govt & financial leaders. We need a change at all levels to generate confidence in our plan, and reduce the cost of borrowing. Is this likely to happen? I fear not.

  21. Philip

    Easily, this is the most frightening article to date from DMcW. From the title through to the body content of the article, it is hard hitting and to the point. Indeed, I would appreciate some attempted rebuttal before we all drown in group think here – maybe something a little less slap dash and less mantra like than the rubbish published by our Minister for Finance today. Hopefully, Lorcan, MK1, Malcolm, Deco etc. could attempt to throw a little acid on it for a stress test.

    My simplistic summary is: The Martians have landed a few decades ago and have well and truly taken over the state and its instruments and have used the financial & media machinery instead of ray guns to subdue the rest of us.

    I see Prof Kinsella is publishing a new book on the Crisis (he’s probably looking for a new revenue stream before the PS cuts really kick in). His focus will be on the lack of leadership and zero credibility of the political system here and how this has been a bigger cause of our troubles here than anything else.

    People need to take control of this. But how? How do you compete with a well crowded media and political circus which is well financed by NAMA backed elites. How will protest be initiated? What is the Gandhi factor needed? How can Glasnost na nGael be initialized? The taxes and levies will be felt big time end of May. How much does it take to reach flash point?

    • Garry

      There are issues with rescinding the guarantee… Serious issues…. you dont guarantee something and then walk away…. in the same way as you dont borrow and not pay back….Not if you ever want to borrow again

      That said, I really like the idea of linking NAMA and the guarantee…. and exploring every option for how to give with one hand to the banks (NAMA) while taking with the other. This is the kind of thinking that is needed to rescue the country…..

      What is most worrying is the minister couldn’t find time to respond to the 20 who advocated nationalisation but found time to ridicule one element of an article by a lone economist….It was a real lawyerly thing to do and actually shows just how rattled these guys are…

      Combine that with the paintings controversy and a very disturbing picture is emerging. Furrylugs & the cartoonist captured it brilliantly. Go with the flow

      • I had another look at that cartoon and it’s in the style that David normally tags to his articles. Now, waves like that are created just before they hit the rocks.
        So David is swimming away from trouble whilst the good ship NAMA is about to beach itself, exit stage left.
        Was our cartoonist up to a bit of devilment?

      • paddythepig


        I agree with you.

        We should tread very carefully rescinding a guarantee.

        The guarantee was introduced as a panic measure, without any consideration for it’s consequences.

        Unravelling it without due care would have equally unknown consequences,


  22. Deco

    David – You hit the nail on the head.

    Wills – I read your commend concerning the section of Irish business which has functions as a parasite, and uses the rest of society as a host. This mentality is still best exemplified in the banking sector, and in parts of the civil service. The are the institutional insiders, the price-setters, the free-rent seekers, the above normal profit seekers. This is the mainstay of IBEC. And IBEC are the largest and most powerful lobby group. They want capitalism, as long as they get socialism when they fail to operate capitalism. And they detest competition. They corrupt Irish society with their iron tight grip on the economy and the nation’s finances. They have driven more people out of Ireland than bad weather or the Redcoats. They control our consumer culture and have massive infleunce on the media – as exemplified by what happened to Eddie Hobbs in 2003 and that incident when Seanie Fitz wanted him taken off the air. And everything they do is in complete contradiction to Article 45. And your comment captured it perfectly.

    Albert Einstein said that the most important part of problem solving was properly understanding the problem. We are learning to understand the problem. And this will help us undermine it.

    I think that in order to pull the rug from under the “Economic rent seeking infrastructure” we will grab on string on the rug, and pull away at it. And then another. And eventually the rug will disappear. Because pulling the rug from under the rogues is not yet possible. This will be very difficult. And the Irish Times is already charting a middle course, replacing Fianna Fail with the Irish Labour Party in political power – and leaving it at that. This is a load of nonsense and it will change nothing. This is a plan to minimize the scale of institutional reform, with a policy platform that amounts to a new cleaner shinier version of Fianna Fail.

    The most important thing is that intellectually Ireland gets itself in order. From the perspective of the bankers, speculators, etc.. the most important objective is that Ireland is intellectually mesmerised by every possible distraction to the point that people are incapable of putting two and two together. The pride concept is very important in this regard. Pride prevents any form of cold abstract reflection. I have been observing this in the last few months – and those who seem most wrapped up in the Irish Pride thing are the lest liable to apply any critical thinking to the current situation. It is like as if they are in complete denial of the scale of the crisis. They are effectively emotionally blocked from seeing the crisis.

    • wills

      much obliged deco,.
      i do not enjoy making these posts but i feel
      morally compelled and duty bound to do so and to call it the
      way it is from my perspective to which i rate no more or less in
      value to anybody else who hold’s truth and love and fun in esteem.

  23. Deco

    Regarding the FF, the Greens, the ESB and their big bureacratic energy plan (and cosy consensus to scratch each other’s back) – I recommend a quick review of the following. This is the alternative. Makes a lot of sense.


    There is an alternative energy plan. And it is about smaller scale electricity generation. And greater internal market competition. It asks for small local scale producer.

    And it is fully endorsed by one of the world’s leading electrical engineering companies. This is also clear evidence of why we should have the alarm bells going off whenever a Green TD Minister is smiling at the launch of another government program.

    With regard to energy, the state plan is second rate. Or at least, that is what Europe’s largest electrical engineering organization are saying. But then I suppose like the IMF, Economist Magazine, the New York Times(on multiple occasions), the OECD, and all the others who assist us with warnings, the Irish government merely has to get around to informing them that their judgement is incorrect, and we can continue. Our pride intact, and our judgement taking the back seat. Once again.

    Another thing – how come Dublin requires so much fuel energy consumption compared to large cities like Munich or London. Once again “Dublin – how not to plan a city” !!!

  24. gadfly55

    Ah, eventually, you will arrive at nationalisation. Our money, our taxes for the real economy, and let the subordinated debt take the hit, because political action is the only way to do this in a general election with a clear policy and a mandate from the people. Of course the establishment, including the mainstream media and RTE is not going to facilitate this process, at all, at all. Professor Kinsella offers us today in the IT a compelling judgement of the failures of the budget, the government and the political and administrative culture in the republic of oligarchs and plutocrats, RTE disses Paul Krugman with Alan Dukes sitting beside Mark Little, giving Krugman the effoff and mind your own business as a final comment in Prime Time’s production responding to the world’s view of Ireland as an exemplar of the busted economy. The 20 academics summed up the unanswerable argument for nationalising the banks last week, which in turn motivated Paul Krugman to write Erin Go Broke for the New York Times, seen by readers world-wide, and to which precious few reader’s comment from Ireland were contributed. David, you are falling behind the curve. More radical appraisal required, because events have overtaken your advice.

  25. coldblow

    roc’s link is superb, the best summary I have ever read, not so much because there’s that much that’s new there but because of the fact that it covers pretty much all the relevant points and because of who wrote it. (I wonder does Brian Lenihan consider the former Chief Economist with the IMF also to be a “swimming against the tide” maverick?) And as roc says, it’s directly relevant to our own case too – uncanny in places. It’s quite a long piece but bears careful reading.

    In trying to reach a judgment on all this, what with cock-up and conspiracy theories, you often doubt your own powers of observation and reasoning. (I wonder if DMcW felt the same on seeing the Finance Minister square up to him in print.) That’s one reason why I like to quote from the likes of Crotty, Lee and others. (If RTE want to do something useful they could try and get Joe Lee over from the US onto one of their programmes.) I know it’s confirming my own prejudice but at least it adds a bit of historical perspective and the evidence just seems to mount up. (It also enables me to make comment at a safe arm’s length!) I haven’t the expertise of some of our ‘heavyweights’ here in dealing with primary source material so I have to make a judgment on the competence and trustworthiness of the various experts, and their predictive success, so in this argument I’m with our host.

  26. Malcolm McClure

    There is nothing new under the sun. The following Essay on Nepotism was written 200 years ago:

    A friendly affectionate man is a title given only to those who limit their benefits to their families, or circle of acquaintances. They are often bad judges of mankind and consider the merit of gaining their esteem superior to every other consideration of talent or genius. They are absorbed in the promotion of those nearest to them. In the scale of egotism, they seldom have any pleasure in the contemplation of general utility, practicing those acts of limited good which the selfishness of mankind has dignified with the appellation of virtues: such as filial, parental, conjugal, etc., and duty: love, friendship, and affection. The field of their affections is bounded by the narrow circle of personal acquaintance. Receiving the immediate advantages of reciprocal benefits by a rapid exchange of mutual good offices, they cultivate an excellent soil and reap immediate advantages.

    This good-natured character can lead to general detriment. Under arbitrary governments, the necessity of protection forces each individual to seek refuge within the parental or friendly circle, and while their influence is limited to their personal friends and acquaintances, they are good members of such a society and good subjects; but for the same reason, they are bad masters when cloaked with power. Habituated to find all perfection in the bounds of their confined society, they are apt to bestow all posts and places of trust on the members of it. They are much inclined to consider their friends infallible, supporting them in all the acts of oppression their ignorance or egotism may lead them to commit.

    Their partiality in favor of their friends becomes flagrant injustice towards the rest of the community. Flattered by the friendly attentions and seducing preference given to all their opinions by their circle of intimacy, they feel shocked at the candid and bold deportment of the man of talent. That adherence to the truth which deranges the oily surface of feminine politeness, although it is the sterling stamp of real knowledge and the only garb of true merit, is offensive to them. The freedom of such salutary counsels intrudes on their self-importance and ruffles their indolent habits. They glide gently down the slippery path of effeminacy and weakness which always leads to wickedness. The women rule, and their passions and prejudices are absolute, and they direct the sovereign power, turning the good-natured, friendly man into a most cruel and wicked ruler.

  27. We are now in a limbo state of a time that is neither before the event or after the event of Decimation of Ireland and unless we act NOW we are history .Once we arrive into the ‘after time’ of The Great Change we all are a nobody and we all lose everything we grew up with and aquired and our minds become empty and devoid of an identity.Our children become plastic capsules of a lost time .We return to slavery again and indentured services.
    We have the best brains in the room but somehow we seem to evade the ‘bulls horns’ and be seen to act .This has been noticeable a few times recently in earlier contributions .Are we going to blame ourselves and is this another mindset accurately described by malcolm .
    We dont seem to have found the code to break the seal that clouds our minds to make decisions and be seen to act.The code is essentially the smallest denominator factor that we can do with the least resistence and the most effective result .The code delivers us across the rubicon river and to the other side .
    May I suggest that a number of us prepare ‘a simple proclamation for a 2nd republic’ and nail it on a door where it can been seen and call a media presence to record that moment .Please respond those interested.

  28. wills


    David’s article is incredibly courageous and perhaps he spent the week
    seriously contemplating its possible ramifications but put duty ahead
    of ambition.

  29. Original-Ed

    “Once you take out their bad debts, the banks should be able to go to the market and finance themselves. If they cannot, they should not be in business.”

    With the same management in place – who would trust them with unguaranteed funds? – it’s calling for a big leap of faith.

  30. Philip

    Let’s face it, with a proper management, the NAMA deal would probably work and work well.

    • wills

      Can i suggest, with respect of course, NAMA works beautifully
      that is why it is been set-up,… but who does it work for,,
      for who’s interests does it operate…..?????

      • Philip

        I agree that the NAMA is a vehicle for preserving the status quo and sucking the life out of the economy. Management clean out has to be enacted to give any hope of contradicting your assertion. If a clean out did occur, we would see a vehicle for responsibly managing the mess. Walking away from the guarantee is not easy now as a lot of positive (for ireland) trading was enacted on that basis which would be slammed into reverse – making the bond spread so bad as to give respectability to Argentina.

    • VincentH

      I do not think so, it could have the best of the best of managers, for it is based on land as the asset not income. A clean Share should be valued on the income it returns not its potential value sometime in the future. What these assets are worth is what can be realised now, this instant, to-day. All the management in the world will not change that the bet we are making is little more than less than the odds of winner of the Grand National next year, onwards until NAMA finishes.
      All we are doing at the moment is weeing away credit in an idiotic attempt.
      I believe the guarantee should be removed, but remain on all deposits, and allow the Banks hit the wall. Then the LIMITED aspect would kick in. At the moment, they are playing the LLoyds game of tagging absolute liability.
      Then the whole, clean branch network, without the drag of questionable bets could be nationlised.
      All that is happening at the moment, in the US, here and Gb there is a frozen attempt to inflate out of this mess, via protection of banking. Frozen due to an ideological fixation that wage inflation is always bad and frozen due to the EU partners unwilling to destroy themselves for something they realised twenty years ago.

  31. Garry

    Got this link from a collegue in the states…


    Im stunned.

    • Yeah, that’s just obscene; how could the people and country put themselves in hoc to such an extent? Beggars belief!

    • wills

      I’ve just recovered ,,,, link is ‘devastating……..
      Utter proof Ireland is the Ponzi Rep. king pin,..

    • Deco

      Now we really are in trouble. For those too lazy to go through the slides – or those with slow internet courtesy of Eircom-Ireland’s cowboy outfit..here is the end result.

      1. Ireland – 811%
      External debt (as % of GDP): 811%
      External debt per capita: $549,819

      Gross external debt: $2.311 trillion (Q4 2008)
      2008 GDP: $285 billion

      Well. There you go now. Something for Irish people to feel proud about. The cost of our adventure with our own pride. That is the cost of all the property shennagins, the partying, the substance abuse, the boozing, the croozing, the shopping in Manhattan, the year out in wasting time in Bondi, election voting machines, the Shopping Malls, Sunny Beach, Majorca, Minorca, Barcelona, Gran Canaria, Barcelona (again), U2 tickets, the HSE, the Rugger World Cup, the Beemer, the Saab, those weekends in the West in a four star hotel, the 30 grand wedding, the designer clothes, Grafton Street, the high octane lifestyle, the expensive sandwiches, and all that contempt for those who chose to live within their means. And hey Presto. Oh, yeah and of course. The Mortgage “yue knue we had to foirk out sooo much fur the pad, we ended up spending less time in Gran Canaria – does my suntan look big in this – really awphul”. And cheering us along all the way, the terrible twins. Ahern and McAleese. Long may it continue. It is soo wonderful.

      Ahern has set us up nicely for the start of the Chinese Century. Now, let’s see if the two faced waster in the Aras starts lambasting us for not ‘celebrating’ where we are at ?
      The next generation in Ireland will be busy rearing pigs for Chinese so that the Chinese won’t have to deal with the smell of pig manure, and so that all that debt can be paid off. Fat lot of use designer clothes will be then.

      • Classic post Deco and absolutely correct. I have just left my job in Antigua and face two months on the beach (oh the pain!) before my next project begins, but I don’t owe a red cent to any bank or any person; neither here, Ireland nor elsewhere – that was because of conscious and responsible decision-making, not luck – I hasten to add. Why the hell did the Irish let the money go to their heads so much and why did they all get so greedy? I really can’t understand it. If you can’t afford something DON’T BUY IT! Simple as that!

      • wills

        …and all of it bought on credit….!!!!!!!!!!!!!!!!!!!!

  32. huffnpuffpolly

    hopped in for a lurk.
    I knew somebody would eventually come up with the idea that it was all our fault – put those bloody women back in the home. The passionisation and effeminisation of men must stop now.

    From the deranged oily surface of feminine politeness

  33. Arrivals Hall : ……….the impact was sudden some already lost overbord…the lifeboats are being arranged in the first class section only, while everyone else is held down stairs in the lowest deck .And the cello ……plays beautifully and a violinist joins in the duet …the ship continues to tilt sideways slowley and in the bow a spirituality appears among the few lucky ones hoping against hope that they might find a life boat …..crying can be heard and sparten possessions are gathered ….the boat lilts further and the cello falls from the hands of the musician …..the violinist bravely continues only this time her face is stressed and wondering what her chances are of escaping to a new life from the one she sees eroding in front of her ……more cries but this time from the lower decks as escaping passengers flee to the upper deck shouting and pushing and there is a stampede …this not hell this is a living crisis said one passenger …this time an armed sailor appears appealing for calm and holds a gun aloft ….and fires a shot ……the few saved life boats are lowered ….the ship lits again while the smoke bellows high and no one else sees or knows where the ship is and no contacts can be made…..everybody jumps into the freezing cold water watched by the few who managed to find a boat …..cries begin to die away …..and silence is deafening …just the oar touching the water as those in the boat look around to see if they find their loved ones….the smog arrives and nothing more can be seen or heard…

  34. Philip

    INTMA – a problem foretold – look at this in http://trueeconomics.blogspot.com/

    Says it all really.

  35. JohnD15

    “the State has got to rescind the guarantee”

    David – I understand the frustration (and share it) but with this statement I find myself in very rare agreement with Lenihan writing in reply in today’s Indo. You can threaten nationalisation, tax audits and whatever other evils you can dream up on the culprits, but default on this sovereign commitment will mean instant closure of the Irish access to international financial markets – without which we will be soon back to the days of cavorting druids and stone huts for the Gaels!

  36. wills


    the link is in error,. goto furry’s post on page4, last article, near bottom
    of page, check it out, excellent officialdom speak on sovereign
    debt,.. great detail and context. Removes all mystery and lay’s
    out the mechanics….

  37. wills

    Our so called establishment to which David’s article relates on,
    have reduced Rep of Ireland to the worlds number one debtor nation status.

    Our sovereign debt is the largest in the world by 500%…!!!!!!!!!!!!!!!!!!!!!

    I’ll pause to ponder…………………………….

  38. JohnD15

    Sorry couldnt find it, would like to if you can re paste. But I suspect what it means is that sovereign defaults a ‘part and parcel’ in terms of having mechanisms to deal with defaulting national states, municpals/local authorities etc but the incidence of default is generally low amongst developed countries. And the relative consequences for regular offenders such as LATAM countries, Russia amongst others versus Ireland will be dramatically different.

    I also dont think the rest of Europe could afford an Ireland Inc actually/or even about to default e.g. apparently an amount equivalent to c.9% of Germany’s GDP represents direct exposure to Ireland (similar story for the UK). Our national and private debt (ca €1.7 trillion) is Ireland’s very own weapon of mass destruction – or mutually assured destruction if we ever try it out!

    • wills


      Acording to gary’s link above, our debt is 2.4 trillion,……!!!

      • JohnD15

        Even better! Although about a third of this relates to non Irish IFSC banks which can be excluded.

        • Garry

          1.7 billion would still leave us as #1 on the list

          Thanks a lof for the info..

          Ive no idea of the sccuracy of the data in the cnbc slideshow but its the scariest thing Ive seen on this crisis….

  39. Shadow Forum – Ok , I get it .This forum is a stalemate to any consideration to be seen to make a change to government policies .The room is just a talking shop or a cinema experience only that we here on blog are getting the preview before the nation catches up in ten years time by then this blog will have been edited by the new ruling party assuming the same clowns are still in power.

  40. JSpain

    John15: I agree with your reaction to DMc’s proposal on default, but it is not the first and wont be the last time that he considers the unthinkable. Again I give him the benefit of the doubt on this and put it down to more of David’s polemic and not serious economic evaluation.

  41. JohnD15

    I think the time on this thing is an hour out – I had better get home! Slan

  42. Malcolm McClure

    Thank you roc for that excellent lead to the IMF view in Atlantic monthly. If I were in the Central Bank I would ask someone to devise an exit strategy for Ireland in case the whole Euro experiment craters as a result of stress in central and eastern Europe.
    If that happens it is very unlikely that the IMF will be rushing to help us, as they will have big enough problems elsewhere.

    There could even be an opportunity for Ireland in that scenario if we make sufficient preparation beforehand. I think the key to a solution could be to stockpile significant quantities of the specie metals, copper and silver with an investment of, say a billion euros.
    Then in extemis we could strike our own coins that would have an inherent market value that was otherwise resistant to speculation. That would give us an instant advantage as the only country in Europe with a strong currency. To repeat the suggestion in the previous blog:

    We would have gold, silver and copper coins, struck in weights related to the market value of each commodity.
    In the 1960s the old copper pennies (pinniiin) weighed a third of an ounce and there were 240 to the punt.
    Today copper is worth about $2 or £1.36 per pound weight. So the copper in an old penny is now worth about 2.8 old pence or 6.7 new pence or 7.5 cent. (In 2006 copper was worth $3.50 a pound, so a penny was worth 5 old pence as scap.) So the Euro in your pocket is now worth about 13 old pence.
    Silver coins struck prior to 1942 had 75% silver. Silver is now $12 per ounce, or $9 per 75% silver ounce. The shilling weighed 5.665 grams so there were five to the ounce, making 5 shillings worth €6.90. So the 5 shilling coin weighing 28.3 grams would be worth 13X6.90 = about 90 pennies If this were made up to 100 pennies per 5 shilling coin, (with 20 pennies per shilling) the extra 10 pence would pay the cost of the mint.

    Instead of paying the government guarantee in devalued Euros to investors who lost out, they could be paid at a very advantageous discount with money that was actually worth something everywhere in the world.

    Even if the Euro remained stable we could sell the stockpile of specie metal at a profit when the market recovers.

    • Right on the money Malcolm. If we had the foresight to plan for the unthinkable we’d have a chance.
      Is the Euro unassailable? Will the dollar survive as the king pin currency or will clever management set the Yuan as the new alpha-fiat?
      Who knows but at least set some scenario planning in place.

  43. Aidan

    Ok so here we are giving the banks a guarantee for 400+ Billion.
    The IMF says that the banks will require 24+ Billion in capital to sort out there mess, minus the 7 Billion we have already given them.
    Now why are we guaranteeing 400+ Billion when even the IMF say 24 Billion will be needed.
    So does Logic not say the sensible course of action would be to Nationalize the banks accept they will require 24 Billion in new capital and stop having a 400+ Billion millstone around our necks.
    Forget about NAMA, instead set up the National Bank Management Association appoint Mr. Bacon as CEO run the banks as commercial companies, they are all profitable companies well capable of giving us the Taxpayer a good return.
    Now will someone please tell Mr Lenihan that we already own the banks as without our Guarantee they are bankrupt there is no negotiating that’s reality.

  44. jim

    The Government cannot bail out the Banks as it cannot afford it.So by using the vehicle called NAMA it can issue Bonds to the Banks in exchange for assets which are marked down sufficiently to allow these assets to hold a collateral value sufficient enough to allow the Banks to exchange them for Euro’s via the ECB.This mechanism bypasses the rule banning the ECB from directly bailing a Member State but at the same time has the effect of allowing the Irish Government to in effect print its own Euro’s via Bonds.Quantitive easing through the backdoor.It also has the effect of saving the Irish Government from having to go into the open Market to raise Finance by Bond Issues which would prove more expensive based on current Bond spreads and also run the risk of being under subscribed and damage the credibility of the Euro zone as a whole.As I have said before the ECB and European Commission want to help Ireland in every possible way,I honestly believe that,my problem with all this is that I do not want to throw good money after bad supporting the present Regime of Bankers and their croney Capitalist buddies,including the one’s in Dail Eireann.This is why I suggest Nationalising all the lending Institutions covered by the Guarantee and controlling them until they are cleaned up.As much as I distrust the present Government, I feel as the Elected Representatives they must take complete control of the Financial System and do all thats required of them ,which should be the best interests of the Country as a whole and not for the Fools who placed bad bets on Property.

  45. Johnny Dunne

    Responses to Brian Lenihan’s article today, sounds like someone ‘rattled’ about Paul Krugman’s – Erin go broke: Ireland’s unlucky economy article quoted which has similar conclusions to David.


    The problem is this guy is probably trying his ‘best’ but unfortunately his advisers don’t have a clue…if any of them could answer publicly the following questions defending the government’s decisions now in the lihgt of what’s happened and was obvious to many in the real world, I’ll be happy to never post again in the knowledge it’ll be OK !

    “State guarantees have been introduced in many countries in response to the unprecedented stress in global financial markets”

    Can anyone quote another country which has guaranteed ‘ALL’ the liabilities of the banks it regulates ? Germany guaranteed ‘Private Deposits’ – consumer deposits including the accounts of privately held businesses.

    ..”banks in Ireland remain very dependent on their continuing ability to raise funds from abroad to finance their activities and meet the economy’s needs”

    Any evidence AIB and BOI are providing net (new loans) to businesses? Anglo, IL&P, Irish Nationwide and EBS don’t lend to trading companies. I know the likes of Bank of Scotland, Ulster Bank, National Irish bank, KBC/IIB and even HSBC are all at least open if not very selective for business lending ie banks which have no guarantee or ‘tied up’ until release loans and deplete balance sheet to NAMA.

    “…working successfully to rebuild international confidence in Ireland and its banks”

    Any evidence of this happening to a level greater than the damage caused by the ‘lethal cocktail’ of the “blanket guarantee” & NAMA ?

    “…proper business of providing credit in this country without the need for state support”

    If this is the case then why not have the leverage to make necessary changes without setting up another ‘quango’ never used before in this specific situation with massive risks to every Irish citizen now and for generations instead of just set up a ‘good bank’ !

    “Reneging on our promises would be very damaging to this country’s credibility,…”

    What about we will have a government deficit of less 3.5%…maybe more…9.5%…sorry over 10%….maybe 13%…..next month (what when we don’t have 100% of many US MNC exports to Europe, Middle East and Africa for 1% of the population of Europe) ???

    “ There is now a broad consensus among informed economic commentators that our economy will not recover until we fix our damaged banking system”

    The only way our economy will recover is by exporting more from Ireland thereby bringing in new money in sales not borrowing – creating jobs, filling up commercial &residential properties and spending.

    “I reject any suggestion that NAMA is a bailout for developers. The agency will acquire loans at an appropriate discount from the face value of the loans held on the banks’ balance sheets. Developers whose loans are transferred to NAMA, however, will continue to be liable for the entire face value of their loan obligations. There will be no discount for developers.” – Can’t get blood out of a stone

    If NAMA buys assets at a ‘discount’ for say €30 billion which have a book value of €90 billion of loans and amounts lent on the balance sheet of banks. That’s €60 billion which would need to be injected into the banks to balance the ‘balance sheet’. Money doesn’t suddenly disappear it needs to pay bank liabilities to depositors and ‘professionally managed’ bond holders (which should bear risk)

    What a naive decision to take a book value of €90 billion loans at a ‘discount’ from the bank’s balance sheet. These are banks assets matched by liabilities, assume even a write down of 50% (conservative based on value write downs in commercial property in Ireland and internationally), that’s €45 billion ‘gap’ which needs to be bridged in order to ‘balance the books’ and not default on the liabilities of the banks guaranteed at the end of September. What a monumental naive decision by a badly advised Minister for Finance.

    “…offering any serious analysis.”

    AIB and BOI are both worth less than € 2 billion on the market (believe there is no ‘capital’ left in these banks). Why not recapitalise, even compensate shareholders and then go about setting up ‘good’ bank(s) to provide the credit to businesses and individuals. €50 million Enterprise Stabilisation Fund for 100 companies with a shrinking GDP and no opportunity to borrow more debt is not enough.

    The only alternative is to ‘ring fence’ billions to promote indigenous businesses, incentivise through lower taxes, thereby creating income from abroad rather than borrowing 20% of government spend.

    We need a plan to generate economic activity by creating employment and demand for goods/services and commercial/residential property where supply outstrips demand

    We don’t have the lever of devaluing our currency to increase competitiveness of exports and comparative costs internationally for operating UK and US multinationals in Ireland.

    Increasing costs (taxes) reduces volume of sales (taxes). It seems the government are badly advised again by people sheltered from the real world….who are these ‘informed economic commentators’?

    The ‘elephant in the corner’ is the EURO strength against pound and dollar (indigenous companies going wallop as can’t export to UK/US, losing MNCs and retail/ wholesale purchases going North)!

    • Tim

      Johnny Dunne,

      Thank you for this excellent, analytical piece.

      Would you consider, please, sending it to this link:


      … and let’s see if it gets published? It certainly SHOULD, for all our sakes.

    • jim

      Well worked contribution there Johnny D.as usual.You must be ready to climb the walls waiting for some sort of meaningfull policies to help SME’s etc….It’s like “waiting for Godot” waiting for these clowns to run out of Advisors,Comittee’s,Reports,etc and put something on the damn table for Buisness’s to work with.

    • wills

      triple AAA rating

    • Deco

      Johnny Dunne – thanks for the Link.
      Clearly the author is deluded. Which is what I have been suspecting for months based on budget 1.0 and also budget 2.0 for 2009.
      I reject any suggestion that NAMA is a bailout for developers. The agency will acquire loans at an appropriate discount from the face value of the loans held on the banks’ balance sheets. Developers whose loans are transferred to NAMA, however, will continue to be liable for the entire face value of their loan obligations. There will be no discount for developers.
      Of course Lenihan has been forced into this position by David. So David – you have effectively decided government policy. Now Lenihan has committed himself in the largest selling daily newsprint to be extremely tough on the developers. This is a worthy achievement.

      Then the Minister makes the following comment:
      I suspect Mr McWilliams is living up to his reputation for swimming against the tide, rather than offering any serious analysis.

      Minister Lenihan, I have followed David McWilliams advice and lived a very simple life. He informed us that the future was going to be tough. That the national finances were in a precarious state. My future is far more secure as a result. Many on this board have done likewise. Mr. McWilliams is well versed in Economics. Minister, you have offered no serious analysis in your peice. Mr McWilliams offers it ever time he discusses economics. He is not a baker attempting to fix a car. McWilliams has been right concerning the value of Irish property.

      Finally an observation concerning the cartoon and the flag flying the slogan “Go with the flow”. My response, based on years listening to such consensual BS is reply No effin way. The endemnic stupidity of mainstream Irish culture for the last ten years came with the chorus ‘go with the flow’. Those who dissented or disagreed were shunned by the establishment and by a large segment of the population. Noel Browne called his autobiography against the tide, on the basis of the strength of the entrenched forces holding back his reforms. But there will be streets named after Noel Browne.

      It is best to swim against the flow in Ireland. The current state of affairs is clear evidence that those who dissent are looking after their own self-interest in a more responsible manner, and are doing a real favour to the deluded in our society. To hell with ‘go with the flow’ – the Minister should that to the fools who spent years doing it and are ruined now. The rest of us wised up a long time ago. What about the flow of young people leaving the country because it is banjaxed ???

      • wills

        I perceive this attacking letter on David as a warning sign been sent
        to him to shut him up,.. I did post yesterday David’s decision to go Public
        in such a fashion a brave brave step into the breech, and I for one
        am with david all the way,…

        Triple AAA rating postwise

  46. Aidan

    NAMA 90 Billion – Discount = Who Knows + Future Value = ?????????????
    IMF est of 24 Billion + Future Bank Profits = Good Deal for Taxpayers + Future sale of banks = ????????????

    • Aidan

      Its only a few people at the top who have run there banks into the ground that need to get there cumuppance Now repace NAMA with CAB and watch the sparks fly.

  47. Tim

    BTW, Folks,

    Since the Minister for Finance is so interested in refuting DMcW’s views in the Indo, wouldn’t it be interesting if someone taught him how to use a computer and he decided to arrive here and refute the excellent contributions made by so many of you?


  48. jim

    Linehan reckons that David is “swimming against the tide” and on this occasion He’s correct. I will expand what I mean by saying that the tide for FF and the Bankers et al is on the way out and David is swimming back towards the shore. David will be on dry land sitting on the ancient rocks of Dun Aengus watching while these other bufoons will join the rest of the flotsam and jetsom lost at sea in the murkey International waters of the North Atlantic waiting for Obama’s American fleet for Rescue.Linehan should forget about pandering to the Rating’s Agencies,International Investors,etc. and see that His saviour is staring Him straight in the face.Europe …….

  49. jim

    Two little snippets which might prove interesting…1. rep from TSB informs a customer of good standing that personal loans will only be issued to clients earning over 30k.( remind me again how many low paid were attempting to bail out at present???)….2.Close friend of mine working for a Bank down in Aussie tells me that a decision to writedown all of a Financial Product rated AAA as totally worthless has been taken.Is this a first for Banking and two more fingers at the rating agencies.450 million give or take a few bob was the writedown.

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