May 3, 2009

You have been warned!

Posted in Irish Economy · 180 comments ·

Reputations are earned, not bequeathed, and a crisis tends to bring that to the fore. In sport, teams gain a name for a certain style or temperament, not because they want to be thought of that way, but because they have proved themselves. Similarly, in a financial crisis, the reputations of individuals companies and countries are tested. The Irish banks and the state have failed miserably on both scores.

But it doesn’t stop there. The Irish Central Bank did not give the faintest inkling that this meltdown would occur; nor did the Department of Finance. We can overlook the financial sector economists who continued to cheerlead, because that is part of their job.

But in the economics and finance game, there are still some outfits that have failed miserably, and are still being taken seriously. This takes some chutzpah on their part.

For example, a few weeks ago, there was consternation about the downgrading of Ireland by Standard & Poor’s, the rating agency. There were headlines about the great tragedy of being regarded badly by such a famed international institution as S&P.

Were not these the same guys who gave AAA rating to sub-prime products? If they were happy to rate toxic debt as ‘‘AAA’’, what in God’s name do they know about anything? Why does anyone take S&P – or indeed any of the ratings agencies – seriously?

And what of our own Economic and Social Research Institute? This week, the ESRI came out with a dramatic forecast of 17 per cent unemployment and a prediction that Ireland would experience the worst recession in the western world. The Institute went on to opine that Ireland would have mass emigration and something akin to a collapse in the economy.

Its predictions were listened to as if it had some great insight. The papers led with this story, as did the RTE News at 6 and 9, plus the radio shows. Editorials were based on its content.

Why? I am not saying that it is wrong – I am just pointing out the fact that, like the S&P, the ESRI has got little right so far on this boom/bust cycle. Its own spin is that it has been on top on the situation, but the reality is quite different.

Less than a year ago – just think about that: a mere 12 months ago – the ESRI released a forecast for the Irish economy, predicting that for the next seven years, Ireland would ‘‘grow by 3.75 per cent on average per annum’’. It went on to say that, after a blip in 2009, ‘‘the economy would continue to outperform its EU neighbours’’. Consistently since 2005, it said that a ‘‘soft landing’’ in the property market was the most likely outcome, with a collapse a ‘‘possibility’’ . . .but just that.

The august ESRI with dozens of economists on its payroll, devoted much time to discussing the importance of demographics underpinning the economy. Who remembers that argument?

This partly government-funded independent research institute also went on to ally itself with the lender TSB to give monthly updates on the housing market.

Again, as late as last year, this particular ESRI publication was talking about a ‘‘soft landing’’. In its worst-case scenario for the Irish economy, the Institute forecast that the economy would ‘‘under perform by an average of 0.7 per cent per year’’!

How’s that for a volte-face? According to the ESRI, this time last year there was a possibility of a modest underperformance and now we face the worst downturn since the Great Depression. What are we to think?

To put this week’s dismal forecast in context, let’s see more of what the experts in their new building in the docklands said last year: ‘‘Even if current difficulties prove more severe than anticipated, the economy is resilient.” Really?

‘‘The prospect of continuing medium term growth above the EU average is underpinned by favourable trends in labour supply and in productivity. While unemployment is currently rising, with a flexible labour market there should be a return to full employment. Despite current difficulties in building and construction, the economy needs continuing substantial investment in housing over the coming decade.”

Yet their latest report is regarded as gospel. This time last year, following the demise of Bear Stearns, when it was known that the Irish banks had borrowed enormously abroad to finance the boom, when the credit crunch had been ongoing for at least eight months, and when the price of houses was regarded by many punters as a joke, the ERSI claimed that the Irish economy needed more houses!

Perhaps the reason the ESRI is so revered unquestioningly is because we in Ireland still have some misguided idea that the ‘‘expert’’ knows more than the average man. Maybe the lesson of the great Irish bust is that reputations have to be earned: don’t accept anything just because it is presented in a traditional form (which, by the way, includes this column). The problem with putting too much store in the forecasts of those who have been lamentably off-target is that we will learn nothing from this experience. In the new Irish world, which emerges from this crisis, unearned reputations should count for nothing. We need to change our mindset completely.

We have seen that institutions like AIB or Bank Of Ireland have failed their shareholders drastically. We have seen how S&P has given toxic waste AAA ratings, thus enticing people into investing. And we have seen how the ESRI has feet of clay like everyone else. Maybe a little bit of humililty might be in order from the professors of the Docklands Poly?

The bankers and politicians are taking a hammering for their mistakes and their hubris; maybe the same could be doled out to all those who, when it is easy to do so, like now, are merely confirming people’s worst suspicions but, when it was hard and unpopular, kept their mouths shut.

In the ESRI’s case, like the Central Bank and the Department of Finance, whether this failure was because they couldn’t see it coming or because they wouldn’t see it coming, we can never know.

  1. Malcolm McClure

    Quotation from ESRI report: “The institute said it expects the average number of jobs in the economy to fall by 187,300 this year as against last year. It expects to see the number of people unemployed averaging 292,200 this year, making for an average unemployment rate of 13.2 per cent. It also believes a further 102,800 jobs will be lost next year pushing the unemployment rate to 16.8 per cent.”

    Any time you read a forecast quoted to four significant figures or even three significant figures, you can be absolutely certain that the forecasters are complete bluffers, who haven’t a clue what they are talking about.

    If 292,200 average were quoted as 290,000 or better still, 300,000– when you could infer it would be somewhere between 250,000 and 350,000– you could be equally certain that the forecaster was treating his numbers with respect and not trying to pull the wool over people’s eyes.

    Quoting four significant figures for an average forecast is plain daft.

    • Spot on Malcolm. It’s the same kind of analysis you get from first year stats students who haven’t figured out that extrapolating a graph and reading off numbers doesn’t constitute a well-reasoned prediction. Unfortunately, such idiocy seems to be the order of the day.

    • Deco

      The ESRI are about as effective as every other PAYE taxpayer funded quango. They produce ‘results’ which are give ‘official’ status. Their output is of no relevance to the general public-because it is consistently inaccurate.

      But they boys of the ESRI get paid fine salaries and are comfortable and their own economic predicament is resolved.

      Eddie Hobbs is barking away on the radio telling us that in six months time that they state will have no money to pay it’s employees. Maybe a decision will be made concerning all of Ditherer’s quangos. Though I strongly suspect that the quangos have realised their vulnerability are are flocking to Greens to arrange ‘protection’ (this involves employing a few Greens-and getting a commitment to retain their state budget).

      But if Hobbs is correct, then we will be looking for quangos to disband. I think it is fair to say the ESRI have failed over the last ten years. Their comprehension of economics let them down. This is a common theme. It is always the core activity that lets down a quango. Like the HSE was supposed to make the health service efficient.

      I cannot think of why the ESRI should be retained. There are services we need. Essential. And there are services that are being paid for by the public, which are of questionable value. Mostly the ESRI seem to function as a kind of a prop for the government’s economic fuddy-duddy gigantuan policies.

      I think that we will have to perform a rationalisation of the various economists and economics institutes living off the taxpayer. There are too many of them. And the output is atrocious.

      A good place to start would be to close down the various economics sections in the banks that covered by the bankers bailout. That would see Dan McLaughlin, Austin Hughes, having to deal with the real world and leave the comfortable existenc of living off the state. And we know from previous announcements from Dan, concerning Irish Ferries, that he is not one to tolerate overpaid or lazy people holding down jobs when others could do the same work for less money and to a higher standard.

      Scrap the ESRI. We knew the economy was in a recession 12 months before the ESRI decided that Ireland was ‘officially in recession’. The ESRI position was that the boom was still in progress until after the ballot boxes were closed for the Lisbon Referendum. But everybody knew the ESRI were holding the truth.
      The ESRI have shown that they can be controlled by the front bench of FF, or that they are can find ways of supporting the government’s PR effort.

      It was an Ahernesque manouvre – a trick being played on a supposedly sheepish electorate to maximize the feel good factor and get people to not think about the detail. Like most Ahernesque ploys, it was a loaded insult to the citizens’ intelligence, it was founded on daftness, – and it backfired. Spectacularly.

      And now we have the ESRI trying desperately to sell it’s usefulness to a public who are sick of lying economists, their projections, their agendas and the vested interests who benefit from this nonsense. The ESRI is trying to catch and re-establish credibility. And we can tell.

  2. G

    Interesting article David, you are beginning to punch a little harder.

    All these jokers with titles and comfortable salaries have destroyed the Irish Republic and yet many remain in the shadows. Every one knows economists aren’t worth a dam, the line about Roosevelt looking for a one armed economist because he tired of those who said ‘well Mr President, on the one hand…………’ – those guys and dolls are like the old shaman’s, convinced of their opinions, which are built on sand (or clay)’, anyone with half a brain knows never to take their forecasts seriously (they take themselves very seriously), but when they influence policy, that is a different thing, because that effects people. The dismal science indeed.

    Regardless of Irish and global machinations among the business and political elite, I can’t see us avoiding the inevitable. Enjoy the clip.

    I’m heading to China in August, hopefully something will come out of it, it’s a big world, Ireland is an insignificant player in many respects and it seems, a grubby one when it comes to Finance and the ‘deal’ After Anglo their word ain’t worth tuppence. In 2004, I wrote elsewhere, quoting Gustav Stressman (Finance Minister during the Weimar Republic) that ‘Ireland was dancing on the edge of an economic volcano’, well, it’s a bit worse than that now.

    Unemployment at 382,000 and rising is quite a figure, 500,000 by the end of the year (especially with students graduating in the summer) is going to be a disaster for the State. It seems that once again decisions made by a few have had disastrous consequences for the many – such an own goal, and unnecessary, if only the most basic of warnings had been heeded. No, those guys were told to commit a collective harri kari.

    Contrary to what many of the self serving pudits say repeatedly that ‘we all bought in’ – I didn’t – no house, no debt, my ‘gut’ guided me all the way, just wish there was something I could do for the country I love and my compatriots who are suffering anguish and despair as I write this few words – one, short life and now so many have to spend it sweating over finances and debts to some bloody bank, that traded recklessly and had to bailed out by the same people it is now zoning in on, if that doesn’t produce a social revolution what will?

    But there is no major movement emerging, no alternative political party, the Irish just seem to take it like th lash of old. A female friend from Trinidad and Tobago asks me ‘where are the men? Where are those who are prepared to stand up and be counted? – I have no answer for her. Maybe the levels of indebtedness has their heads down hoping the storm will blow over, it won’t, it’s only beginning.

    The ‘experts’ with their self serving talk of soft landings and now ‘green shoots’, the elites across the world all use the same language as they are very concerned that a 1798 will occur, Greece and some Eastern European countries are on the edge – serious trouble coming.

    The guys at the top couldn’t see beyond the end of quarter profits, the greedy game, one way or another, they sold their souls not for English gold but for the dollar/euro. Those ‘in property’ like the hated landlord of old, made their money off the backs of other people’s labour, it should never have been alllowed in the first place, an abode is a right not a commodity. I would be ashamed of myself if I thought I was involved in such a practice, charging rent and watching my ‘asset’ appreciate, is that it???? Woopie do!!! Great contribution to humanity, way to go.

    Pathetic, but an epoch changing period, out of the chaos that is yet to come, a new Ireland may emerge, too early to tell. We live in hope.

    • Deco

      G – best of luck in China. Try and learn as much as possible. And do not do the usual Irish thing of ‘proud to be ….etc’. In China it has no significance, and will be readily seen for the type of intellectual subprime that it really is. My advice – be patient when listening, be observant, learn to be quiet, be respectful, endure whatever hardships you face, be direct, and be thoughtful.

      China is a country that is committed to one thing – winning. In Ireland the system is committed to preserving the system, even if it drags the entire society into the drain. A bit like Ancient Rome, our culture has descended to bread and Circuses. When there is less bread, we are told to spend more time in the Circuses. The people are dumbed down in the so-called free world. And this is the crux that needs to be changed.

      It seems that the vested interests proclaim Ireland as a knowledge economy. But the entire society is made live within the constraints of endemnic and systematic lying and coverups. This is the great hypocrisy of modern liberal Ireland. You can do whatever you like as long as you have a conscience that is open to it. The disconnect between knowledge, and distortion of knowledge, needs to be pulled open and resolved. This requires an intellectual revolution in the minds of the citizens. This will make us a knowledge society.

      Harry Truman is accredited with the quotation “Give me a one handed economist…”.

      Another Truman quotation was “the buck stops here”. He had it on his desk when he was US President. Unfortunately none of the clowns in the Kildare Street circus seem to grasp this concept.

      But if one citizen decides to be responsible for a small bit of the change that will fix the problem, then that is progress. One. Then another. Then another. And then civil society will get rebuilt again.

      • wills

        head on the nail PART 2

      • G

        @ Deco

        Appreciate your comments and detailed posts – insightful and infromed.

        I take on baord what you have said about China, I am currently taking ‘briefing lessons’ three times a week from a Chinese student, so as to get the inside track. I am reading all

  3. Tim

    I agree with Malcolm and G here.

    Ah, yes! The “experts”! Every time I hear or read that word, I cringe. Apart from teaching, I work in the IT sector; there are many “experts” in this game: WARNING: if someone in the IT sector refers to themselves as an “expert”, do NOT let them touch your computers. Always apply Jurgen Habermas’ “hermeneutic of suspiscion” to everything you are told, but especially in IT. The self-proclaimed “expert” is a cowboy. I think it was Aristotle that said “The wisest man is he who, first, admits his own ignorance”.

    We saw Peter Bacon last week, on Primetime and we saw how that “expert” fared under questioning about NAMA.

    Anyone who can do a historical search on the ownership of websites will know that the first owner of in the late ’90s was not instructed by Richard Burrows. This “expert”, as the chair of one of the biggest banks in Ireland, had not himself, nor had he the wit to appoint a sub-ordinate with the acumen to even register his banks name as a dot com.

    Similar issue in AIB.

    But our government seems to listen to these “experts”.

    Crucially, government appears to enact policy according to what these “experts” tell them to do: remember that it was Sean Fitzpatrick of Anglo-Irish Bank, that told the government to remove the universal right to medical cards for the over-seventies?

    A banker DICTATING government policy? Need I say more?

    Folks, watch out for “experts”.

    • Robert


      I agree with you 100% regarding Bacon on Prime Time recently.

      Watched it myself and my overall impression was that he came across as a total bluffer.

      He couldn’t even handle questions from Miriam O’Callaghan – the same interviewer who recently asked a FF minister if he “would like to start again”. . . . . The dopes in RTE played it over the airways!!

      • Tim

        Robert, yes; but Miriam is smart enough that she may have been giving him the “soft-landing” that the bank-paid-economists were promising us for two years: soft landing in something deep and smelly!

        She gave him enough rope to hang himself…… maybe.

      • Deco

        Robert – in case you don’t know, Miriam is pro-FF, her brother was an FF candidate the other year. She did give some hard interviews to FF politicians, but she always talked up the economy, as did most people in RTE and the print media for most of the past two decades.

        And there was a reason why – just look at what happened to those that dissented-George Lee, David McW, Eddie Hobbs, etc..they got less airtime.

  4. shtove

    The point about the lunacy of the rating agencies, like S&P, is that they were paid by the debt issuers to rate the debt issues.

    No hard to see why that process went loop-the-loop.

    The same point does not apply to their rating of gubmint debt. Mind you, they are licensed by Obama’s gubmint …

    Lots of interesting points in the article, but I’m straining to see the consistency.

    I’d like DMcW to post his “thesis” in a side bar, or a principled outlook – some yardstick by which to measure the coherence of his views.

    • jim

      The rating agencies were only interested in their own commissions.They did’nt even understand the risk formula’s employed on Wall St….Tranching CDO’s etc using a formula that contained a so called magic number that was derived from Credit default swaps going back less than 10 years when property prices were always rising.Give me a break for jasus sake.A bunch of lazy money grabbing chancers.They would sell a model for risk to any un-suspecting fool.When it comes to risk analysis there’s no shortcuts or magic formulas,its graft and accurate information and caution,peoples livelihoods depend on you getting it right.

  5. jim

    At the end of the day David it all boils down to stakeholders and what their losses will be as a result of making wrong calls.None of the people you mention will loose their jobs or suffer any loss ,at least for now….I read where the Dept.of Finance has something like 40 people with degrees in Economics,1 Ph.D,God knows how many Accountants etc(staff of 614).and yet the level of accurate information is awfull.There must be something fundamentally wrong with its structures when that many Educated people cannot produce the type of information that the Economy depends on.Apart from accurate information,it is just maddening to the outside observer as to how long it takes to formulate even the most basic piece of work.When you consider some of the blunders during the budget,when the Government could’nt even say whether some of the figures were gross or net.As I said the structures must be all arseway’s.No private sector Buisness could carry that amount of backroom staff and make a profit ,if they were making decisions based on unsound information….Im not sure if all sort’s of old Political games are not being played out accross these Depts. cutehoor promotions,say nothing and after a while say nothing again type of mentality.Permanent Pensionable stopovers and general drop in centres for the Habitually bewildered.Taking ownership of a project and accepting responsibility for outcomes seems to be a non-existent concept.Every effort seems to lead to a fob off of responsibility to someone else in the best traditions of office politics.Even the language used in publications and elsewhere tends to be so vague that it either includes everything or nothing depending on how you read it.From my experience when you meet structures like these in other Countries,you tend to give them a miss,and generally just ask “who do I give the brown envelope to” to get things done.Bananna structures that’s what they are,controlled by Bananna Politiicans,in a Bananna Country….Its just embarrassing, Im getting jokes thrown at Me all the time lately.How do you explain this shit to strangers.Will somebody with some moral authority please step forward and take control,while there’s still time.

  6. Zombie Banker Blues : More Than Ever

    Scientists, troops and auditors arrive from abroad to investigate the total collapse of a small Republic.

    They’re looking for ‘Fingers’. His actions had hastened the spiral of the country into a bottomless liquidity trap. They want to interrogate him.

    Meanwhile an anonymous auditor, hiding out in one of the few sanctuaries which remain, spills the beans on the inhuman practices which led to the collapse.

  7. The Chinese say a fish rots from the head down and issues of accountability and reform all point to the political system.

    If there is no change in the status quo at the top, then it will remain business as usual elsewhere.

    It’s interesting in the Oireachtas, that today’s public holiday is a recent one but the politicians follow the “tradition” of taking Tuesday off as well.

    It’s easy to see how revolutions are triggered and sadly, it may well take rioting in the streets to get change.

    As to alternative parties, the problem is that you can get someone like Declan Ganley, aching to be a European politician and voters may never know what he really stands for.

    • G

      I’m beginning to have a clearer understanding of 1930s Germany – inept government, ruinous business elite who have no humility and lie at every turn (‘banks are adequately capitalised’ – remember that canard) massive public debt, rapidly rising unemployment, rise in social tensions and crime, absence of hope……………………..

  8. paddythepig

    Here’s an article with a very relevant theme. It highlights that many people will need to reinvent themselves during the recession, in order to be employable. They will have to find something productive to do, in order to survive.

    This has huge implications for people all over Ireland, who are finding out that their career prospects were built on a foundation of hot air.

    What is the best way to help people re-invent themselves? The Ireland of 2006 is gone, and is never coming back.

    How would the ESRI boys re-invent themselves, if their bluff is called?


    • Paddy,

      Declare all previous positions “inoperative” à la Nixon’s press secretary Ron Ziegler or like all professional pundits, polish the brass neck and make bold new predictions!

      In fairness as we Irish say, in contrast with the guys at the ESRI, what should be the penance for the plonkers at the Central Bank – - impotently wagging fingers while refusing to use the tools, that they still had in the box.

      They should be frogmarched through the streets wearing sandwich boards emblazoned with RESILIENT and SHOCK ABSORPTION CAPACITY.

      • Deco

        Ah yeah…..and what about Neary and IFRSA ?…a complete waste of space.

        Let the markets regulate the banks. That means no more socialism for the rich. No more bailouts. Let the shareholders launch their civil law suits against the banks for not providing accurate information in their account.

        I also recommend that Dermot Desmond sells his AIB shares and starts a new bank with headquarters in some small midlands village. Just for the productive export sector. Nothing to do with property. Nothing to do with credit cards, holiday loans, etc…For people who have redundancies and who want to start their own businesses.
        And let this new bank rip open the old banks and result in the old banks losing all their useless layers of overpaid incompentent managers.

        If the CBoI did anything to dampen (excessive) consumer confidence they would have bankers and politicians hammering them faster than you could say “Digout”. Look what happened to McCreevy when he tried to take money out of the economy and encourage people to save. The Irish Labour Party (of all entities) went absolutely ballistic and claimed that he was slowing down growth whilst depriving the state of vital resources. RTE and the Irish Times went completely ape. Eventually ditherer sent McCreevy out of the way. Even insiders in powerful positions who were unafraid at challenging the established interests got lambasted and sent packing. Incidentally IBEC were also furious about McCreevy. And IBEC are the lobby group for market-rigging in Ireland.

    • wills

      WARNING: Do not re – invent yourself and leave the door open for a POnzi parasite to come and visit.

    • wills

      ‘Overcapacity’ is a classic consequence of a POzni economy/racket.

    • Deco

      Paddy – the ESRI are too lazy to re-invent themselves.

      They are trying to reinvent their reputation. This is standard practice with a failed institution in Ireland. Never fix the underlying problem, when you can do a PR makeover, get media support/endorsement, and get away with it.

      We can change Ireland, by not being fooled by this superficial trickery. By finding out the truth, by analyzing it, and by understanding what is really happening. And then by explaining it to our neighbours and friends. It takes time. But it is the only way.

      • wills

        head on the nail PART 3

        • Deco

          Wills thank you for your encouragement. All the contributors make very salient points. This keeps this site alive. The quality of the thinking and the direct honest of the contributors.

          We get that from David McW !!

      • paddythepig

        “The ESRI are too lazy to re-invent themselves”

        I agree. They have it way too easy ; no accountability ; collectively, they have the neck of a giraffe.

        Given the scale of this crisis though, I think by the end of it, we will see people of this ilk falling on their swords, and being forced to re-invent themselves. Middle-men and chin-scratchers better watch out ; your lack of productivity is there for all to see. The clock ticks, the guillotine awaits.

        Personally, I see it as an essential pre-requisite to recovery.

        My friends tells me “It’ll never happen”. We’ll see.



    How many clowns from the ESRI,Central Bank etc have been fired?.Their forecasts were hopeless (as bad as dopey Dan Mc Laughlin)-anybody who observed the Lawson boom and bust could surely see the parallels between the two booms were very similar.Without exiting the Euro, how will the economy start to grow?.It is an impossibility, that nobody ,apart from Damien Kiberd has addressed.The Swedes and Finns used devaluation as a tool in sorting out their mess-Ireland can’t.

  10. Johnny Dunne

    “In the ESRI’s case, like the Central Bank and the Department of Finance, whether this failure was because they couldn’t see it coming or because they wouldn’t see it coming, we can never know.”
    I think it is a case of “they wouldn’t see it coming” or didn’t want to be the bearers of bad news in case the ‘messenger was shot’.

    David Doyle, the Secretary General of the Department of Finance been since 2001 said publically this week “he has reputation as a dog that does ‘bark and bite”, sounds like his department need some guide dogs to help this see beyond a few month….

    Here is an article from Sunday’s Business Post referring to latest exchequer figures – “Deficit soars to almost €6 billion” for 4 months!

    An analysis which would be interesting to compare later this year…

    “The tax take in April was down almost 25 per cent compared to April last year, leaving the government with an exchequer deficit of almost €6 billion for the first four months of the year.”

    Does this mean there is a risk of a €18 million+ deficit for the ’12 month’ year instead of their “revised estimates forecast that this deficit will rise to close to €13 billion by the end of the year” Does anyone believe the deficit will be ‘only’ €7 billion for next 8 months ?

    “Figures to be published this week will show that the government raised €1.6 billion in tax revenues in April”

    If you multiply this figure by 12 you get less than €20 billion in tax take. This is a long way off current forecasts of €34 billion tax for the year down from €40 billion in 2008 and €47 billion in 2007. I know there is seasonal variations in tax revenue but when you are moving in a downward spiral this needs to be considered also.

    “According to new estimates by the Department of Finance, the state has spent €15.9 billion in the first four months of the year, while it has recovered just €10.1 billion in tax. This leaves the state with an exchequer deficit of €5.8 billion from the first four months.”

    Again annualising these figures shows €48 billion in spend versus €30 billion in tax revenue – €18 billion. Which putting into perspective is more than ALL of our export sales from ‘Indigenous’ Irish owned companies. €18 billion is about the same as ALL the tax collected last year from Income AND Corporation tax – think about it.

    Now why can’t any of these departments come up with more savings than a few million from special needs teachers etc — there’s lot’s of waste but who will be the ‘whistle blowers’ and catalyst for change ?

    “The revised estimates predict the government will raise €34.4 billion this year and spend €47.3 billion. The figures take into account the tax hikes and spending cut backs in the supplementary budget last month.” – €34 billion for the year but €1.6 billion in April – how ?

    My prediction unfortunately is much less than €30 billion in tax revenue and more than €50 billion in spend because the badly advised policies are being put in place to increase tax, reduce economic activity while increasing government spend in the major departments where there is little management control and accountability – a Finance Controller in a SME would be fired by now!

    • wills

      Johnny: My answer to question is the following…. A very large % bought into the POnzi Rep. thus a web of interconnecting loyalties and blood pacts in a tightly weaved social structure of the likes on an island give the powers at be very very wriggle room to make things happen to save the real economy when the POnzi variant strain die’s.

  11. wills

    David: B U L L S E Y E

    The poltical economy is presently geared to been a ‘POnzi money making machine’.

    Certain quarter’s are buying into the ‘get-rich-quick’ mutation.

    Underlying the POnzi mutation one will find real economy professionalism fighting the good fight trying to keep
    the real economy alive against the POnzi mutation kicking out to try and stay alive.

    Those that rendered over their services and labours to the POnzi mutation are fighting for their survival. Their logic is, law of the jungle, every man for himself. Hence, the realtiy we are all faced with
    detailed in your pugnacious article.

    So what we have is POnzi propaganda machinations at work as the vested interests eye up where they are positioning their interests
    next while the POnzi property mutation variant burns collapses inward’s.

    I do not find it surprising the CB, ERSI, never forewarned the impending collapse. Why.? well perhaps interests lay somewhere else,..?! One never cries run for the lifeboats when the boat is sinking
    cos the 100 meter yard dash for the exit will log jam.

    Finally at last the penny may be dropping and people seeing with their own eye’s that a section of our community who are wearing
    badges of authority are pirates who looted the real economy system
    and are now buying time to ensure the loot is stashed in a sfe location and a get – away is ready to go.

    • liam


      Quick question: whats a “POnzi” scheme (as opposed to a regular ‘Ponzi’ scheme)?

      • wills

        Liam: Pretty much no difference. They both define a perversion of our political – economy by a bunch of greedy ingrates who generally game it by lying and cheating the more vulnerable and easily led of our community.

  12. Many people would agree that lack of ethics was a fundamental factor in the implosion of banking services in Western economies. Investment commitments imply the need for trust that a desired outcome will be attained. Collateral holdings and access to various KPI’s of progress are a good adjunct but not an adequate substitute for trust, as we now see.

    Discarding arrogance and selfishness whilst embracing honesty, justice, transparency, a service mentality and respect for others is a matter of self-interest in military life, as it profoundly affects peoples decisions about whom to trust in combat. Other highly-ordered organisations have historically espoused similar principles, monastic and pilgrim communities for example. At the risk of sounding sanctimonious, I believe that as the depression deepens the stark simplicity of the choice facing leaders between being trustworthy or being essentially self-serving will become a matter of organisational survival. This is particularly true for Irish services organisations including government and public sector. They lack both the resiliency and the credibility to survive the depression the country faces unless they reform. This will become apparent through increasing irrelevance of untrustworthy organisations. Expect businesses to turn to the black economy and people to turn to self-organising networks (Bizcamp etc), barter and communities of practice to find credible information and services worth paying for.

    If I am right those Irish organisations who still have the capacity to make this evolution and redeem themselves in the eyes of those they purport to serve, will try and do so. Those who fail to do so will eventually perish – even those in protected monopolies.

  13. My understanding of the unemployment situation is that we have around 400,000 on the live register, with about 200,000 of these losing their jobs i the past 12 months (official 96% increase). We’ve lost an additional 50,000 immigrants (at least) over the past 12 months due to the down turn.

    Effectively we’ve seen a quarter of a million jobs lost. Our workforce is around 2,000,000. In real terms we’re heading towards around 25% unemployment. If the trend of 2008 continues we’ll see a further 250k on the live register. In real terms, 1/3 of the potential work force would be unemployed. The ESRI would say that a large portion of the jobs lost are construction jobs and the downward trend won’t continue at the same pace. What if they’re wrong? I know many SME owners who feel they’ll have to close by the end of 09 if there’s not an upturn. They’re borrowing to pay the rent and staff.

    According to the IDA, 36% of our workforce is under 25 years of age. Young people whose jobs are under pressure or who’ve lost their jobs generally emigrate. Those who have jobs but fear high taxation look to emigrate also. We’re likely to lose the young people best placed to help our economy recover and to be stuck with those with construction related skills where there’s little worldwide demand. Unfortunately, I haven’t manged to find any metrics of age versus unemployment but I’m sure they exist.

    Our GDP contraction for 09 as predicted by the ESRI will be 8.3%. Let’s be pessimistic and say 10%. Their predictions for next year are a laughable 1.1% drop. What if the 1.1% is as ridiculous as it sounds? What if it’s a further 10% with more MNC’s leaving and further bankruptcies of irish retailers and traders. Why do we persist with obviously optimistic predictions?

    It’s possible that at this point in 2010 we’ll have 1/3 unemployment in real terms, our national debt will match or exceed our GDP and our income taxes will have to skyrocket to make up the difference between social welfare payments and reduced tax take. We’re already paying a huge amount of tax, taking the cumulative effect of direct and indirect taxes. We have welfare state costs, without the welfare.

    This doesn’t require another financial disaster, merely the extrapolation of a current trend based on an economy that’s been overboiled for 5 years past the point at which we had become conspicuously uncompetitive. Now, I’ve probably misquoted figures here but it appears clear from most commentators that cutting costs alone won’t solve our problems.

    Cutting 10% of the public sector workforce won’t do it for example. We’ll just pass them onto the live register. There, they’ll receive the dole, mortgage assistance and children’s allowance. If the mortgage assistance doesn’t cover the payments then the house gets repossessed. This merely crystalises the loss, which we as taxpayers have guaranteed. The whole country is “vertically integrated” due to state guarantees. We own all the losses. We’re angry with eachother, public-sector and private sector yet this is futility itself. We’re all going to pay. Public sector redundancies only make sense if they involve payoffs which remove entitlement of former public sector workers to claim the dole for a period. We probably need a certain amount of emigration but how do we keep those we want?

    We need to attract external investment from foreign companies who wish to setup here and for our own indigenous industry. We also need to find a few Irish companies and R&D organisations and back them to the hilt. We’re talking up a storm about cuts and tax hikes but the Tanaiste is silent on ANY positive DETE move to improve the prognosis. I think the time is right for a special “Knowledge Industry” tax rate which is extremely low, say 5%. We also need a matched funding programme for foreign investment in indigenous companies. Try getting money if you’re a tech-startup in Ireland. I’ve been informed that the EU still has an appetite to invest money in R&D and industrial development projects in Ireland. However, we’re not addressing this. Our instruments of growth as overseen by the DETE are blunt.

    Our economic prognosis looks bleak. I think most people’s objection to bearing the brunt of this in tax hikes is that it looks like there’s little hope for the future. Many young-ish (30 something) people I know are looking for jobs elsewhere. Some have actually found jobs in Canada, New Zealand, Australia and even the US. WIthout hope, there’s little to hold them here. By the end of 2009 I may join them, with reluctance but with hope. A small word that makes progress possible.

    • Johnny Dunne

      Shane, Totally agree with your analysis of the huge increase in ‘real’ unemployment numbers and the impact on emigration.

      What’s the real number employed now – if it was 2.1 million at the ‘height’ then it could be as low as 1.8 million now? Recall Brian Cowen quoting a low figure recently. Point is at the current rate will have over 500k unemployed and say 1.5 million woking by 2010. The rest will have emigrated out of necessity and opportunity

    • G

      are these figures correct? The 1 in 3 unemployed?

    • paddythepig


      Very good post. Your second last paragraph contains a valuable seed for recovery.

      We must promote innovation at all costs.

      Problem is, this is Ireland. The events of the past 10 years have proven that true innovation is not valued or understood by the Irish establishment ; the get-rich-scheme and the quick-buck is more revered. Their bankrupt policies are a liability now, as potential innovators are coughing up real money for their mistakes. Maybe it will be better to take good ideas elsewhere, where they will be valued.

      Without a massive cultural change, your last paragraph may sum up the future for a lot of young Irish people with ideas.

      I hope I’m wrong.


    • Robert

      In six months time there will be the 2010 budget with Lenihan announcing further tax rises and spending cuts (especially in Health, Social Welfare & Education). This will force businesses to close and put us well beyond the 500,000 unemployed figure as 2010 dawns!

      How on Earth the ESRI comes to the conclusion that there will only be a 1.1 % drop in GDP in 2010 is beyond me? It is a completely made up figure – probably generated by the random number button on their calculator.

      This sort of nonsense continues in other sectors of the media. For instance on The Late Late Show (last friday), there was an estate agent telling the public that we hit the bottom of the property market in terms of prices and now is the time to buy. Hardly surprising that an estate agent would come to that view . . . All complete BS!

    • Deco

      Yeah the prognosis is tough. This country is going to have to drop an awful lot of bull out of it’s thinking fairly fast. And I am talking about the performance of people in the institutional state.

      To start a new business requires capital. Knowledge capital, infrastructure, and finance. And it requires a definite market. And an intelligent business plam. Finance is the hard bit in today’s climate.

      This brings us to two points.
      1) Human capital. David mentioned a mentorship of experienced business entreprenuers providing parttime consulting advice to small start up businesses. He mentioned how it is done in Argentina. Good idea. We need that here. The usefulness of FAS training courses is another issue.

      2) Finance. David also gave the example of Israel and the Isreali “infrastructure” (entirely private) for providing seed venture capital. Another excellent idea. But we will not get this until we clean up the stinking corruption in the Irish institutional state. The money does exist in Ireland. We need a “good bank” in order to make this happen. And that good bank will have to be staffed by intelligent loan appraisors and not the D4 banking methodology. (“oh, he was scrum half for Terenure, and I knew his father, really entertaining chap, we have to provide him the loan”). We need meritocratic, honest banking. Apart from that we need to regard people who live modestly as normal like they do in other countries. The Hollywood mentality in Ireland has wasted a lot of potential capital that is now urgently needed.

      And I will bring a third point.
      3) State performance. The amount of bureacracy involved in building a factory or plant in some sectors is prohibitive. The state is a prohibition on enterprise. Unless you are setting up in an Udaras na Gaeltachta area, in which can you everything you want. Only you are located beyond the beyond !! Apart from that people do not trust the state because it is racked with cronyism, and the suspicion that your business ideas will get communicated to competitors.

    • G

      Strong analysis, and agree wholeheartedly with you on the lack of financial assistance for startups, a great game was talked up, but we are not innovative, totally uncompetitive, I mean for Christ sake building houses and commercial property accounted for 40% of government tax take and a huge section of the employed, sheer lunacy……………….

      David McWilliams may indeed be right when he said that this generation may have to emigrate twice!! There are always jobs out there for qualified people, sure there is a global economic contraction, but if Ireland had pursued a more diversified and less dependant economy the story would have been very different.

      The Singaporean Finance Minister was on Al Jazeera on Sunday saying that for the first time the country had dipped into its financial reserves (which are extensive apparently) and they should weather the storm, we have no such fund apparently, money has gone offshore or down holes in different consistuencies while the Charlie McGreevy school of finance philosophy was spend it when you have it.

      Lenihan was banging on about how strong our exports are compared to others, the man is living in a dream world, again trying to talk the game up, I suppose he can’t acknowledge this is an economic Chernobyl but……………….

  14. wills

    POnzi Rep. is emptying out it’s young blood due to the threat it poses.

  15. MK1

    Hi David,

    I wouldnt throw out the baby with the bathwater.

    Yes, S&P, Moody’s, Fitch’s and other ratings agencies got things badly wrong when it came to grading the risk of sub-prime products, CDO’s, CMO’s, and other MBS’s. However, they werent totally to blame as the products in many cases were masked, obfuscated and not all the details were present. In this case the analogy is that the auditor got it wrong, and repeatedly so. The model that the product packagers exploited was a weakness in several risk assessment mathematical models which erroneously assumed that proprty values would always increase.

    Such risk modelling was not expected to be put on products which were then mis-sold for short-term gain and long-term naivety.

    So, are S&P correct about Ireland? A lot of the details that they write about in their report is correct, in fact a lot of what they wrote is in agreement with your good self. Should we believe their rating? Well, just because they got sub-prime wrong, it doesnt mean that they are getting Ireland wrong.

    David, you will know that economics is not an exact science. And that’s even for determin ing what has gone on, never mind predicting what will happen in the future in a chaatic system (mathematically) and with human intervention/interaction that cant be predicted. I dont know what I am about to buy next week never mind next month or next year! Do you?

    They are but mere economists, and one persons prediction is as good as another.


    • wills

      So many people getting so much wrong so many times and yet not getting it wrong for their bonuses, mmmmmmmm

    • paddythepig


      Your last sentence is the best justification I’ve ever read for immediately getting rid of the ESRI, and all their fellow astrologists interpreting the tea-leaves in our financial institutions.


      • Some of you may believe that most if not all economists are a waste of time but before demonising the ESRI, consider that, even the financial services economists who will now dare directly criticise public policy, such as Jim Power, will pick the easy targets. You won’t find Power criticising his own sector directly. Other economists can have their own agenda.

        At RTÉ, George Lee presented an independent position but his organisation kowtowed to the political status quo and failed to hold politicians in power, to account.

        Don’t forget that an individual who is a very good economist may in fact be a better one than “leading” economists, but because he/she does not seek to build a media profile, is unkown to the general public.

        Without wishing to question the crediantials of Alan Ahearne, would Lenihan have picked him as an adviser if he hadn’t invested in promoting himself in the media?

        Then you have economists such as Joseph Stiglitz, at an international level, and every time I come across his criticism of the Obama administration, I wonder if his reaction is because his Nemesis, Larry Summers, became a top adviser to Obama, instead of him?

        The ESRI was the creation of Ken Whitaker, as an independent institute, that is publicly funded and free of commercial influences.

        It isn’t always right but it is a lot more preferable to having clones of Dan McLaughlin and Austin Hughes.

        • paddythepig


          Podge and Rodge would do a better job than Dan or Austin. And while we’re at it, lets not forget that we have many others of equal talent to Dan and Austin – such as Ronnie the Toole and Alan McQuaid.

          The ESRI are far too comfortable in their own skin for my liking. I find the concept of a publicly funded independent thinktank to be a bit odd. The ESRI have been a complete failure for the past number of years. The dogs in the street could see a trainwreck coming, yet they couldn’t. Why?

          A lot, in my opinion, has to do with not ‘rocking the boat’ or ‘biting the hand that feeds’.

          I could countenance preserving a truly independent and courageous thinktank, which is not afraid to speak the truth, no matter how much the Taoiseach of the day might ridicule them. But the current staff would have to go. Otherwise, it’s a total sham.


          • Deco

            Yeah-true point. The ESRI seem to rarely drift from the bounds set by their political masters.
            The universities do provide independent criticism of government economic policy.

            And we also have David who informed us what was really going on inside the banks, and how they were fuelling the property ponzi scheme.

    • Malcolm McClure

      MK1: I mostly agree with your postings but I have to disagree with what you say about predictions– one person’s predictions are not as good as another, otherwise the bookies would soon go broke.

      Making responsible predictions in economics is a highly skilled business requiring a lot of experience. If the results are expressed in numbers they should have a explicit or implicit margin of error, otherwise there can be no post facto check on whether the forecaster is doing a good job.
      All predictions should be accompanied by a measure of uncertainty, either encompassing the error band of the last significant figure (my preferred method) or by using a simple triangular distribution (the standard deviation method is mostly statistical hocus pocus).

      Good forecasters will have checked the accuracy of the basic data and will have a broad but detailed knowledge of most of the key variables, based on how they have interacted in the past. They will not use sophisticated statistical models but will explain their uncertainties in language the reader can understand.

      • MK1

        Hi Malcom,

        The problem that economists have is that just like a horse race there is no deterministic outcome. The favourite is not guaranteed to win, as any betting person or indeed Racing Post ‘analyst’ knows. I agree that skills are required to predict as best on possible on all known information, but there are errors of margin and all the information is not known. Its a bit like predicting the weather for periods greater than 6 days. Chaos theory correctly surmises that without accurate input data the future output result is unknown. So it is with economic systems. They are chaotic (mathematically).

        Never underestimate a monkey, or a random computer machine, as I dont want to lambast monkeys!, at being equally as accurate as many economists and think-tanks, etc. If you look back 3 years ago, I can bet you that 99% (and maybe 5 nines?) of economists were predicting positive growth in 2009 for most of the globe. Some of the randomised machine/monkeys would have predicted negative GDP and more of them would have been right, no matter how well thought out some of these econmists were, they got it wrong!

        > If the results are expressed in numbers they should have a explicit or implicit margin of error

        Yes, they should. eg: Growth in 2019 will be 0% (+/- 100%) ! ;-)


  16. Subscribe. Sorry, that link that Tim gave me to subscribe without posting didn’t work. I will keep trying.

  17. wills

    Bloggers: Just to take up on JDunnes point on the evidence coming in that the gov in their mis-placed loyalties are sacrificing employment for quik fix solutions.,,

    An old POnzi truism comes to mind, ‘ catastrophe for workers is a catastrophe averted for bankers and corporations and elites.’

    Must bear one thing in mind here, the problem with operating a giant global ponzi scheme (to which POnzi Rep. bought into hook line n sinker), is that the ponzis at the bottom of the pyramid need to earn something eventually to keep bubble going.

  18. Johnny Dunne

    There is only one way for Ireland’s economy to recover is export led job creation as the private sector do not have the flexibility to borrow more and in many cases the will not try due to uncertainty about the future demand for business and the overall economy.

    “Central Bank officials described the March lending increase as “historically low”. Mortgage lending in Ireland grew by €20m in March, according to figures released by the Central Bank. The bank said home buyer business accounted for €428m during the first quarter of 2009. This is a fraction of the €2.6bn lent during the same period last year (and down from the high of over €2 billion per month in 2007). Domestic lending fell by €3.9bn in March to €391.7bn, which the bank says more than offsets the increases that had been recorded for the first two months of the year.”

    Bottom line, money is coming out of the economy as total lending levels drop — no net new cash!

    Shane’s comment is the only solution to generate activity – “We need to attract external investment from foreign companies who wish to setup here and for our own indigenous industry. We also need to find a few Irish companies and R&D organisations and back them to the hilt”

    Three proposals below would increase the volume of businesses generating export revenue (not just transfer pricing) from Ireland and in turn economic activity producing tax revenue this year if there was the ‘vision & ambition’ in the Finance Department.

     Promote heavily the fact BES is now applicable to all SME’s in the EEA region with a qualifying Irish operation. Opportunity to attract companies from all of Europe to trade from Ireland.
     ‘Income’ Tax remission for ‘start-ups’ and export businesses. Most start-ups would have a better chance of developing if did not have to pay income tax in early years as it built value and recurring profitable income from customers. Might help existing exporters with strong euro.
     ‘€1 billion Innovation fund’ for international businesses trading from Ireland. Opportunity to have a fund servicing export businesses and become the leader in financing innovation.
    We could then see a ‘critical mass’ of entrepreneurs from all over the world coming to Ireland. Remember Silicon Valley companies are not dominated by Californians but “the best in the world” located from wherever because they knew this was the place to setup, join and develop businesses.

    Unfortunately, we still have the ESRI and Central Bank both stating that tax revenue in 2010 will be back ‘up to’ €36 billion. Both groups of well paid economists and officials come to the same conclusion that on average €3 billion per month next year will be generated in tax recepits which is nearly double the €1.6 billion collected in April !

    The only way this will happen is if we ‘turn the tide’ and generate employment in 100’s of “export oriented” businesses which will in turn create demand for local services and sustain employment. If not, then the downward spiral in confidence, spend, employment, tax revenue and spiralling emigration leading to 3:1 dependancy !

    • Obama has just announced a crackdown on incentives for US companies to move jobs abroad.

      As for creating employment in 100’s of “export oriented” businesses. do not have a short-term horizon.

      Building new export markets is a very difficult challenge. This is why almost 50% of exports from Irish-owned companies go to the UK:

      • Excellent article Michael, as usual.

        • Johnny Dunne

          Agreed – great anlysis in this article Michael…

          Lenihan seems to be still ‘spinning’ jackanory’s at some EU Finance Minister conference today where he said despite all the negative indicators for Ireland announced by the EU (9% fall GDP, unemployment moving to 15%,, budget deficit of 12% this year and 15.5% in 2010) Ireland’s exports are holding up better than other EU nations….

          Obviously, he wasn’t briefed on the insights from your articletoday Michael…

          “Commentary on Irish exports generally does not make a distinction between exports by foreign-owned and indigenous firms. However, usually the result is to create confusion rather than lucidity.

          For example, chemical exports from mainly American firms in Ireland, increased by 6 per cent in the first two months of 2009, while the value of all other exports actually fell by 14 per cent.

          The increase in chemical exports may not have had any significant impact on the Irish economy compared with the decline in the rest of the export categories”

          Got me thinking is the EU are announcing our budget deficit will be over 15% next year (remmeber the limit was 3%), Why can’t we break the EU state aid rules also to ensure this deficit is not increased to this level – 1% is nearly €2 billion which would go a long way to supporting “real exports” ?

          • wills

            Johnny: Precisely the point of Davids article, these ‘so called’ experts can not be trusted any more for clear objective prognosis, stats, analysis,.. they are working to an agenda remaining behind closed door’s.

      • wills

        Michael: Excellent link, much thks. The gear shift in economic based activity from export led too construction is a classic POnzi parasite element taking hold on the real economy and funneling off the illicit profits into real assets, a tight grip conso;idation of the political and economic power centres too lock everything down while a certain level of prosperity enter’s into all sector’s of society.

  19. Johnny Dunne

    I agree MH this will be very dificult in the short term as we have lost about 300 MNCs since early 200′s down to less than 1,000 and falling.

    My proposal would be to have an ‘aggressive’ marketing campaign focuisng on ‘poaching’ high grwoth oriented compnaies from other countries, getting them to locate in Ireland with low income tax etc

    They then could book there already established revenue from ireland and develop new business opportunities as they would retain morew profit (lower tax) in this tough business environment.

    While we still have young and experienced talent in irealnd the ‘window’ of opportunity is relatively short but could have long term benefits if executed on ?? – no point in just talking about ‘knowledge economy’ bla bla as every other developed market is doing saem…

    • wills

      Johnny: The world economy is in the grip of a POnzi bubble bursting contraction not just the POnzi Rep. of Ireland., so there ain’t that much business around at the moment either way.

      • wills

        Also johnny,, I suspect any stat’s coming out of the CB are not to be trusted at this stage,.. and i am in full agreement with Malcolms analysis on the ERSI stat’s and it’s dubious math’s ‘clipping’.

  20. Just had FF canvassers at the door maintaining that the HSE is secretly run by an FG cabal.

    How’s that for Denial of the Week?

    • Deco

      Oh great, finally we have an anti-establishment political party that we can support….a party that is going to reform all the rot in the Irish institutional state….and bring a fresh sense of openess, accountability and transparency to Ireland….and is what party is offering this…..FF ???? … I say, public bodies and entities do not reform themselves after failure, their reform their public image…but we are wising up to this scam.

      There is a cabal running the HSE. A cabal of cronies appointed by Prof Drumm. Harney has a lot of influence. I was told that there was a joke going around inside the HSE…that the PDs were dissolved because they all got what they wanted out of politics….state management jobs….hilarious given that PD doctrine was all about the waste that occurs in the Public sector.

      I hope you asked him if he was going to sack that cabal before the local elections…I mean FF are in power….why can’t they sack the FG cabal who are supposed to be running the HSE….sounds like as if they are lacking in resolve….I mean if the cronies running the HSE are not their cronies, then they should do something patriotic and sack the wasters….it would be more patriotic than the usual wear the green jersey lemming nonsense we get from FF and Ditherer

    • Tim

      Furrylugs, this is classic refusal to accept responsibility for one’s own actions; it is as old as the hills and even goes back to the Book of Genesis, itself:

      “And God found Adam hiding in the garden and He asked him: “Why did you eat the fruit of the tree of the knowledge of good and evil? The only tree I commanded you not to eat of?”

      “Lord, it was the woman YOU sent me”.

      So, Furrylugs, the FFs blame the “woman” opposition FG that you, the electorate, sent them.

      Thousands of years old, that excuse.

  21. wills

    sound’s like an accidental ‘backwards’ admission…!!!!!

    • martino

      They just said on the radio there, RTE Radio One News, that some 18 million jobs are to be lost in Europe this year. I’m with Wills, the whole thing is coming precariously close to crashing down- ‘the centre cannot hold,’ as Yeats said. Now, accident or design, that’s the question.

      • wills

        martino: Just to clarify,. my contention is the POnzi credit bubble de- leveraging is underway, but the real economy superstructure will stay intact but will suffer to a degree under the stress caused by bubble bursting. My contentions are that we must maintain a de-lineation between two seperate economic realities a foot. Economy no.1 the real economy and economy no.2 which is in fact a racket, the POnzi economy. No.2 hosts on No.1 and is a constant draw on it’s labours, and No.1 is in a constant economic struggle between expanding wealth for all and at the same time battling with the POnzi parasite hosting on the oxygen provided by the real economy,..

  22. martino

    wills: thanks, but why do you write it POnzi?

  23. Peter Schum

    All very depressing. Bank Holiday weekend over, and this week marks the start of the emergency budget changes. The only upside is i am getting very good value when I go out to eat in my favourite local restaurant. But at the prices they need to offer to get people in the door, how long can they survive. I fear the level of drop-off’s within the food & retail sector over coming months will be significant. I really don’t want to go to China. How can we turn this around. I like the comments in this blog, but how can they effect change. Can anybody offer some hope & inspiration for the future ?

    • Johnny Dunne

      Maybe our host will be announced as a candidate in the Dublin South by election tomorrow and be on the opposition front bench this time next month offering “some hope & inspiration for the future” ?

      • Deco

        Yeah. I am in favour.

        We need a real economist who is worth this salt in the Dail !!!
        David could work alongside Shane Ross – it would be a strong partnership and would have massive impact !!

        • Robert

          And DMcW could be running against a FF candidate who works for Anglo Irish Bank. . . . . the late Seamus Brennan’s son . . . .

          You can hardly blame him looking to get on the FF ticket – especially when he considers that the Taoiseach, Tanaiste and the Minister for Finance are only in their positions because their fathers held the same seat.

          • Deco

            The Dail as a clique of families goes beyond even that. This is a case of a rerun of the typical strategy for by-elections for political parties. In fact it is pretty endemnic. And it is also widespread. They all do it unashamedly. You can see it here if you want.

            The Labour Party will probably pick Emer Costelloe, wife of sitting Labour TD Joe Costelloe as candidate for Dublin Central. This would be a husband and wife team. That in itself is a dubious way to select candidates. The alternative option is Ivana Bacik, who is very well connected with influential power magnates in the party hierarchy. I doub that she has any connection with the constituency, except maybe that she went shopping there on a few occasins. She comes from a wealthy background in Waterford, went to boarding school, and speaks with an upper class accent. She is unrepresentative and will be a disaster. This also opens the possibility of a by-election for Trinners students – an interesting concept considering how few kids from the Dublin Central constituency go there to college. Of course it has been a long standing gripe of the senior figures in the Irish Labour Party, continually expressed in the Irish Times and on RTE, that the Irish working class are not automatically programmed to vote for them in every election like occurs in Scotland for example….obviously, they are assuming steadfastly that it has absolutely nothing to do with the ridiculously unsuitable candidates they offer the people…so they attempt every time to send the electorate on a guilttrip every time….and the voters ignore them…and it fails spectacularly every time. In this case the Irish Labour Party bosses think that it is better to have an unrepresentative candidate representing a constituency, in terms of how it reflects on their brand image nationally. This is evidently of more importance than the damage that could be done to the party’s image nationally by having the wife of a sitting TD run in the by-election. It also sounds to me that they are going to shout nepotism at FF, and must avert any possibility that it will be thrown back at them. It all sounds to me as if they have already decided that they don’t wan’t to make any real effort in Dublin Central.

            We also have Bertie Ahern canvassing for his brother Maurice, so as to make sure that Maurice is on the FF ticket for Dublin Central. Once again ditherer is making assumptions about his own popularity. A cynic could comment that his arrogance has not left him. One of the supposed advantages of this strategy being, that Maurice will get the full backing of the Drumcondra mafia. As if people can be ‘organized’ so that they will vote for another Ahern. It is all a bit tempting and could end up a massive flop. Which would be really funny. Anyway Bertie Ahern has missed 85% of the Dail votes this year – so why should another Ahern be sent to the Dail, when the first one is never around ?

            Meanwhile FG have promised a “big name” candidate. What is amazing is that FG have decided that they are going to put in a big name candidate – though they still have not selected one. It seems as if the big name is having second thoughts. There is an inherent assumption in the sellability of a big name. Why can’t FG think about picking somebody with ability rather than a big name ?? Did they learn that superficial nonsense does not work from the Noonan meltdown ? The electorate do not celebrity candidates. The danger is that Kenny will pick somebody who is a big name, so as maintain his original promse, and that we could see another useless poltician in the Dail. One option listed is that PD TD Liz O’Donnell might rejoin FG. What exactly do FG activists make of this ? She was in FG, she left for the PDs, she supported several FF governments, plus all those PD policies which Vincent Browne continually describes as divisive. Is she now assuming that FG canvassers will work for her, and that they are prepared to disregard the disintegration of the PDs as a factor in her motives ? She has massive pensions from being in gov with FF, and this is a real source of embarrasment to both Kenny and the local canvassers. So this won’t happen. Alan Dukes would win it. But he might be doing the country better service sitting on the board of dodgy banks and monitoring their activities.The name George Lee is mentioned – but that would have been sorted by now if that was going to happen. Maybe he might go forward as an independent. George would do it, no problem.

            These shenagins are unimpressive. There are assumptions in the various political parties that need to be solidly thumped and eliminated. I sense that the electorate will take the opportunity to indicate that they expect better quality representation in the Dail. But that the political parties will fail to ‘get it’ (the message that is). If they ever do get it, then we will get better candidates. The examples above point to political parties trying actively to prevent new talent appearing on the scene. They are all playing silly games.

            David would do it. So too would Shane Ross. Both have what it takes. Senator Ross would be able to hound the government in the Dail, and it would be far more public than coverage of events in Seanad Eireann.

        • Tim

          Deco, as I have promised before, if DMcW runs, I will canvass for him anywhere, anytime.

          He would need to be confident of having a team;

          Anyone else up for it? Sign up here, so he can see:

          • G

            I’m not a fan of O’Donnell, careerist politican, who claimed the entire credit for the Northern Ireland peace process in her One to One interview with Brian Dobson (or is it Byran)…………typical Pravda interview, he just let her go on and on, maybe he just couldn’t be bothered, he’s looking worn out himself from boredom – just going through the motions.

            Anyway she wears too much makeup, always seems like she’s giving you an ould flirt but behind it all the smiles and faux sincerity and ‘gravitas’ you know deep down that it’s all about Liz! Or Ivana, or Bertie, or whoever – they are all the same in this regard. It’s either Pat Rabbitte going on for half an hour to make a simple point, Gilmore with cheeks like Pat the Postman (not more populist/manufactured outrage Eamon), blonde Enda trying to sound coherent but you end up more confused or less impressed, or Cowen like some crazed looney from the corner of the bar ranting an raving about something, which you are not sure about what and are half afraid he may turn violent until you hear ‘the Fields of Athenry or a ‘Nation once again’ (anyone for a few apartments? Two for one!!!). This isn’t the Weimar republic, its the Muppet Republic.

            There is a ‘want’ in politicians, rock and roll for the nerd, this craving need for attention to the extent that they will destroy the State, they should all undergo analysis.

            O’Donnell was a PD (not much difference from FG)…..I rest my case your honour, keep these people far away from publicity and most of all from power!!!

          • G

            @ Tim

            David has more sense and money, he won’t touch politics, you’d want to be out of your mind to want to mix it with those currently in the Dail!

            Why don’t you stand? You’re already on a mission to change the party from within, why not go all the way?

          • wills

            G: Camera always tell’s the truth and in this case it’s what Freud described as ‘Primary Narcissism’….

          • Tim

            G, thanks for the vote of confidence, but I have no such aspiration!

            Or, as you say, maybe more sense; certainly not enough money – getting elected is inbelieveably expensive – I know of some who spent upwards of €50,000 on the last General election campaign; dunno where they get it from: most people here praise the private sector and denigrate the public sector, but it is the private sector business people that bank-roll our politicians …….. Hmmmmmmm…..

            I have a great face for radio, though! Mind you, if politics really is “showbusiness for ugly people”, I may have a chance……….

            Although I know that I would have a certain honesty and integrity to bring to the table ( as well as a strong passion for education – the most important portfolio after finance in the cabinet), we can see where all these same qualities got the only candidate I could bring myself to canvass for in the last election, Joe Behan in FF – resignation in the face of insurmountable odds. So, I do not think I would be effective in that role, either.

            The “change from within” is gathering apace and McGuinness-et-al have tremendous support at grass-roots level. This thing can only change from the bottom-up, so I will continue to ferret away as I am, though it is challenging.

            Here is a question to ask of your local/European candidates when they call to your door:

            “Do you wish that the FF members of Cabinet would act a little differently than heretofore and function, in accordance with Article 45 of our Constitution, more on behalf of the ordinary citizen than on behalf of the wealthy and the bankers?”

            Voting in accordance with the response they give you is not only your democratic right, but your duty.

  24. Deco

    The EU is hardly being objective either.

    There is lot of concern in the EU over the state of Spain. Sorry to disappoint any Irish people whose concept of pride requires that we get to exaggerate our significance. We are simply too small. 40 Million people. Nobody knows how many hundred billion of bad debts. Neither the Spanish banks nor the Spanish government will tell the truth. Unemploment of 18%, even after the government massages the figures. The EU Commision is really in a qandry about who to describe the Spanish situation. If revealed it would be much worse than Greece. The markets have been discounting the Euro on the basis of the Spanish financial situation over the last few months.
    I think that this is a massive coverup. The objective being to hide the truth from the Northern Euro members and France. Especially the Netherlands and Germany-who take this type of behaviour as a serious transgression of EU law and policy.

    And the Spanish EU Commisioner declares that Ireland will have the highest unemployment rate in the EU. It is possible. (Coughlan can make this happen-as testified by her performance over Dell). But is based on forecasts from two economies, where neither is governed by politicians who want to tell the truth !!!

    Now, when (not if) this becomes evident, Euro interest rates will have to increase. The Euro will be weakned. And there will be a lot of instability in Europe. And the EU Commision might need to make an example of somebody with a fair deal of visibility. We might get punished in an attempt to show that Euro Stability pact rules are being applied. In any case our banks will be unable to renew their bonds when this happens.

    Prepare for the worst. That means more wage/salary drops. And less spending. And another emergency budget in September as government finances continue to fall to the floor.

    • Tim

      Deco, …… “that means……..”, …….. and massive interest rate increases and more mortgage defaults and greater support by taxpayers for the banks and a continuing spiral…….. downwards, down, down, down!

      Do not forget Italy in your consideration of countries whose government does not want to tell the truth (actually, can you name one that does? I cannot).

    • G

      @ Deco

      Appreciate your comments and detailed posts – insightful and infromed.

      I take on board what you have said about China, I am currently taking ‘briefing lessons’ three times a week from a PhD Chinese student, so as to get the inside track. A delighful lady who is repulsed by ‘the chest women’ as she refers to the scantily clad young ladies that appear at weekends in our towns and cities and on a nightly and noisy basis in the house she shares with male students. She is not impressed. Indeed, none of her colleagues even invited her to dinner or for a spin, no advice on personal security or where to get the best deals – that is the Ireland of the 1000 welcomes. I do my bit, but it is appalling, if we keep this up we will be left far behind with only our hubris and empty housing estates to comfort us.

      I am reading all I can on China. I’m going into business with a friend of mine on a project I think has potential for Ireland down the line, but first I must do the ground work and get over there for a few weeks to see what is going on, and how things are done. I firmly believe there is untapped potential but I need to find out for myself.

      The goal is to observe and listen. I know why I am going I just need to see if I can marry my ideas with the reality. I am confident something will come. While I have great affection for Ireland, I’ve lived in several countries and always regarded myself as an internationalist as oppose to an Irish national, I always found it difficult to identify with Ireland, could never quite understand it or the way it operated.

      But there are still many good people in this country, many who post on this website, who want to see a better country emerge, who are tired of the nepotism, the brown envelopes, the abuse of power by the few, the betrayal of the nation and its heritage by people who now try to wrap the flag around themselves and call on us to do our duty.

      It is the average decent person and not the political and business classes that I look to. You outlined in a later post the backgrounds of various ‘labour’ candidates, like a lot in the Labour party, middle class, opportunists by and large, or the FF mafia in Dublin, or the family ties that leads other amateurs to power (we now see the consequences of such an appalling system – I am praying June will right some of the wrongs to such an extent that a general election will be called and FF will be decimated for a generation – I hope all the Aherns, Lenihans, Coughlans, Hanafins, McGraths will all be swept out in the tide).

      I’m just not sure if Ireland can really overcome its major issues, like the hindrance on dynamic people/thinking, only a complete breakdown in the old order of doing things could allow the new forces to break out.

      The government talks of innovation etc but their very existence, Coughlan herself in Trade, IS the problem, she didn’t earn it or get there on merit, but on who her daddy was, that IS the central issue in this country, it is practically a cliche in Ireland ‘it isn’t what you know, but who you know’, so much for the knowledge economy.

      • Malcolm McClure

        G: Thank you for your constructive comments and best wishes for the success of your China venture. Others could learn from your methodical approach. Ireland still could be a useful Eurozone base for ‘this end’ with its CT advantages and English language.

  25. wills

    Gov and Gov linked agencies are working their socks off to get going again the re-inflation of the property bubble which they perceive as a way out of the POnzi property bubble bursting cost to gov revenue’s.

    This may explain the lack of sense emanating from their prognostications. Covering the tracks as they try to put the POnzi property bubble money making machine back on the bubble inflating tracks.

  26. Deco

    { Less than a year ago – just think about that: a mere 12 months ago – the ESRI released a forecast for the Irish economy, predicting that for the next seven years, Ireland would ‘‘grow by 3.75 per cent on average per annum’’. It went on to say that, after a blip in 2009, ‘‘the economy would continue to outperform its EU neighbours’’. Consistently since 2005, it said that a ‘‘soft landing’’ in the property market was the most likely outcome, with a collapse a ‘‘possibility’’ . . .but just that. }

    David you have presented the evidence.

    The ESRI are just a collection of guessers. They simply go along with the consensus of the bank economists. This is Ireland. Dissent is not welcomed. There is a culture of people doing original thinking being marginalised and being given the cold shoulder. It is a technique used to implement conformity in Ireland. And we need to end it.

    I can choose to have no business with BoI, because I dislike their obsession with nonsense, and because I detest the idea of paying for pretend economists like Dan McLaughlin. In the process I am forcing BoI to clean up their act, to become meroticratic and sack McLaughlin the Muppet. I can apply my conscience as Ghandhi advocated, by withdrawing my consent to their behaviour. Same with any other bank. I can do as I please, and so can anybody here. Well until Lenihan decided to help the scoundrels. But we will vote on that in June.

    But none of us can choose to take our business away from the clowns in the ESRI. They are part of the state system. They are the official state institute responsible to producing official economic forecasts. Another useless quango.

  27. Tim

    Deco, Here it is again, from previous thread:

    Just in case anyone here might like to ask IFRSA about its progress in that investigation by simply banging off a little email or fax that will greet the nice people there on Tuesday morning, here are the contact details for the legal and enforcement department:

    Administrative Sanctions Contact Details

    Legal and Enforcement Department
    Financial Regulator
    PO Box 9138
    College Green
    Dublin 2
    Tel: +353 1 410 4833
    Fax: +353 1 410 4060


    To be honest, they will probably appreciate the enquiry, as it appears that, until recently at least, they may have been very bored at work due to not having anything to do.

    For Dan Boyle and every other TD and Senator you may wish to contact, here is a link to a page that provides a “0ne-stop-shop” to every Oireachtas member in the country:

    They are supposed to work for us, not just the golden circle, so……

    Let’s keep at it.

    • Tim

      Folks, here is my innocuous little missive to the IFSRA legal dept., in case anyone else might like to copy and paste a little enquiry to them:

      To whom it may concern,
      As a concerned citizen of Ireland, and a taxpayer to a government that has nationalised the bank named in the subject line of this message, I would appreciate if you would be so kind as to inform me, by return, of the progress-to-date made by your good office in the matter of the investigation into dubious transactions that have allegedly occurred between said bank and other credit institutions in the Republic of Ireland.

      Has your investigation concluded? Or, is it approaching conclusion? Has your office sent a file on these matters to the Office of the DPP? Or, will your office send a file to the DPP in the near future?

      Has your office sent a file on your progress-to-date on these matters to our Minister for Finance? Or, to the Department of An Taoiseach? If not, why not?

      As a publicly-funded body, will your office be informing the public, any time soon, of your progress to date in this matter? If so, when? If not, why not?

      Kind regards,

    • Deco

      Tim – I am going to give them a phone call. For fun. I am looking forward to their “official explanation”.

  28. Tim

    Folks, I am with Naomi Klein on this:

    “I’m appalled at news that there’s a 17-year-old girl who is facing jail time for having a few beers and breaking a window at the RBS Bank during the G-20 protests, when not a single banker is going to jail for burning down the global economy. What kind of a system is that? I think we should rally to this young woman’s defense.”

    As Vincent Brown said last Tuesday evening, while launching the election campaign for “People Before Profit” in Dublin:

    “If the Left does not emerge from this crisis all-the-stronger, the Left will have failed”.

    I agree with him.

    • G

      Browne is an interesting character, he has really come on in this crisis, and risen in my esteem……he’s been hitting away at the ultra rich for quite a while, accept he is wealthy himself but how many others in his circumstances have spoken up, really interesting times.

  29. Tim

    Folks, we need to look beyond the June elections; they mean very little. Those of you who believe that the ire of the electorate that WILL be expressed in June will make a difference Nationally are misguided.

    The local and European elections will alter nothing at national level. And national politicians are perfectly willing to sacrifice their local candidates for now.

    I might as well have a cow-pat hanging around my neck as a FF sticker while I knock on anyone’s door for this election in June.

    Does the Parliamentary party care? Nope.

    Does FF HQ care? Nope. (They have, even, parachuted non-ff “candidates” into the race because grass-roots FF people have pulled out!).

    These elections do not count, on a national basis. (remember the FG “melt-down” at local election under Michael whats-his-name? the guy responsible in the ’80s, as minister for Health, for the BTSB fiasco that infected so many women with Hep C from cheap blood products? Michael, ……. Michael …… what?

    Anyway, the FG party recovered dramatically from that local election melt-down at the very next General Election, under the leadership of Enda Kenny – a LIAR!

    Go figure!?

  30. Tim

    Folks, no-one has responded to my post on the IFSRA contact info.

    I wonder why?

  31. MK1

    About Peter Bacon, his proposal for NAMA and his appearance on Prime Time:

    People say that he was ‘unpicked’ on that show. But one thing that I took out of it was that when tasked with the question of which route Ireland should take, NAMA or the Insurance route, his report analysed both and stated the case for a NAMA (financial skip).

    I’m not saying that I support what he said or indeed NAMA, just stating how his thinking may have worked in terms of himself justifying his own analysis and that NAMA was the lessor of two evils.

    There is no argument though against nationalising the banks so that the problem of valuing the bad debts goes away. Of course, an alternative would be to support a good bank operating in the economy and let the bad/ill banks trade their way out of it. That would also mean letting bad banks go bust.

    David, when are you going to write an article that will support that, knowing what we know now, that LANCING THE BOIL, ie: letting the ill banks fail, etc, was the correct path of action from Sep 2008?


    • Tim

      MK1, You have been utterly consisten and surgically fair. I am not so fair to such as Bacon, so I bow to your objectivity.

      “Lance that boil” has been your mantra since the bank-guarantee was mooted, let alone announced. I agreed with your mantra then (though I needed and still need coaching in economics) and I still agree with it now.

      David McWilliams cannot “lance that boil”.

      David McWilliams cannot force those who CAN lance that boil to do so.

      So, how do we proceed?

      Perhaps, by continuing to raise the matter here, so that DMcW might, eventually, write an article calling for the boil to be lanced?

      No-one in cabinet will listen.

      Join your local FF cumann and keep saying it; hook up with a Minister and keep saying it until that minister says it in n Dail. Then get him to keep saying it in An Dail.

      Saying it here will only get so-far: 7 months, repeating your mantra.

      • MK1

        Hi Tim,

        I have spoken with Ministers in the past on various issues so would not be hopeful of them changing their spots even when issues become obvious or even when enlightened.

        The problem is that speaking to them or TD’s at this point wont change a thing and our energies, which are limited, would better be spent elsewhere. As an individual we are all powerless. We only become ‘powerful’ in the collective, and if there are enough of right-thinking minds with sufficient energy to enact a change. ‘Converting’ people to a particular mindset can take a long time. Sometimes, it can take a generation which can then be too late. But one possible way is to try and convince part of the electorate or indeed those who are in a position to influence (media) or represent.

        But if we look at the problem this way, that FF was partially responsible for the mess we find ourselves in, surely spending time ‘converting’ non-FF people is the only way to go.

        I realise that your idea is to convert FF from within. But when Gandhi wanted to coerce the British, he didnt join the British Army and become an officer, he chose the natural route to do it from the outside. I think your best path would be there as well, just my 2 cents, although there is no harm of a few try to convert from ‘within’.

        > Saying it here will only get so-far

        It probably wont get anywhere ……. but its worth saying anyway.

        The only way for us the people to affect change is through the ballot box. In the collective though, I am not sure if we are smart enough to use that method wisely in terms of producing the best outcome. We probably dont have enough choices on offer either. We get what we vote for.

        About Peter Bacon: perhaps I was too fair as I do agree with Jim below that he is a ‘semi-puppet’. But he wont be the first nor the last ‘independent consultant’ to produce a report with the answer that the government ‘wanted’. Many of us have seen such things in spades before. And as others have alluded too, he may have some personal interest in the state-bail-out working. He is far from being alone in that though.

        I dont see that many people boycotting banks, do you? They are benefitting just as much from the state bailouts as anyone. At this point in time, public outrage is not sufficient nor directed at the right people. Fitzgerald and Fingleton are soft targets for Joe Bloggs to hit out at. There is far far more as these problems are systemic and deep rooted. Fitzgerald and Fingleton are but the cherries on a very rotten cake.


        • Are credit unions run honestly in Ireland? Can they provide most if not all of the ‘services’ that the banks are supposed to? I really don’t know. My mother has just set up an account in the Lucan branch for my baby daughter, who obviously lives out here with me in the Caribbean. If they are better run and with more integrity (or within a tighter set of parameters – existing regulations?) then why doesn’t everyone on here take all their money out of the rancid banks and put it in the credit unions as a symbolic but also material (and publicised) gesture of our collective desire for a more honest new financial utility (to borrow one of Wills favourite words)? Is this a good idea or not? – be honest and blunt with me. I’m dying for some action from us of any sort even if its going to be vicarious in the large part for me personally. Also, extra savings could go in the post office, I’ve got an account there since 1972 – the year I was born.

          • …and (I forgot to mention) I would be hoping that if everyone transferred their deposits, the banks would rapidly collapse, which is what should have happened in the first place…

          • G

            @ adamabyss

            The Caribbean sounds like just the place to be right now!! Have a Mohito on me, I have many happy memories with an ex, from my short time there and in Central America, wish you every success.

          • Thanks a lot ‘G’. Mohitos do really hit the spot.

          • Thanks a lot ‘G’. Mohitos do really hit the spot!

  32. jim

    Peter Bacon is a FF appointed puppet.All His reports from before on Housing,and His proposals now on NAMA have been virtually all shadow written for Him by FF and people within the Dept.of Finance.He has set up His own little company for the job as I have already posted.Paid puppet property developer with no credibility just like His paymasters ZANU-FF and cowering puppets in Dept.of Finance.FF wont lance the boil,because its their own.The only one’s who can lance the boil is the Electorate.Gormless and His crew have been sucked into the Docklands just like the PD’s.Ita amazing how easily the Greens were bought,after all their posturing in opposition.They turned out be nothing but a bunch of D4′s in green wellies,I would’nt ask them to “save Hay” never mind this Economy.Gormless tried to give the impression at His Ardheis that He would police FF and the Banking problem,sorry but nobody believes that anymore.FF have used the Greens like a recycle bin.Time to lance the boil and take out the trash.

    • G

      Noam Chomsky has written on this ‘he is no longer surprised at the speed to which the supposed opposition, who once in power, internalise the values of the governing elite!’ – the Greens are a perfect confirmation of this astute observation, it’s been classic watching them move, but they will pay the ultimate price for ‘doing the deal’……..they should have taken down FF when they had a chance. Never learn, just saw power and ministerial office, how fleeting it all is.

  33. nono

    Reputation or authority?
    In 1964, Professor Stanley Milgram conducted a series of experiment to test the level of obedience of subjects to an “authority” to show why how many Germans were instrumented by the Nazis. The experiment consisted of 3 people:
    the experimenter (the authority),
    the teacher (an actual participant unaware of the actual setup)
    and the learner (an actor).
    The teacher was meant to “teach” a list of word pairs to the learner. He would then read the first word of each pair and give the learner 4 different possibilities. The learner would then have to choose the correct one by pressing a button. If he got the answer wrong, the teacher would then have to administer an electric shock to the learner and restart the list again. Each wrong answer would make the voltage of the electric shock increase by 15 volts. The teacher doesn’t know that the learner doesn’t actually receive any electrical shock. After a while, the learner pretends to be increasingly distressed, bangs his head on the walls and complains about his heart. Some subjects paused after 135 volts to question the purpose of the experiment but the authority tells them it’s ok to continue and that they wouldn’t be held responsible. It was halted when the learner was given the maximum 450-volt shock. The result of the experiment is that 65 percent of the participants administered the 450-volt shock though many were uncomfortable doing so. Only one participant steadily refused to administer shocks above the 300-volt level.
    2 main interpretations were given for the results of the experiment:
    The first is the theory of conformism. A subject who has neither ability nor expertise to make decisions, especially in a crisis, will leave the decision making to the group and its hierarchy.
    The second is the agentic state theory wherein the essence of obedience consists of the fact that a person comes to view himself as the instrument of carrying out another person’s wishes and therefore he no longer sees himself as responsible for his actions.
    Another explanation is that “people have learned that when experts tell them something is all right, it probably is even if it does not seem so”.

  34. MK1

    Hi David (McW),

    A point I’d like you to raise in an article is the fact that the only way for banks to trade out of their difficulties is to extract extra monies from the Irish economy both in the ‘retail’ (consumer) and the commercial sectors.

    This is exemplfied by NIB’s financial results today ( ) which show that they have improved their operating profits by 90% to 21m in a quarter.

    One way or another, the only way for banks to recover (ie: pay for their bad debts/loans) is for Irish people to pay for it through other means. That is fairer than taxpayers money going directly in terms of “recapitalisation” perhaps, but given that all of our banks or most of them are sick, the banking situation will be only holding Ireland back, even if propped up on its “death bed” by us taxpayers, as they extract a pound of flesh to stay alive.

    People also need to comprehend that it has ever been thus. AIB, BOI and the rest of what is now easily seen as a cabal have NEVER been a service to Ireland – they have been a leech. And this situation allows us to reform banking in this country radically. It is an opportunity which so far has been missed.

    So David, lets call for it, lets call for radical banking reform.


  35. Philip

    @MK1, this gets back to the idea that we need banks as a service to the economy just like any other old business knocking around out there. Retail banking was really a sideline business for the main banks. I remember years ago how I had an account manager who’d call me up every few months not so much to sell me a mortgage or loan but to advise me how to distribute funds and manage my affairs mlre efficiently (at a time when I had relative few funds to speak of!). The electronic banking and ATMs a) blew away the personal touch and b) made the bank product (loan) focused. I might as well have been dealing with EBAY.

    I am not surprised at the statistical blunders of our official prognosticators. Let’s face it, having such “independant” organisations answering questions to a market that can react on a whim is a recipe for disaster. In a rough parallel to quantum mechanics, the actual readout of the measurement affects the measurement. All states (positive and negative) remain valid in a superimposed state until some “independent experts” either in financial or public circles collapses the wave function and then the market economy flips it one way or the other. Now, it is my profound belief that there are a number of “geniuses” in Government taking this idea very seriously and in an effort to maintain the superimposed state as long as possible, I expect a few reinforcements to the existing laws on freedom of information to take place very soon. Mark my words :). Who knows? Maybe they are right.

    When I finished reading David’s article, I felt that Iceland may have got off lucky. At least they have “come out” and they are no longer newsworthy. Had we bankrupted a few months ago, we’d be on the road to recovery by now – even if FF was returned to office. As it is, we are still in decline (if you believe the reports anymore!!) and there is certainly no where to run and no money to be had as the IMF, ECB etc look like they be looking for a few bob as well.

    • Great simile with quantum physics and the like Philip. Just think – in a ‘Universe Next Door’ (to paraphrase the title of a book by Marcus Chown dealing with such matters of superposition etc.), in another part of the Multiverse so to speak, the Celtic Tiger is still roaring. Oh the Horror!

      • Philip

        I know, and the thing is, it’s probably not that weird to the mentality we have in this country. While acknowledging your technically correct spelling – it really is superimposition :)

  36. gadfly55

    When you write from deep roots, you write well, and this article is as good as you get, and worth keeping.

  37. gadfly55

    So make your judgement on where this country is going to be in five years. It appears that only the opinion of outside investors, including banks, is of any significance to the politicians in control. We, the citizens, are of no consequence in their calculations.


    If Shay Brennan stands for election and wins a seat in Dublin South the dumb electorate deserve what is coming to them.An Anglo employee (like so many FF offspring) would be persona non gratia in any self respecting society.It wasn’t just Drumm and Fitzie who screwed up!.The Luas green line cost 300 mill and may be a big enough bribe to persuade the doyens of Dundrum to create another political dynasty.

  39. jim

    George Lee for Dublin South,even though I never voted for FG in my life,I hope He make’s it.Given up a well paid job in RTE to try an make a change,and help solve the present morass.That’s what Im talking about. P.S just cannot see Davy mac getting the Economics editor’s slot on RTE….I think He would scare the be-jasus out of all in Donnybrook.

    • G

      Yeah interesting move, but not sure correct one, he’s going to find it a tough game now, it also impacts on his previous reporting, his credibility and impartiaity are open to serious question, I am more reluctant to take the guy seriously because I wonder about his agenda.

      On another level, I think it is a brave move on his part. Like Jim, I wouldn’t vote FG in a fit, but on this occasion if i lived in the constituency I would give him number 1 and see what he does.

      I understand a little better why my father voted FG in the 80′s, he smirked when I said ‘how could you have done that’, the smirk of experience (in other words, you weren’t there).

      My experience reminds me of Mark Twain who once said that when he was 17 he couldn’t believe how foolish his father was, and when he turned 21 he was amazed at how much his father had learned in the short course of four years.

  40. Malcolm McClure

    What we have been predicting here for months has finally happened:
    Its the end of the end for Ireland

    • Malcolm McClure

      The implications of US tax deferral for ireland were discussed by Cliff taylor 10 days ago in the SBP:
      It is possible that this is the worst news for Ireland since 1847, except instead of potato blight, we are about to have an investment blight.

      • G

        The economic storm went from category 3 to 4, reaching the tipping point for sure, certainly doesn’t help the cause, but was a predictable move and will take some time to play out, just more ammunition for MNC’s and their move to low wage economies……………………

      • Philip

        You know, I think the benefits of this tax break we gave to MNCs is exaggerated. For example, I read an article (think it was the indo a few months ago – I’ll dig up on request – but I am sure our learned friends here scanned it as well) where taxation in Germany worked out a lot cheaper that in Ireland. For example, the capital tax breaks were huge and indeed in some cases the companies would up getting what in effect were investment grants. Maybe I misinterpreted.

        The other element of these breaks is that they only work while the company is making a profit.Once the profit/margin dips below a given point, out labour flexibility works against us and we get ditched at a whim in favour of the East.

        There is no stickiness with our tax breaks. It was a mirage to allow contracts of undertaking between the employees and the employers to the the weakest in Europe.

        Way to go Obama!!

        • Malcolm McClure

          It could be that Obama has done Ireland a good turn by putting more pressure on the FF government to throw in the towel and call an election. After the cronies have been cleansed out, then he can find ways and means to help put us back on our feet. (Democrats usually have warm feelings for us.)

      • Deco

        This is really bad news. We should have been saving for the rainy day. But we were ‘educated’ to believe that such ideas were unfashionable and had no place in the modern Ireland. Waste was an essentail part of the culture that we became. So was arrogance.

        But the media, and the entire establishment told us that being Irish meant expressing pride, showing off, and celebrating. Now we are in serious trouble.

        Now, the value of savings and living modestly will be revealed. Different attitudes to personal finances and lifestyle will eventually undermine the pervasive corruption in Irish society.

      • Tim

        Not so; the world is very different now, to that of 1847.

        • Malcolm McClure

          Tim: Your spin merchants are already on the job. IDA chief executive Barry O’Leary said this morning the agency had expected the measures to be more severe and was not overly concerned that the proposals would deter US firms from investing here. He pointed out that the plan was “well signalled” in advance by Mr Obama and yet US companies such as Hewlett Packard, Intel and Paypal have continued to invest heavily in Ireland.Mr O’Leary was confident Ireland will not be too severely affected. “It does appear from initial reading that we’ll fare pretty well out of this whole process,” Mr O’Leary said.
          Hollow chuckles in order here?
          Intel is investing $50 millions to create 134 jobs over 4 years;
          HP is creating 500 phone service line jobs subsidized by IDA.;
          Paypal is investing $15 millions to create 35 jobs.
          Hardly likely to make a big dent in the Live Register?

  41. MK1

    George Lee’s and FG’s move is an unusual one it has to be said. Whilst a lot of people had a lot of time for George and his reading, it was taken that he was an independent voice from the state media. If he harboured FG ambitions all along, it does taint hat he has said and pontificated about in the past when done with rigour. I am (was?) a fan of George but I think this is a wrong move.

    The jury (the electorate in this case!) is still out on celebrity politicians. Like a celebrity banisteoir, will Gerge be able to come in from the cold with no experience on this and get to grips. Surely, like any ‘job’, he should have spent some time learning it at the grass roots level. Maybe he has all along unbeknownst to me.

    The people will decide (I hope) and not the media.

    But certainly calls to have the state media independent from politics needs to be further looked at.


    • Peter Schum

      Are not all our economists tainted with this celebrity tag to some extent. I think we need more economists at the table to influence the strategic direction. If we don’t go looking in the celebrity pool, where do we look.

      • Philip

        Peter, I fully agree. It’s one thing being the hurler on the ditch commenting on the woes and tribulations (which I am many of us are doing here today). It is quite another to nail your colours to the mast. I’ll follow George and a few compentents like him – has to be better than what we have right now.

        • Tim

          Philip. you can’t, really “follow” the opposition.

          • Philip

            Ah, don’t be so pedantic. The opposed need to be removed before they are responsible for you loosing your job and hence your valued services to society and our children. We need competence at the top.

    • G

      Agree with you MK1.

      Lee, in the interests of saving the country (no small feat) may have done his colleagues a greater disservice, they will be viewed with even more suspicion, can’t see why though as RTE is akin to Pravda in its subservience to power, and the role it played in building up the property game with its ridiculous, pretentious garden programmes and house make overs, or whatever they are called. Is this education? Value for money?

      There is a great character in Homer’s Iliad, Patroklos who is warned by Achilles ‘to know his limitations’ and ‘not go beyond a certain point’ in the fight with the Trojans. In the heat of battle Patroklos gets a rush of blood and pushes on, only to be surrounded and mortally injured by Apollo and finished off by Hector.

      George may have bitten off more than he can chew on this one……..time will tell, I wish him well. ‘Celebrity candidates’ is a most unfortunate title and an even worse occurrence, but then the book has gone out the window in light of recent events, again not what you are about, or what you represent but based more on who you are.

    • Robert

      George Lee standing for FG had “Deal” written all over it. There is no way he is standing for them simply to sit on the opposition benches.

      It’s clear that to give up his well-paid RTE job there has to be something in it for him . . . FG are likely to be in Govt in 2012. My guess is that Leo Varadkar (as FG Spokesperson on Enterprise, Trade and Employment) will be sidelined as the election approaches and then placed somewhere else after the election for Lee to takeover at the Dept of Enterprise, Trade and Employment.

      I welcome Lee’s entry into politics though. It is a step in the right direction. He’s taking a massive pay cut and appears to have some basic knowledge of Economics – which, let’s fact it, is a rareity in Dail Eireann.

      • wills

        Maybe what was in it for him is what he said, he is doing it for out of a sense of duty to his children and country,. which he said twice to-day, from what i’ve heard so far,.. robert are you really a teacher or just spoofing…

  42. George Lee – I have always likened him to Bono with his Princely Demure except no viewers have seen him in his shades – should he go into Politics will the viewers say ‘with or without you ‘ or are they going to miss him from the Box and just say he has gone to ‘where steets have no names ‘ . ~But then again if his chosen journey is canvassing will he be saying to himself ‘ I still haven’t found what I am looking for ‘ and be told to ‘Walk On’. Even on a ‘Beautiful day ‘ he may find the ‘Desire’ to say that he is one of the ‘Original of The Species’. There is only ‘One’ George and he is an ‘Elevation’.


    This whole situation is starting to remind me of another George. Clooney the Looney who headed out into the greatest storm ever despite good advice purely for greed.

    Despite trying to look for the green shoots during the last week all I can see is knotweed choking every aspect of Irish economic activity.

    Where’s the spaceship when you need it?

  44. mediator

    G, MK1 etc

    FG are the only game in town for people who are against what this government (FF) have done to our country because unfortunately there is no change right now of a new political movement emerging.

    Because George Lee has decided to run does not mean he was always a blueshirt while in RTE and was just waiting for his chance.
    I am from what might have been termed a FF family yet I haven’t voted FF for either of the past two elections because I could see what they were at.

    You can’t have your cake and eat it – the only way for our politicians to start taking our dumdum electorate seriously if if there is a huge swing away from FF (or whoever screws up in the future) towards an alternative party (even if that party is not exactly a great option).

    By huge I mean that the core of FF TD’s fail to get re-elected leaving them with sub 20 seats. Failure to do this at the by election
    or in future elections will just mean more of the same and business as usual.

    • G

      @ mediator

      Maybe so, but he has left himself and the organisation he formerly worked for wide open to attack. Just listen to Sean O’Rourke’s interview with Lee on the News at One today – Lee held a senior and sensitive post, to be fair I found him good but ‘How we blew the boom’ and other programmes can be seen in a different light given recent events, his decision tarnishes his work, no doubts there.

      He admitted he was approached by FG 7 years ago, he has worked for RTE for 17, so for over a third of his time this thing has been brewing, it certainly compromises him. I accept the argument for getting him in the Dail, better that Jackie Healy Rae, or Liz O’Donnell – he is educated and has a general economic knowledge – the country needs its best to step forward, Lee is potentially one such person. But there is something uncomfortable about the whole episode.

      • wills

        G: I heard the ‘o rourke interview and it was plainly obvious as for as i am concerned to be a blatant journalistic diatribe hatchet job attacking Lee before he could get a word in edgewise. In fact i would go further and declare it as a character assassination attempt on Lee before he even has launched his campaign, and i find the whole notion that Lee in some way could not do his job as an objective journalist and ponder privately to himself on whether to enter politics or not as a very feeble ill-thought bizarre notion.

        • wills

          ….we are bordering here on orwellian thought police and babysitting people over free will and be left to their own devices to be able to make up their own minds for themselves and continue to conduct their day to day business,…this is very suspect this whole notion that Lee should have reported to his boss this and that and the other what was going on in his head.

          • G

            I agree that O’Rourke’s interview was appalling, it probably even caught Lee off guard in its ferocity, and then for O’Rourke to say at the end ‘we’ll miss you around here’, I doubt Lee will miss that nonsense, but Lee is in a different game now.

            I agree also on your Orwellian comment and free will, but there is still something really off about this entire scenario…………….my gut just says no, it’s inappropriate……………his move undermines an entire news organisation and what little independence and impartiality it has (not a lot in my view) this is bigger than Lee afterall………….but I stand to be corrected………I too could be overreacting…………………….

  45. Garry

    I have no idea if George Lee was ever a member of FG or not… but I agree with mediator. If you believe that the current government (FF) havent done a good job over the past 12 years, kick them out.

    FG are the only alternative to FF at present. Labour might even go back into power with FF, they did it before.

    No matter what you think of FG, they are a moderate democratic party, a lot less corrupt than FF and would be a better choice than the current bunch of drunkards, crooks, gombeen men, fools and shysters who have ran the country into the ground and who are now trying to look after their crooked friends. They are so used to living off the taxpayer with crooked deals …. they havent even started to grasp the concept the country is bankrupt and this last to starve strategy will not work for them.

    It we wait till the situation gets so bad its either burn the bastards out, starve, or elect some out and out extremists out of desperation.
    Vote FG to get FF out before a much more extremist alternative emerges.

    Whoever is in power will have a thankless task cleaning up after FF. I cant imagine George Lee or anyone sane would want to do this

    …. looking for green shoots… I can guarantee a few next month, the spuds got put in the ground a week ago. I think they will be needed.

    Make no mistake, FF have guaranteed poverty for a generation in Ireland. The descent into poverty in Ireland is only starting.

  46. Peter Schum

    With George moving into the political ring, does this mean a vacancy arises for post of RTE economics editor. David perhaps ?? But then, who would moderate this blog. However, I believe a strong voice is required to ensure our public broadcasting service does not falter in continuing to hold our govt accountable. The trade-off, whilst regettable, might be beneficial ‘going forward’.

  47. wills

    Bloggers: I purport George Lee’s decision to enter into politics and see how fair a contribution he can provide in the governing of this country’s affairs is his democratic right and it is of no one’s right to second question his right to carry this brave step through in such a transparent fashion.,, we are entering into something different in the cultural atmosphere when one turns on the Radio at lunchtime to hear a citizen of this country been ‘bitched slapped’ over his decision to go into politics, by , in another bizarre sequence of events, ‘bitch slapped’ by his colleague, this interview actually interrogation will go down in infamy and a mask slipping on an order at work in RTE to which up until now managed to slimey out of the spotlight of truth it itself purports to be doing on behalf of the listenership. O’rourke sounded like a madman.

  48. wills

    Bloggers: Ponzi Rep,, update, the vested interests are beavering away preventing the markets to return to function as they ‘pinky and the brain’ into reality solutions that will re-inflate the POnzi property bubble and rescue the dire situation appearing on the horizon of the gov running out of cash, idea’s and joe public’s patient understanding.

    Could not but help thinking back to ‘let them eat cake’ utterance from times past when it was announced to-day Tesco’s are restoring their prices to proper market equilibrium prices in the POnzi Rep, on;y at the border though, give it time,… but, here we have it, the prices were all along hiked up artificially and now someone somewhere decided to wave a magic wand and put the price’s back to proper market level….. so it wasn’t all in our mind’s, it wasn’t merely eejits not understanding laws of supply and demand, we really were been ripped off..!!!! And just when the masses are getting a little moved in anger, quick, put the food prices down there quick, that will settle the natives a bit until we figure out how we get this POnzi property bubble re-inflated,.

  49. wills

    Bloggers: HOW TO CUT THE COST OF RUNNING REP. OF IRELAND., (a few idea’s)

    1: Let the banks go bankrupt.
    2: Reduce the public service size. Get rid of the chaff.
    2: Reduce the social welfare employment benefit to 130 euro.
    3: End over sea aid.
    4: Eliminate ‘expenses’ and secondary pensions to all public sector workers.
    5: Cut child benefit to 130 euro and after second chlid, you get nothing.
    6: Put electricity cost rates back to european average.
    7: Refuse medical card to anyone who can afford medical care.
    8: Put old age pension and retirement forward to 70.

    • G

      Ending overseas aid is a crime given the money in this country. the sickness of greed of our so called self-made billionaires.

      It is a crime, like being party to the holocaust, have you even been to a developing country? Have you seen malnutrition or landmine victims?

      The root of these evils is in the West, however, until we can put our house in other, we should continue to support overseas aid, I think it could be done better like cutting the main charities down to one or two, because most of the others have salaried people making a nice penny, just see Concern annual report for their Chief Executive’s salary, in excess of 150,000, which I find personally offensive.

      But to turn our back, with billionaires and 33,000 millionaires in this country on the poorest of the poor, well i’ve heard it all, I personally would have no problem paying higher taxes if my money was going to overseas aid as oppose to Cowen’s salary.

      Reducing social welfare to 130, have you ever been unemployed? Well if you are trying to provoke a revolution (which might not be a bad thing) then go right ahead with that, put your name on the legislation and see what happens.

      You don’t work for the IMF by any chance?

      • G

        wills: I will finish with a quote from Georger Bernard Shaw: ‘Poverty was the greatest of evils and worst of crimes’.

        • wills

          G: i figure it like this G, the top elites in the money have a horrible trait of tending to hide behind the ‘lower downers’ and this would be one way to shut them up, which would be the masses to tighten belt and give the elites no place to hide. The elites are shameful and will use any excuse to justify themselves in any way possible to fleece the serf.

  50. wills – I always like your post .However after reading your last submissions I am beginning to think that when you sleep that you might be facing Albania every night .Could you move the bed around in the room and face Las Vegas .

    • wills

      John’, a bit of frugality on the rock of earth might replenish the animal spirits,..!!!

    • paddythepig

      John, we’ve been living in Vegas for 10 years, we’re cleaned out. As the fella says, it’s ‘payback time’.

      We can’t go back.

      Where to now?


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