October 6, 2009

Capital solution to banking mess

Posted in Banks · 90 comments ·
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The saga of Independent News &Media (INM) and the clash of the two Titans involved is the stuff of a Hollywood blockbuster. If you ever had the pleasure of reading a book like Barbarians at the Gate, you will notice the similarities in the characters, the battles and the likely outcome.

Maybe someday, someone will take this material and turn it into drama, but right now, consider the solution on the table and ask whether something like this could be used to good effect for our economy.

As the current spin is that ‘‘there is no alternative to Nama’’, maybe the structure of the INM deal gives us another option rooted in traditional corporate finance, rather than the financial experimentation that Nama represents.

So let’s examine the INM deal in broadest-brush terms. The company has run up huge debts which, if they were to be paid, might tip it into bankruptcy. It also has two major shareholders at each other’s throats for control. The sums of money involved in this battle are staggering, as are the potential losses. But the clash of the Titans – although dramatic – is not the key driver of the story.

The rudiments of the story are as old as the economic cycle. A big company rides the boom and expands using borrowings, which looked affordable when revenues were booming and the share price soaring. Some assets were bought which may not look so rosy in more straitened times. Then recession hits, revenues collapse and the debts look like crippling the company.

The company goes back to the debt holders and says: ‘‘Listen lads, we have a problem and, frankly, our problem is your problem. We can’t pay all the debts today, but we believe that the company will be able to turn itself around in the next few years, so why don’t we do something creative instead of folding the company and you having to take a loss today?”

The fact that Tony and Gavin O’Reilly and Denis O’Brien are wrestling for control of the company is fascinating, but it’s not really the nuts and bolts of the story. The major narrative is whether they will have anything to fight over when the recession lifts. Park the individuals for now and look at the solution.

The bondholders have decided that it is in their interests to swap their debt for equity in the company. They have made a call, which can be summed up as follows:

‘‘We believe the company will make money in the future and therefore we have ‘hope value’. Otherwise, if we were to enforce the contracts for all the debt repayments now, we would strangle the company, and everyone, including ourselves, would lose.”

They have decided to take shares in the company, instead of debt. This means that the major shareholders lose significantly but, importantly, live to fight another day.

The bondholders now have a huge interest in the company turning itself around, because they will be paid through the share price. The fact that they bought the shares at close to rock bottom implies that they lose cashflow today in the hope of capital gain tomorrow.

This, in essence, is what has been achieved. The debt equity swap is one of the oldest tricks in corporate finance and is standard practice for companies and countries that find themselves in a debt induced quagmire after a boom fuelled by too much borrowing.

Now, armed with this template, let’s look at Ireland and our banks and housing mess. Let’s start with the people, not the institutions, because economics is about people, not bricks and mortar or corporate logos. Nobody in Ireland cares where we bank our money, as long as the bank is robust. This is the crux of the problem with Nama. Brian Lenihan, the Minister for Finance, seems to believe that the banks and their survival matters, but they don’t. Only the people matter.

The minister seems to believe that you can’t screw the bondholders, but the INM deal reveals that bondholders are eminently sensible and will do deals which make sense. It also reveals that the creditors are wise enough to realise that they too share some of the blame for lending too much to the company in the first place.

If they were happy to share the gain in the good times, they should be ready to share the losses in the bad times.

Despite all the international evidence, our government seems to believe that, if you do a deal with creditors of banks, you are screwing them. Furthermore, the Department of Finance contends that, if you screw bondholders now, the next time you go back to the market, they won’t be there for you.

In contrast, it knows that it can screw the people now, because the next time you go back to the Irish people, we will still be here. Unlike the bondholders, we can’t go anywhere; so we get screwed by the very people who are supposed to be acting in our best interest.

But it doesn’t have to be like this. What if the state looked at all the negative equity in the mortgage market – some 300,000 people at this stage are in this position – and dealt with the long-term solution to this huge and terrifying problem which is shattering families all around the country, by taking the equity in the house.

Why not create a new bank, let the rotten ones go and do a deal with old creditors based on their sharing the responsibility and the potential upside?

We could easily say to the people in negative equity that we are going to write off half the mortgage in their house, so that they can stay in it and try and sort out their lives without all the trauma of defaulting.

In return, the banks’ creditors would own a certain proportion of the house and the homeowner would pay them a small dividend every year. When it came to selling the house – let’s say in ten years – the banks’ creditors and the homeowner would both share any upside.

So we create a debt/equity swap for the nation. No need for Nama, no need for higher national debts and no need for a monster property company, which will jam up the system for years. We also wind down our banks, create new ones and keep the bondholders on side with the new deal.

This is what happens in the real world. This is what happened at INM and it is what adults do when faced with a problem: we find a deal. It’s not unusual, it’s capitalism.


  1. McWilliams Cleaning Solutions : by Moonpower
    ( formerly The Medicine Hat Show )
    Edited and tuned to the Moon

    ( includes ingredients from German Runic Stones and Emperor Napoleon War Benefit Relief ) ( don’t mention comic)

    Projected Results :

    Part 1
    Ireland Inc ( Top of The World National Debt Performance )
    Ref: 00000000000000000B
    Directors: FF Cabinet ( to be removed immediately)- replace with ‘we are not sure’
    MD: Brian Lenihae hung dried and smoked) — replace with ‘still don’t know’
    Chairman : Brian Cowen ( Machiavellian & Poisoned Chalice Manager )( to be replaced any alcohol free Showbiz person)
    Creditors : None
    Security : None
    Shareholders : Irish Passport Holders
    Directors Remunerations : Independent New Irish Electorate Commissioner to be appointed to ensure equity prevails in common with other EU countries relative to size and responsibility and all expenses only paid upon presentation of approved vouched documents .
    Pensions : Many current members will retire and run away with their Gold Bars & Gold Balls and new Yellow Packs will replace them that have knowledge of Lidl & Aldi philosophy.
    Auditors of The State : Got no answer to this Question yet but will talk to Marion Finnucan and Joe Duffy .
    Bondholders Ref : Letts Hugs & Kisses Reserves : Build up a supply of Chinese medicine to administer around the neck when necessary.

    Part 2
    Irish Banks ( Flushed With Reserves )
    Sovereign Denomination : King Khalid’s Pot of Gold
    Directors : Al Capone ; Grenzle Bear , Slutzl
    Secretary: Heidle Weiss
    Shareholders : Bondholders ( Slave Traders ). All OAP get only 1% in a managed fund or they can have them written in old expired Russian War Certificates
    Salaries : Same as Lidle Store Managers
    Auditors : Jewish Alliance ( Syn & Gogg & Kabalah)
    Legal Advisors : Solomen & Solomen & Mines Auditors Remuneration : Peanuts & Khoshers
    Auditors Apologies : How can I help You
    Company Performance : Envy of EU.
    Government Proviso: That the banking license is valid for 10 years and that the bond debts are paid back in full to be reinstated by a new generation of ‘New Irish’.

    Wobble Wonker’s Factory Opinion

    I think this is a great idea to be worked on .I am reminded of Napoleon when he watched his Soldiers injured from the ravage of war and had sympathy and created a new law to assist them financially and called it ‘Viager’ .This is still in operation in France and is popular .We here in Ireland do not have any such laws .We may have fake versions of it ( Reversion Interest — Buy Back etc ) but allow me be honest we just don’t have any and to try to adapt what we have is the same as extending a dilapidated house with a modern extension and nothing seems just right afterwards.
    This article raises us ( residential borrowers in particular) from Slaves to Soldiers but that’s all .Its better than nothing as things are and it attributes to us our real responsibilities. It gives us hope .Creative finance and law needs to be weaved and woven and knotted and crocheted till it is exactly right and proper and a complete new law. Whatever happens the evolution of this FF mess we will have to visit this topic again. There are many questions and many answers .What is interesting about the French Viager is that the only people that gain are in this case :

    a) The Bondholders ; and

    b) The Residential Borrowers .

    In other words in general banks and auctioneers make little or no money from it as it stands. That is good news. Banks will only make money from projected retail banking .
    We must copper fasten this solution with absolute elimination of cute hoorism it’s too serious to play with.

  2. Fianna Fail Jailors Whore House
    Ireland Inc ( Captive State in Liquidation)
    ref: €90B

    Directors: FF Cabinet ( in the bar most of the time )
    MD Brian Lenehan ( Slave Trader )
    Chairman : Brian Cowen ( Machiavellian & Poisoned Chalice Manager )
    Creditors : International Bondholders ( Slave Farm Owners )
    Secured by Charges on All Irish Taxpayers and Passport Holders that are now deemed indentured as Irish Slaves indefinitely to Deep Black Vortex PLC ( under stewardship of ECB and soon to be IMF c/o Zimbabwe )
    Shareholders : ALL Old Age Pensioners who got screwed by a Banker

    Salaries Paid by Ireland Inc to : FF Cabinet more than any European Politicians :
    Expenses Paid: Incredible &Massive Amounts including loads to Johnny Cash- easy criminal ( aka Mr Procurement and Privileges )
    Pensions : Golden Balls , Golden Handshakes ,Ooodle Mc Coodles Funds Infinite .
    Remuneration paid to Irish Taxpayers : NONE ( actually instead the taxpayers paid (to Revenue Funds) in more than they were told in fact lots more than they can afford.
    Auditors of the State: Well Lads there is no law against Crime ( wink) .What do you want to know?
    Bondholders reference number : Mafia Omerta c/o Don Corleon friends of smirkers

    Irish Bank Regulatory Performance

    1. Irish Banks FCUKed
    Ref: €90B trf to a captive fund c/o Slave Trader
    Directors : Proxies ,Pals & Buddies ,Resigned , Kicked ~~Out, Ran Away, Puppeteers , awaiting reinstatement of an honest new Board mostly D4 Kriminals
    Salaries Paid: Gold Plates, Cars, Rolex Watches, Loads of ‘X Euros’ (wink),Sun Tan, Olive Oil, Casinos ,SA Randy Money, and free Rugby Tickets ,bankrupt free Aer Lingus tickets .
    Auditors: Lying & Ernst ( jointly) Older & Yung
    Legal Advisors : Greed & More Greed & Sons & Daughters
    Auditors Notes: Forgot to spot the Millions of Loans given to Directors ….amm we don’t know if anything is performing or not .We just don’t know anything ( now give us our money or we blackmail you ).
    Auditors Remuneration: Millions Millions and more and more
    Auditors Apologies: Mind your Own Business
    Company Performance : Worlds Worst
    Company Reliability: Cool Criminals

  3. Deco

    There are several aspects to this article. First the banks are capitalistic enterprises. Lenihan seems completely blind to this. But then this is to be expected. The Lenihans (including O’Rourke) are a clan of civil service employees – they completely misunderstand the profit motive. They also seem to take moral stances on ‘maintaining the pretence’ when it would be better to be completely honest. So Lenihan’s intellectual model for analyzing the banks is flawed.

    What David is saying is some elementary and intelligent that any eijet would get it. Except Lenihan, who has a mental construct, and an elabourate education. And a man with an elabourate education can elabourately not see the straightforward solution in front of his nose.

    Maybe, I am wrong – maybe Lenihan is not the decision maker – maybe a phone call from Frankfurt is the other end of the policy. And anyway didn’t GP Finance spokesperson Dan Boyle declare that the banks were more important than the factories to the economy. Even if Lenihan knew what was required, the GP economic fruitcakes would prevent him from implementing an intelligent policy in this regard. Even worse, when he is mistaken, we can be certain that the GP will encourage him. He is surrounded by a collection of clueless fools and nepotists whose primary objective is preventing the general publci from seeing the true state of the Irish banking system.

    David – excellent article. A “wake up and smell the horsemanure in the banking policy” type article. Irish government banking policy is flawed. It is presided over by a lawyer. There is no economic comprehension. We do not need any more evidence of Lenihan’s economic cluelessness – just look at the Anglo debacle.

    Capitalism is a risky activity. There has been a bias since Greenspan for state policy to reduce the risk in capitalism at the expense of the general public. In essence the current Western model of economics is biased towards the owners of capital, and against the providers of all other economic inputs. This results in serious long term problems to the resource base of the economy. We get a misallocation of profits in finance, consumer services and retail, and the expense of industrial production. And we are told that this is ‘progress’. All that we are left with is debt mountains – and buffoon politicians like the three FF stooges and the three GP stooges.

    David has to be careful with respect to libel laws and the banks. Thankfully Phoenix magazine have the tradition of telling us what is really going on in the D4 banking community.

    I recommend that you get the copy of Phoenix with Cowen and Martin on the cover if you can. Somewhere near the end there is an article titled “the 170 Billion Writedown in the ISEQ” or something like this. And it details the real situation with the Irish banks that Lenihan has so much faith in.

  4. liam

    David,

    On the money as usual.

    You mentioned something similar to this idea maybe a year ago, no? I think essentially what you are saying is Ireland creates a ‘good bank’ that acts as a proxy for the renegotiated positions of Irish mortgage holders w.r.t. the banks bondholders.

    If the banks and bondholders were culpable in lending, then so, unfortunately, were the borrowers. This idea would require very careful structuring so that it did not result in smacktards with 15 times salary mortgages getting off the hook (by way of reduced mortgage payments), while more sensible mortgage holders are left with the status quo and its attendant risks. Even under benign economic conditions a certain amount of mortgage holders will default (I admit, I have no idea of the percentage), so preventing abuse of the scheme you propose would be not impossible but complicated and would require a certain amount of faith in, and honesty from, both the mortgage holders and the bank.

    So how about opening this bond option to all mortgage holders, and allow the mortgage holder to buy back the bond when it matures?

    In the spirit of crisis-is-opportunity, it might even be possible to provide incentives from which the economy as a whole would benefit. Now apologies in advance if this sounds like wishy-washy nonsense, but hear me out.

    Energy is the biggest long-term challenge Ireland is likely to face as Ireland is heavily dependant on imported energy. According to Sustainability Ireland, 30% of all energy use is domestic (~99% of which is heating water or air). The mortgage holder agrees to essentially give up some portion of their equity with the benefit of reduced mortgage payments, you could have a scheme whereby they agree to some fixed rate or reduction in energy consumption for the property over a fixed year period, in return for which they claw back some of the equity, paid for by the state.

    How the gains are achieved is up to the owner. If they want to install technology and modern insulation, this is the best. It would also have the effect of increasing the property value due to its inherently lower running costs, which can be tied in some way to the equity return so that the repayment of the bond does not exceed its original value. The gains are not huge in terms of oil imports, at current prices its a few €100M at most (but more as the price increases, as it will do). But think of it as an investment in strategic national infrastructure, like building a power plant.

    This is just one idea, but in any case, its a way to release housing equity in to the productive sector of the economy, whatever the incentive used.

    • liam

      I’m not sure that is clear. essentially I am saying whatever scheme is used should also have benefits that are accessible to people who were sensible enough not get carried away in the boom. The scheme proposed as-is indirectly punishes them.

      • liam

        I had myself convinced for about half an hour. Clearly this is nonsense and The McWilliams Plan should be implemented without delay (this is not sarcasim). An object lesson in speaking without thinking. I’ll get my coat…

        • Philip

          I really like this idea and what’s more, you are increasing the value of the asset into the future as energy prices ramp. Anyone have a modeller to run the numbers?

          • Tim

            Liam and Philip, I agree that it is a good idea and that you should not write it off like that, Liam. I do not have a modeller to run the numbers, but I do have solar hot water; it is an excellent system and the numbers on it, reflected in my electricity bill, would broadly suggest that Liam’s idea is a good runner.

            Can we all play with this for a while and revert?

          • liam

            It won’t work because nobody would be mad enough to give up a big chunk of equity for the sake of a mortgage holiday, unless they can’t afford the mortgage and are facing being turfed out of their house. Some back-of-an-envelope calcs on the train home confirmed that, hence my comments.

            I’ve also liberally and incorrectly interchanged ‘bond’ and ‘equity’.

            If you can use existing equity to raise a bond to do the work, fair enough, but giving up equity would be just mad. worse, if the asset price increases, the amount you have to pay back goes up. I’m not sure it would not be easier and cheaper to either re-mortgage to get the improvements or for the state to simply fund the cost. A bond option is no good for folks in -ve equity, and debt-for-equity is no god for folks in +ve equity.

            I’ve only spent a little time thinking about it, your welcome to have a crack though.

  5. Alan42

    When I was emigrating to Oz I was short of a couple of points . In order to gain the extra points I had to buy a $ 100,000 bond in a State government . I had 3 choices . Tasmania , South Australia or NSW . I knew nothing about bonds and neither did my accountant ( he concentrated all his efforts on sending me invoices ) Anyway with a bit of research over the internet and with the help of some friends in Oz we concluded that the SA Govt were the safest . In that they had strong but steady growth , were not crippled by debt and they had mines . I only had e-mail contact with the SA govt bond people . I had lots of questions and they replied with one line answers . So I bought a bond over the internet . I went to the bank to transfer the money . The bank manager thought that I was nuts .” The bond only pay’s 5 % , you should buy a house . I told him that I was emigrating and selling a house . He replied ” Rent the house and use the $ 100,000 to buy another house , go to Oz if you must and sell in a few years , a much better rate of return ” Anyway I digress .
    Now I am not a Country , a major company or a bond trader and my bond is probably nothing like the bonds in the article . But if simple old me who can’t afford to throw around $100,000 Au at the drop of a hat can do some simple research and buy a bond in a country on the other side of the planet , why are the Irish govenment so afraid of the international bond market ? Don’t the NTMA deal with them all of the time ? Have they not got finance experts and economists who know how these deals are worked out ? Irish banks are not the first ones in the world to go bust or be wound down . There must be some kind of standard way of dealing with a banking crisis that is the industry norm . Has the worlds financial system not now been stabilised and would it not be easier to wind up banks now rather than a year ago when everything was crashing at the same time ?
    Weather NAMA is a good idea or not , why are we not just getting on with it ? If its such a crisis why did the government go on holiday first ? I know that they were working on legal details in the DOF . But we can’t even issue speeding fines without the law being full of loopholes resulting in cases thrown out of court . NAMA could be tied up in court for years .
    The GBF seems to be over , banks have gone bust , been bailed out , have merged and are back in profit again and here we are still discussing it . Now we are waiting for 500 hippies to make up their minds .
    Yet the government are acting like we are borrowing money from Tony Soprano who just watches the VB show or Prime Time for his market analysis instead of organisations with teams of analysts , complex mathamatical formulas and big computers , finance and economic experts with degrees in all kinds of financial related boring stuff etc who can look at INM and see that they have assets all over the world that will increase in value as the world picks up and they will get a good return .
    The ametuer bond trader that I am thinks that the banks bad debts must be much bigger than anybody is letting on . Why are the government acting like Tony and his crew are about to pay a visit ?

    • Alan42

      I have no Idea what the GBF is , maybe its the next crisis . I meant the GFC .
      I have another question . Irish banks were making big profits even before the property binge . I remember looking at the annual report of AIB in the early 90′s and thinking that I was in the wrong business . So is there not a bank somewhere in the world eyeing up Ireland and thinking ‘ 4.5 million in need of a bank , competion is limited , lets open in Ireland and make a killing ‘ ?

    • Tim

      Alan42
      “The ametuer bond trader that I am thinks that the banks bad debts must be much bigger than anybody is letting on.”

      Yes, it is. Last I heard, the corporate (non-banking) debt is over €1.6 trillion. The danger is, if these companies go to the wall and are all/mostly Ltd companies, it will be “curtains”. This is almost never mentioned in the media.

      Also, news arriving tells me that JO’D has already resigned. 6 news did not say. I wonder if 9 news will?

      • Colin_in_exile

        Tim,

        No news as of yet confirming resignation. If he resigns, what happens dail arithmetic? I presume Howlin will become cc, does JO’D simply park his large fat derriere on the FF backbenches? Is NAMA less likely to get passed? What’s the numbers breakdown? Anyone know what way Finian McGrath will vote on NAMA?

        • Tim

          Colin_in_exile, If he has resigned, he returns to the back bench, like Bertie. He forfeits his “free pass” in the next general election. Whoever replaces him, brings about a bi-election in their own constituency, unless the govt falls before that can be arranged, of course.

          • Tim

            Colin_in_exile, just……. wondering why you repeat the obvious?

          • Colin_in_exile

            You mean FMcG on NAMA? I haven’t got an answer yet. I thought he was all pro community, in the underdog’s corner, etc……

            Do the people (working class Dubs) who voted him in expect him to prop up the Banksters/Developers at their expense? Is he not getting any phone calls from his constituents complaining about how unfair NAMA is?

  6. MK1

    Hi David,

    I like it when you come around to my way of thinking, ie: Lance the Boil, create a new good bank and jetison the ill ones that are listing. Shout it loud and clear.

    David: Nobody in Ireland cares where we bank our money … Brian Lenihan seems to believe that the banks and their survival matters, but they don’t.

    This is a key point. I am trying to figure out why any government would save our ill banks at all costs. Anglo is in a particularly bad state. The ECB and the E.Commision turned an initial blind eye to its categorisation as being systemically important to Ireland Teo, but they are questioning that now I understand as our givernment readily admits that the recent 4b it threw at it is good money after bad.

    Some things that I can think of:
    – NTMA (in the NPRF) still hold a load of AnIB, AIB, BOI shares perhaps?
    – many ‘connected’ people still hold bank shares (Quinn?)
    – many in FF still hold banks shares

    We know that ‘grey-haired-ireland’ held many BOI/AIB shares as they were seen as Blue-chip and safe. Yes, every high steet in Ireland has a BOI and an AIB and some have alternatives for colouring rather then for real competition. Yes, they could be seen as culturally ‘embedded’ …. BUT …
    They arent. They are just businesses that have gone bad, businesses with special licences which have been sucking money out of other REAL businesses for decades. Its not as if we EVER had efficient banking here, lets face it.

    So, these ill banks present us with a great opportunity to clean up and reform our banking system.

    Now we know what to do with the banks, lets get back to the current ‘cashflow’ problem of Ireland Teo.

    Government Income minus Government Spending is a large negative number of the order of 20billion. Its true that we do have a bit of headroom to borrow to cover this but its still money going in the wrong direction, a false economy. It cant go on.

    How do we change it?

    I think both cuts (66%) and tax increases (34%) is the way to bridge the gap. Salary and gov services cost decreases (as we dont have the power to devalue a currency) should be brought in. Major reform and cost cutting and getting rid of waste.

    Hard nettles to grasp: unemployment benefit. This is tooo high by EU benchmarks. Minimum wage: again too high. We have no option but to cut them or tax them, etc.

    BUT …. lets cut the top-level fat first!!!!!
    The difficulty is that the top-level fat is running the place (ie: government), and public sector and private sector and indeed media are also top-level fat. EVERYBODY apart from brain surgeons earning +80k should have that amount above 80k taxed 100% as an interim emergency measure.

    We need some Barbarians at the Gate of the Dail if you ask me!!!!

    MK1

    • Tim

      MK1, Correct…… and Right. Scary percentages, though, which would have an awful knock-on effect through the economy via VAT returns and drop in retail returns, I fear.

      The economic balance is terribly precarious at the moment. What you suggest must be done forensically, rather than by the blunt-instrument, slash and burn approach that the govt is currently taking.

      I urge caution; lest your sensible approach be taken by idiotic people, in sound-bite fashion, as a lump-hammer in the hands of an ape.

      Let’s keep at it!

  7. Malcolm McClure

    Beanz Meanz O’Reilly and MiniCTC O’Brien fighting over a couple of newspapers reminds me of a couple of Maintz monks disputing a quiver of quill pens and a few sheets of vellum, when Johannes Gensfleisch bin Laden zum Gutenberg has opened his new printing shop just down the street.

    Web2 and mobile phones have changed the entire basis of world commerce. The new game in town is ‘who can get to a sales opportunity quickest with the mostest at the best price. Banks with 3-day clearance of cheques, employing armed military outriders for deliveries to ATMs, and offering zero percent interest on current accounts, (even though on average they hold a third of our income for half the month, which they then parlay into their cash reserves and borrow 12 times that amount) is a simply unsustainable business model in this day and age.

    We have all been brainwashed into thinking that it’s bonds and equity that makes the world go round, whereas it is raising children in a stable family environment that makes life worthwhile for the majority of people. Until the government gets its priorities right there is scant hope for the country.

    • Philip

      I suspect there are dozens of business models that have been damaged in the way you indicate. Large scale outsourcing is but another example of model change that has seriously disrupted the western world. Trouble is that the values which sufficed until then, no longer apply…the tide rising all boats moniker starts to fall apart when effects are delocalised.

      Community and Family are key. Once that is working well, it;s always a good longterm bet. Which brigs me back to good energy use and having sufficient available. But that’s another topic.

      Back to David’s point, I see one glaring gap that needs some class of a solution. Jobs! Now I’d like to see how this suggestion of David’s might address this in a time when credit will unavailable for the next 12-18 months. I like Liam’s above suggestion which is a possible practical play on the same theme.

      • Tim

        Philip, not a worry about jobs, we did the “Vote ‘Yes’ for jobs” thing, last Friday, that Fine Gael posters exhorted us to do.

        Happy Days!

        • Colin_in_exile

          Tim,

          Didn’t MO’L say he may relocate hundreds of Ryanair jobs out of Ireland if the outcome was a No vote? Clearly FG’s advice here is correct. Delighted to see you are taking on board advice from other parties.

          • Tim

            Colin_in_exile, now,now……

            …Let’s not go there again! I am not promoting FF; but I am pointing out our democratic defecit……

            Please, do not reply to this one……. or I will have to ignore it; I made a promise to our kind host and I intend to honour it.

    • Tim

      Malcolm McClure, I find myself in broad agreement with you here, though I am not a hundred percent sure that the INM battle is just over “a couple of newspapers”.

      Electronic media have, indeed, altered the commercial landscape and the banking business model has been flawed for years, but it is even worse that you say, I fear. The cash-transport system the banks use is paid for, mostly, by the taxpayer: I always see two garda squad-cars, each with at least two Gardai in it and at least two Defense-Force transports, each with God-only-knows how many armed personnel. We pay for that. Why? We even paid for it when the banks were making billions in profits. Indeed, when we were all trying to suggest ways in which the govt could save money last year, this was one area that I focused on; I think I had a figure for it at the time, but cannot recall how much right now, sorry. (If I find it, I will post; I think it is one of the first things that should be changed.)

      I agree with your third paragraph in its entirety and could not have said it better, so I will stop now.

  8. Where is Furrylugs your Nation calls you .

  9. Deco

    The flaw of both Denis the Menace, and The Wily O’Reilly is that they are both are missing the business opportunity of a lifetime. Malcolm hits the nail on the head. Newspapers are a declining technology. And anyway much of the content is fairytales. Just look at the IT and it’s coverage of economics between 1997 and 2007. One article per week from such Einsteins as Dan McLoughlin and Austin Hughes. (eh, where are they now ?? :)))

    The two “big O” egos should get sense, and go into banking instead of papers. Buy one large building in West Dublin, and smaller outlets in Dublin city, Cork, Galway, Kilkenny, Dundalk, Sligo and set up a bank. An business bank or businesses that are making real stuff or providing real services. With their capital reserves they would be able to claim to be the only good bank in the country. Their competition would in now way to deal with them.

    The private sector has failed to generate new competitor banks to take over from the decripid bad banks. Maybe they are scared away by the effective protectionism of the established players – by the government.

    John Allen is correct – Switch on the Bat-Signal for FurryLugs :)))

    • Tim

      Deco, we already have a good bank, with cash reserves and branches in every town in the country (and it enjoys a full govt guarantee – always did).

      It is called “An Post”.

      I have been trying to have this heard on radio, TV and newspapers for months; but no-one will say it in public. Every media outlet seems intent on supporting the spin that we need to save the bad banks because we don’t have any good ones. Why?

  10. Deco

    We need to differentiate between two competing factors for predominance ultimately.

    The deposit base – which is savings of PAYE taxpayers for their own investment and future consumption, and which represents the future prospects of the society and economy.

    The misallocated money thrown into the property ponzi scheme – which will never come back, and which demads strong repayment.

    Violating number 1 is a violation of Article 45, Bunreacht na hEireann. Though I do not know if Article 45 has any power any more.

    Violating number 2 would destroy the careers of bankers, punish the rich for throwing money into a ponzi scheme, and annoy the lobbyists in Brussels.

    Lenihan, Cowen, Boyle, and the idiots in the Department of Finance – who together constitute a collection of dunces in all matters relating to the economy have already decided.

    Capitalism for the poor (as per David’s article on Letterkenny) and socialism for the rich (as per Ireland’s supportive policy for reckless bond-holders).

    For Pete’s sake Lenihan – even George Dubya Bush and Henry Paulson thrashed the bank bondholders. This policy of bailing them out with the PAYE taxpayer is the most stupid policy ever concocted in the history of the state. And that really is saying something !!!

    Another thing – where are Morgan Kelly and Brian Lucey ??? Have they been silenced by the regime ???

    • wills

      Deco, lucey is very busy on comments over at irisheconomy,ie

      • Deco

        Wills – I am going to check that out. Prof Lucey is very diligent and takes his job seriously. And unlike Lenihan – he knows the difference between an Asset and a liability.

        • Tim

          Deco, may I refer back to a question I asked many months ago (March or April, I think)?

          What about Alan Ahearne?

          He was against NAMA in Jan/Feb, when he wrote some powerful articles against the banks and govt plans for them.

          Then he was hired by Lenihan and he did an about-face.

  11. adamabyss

    subscribe.

  12. Deco

    I don’t know if anybody seen Prof. Niall Ferguson’s documentary “The Ascent of Money”. There is one really good episode concerning Risk. For some reason, it suddenly seems relevant. I think it is the fact that current policy is about dissipating risk across the system.

    The problem here is that this will break the system. Effectively the public welfare state will be broken by the efforts to take risk out of capitalism. We have to accept that there needs to be pain, as a result of the correction. The fairytale mindset (it all ends happily ever after) is inately stupid-but still Lenihan believes in it.

    The consumer debt mountain is coming crashing down on the rest of the economy. We need to stop borrowing endlessly and pointlessly. When I look at breakingnews dot ie, I see one scandal after another involving the misappropriation of public funds. (and yes ‘whiskey-eyes in the robe’ should resign his Dail seat as well as his office).

    • wills

      Deco, ‘death spiral’ unleashes the truth. These reveals are the crony network edifice imploding. It’s cohesion melting away like a ball of wax as the truth relating to the ‘pigs at the trough’ epidemic unleashed by the ‘credit bubble’ flies nearer to the sun / trough emptying out.

      • Deco

        Wills – I think what we have in this country is a continual PR exercise with the objective of preventing the PAYE sector from finding out what is happening.

        There is a culture of ‘denial’ rampant at the top in both D2 (the State) and D4 (the banks/the ISEQ directors). I think that they have more of an idea about the true state of reality than they are admitting. It is a case of keep coasting and rest of the folks out there will never know any better.

        In which case we will keep asking questions, keep probing for information and ignoring the reassurances. Be prepared for a calamity in the national finances. Because that is exactly where things are heading.

  13. cozzy121

    David, while I admire your perseverance, I’m afraid you’re again ignoring the difference between government (specifically this one) and business. The deal between the bondholders and INM is (by in large) a deal between honourable business professionals who’s common goal is to make profit and they will work towards that goal, be it save a failing institution. They have a certain level of trust towards one another.
    Contrast the above to what bondholders would have to deal with, when sitting down to negotiate with our lads in charge or their civil servants. One sides goal would be to make a profit (a return), the others sides’ goal would vary from self profit, self interest, self indulgence, self flagellation, self pity and self-service.
    This governments fear of not screwing the bondholders is well founded — our lads realise the bondholders know how truly incompetent they are and know they wouldn’t be able to negotiate any sort of “deal” with the bondholders.

    • Tim

      cozzy121 , This is inaccurate. The “punch-above-our-weight” stuff is true, for whatever reason,

      One could possit that it is because we have more Nobel prizes, per head of population, than any other country…….

      Or you can say how stupid we are……..

  14. I believe the main stumbling block to David’s idea are the Mandarins in Merrion Square who only have one mindset and that is ‘what is in it for them alone’ .It is this cold poker faced little hitlers that have ruined the nation and the Government ( especially Berti ) did not try to stop that sooner .All of them need to be shafted by the appointment of an over see body appointed by the electorate and be seen to do that .

  15. Tim

    David, a very good idea; then again, I would find almost any capitalist solution better than NAMA. Deco is correct, too: Capitalist entities should survive by their own capitalist rules.

    Here is a useful article; summary of issues we should have with NAMA and raise them with anyone who will listen, before its too late:

    http://www.progressive-economy.ie/2009/10/guest-post-by-brendan-williams.html?showComment=1254831392365#c7860681842859430998

    • Malcolm McClure

      Tim: Picking up my suggestion of yesterday that Labour is the natural party to protect your self-interest, which you never answered, it has just come through that Eamon Gilmore in Dail has just stated his intention to call for O’Donohue to resign. Seems he is the only leader with the cojones to call a spade a spade.

      • Tim

        Malcolm McClure, sorry; I did not see that post. My sources tell me that JO’D has already resigned – its just not on the news yet.

        However, back to your suggestion: LAB would, indeed, ostensibly, appear to be a comfortable place for the expression of my political activism – if only it functioned as it proclaims. When I saw Ruairi Quinn canvassing his constituency in the ’90s and driving his Merc in Sandymount, but switching to a banger for Ringsend (even changing clothes for the switch!), I smelled a rat. Then, ’97 (I think), I saw Nurses on strike at St. Vincent’s hospital while there was an index-card advert on the notice-board in the Mater Hospital seeking a sixth nurse to share a three-bed BEDROOM just to pay the rent (they work different shifts, so three can sleep while three work) and Pat Rabbitt turned-up on their picket-line and said “Get back to work!” and some of their union subscription out of their tiny salary goes directly to the LAB, well……….

        That was it for me.

        Champaign socialists. The problem in Irish politics (perhaps in most countries?) is that they are all in on it. Gilmore plays “The Opposition Game” very well, I’ll grant you………

        But it is still only a game, to him. As I said last night, though I want to see JO’D gone, I don’t want that to be the end of it; Let’s see all their expenses claims, including Gilmore’s. (I work in his constituency, so I have my reasons…..)

        Apologies again for missing your question yesterday.

        • Malcolm McClure

          Tim: Fair enough. It’s an invidious choice for voters all over the world, because it seems politicians everywhere soon discover that to keep their seats they have to comply with what the ‘big boys’ want, rather than what the voters thought they were voting for.
          ‘Fraid I have no solution for this. Seems that democracy sucks. Maybe we should all put our efforts into keeping our nearest and dearest content rather than trying to change the world.
          Yet you say ‘Let’s keep at it’. Why? I can assure you that the big boys aren’t reading DMcW’s blog tonight. They are smoozing each other beside a pool somewhere sunny and warm.

          • Tim

            Malcolm McClure, I say “Let’s keep at it!” because I want o encourage posters to speak their truth, thus, spreading it.

            We are NOT doomed; someone, some post here, may spark something that will effect some good.

            We all know that the big boys are ferreting-away in the bachground; but, can I tell you this, Malcolm?

            Most of the “big-boys” are not on the internet, not on blogs, not on facebook and not on twitter.

            Ergo, we have the advantage, for now. Must use it.

            That’s “why”, if an expressed-reason were needed.

            I am going to cease “justifying” my self/my actions/my postings here,and allow them to speak for themselves.

  16. mediator

    Couldn’t Agree More

  17. wills

    Captain, aarrrrrrrrrrrghhhhhhh, our ship’ POnzi Rep’ is headed for the rock’s.

    $400,o00,000 per week borrowings to pay bills = heading for the rocks, rrrrrrrrrrrrrrrrrrrrrrrrrrrrrr.

    Taxx revenues falling off cliff, rrrrrrrrrrrrrrrrrrr.

    Competitiveness KAPUT, rrrrr.

    Captain, der ‘ar rumblings ya see amongst the crewww captain, rrrrrrrrrrrr

    The trough is running out, and the rich will get the lifeboats.

    Crony networks are a imploding and everyone is at each other throats captain.

    The public / taxpayer and the gov / bankers / corporate’s live in two different worlds.

    So, David, does your article reckon BL etc is bulldozing NAMA through on the basis of being ignorant in relation to international creditors wish list, and that he is dancing a jig to the creditors tune and giving them what he believes they want which is NAMA… i dunno, methinks BL ain’t putting international creditors as number 1 priority.

    Secondly, i don’t think negative equity is a problem in of itself if occupier is not going to use house as an ATM card, which is TOUGH. A house is not an investment and Ireland went down the toilet when our culture started to glorify and hype up the property get rich quick who wants to be a millionaire rubbish.

    “WHy not create a new bank, and let the rotten one’s go’…………………… that is the question,. that is the talking point david, there it is, why is NAMA really taken place, what is really going on here,

    the gov know…………

    1; NAMA hijacks the pice discovery mechanism for property and so stops the restoration of the market equilibrium price for property.

    2; competitiveness was destroyed by the property bubble and here they are frankensteining a new bubble in the full knowledge that the bubble ramsacked our competitiveness and so how can we get competitiveness back if the property prices are rigged by the state, nevermind the auctioneer ar even the seller.

    3; the credtiors are not like vulchers circling for blood. The international creditors and the banks are an ol boy’s network in of itself and david we all know if gov can run to ecb and secure a 54 billion hand out for bonds issued that these guy’s are in touch keeping each other up too speed 24/7.

    THe gov do not care one fig for the public. THe expense scandal’s and molloy golden handshake and the instant guaranteeing of banks using irelands wealth,and the instant bailing out of an investment bank ANIB that never gave mortgages to joe bloggs, and the way carroll can play ring a ring a rosie in the four courts, and the like, show, that, the gov and the connections operate in a different ecosystem too the working man. So, whether we like it or not, anyone who continues to think that the gov are accidentally doing NAMA through ignorance, or, the gov are doing NAMA for the betterment of the taxpayer, or gov are doing NAMA to get credit flowing again, are in la la land.

    The gov are juggernauting NAMA through because it works. It works for them and their crony network.

    THat’s the real politic. Ireland is not a functioning democracy. It is a centrally planned controlled economy run by a central banking oligarchy and we are now seeing the feet of the rogues and scoundrels sticking out from behind the 11,000 euro curtain,, and NAMA is too preserve the neo feudal system going forward into a brave new world these technocratic geeks and nerds and chancers have in store for the rest of us.

    Don’t say i didn’t tell ya.

    • Philip

      Ireland never was a functioning democracy just like we never were genuine practising Catholics/ Christians. We are drunken mystics who run to the nearest moving statue or start seeing things in a chopped down tree. Once you start with this realisation, the rest slots into place.

      Ask and Irishman about lying, being a scoundrel, being rogish etc. and for the majority of them, they see this as the basis of survival. Ethics simply has no place in society. We whinge and whine rather than assert what is ours. Look at the pushover PAYE workers, the slavers and ultimate losers who thought ethics was their salvation.

      Was listening to Joe Duffy today. The anger is building. People whose parents or themselves were never unemployed or unable to pay their bills are now starting to multiply. They were scrimpers doing the right thing. O Donoghue’s 11K Curtains from France for one office window etc etc.

      I think David’s idea is typical of what happens in a situation when trading partners run into difficulty. ADULTS at work. What he forgets is that Ireland has yet to enter its genital period before it can really mix it with the rest of the world.

      FF are the blankie/ soother of Irish society…and I think we are about to let it go. Petulant teenagers rise up!!

    • Tim

      wills,

      “so how can we get competitiveness back if the property prices are rigged by the state?”

      …Only one way to do that, wills: Force wages down massively, which is happening through Lisbon2, the Trade Unions and the Government.

      THAT is the juggernaut that is coming………
      …. to pay for NAMA.

      Stiglitz says the words: “rob the taxpayer” and “Bananna Republic”, in quick succession, in reference to what is being done to us.

      This man won the Nobel Prize for economics…….

      Will anyone listen?

      • wills

        tim, what we have here is ‘corporate communism’ in action.

      • Colin_in_exile

        Tim,

        Good post.
        “Will anyone listen?”
        The problem is many people are still in a state of denial about thedrop in value of their own property. I think I read somewhere like daft recently, that the average length of time a property is on the market before it sells is 9 months. This can only show up the seller as a beligerent .

        Also, there is our silver haired generation who benefitted from the “generation game” don’t give a fiddler’s fart about the younger generation (with the exception of their own family of course). In fact, they are the original me feiners, and passed on all these attributes to their children, resulting in less and less social cohesion, resulting in a game of “everyone for themselves” . The game is up now and these people are like rabbits caught in the headlights, unable to listen, see or understand how the government is about to rape them.

        • Tim

          Colin_in_exile,”about to”?

          Already done….. coming back for more: watch JO’D pension, if he retires instead of runnin in the next election!

          If I had his “package”, I would retire….

      • Colin_in_exile

        And before you ask, yes, my parents thought I should have tried to get on the property ladder (i.e. a 2 bed flat where catswingers are not welcome), and yes, I’ve proved the wrong, so now they know “house prices DO NOT always rise”.

        And sure if DMcW hadn’t come on the scene, many people like me would have been hoodwinked into buying property.

        • Tim

          Aha!

          Good for you! Fair warrior!

          Now, though, we have problem that we need to sort-out.

          (though, I was never going to ask).

          I have nothing to lose, here; which is why I post honestly. I did not “get drunk on credit”; I did not get “drunk on property”; I just lived my life, with my family.

          Why should I pay for the gamblers’ losses? Why should you?

  18. Tim

    Folks, Mark Little just left Nobel prize-winning economist, Joseph Stiglitz. He says, re NAMA, that the idea of overpaying banks for impaired loans is “criminal”.

    I agree.

    It should be on Prime Time tonight (if editorial policy allows the truth, for a change), just before DMcW’s new documentary, “Addicted to Money”.

    Let’s keep at it!

  19. MaxKeiser

    Dear David McWilliams,

    What you suggest re the effective bail out 300,000 people in Negative Equity will simply never happen.

    Just one (of the many) reason(s) why:

    It simply punishes those who did not take what was a hugely risky punt Irish Property market. (Property it’s self being hugely risky investment vehicle, and Irish property even more so).

    In effect what you propose above would reward those who stood to (and in many, many cases did) benefit from buying Property ~ with a bail out.
    Punish those who did not take the risk (despite huge pressures).

    Please correct me if I am wrong but you have previously written about this very hazard your self, but it is curiously missing from this weeks piece. While the negative equity issue is gaining media traction.

    This downturn will last approx. 6 months after we find the bottom of the “property market”. The way we are going with NAMA etc. we need to be careful about an entire lost decade.

    And what is worse is that your proposal would in effect delay the market bottoming out.

    Lastly it’s certainly is not capitalism, nor is it just the privatisation of profit and the socialisation on debt.
    But your proposal also involves the punishment (by their own Government) of those who chose, in a “Free market”, not to buy a highly risky asset class.

    With respect David ~ “Opportunity Cost, how are ya?”

    Yours sincerely,

    MaxKeiser

    • wills

      It is perplexing max why DMcW offers a reprieve for stranded occupiers in negative equity?

      Any takers?

      • Tim

        wills, I’ll take that for a run, if you don’t mind…..

        I think it is like my idea (some long time ago, now) that, if we MUST recapitalise the banks with billions from our pension fund at the NTMA, we should have made cheques, payable to those banks, available to defaulting employers and family-home-owners, thus killing three birds with one stone.

        1) The banks get recapitalised;
        2) Employers maintain jobs;
        3) People keep their family-homes.

        But this did not happen; The govt, simply, GAVE the money to the banks; and where is it? Gone! No good came of it. At least, with my idea, using only the very same money, some SMEs, some jobs and some homes could have been saved.

        Maybe that is what DMcW is driving at.

        He is trying to achieve SOMETHING other than jsut pouring money down a drain, as we have already done with the recapitalisation.

    • Alan42

      The problem is that these are real people and they are in very real trouble and there is thousands of them .
      I was watching Prime Time the other night and there was this woman with a mortgage repayments of 2170 a month . It did not actually say a month but most mortgages are paid by the month . I was stunned . I sold my house in 2004 and my repayments were only 500 a month . Both herself and her husband are unemployed . They are being protected by the moratorium for the moment . She said if they sold and got at least a hope price they would be left with debts of 140,000 . How are they going to pay that back without jobs ? If they do get jobs and come up with repayments they are dead to the economy for at least 10 years as they won’t spend anything .
      If you are one job down in a two income family already suffering from say a 10 % wage cut with extra government levies and are managing repayments of 2170 ( she seemed like a typical young homeowner ) what is going to happen when interests rates go up ? All these people are really important for the economy as they shop down the local hardware superstore , pizza takeaway .or whatever . Now factor in the social cost . Where are they going to live when the bank takes possession of the house ? Unemployed in social housing paying back hundreds of thousands of Euro for the rest of their lives ?
      Why about the people paying back 2170 Euro ( I am still stunned by that figure , maybe I did not hear it correctly ) with credit card debt ,credit union loans , car loans , personal loans etc etc . You’ll find a lot of them taking their own lives .
      Its just plain wrong and immoral to cast them to the wolves .
      Somebody somewhere must take responsibility for this mess . I would imagine the people who led us from boom the bust would be the people for the task . However it is not the case . Its not that they are unwilling to take responsibility . It is that they are incapable of any kind of responsibility and leadership . The only vision they have of future growth in the economy is with the developers .
      When I read David article about the banks holding the economy to ransom I thought it was a bit far fetched . But then I watched the ex CEO of BOI on the VB show and his single Mother’s comment ., I was amazed not by his single Mothers comment ( although bad enough on the day he gets the promise of billions of Euro ) It was his pension comment at the end . ” You need banks , where do you think your pension is ” We are being held to ransom .

      • adamabyss

        Alan42, you did hear right about the 2,170. I was stunned myself. However, my first thought was ‘what idiot would agree to pay such a high mortgage per month, whether or not both her and her husband were working’. It was a disaster waiting to happen. That’s what you get for believing all the ‘foot on the property ladder’ crap and not using your own brain to discern that it was all a scam.

        • wills

          adam, agree with you to the extent that, there are eejit’s who bought into this ‘madness’ and felt frightened into it, scared into it and then there are those who were jumping in head first, and were in it for the gravy train. This is a fact, not conjecture.

      • MaxKeiser

        Yes Alan, we were all shocked by her massive mortgage.

        Her partner worked in construction, & it’s also probable that they dabbled in the property boom else where too.

        They are taking real pain now – & that’s not good for anyone.

        But they stood to (& possibly did) take real profit from the property boom too.

        • Alan42

          Adam and Max . Well I agree it was nuts . I thought it was nuts at the time but I was never 100 % certain that I was right given the cult thinking on property prices at the time . ‘ Maybe they are right ‘ went through my mind a lot .
          As much as I think that FF are really just criminals in suits you would imagine that there is economists with very big computers toiling away in dark offices somewhere in government buidings shaping economic policy .
          I do feel sorry for her though as a ‘ but for the grace of god ‘ goes me ‘ If I was younger and wanted to stay in Ireland .I could be in the same situation . Her generation never seen hardship or recession . They are the ‘ Playstation generation ‘ They all thought Bertie was great . And why not ? Here he was delivering Ireland a fantastic boom where everything you touched turned to gold . They never experienced the 1980′s with unempolyment , emigration and Gandon mansions .
          Maybe you are both younger than me and have a finer sense of what was wrong . However with me I always knew that the children of 1980′s FF never had my best interests at heart . She was sold a lie by people who should have known better .

          • adamabyss

            Well I am 37 and I left in 1989 at the age of 17. Best thing that could ever have happened to me. Got out and saw the world and am still seeing it. Could see from a distance (and on visits) that what was going on in Ireland was utter nonsense and I wanted no part of it.

          • Alan42

            Adam , I agree . She just spoke about 2170 repayments a month like it was perfectly normal .
            Whoever gave her that mortgage should be banned from ever working in a bank again .
            Yet NAMA isgoing to bail out the very same bankers in hope of kick starting the whole thing again to obtain LTEV .

  20. Colin_in_exile

    David,

    “We could easily say to the people in negative equity that we are going to write off half the mortgage in their house, so that they can stay in it and try and sort out their lives without all the trauma of defaulting.”

    Before you do that, please allow those of us who could not afford to get on the property ladder, the chance to buy a house (plenty out there I believe), to share in the bonanza of mortgages half written off.
    What about the part time landlords who expanded their little portfolio during the boom, do they benefit from the bonanza too?

    • liam

      I thought the same thing initially, but a consequence of this plan is that the -ve equity people lose half of their house, and the banks are taking a defered risk on the other half.

      For private property owners the suns work out, but I wonder if that is also true for commercial developments with their tangled web of cross-colateralisation? Am I right in thinking that Liam Carroll’s empire collapsed because it was unable to pay 1/10th of its debt? If so, then this is a great deal for private property holders, in that it keeps a roof over their heads, but It is harder to see how this fixes the problem of the commercial property sector. One presumes they are expected to crash and burn. What are the chances of that?

    • liam

      Sorry for the multiple replies, i realised I had not spoken of your original question! Perhaps the best thing that can be done for those wishing to buy property now is to force a market correction in prices by dumping NAMA.

  21. wills

    When central bankers are giving interviews on how lucky we all are receiving triple this, and double benefit and quadruple child allowance it makes one truly queasy.

    One scratches ones head and ponders, where is this going, to borrow a phrase from malcolm mcclure, mind fu2k.

    Will we see bank officials handing out pamphlets on contraception at the bank. Will we be met with benefit recepient assessing scan checks before opening accounts, weird.

    What professional business is it for central bankers to be giving interviews across the meeja commenting on this.

    Oh i get it, the central bank us the voice of authority now on allocation of tax payers funds.

  22. Tim

    Folks, confirmation, just in:

    “The Ceann Comhairle has announced that he will resign his position next week when he will make a statement to the House.”

    • Tim

      He is a Pr1ck.

      He knows that all newspapers have to “Stop-Press”, now and change their “run”, because he refused to make it known before 9pm.

      • Tim

        Also, I am convinced he is delaying til Tuesday-next in order to hedge his bets on Saturday’s Green Convention result causing a collapse of government, thus guaranteeing his seat in a snap general election.

        Sneaky, cute-hoorism.

  23. Tim

    Folks, DMcW speaking major truth to ordinary people in his new documentary “Addicted to Money”!

    He is explaining it in the “lady-bird” version, to bring more people “on-board”, in order that more people understand NAMA.

    He is performing a major public service, I suggest.

    Go, David, Go!

  24. wills

    David, you really nailed it at the end of ‘addicted to money’ tonight. I’ve watched all the docu’s across all the station ‘s and some, regarding the financial firestorm, now underway, and this docu tonight ‘kicked some a$$’.

  25. Tim

    Folks, here it is, on JO’D:

    Taoiseach: 23.35: “In indicating his intention to step down from the office of Ceann Comhairle, John O’Donoghue TD acted in the best interests of Dáil Éireann, and the office of Ceann Comhairle.

    He has been a most effective and fair Ceann Comhairle who has acted with commitment and integrity to ensure that the members of Dáil Éireann ould debate freely and fairly the issues of the day.

    I thank him for his contribution to this Dáil as Ceann Comhairle and I wish him well for the future.”

    ENDS.

    Fall-guy!

    Can we, please, look at the others’ expenses?

    • Colin_in_exile

      Tim,

      Is “Can we, please, look at the others’ expenses?” directed at anyone in particular? or the whole 166 TDs?

      Off topic, but this I believe is important to report here – I heard on the BBC Radio 2 news at midnight a reporter relaying the story of a school principal in Co Cork sending out a letter to parents asking them to provide their children with toilet roll when going to school. I couldn’t believe my ears.

      This idiot is damaging Ireland’s reputation abroad. We’re a complete laughing stock again. She should be sacked. How expensive is toilet roll in Ireland these days? Could she not explore alternatives on making savings elsewhere?

      • Tim

        Colin_in_exile,
        No. She is correct.

        That is how it is, in my daily life, in my teaching job.

        Becauser of the cuts, the “toilet-paper-crisis” has, simply, struck earlier than expected = but it IS expected…. it just happens later than this, most years.

        This is not “new”….. it’s just…. “early”, that’s all.

        You will, probably, NOT hear about the “chalk-crisis” – that happens EVERY year in Marcch-April. Schools run outr of chalk and have no money to proceed.

        But most people don’t believe that, so it does not exist.

        That was before the cut-backs.

        Let’s see what happens to “chalk-provision” this year……….?

        You think I’m Joking?

        Come to work with me.

    • Colin_in_exile

      And this is what happens in other countries when something similar happens.

      http://www.irishtimes.com/newspaper/breaking/2009/1006/breaking73.htm

  26. Tim

    Folks, Roubini speaks:

    Do not monetize deficits;
    Do increase regulation.

    Just another voice that can be used against NAMA?

    http://www.rgemonitor.com/roubini-monitor/257791/

  27. Tim

    Cork (UCC) economist who has two articles on why NAMA is not such a bad deal (!!??!!) is inviting comments from readers:

    http://www.corkeconomics.com/?p=639

    Anyone want to tell him a thing or two?

    Let’s keep at it!

  28. Fergal73

    Too much moral hazard here – better than NAMA, but I’m afraid if you took on a debt, you have to pay it back. I emigrated because property was overvalued. My brother is 38, married, 1 kid and rents. There were options to avoid paying stupid money for basic shelter. Why those who decided not to partake in the insanity should now not be rewarded while those who inflated the bubble get a reprieve is entirely beyond me.

    Not sure where this came from, but it seems pretty apt to describe what the world is up to at the moment.

    It is the month of August, on the shores of the Black Sea. It is raining, and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.
    Suddenly, a rich tourist comes to town. He enters the only hotel, lays a 100 Euro note on the reception counter, and goes to inspect the rooms upstairs in order to choose one. The hotel proprietor takes the 100 Euro note and runs to pay his debt to the butcher.
    The butcher takes the 100 Euro note, and runs to pay his debt to the pig grower. The pig grower takes the 100 Euro note, and runs to pay his debt to the supplier of his feed and fuel. The supplier of feed and fuel takes the 100 Euro note and runs to pay his debt to the town’s prostitute that in these hard times, gave her “services” on credit. The hooker runs to the hotel, and pays off her debt with the 100 Euro note to the hotel proprietor to pay for the rooms that she rented when she brought her clients there.
    The hotel proprietor then lays the 100 Euro note back on the counter so that the rich tourist will not suspect anything.
    At that moment, the tourist comes down after inspecting the rooms, and takes his 100 Euro note, after saying that he did not like any of the rooms, and leaves town.
    No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism…..
    And that, ladies and gentlemen, is how the financial markets of the world are doing business today.

    • wills

      Fergal, this is an excellent analogy to explain how a ‘debt based’ money system works. There is never enough money in existence to pay off debts ‘cos the debt is racking up interest.

  29. liam

    David,

    The more I think about this the more problems I seem to see with it. I’m sorry to be so negative.

    This +ve/-ve equity thing is also a red herring I think. As I suggested above, there are people who are in +ve equity who cannot afford to pay their mortgages, perhaps because of unemployment, but there are also people who are in -ve equity who can afford to continue paying their mortgages.

    Dividing people in to +ve/-ve equity categories is risky, as the real factor to be considered is affordability. I still think that a scheme like this could work, but only if it is offered to all mortgage holders, and with conditions attached that allow the financially (sane?) prudent to see some benefits.

  30. G

    Interestingly, when Batista, the brutal and vicious dictator of Cuba fled the country after the Revolutionary forces rolled into Havana, he loaded his plane with bars of gold and bags of cash, the amount is not clearly known but it was enormous sum, not too dissimilar then to the golden handshakes that we have been witnessing over the last year, culminating most recently with that man who claimed back his £1 donation to UNICEF! Let his name live forever (for all the wrong reasons).
    http://www.independent.ie/national-news/ceann-comhairle-reclaimed-pound1-donation-to-charity-1905969.html

    Mafia the lot, when will the people act?

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