November 8, 2009

Worst-case scenario looms

Posted in Banks · 155 comments ·

Which one of the two big banks will be nationalised first? This sounds fanciful, but events in the last few days suggest that the perception of the Irish banks has changed profoundly – for the worse – and nationalisation is on the cards. This means we now face the possibility that we will have the guarantee, Nama and the nationalisation of one of the big two banks all at once.

In a sense, to use EU parlance, we will have a triple-lock tying the Irish people to the Irish banks for years to come. We run the risk that Ireland will come to be regarded – for future students of finance and economics – as a text-book case of how not to do things in a crisis. I hope this does not turn out to be the case, but the recent signs from our close neighbours and the reaction of the markets are not good.

The dramatic change in outlook for the banks has been triggered by the EU. The European Commission is rightly worried about the abuse of its competition rules, which occurred last year when governments around Europe injected money into banks. For the single market to work properly, the EU has to make sure that national banks don’t get an unfair advantage over foreign banks. If national banks were favoured by national governments, this would be an unfair advantage over foreign competitors and would constitute an abuse of the single market.

This means that, if Bank of Ireland (BoI) and AIB are getting Irish government money to stay afloat, while the likes of, let’s say, Rabobank (to take just an example),which trades in Ireland, is not getting Irish government help, then EU competition laws rightly suggest that this is an abuse of the level playing field of competition.

Until recently, the EU was prepared to take a softly, softly approach because of the depth of the financial crisis, but all that has changed. Since April, bank shares across Europe have rallied and the EU has now decided that it is time for the banks to pay back the money they owe to their governments. So far, national governments have been reluctant to force their banks to act, so the EU has decided to do the governments’ job for them.

In short, the EU doesn’t trust the banks to act, nor does it trust the national governments to force them. If the EU loses this battle, it loses Europe’s internal market, which it has been creating since 1992.The stakes are huge.

Neelie Kroes, the EU’s competition commissioner, moved first against the Dutch bank ING. The Commission has instructed ING to sell assets to get the cash to pay back the government. The EU instructed ING to break itself up, separate the bank from the life assurance subsidiary that it owned, sell the life assurance part and give the cash back.

This move caused bank shares around Europe to fall, as the implication is that the banks will no longer get subsidies. This means that we can’t stay in the ‘half-way house’ of part private/part public banks that emerged in the crisis. The Commission has decreed that either the banks are private companies, in which case they have to pay the money back, or they are fully nationalised. The ramifications of this move – which was always going to come – are enormous.

Last week, the EU focused on the British banks, with Kroes turning on the wounded giant RBS (Royal Bank of Scotland).The British government, realising that RBS would not be able to raise new capital on the market, increased its stake in RBS from 70 per cent to 84 per cent. When a government owns 84 per cent of a bank, it might as well own the lot. No one in the private sector is prepared to invest in RBS, so that the government has become ‘‘the owner of last resort’’ in forced nationalisation.

What will happen when Kroes turns her attention to Ireland? She will look at Nama as a huge state aid – which it is. She will look at the government’s minority stakes in the banks as state aids -which they are – and she will ask, what are we going to do next? How are our banks going to pay back the money so that Ireland does not abuse the EU’s free and fair competition laws?

During the summer, and even up to mid October, there was a chance that the banks, protected by Nama, could have gone out to the markets and raised equity.

But now that window seems to be shut. The markets are closed.

It didn’t help that management of the banks suggested that Nama was a bad deal for them, because by doing this, they looked out of touch. Even though the dogs in the street realise that Nama will overpay for assets, the banks suggested that the property assets on their balance sheets were worth more than the government was prepared to pay. This reaction signalled to the markets that bank managements – more or less the same guys who got the banks into the mess – have not woken up to the severity of the slump. Obviously, their shares fell dramatically as a result.

As the equity of the banks diminishes, the big question is: where will the Irish banks get money to ensure that their crucial capital adequacy ratios do not get breached again?With loans-to-deposit ratios still over 150 per cent,with the economy stalling and precious few new loans made, the banks can’t generate any profits. If you doubt this, just look at Bank of Ireland’s reported loss of nearly €1 billion this week.

So where will the money come from? The EU will now instruct AIB to sell its non-core assets, such as the banks in Poland and the US. Likewise Bank of Ireland, in order to pay back the government. But the banks will need more cash and, if they can’t raise it on the markets, the government will have to inject money into them. Unlike last year, the EU will not be keen to allow the states to inject capital without full nationalisation because this is simply trying to pull the wool over the Commissioner’s eyes. So where does that leave us?

It leaves us facing the nationalisation of one or both of the big banks. The government is set against this, but the iron laws of the market dictate that, when the banks need new money and no one else is prepared to give it, the government takes up the slack.

If I were a betting man, I’d say one of the big banks will be fully nationalised early next year. This would mean that, rather than the guarantee – which, on its own, was intended to be used to deal with the creditors in an orderly fashion and sell one of the big banks for a song to an international bank – we will get the triple lock. The triple lock is the guarantee, Nama and nationalisation. This is probably the worse combination of all.

But that’s what you get for dithering for over a year while the rest of the world gets on with sorting out their mess.

  1. Good solid analysis, David.

    The management of the ‘Big Four’ banks in Australia seem to believe that our stimulus package here has precluded the popping of the real estate bubble.

    As our bubble was even bigger than Ireland’s, I expect we’re simply behind the curve and that our banking Canutes will shortlu experience much the same shock as yours.

    Either that, or maybe our bankers are correct that little ol’ Oz is about to lead the world out of this depression. :)

  2. Malcolm McClure

    David: Thankfully, we can put last week behind us and get on with your well reasoned triple lock analysis. As you have illuminated, you helped initiate the bank guarantee and other major economies eventually followed that lead, so it was the right solution in the circumstances and bought us some time. Unfortunately Cowen has wasted half that time prevaricating about what to do next. Instead of taking the bull by the horns and nationalizing the six banks, he footered about while the DoF devised this absurd Nama mechanism.
    It is becoming obvious that the end of the Irish guarantee period approaching next year will affect the agencies rating of bank shares and sovereign debt. Can you tell us how you intended that the guarantee would be unscrambled as the sums involved are an order of magnitude bigger than Nama?
    Obviously either the ECB or IMF are going to enforce the complete reorganization of our financial sector, with the big banks broken up into mom and pop operations if necessary. Better get on with it ourselves.

  3. Philip

    Excellent article that leaves my poor little head spinning. I see the inevitability of nationalisation alright. But with the guarantee and NAMA, we wind up with a state which owns a bank, whose deposits and debts are guaranteed and whose bad debt management has been outsourced to a 3rd party with a majority share holding in case we defacto nationalise the banks and suppress their ability to get money on the open market….is someone taking the p1$$ here?

    • Philip

      I see da Indo has an article on Dan O’Brien’s new book on inertia in our Government/ Politics, Civil Service etc. (Ireland, Europe and the World:Writings on a New Century). It’s not down to corruption etc. that’s just a small part of it. I think he’s onto a root cause issue – cycles of inaction – as he terms it.

    • Philip

      On a positive note, EU may be saving our asses here by causing our antiquated system to shatter under global forces. About time our local yokels started to understand how stupid they really are and learn their limitations.

  4. roc

    I’ve said it here before, but really, it’s dangerous when the lines are blurred between opinion and journalism on the one hand, and focused and considered economic analysis on the other. – It is worse than dangerous to come up with solutions and analyses that are not carefully considered and weighed up with a full weight of responsibility assumed. The case in point is the guarantee scheme. – What is becoming apparent now is that is a considered analysis had been done, only a prospective guarantee would have been offered. Rather than a retrospective and a prospective guarantee. As per It seems that with all this dabbling of dilettantes of one flavour or another, put together with the quiet machiavellian machinations of the vested interests, we have made a complete hash of everything. Time for these people to step back.

  5. Yep, bit of a ‘District 9′ post last week but solid enough here (…set up management companies to purchase, secure, maintain the
    vacant urban estates. Sell to the Irish diaspora at knock down prices, tax/tourism revenues will rocket. ).

    There are many ways to deal with the ‘triple lock’. Some might be:

    Bring on nationalisation, end the guarantee at appropriate time, renegotiate with bondholders, end NAMA.

    Leave the banks to sort out their own toxic mess, but fire/demote all their senior management, end bonuses/cut pay.

    Don’t believe brains will flee. There’s plenty who will stay around who can be rewarded if we get a turnaround. Not if the mess is badly managed!

    Set up inquiry with 6 month remit to report on where/how it went wrong.

    Create a couple of clean banks; take the good stuff including performing loans/branch
    network into newAIB/newBOI and leave the toxic stuff behind for the banks to sort.

    Most all, get rid of the current encumbent mess of a moronic Government, polluter pays
    for its mess!

    If necessary, bring in the IMF.

    Fire anybody in DoF connected however remotely with suggesting NAMA(Not Another Mess Again).

    Spend the ECB money wisely instead!

    Restructure Dof with personnel/practices and conservative bonus structure different to but similar to Goldman Sachs.

    We might have a fighting chance of survival. Otherwise its enjoy the music from FF orchestra on the Titanic!

    • cbweb, agree with you here , I have been saying this for two years now with regard to our over supply of domestic and commercial units, why not let ex pats buy these units at just above cost price when they come here and open up their businesses and then give them also a tax break for a year.
      Also checked your web site and fair play for putting up The Venus Project, on video section

    • paulmcd

      “If necessary, bring in the IMF.”
      I agree wholeheartedly! I consider that bringing in the IMF is essential. Ideally, the leaders of social groups, like the unions together with top economists who are opposed to NAMA, like DAVID, would meet with senior IMF officials and put forward the case for a fair solution which will inflict the maximum pain on those who merit it.

      To my mind, the top financiers and politicians who presided over our economic meltdown should be the prime victims of a just solution.

      I would consider that a pay cap should be introduced for public servants, but to my knowledge no union leader has broached this issue. It is impossible to see how union general secretaries on triple-digit salaries who are in discussions with senior civil servants who are equally well remunerated could, for example, propose a pay cap of €100,000 for the highest-paid in their sectors. If some public servants or professionals do not like the pay cap and decide to leave the country then GOOD RIDDANCE. There are plenty of young talented people to take their places.

  6. cozzy121

    So I take it, it’s time to sell me shares in BoI?

  7. lff12

    The real problem here is that the government leapt in with immediate effect with the guarantee and Anglo nationalization, but everything that happened since has been snails pace. The market doesn’t trust Ireland, that confidence is hard to justify right now. It would appear to any investor with half a brain that last September’s rapid response was basically protecting the mighty, and no doubt, the interests of both Oireachteas members and the neo-fascist oligarchy which masquerades as FF and their financial backers.

  8. gadfly55

    Nice to see you laughing at yourself on the Panel, but your right side panelists are way out of their depth and uneasy. Delamere babbles on and Maxwell shows some insight. This article is back on the beam, and it is totally astounding that the hysterical delusion and denial in this country has persisted for more than a year, but sure the etiology of this collective cultural dysfuntion derive from the gene stream of those who could not find a way off the island, and held on, held on, in the demented hope things could not get worse. Well, welcome to the abyss off the continental shelf where the continents split. We are now about to get a long lesson in the realities of life under European control, and personally I am glad of it as I emigrate to France.

  9. MK1

    Hi David,

    Back to our regular topic, the banking providers in Ireland.

    David McW> The Commission has decreed that either the banks are private companies, in which case they have to pay the money back, or they are fully nationalised. The ramifications of this move — which was always going to come — are enormous.

    But was this move always going to come and is it going to come??? The fact that the EC has turned a blind eye to its rules, that the ERM rules are being flaunted left right and centre, is a statement that the system, even when faulty is more important than the rules themselves.

    The EC wants Ireland to have a functioning banking system. It may force Ireland to establish a plan, that banks will be nationalised, run for a period, be merged, etc, and then floated (privatised) perhaps over a 5 year plan. In that scenario all the 6 protected banks would be nationalised.

    The thing is by EC rules, state support in certain sectors is NOT allowed. However, financial services have always been a special sector. Did you ever wonder why we dont have to pay VAT on our bank services, how banks arent mandated to invoice customers for services rendered BEFORE payments are executed by the customer, etc, etc????

    Banks have always been a problem area because they get into trouble and the effects can be widespread. They can create a a very big hole unlike many other businesses.

    When any competition analyst looks at banking services in Ireland they will conclude that there are oligopilistic practices, that banks are making too much money (even BOI in its recent accounts showed 787m or so of operational PROFITS). They are effectively holding this county and its businesses to ransom.

    I would be more than delighted if the EU would come in and break this up, cause real banking reform to happen, a real LANCING OF THE BOIL ….

    Come on David, support the Lance! You know its the correct call for a decent society.


  10. wills

    The ‘private banks’ which is a central banking system brought into existence in 1694 in the ‘City of London’ has a sector of our society ‘locked in a prison of suffering’.

    The ‘triple lock’ is a ‘tightening’ of this CBanking prison system, a turning of the screw, squeezing further the gut’s out of the labour’s of the serfdom class.

    Now the ECB is a lynchpin of the CBanking prison system and I for one remain very suspicious on any ‘supposed’ reform.

    I find it also intriguing as to why it is Ireland is under a ‘triple lock’ and no other country who suffered the same POnzi ‘ itis contagion is.

    The plot thicken’s the deeper down the warren hole we all go.

  11. Deco

    { But that’s what you get for dithering for over a year while the rest of the world gets on with sorting out their mess.
    That just about sums all that has come from Merrion Square/Kildare Street over the las 15 months.

    There is an awful lot of denial of responsibility with respect to fixing the problem.

    Everybody seems to think it was caused by somebody else. Except those who cannot avoid being tied up with the mess. And they are telling us that it can all be resolved with a massive Keynesian economic stimulus package.

    Lies fed the boom. And it would seem that the bust is there to teach us some very humble truths. Except the arrogance of Irish people is preventing it from being acknowledged.

    20 Billion being borrowed every year – even without bailing out the banks. Look, even if there was nothing wrong with the banks – this country would be in serious trouble.

    We are heading for a deflationary scenario, simply because the private sector is being driven out of existence. The cost base is in serious trouble. All sorts of stupid notions about moving up the value chain are being proven to be societally expensive. Our love affair with the Californian dream is turning into a nightmare. It is bankrupting California, and bankrupting us.

    The Ahernian model of government interventionism, planning, patronage and excess is grinding Ireland into impovrishment. We have run the entire country using the principles of Tammany Hall.

    • wills

      Deco: It’s through the ‘Cbanking system’ economic penury is leashed upon a second tier of society, in cycles.

      And, the present day crisis is merely a repeat of the crisis in the early eighties and the one before that and the one before that and the one before that one.

      We are witnessing nothing new. Just a different story line.

      THe Cbanking system is one of the mean’s the top tier use to cause misery and penury and neo serfdom.

      And there are the second tier eejits brainwashed into playing along with their enslavement and then there are not.

      • Deco

        Wills – you are correct in that the central banking system holds enormous power – and seems accountable to the rich most of the time. Though Mugabe managed to make his central bank accountable to him and his cronies.

        We had a central bank in Ireland – it operated like an extension of the civil service. Then we got a financial regulator, because the Brits created one, and we had to copy them. But that has now been shown to be a farce.

        The statements coming out of Alan Greenspan, and the awe with which he was revered by the Media in the English speaking countries was a lesson to me into the usefulness of the media. Greenspan, his mumbo jumbo which were undecipherable, and his love of monetary easing created this crisis. He then placed Greenspan 2.0(Bernanke) in place to carry on the mistakes. And Brian Lenihan read Greenspan’s mumbo jumbo, and then considered himself prepared for the task. It could not get any more absurd.

        • wills

          Deco –
          Just too put finesse further my reply.
          I see the Cbanking system responsible primarily for the ‘craziness’ we see in the macro and micro economic system we all live in.


          Bottle of coke = real economy / free market system.

          CBanking system = claw on bottle of coke that shakes it up and down and makes it into a fizz bomb.

          ..and the whole procedure starts all over again.

          So, if we stopped shaking the ‘bottle of coke’ the fizz bomb / craziness would be removed.

          What ya reckon Deco!?

          • wills

            Deco – in relation to the ‘behavioral economics’ which is separate again to the actual macro / micro economic’s, particularly in relation to your posts on post colonial complex my POV is framed in terms of the crony elites structured in a ‘lord of the flies’ type arrangement.

            There is a power based peking order that is glued together on the basis of who carries the most powerful ‘ray gun’.

            And as one goes down the peking order in a classified system akin to that of school, so secondary school dennis the menaces down into primary school bash street kid’s the power of the ray gun diminishes.

            Wacky but i keep coming back to this in my observations.

  12. Deco

    Yes-We are all responsible to some degree or another for the mess.

    Let’s all deal with that. Ireland is stuck in a state of denial. The arrogance that comes with that is not something that we should be “proud of” !!!

    • Deco

      The breakthrough in getting out of this mess will come like this.

      Hello – I am Irish and I have a problem that I need to acknowledge – I keep telling myself that I am proud even though it causes me to do a lot of really stupid and irresponsible things. I keep deciding to do things because I tell myself that other people are doing it to. I have a problem with my own self significance. I feel terrible when I feel insignificant. Is this because I am not getting enough emotional balance in my life. I have done many stupid things because I craved self-importance.

      I need to acknowldege that it is far more intelligent if I learnt how to be humble !!!

    • Deco

      Here is a link which I am giving you as an example of the “Irish ‘Proud of’ Construct”–young-proud-of-their-work-with-anglo-1937645.html

      It seems that being proud of something is an entitlement to stupidly and massively wrong, and to be in a complete state of denial afterwards.

      And it is not just Ernst & Dung that have this problem….It is endemnic across the entire spectrum of Irish existence. The further up the authority tree you go the more proud and the more certain they become.

  13. adamabyss


  14. Ruairí

    “Everyone, for your own and your family’s sake, have a look at this and stay on top of the gold story. Gold is not a hedge against inflation. Its a hedge against government stupidity and wanton funny money printing. Which has been done with gusto, my boys.

    “And it’s why India recently purchased 200 metric tons of gold from the International Monetary Fund (IMF) for $6.7 billion. ……That’s more than 7.054 million ounces of gold, now worth over $7.37 billion.”

    In the early 1990′s, Gordon Brown famously sold most of the UK Treasury’s gold holdings, at a time when gold was at its cyclical lowest.

    In the last few weeks, India bought gold that has already increased in value by $500m and will rocket further.
    While Western democracies and their associated treasuries have been offloading, China, and now India are bulking up on gold bullion.

    What is to stop our government aping the current winners (China, India and the BRICs) not the loser (USA and UK) economies and their central banks.

    Why not find the €4BN from increasing values in gold? Why not spend €54BN of borrowed money on buying up gold bullion and safeguarding our future?

    Daft you might say? How daft was it for Gordon Brown to sell out at the bottom of the cycle? (Very daft).

    One of our Cabinet recently sagely advised that our government is in a similar position to a household regarding unsustainable spending. Peter Power even condescended last night (The Week in Politics) to explain NAMA in terms of €54,000 etc just so us ‘thick’ plebs could see the picture that he and Brian and Mary can see.

    Just to reverse the metaphor that the government now seems to keen to use; to be ONE with the sheeple, the idea of unsustainable household debt: – I too have put my money where my mouth is (I’ve mentioned it here before) and purchased as much gold as I can through there is NO risk to your ownership. Unless you leave cash funds in the account. Once you purchase gold, its in the vault in your name. Go Swiss, and give two fingers to FF and the Greens. I have.
    I don’t know the intricacies of our monetary rights but I’m sure some of you do. If we can have NAMAs and SPVs, we can surely have the NTMA purchase gold NOW and secure our futures, by mimicking India and China, not the washed up Bernanke who is hell-bent on destrying the dollar and Msr. Trichet who is focused on the Deutschmark, sorry Euro.

    • Deco

      Not only did Gordon Brown manage to sell gold for it’s lowest price since 1976, but he also managed to make as much noise as an elephant in a toy shop. In fact Brown managed to drive the price down before he sold it. Even Cowen never managed to something that stupid.

      Brown and Neo-liberal Marxists in the New Labour Movement were delighted to have driven the price down. It was an ideological act of faith that they wanted to drive down the price of gold. The same fools also regard it as an ideological act of faith that they intervene in the economy to save the rich with their policy of socialism for the benefit of the rich.

      I have met several people in the last week who told me that they expect the government to eventually prevent people from withdrawing money from Irish banks. Such a crisis happened before in Argentina. The circumstances there was that the Argentine Peso was linked to the Dollar. But the Peso was a funny currency. Eventually it was costing a fortune for the Argentine state to prop up the currency. So they Argentine state closed the banks. And then converted the Pesos in the bank into Dollars at a modified exchange rate to prevent money flows out of the country.

      Whatever about gold – you might be well advised to stick Euros in a bank in a different EU jurisdiction.

      As David outlined, in the absence of any serious policy framework, we are heading into a harsh crisis. A severe reckoning.

      It will change the character of Ireland. The people of Ireland will not be as tolerant of incompetence, ineptitude, deceit, and scandals as we have been in the last three decades. It will be no country for fools like Martin Cullen, Bertie Ahern, Mama Harney etc….

      • MaxKeiser

        Dear Deco, can you please tell us more about “government to eventually prevent people from withdrawing money from Irish banks” ?

        I have been expecting same for a while know, but I have not heard it out loud so to speak…

  15. Ruairí


  16. Ruairí

    “Everyone, for your own and your family’s sake, have a look at this and stay on top of the gold story. Gold is not a hedge against inflation. Its a hedge against government stupidity and wanton funny money printing. Which has been done with gusto, my boys.

    “And it’s why India recently purchased 200 metric tons of gold from the International Monetary Fund (IMF) for $6.7 billion. ……That’s more than 7.054 million ounces of gold, now worth over $7.37 billion.”

    In the early 1990′s, Gordon Brown famously sold most of the UK Treasury’s gold holdings, at a time when gold was at its cyclical lowest.

    In the last few weeks, India bought gold that has already increased in value by $500m and will rocket further.
    While Western democracies and their associated treasuries have been offloading, China, and now India are bulking up on gold bullion.

    What is to stop our government aping the current winners (China, India and the BRICs) not the loser (USA and UK) economies and their central banks.

    Why not find the €4BN from increasing values in gold? Why not spend €54BN of borrowed money on buying up gold bullion and safeguarding our future?

    Daft you might say? How daft was it for Gordon Brown to sell out at the bottom of the cycle? (Very daft).

    One of our Cabinet recently sagely advised that our government is in a similar position to a household regarding unsustainable spending. Peter Power even condescended last night (The Week in Politics) to explain NAMA in terms of €54,000 etc just so us ‘thick’ plebs could see the picture that he and Brian and Mary can see.

    Just to reverse the metaphor that the government now seems to keen to use; to be ONE with the sheeple, the idea of unsustainable household debt: – I too have put my money where my mouth is (I’ve mentioned it here before) and purchased as much gold as I can through there is NO risk to your ownership. Unless you leave cash funds in the account. Once you purchase gold, its in the vault in your name. Go Swiss, and give two fingers to FF and the Greens. I have.
    I don’t know the intricacies of our monetary rights but I’m sure some of you do. If we can have NAMAs and SPVs, we can surely have the NTMA purchase gold NOW and secure our futures, by mimicking India and China, not the washed up Bernanke who is hell-bent on destrying the dollar and Trichet who is focused on the Deutschmark, sorry Euro.

    • ThomasFergus

      In the early 1990s Gordon Brown and his NuLab party were in opposition. When did he sell this gold? Just wondering…

      • Ruairí

        Oh doubting Thomas :-)

        What’s a few years between barflies?

        • ThomasFergus

          Ah I didn’t doubt you Ruairí, just wanted a more accurate description of what happened, which you have just supplied, so fair play. Funny how the British press would go bananas about sovereignty issues such as the euro and so on, yet have allowed this to slip under the radar. I’m reminded of the Spanish Republican Government that sold all their gold for Stalin’s weapons and commissars in 1936….bad deal all round really.

          • Ruairí

            Only a pity that they didn’t have twice as much gold and twice as many arms to hold the weapons Thomas ;-)

            Viva la Républica comrade! ;-)

      • gquinn

        He sold the Gold in 1999 when Gold was at its bottom of $256 an ounce. Ouch :-) LOL

        • Ruairí

          About as intelligent as airing proposals that people over 60 could be terminated gquinn? Ouch :-) LOL

          • gquinn

            Actually Ruairi the Eugenics program is part of history and it was also part of the Lisbon treaty. So a Eugenics program will be coming in in the next few years.

            I know people in living and working in France who are currently developing the Eugenics program for Europe.

            The first on the agenda is to cut down on the children being born through a fine system. It will be something like you can only have two children and any more you get fined. After a couple of years then they bring out imprissonment if you have more than 2 children.

            Next is Euthensia and it is when people are over a certain age then they will be terminated and also people that have genetic defects or have a family history of genetic defects will be sterillised.

            All in the name of helping the climate and the World :-) LOL

            I’m really looking forward to the future in Europe.

    • Josey

      yes that’s what is now called “Brown’s bottom” when he sold gold at it’s lowest price in decades.

      I too have invested in gold, I’ve actually taken physical posession of some, just in case. I bought mine from

      If the likes of us can see it and the gov can’t….it’s either the gov is stupid or they are deliberately fecking the country up.

  17. Philip

    Hello, I am Irish and I have a problem. I do not realise how important and significant I am. Instead of being confident and choosing a course and following it with resolve and long term outlook, my low sense of self esteem means I spend too long believing other countries over-hyping of themselves and pulling strokes instead hard work (Plagiarized from a friend of mine – who I am trying to get to blog here cos he’s wonderfully disagreeable)

    • Deco

      Philip – I appreciate your efforts to get to the core of the issue of what drove people to behave like lemmings. There is something about a superiority complex being really an inferiority complex.

      There was a massive superiority complex over the past two decades in Ireland. Heck we built two massive stadia two miles aprt from each other to show that we could do it. Swell out with pride, and you end stuck with the bill for unintelligent decision making.

      I just want common sense to come back – there is not enough of it around anymore. Apparently we are proud, therefore we don’t need common sense. This is the intellectual construct that has dominated Irish society for two decades – culminating in a cruxcendo of complete, unrestrained, utter stupidity.

      And Philip – Ireland is stupidly obsessed with our own significance. This obsession is the primary national expression of the inferiority/superiority complex. Rather than take that seriously, we should admit that it is a symptom of a deep problem – which needs to be fixed.

      There was not enough common sense in Ireland to prevent the mania. Common sense became unfashionable. Instead pride replaced common sense. Pride defeated common sense for a long time – but in the end – common sense always wins – the lesson will humble everyone.

      • Ruairí

        I understand completely what you mean by pride Deco and I’ve read your posts on the possibility of real inferiority showing itself outwardly as superiority complexes. I agree completely with your analysis but I find that that false price is better labelled as arrogance. as its not pride of one’s own virtuous works, its pride vis-a-vis one’s neighbours / peers.
        How do we counter it? I doubt the older generations can be cured. except through hardship. The younger crew coming up can be taught emotional intelligence skills (in the primary curriculum) to know when an outside “authority” is trying to mess with their mind. i.e. property ladders, cars brands befitting your status, etc etc. I’m not totally anti-consumption. I’m merely calling for the rounded education of ‘thinking’ citizens. I do know that such a call is anathema to ‘business as usual’ and frightens any logical government.
        I also know that the correct paths are reasonably obvious to any poster here and are not being taken for reasonably obvious reasons also. It pains me to hear a RePUBlican like Brian Cowen quote Sean Lemass and mention patriotism. It pains me to hear a man like Lenihan label as unpatriotic those who seek to avoid their burden of NAMA by shopping up North.
        But Deco, not to hijack your analysis. You are spot on. Pride and flawed thinking are at the heart of our malady. And not just the cabinet’s. Most Irish people are playing the victim in all walks of life, instead of considering motives / agenda of other parties.
        People, get your thinking caps on.

    • Deco

      There was no shortage of confidence or self-esteem….well outwardly at least…..people were paying fifteen million plus for mansions in South Dublin, buying apartments in Budapest under a drunken haze, having stag parties in Barecelona, and buying Beemers with no downpayment. I remember explaining to a German lady that Irish couples spent 20K on a Wedding, and that the woman would feel humiliated, almost to the point of calling it off, if the bill didn’t go over 20 grand. Value for money was only a concept that applied when buying a loaf of bread. And she shook her head in disbelief that there could be such a level of stupidity could exist, let alone reach the point of being a societal norm. The question of whether or not the couple loved each other was reduced to the level of complete insignificance by the show and extravaganza.

      It was just that….there was a massive lack of common sense…and there is a massive sense of denial concerning this.

  18. Deco

    To those who have read the above and are thinking that RBoS does not affect us – it does.

    RBoS is the parent/owner of the Ulster Bank. UB happens to be heavily involved in the speculator financing ponzi scheme. Just look at the results from the Zoe Developments case. UB is also covered by the bank gaurantee scheme (and it should not have been). I bet that it is looking for a “digout” from NAMA as well.

    The great efforts being made to preserve a corrupt, and unworkable system….

    • Philip

      Well, the boys in the EU can only print so much money or it’s bye bye Euro. Maybe Wills is right…maybe the thick plottens…

    • ThomasFergus

      I don’t think Ulster Bank is covered. think you’re wrong there. I have a 40 year mortgage wtih first active like a millstone around my neck. First Active is owned by (now merged with) Ulster Bank. Ulster Bank is owned by RBS. RBS is 84% owned by the UK Government. So the British Government owns my apartment in central dublin, like it owns so much more property around the country.

      Articles 2 and 3 how are ya!

      • Could you try an IVA in Britain claiming mis-selling?
        Just a thought.

        • ThomasFergus

          Wouldn’t the tort of negligent misstatment as applied to auctioneers/bankers here be just as good? I’d love to see somebody take a test case here on that. Even allowing for caveat emptor, there is enough case law even in a conservative country like Ireland to suggest that the courts might look favourably on the idea that many people takking out mortgages in Ireland were sold a pup by “professional” auctioneers/solicitors/bankers.

          Btw, I can still afford my mortgage and I’m nowhere near the stage encountered by tens of thousands (hundreds of thousands?) of others. It’s just a millstone around my neck; admittedly a millstone in central Dublin with a much better possibility of rental than say, Mullingar.

          Thought David’s article a few weeks ago on debt for equity would be a much more fairer, non-taxpayer exposing, solution, i.e, RBS offer me 20 yrs off my mortgage in return for 50% ownership. Doesn’t expose the taxpayer, leaves us both with skin in the game, and punishes us both for our recklessness. As it stands, it’s just this economic illiterate that’s being punished, while Sir Fred hightails it to France cushioned by Her Maj’s millions. Moral hazard and all that.

  19. [...] to sell your bank shares (if you've any left!)… Worst-case scenario looms | David McWilliams .. Which one of the two big banks will be nationalised first? __________________ "WAKE UP! [...]

  20. Alan42

    Ok I understand that the government are slow and generally useless . But from my financial education over the last year I understand that if you are to rescue a bank or a banking system you have to do it early .

    I think that they are dithering because the banks problems are much worse than anybody expected . Maybe Anglo could bankrupt the State on its own .
    A couple of weeks ago Lenihan ( nice man ) said that NAMA could be further delayed if the President sent it to The Supreme Court to be tested . That guy is a barrister and therefore he is very careful when he chooses his words . Why did he say that ?
    He has been working on NAMA for months and is the biggest gamble of his life and the biggest thing that the State has ever undertaken and yet he floats an idea that could actually scrap NAMA in the courts ?

    Maybe they are waiting for the guarantee to run out and are just stalling for time .

    Is Anglo not triple locked already ? It will have the most bad loans going to NAMA anyway .

    Has anybody considered that the Irish banks could have a whole pile of useless paper from US subprime that brought down international banks sitting on the balance sheets .

    Has there ever been a case where all the banks in a country have failed at the same time ?

    • That’s hitting the nail firmly on the head Alan.
      It’s obvious they’re all in An Buinniocht so delay, prevaricate till the shredders have sanitised the evidence.

    • wills

      The gov did rescue the banking system, overnight, when it ‘illegitimately’ so, backstopped the bank’s with the taxpayers kitty.

      Full bank guarantee = bank safe.

      The time lag in stealing the taxpayers monies to pay for the banks gambling debts is something else altogether indeed.

  21. If you guys like my NAMA hit movie pass the link on..ta!

  22. paulmcd

    The banking fiasco in Ireland is on a scale which is unparalleled anywhere in the Anglo-Saxon world. In the past I have done rough mental calculations which would suggest the Irish taxpayer is being forced to assume twice the level of banking debt per capita as his British counterpart and at least three times that of the US taxpayer. However, the figures keep changing and perhaps there is someone out there with a more up-to-date and accurate evaluation of the situation.

    What guidelines were the banking “Lords of the Universe” supposed to be following, if any? On the assumption that there were guidelines and that these guidelines were ignored, then surely the banking executives responsible were in breach of their contracts. We were told that bonuses had to be paid to these “geniuses” under the terms of the very contracts which may have been breached. Surely sanctioning a level of risk which endangers the survival of your institution is an act of gross negligence and a serious breach of trust. Can anyone enlighten me on the legal perspective?

  23. Red5

    Hi folks,

    I know this is completely not the forum for this (apologies) but thought if anyone can offer insightful advice, it’s here. I never withdrew my SSIA after its end date and actually bought into the market deal for the further 3 years (awful move). Anyhow, it seems they’ve seen a 20% jump over last 6 months and am now wondering whether to cut and run. Any advice greatly appreciated.

  24. Colin_in_exile


    You’re back on top form with this article.

    Deco, Its been about 6 years now since I last felt proud to be Irish. One day at a time as the old saying goes. I remember the day I stopped feeling proud very well. I had a packet of Walkers crisps (bought in Tesco) opened, and was enjoying them, I offerred some to my colleagues, when one of them told me those Tan crisps are crap and that Tayto were the best.
    So, I was intrigued, and later that day I bought Tayto crisps, sampled them, and admitted to myself they were inferior to Walkers (according to my tastebuds anyway). The following day I offerred my opinion to the same colleagues, and I came up against a brick wall of disbelief and denial. I don’t think I’ve felt less Irish before or after in my whole life.

    • ThomasFergus

      Much and all as I despise what this country has become, Tayto crisps are better than Walkers. Taytos and a can of Tanora are part of the goldenest of golden memories of my Cork childhood, I could never warm to Walkers, Lays or even the domestic King crisps…….

      • Colin_in_exile


        You’re entitled to your own taste, that’s fine. Just one thing though, IF, as you say Tayto are better than Walkers, why aren’t Tayto exporting to UK and beyond? By the way, I know you can get Tayto crisps in some ethnic Irish shops Kilburn, Cricklewood and Camden, but they’ve never heard of them in Bethnal Green, Brixton & Bermondsey.

        • ThomasFergus

          Probably because they’re crap at exporting them. They probably relied for most of our existence as an “independent” state on import barriers here and the fact that British and European retailers/exporters couldn’t give a fig for the tiny Irish economy. Opening up fully to Europe has seen some Irish businesses adapt, and others stagnate. I suspect Tayto is one of those?

          I think Tayto would do great in Spain/France. Lays are absolutely rank.

          • Err, ye all know Tayto are owned by Walkers now, right?

          • Tim

            I remember buying Tayto in New York as far back as 1989, when I was doing summer-work to pay college fees.

          • Colin_in_exile


            My point was, if, as many Irish people believe, that the Tayto Crisp is the best crisp in the world, then why didn’t it conquer the world? When I use the term world, I don’t mean where the Irish diaspora are, I mean the entire world.

            Tim, I presume you were probably living in an Irish neighbourhood in New York in 1989.

  25. Just watched Pat Kenny The Front line…. Brilliant Live Television . Yellow Shirt Man , asks Pat why he earns €600000 for eleven hours a week work ?……. Brilliant David now has to ( well for this week ) deal with This On The Panel ??

    • adamabyss

      Yes, it was excellent BrendanW. The follow on segment about manipulation of kids through advertising was also very good and should be required watching for any parent.

      • wills

        Adamabyss, did you enjoy stay in Ireland.

        • adamabyss

          Still here wills, watching the mayhem and reading as much as I can. Went to David’s book launch last week which was excellent. I shall be here till Christmas or just after. Hoping to meet up with one or two of you before then. Maybe we could have a Christmas bash?!

          • wills

            A meet up, i’m on for that adam. Tell more on D’s book launch. Did you get to chat with D per chance, any mention about the website?

          • adamabyss

            I’m sure Tim would be on for a meeting wills, as would Paul O’Mahony, although he’s in Cork – any other takers? I managed to have a quick chat with David last week and get a signed copy of the book as well as a nice photo. He remembered that I had been posting from Antigua and was very appreciative. Considering how little I post compared to some of you chaps, I’m sure he’s very grateful for all the positive input on here. At the launch there were three excellent short speeches from Dermot O’Dwyer (Managing Director – Gill & Macmillan), Des Bishop – a comedian I had not heard of but who was funny, as well as David himself; not to mention loads of free delicious plonk and canapés. Perhaps you should get yourself along to the Q. & A. session next week in Waterstone’s — I’m sure David would be delighted to hear from you.

          • wills

            Adam – good idea adam, will be in touch with tim, see how we can do that.

          • Tim

            Gentlemen, count me in.

  26. Tull McAdoo

    Brian Linehan is Minister for Finance now, but lets pretend for a moment that FF lost the last Election and we now had Minister Bloggs running the show. Minister Bloggs would have been caught out by the Credit crunch just like Linehan. Why.???
    Bloggs would have received the same assurances from the Regulator about the Banks been well capitalised and able to accept shocks. Merril Lynch et al would have said the same about the fundamentals etc.etc.
    The Regulator would have allowed the Banks to help each other ala Anglo/Il&P to get over the wholesale money market freeze i.e. “good man willie” and all that stuff.
    So lets move on to the crisis resolution and assume that the floppy one Davy Mac etc. convinced Bloggs to issue the same guarantee. Deposit flights are averted, ok so far.
    Banks arrive looking for Capital or some sort of help, but the Irish Government cannot give State Aid. So up steps the NTMA, which has an Independent remit to reduce the National debt, and can invest where ever it sees fit to get a good return for Taxpayers and decides it will take a punt on Irish Bank’s which is paying out 8%. NTMA gets thumbs up from DOF, Regulator, et al based on their read of the so called fundamentals. Remedy fails Banks still in trouble.
    Bloggs tries major move and clear out all the management of all the Banks. Bloggs told to piss off and stop messing with Private companies etc. etc. Bloggs succeeds by getting NTMA to pull plug on Bank Management as major investor. Banks still in trouble with property loans, under new management.
    Bloggs needs bad bank/nama type vehicle to take dodgy loans off Banks and clear up balance sheets. Bloggs sells vehicle to Green Party et al based on Government ownership etc,(nothing to do with Europe what Bloggs tells Green Party) but that wont fly with ECB/ Competition Commissioner so Bloggs introduces SPV which makes vehicle Public / private partnership with Government as smaller shareholder and keeps fingers crossed , fearing protests from all and sundry. None materialise only TIM and Wills and a couple thousand more.
    Banks launch unguaranteed Bonds on open market and get them away with higher coupon. Banks buy back their old Bonds at discount and save money there. Commissioner/ECB give reluctant all clear to Nama vehicle.
    Banks all over Europe told to pay back any Government money they owe. Banks in Ireland did’nt get money directly from Irish Government so not affected by these measures.
    Banks may need fresh Capital after departure of loans to SPV. Irish Government still bound by State aid rules so cannot oblige except to Nationalise Banks. Banks look deep into Capital ratio positions and dependence on wholesale money markets for their Business models etc. and some decide to call it a day and be Nationalised. Big two fight on selling off non core assets, buy back Bonds at good discount as market confidence waivers. They up interest rates and try to increase margins where possible. Every idea is tried to stay afloat.
    Has bloggs used up all his creative support mechanisms.???
    Will bloggs get credit flowing again.???
    Will the big two attract Capital from any other source and stay going.???
    Will the big two throw in the towel and be Nationalised.????
    Will Seanie Fitz get his wish to see the back of the “Protestant Fuckers”???
    Will this be our time as Seanie called it without of course saying who “the we “ are.????
    Will the State through the Banks and property etc. finally take over the State from most of the free market.???
    Will this be Berties “ Im just an old fashioned socialist “ final solution.???
    Will this be a new dictatorship of the insiders and vested interests.???
    Tune in soon for the answers to all these questions and some more @ Davy’s drop in centre for the bewildered. Tickets available at all good outlets. Usual terms and conditions apply.
    Goodnight Ireland .Sleep well.

    • Malcolm McClure

      Tull McAdoo; There is a silver thread of insider understanding running through your post that wasn’t woven in south Kerry. I agree that we are getting into an entirely new ball game and our experience of yesteryear cannot be projected into the future. The velocity of money has stalled and something has to be done worldwide to get things moving again.

      Because investors have become stubbornly risk-averse, they are avoiding even safe investments and building up cash reserves. Keynes called this the Liquidity Trap — there is plenty of money around, but risk-averse investors, infected with uncertainty, refuse to “put it to work”. Therefore fiscal authorities are obliged to step into the breech and borrow money from the newly risk-averse, using it to recapitalize the banking system. In parallel, the monetary authorities drive the interest rate to zero and hold it there for an extended period, making holding cash very painful and re-generating investors’ appetite for risk.
      Given classical economic constraints, that is where we are now, except THERE IS A CATCH.

      People are out of work because workers produce “stuff” and there is FAR TOO MUCH “stuff” in the world already. Consequently work goes to where-ever “stuff” can be made cheapest, while disparity grows where-ever “stuff” is consumed between rich consumers and their local unemployed. In these circumstances the traditional solution would be to make the wholesale destruction of “stuff” a pretext for having another world war.

      An alternative would be to make the possession of old “stuff” prohibitive. Demolish old buildings, scrap old cars, burn old clothes etc. Perhaps we need a bonfire of the vanities.

      • Philip

        …what about food stuff and energy saving stuff and and caring stuff… precious little of that

      • Philip

        An alternative would be to make holding money very painful and this is where the REAL CATCH is…such owners run the world.

        Your alternative is effectively a tax on hard working people to make money move again to the benefit of the owners. It is also a call to pollute.

        • wills

          i read it as the truth of market dynamics at work in relation to the ‘velocity of money’ under a system owned and run by a select group of oligarchs which means a tax on hard working people to make money move again to benefit the owners would follow.

          In fact, i would put NAMA in this category, it is such a mechanism albeit fandangled.

  27. There is a piece of waste land down in Ringsend which was bought for 400 million Euros from some lucky wheeler dealer.
    It is now valued at 60 million. that is 15% approx of its purchase price.Assuming that virtually all of the capital used for these loans was cross guaranteed on other inflated property assets what proportion of all toxic loans is land.?
    Mr Lenehan values all assets at 70% of the original book value.
    Does this refer to the amount of money loaned to the developers.
    if so we can presume they expected to make a profit of -say 100%- on their sales in those heady days of old.
    However if the properties were finished and sold off at cost (50% of the originally anticipated price) maybe Mr Lenehan has it right.?
    Problem is will the developers finish the properties, and sell them with zero profit.?
    And what about those ultra toxic land loans.
    Another thing if the half finished developments are not completed they will deteriorate in time to a point where they will have to be demolished-and the land will revert to ultra toxicity value.

    • wills

      Who is the ‘lucky wheeler dealer’ ?

      Who are the vendors that received the rigged market POnzi cash bonanza’s.

      Who are they. These are the guy’s the revenue is obliged to go after to pay for the shortfall in the exchequers finances.

      These are the guy’s who must be approved of first in line to pay for NAMA.

      Not regular taxpayer first in line.

      • ThomasFergus

        The Revenue is not obliged to go after them at all. In fact, given the hard ideology pertaining to property rights in this country, I suspect the Revenue feel obliged NOT to touch those people who made fortunes from selling land at hyper inflated prices and using expensive tax consultants to legally whisk away that money from the taxman.
        However, I agree with your general sentiment. The Revenue SHOULD go after these guys, and the Taxpayer SHOULD NOT be first in line to pay for the Ponzi collapse. For that to occur, we need a revolution, democratic or otherwise.

        • wills

          The revenue are obliged to the constitution which is the legal charter set out as the blueprint in through which Irish society is organized. And according to A45 the revenue are obliged.

          • ThomasFergus

            Article 45 states, inter alia, that ” the ownership and control of the material resources of the community may be so distributed amongst private individuals and the various classes as best to subserve the common good.”

            Article 43 states, inter alia that “The State acknowledges that man, in virtue of his rational being, has the natural right, antecedent to positive law, to the private ownership of external goods.
            2° The State accordingly guarantees to pass no law attempting to abolish the right of private ownership or
            the general right to transfer, bequeath, and inherit property.
            The State recognises, however, that the exercise of the rights mentioned in the foregoing provisions of this Article ought, in civil society, to be regulated by the principles of social justice.”

            So in a sense you are right. But Irish case law and Government action/inaction since “independence” suggests that the common good is defined exceptionally narrowly, while private property is defined exceptionnally broadly. And no Supreme Court that contains the likes of Adrian Hardiman is going to contradict that private property philosophy.

            All in my opinion of course.

          • Ruairí

            Wills, Furrylugs et al, Article 45 enters the political fray! Vincent Browne’s guests are thrashing it out as we speak. Lady speaker Kathleen ? from UCD brought it up. Leo Varadkar avoided it when it came to the upcoming NAMA debate. Jim Power coming out as very pragmatic again and not empathetic enough. Too many conferences but a good guy all the same.

  28. Philip

    What is stopping an Irish company from borrowing from a German bank? What is stopping depositors from banking with a German bank? Why can’t I set up my company in Germany/ Belgium, Netherlands etc…ACME GmBH, or Sprl or whatever and work my business from there? What is stopping me from operating in Ireland while using banking services in other countries?

  29. wills


    The vendor’s who profited most in the property POnzi bubble are first in line to pay for the aftermath.

    NOT the ordinary worker / taxpayer.

    The vendor’s who raided the banks credit bubble must be first in line tp pay up for POnzi property bubble aftermath.

    The vendor’s salted away POnzi profits must be first funds used to pay up for the new economic realities.

    NOT the average worker / taxpayer.

    The average taxpayer / worker is been slowly ever calculatingly sidled up the line in the ‘who foot’s the PONZI aftermath’ bill first list.

    It’s underway.

    Hanafin on frontline last night and child benefit 3 tier classification stinks.

    It make s economic sense in of itself but it distracts away slyly from who ought to be first on the list of who foot’s the bill.

    Who foots the ‘POnzi property bubble’ aftermath bill FIRST is central to the cost of the mess allocating to those who benefitted the most. After all it was a POnzi scheme not real economy real wealth.

    It is just and equitable that the vendors and vampires who are responsible for extracting the huge debts out of the average workers are held to account first to foot the bill now.

    The gov is obliged to follow the POnzi cash trail and do whatever too reclaim these monies back into the real economy and use it.

    Then, go down the peking order and cut and slash the over paid in the public sector and shut down the waste and so on and so forth.


    • Philip

      Maybe another way of looking at it is that we have run out of gas and we have to resort to loosing ballast aka C.Allowances, PS cuts etc.

      Gross incompetence – nothing else.

      In fact, I regard the whole financial system as very incompetent suffering from an addiction to the spoils of what “wealth” brings to the detriment of solid clear and objective thinking.

      • wills


        The financial system works in favour incredibly efficiently for those who are in its starboard engine.

        They weave all sorts of money alchemy to preserve equity and avoid dilution and game the system over and over and this time they ran the ship into the rocks.

        So, anyone who creamed it pay for the repair job first.

        • wills

          Lets go after the non dom’s. The property speculators who’ve legged it to tax havens. Lets tax all the bankers assets. Let’s bring the top bankers bonuses back into the tax net retrospectively. Lets property tax the hell out of the top tiers assets. Let’s confiscate the wealth stolen from the thieves who stole it.

          • ThomasFergus

            Absolutely, but CAN we do it? Retrospective legislation is frowned upon by the Irish courts, and with good reason. I’m all for taxing speculation to prevent these ponzi schemes happening again, but how can we go after money that has been legally salted away thanks to the various provisions in the Finance Acts introduced by the democratically elected Charlie McCreevey?

            Would love to see it done, but can’t see how. Would love to hear from a tax specialist and/or lawyer on this.

          • wills

            Thomas, we are in alignment on this one then! Crisps wise i reckon walkers ahead cheese and onion and king for salt n vineagar.

          • Malcolm McClure

            Wills: Unfortunately, life’s not that simple.
            People like Seanie have shell companies that fail first. Most of their assets, including the house, were placed in the wife’s name as soon as there were clouds on the horizon. Next step was for the wife to strip anything moveable out of the companies and sell it for cash. Then Seanie moves to France and declares himself bankrupt there. This has the dual advantage of establishing himself as non-domiciled in Ireland after one year and getting the advantage of being discharged from bankruptcy a mere six months after being declared bankrupt instead of UK’s 12 months or Ireland’s 12 YEARS.
            Thus, although Ireland has its draconian 1988 bankruptcy laws, hardly any wealthy person ever gets caught by them. Natural justice has no meaning for the Irish rich. In a few months Seanie wil be back and playing his old games.

  30. Dilly

    I was driving to work this morning, and I saw to men by the side of the road holding up a placard asking for a job. It gave me a chill, as I have not seen people standing on the side of the road looking for jobs since I was in London in the 80′s.

  31. Just been listening to Max Keiser , turns out for less than 11 trillion dollars every mortage and credit card in the USA could have been paid off instead they have now given over even more to the Bankers to go out speculating again.
    We are now reaching THE Worst Case Scenario ..
    Going to be a fun winter , of discontent , Bring On The Yellow Shirts

    • gquinn

      Time to buy Gold. At least its real and can’t be counterfeited.

      • Tim

        gquinn, you are correct, of course.

        However, buying gold is only possible for people with relatively large cash-reserves. With wage-cuts and job-losses and ultra-high morgages, I wonder how many people can afford to buy even 5 ounces of the stuff?

        Many of my work-colleagues were close to the edge before the cuts and levies and have, since, begun robbing Peter to Pay Paul and know that they will soon begin to default. Buying gold is not an option for the majority of people, many of whom – stupidly – use credit cards to stave-off the inevitable.

        • Dilly

          100% correct Tim !. Many people I know are on life support at the moment. One friend who has a business, but also became a landlord (9 properties), he used those exact words during the summer “robbing Peter to Pay Paul”.

        • severelyltd

          Why not buy copper or lead from a wholesaler. If you are worried and looking to hedge then these metals are easier to take possession of and relatively easy to dispose of when you need to. They have practical uses in the survivalist sense compared to Gold and the security risk is also small. Oh, and lead has more than doubled in value since the start of the year.

        • Ruairí


          I’m afraid that I disagree 100% with this misconception that no one can afford to fight back.
          Always pay yourself first. That’s the philosophy of the rich boys and time to start copying it I think.
          With something like http://www.bullionvaultcom, you can as low as €30-€50 of gold. You can buy 1 ounce, 2, ounces etc.
          If you have an overdraft and it could even be with a bank that may be nationalised etc, then nurse it but don’t panic and pay it off! If you can, put the corresponding amount into digital gold (not gold bullion, as unless Mad Maz happens, gold bullion actually loses you a % of money Josey! Still better than Anglo or Aer Lingus shares though!!). Watch the gold every day on your desktop using either or the desktop utility by The trend for gold is now bullish based on technical analysis. Its all there on,,, and, although the least two could be termed biased, but 3rd party analysis they point to is not.
          In this case, you would again be robbing Peter (the bank O/D, perhaps the 2nd car that’s not needed now as one of you just lost a job etc etc) to pay Paul (your gold holding). It makes total sense to take 100% ownership of your destiny and be brave. If you could turn 1k into 4k over the next2.5-3yrs, that will take the edge off of other debts. If you can make 3k into 12k, it could be the value of a site, as irish landprices plummet.
          Tim, We MUST be cogniscant of MEGATRENDS. We must step outside of concensus financial realities if we are to break free from the false financial landscapes painted by our ‘masters’.
          The LTEV on gold is very very good !! About 300% return. The LTEV on property is flawed, and based on pure gambling and scant data. The data for gold is very very solid. It works in longterm cycles, its a very fluid asset (digital gold is anyway) and its way off its inflation-adjusted highs of the 70′s.
          of course it could go down, but so long as you keep an eye on it and bail out and lose 5%, then so what? You can’t bail out of a house or mortgage that quickly?

          The internet is leading to a huge democratisation of accessability to certain markets. e.g. buying engagement rings at international wholesale diamond prices. See The buying of digital gold with the same hand of cards as gold bullion dealers: – see How long this sort of real ‘democracy’ lasts, I do not know. I can’t imagine for very long.
          No matter how close to the edge one is, and I have been there (put myself there twice or three times), it starts with putting your family first, and putting money to work for you. I don’t advise leaving another man short of money. But I do advise, and BrendanW echoed my previous ‘call to action’ sentiments last night, that if you have money on deposit in a credit union or a bank (even if its an o/d), IN MY OPINION ONLY, one should withdraw it and build up a gold position now as stimulus 2 from USA will show all of the cracks in the world system. Dollar is plunging, gold is in the ascent. Close to $1120 this morning, 850 last autumn. You can see how this could pay a few bills and still leave the original deposit intact.
          Folks, if you buy anything this year for anyone younger than you, starting out, who perhaps looks up to you, buy them “The Richest Man in Babylon”. So simple, almost stupid. But the CORE lessons of money (and work Wills !!!!) do not change. Many libraries will have it too but it is very cheap on Amazon or available free here on PDF

          Tim, I respect your POV on people’s position re credit cards and Peter and Paul, but the only way for sheeple to become people is to stop acting like a victim and act like a winner. Neuro Linguistic Programming, NLP. Ape the winners.

          • wills

            Ruairi – i think tim maybe intimating on it is more difficult for some to fight back more than others. But, resisting is available to all one way or the other.

          • gquinn

            Very good Ruairi. I completly agree with you.

            People should wake up to the fact that they were brainwashed by the Govenment, Banks and Estate agents and they wrre the suckers.

            It’s important for people to remember this lesson because when another bull market happens and when the bank rings them up asking them to take out 100% mortgage then I hope people tell the banks to go where the sun does not shine. Thats what I done during the boom and I reapped the rewards by shorting a very silly bull market and now I’m siting on a cusion of cash and I do not feel sorry for anyone that bought property near the top and they are facing financial ruin, I am not sorry for these idiots not one iota :-) LOL

            At the end of the day, its a free market and make sure you are not a sucker. As they say during poker “If you can’t find out who the sucker is in the first 30 mins of the game then the sucker is you”.

          • Dilly

            NLP is very interesting, I have read up on it before.

  32. wills

    Malcolm –
    Reply at 28 very sobering indeed.
    My posting is more bent on putting into perspective the unfolding realities concerning who foot’s the bill and who, in an ideal world, a world according too the principles and law we are told every day we live under, bears the burden of the cost.

    In the light of D’s article above the ‘sorting out of the mess’ may lead us all down interesting pathway’s that quite possibly lead to denouements with a satisfactory ending as opposed to endings the ‘vested interests’ smugly thing are inevitable.

  33. wills


    We ought to keep our eye’s peeled on the tricks and the new scam’s the power elites rule the law over us the doublespeak domesticating us all into paying off their gambling bill’s and taking the cut’s and new taxes too get their two tier mercantilist central banking system kicking over again into the next new cycle.

    Which appears to be the introduction of the green industrial revolution the bankers and industrial magnates are gearing up for for the next bubble idea.

    • Hmm. Yes.
      How about a tax on water extraction, say like all those people with private wells?
      And look at the carbon footprint of bicycle tyres.
      Not to mention a leather tax on the Jimmy Choo’s to discourage Bullocks.
      Personally, I’d like to see a Toothpaste Tax to discourage excessive water usage.
      Vote Green – The Party of Mean.

  34. Tim

    Folks, just look at this:

    …not for the clip (which, I’m sure, most of you have seen), but for the comments that follow underneath the clip.

    The entirety is very enlightening about where our people are heading, I think.

    …. and its not to a good place……

    • Yep, he could be Ireland’s answer to Michael Moore, you can still catch the full show at , search for Frontline.

      Pat had already given hapless Hanafin a soft landing on her announcement they were not going to look at taxation as a solution in the next budget.

      She was especially squirmy when she replied to criticism from the audience about the bailout of the banks…They wern’t bailing out the banks, they were buying ASSETS from the banks…. She then followed shouty man with the refrain, we’re all in this together!!

      It seems some will travel first class, some won’t be allowed onto the lifeboats, others we’ll throw overboard .

      With this leadership, Ireland Inc is sunk!

  35. Hi All , today I think we may have seen a chink in The Banks walls, they have all come out and are looking to work with mortgage holders !!
    While we may have different laws here regarding debt , in America for example you go into default and give back the property you don’t owe the out standing where as here , the banks can still go after us.
    But here is the delima for the Bankers , now we have thousands around the country going into arrears and they do not want to take back these houses as they will not be fluid assets
    While Banks are in trouble because of derivatives , they still need the daily cash transactions to function.
    Forget Anglo this is already a dead bank for developers , but the rest we could put under enormous pressure if we collectively with drew our savings , just look what Joe Duffy did already and how scared lenihan was when people starting with drawing and this was partly why the guarantee was put in place.
    Banking is just another service provided by merchants . What is going on with the re investing of these houses is just madness , the system is broken .
    We are simply giving them money for loans that were never backed up by their reserves , we are been duped .

    The Social Revolution which we are going through now is necessary as in ‘The Knowledge Economy’ we won’t have full employment , technology it’s self is making sure of that, so a more social society has to also be developed.
    We have to move away from 19th century politicians and 20th century banking.along with the industry of War and colonialism.
    We have to think Globally and move from our insular ways, and see the effects of individual consumerism today we are over supplied with material products, look at the ports and China’s ware houses .
    If it takes a further two three years to sort this all out , so be it as right now the Old School are not able to deal with this economic mess.
    Also , I think a summer pack of Tayto are superior to the Walkers !

    • wills

      brendan, walkers cheese and onion i regret to say is top’s but, king salt n vinegar rules. Also, i regret to inform, walkers bags are filled less again, today i opened a bag and i could see the bottom of the pack.

      On the post, one thing worth noting. The banker’s engineered the meltdown and will engineer another ponzi scam soon if credit provision is not removed from the corporate private sphere.

  36. Tim

    Folks, sooner or later, we are going to have to deal with the fact that the majority of people are not weel-off in Ireland; that the majority listened to the like of Mary Harney, saying “The country is awash with money”, “We are all very wealthy in Ireland”, etc….., looked around, realised that they weren’t wealthy, saw cheap credit and decided to use it, just to “keep-up with the Joneses”.

    I saw people, without a seat-in-their-trousers, buying new cars (people on €28k pa and less!) and laughing at me, with my ’97 (before black-ice and “that tree! and now, my ’01 car).

    This is back to Deco’s “false-pride” thing; the arrogance thing; the “celtic Tiger rising-tide-lifts-all-boats” rubbish.

    It didn’t.

    Some of us knew it was a lie. We did not “get drunk on prosperity”, or the Champaigne that Charlie McGreevy recommended – we knew we could not afford chanpaigne.

    Now, those of us who were prudent are being forced to pay for the imprudence of other, stupid, people.

    But, what are we to do?

    The “Peter-and-Paul” issue I mentioned above, that Dilly has seen first-hand, too, is very real: Millions of PEOPLE are on the precipice. Dilly reported to us of a neighbour’s suicide because of it. So, Harney’s “Ireland Inc.” is killing people. The lies, the “Spin” is killing people and splitting-up families, with renewed emmigration: Irish mothers and Fathers, all over this country, who maybe (like me) did not engage in the bubble, are in the airport tonight, saying “Goodbye” to their children, as they leave.

    It breaks my heart, to imagine it!

    Why are they leaving?

    Because they can see no hope of a decent life in our country: what an awful endictment of their parents’ choices (political and economic).

    “Ireland Inc.” is dead.


    It was a terribly bad idea, an inviable company. A “Country”, a “Society”, is too diverse to be the “lean, mean, productive, machine” that a commercial company has to be. For “Ireland Inc.” to work, you would have to euthanise the elderly, abort the disabled, sterilise the stupid and…… basically, run the country with Darwinism as the predominant ideology.

    Since we don’t want that………

    What are we going to DO about all of the “micro-economic” sh1t that IS going to hit the fan?

    What about the 200,000 ex-construction-related-workers, who are unemployed? (forget about the other 225,000 who did not even work when there were so many jobs available, that we imported people to fill the jobs – they will never work, anyway)

    What will we do with the mortgages they cannot pay? What will we do with the car-loans they cannot pay? What will we do with the credit-card bills that they cannot pay? What will we do with the ESB bills that they cannot pay? What will we do with the Gas bills that they cannot pay? What will we do about the winter-heating-oil bills that they cannot pay?

    We tend to focus, her, on more “macro-economics”, but we may be missing the point: just as “All politics is local”, maybe “All economics is Micro”.

    The crisis started, don’t forget, with giving home-loans to poor people who could not repay them – and the bankers knew that, but, did it, anyway, to get their “Bonus”.

    Then, bought the “new car”, with the bonus, that drove the neighbour mad, that, out of pride, borrowed to keep-up, that now has to pay, though the job is gone.

    What a mess!

    But what, on earth, are we going to do about the “micro-economics” of it all?

    Cuts. Cut Child-benefit, so people have less money to spend in the real economy; cut publis-sector pay, so 300.000 people have lesss money to spend in the real economy; cut social welfare, so that people have less money to spend in the real economy…… cut, cut, cut!

    Oh, Lord…….. Poor ol’ Ireland.

    • wills

      tim – an interesting ‘stat’ on the meeja last few day’s…

      50% of workers are on 15,000 euro’s or less!!!!!!!!!!!!!!! You probably know this but it’s worth posting in light of article and ‘footing the bill’.

      Another interesting piece of info,..

      Gobarchev in an interview yesterday declared how saddened he is over the last 20 years since the wall came down, saddened over the to quote him ‘cavernous gap between rich and poor’ that opened up post berlin wall.

      Also, the lowest income workers, the 50 % of the working population who earn under 15,000 euro are coming into the cross hairs to divvy up for the gambling debt’s alongside middle income earners and yet the higher earners who are responsible and profitted the most remain in toto untouched!

      • Tim

        wills, I thought that was €35k or less, thus. out of the tax bracket, though I could be wrong.

        My wife is on part-time work and earns about €19k pa and does not pay tax. She pays prsi, alright

        Of course, the problem is that “10% of nothing, is NOTHING”.

        No point in taxing people who earn very little – you wont bring the money in.

        They will tax the middle-earners, again:

        Those between €40 and €80k, because that’s where the numbers are……..

        This is all about numbers, not “fairness”.

    • Colin_in_exile


      I agree with most of what you say, the general jist of it, except about the suicide which you claim is Mary Harney’s fault. That’s simply not true, its not her fault (Jesus, I can’t believe I’m defending the woman).

      Suicide is an extension of the pride construct. It IS the coward’s way out. The suicidal person does not want to be seen as a financial failure – the person who lost it all, they’d rather be dead than have a humbler existance. Remember Pride was the first sin, God’s no.2 wanted to be the same as God, so God sent him to a place called Hell where he could be No. 1.

      • Tim

        Colin_in_exile, I did not claim that suicide is “Mary Harney’s fault”.

        I linked suicide ( which is VERY real for Dilly’s DEAD associate) to spin that Ms Harney espoused……..

        I di not say that it was her “fault”.

        Individual responsibility is always a factor.

        Will ALL “individuals” involved ACCEPT, said “responsibility”?

      • Alan42

        Colin , W T F ?

      • Dilly


        This guy was one of the nicest people you could meet, always pleasant and polite. He lost is job, marriage, and had debts (property) on top of that. He used to sit for hours in his car listening to the radio in the weeks before his death. I often meant to ask him if he would like to join myself and my friends for a beer. But I never plucked up the courage, I feel so bad now. Also, after he died, his relatives piled all his belongings into a skip, and within weeks, it was like he never existed.

        • Dilly

          If you want to see where we are heading, drive past the Salmon Leap pub in Leixlip at 9 am, there are guys standing at the side of the road looking for work.

        • Colin_in_exile

          Dilly, Alan,

          I’ve lost my job too, 2nd time this year. If I can’t find work in a few weeks I’ll have to move back home, back to my parents, where there will be arguments and the blame game is played out, along with a welcome. I’ll be bumping into my old neighbours, some will be sympathetic, others I know will enjoy seeing me taken down a peg or two, I’ll have to swallow a lot of pride, its gonna be hard, but I’m not going to take the coward’s way out for the sake of some pride.

    • Tim , again your on your soap box, ‘remember giving loans to the poor people started this ‘…….Not that simple at all, No poor person here got loans for houses, but speculators and developers got loans with false security .
      Let them make the ‘Cuts’ and let’s wait to see , what F.F cut them selves , I think we now have some back benchers worried, I gave Connick a right lecture on how he has done nothing since getting in, so this week at least he’s out trying to spin the cash for clonkers , as he knows now he will not Ever again get elected .

      • Tim

        BrendanW, Fair play to you! (I woudn’t doubt you).

        “I gave Connick a right lecture on how he has done nothing since getting in”


        Will you meet with me, Adamabyss, wills and whoever else, when the boys come-up with a plan? (Please?)

  37. Tim

    Folks, see if this “feeds-in” to what we need:

    Philip, Deco, Liam, wills, Furrylugs, John ALLEN, MK1 and going-home, et al?

    Lorcan, where are you?

    • Malcolm McClure

      Tim: By coincidence today, I came across a related, relevant, but longer discussion of a book written 400 years ago that is packed with insights that I heartily wish I had been taught at school.
      As a dedicated teacher, I’d be most interested in your comments on this summary, particularly the section on logic and dialectics and its relevance to our discussions here.

      • Tim

        Malcolm McClure, I will examine, consider, (perhaps, present) and report, with due diligence,

        Thank you for offering the information.

      • liam

        Very interesting and relevant choice Malcolm. Part of the problem with the national debate is the inability to deal with minority opinions, partly because of an incapacity or unwillingness to “labour to tell [one's] tale” in order to avoid ambiguity or misinterpretation on the part of the reader. There may also be some cultural factors at play (TulloMcAdoo brilliantly exposes this). The most important voice in the room is that of the genuine dissenter (as opposed to the guy who is just looking for a fight).

        Notwithstanding the waffling morality of the Guardian article, it is useful as a reminder that this is not a debating club: there are real issues at stake and I do believe that we are all here to deal with them and not to score points or massage each others ego’s.

  38. Tim

    See if Mary Harney can Hypnotise you, here:

    BrendanW, I was aiming at (but may have missed the “bulls-eye”) the micro-loans that poor people were offered and took – how much is that?

    People, getting letters from banks, every month, offering: “You have been pre-approved for a loan of €15,000″, etc.

    So many people accepted this “pre-approval” stuff, BrendanW, that I think, it will become a huge problem for us, after we stop looking (only) at the macro-economic problem.

  39. Here’s a link to David’s jewish friends ,…why can’t we do this .
    We could give the start ups FREE Commercial space ( say any property not rented in last three years ) and let them have also one of our many empty houses and tax free for first year and let their new employee’s keep social payments for this year , if they have been unemployed with a Degree for a year …..

    I also like to know when is David bringing out The Farmleigh Business Plan , must be five weeks gone since this event ?

  40. Tim

    BrendanW , glad to see you “dipping-in” here, more often, now.


    Is there a chance that some of us might meet you, if we manage to set it up, with wills and Adamabyss?

  41. Deco

    In the media at the moment the banking situation seems to be dropping down the list of priorities. Yesterday a Red top newspaper gave us a headline concerning Cowen’s endorsement of two brash kids in a Pop Idol type teeny bopper competition. The other Red Tops were on a similar line.

    The Irish times brings us once again the more positive spin of events. The IT tells us that the Irish government is getting increasingly optimistic because the latest forecast is that the economy will drop by only 1-2% next year. Things are not as bad as we thought we are being told. [Personally I reckon they are much worse].

    The IT also tells us that there are now more students in Ireland than farmers. And presumably more people in either of those categories than in the construction sector. In essense the three largest sectors of the employment market, are being carried, like Obama Democrats, on “hope”. Long years of hard work, hope and character building episodes. The latest HEA statistics indicates that Irish people have decided to ‘go technical’ with respect to the course that they are choosing – in an effort to get real skills. This is an improvement. But it remains to be seen if the cost base issue will get resolved. On this issue we have dithering.

    One piece of information that I seen on the net during the week concerns the merget of Herald AM and Metro. We actually seen cut-throat competition in a sector of the Irish economy recently – freesheet bulletin papers. It was only a matter of time before a backroom deal would be reached to put an an end to this “competition in the Irish market scenario”. This has now happened, with the two competitors in a market deciding to ‘pool resources’. They will hold shares in the merged entity. Share the profits. You get a more blatent infringement of Competition Policy. The Competition Authority should be indicating that this is illegal – instead they are giving it the full stamp of approval.

    The Irish Competition Authority has given approval to an ending of competition in one sector of the market. Once again, I have to ask the question, “what exactly is going on with respect to the Irish Competition Authority and it’s obligations to ensure competition in the market place ?” . This is not oligopolistic behaviour being facilitated by the Irish competition Authority (which is the usual scenario). No. This is even more blatent. This is small sector monopoly control. Currently the bulletins concerned are freesheets – so it could be said that there is no market, because there is no price. But the objective is to have set a price.

    It’s like as if you seen Rip-off Republic, five years ago, and you said that we need to do something about the market rigging and price setting. And five years on, it continues as usual.

    Really should we be surprised if the banks are still playing uncompetitive games, and making oligopolistic manoevres ?

    Neelie Kroes could send her entire Competition Unit over here, and they would never be able to rid Ireland of the rampant tendency of Irish private sector interests to rig markets.

    Is there any chance that somebody might perform an analysis of who directs the Competition Authority and what connections they have to the rest of the rogues running Ireland ? None – that, you can be sure is the very last thing that will happen in Ireland.

  42. liam


    An interesting article. I have a feeling that such warnings however will make not a jot of difference it seems. I had the opportunity to witness first-hand the latest Leviathan. Political cabaret indeed. Pure theatre. I was watching from the gallery (with a head already out of kilter from jet-lag) at an exposition of the surreal during the panel ‘discussion’. Initially I was impressed that Boyle and Fahy showed up at all, though I’m not sure which side of courage (bravery or utter stupidity) they were on.

    What I took away from the meeting is relevant to the article above: these guys couldn’t give a flying fuck one way or another what anybody in Ireland says. Discussion was impossible that evening as the advocates on both sides were speaking entirely different languages.

    Ireland is insignificant economically (especially from the distance I am now at). Up until now, nobody knew nor cared of Ireland’s particular woes, since everywhere is having problems and governments and business are in fire-fighting mode. Now that there is some talk of recovery in some parts of the world, people are inevitably looking at where the investment opportunities are. It is instructive therefore to look at what the perception of Ireland is from the outside. Here’s a taster:

    The 12 Worst Economic Crashes of 2010.

    You and others have tried debate and reason, to no avail. I’m inclined to think that “talking down the economy” is exactly the strategy needed in order to force the government to confront the realities of Ireland’s position internationally.

  43. paddythepig

    Here is a good post from IrishEconomy by Philip Lane:

    This is pretty much the same analysis given by Alan Ahearne on Prime Time earlier in the year, and what Biffo & Brian are now quoting. Ahearne hasn’t gone to the dark side btw. There’s only one omission in the analysis ; mathematically, some private sector payrises – in MNC for example – are desirable, providing they don’t end up becoming uncompetitive in the process (which at current global pay rates, they would).

    Dilly, what’s the endgame for your buddy with the 9 houses? Without NAMA, he’d rightly be the guy on the side of the road with the ‘Available for Work’ sign. Will NAMA succeed in saving his ass in the long run? Opinions?


    • wills

      Paddy –

      So Philip LAne reckon’s

      >> Ireland ‘s banks unleashed a POnzi economy through credit.

      >> THe public sector are run by cronies pumping up salaries to highest in europe.

      >> FF spent the bubble revenues thinking short term.

      >> Pass the buck on structural deficits mismanagement onto the middle and lower worker.

      >>pop ageing seen as a problem!!!! (eugenics alert)

      >> Put fiscal stabilisation at top of priority list, (bit late now that the horse has bolted)

      Seem’s very similar to ahearne alright, ‘vested interest’ shill.

    • Dilly

      He is 2 million in the hole, and just about surviving. I told him in 2005 to sell all 9 houses. He laughed at me. He has a friend who I don’t know too well, but the guy was boasting in the pub about buying an apartment block in the UK. God knows what state that guy is in now, I havent seen him in a couple of years. These guys were throwing money around. 10k to a girlfriend as a birthday present, it was just INSANE !!. I was getting out of property at a time when everyone was paying silly money for it, But I am going to end up paying anyway through NAMA. Unless I leave, again.

      • Dilly

        Just to add, when I told people I was selling up, the answer I always got was, “where will you live”. I will live anywhere I bloody want now that I am not indebted to the banks. The mentality towards property made it easy for banks to make money.

        • wills

          You had a sense of who you are dilly and it kept you of the mind control grid thinking for yourself. THe crazies who run the system feed on mass fear and pop idol delirium.

  44. G

    There you go David et al……….

    John Perkins calls himself a former economic hit man. He has seen the signs of today’s financial meltdown before. The subprime mortgage fiasco, the collapse of the banking industry, the rising unemployment rate–these are all familiar to him.

    Perkins was on the front lines of monitoring and helping create these very events that were once just confined to the third world. From ’71 to 1981, he worked for the international consulting firm Chas T. Main, where he was a self-described “economic hit man.” It was based in Boston.

    He’s the author of the New York Times bestseller, Confessions of an Economic Hit Man and The Secret History of the American Empire. Well, he’s out with a new book. It’s called Hoodwinked: An Economic Hit Man Reveals Why the World Financial Markets Imploded–and What We Need to Do to Remake Them.

    ” Amy GOODMAN: You talk about the robber barons, the modern day robber barons. Who do you mean?

    JOHN PERKINS: So many of them. You know, we’ve seen them recently on Wall Street, the people from Goldman Sachs and Citigroup and so many other organizations, people like Jack Welch, who is a former CEO of General Electric. And as I lecture at business schools and MBA programs, Jack Welch is often held up as this idol. Jack Welch laid off a quarter of GE’s employees. You know, he said he was making the company meaner and leaner–he certainly was making it meaner–gave himself huge raises and bonuses at the same time, turned General Electric essentially from a manufacturing company into a financial services company, which really was one of the leaders in taking us down this course today that we’re on of a failed economic system.

    And we truly have a failed economic system at this point. It’s deep. You know, one of the reasons I wrote Hoodwinked is because I saw a lot of books coming out that deal with what I consider triage. What do you do with AIG? What do you do with General Electric? What do you do about the immediate problems with Wall Street? But the problem is much, much deeper. There’s a cancer beneath all that. And this is this very basics of our current economic system. And we must delve down and root out that cancer and move into something much better.

    I have a two-year-old grandson. And as I look at this baby, you know, I think, what’s this world going to look like in six decades, when he’s my age? If we stay the course, it will be horrible. But we have this opportunity now, and I think this economic turmoil that we’re in today is teaching us that we must change. We have a failed system. We must create something better.

    AMY GOODMAN: John Perkins, you have an interesting theory about what happened in Honduras, the coup that just took place there. What do you think?

    JOHN PERKINS: Well, I don’t think it’s a theory. You know, I think it’s–I was in Panama at the time that the coup took place. And, you know, the democratic–

    AMY GOODMAN: In June.

    JOHN PERKINS: Yeah. The democratically elected president, Zelaya, had called for a new constitution to replace the old one that was really set up by the oligarchy in favor of the very, very, very wealthy and the international companies. He also called for a 60 percent increase in the bottom wage rate, which had a huge impact on Dole and Chiquita, two of the biggest employers in that company. They, along with a number of companies that have sweatshops in Honduras, strongly objected, very much the same way that they had objected to Aristide in Haiti, when he did something similar, and called in the military. The general in charge of the military was a graduate of our School of the Americas, this, you know, school that’s famous for creating dictators, and they overthrew Zelaya. It was a classic CIA-sponsored type of coup, very similar to what United Fruit had done in Guatemala in the early ’50s. And, of course, United Fruit became Chiquita.

    So you had this–you know, this strong relationship and got rid of this democratically elected president, because he was drawing a line in the sand. We had seen ten countries in Latin America bring in new presidents who are instituting very significant reforms in favor of the people, in favor of using local resources to help the people pull themselves up by the bootstraps, and I think the corporatocracy decided to draw a line in the sand in Honduras.”

    • wills

      G – great post. Relevant to D’s article in relation too an economic system run and controlled by special interests and in Ireland’s case the line in the sand will be the ‘triple lock’ ushering in a democratic deficit bordering on good old fashioned commie centrally planned economy under the control in irelands case of an installed corporatist state in liason with the ECB.

    • Malcolm McClure

      G: I bought Perkins’ ‘Hitman’ book in January and was quickly convinced of its relevance to the developing mess in Ireland and many other states. It is a textbook of American neocolonial methods. Perhaps fortunately, Perkins’ conscience began to prick and he regressed to hippy in latter chapters of his book.
      I became acquainted briefly with one of his colleagues who stayed in the trade and I formed an indelible impression of his extremely personable ruthlessness. FF hotshots would have been butter between his fingers.

  45. Heres a mad idea to generate jobs.
    Instead of standing around like Meerkats in a Flamingo Factory while we see outsourcing send jobs off to India, why don’t we concentrate on Off-shoring?
    The IDA or Enterprise Ireland sets up a whole new company, staffed with suitable people targetted to cause savings among MNC’s they already deal with. Instead of tax breaks, the State takes the hit of the risks associated with new start-ups (since the aforesaided NGO’s are experts at lecturing us about sime risks. Once up and running in “shadow” mode, the new “company” is simply sold to an MNC for a Euro to administer and fund. Offshored admin, IT, HR and other “support” functions won’t have to head off to the Far-East, which is a cause of great concern to many MNC customers.
    Just a skeleton idea for discussion but if we keep waiting for inward investment without putting some honey in the hive we’ll keep losing out to what is effectively the same policy among the ASEANs.

    • liam

      If I read you correctly, your are looking at essentially moving Irish Co’s up the value chain by taking advantage of the locally-based MNC’s likely interest in what our SME’s are producing. I believe you are thinking in the right direction but (and I don’t wish to be negative) I’d constructively suggest that cost savings are fine (the biggest can be achieved by leaving the Euro) but we need also to figure out where the value-add for an MNC located in Ireland is. We cannot compete on price alone in the long term, devaluation or no devaluation.

      • Hi Liam,
        I was musing about becoming a “near-shore” support centre for European MNC’s. Bit like the IFSC for Euro banks. It’s by no means an original idea and as you say, where’s the added value but our cost base is in the middle of a savage correction so maybe we could look at “Socionomics”.
        The MNC can relocate it’s core base to wherever for cost reasons but retain “extended arm” socially sensitive elements of the business in “dear ‘ol Oirland”. The marketing function springs to mind. We were very good at selling the Tiger after all.

        • liam

          Gotcha. Your follow-up post below explains this pretty clearly. One could argue these are value-add services you are talking about. What you propose looks entirely different if you consider it from that perspective.

          Ireland is not without opportunities or ideas. I absolutely guarantee you, innovations will emerge, the question is will they be capitalised on for the benefit of Ireland Inc. (maybe by sale/license to the MNC’s), or realised in another part of the world by fleeing entrepreneurs?

          • Well if we’re all going to have a Jamboree, we might as well meet to discuss setting up something viable. I couldn’t see 15 grumpy old men meeting to vocalise whats discussed here at length being very productive.
            For a kick-off, whats stopping a variety of multi skilled experienced (but unemployed) professionals setting up an online (cloud computing) co-operative to provide a service to several companies who are crippled by the onerous demands of their support functions? A form of Diogenes the Cynic in his pot dishing out Ethical Corporate Governance & Risk Management solutions in a manner designed to make money from beurocracy. I’ve achieved this in a small way, turning Health & Safety requirements into profit.
            Happy to discuss further.

  46. From the Economist.
    Apologies for the full post but the old Puter is playing up today.

    Economists argue that offshoring is a win-win phenomenon
    Oct 28th 2009
    Offshoring–the wholesale shifting of corporate functions and jobs (particularly those of back-office workers in it and accounting-type roles) to overseas territories–is what gave outsourcing a bad name. It is important, however, to note a crucial distinction between the two:
    - Outsourcing need not necessarily result in job losses in a particular territory or country. A job can simply be handed over to another organisation of the same nationality and geographical location where (the company handing it over hopes) it can be carried out more efficiently. Sometimes that other organisation may be in another country, but more often than not it is not.
    - Offshoring, however, does involve shifting jobs to another country, but it may not involve transferring jobs to another organisation. For example, a company may simply decide to move its local customer services operation to one of its own subsidiaries abroad. That is offshoring, but it is not outsourcing.
    Economists argue that offshoring is a win-win phenomenon: the country that sends the work abroad gains from lower costs, and the country that gains the work gets extra jobs. But countries sometimes panic about the scale of offshoring. When production jobs moved en masse to China and other cheap labour destinations, rich-world governments did not worry unduly because they thought that their workers could glide painlessly from manufacturing jobs to service jobs. Who, they thought, would begrudge giving up a lifetime on the factory floor for a lifetime in a clean, antiseptic office?
    The real problem arose when the service jobs also started to go abroad, when every other service company’s call centre suddenly seemed to be based in Bangalore, in the middle of India, not Indiana. What were western workers going to move on to this time, once they had been priced out of the services sector?
    At one stage, Americans became almost hysterical about the issue. A 2004 report by Forrester Research, a highly reputable firm, estimated that 3.3m American jobs would have gone offshore by 2015. This was immediately taken as a known fact. But the author of the report subsequently told the Wall Street Journal that his estimates were no more than “educated guesses”. As one commentator said: “The public’s intense desire to understand the scope of the problem has bred a reliance on statistics that even [Forrester] admits are based heavily on guesswork.”
    In practice, the hysteria died down, even as the benefits of offshoring were being questioned more and more. Managers found it increasingly difficult to manage far-flung service operations in cultures they did not understand, and firms began to bring some functions back to their home base–especially call centres, where customers often found it difficult to explain localised problems to someone working in a totally different climate in a totally different time zone. Indeed, in 2006 an Indian call-centre operator opened a new centre in Northern Ireland.
    Closely allied to offshoring is the concept of nearshoring, a phenomenon whereby companies shift operations, often IT-related ones, to foreign countries that are close to their own, but where they can still gain a labour-cost advantage–from the United States, for example, where Spanish is the second language, to Mexico; or from Japan to the Chinese city of Dalian, which was occupied by the Japanese for many years and where there are Japanese-speakers. Nearby countries are more likely to speak the same language as the country of the corporation doing the offshoring; they are more easily accessible at short notice; and they are unlikely to leave the short-stay visitor with jet lag.

  47. Tim

    Folks, It seems Senators Mullen, O’Toole and Harris have voted against an amendment on NAMA that would have allowed Freedom of Information requests about it.

    More skulduggery from these three oh-so-media-darlings.

  48. [...] banks are facing nationalisation because of a year of inaction on the part of the Irish government here. The role of the European Commission in restoring sanity in all this is [...]

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