November 29, 2009

Debt in the desert shows how we must not proceed

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The default of Dubai World – announced on Thanksgiving Day, when most Americans were on holiday – showed us what the second leg of this great crisis was all about.

The financial markets’ reaction indicated that many believed that, rather than being an isolated incident, this default in Dubai – for so long, the poster boy of globalisation – might be the beginning of a new domino effect of defaults all around the exposed parts of the world.

I say ‘exposed’ parts of the world because a new trend is developing, as the ramifications of the great 2008 crash become more evident. We are moving into a phase where the relative position of companies and countries is being closely looked at.

In the crisis, a ‘blanket’ rescue operation was mounted – the good and the bad were treated with equal generosity. The world’s central banks, because they were worried about systemic risk – which is a complicated way of saying ‘‘the bad boys will drag down the good boys’’ – treated everyone the same. Money was printed and thrown at everyone, everywhere, in the hope that the system would not seize up.

Now that the system has been saved – or at least looks more robust than many imagined possible this time last year – it is time to become more discriminating. Financial history reveals that all economic crises go through various stages.

Typically, there are periods of calm, when people think the worst is over and then, wham, something else happens, triggering another decline. In the discriminating as opposed to the blanket phase, investors consider who is really delinquent and who can be salvaged.

This time around, the discriminating phase has been made all the more acute by the fact that the central banks – and the ECB in particular – have warned the fragile banks that the taps will be turned off soon.

The realisation of this in Greece last week caused a huge sell-off in the stock market there. No one seems to have reminded us that the Irish banks are much more dependent on the ECB’s daily largesse than the Greeks.

It is ridiculous to think that countries and companies carrying huge debts, borrowed in the good times, will be able to pay them all. There are a few hard rules of economics, one of which is that debts that can’t be paid won’t be paid. The sooner the creditors realise this, the better for everyone.

All over the world, borrowers are doing deals with lenders to restructure debts. Many major companies – Independent News & Media is an Irish example – have done debt/equity swaps with creditors, giving them shares instead of cash, thus ensuring that the company, its creditors and existing shareholders live to fight another day.

This is what adults do in a crisis: they make the best deal possible. Only fanatics carry on as if nothing has happened, promising to honour all debts and never to renegotiate. So when we hear our government suggesting that our crippled taxpayers can pay all the debts incurred by our bankers, the world knows we are spoofing.

This type of behaviour scares people, and leads to capital flight. When capital leaves a country, it doesn’t come back until there is an event that signals that the game has changed and the boil has been lanced.

One event would be a change in the management at the top of the banks. It is hard to overestimate the damage that has been done by the failure to appoint outsiders to the top positions of our banks.

I was chatting to a serious investor from New York the other day who despaired of the situation. Two years into the problem, we have no new management and the only outsider in the Irish banking scene is the new boss of Anglo, who was brought in after nationalisation.

Next year, there is likely to be a significant re-rating of countries and companies.

What the Dubai default indicates is that the bond market was asleep. It didn’t see this coming. Dubai, like Ireland, went on a binge over the past ten years, using other people’s money to build whatever and wherever it could. Now Dubai can’t pay it back.

Let’s just do some back of the envelope calculations for Ireland to see whether we are hurtling down the Dubai route. How much money do we owe and how will the financial markets regard us next year – particularly after the Dubai default?

Let’s start with the banks. Last year, they borrowed €135billion abroad to fund their lending here. With ECB help in the past year, flogging a few assets, the figure probably stands at about €120 billion. Government debt, according to the National Treasury Management Agency, stands at €73 billion.

Together that is €208 billion; being generous we can call it €200 billion. Averaging interest at 5 per cent means the interest payment on this is €10 billion per annum. In the past few months, when millions seem to have slipped into billions, and nobody can grasp how big the number is, let’s just remind ourselves that €10 billion is enough to build nine Luas lines in our cities or enough to give every worker in the country a pay rise of €90 a week.

Remember this €10 billion is just the interest to be paid every year. The principal may have to be repaid eventually too.

But the people repaying this €10 billion each year are also the people paying interest on their own debts, because private sector debt stands at €378 billion.

Again, allowing 5 per cent interest (but it is probably higher in most cases), this leads to annual interest payments of €18.9 billion – 17 Luas lines and €170.10 per worker in the economy per week. Presuming that the interest payments on the private debt are covering the banks’ debt, we can add the €378 billion of private sector debts to the national debt of €73 billion and now add Nama loans of €54 billion just for good measure.

This gives us a total debt of €505 billion Once again, allowing for 5 per cent interest, we get total interest payments that have to be generated from Ireland every year of €25.1 billion per annum. That’s how much cash will leave the country in interest payments on loans next year.

This means that the first €225 earned by every worker every week in this country will be earned simply to pay the huge debts. Now what are we going to do about this? With these figures, default is obviously on the horizon.

Should we renegotiate now or allow the thing to blow up like Dubai? I can’t answer this, but it’s interesting to see what the Bible has to say. The Bible reveals that debt cycles, defaults and debtors getting into trouble are stories that are as old as the hills. In Deuteronomy, chapter 15, verses 1 and 2, the Bible says: “At the end of every seven years thou shalt make a release . . . Every creditor that lendeth unto his neighbour shall release it; he shall not exact it of his neighbour or of his brother because it is called the Lord’s release.”

At least if we do ’fess up and begin to renegotiate our debts, we might have the consolation of knowing that God is on our side.


  1. ps200306

    David – If we’re getting all biblical, I think the times call for a Leviticus 25, not just a Deuteronomy 15, i.e. a Sabbath of Sabbath years, a super-debt-release jubilee.

    “Consecrate the fiftieth year and proclaim liberty throughout the land to all its inhabitants… If you sell land to one of your countrymen or buy any from him, do not take advantage of each other… If one of your countrymen becomes poor and is unable to support himself among you, help him as you would an alien or a temporary resident, so he can continue to live among you. Do not take interest of any kind from him, but fear your God, so that your countryman may continue to live among you. You must not lend him money at interest or sell him food at a profit.”

    If only.

  2. CitizenWhy

    The world will be in financial crisis until the leading cause of this crisis – the United States – gets its house in order.

    The United States cannot afford th war in Afghanistan. The money spent in Afghanistan in one year would be better spent on a new defense strategy and on the recovery of the US economy.

    Here’s what the US needs to do:

    - Redefine the mission of the US military to defend national territory and vital interests abroad through means that are financed through taxation and domestic borrowing, not through foreign borrowing.

    - No troops on foreign soil.

    - Redefine the S military mission abroad as making justified strategic retaliatory strikes, as was done under Reagan and Clinton, with the occasional creation of “no fly” zones as was done for northern Iraq when Saddam was in power, effectively giving him no real jurisdiction over that region.

    - Under this new policy withdraw from Afghanistan and Iraq within 4 months.

    - Divert 2 months of $the 45 billion dollar a month cost of Afghanistan into US Homeland Security and North American Defense.

    - Divert 6 months of the $45 billion dollar month cost of the Afghanistan war into a national jobs program and an infrastructure rebuilding program.

    - Use the other savings to reduce the national debt.

  3. liam

    €500B resting in a “high yield” savings account (say, 5%?) would in theory generate about €2.85M ever HOUR.

  4. liam

    Unfortunately the “Bertie and Dubai” youtube video linked on GavinsBlog that I posted in the previous article has mysteriously been deleted by the video’s owner, branddubai…

    Thankfully, the internets come to the rescue. Get it while its hot:
    http://www.irishcentral.com/opinion/col/kellyscorner/Bertie-Ahern-lauds-Dubai-as-a-succes-78090192.html

    • paddythepig

      Great link Liam, thanks for that. Ahern should find a corner to slink back into, and keep his gob shut. He really is an embarrassment.

      As are all the gombeens who voted for him.

      So now everyone wants to default. Grand. Just as long as everyone feeding off the state coffers from Biffo down to the bloke on the dole listens to Lenny who said “Default would have disasterous consequences for the funding of the state”.

      We’re snookered. Default or no default, euro or no euro, there are no easy ways out of this crisis. Ireland will be a barren place for at least a generation.

      Paddy

      • Jonathan Hannon

        its good to try and take some positives out of everything, at least the recession showed up Bertie for the chancer he is. I spent years telling anyone that would listen that Fianna Fail were walking us down a road to disaster. Its not nice been right on this occasion. Tagging these guys as Neo-liberals is according them with to much intelligence. Milton Freid Bertie man wasn’t stupid, he just really believed his idea’s were good. just went along with McCreevey and look where we are now. We haven’t defaulted on our loans, Nama has made sure of that. But we have strangled generations of Irish people with a debt brought on by stupidity and greed. The ‘investors’ that took a punt on the irish banking system lost out. With every investment theirs risk we all know that, but Nama has made sure they get their money back and the debt is now the problem of the irish people

  5. Christmas Crib in The Desert :

    David has put together a christmas crib .
    He has the setting in the desert , with a Donkey ( NAMA -neidin) a Camel ( Removal Truck — nadeen) , Wise Men ( Investors) ,Crib ( Ireland Inc ) Jesus ( Allah — forgiveness of debts ) and B&B and main parties ( those Inns that have refused tax payers refuge ) . There are the stars overhead because that is what attracts the investors but B&B seem to have blurred them a bit .There are Animals in the crib too ( Irish Banks — starving for food ) and although the crib is in the desert the night time picture paints it to be freezing because B&B are blocking the sun too during the day.Joseph & Mary are The Tax Payers .

    I am still thinking about that electric telephone in the desert and having no cable only Allah at the end of the line .This brings me back to the monks again they know how to ask for anything and they are geniuses at it because they do nothing only just asking all the time …..and they get it .They call it Prayer.

    Abu Dhabi will not honour all debts owed by Dubai and today is BLACK Monday during their Holy Season.
    We need to take inspiration from the lessons in Dubai and rescind our our commitments to NAMA .

  6. The Ghost of Dubai :

    BCCI Bank of Credit and Commerce International disappeared in the 90′s and was effectively the private bank of the rulers in Middle East .It ended in serious embarrassment and a significant cost that is today still been underwritten .It was on many high streets in London and the Isle of Man and in Luxembourg as well in many cities in the middle east.
    It was build on sand and had a facade of illusions like mirages in the desert and appointed proxies from elsewhere as Board of Directors to create false sense of security .
    Today we are re-visiting those times and it’s revelations will be stories of years to come.

  7. conor

    I am reminded of the following when I read of Bertie opening his mouth once again:
    “Better to be thought of as a fool, than open one’s mouth and have it confirmed”

  8. tony_murphy

    Having read this article, I am in no doubt that Ireland will not be able to pay its debts. It’s staggering the amount of government and private debt. There is no comeback from this.

    Time to admit bankruptcy, ditch the euro, get politicians who let this happen to resign immediately. Let banks fail. Start again

  9. Twisted Fate :

    Look at an Arab Financier straight in the eye and your head will fall off .That is why the knife has a curve to be acted on from behind ….and discretely.

  10. Irelands new Triple BBB rating: Bemoaners; Begrudgers and Buggerers>

  11. MK1

    Hi David,

    You touch on a few interesting items in this article.

    The Dubai story is a classic example where the human failings of excessive greed has played out and put an area in a country that is wealth-generative (through its natural Oil and gas resources) into unnecessary trouble.

    The development path of Dubai and UAE is amazing. About the time you and I were born in the 60′s David, UAE had less than 100,000 people! Today it has 6 million, most of them non-Arab immigrants. So it is a place on nearly a constant boom growth trajectory.

    They were literally digging up the money from the sand with their drilling and turning everybody wealthy. A “black gold” rush, if you will. And natural resources are still the key behind the economy.

    This debt mountain they have fallen into is an example of running too far too quickly. Prospectors getting well ahead of themselves, en masse. It was fuelled also by intra-UAE competition between Dubai and Abu-Dhabi. It can be summed up in one word: greed.

    You can also throw in vanity. Maybe stupidity too.

    DavidMcW> So when we hear our government suggesting that our crippled taxpayers can pay all the debts incurred by our bankers, the world knows we are spoofing.

    Not necessarily so. Most countries are in debt with the global financial system/model, and as long as they pay back the debt at some stage and in stages, then the ‘market’ will have confidence in that country. Irelands debt can still grow enormously even from here before lenders get spooked that we may default.

    Indeed, as you know with the Russian default case, lenders wont believe it till they see it and will cover their risk by interest rate hikes. So far, Ireland Teo is a ‘performing loan’.

    Lenders in our case will be happy to lend to us as long as we keep paying. And so far we are.

    You are right though, the payments can only come about through the sweat and work from the private sector, and the NAMA debacle has just moved more of that debt form a few banking companies to the populace at large. In egyptian times this was recgnised as slavery.

    DavidMcW> This type of behaviour scares people, and leads to capital flight. When capital leaves a country, it doesn’t come back until there is an event that signals that the game has changed and the boil has been lanced.

    I am glad you are lancing the boil! ;-)

    Capital will try and go to where it can get the best return. But it also spreads its bets. People with capital will still be investing in Ireland if there is a reasonable case to do so, and for some there are, and lenders (bond buyers) will continue to prop us up if we give them a good return and keep making the payments.

    Capital has no loyalty nor a brain, but it is “sticky” in where it moves to. So far, Irish soverign debt is being bought so there are some suckers out there. I’m not sure if I personally would give Ireland 1 billion euro, never mind the 23 billion we have borrowed this year. Would You?

    As for the bible lessons …. is greed good?

    MK1

    • René

      Let’s not forget the migrant workers who are trying to stay alive among this mess.
      http://blog.ted.com/2009/11/the_refugees_of.php

    • Deco

      MK1 – that entire ‘build and they will come’ philosophy, while driven by noble top level aspirations is built of a lack of a real business plan.

      But hey at least the Sheikh of Dubai had a plan. We in Ireland had NDP – the National Disaster Plan. And look at the disasters that it failed to predict !!!

      And the Sheikh has real buildings in Dubai. Much better than a mountain of rapidly declining in value USD, with Timothy Geithner making promises that the fairytale will all end up happily ever after for everybody.

  12. Malcolm McClure

    El Hamdu-lillah,
    Just as we establish ourselves as a prime example of the putative financial and moral bankruptcy of the West, a beacon of hope appears from the parched deserts of the Middle East. This time it is not in the form of a bearded gentleman carrying a cross but as a financial approach based on the sukuk:
    http://business.timesonline.co.uk/tol/business/markets/the_gulf/article6934074.ece
    Much of the baggage that comes with it is reprehensible to western minds, but its logic bears closer examination.

  13. severelyltd

    Alas, the penny drops. Frightening figures David. Even more frightening when you add future obligations. Public sector pensions for example. I reckon €700 billion or there abouts for all debt that has been given to the taxpayer as a liability. The government knows well but It doesn’t have the balls to do anything except keep the status quo and hope the problem goes away. When you mention doing deals we don’t have any assets left as they were all given away by our corrupt Government. The average person on the street doesn’t know how many zeros there are in a billion. They will know it off by heart soon enough.

  14. ak8

    €10 Billion a year in interest?? Just another reason why I plan to immigrate / (leave a sinking ship)!

  15. ak8

    €10 Billion a year in interest?? Just another reason why I plan to Emigrate / (leave a sinking ship)!

  16. Inshallah Bukrah – God is Great ………and with a good camel the debts are delivered far away so far away they just burn up under the sun.Just like doobee doobee dooo

    Thats all folks Dubye

    • Malcolm McClure

      John:
      Abu Dhabi will bail out the world ‘inshallah’.
      But compared with bukrah, mañana conveys a sense of extreme urgency.

      • Colin_in_exile

        They’ll always find the money for mosque building in kaffir lands until the kaffirs grow a pair of cojones and shout stop!.

  17. Alan42

    I am watching a bondtrader discussing Dubai on TV . Its all fine . Investers will get a haircut , drawing a line under debt , it will be fair , investors will not be put off investing in The EUA in the future ,
    In short its not the end of the world for Dubai . Ireland on the other hand is bailing out everybody.

  18. The Eye

    Does anyone agree with me That its almost I.M.F O’clock and if so what month will they come in on? I’m guessing March.
    Is is better for us in the long run?

    • roc

      Maybe (it might be better for us in the long run…)
      http://www.theatlantic.com/doc/print/200905/imf-advice
      "…the real concern of the fund’s senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis.
      Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders…"
      However, it would also be true to say that there is corruption now within the IMF – that developed from the complicity of the economics profession and indeed all of the highest level of decision-makers of the Anglo-US axis of hegemony that’s been in place since the end of WWII, with the banking and credit and financial engineering and financial marketing industrial complex.
      So, who best to take apart the take apart the corrupt, disempowering, cronyistic, rent-seeking political and economic structures that are killing this country?
      I think it’s just a question of political will. So, keep up the good narrative, guys.

      • The Eye

        Great post!!
        ” The powerful elites within them overreached in good times and took too many risks”.

        Now where did I see that happen before?

        • The Eye

          Ireland is now lurching toward financial ruin through NAMA (the National Asset Management Agency, its home-grown form of quantitative easing) and out-of-control public sector borrowing. Many would say that it is the financial crisis that caused the problem however, I believe, it is the failure of our political class to ethically regulate itself which is the true source of the current mayhem. This class is working closely with a golden circle to bail itself out yet will now leave a “bill of costs” which will cripple the Irish public finances for decades. This class has sold out the country to a super socialist Europe that forces itself into every aspect of out lives to the detriment of real freedom. The ongoing erosion of our liberty is clothed in a veneer of “greater good” but the effect is social atrophy. This governmental “fabianism” will result in the control of everything by an all powerful bureaucratic elite, where “ownership” is valueless due to carbon taxes, government regulation, local authority supervision, clerical intrusion and stealth constraints.

  19. Cloghogue Rogue

    Thought that this may be of greater interest than laughing at ex- Taosigh: http://www.youtube.com/watch?v=c5tN-U6DDvA

    As Dubai was a spatial fix like many more besides would it not be better looking at Capital by Karl Marx than the Bible by a load of nutters?
    http://opus.kobv.de/ubp/volltexte/2008/2436/pdf/gr2_01_Ess02.pdf

    • celtic_al

      This article is completely misleading. It is simply taking the liabilities of Ireland Inc’s balance sheet and assuming there are no interest earning assets supporting them, or, to put it another way, if all the debt was internally held (Irish households held all the government debt) then interest payments are merely an internal transfer

      a) ‘Ireland’ owns offshore assets, either through private citizens or the loans of it’s banks. While no exact figures are available, it is perhaps as much as €200 bio, most of which is earning interest or rent. The only issue is whether the loans will not be repaid, and the banks are provisioning for this via writedowns to date and NAMA. Perhaps they are underestimating this but most of their loans have been securitised and their leeway to hide non-performing loans is severly restricted. Similarly if the value of offshore property held by private individuals has fallen, this is a loss, but again it depends on the original loan to value and prospective rental yield.
      b) Most of the private sector debt of €378 bio is supported by domestic savings (retail deposits, pension funds, notes and coins, corporate earnings etc). The interest gap is a tiny fraction of that suggested by the article as ‘leaving the country’.
      c) NAMA will earn interest, the Government estimates the run rate to be positive. Even if they are wrong, they are not wrong by 100% as implied here.

      The issue for Ireland is that in general, the liabilites are due for repayment well before the assets will be repaid, therefore we need to refinance the liabilities until that point. There may also be a difference between the value of those assets and liabilites which is a loss to the value of ‘Ireland Inc’ but to suggest that the first €225 earned by every worker every work needs to be paid to service our debt is disingenuous, and unhelpful as this country faces up to what needs to be done to address the problems in our fiscal deficit and the deleveraging of our banking system.

      (Note that the CSO has estimated that the net interest gap for the first 6 months of 2009 was €1bio)

      • tony_murphy

        4 million people approx in ireland, 400,000+ are unemployed

        good luck finding 500 billion worth of assets – here or elsewhere. i admire your optimism though

        it doesn’t take a genius to work out how screwed the country is

        • G

          We might have been able to generate some ‘home’ income from the oil and gas fields if we hadn’t sold it all off to Shell etc

          We should start our own national gas and oil company, hire the best, pay them, pump out the resources and re-destribute the income and invest in infrastructure, high-tech research, our own IT businesses so we are not dependant on US MNCs and we should become the number 1 at green technology, which would create thousands of sustainable jobs and a sustainable economy, but we are still in the ‘pub’ mentality, we refuse to take the bull by the horns, refuse to grow up and take responsibility, we leave to others to help us out of a mess we allowed. Following the neoliberal agenda, we our home grown money men, developers, banksters and estate agents fumbling in the greasy till. Overexposed or what. Next March will be crunch time.

          • tony_murphy

            G, one problem is that government is full of solicitors and teachers. not a technical person in sight as far as i’m aware

            other problem is government doesn’t multitask. one problem at a time for mr cowen

        • G

          @ tony_murphy – more like 500,000 unemployed when you factor in those waiting to have their applications processed (over 60,000),
          http://www.independent.ie/business/personal-finance/surviving-the-recession/fourmonth-wait-for-dole-as-jobless-rate-increases-1931578.html

          Forecast for 550,000 to 580,000 next year, nothing coming down the line, nothing sent in train (like world class green industries/indigenous industries) and no money saved for the rainy day, hence the need for major cuts.

          • Colin_in_exile

            Most Irish people do not like change, are both socially and economically conservative and find tremendous solace in the pub. Not even the 2nd coming of the Lord would change that.

  20. G

    Bertie in his recent praises of Dubai should do a bit of reading, wondered if he was paid for his pronouncements, it’s all he seems to be doing, getting paid for talking, not too different to his time as Taoiseach!

    Dark Side of Dubai
    http://www.independent.co.uk/opinion/commentators/johann-hari/the-dark-side-of-dubai-1664368.html

    A morally bankrupt dictatorship built by slave labour society
    http://www.independent.co.uk/opinion/commentators/johann-hari/johann-hari-a-morally-bankrupt-dictatorship-built-by-slave-labour-1828754.html

    • wills

      excellent info at links G.

    • Colin_in_exile

      Great article, thanks for the link G. Some golden nuggets of truth in every paragraph. Only got to Paragraph 11, will read the rest later. Just glad I’m not living there, don’t think I would have liked the “lifestyle” myself. I feel sorry for all the slaves there.

  21. adamabyss

    subscribe.

    • wills

      My point is, the dubai debt de fault is a hollywood production controlled by the dubai inc owned by the corporate interests which are in control of the COpenhagen meeting on the global Warming SCAM.

  22. I think Cowen should install an electric telephone that just dips the cable wire into the sand in his office …and employing a royal camel to offload the financial shit deposited at the Dept of Finance and take it far away in humps to be dumped far far away.That might give him a real neck .
    He can rescind all financial commitments by Irish Taxpayers then

  23. G

    I accept that bailouts, Ireland’s debt and repayments are all important, but surely employment is the pressing issue if we want to increase government revenue from taxation (direct & indirect) and get consumption going.

    I have seen no action from the government on this, no public announcements/measures etc – people in their hundreds of thousands are sitting at home watching their lives slip away, we need action, and we need it now.

    Paul Krugman comments on the obvious in today’s New York Times, the full article is worth reading:

    “Yes, the recession is probably over in a technical sense, but that doesn’t mean that full employment is just around the corner. Historically, financial crises have typically been followed not just by severe recessions but by anemic recoveries; it’s usually years before unemployment declines to anything like normal levels. And all indications are that the aftermath of the latest financial crisis is following the usual script.

    The Federal Reserve, for example, expects unemployment, currently 10.2 percent, to stay above 8 percent – a number that would have been considered disastrous not long ago – until sometime in 2012.

    And the damage from sustained high unemployment will last much longer. The long-term unemployed can lose their skills, and even when the economy recovers they tend to have difficulty finding a job, because they’re regarded as poor risks by potential employers. Meanwhile, students who graduate into a poor labor market start their careers at a huge disadvantage – and pay a price in lower earnings for their whole working lives. Failure to act on unemployment isn’t just cruel, it’s short-sighted.”
    http://www.nytimes.com/2009/11/30/opinion/30krugman.html

  24. Deco

    I just wonder…..Is there anything in Dubai covered by NAMA. It seems that the D4 banks were giving loans everywhere, overvalued hotels in London, houses below the high water mark in Carrick-on-Shannon, penthouses in Manhattan, waterlogged fields in Kildare, apartments in Sunny Beach Blugaria, golf club memberships in Andalucia, student flats in Leeds, shoeboxes in Islandbridge, retail space in Nenagh….

    …surely an Irish bank manager somewhere thought that Dubai offerred “investment opportunities” equal to any of the above ??

    I read your article yesterday in the SBP and it was very good. But my first thought of the biblical analogy was the “there were seven years of plenty, and then followed seven years of bad harvests” – except in this country our Joseph characters were brandished with insults from the Pharaoh in Drumcondra.

    I also seen an article on the facing page from George Lee in which George questionned the economic wisdom of the EU Commission. I would question this also. Brazil now has a lower unemployment rate than Europe. Apart from that the unemployment rate in in the core founding six EU members is higher in 2009 than it was in 1999. And it was higher in 1999 than it was in 1989. And it was higher probably higher in 1989 than it was in 1979. Two decades of centralization and obsessive rule making has produced lethargy and underperformance. And nobody is saying anything about it.

    • gquinn

      It’s called Socialism.

      It leads to fewer companies because of tighter regulations and therefore fewer jobs and higher prices for the consumer and no choice.

  25. wills

    The Dubai debt de fault is a Scam.

    A diversion tactic too take peoples eye of the real news story which is the NWO ‘earth government’ formation at Copenhagen.

    As the corporate interests wheel out the next POnzi Scam they have the rest of us completely pre occupied with the controlled demolition of the Banks POnzi property buble.

    For anyone who wants to catch up on the real News now, not the scam mainstream news been feed as opiate to the sheeple get informed NOW on CLIMATEGATE.

    Heres a link that provides all the links needed.

    Dubai is a ‘look over there. look over there punk’/

    http://www.infowars.com/climategate-for-dummies/

  26. wills

    POsters:

    The Dubai de fault is to bury CLIMATEGATE as a NEWS story.

    So, this means CLIMATEGATE is a threat too NWO’s pinky and the brain COpenhagen conspiracy.

  27. Fergal73

    The only solution is to emigrate.
    Ireland voted in fools and got what it deserved. Hard-working tax payers get screwed, young people who worked and bought during the boom, foolish as they may have been, at least worked and paid taxes.

    Many contributers to society are left wondering how to maintain a roof over their heads.

    http://www.independent.ie/national-news/outcry-over-councils-83643m-bill-to-house-six-traveller-families-1958626.html

    In 2002, I said to my parents (somewhat jokingly), that the best way for me to get a roof over my head was to quit my job, take up a drug habit and maybe get some unemployed girl pregnant. Deciding that this wasn’t the life I wanted to lead I emigrated in 2004.

    Eur 0.5 m housing for net takers makes me sick. I’m just glad I didn;t pay for it through my taxes.

    There’s no way Ireland can pay its debts with this kind of moral outlook on tax expenditure, and as for the public service strikes, it’s not just turkeys voting for Christmas, it’s more like lemmings organising a race out west towards the Cliffs of Moher.
    Emigrate. It’s the only answer, unless you fancy paying 50 – 65% tax rates in 15 years.

    • wills

      Yea emigrate too another POnzi riddled economy, unless you emigrate too santa clauses toy factory in the north pole.

    • wills

      Ireland does not owe all these debts.

      Some of our greedy citizens owe the debts.

      I for one owe squat.

      • Fergal73

        Australia and New Zealand are in pretty good shape. There are Asian countries like the Philippines where as a worker you will not be saddled with the burden of housing non-contributers in accomdation finer than your own. (You may not like the overall levels of poverty in some of nations, but Ireland has gone down the wrong path entirely with its inflated public service, a massive pension debt hanging over it and this pervasive attitude that someone else should always pay and take responsibility – hence the Eur 0.5M public housing units.

        Wills – you, as an Irish taxpayer will have to pay the debts of Ireland. You as taxpayer part funded the 0.5M house. You as taxpayer paid for limos from terminal to terminal in Heathrow and for Mary Harney’s hairdo.
        It was your money they used, and plenty of it is future valued – i.e. taxes you will end up paying. You are only correct in that you have no personal responsibility – but the only way to exercise that is to get out of the Irish tax net.
        Screw it, emigrate.

        • wills

          Fergal73:

          The monies squandered away in gluttonous vice all public monies, yes.

          The debt burden is not my responsibility and as a citizen of this country i disavow any monies from my labours put to use to pay off this debt.

    • Colin_in_exile

      I do hope that quango “equality authority” is starved of taxpayer funds, and left to rot. Pavee point should be given a traveller’s funeral and burial.

  28. wills

    Dubai is a mock up story as part of the global elites hail mary pass run for the copenhagen NWO touch down.

    • wills

      Copenhagen ushering in ‘Carbon Nation’.

      Carbon Nation:

      The real business of carbon regulation is a matter of global synchronicity while controlling our mobility and freedom without actually having to expose themselves to challenge, or debate.

    • Malcolm McClure

      Wills: Since you moved away from the typological tics and repetitive ponzi usage (possibly justified, but off-putting) your contributions have risen substantially in my esteem.
      You were the first to point out the climategate scam 5:45pm Nov 23. You also understand the link between climategate and global agenda being planned at the Copenhagen conference.
      Just because something can be constructed to look like a conspiracy usually means that the conspiracy is the product of an over-ripe imagination.
      However it is beginning to look more like Copenhagen is planning to establish a global authority under UN auspices. See:
      http://www.foxnews.com/story/0,2933,577827,00.html
      This is an extremely serious development, particularly as the MSM seems to be deliberately ignoring it.
      You are not afraid of using your head. Keep it up.

  29. [...] Debt in the desert shows how we must not proceed | David McWilliams BCCI Bank of Credit and Commerce International disappeared in the 90’s and was effectively the private bank of the rulers in Middle East .It ended in serious embarrassment and a significant cost that is today still been underwritten . ….. a) ‘Ireland’ owns offshore assets, either through private citizens or the loans of it’s banks See the original post: Debt in the desert shows how we must not proceed | David McWilliams [...]

  30. Tim

    Folks, I am trying to finish reading David’s book, “Follow The Money” and I am seeing your influences in it, if I’m not mistaken; some words, concepts, phrases that you have written here are resonnating with me as I read.

    I really think that contributions here are feeding into his writings and thought-processes. Contributing here is a very important thing to do.

    (anyone else reading it and thinking the same?)

    Anyhow, I cannot think of anything to add to your comments right now; you have it covered. The message of the article is what it is: another stark warning.

    The “Climategate” information, I am just beginning to research, so cannot offer any comment worth reading.

    Let’s keep at it!

  31. Malcolm – Abu Dhabi will bail out the soverign state of Dubai but will not bail out the deceptive ‘World’ of it’s creditors who are veiled away like their women thus the State of Dubai has shielded itself with a’ twisted fate dagger’.'World’ is written in the sand enjoying more than a limited exposure and NO GUARANTEES from the state.It’s a cordless cable electric telephone.

  32. Dubai and Ireland can only be compared to a level the difference being in Dubai they have had a more clear plan of where they want to be , sure the construction may be done by Indians and Philippines and the labour conditions may seem harsh in comparison to standards here in Europe , yet what these construction workers earn is still higher than in their own countries. Sure your liberals will tell you they are housed in terrible conditions but get real the Irish navy had it no different in England in the 1950′s and did we pay our immigrants top rates to build our homes and buildings ?
    Take a look at their Horse racing tracks, their driving track for formula one , their golf courses , their airport ,their motor ways their port all built to the highest standards using the most up to date engineering available within the construction sector,and all energy efficient and built on or ahead of time. Yes they now have like we do a glut of real estate but this is where we differ , If you went to Dubai to invest and borrowed there , if you don’t pay back your loan , jail is some thing you have to take serious as you will be sent there for non payment. What do we do ?….. Well been the good Christian’s that we are , sure ‘we’ll pay Your Debts!’…
    This is where our cultures differ…. we had NO Plan. we built where ever and imputing infrastructure, ah sure we’ll put that in later! …
    And as we keep hearing ,…’we are where we are !’ and still we have no plan , it’s just NUTS!.
    To distract the general public we get a Report released into what the Church was up to with protecting the perverts within it’s ranks, it’s just sicking what is going on here Our Political class simply has no idea what to do next , we owe billions but don’t worry sure we’ll just cut what we’re spending and then we’ll bring in ‘ Carbon taxes’ and cut social welfare and sure why not increase the taxes on the old reliable s problem solved ! sure don’t us Irish love a session and sure while we may give out about the price of the pint , what can I do about it so we collectively pay these prices. Except now we won’t have the money in our pockets to buy these items.
    We have become over the last fifteen years very individualist and this helps our political classes as we don’t collectively stand together to say enough is enough.
    Now there is nothing we can do about NAMA , so let F.F and those fools the Greens bring in their negative budget .
    Hopefully it will be the fuse to lite the ticking social anger time bomb that they are now presiding over.

    • Colin_in_exile

      Brendan,

      Its far from the liberal left my politics are, but you can’t compare the 50s Irish navy in England with the Indian in Dubai. Why?

      1. Paddy didn’t have his passport withheld from him. He was free to return home anytime at no extra cost.
      2. Paddy didn’t have to pay a large amount of money to an agent back home to get his start in England.
      3. Paddy was paid well enough to become an alcoholic if he wanted to.
      4. Paddy did not share a room with 5 others.
      5. If Paddy was sober and hard working, he could do well in the cities, show me the Indian John Murphy or Des O’Rourke or hundreds of small businesses Paddy started in construction.
      6. Paddy could bring his family over with him, or start his own family in UK.
      7. Paddy didn’t work 14 hours a day in blistering heat.

      I could go on and on, hope you get the picture.

      About the church, I think its important that its faults are highlighted and dealt with, so that we can all move on from it and become a society that truly cherishes its children. That to me should be the first building block of a fairer and better society.

      • Ah Colin, if only it was that simple…Paddy didn’t have a passport, Paddy had to borrow from home to leave, Paddy worked longer hours and was paid less when he worked with his own, Paddy shared a room in the lodgings that took Paddies, Paddy worked in the rain and the cold in his suit…
        This is the problem here in Ireland we have fickle long term memories.
        Regarding the Church here it is still linked in with our Political Parties and like the Bankers and Developers none of the top will get jail either …..
        Need I go on !

        • Colin_in_exile

          Hi Brendan,

          Yes, correct, Paddy didn’t have a passport, because he didn’t need one to travel to UK. He also didn’t need one to return home unlike our Indian friends in Dubai.

          Yes, I’m sure Paddy needed to borrow some money for his travel expenses, but he could have also saved some from doing odd jobs, remember Frank McCourt’s story in Angela’s Ashes?

          Sharing a room with 1 person is a bit of company for young Paddy in a foreign land. Sharing with 5 others would not lend Paddy to getting a good night’s sleep.

          Rain & Cold is a lot more tolerable than 40 deg C heat, England has nice warmer drier summers than back home. Winters are drier also.

          Paddy soon knew if he had any cop on that English employer would treat him better than Irish employer. You got your start with Paddy, but changed to English boss as soon as you could convince him you were useful to him. No progression allowed for Indian labourers in Dubai.

          But we can agree to disagree.

          Regarding a meet up, what do you hope can be achieved? We’re all armchair economists/political scientists/conspiracy theorists here. Is our host here gonna attend? I’m open to the idea, but I’m not convinced it can achieve anything at the moment.

    • wills

      Yes there was a plan brendan.

      The banks knew exactly what they were doing lending every euro out too property speculators and knew it would explode and knew the bill would go to the taxpayer.

    • Fergal73

      Part of my emigration led me to a year working in Dubai (2002). From what I heard, the standard of construction was not very high, and some people seriously questioned the sufficiency of the foundations of the high rise buildings in particular. The sand goes down a long way, but it is sand.
      I’m also with Colin_in_exile, I don’t think the conditions of the Irish labourers in the 50′s could be compared with the conditions of the foreign labourers in Dubai.

  33. [...] Fanatics By Ciaran David McWilliams’ column in this week’s Sunday Business Post is well worth a look here. [...]

  34. Tull McAdoo

    Well now lets see how best to explain the decision to default from past experience. The whole thing is a bit like trench warfare from the first world war. The powers that be will not default or surrender but will remain fanatical in their belief’s so long as their own position does not become untenable and they run the risk of being overrun, or suffer personal loss.

    So long as there are enough taxpayers and others available to send over the top, then the economic war will continue. The type of carnage that was reported from WW1 in Flanders etc. was a result of class driven, insular, cosy consensus policy decisions, that had little or no regard for front line human life. The ordinary grunts would be piled higher and higher in a desperate attempt to use the sheer weight of numbers to overcome the objective.

    So Ireland is not much different it seems, with wave after wave of budgets and pay cuts etc. being used by the same type of incompetent gombeen fuckwits from DOF et al through their neo liberal free market slave traders, Cowen, Harney et al throwing more good money and people at a problem of their own making.

    Cowen and Harney et al were happy with the downward deflationary spiral as their weapon of choice to fight for competitive advantage until the inevitable sight of solid ground rising up from below has left a certain level of panic and doubt among the pilots at our controls. We have witnessed a number of the well connected avail of golden parachutes and exit through the rear of the plane, landing in Switzerland, America etc. etc.

    My biggest fear is that after the almost certain failure of the upcoming budget to pull us out of this nosedive, there will be a scramble for parachutes after Christmas. David is right, Taxpayers have been overwhelmed with a debt burden that they will not carry.

    FF have left Ireland insolvent. God help us all.

    • Colin_in_exile

      Tull,

      But the sheep (PAYE Taxpayers) seem to be too docile, to forbid Cowen, Harney et al loading them with this debt burden. Public Sector sheep who occupy the best pastures are the only ones to bleat in anger. The Unemployed sheep whose pastures are currently under water are seemingly just happy to have their next meal put in front of them.

    • wills

      Tull:

      I reckon 98% of Pop of Ireland are in denial on the debt burden stats.

      And in denial they are going too stay.

      NAMA is now out of the woods and on its way and i posted once this happens the elites will now Do anything too preserve their power base.

      So, we have, An xtra 1 billion thrown on taxpayers today for BoI.

      We have, ESB flooding the midlands.

      We have, the gov washing it’s hands of responsibility of a Paedo – police – cleric state.

      We have, a budget on the horizon which will further along the massive transfer of wealth into the elites hands.

  35. wills

    Posters:

    Watching FRONTLINE RTE 1 and this ESB malarky releasing some of the waters is sounding more and more hollow and suspicious and i cannot keep thinking here is the new SHOCK DOCTRINE Ireland in action.

    Why did the army stay in barracks sitting on ar$es?

    This ‘rainfall’ is been used to sell the manmade global warming Scam too the ‘hick’ irish in the midland and then put through the meeja as a black op’s/

  36. wills

    Posters:

    On meeja to – day, NAMA re fixing write downs on BoI toxic debts from 18% too 25% requiring an xtra billion euros capital bulk up from the taxpayer.

    Tucked away 7th news item to night.

    The irish people now are so swamped out by the ruling powers monopoly money gaming on the bond issuance of the country that people are nubed in confusion.

  37. wills

    Posters:

    FF lost Jim’s support to- day. FF are decimating their base support across Ireland he said to – day.

    Is he right?

    Are FF finished?

    • Colin_in_exile

      There’s now an opportunity for any FF backbencher to follow McDaid, and vote against the budget, and go marching back to his constituents as a hero. Have they got the courage?

      Personally, I can’t see it happening, and the government will see out its 5 year term, unless one or two of them snuff it in the meantime.

    • wills

      Old Guard FF’rs in a time warp i refer too here, of course, not the honorable members.

  38. Nation Calls :

    Where are :

    Furrylugs

    Andrew Mooney

    Josey

    Paul O’ Mahony ( Cork)

    Huff & Puff

    et al cannot remember the others

    Tim & Deco have reduced their contributions so vroom vroom in more
    We need more contributors to Christmas …..so please join in.

    • John Allen…extra contributions here is as useful as pissing against the wind !
      What is needed now is more direct action, but this won’t happen here as we have become so self centred and individualist .
      I have been popping onto this page for the last two years and Tim has been the only contributor who suggested we meet up , how successful was he with this call ?….he met Wills ( the conspiracy theorist )
      The time for talking is over and as much as you , I or anyone else writes on these pages is of no use unless action is taken.

      • tony_murphy

        Comments are really useful, new users like myself browse and learn alot from contributions on this site. Please keep sharing knowledge

      • wills

        if you mean by that that i am pointing a finger at planned out scamming fleecing and conning of people attempting to get on with things and do the right thing, then yes.

      • Tim

        BrendanW, I also met Liam; have personal contact via email/phone/FB/Twitter with Paul O’Mahony, Lorcan, Adamabyss, martinho and Furryluggs. Not too-bad, I’d say, for people who are often spread across the globe, as well as the country. I’m not stopping there, either.

        John ALLEN, I am trying hard to find enough time to read comments here, while trying to finish David’s book. I am not losing momentum, just squeezed for time.

        Let’s keep at it!

      • BrendanW & John Allen,

        Tim suggested I respond to John Allen. I too have found it difficult to deal with a situation in which so many good people have expressed their passion & ideas, but not taken it further.
        At one time I did my best to float a suggestion that we meet face to face and use all the social media to promote deeper alliances. I didn’t persist with the suggestion and accept that, if I’d tried harder I’d have made more happen.
        I’ve admired Tim for his work, courage and action.
        I had a difficulty with the fact that so many posted under pseudonyms. I still feel strongly that now is the time for being transparent in thought and deed. I wouldn’t been keen to meet people who’s names weren’t openly available to me and others. I also think that ideas are cheap; reputations are what matters most.
        I’m not up to date on the conversation here any more. I’ve been beating a drum for a campaign that says “Cut Ministers’ Pay 48% & TDs 38% – before anyone else’s pay is cut”. I have no time for a more modest demand. I’ve also said I don’t think Brian Cowen should be paid anything for the quality of leadership he has provided. I mean precisely that: zilch for the Taoiseach, until he proves he deserves to be paid.
        I’ve lost track of examples of people taking much greater pay cuts than these demands.
        Howling (pissing as you call it) is better than nothing.
        I’d love to know what you mean by “direct action”. When I was a revolutionary, that phrase had a particular meaning to me. It would be “direct action” to burn the house of the RC Bishop of Limerick. Is that the sort of thing you have in mind?
        Where do you live? If you’re anywhere near Cork, and I can find out a bit more about you, I’ll meet you to see what we could collaborate over and do together.
        John Allen, I was put off you by something you said once. It’s time I got over it.
        You can contact me most easily via twitter @omaniblog.
        Thanks Tim.

    • Josey

      Josey calling in for duty. Been busy adjusting to my new career as an english teacher to foreigners. To Tim…I feel your pain, preparation is the unseen burden of the Teacher.

      May I make a suggestion….google Alan Watt :-)

      Also climategate is the real news.

      Nuff said,

      Josey

  39. tony_murphy

    interesting link re living euroland

    http://www.smh.com.au/business/some-euro-zone-prisoners-could-break-free-20091130-k1bf.html

    also on climate gate, we all know chinese and russians change the weather when they’ve got a big parade or an olympics, guess americans, british, french and germans can do it as well. probably not an exact science but i wouldn’t rule it out, maybe the storms were meant to hit so where else?

    have a listen to this on how they plan to reflect more sun using whiter clouds Sean Twomey Effect
    http://www.bbc.co.uk/programmes/p0053drb

  40. MK1

    Hi Deco,

    Deco> that entire ‘build and they will come’ philosophy, while driven by noble top level aspirations is built of a lack of a real business plan. But hey at least the Sheikh of Dubai had a plan.
    And the Sheikh has real buildings in Dubai.

    But any country that develops too much ‘infrastucture’/housing/property using excessive levels of credit, and where the output is not utilised nor commercially viable is just a bubble that has to burst.

    Granted, Dubai’s family controlled government and central planning meant that the small city-emirate could be planned from a master blueprint plan rather than our frenzy here in Ireland which had many pigs feeding at the same trough and housing estates in Carlow competing with those in Meath, etc, and the maniacal urban sprawl that was allowed to come into being.

    We’ve had a bubble, Dubai has had a bubble, and like all bubbles, its the scalar aspect which is key, the evel of the bubble, not the direction per se. And property in Ireland still has a way to go down. There are still 4 beds being sold for 1million in Dublin. Insanity has not yet washed out and is clinging on with its fingernails in desperate denial.

    Denial in its upmost nakedness was demonstrated by the not so canny Brian Lenihan when he claimed that the propsed NAMA levels had marked the low end of property value contractions, and that yields had never been better! Meanwhile somewhere not in cuckoo land and in reality prices and rents are falling.

    Wills, I dont subscribe to your conspiracy theory that the Dubai debt problem was manufactured to distract from meetings in Copenhagen.

    I do agree in principal that the powers that be want to oremain in power etc and will nearly do everthing that they can, and media certainly can influence the public, etc, Berlusconi being a case example.

    But I dont think the powers that be are as cunning or as well-planned as you make out. Far too many of them fail for that …. and they compete, its chaos in action leveraging off human psyche and failings. Its more like biology in action! Worms eating other worms. Pretty ugly it has to be said …..

    MK1

    • wills

      Mk1:
      Try view it from the perspective of a spoilt greedy attention grabbing child.

      Try remember the sly cunningness of kid’s when you were a little lad.

      Now, transpose that naughtiness onto child – adults and bingo there it is.

      • wills

        And, i’m posting that the dubai debt default was organised for a news story just this week when anyone with any interest in global finance could see for the last 6 – 8 months Dubai’s POnzi bubble had burst and the slack jaw cop out on the aftermath was only a matter of time announced on high too the plebs taking the tab.

        And they announced it the week before the copenhagen fake green tyranny SCAM.

        MMMMMMmmm just a coincidence, not in my perspective.

  41. Dubai :

    Lost Golden Civilisations in the sand to BCCI ( Bank Credit and Commerce International ( Scandal) to Dubai World collapse

    Ireland

    Munster Bank ( pre-aib ) ( default on shareholders and depositors ) to AIB ( 80′s default on taxpayer ) to Anbasher Bank ( default on depositors ) to Anglo Irish ( default on shareholders and taxpayers ) to AIB ( again ) ( default on shareholders and taxpayers ) to B of Irl ( default on shareholders and taxpayers ) to more to arrive

    Do you know that the former bank Munster & Leinster ( pre aib ) is still incorporated .

  42. Colin_in_exile

    Aussies are leading the way in the common sense stakes.

    Australia’s opposition Liberal Party has elected a climate-change sceptic as its new leader, dealing a blow to the government’s carbon-trading law plans.

    http://news.bbc.co.uk/1/hi/world/asia-pacific/8387653.stm

    • Alan42

      The Aussie oposition has elected an extreme right wing bigot as its leader who is playing politics with climate change .
      There is no chance that the Liberials will ever win an election with this guy .
      He makes Dick Chaney look like a social worker .

  43. Colin_in_exile

    The current record price of gold and talk of Indian labourers in Dubai got me thinking. Currently, India is a net Importer of Gold – India’s gold imports in November 2009 fell sharply to 16 metric tons from 34 tons a year earlier due to record high prices, a senior industry official said Monday.

    We in Ireland have many do-gooder agencies like GOAL, who are besieging us to part with what little few euros we have left.

    Among GOAL’s many projects is the provision of clean water at 42 schools in Calcutta. http://www.goal.ie/about/GOALHIGHLIGHTSAUTUMN2009.pdf

    Can anyone answer me, why are Irish people with Irish money doing this work when the Indian people are busy spending their money on foreign gold?

  44. Tim

    Folks, this from Dermot Casey (review of O’Toole’s book, mentioning DMcW’s book “Follow the Money” and illuminating many issues of interest to us here:

    As I started to read Fintan O’Toole’s “Ship of Fools” I grabbed a stack of Post-it notes to mark interesting passages and key points for easy reference later. The trouble is, after 40 pages it became clear that marking ever page, or every other page, was not a good way to go back to reading the key points. And that’s what it was becoming, with revelations on each and every page of fraud, deception and corruption, the wholesale fleecing of the country aided, abetted and encouraged, most prominently by Fianna Fail.

    That’s because the book itself is a set of key points. It is a distillation of O’Toole’s knowledge and experience over decades looking with increasing despair on Irish life. One suspects that the working title for this book (as with David McWilliams’ latest) could have been “I Told You So” or at least “I Warned You“. O’Toole describes the book as a polemic. That does it an injustice. Polemic conjures up an element of hyperbole and bombast being deployed in advance of an argument. This is an almost surgical dissection of the body politic, with each layer, canker and cancers laid out with clinical precision. Facts and figures are marshalled to reinforce the arguments at each stage.

    O’Toole, like great analysts before him, cuts to the heart of the matter in Irish society. He describes our State as “barely modern let alone post-modern” (pg 101) and summarises our problems devastatingly as “a weird unfolding in the globalised twenty-first century of an intensely local nineteenth-century psychodrama.” The tragedy is not that we didn’t know what to do. It’s clear from the evidence that at all times government knew what to do, but chose not to do it. From the original Kenny Report on development land to the present day we have known, particularly at a governmental level. Our government has repeatedly “abdicated its responsibility for short term advantage” (pg 140)

    Various dramas play out as an example of the problems we have faced. The repeated selling of Eircom is a microcosm of Ireland’s problems. The “ideologically induced stupidity” of the market drove the sale of Eircom at a time Ireland was supposed to be driving toward a knowledge-based economy. A careful distinction needs to be made here between the European ideal of a knowledge-based society and the Irish view of a knowledge-based economy, as the favouring of the economy over society is one of the key threads in this book. O’Toole points out that €4.1Billion in 2000 would have provided for 5Mbps broadband for the whole country. Instead the state sold the core telecoms infrastructure company and pocketed the money. If this did not completely strangle the knowledge economy in its infancy it certainly severely stunted its growth. O’Toole sums up the Government’s approach to the knowledge economy as “more reminiscent of the IT Crowd”. To be honest that is unfair to the IT Crowd.

    This issue of lip service versus what is really valued plays out repeatedly in the book. The repetition of 19th Century patterns in the current information society emerge again and again. O’Toole describes the lack of interest among students to study for anything other than the professions, and how this leads to the “professions reproducing the professions”. He talks about the lack of value for science, engineering and technology in society. In some research I carried out myself I came to the same conclusion, that the key barriers that held back the development of a knowledge-based society were cultural, not technological. J.J. Lee first pointed this out over twenty years ago in his book “Ireland, 1912-1985: Politics and Society” (and O’Toole does refer to Lee at least once in the book). In it Lee pointed out the central role of the Catholic Church in the creation of classes of professions, merchants, farmers and others, and the role the Church played in preventing change. The irony in all of this is that as I write these words the report of Commission of Investigation into Child Abuse in the Dublin Dioceses is being widely discussed after its publication last week. The rotten core laid bare in that report is essentially the rotten core laid bare in Fintan O’Toole’s book.

    Patsy McGarry in his Irish Times report last Friday referred to the Church’s use of “mental reservation”, a concept “developed and much discussed over the centuries, which permits a church man knowingly to convey a misleading impression to another person without being guilty of lying”. This concept is at the heart of the Commissions investigation.

    “Mental reservation” appears to have been an ingrained Irish trait. O’Toole similarly describes the Irish facility for doublethink, talking out both sides of our mouth at once, as being the Irish version of Orwell’s “TruthSpeak” (pg 181). The relationship between the State and the Church particularly through the actions of Bertie Ahern is discussed late in the book, with Ahern choosing to buttress the Church and its assets via those sweetheart deals provided in the wake of the first wave of child abuse scandals.

    Our inability to imagine the future leads to a situation where Ireland has been described internationally as “the worst case scenario for growth” (pg 174). I’m not sure that this is a “consequence of an inability to imagine the future” (pg 177). More likely it is a deliberate disregarding of the possible future for reasons of power, clientism, tribal loyalty and party over country.

    What has occurred to me while reading about organisational change and thinking about the desperate entrenchment of privilege in Irish society, is the question of whether we have fallen into a societal Nash Equilibrium.

    Wikipedia describes a Nash Equilibrium as:

    If each player has chosen a strategy and no player can benefit by changing his or her strategy while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitute a Nash equilibrium.

    A website that talked about organisational change points out that:

    “There is no guarantee that a Nash equilibrium is optimal for the system as a whole. Most are not. However, it is often very difficult to move from one Nash equilibrium to another. To do it successfully, all players must be made aware that a better state is attainable and they must trust each other to change.”

    Machiavelli got there earlier when he said:

    “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries … and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it.”

    We can see this in the state of Ireland at the moment. We have moved from De Velara’s “comely maidens, dancing at the crossroads” to Orna Mulchay’s description of “pert breasted women” wandering around Sean Dunne’s planned Knightsbridge in Ballsbridge. There is an illusion of change without real sustainable progress or alteration of the power structures that underlie the State. Instead of change what we have had over the last decade is a chimera, as Dublin became the site of Europe’s biggest ever fraud (Parmalat pg 134), the largest every bankruptcy in EU history (DEPFA pg 140) and a $500 million scam (pg 140). We have had governments that ideologically promulgated inequality (pg 94 on McDowell). We had rulers who sense of entitlement almost lead to Bertie Ahern becoming the highest paid leader in the world, that is, before public outrage finally called a halt to the incessant political wage hikes.

    The problems that O’Toole reflects on, ending with the mortgaging of the State to bail out Anglo Irish Bank, are endemic, systemic and deep rooted. J.J. Lee twenty years ago pointed to “a suspicion of the intellectual process and the value of ideas’ among businessmen”, an attitude Ivor Kenny “attributes to the pervasive anti-intellectualism of Irish culture”.

    Look at who benefits from the continuation of culture. “The sanctity of property, the unflinching materialism of farmer calculations, the defence of professional status” were for decades the key values of the Irish State; values baptized by the Catholic Church (Lee, 1989 pp 159). O’Toole shows that they still are. These barren virtues were typical of the mercantile cultures that predated the intellectual enlightenment in Europe, and indicate unenlightened attitudes to knowledge and innovation and which see civic virtue as dangers that can upset the status quo. Innovation does upset the status quo, because it generates a new dynamic in a non-linear system leading to unpredictable results.

    Enabling this dynamic is the essence of economic growth and development. Powerful interest groups tend to block technologies to protect their rents. Our society’s structure, as well as our beliefs and attitudes need to ensure that dynamic change is allowed to occur. Despite all our economic growth the focus has always been on the encouragement of Foreign Direct Investment in Ireland rather than the growth and development of native industry. The fortunes gambled at the Casino of the Celtic Tiger were not gambled on creating an Irish Google or Microsoft. Instead they were thrown at bricks and mortar and the property shell game.

    Problems of perception with regard to the value of science and progress and the whole action of modernism are deeply embedded in Irish culture. The power of this culture is reflected in the traditional interest groups of the State: the farmers, the vintners, the builders and the clergy. This is all laid bare in this book.

    The extant power structures of Irish culture embodies Foucault’s notion of relationships of power acting on actions, controlling the choices and constraining the mode of development of others. The outcome of this culture is intellectual poverty and the stunted development of a State, benighted by generations of emigration. The institutions of the State played midwife to and supported this culture. The ultimate tragedy we are faced with is a return to the dysfunctional cycles of the past as the demon of emigration rises to haunt the country again.

    Our problems stem from inflexible structural systems where these powerful, vested interests have acted to discourage any change that could threaten their rents. Debates over the morality of divorce, the reform of the Common Agricultural Policy, the productivity of the public service have all taken place in struggles to preserve what each group saw as its own interest. At the same time no debate has taken place on the importance of an innovative knowledge-based economy in generating wealth and promoting societal well-being. An economy in the service of the people as opposed to a people in service to the economy.

    The regime of Church sponsored censorship, which beggared the intellectual development of Ireland and stifled this temperament for much of the 20th century is an absolute moral bad. It is no coincidence that economic stagnation paralleled intellectual repression. The problem with the Catholic Church is that it has at least from the time of Copernicus become, as Hans Kung points out in his Short History of the Catholic Church, “an institution characterised not so much by intellectual effort, empirical assimilation and cultural competence as by defensiveness against all that was new”. As a consequence, “in the Catholic countries, hardly any later generations of scientists appeared” (Küng p 155). Catholic beliefs are barren ground for the development of scientific thought; barren ground for the development of modern thought and modernisation.

    Küng traced the modern development of France from the time of the revolution, when the secular power of the Church, which extended to education and hospitals, was replaced with a secularised republican culture (Küng, 2001). The lesson from our past is that this closed-mindedness is destructive to human growth and development. O’Toole says Ireland has essentially to grow up and become a modern society, as a first step out of the tar-pit we have become mired in, echoing the evidence of Küng.

    It is easy to come away from this book with a sense of despair. The nation plundered, our children’s futures mortgaged, emigration as the only route out of the past and the maintenance of existing power structure that have not only failed but have damned our society since Independence. In the end, despair is the only sin. We must not go gently but rather marshal our anger and use it to forge new structures and a new modern Ireland. Read this book. It will help gather your anger for the tasks that lie ahead.
    ENDS.

    You can find it, in original form (and see comments as they arrive), here:

    http://www.irishleftreview.org/2009/12/01/book-review-ship-fools-fintan-otoole/

    • wills

      tim, i would contend this diagnosis is merely a toned down version of the truth.

      Brilliant post tim.

      • wills

        I’m pushing the truth out here but i came across these pictures last week and after deep reflection i’m going too post the link.

        It shows terrible evidence of government at work during the cold war.

        Do not go to link if one is easily upset.

        http://www.boston.com/bigpicture/2009/11/kazakhstans_radioactive_legacy.html

        I am posting this link in relation too government unchecked in relation to the savage feudal system we must resist on all fronts coming at us unceasingly from all crazy directions, even when it seems utterly pointless and hopeless.

        We are able too, thats all one requires.

        The photographs are taken in heart wrenching compassion.

    • MK1

      Thanks Tim for that synopis of O’Tooles book.

      He is right, we should not let despair get the better of us but instead strive to direct our anger into to forge a better Ireland. We all dont have the energy to do that on a personal basis everyday though.

      Your mantra to “Keep at It” is apt. But I think we will also be saying this in 2 decades time.

      MK1

  45. zohan

    Colin , it’s because we Irish are so easygoing and laid back that we just let anyone take advantage of us.
    No public sector pay cuts………ah well at least we won’t have to pay them for their extra 12 day’s holiday…..! Let’s just suffer when they are all off together………ah sure that’s ok.
    gombeen f**#ing government.

  46. tony_murphy

    All them billions in debt and they’re taking more time off. how many days unpaid leave equals 22 billion?

    http://uk.news.yahoo.com/22/20091201/tts-uk-ireland-budget-unions-ca02f96.html

    what does cowen think he is running?

    • Tim

      tony_murphy,

      277 days each, for all 330,000 public sector workers, should save €22 billion; but, then, they would have no money to spend in the private sector and more jobs would be lost as a consequence and people would have to heal themselves instead of going to hospitals, teach their own children, instead of sending them to school, deal with their own waste, instead of running sewers, source their own water, instead of having it on-tap protect themselves from crime, instead of calling the Gardai and…….. you get the picture.

  47. Tim

    wills, we are approaching the “Crunch” on this slow-moving-train-crash.

    It’s gonna hurt alotta people.

    Many will arrive here, I think, needing “treatment” (expressing anger and seeking understanding).

    Let’s keep at it!

    John ALLEN, if you ask my assistance in contacting Paul O’Mahony in person, I can supply same. (I trust that you already know how to contact me….).

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