January 31, 2010

Don’t believe recovery hype

Posted in Debt · 255 comments ·

Many years ago, just before the fall of communism in Russia, I lived for a while with a Russian family in a small village about 100 miles west of Moscow called Novi Ruza. The experience was a bit like going to a Russian version of the Gaeltacht. I lived with a family who didn’t speak English, except for the daughter whose only access to English was a scratched recording of Hey Hey My My by Neil Young.

In this atmosphere – listening to Neil Young and going to Russian classes every day – I tried, with limited success, to learn Russian.

Most mornings, the official radio carried riveting stories about bumper grain harvests in Ukraine and how the collective farms had beaten all expectations. Yet the shops in the village had no bread.

We heard stories about how much industrial machinery the Soviet Union was producing, yet there were no spare parts for the Lada, which kept breaking down.

Every week, there was a story about how the great triumph of socialism was just around the corner.

I suppose we would now call this sort of stuff ‘talking up’ the economy.

Communists were great at it. They would spot a recovery, a new dawn, at the drop of a fedora. They believed in the ‘incantation’ approach to economics, which held that, if you incant or even chant long enough about something, that something will eventually come true. Daft, I know, but the communists were great believers in positive thinking, even if there was no evidence to back it up.

Now is it just me or do you get the sense that you are listening to Pravda on the radio these days? There seems to be a concerted spin, delivered by politicians and so-called economists, who never saw this bust coming and were preaching ‘soft landings’ two years ago, that Ireland is now on the cusp of recovery. We are going to experience some mythical ‘export-led growth’, which will drive down unemployment and, by next year, we will splurge again, spending all the savings we are sitting on.

Quite how we could possibly have labour-intensive, export-led growth when we have one of the highest wages in the world is beyond me. For that matter, I can’t see how we will splurge our savings when the government deficits are so huge that they will absorb our nest egg. I can almost hear the sheaves of wheat bursting out of their ties on the steppe.

The truth – a strange concept which ultimately broke the communists – is that Ireland is not going to experience a recovery any time soon, and this year will feel worse than last year. Behind all the spin and incantation, there is a barely audible sound which will get louder and louder. It is a large sucking sound: the sound of money leaving the economy.

What is now faint will become a cacophony.

We don’t seem to realise that we are now in a phony war situation where our sense of stability is based on the European Central Bank (ECB) injecting soft loans into the banking system. This massive monetary injection was carried out all over Europe to make sure the European banking system survived last year.

The ECB is now unwinding this credit. Let’s just recap on the way the banking system works. If the banks stop lending to each other (as happened in September 2008), the Central Bank, acting as the ‘lender of last resort’, steps in. It says to the banks: ‘‘Give us what you call ‘assets’ on your balance sheets and in return we will give you money so that you don’t run out of money and go bust.”

In Ireland, the assets on the banks’ balance sheets are our mortgages and all sorts of loans to property. So the banks package all these mortgages into what is called an asset-backed security (ABS).

This product, which could be thousands of performing mortgages, is rated by the rating agencies and then given to the Central Bank in return for cash.

This cash goes into our ATMs and we spend it. The ECB did this all over Europe from September 2008, because every banking system was experiencing problems.

The pathetic spin put out by the government and believed by many is that Ireland has some sort of sweetheart deal with the ECB, whereby the Europeans looked favourably on Ireland.

This is not true. The ECB treated the Irish banks the same as any other banks in Europe. In fact, it could not have legally treated us any differently to any other country. It loosened its rules on what did and did not constitute ‘security’. So banks in Europe that couldn’t get money anywhere else went to the ECB and exchanged ‘assets’ for cash.

In normal times, the ECB will only accept assets with an AAA rating as collateral. In the past two years, it has loosened this and accepted any old trash in return for cash to protect the system. Look at the chart for Europe as a whole, and we see that the ECB provided over €500 billion in this type of financing across the eurozone.

In July, it intends to pull €442 billion out of the system, as it reverts to taking only AAA assets and signals to the rest of Europe that the banking crisis is over. But it’s not over in Ireland.

In the crisis, different countries needed differing amounts of cash, depending on how delinquent the country’s bankers and regulators were during the boom. It will come as no surprise that Ireland is the most badly affected. Today, Irish banks are getting €98 billion from the ECB in this type of ‘cash for trash’ funding. That is 17 per cent of our banking system’s assets, which are about €520 billion.

Nearly as fragile are the Greeks, who are getting €42 billion or 8.8 per cent of total assets. For Italian and French banks, only 0.8 per cent and 1.8 per cent respectively of their total requirement comes from the ECB. In other words, when the ECB changes its rules, it will have no effect in Italy and France, a nasty impact in Greece and a catastrophic impact on the amount of money in ATMs here.

The major problem for Ireland is that the ECB will accept only AAA assets from March, but we don’t have any AAA assets.

Our government debt, the least risky (apparently) asset in Ireland is not even AAA any more. The ABS packages of our mortgages are clearly nowhere near AAA and will be further downgraded as mortgage defaults rise.

So where are we going to get €92 billion and how much will our banks have to pay over and above ECB interest rates? Someone will lend to us – but at a huge premium and probably a rationed amount of cash.

This means the most heavily indebted country in Europe is facing interest rate hikes and a massive contraction of credit from bust banks, which are looking for more cash from us. This can only be generated by more government borrowing, which drives down the rating on the debt further, drives up the cost of money to businesses and increases the likely tax hikes. Recovery, how are you?

I lived in Russia too long and listened to drivel about the whopping grain harvest in Ukraine as we queued for bread. We are hearing the same nonsense from our government and their lackeys on the radio and in print these days. As that great economic thinker, Chuck D of rap group Public Enemy, once said: ‘‘Don’t believe the hype.”

  1. recoveryplan

    Excellent article,David, makes you think what will it take to get the Irish people to wake up!!!!

    • The Pimpernell

      Reading these posts regularly there seems to be a great deal of discord in Ireland. I have recently moved back from having lived in the UK for 20 years – I am completely disillusioned with Ireland and the problem seems to be with politics here.
      Our politics hail from the civil war where we don’t seem to care who rules the country just once it is not the UK!
      Speaking to canvassers that usually come knocking on doors at election time I always ask “what does your party stand for”, ”what set of political principals do you have as a guide”, “are you left/right leaning in your political perspective”?
      Not one of these canvassers has been able to answer any of these simple questions!!!
      Something has to change, we need some direction and someone to lead. Our current collection of politicians are careerists and few have a clue about the fundamentals of business and they certainly seem to have a poor grasp of macro economics.
      Ireland can be a great nation, with an important place in the world, we simply need a clean slate and a new start.
      David certainly has some good ideas and his opinion holds a mirror up to our leaders but until we get rid of the apathy that exists in the country we will never be a great nation.
      Your thoughts?

      • brum mayo

        This is probably a very good analysis of Irelands future,the problems in there are 80 years in the making starting with the 1st fianna fail government ramming the “volunteers” into government sinecures to block opposition policies when they found themselves out in the cold electorally,every semi-state body found positions for the kin and voters of this party who see the Dail as their birthright whether it be Bnmona Aer lingus etc,that is why the unions have the whip hand in all exchanges.Look at the young scientists expo year on blessed year,some great talent but what becomes of them?that is our future surely!FF are wedded to the notion of all being employed as factory hands for the multi-nationals,no Irish co. get their terms for advance factory rents etc.Why so?There is not a single public scheme in Ireland that truly goes to open tender,We have bid from the UK year in year out and lost to friends of FF who we undercut by at least 30% and our rebuttal tells us we do not understand the local market.Ireland above all needs a conservative type government which will demand value for money.

      • MT25

        Agree 100%. I will never vote for any candidate associated with the FF/FG symbiotic alliance. Surely the model is broken and we need to rethink it. Do we need to be totally constituency based? Could we have an Irish citizens constituency?

    • TopsyTurvey

      I find this article heard to correlate with some of David’s recent publications. On the one hand he admits that the ECB is pumping all the liquidity into the market, but he argues constantly that we should leave the Euro. It could be argued that by joining the Euro and thus adopting the low interest environment our problems began. Surley though we could not rely on our central bank to do any batter! – with their record. Admittedly though the credit crunch/liquidity crisis is not over yet.

  2. recoveryplan

    Just a quick follow up; if the papers are to be believed, Dan Boyle threatend to resign which would have provoked an election. Can somebody here please tell me how to convince this man to do the honourable thing and give the people back their right to choose a legitimate government ? I for one have had enough….

    • Deco

      Well it all depends on which paper doesn’t it !!

      If any of you want an election then send this around to everyone you know.


      Dan “it is more important to save the banks than the factories” Boil is an actor. The Greens will not call an election. Gormless is too busy inserting the reject GP candidates from last year’s local election into state paid positions. Boil throwing a tamtrum is just one more PR stunt.

    • Boyle’s never don’t an honourable thing in his life, why would he start now?

      • G

        @ dahamsta – I wouldn’t go that far, I know personally that he has done some good things and was a ‘worker’ in the Dail, critical error he made was neglecting his backyard by not going door-to-door, he let it slide and got hammered for it by the likes of Michael McGrath (FF) who smashed the poll at his first attempt, getting almost 4 times Boyle’s vote – I know because I saw the work personally on the ground.

        The fact of the matter is Boyle in his current incarnation is hopelessly compromised. A ‘committed’ Green party member, holding a senior position and a Senate seat (appointed) – he won’t bite the hand that feeds him and so is rolled out as the sacrificial lamb.

        I watched him one night on Prime Time defending God awful policies and I could see he was clearly uncomfortable and unsure – the first Lenihan budget was the nail in the coffin not to many the innumerable compromises on core Green policies like motorways, failure to build integrated, tram and train based transport system, failure of flood defences and poor Gormley and government response etc etc.

        In any case, it is almost academic, the Greens as pointed out in that wonderful article in the Times, are a nepotistic, spent force and have completely blown whatever credibility they had (people being appointed as a result of telephone conversations- Ryan didn’t even care about the most basic optics – contempt for an electorate which is waiting in the long grass for judgement).

        FF have done what they have always done, used a Junior partner to take some of the punches and see them disappear as a political entity – FF are masters at it and the Greens should never have gone in to government, they should have seen the trouble after they went in especially when they proved themselves incapable of reigning in FF on medical card issue etc they held the balance of power but unlike Parnell never used it effectively – they became the wiping boys.

        Their fateful decision has cost them their party, they lost about one third of their base when they joined (nasty public spats) and lost another one third with the policies they have supported and in some cases actually championed, so they are down to a non-existence one third, less in some parts of the country, election time will see their exit and Gormley and Ryan know it, so more about safe guarding their personal positions, appointing their favourities to semi-states, quangos and film boards (€40,000 for one person allegedly – handy work if you can get it) and seeing what they can get in terms of business contacts, consultancy positions etc in the after political-life…….wouldn’t be surprised if Ryan is invited to join some Wind Farm company and other renewable products as it is the game of the future while Gormley will seek some international position suitable for that planet size ego, Sargent may be the lone, sorry soldier in the Dail, a living reminder of what happens when you engage in Faustian political pacts………

        • Deco

          Where is your self – respect ?
          The GP are bunch of liars.

          I actually think at this stage that the Greens are the toxic contaminent in the government. The GP are behaving exactly like the PDs before them grabbing state jobs for their mates at every opportunity.

          In return for your consideration they liars in the GP will give you nothing.

          • G

            Deco – I understand, and I know people are extremely annoyed and rightly so. Absolutist positions, we all do it, have a tendancy to throw the baby out with the bathwater and actually disguise the truth in some senses.

            I have to be true to what I know, Boyle was very proactive on an issue I raised with him some time back, he moved on it, got the relevant meetings setup and delivered the goods and most importantly, was sincere, btw, this wasn’t a property deal, a zoning issue or getting someone hired, it was a non-profit issue.

            But the world and the GP have changed a lot since then and he has found himself acting in a way which I am appalled at – I think he may in fact be the one to bring things to a head – if that day ever arrives.

            Boyle is of FF extract and obviously self-interest is in there somewhere – but yes, they are all shadows of themselves, principles torn to pieces, party torn to pieces and almost certain annihilation awaits them at the next General Election – they should have stayed out or gone in with FG-Labour – failure to do so was criminal and could have changed the face of Ireland.

          • G

            Deco – I understand, and I know people are extremely annoyed and rightly so. Absolutist positions, we all do it, have a tendency to throw the baby out with the bathwater and actually disguise the truth in some senses.

            I have to be true to what I know, Boyle was very proactive on an issue I raised with him some time back, he moved on it, got the relevant meetings setup and delivered the goods and most importantly, was sincere, btw, this wasn’t a property deal, a zoning issue or getting someone hired, it was a non-profit issue.

            But the world and the GP have changed a lot since then and he has found himself acting in a way which I am appalled at – I think he may in fact be the one to bring things to a head – if that day ever arrives.

            Boyle is of FF extract and obviously self-interest is in there somewhere – but yes, they are all shadows of themselves, principles torn to pieces, party torn to pieces and almost certain annihilation awaits them at the next General Election – they should have stayed out or gone in with FG-Labour – failure to do so was criminal and could have changed the face of Ireland.

        • Deco

          And another thing – this thing about Boil being hopeless and having no option.

          Joe Behan had convictions and stood by them. He did not get involved in this pretendy nonsense that Boil is going on with. Dan Boil is a fake.

  3. paul77

    The dream is over…..lucky I have 60 grand in the bank to get out of this joke of a country!, never believed the hype thanks David and a few others like him!

    • Ruairí

      Nice one Paul. Fair dues. I hope you get your moment in the sun. You’ve waited, based on sound analysis, like many of us. Might want to start checking the serial numbers on them “Eunts” before they close the borders on us financially !! John Allen’s backwater currency prophecies could come true yet…..
      Ah unlikely, but I would get that into a euro account abroad before all sorts of inalienable EU rights become under review for the PIIGS babies.
      €60k could even be the airport departure tax from this place………….. an inheritance tax in advance, as it were. From all the lolly you will make abroad…..

      • paul77

        I opened a robo account some time ago, think my money is guaranteed by the dutch government now, its not that much but it should get me started if needs be in another country, I work for a major US mutlinational that make main frame servers, its off to Singapore in the summer, we ship a couple of billion every year from our plant, some servers go up to 25 million each, so a wee bit of corporate tax will be missing from then me thinks.

        Well at least I did not listen to all the people in work over the years trying to get me to buy property because ‘you could not lose’, I really feel sorry for them now, job going and serious negative equity, many said was was negative and all that, but thanks to all on here I might just have some sort of quality of life, either in this country and another, thanks David and the other economic jedi’s on here, I owe you big time!.

  4. IrishGuyInSydney

    I totally agree David, things will definitely get worse before they get better in Ireland.

  5. ps200306

    Hang on a second … isn’t this what NAMA is all about? The banks get all their shitty assets converted into government bonds, so that when they go cap in hand to the ECB their assets are only as toxic as Irish government debt, which is supposed to be somewhat less toxic than a loan to a bankrupt Irish property developer, and therefore cheaper (N.B. cheapER, not cheap) to borrow against. I’m not a fan of the government or NAMA, jes’ sayin’ … that’s how it was supposed to work. What am I missing?

    paul77 — 60k in the bank? a) I hope it’s not an Irish bank, b) aren’t you going to stay and hold out for a cheap bit o’ property?


  6. ps200306

    Speaking of Russia …

    Back in the seventies when I was a kid, we had one of those big old valve long-wave radio sets which was a throwback to an even earlier pre-transistor era. I remember listening to Radio Moscow’s international service, to a female announcer with an almost flawless BBC-English accent except for the slightest (and to me at them time, very exotic) Russian twang. That station was basically a propaganda vehicle for the communist regime, and it showed, so the announcer would be saying something like: “Mr. Macintosh from Glasgow writes to ask about the unemployment levels in the Soviet Union. Well, Mr. Macintosh, here in the Soviet Union we have full employment at all times … etc. etc.”

    She may well have been telling the truth. And she might even have said something of value for today’s Ireland — full employment wasn’t a sign of a healthy efficient economy, but of a very sick one.

  7. I’m based in Asia, and I’m just back from a week in Ireland. I come from a middle-ish class family, and hang out in middle-class circles – the people who I thought would be most interested in the state of the State. But when back in Ireland, no one, not one of my friends or family, had any idea about what was going on. Some thought NAMA was the only choice, and most were apathetic. It was deeply depressing. We really need a few good men in Ireland – most of our career / dynasty politicians cannot be relied upon as they’re only intersested in feathering their own nests.

    • liam

      Indeed. It seems the further away you are the easier the bullshit is to spot. I am equally frustrated and bemused at the attitude I regularly see and hear coming from the Irish. And, whenever I mention our host, people start jabbering on about how he is always on the TV and hes a self publicist etc etc. Nobody actually wants to engage in a discussion on the content. I have frequently heard it dismissed as “nonsense”, with no further explanation. The Irish are for the most part I believe still in denial. I despair at their attitude.

      Take this bullshit right here:

      Out of Idle curiosity, I had a (very in-expert and cursory) look at this deal last year, as I couldn’t quite believe that Anglo could sell this crap to anyone. What the article doesn’t tell you is that the CEO of Green Property is a director of an Anglo subsidiary company, a company that is made almost entirely of property developers to which Anglo was lending money. It also doesn’t mention that not only is the loan interest free, its also mostly made up of debt for equity rather than actual cash. Its effectively an accounting trick reworked as PR as far as I can work out, though I know nothing about how such matters are dealt with in practice, and my information may be now out of date.

      If I can find this stuff to on the internet in Japan, what on earth are the Irish doing with this crapola going on next door to them!?

  8. Good write up. I was looking forward to the next alert and reading some more sensible words which should waken up anyone who is not still living in 2004.

    Thankfully this blog is a rarity in Ireland in that it provides a voice that can be believed
    in and which does not leave you with that sinking outsider feeling you get after listening to our own versions of Pravda in RTE and and the press. Being an outsider in Ireland can be tough but it beats being an inside slave whose integrity has beed busted and whose silence is assured through corruption and fear.

    Talking of Russia, I knew a man in Glasgow who was a committed commies and conscientious objector during WW2 and who was sent to Barlinnie Jail repeatedly in an attempt to break him.

    He organised rent strikes and managed to get rotting homes pulled down and rebuilt for the
    coal miners in a lanarkshire village who were living in squalor. A lot of these people were
    of Irish descent and were still suffering the curse of the landlord. All it took was one person with guts to affect change otherwise the people would have put up with this crap for years.

    He could do this because he was not stuck in a mind prison that comes of work, mortgages and pensions. He had nothing except his principles and he would have have rather than gone to prison than let them win.

    In Ireland you get sneered at for having principles.

    • G

      Excellent post.

      “He could do this because he was not stuck in a mind prison that comes of work, mortgages and pensions.” – oustanding – gets to the core!

      We could be in for a financial tsunami of a wake-up call, was socialising with a Caribbean lady over the weekend, she has stockpiled a month’s food supplies for herself and her children (“because I am a mother and see how poorly this government acts in time of crisis, I rely on myself not on Minister Gormley”).

      She recommended tinned food (beans etc), plenty of bottled water and board games to keep the kids occupied. She said it took two weeks to come to the assistance of the people in Haiti, she said it would take at least a month before anything happened in Ireland because the people at all levels are so apathetic and incompetent, appointed on the basis of connections and not ability, she said a Katrina style crisis would be a lot worse here because unlike the US we don’t have .1% of the necessary resources.

      She maintained the failings were due in part to the Irish character, the negative traits which were celebrated during the boom and post-colonial mindset that someone else will take care of it. She said the Irish were affable, but almost pathological so, the need to be liked, loved even but insincere, she said she lost count the number of times people said they would call or do something only to never see them again or some excuse, like ‘something has come up’.

      She maintained the Irish didn’t have staying power and could not believe the condition of the roads and footpaths and buildings in the city centres (lack of paint or attention to detail).

      She wondered why the Irish people tolerated such appalling conditions, dog poo on the streets, shabby health service where you had to pay €100 upon entry.

      She also noticed given she was black and from the Caribbean she was told (again she lost count) if she was so critical “why doesn’t she go back to Trinidad?” – naturally she found this immature and unsettling.

      She also mentioned the ‘system of control’ in Ireland which begins in school with large class sizes and excessive role of the church, which was all about control and subserviance, the lack of independent or critical thinking.

      We went to the movies Saturday night to see Clooney’s ‘Up in the Air’, not for the first time she commented on the inability of the Irish audience to laugh, to express themselves, she notice the dour clothing and tendancy to conform, she thought it a very damaged society.

      Needless to say, she is thinking of relocating.

      • The Eye

        Sounds like to me from her critical atitude shes a Nigerian hooker fronting as a Carribean bet you paid for the cinema tickets.

      • Bamboo

        @ G,
        I can well understand why the Caribbean lady is seeing things this way.

        However, I must add that trying to settle in a new country/culture and society is the hardest thing to do in one’s life. I’ve been in that position myself and it took a considerable time to accept things as they are. I missed my own way of life, my friends and family that I’ve left behind, food, climate, etc. In essence the reality is I was suffering from homesickness but was fighting against it. Everything that I didn’t like I blamed it to the Irish people/culture. You can’t afford to get angry or you’ll be socially excluded. Some of us can only find solace within one’s own fellow nationals.

        Like me, she is not only foreign but she looks foreign and by default it is a personal struggle. Hopefully the time will come soon that she accepts the things as they are in life. Nothing is going to change in her surroundings. The only change that you can hope for is acceptance.

        “Lord grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference”

        • liam

          “…trying to settle in a new country/culture and society is the hardest thing to do in one’s life…”

          Hmmm… Believe me and understand that I agree with you, getting over those “WTF!” moments and learning to simply accept that people do things differently is something a lot of people find remarkably difficult.

          But, I don’t think thats whats going on here. I can tell you that I get a huge reverse-culture-shock every time I come back to Ireland. I’m with the Caribbean woman on this one. It sounds like she has understood perfectly how things work in Ireland.

      • Ruairí

        @ The Eye, that was a pretty amoeba-like response. Was it some sort of knee-jerk trigger from a closed-minded upbringing? Never mind.

        @ G, you say “She maintained the failings were due in part to the Irish character”
        I completely agree and I know that deco labours this point about the negative traits of the Irish ‘success’ archetype. We need to re-imbue that archetype and do it quickly, through education, through government supports for industry etc etc, everywhere where govt gets a chance to steer the mindset. It is a task that government can do, if it is visionary.

        What we need is more of the Swiss or Japanese attention to detail, diligence, pride in our work. I can’t recall the exact Japanese phrase but Kenichi Ohmae mentions it often in the ‘Mind of the Strategist’. Essentially, we had here in Ireland, young ones wishing they weren’t serving you coffee (too good for it as they had degrees you know) even though it was their first job and / or bills needed to be paid, civil servants wishing they were private (and many jumped ship pre-benchmarking because they felt they were missing out), builders wishing they were developers, credit unions wishing they were banks, salesmen wishing they were entrepreneurs (been there!), etc etc.

        We all got above our station. Now I don’t mean that we can’t (many of us) scale the dizzy heights. I mean that somewhere along the way, the Irish pride went into overdrive again and we all felt too good for the jobs we were in. We’ve never admired dirty work in this country (apart from shady dealing) and that is what stuck in the gut of many professionals (David previously wrote an article that touched on this envy syndrome that ultimately drove professionals into property syndicates.
        But at the base of it all is some sort of inferiority (colonial?) complex that causes most of us to not want to do our jobs to the best of our ability but instead to feel we deserve better. Perhaps we do and perhaps it is a lack of meritocracy that breeds this contempt for one’s present station. But it has no doubt caused harder working and more diligent / conscientious (grateful) cultures to pick up the ball that we’ve been dropping for 10 years now.

        • lff12

          How come what you call “dirty work” – i.e. labour intensive work, was precisely the area where wages rose most disproportionately? Most of the industries where wages went bananas were wages previously protected under JLC agreements designed to prevent employer exploitation. Ironically, a lot of “high tech” and “skilled” work, was knocked back due to global competition, especially in manufacturing and IT.

          • Ruairí

            lff12, until the Tiger years, builders, carpenters, blocklayers etc were always paid well for their work (only on unionised sites, not in rural Ireland I can assure you) but not in proportion to what professionals were being paid. That balance tipped exponentially during the boom but in fact the despising also increased exponentially too. The same phenomenon of which I report anecdotally and you also are two ends of the same string. The same societal issue was occurring in Denmark in the early noughties. Highly educated danes on the dole while immigrants work at the menial jobs and in between , sometimes work sometimes not, but not for either of these groups. They were both stuck.
            Your assessment is correct but does not dilute at all (as there’s no correlation in your argument, in my opinion) the enmity felt towards dirty work (and also the envy and enmity towards those who were now outdoing their betters in the class wars).

          • Ruairí

            And of course lff12, because we valued housebuilding over exporting. Its the key faultline of 2002. We chose a housing boom instead of deepening our competitive gains. We had oil companies buying up rural sites ‘closed down’ by Tesco and other competitive factors, then cleaning up the sites, and then building semi-ds!! Sure who would export, invest in R&D when you could build houses. The best of our business brains went into cold storage for the last 10 years.

          • wills

            Spot on ruairi great comments

      • wills

        An accurate observation on her behalf of a people arrested in exual developemnt at way back at stage 2.

  9. Morning All,

    It is a little bit disheartening when you feel the apathy. But things will become more focussed. 2009 was a year of shock – and it looked like a traditional shock led recession, with most of the impact on public finances and jobs. 2010 will be totally different and the true nature of our debts comes into focus. The fact that the mainstream media still spouts drivel should not come as a surprise to anyone who remembers how these people behaved in the boom!

    There is only one way out which is a negotiation with the creditors and ultimately give the banks away for free.

    All the best, David

    • G

      Give the banks away for free or nationalise them (?) – any profits made in the future (very, very far away) to be used for the benefit of the population.

      Krugman, Stiglitz and Michael Hudson have written about the ‘hype’ around recovery, the fanfare around the ‘end of recession’, which are driven by political considerations, the reality would seem far from the ‘truth.

      The following is pretty interesting – wonder if the general populace are a) interested in informing themselves and b) taking charge of affairs and being active participants in democracy. I think not somehow, but I go back to Chomsky’s words quoting from Antonio Gramsci: “pessimism of the intellect, optimism of the will”.

      We can agitate for more accountable politicians, semi-state employees (accountable for the public purse/prosecute those deemed to have abused their positions or squandered public funds – that would get them aline), leadership and example comes from the top, Cowen has no legitimacy, as long as we have the current government, the fortunes of the Irish people will not improve.

      I don’t trust FG (narrowness of the political options – tweedle dum and tweedle dee) and Labour seem incapable – we are ill served and understand more clearly why people have left, people could read the play quite clearly, regressive measures from ‘government’, not solution or even hope based.

    • Bamboo

      Folks, Sorry to copy and pasting from my earlier post

      “These parties know exactly what the people want to hear and and they talk the talk according to outcome in their market research. Nothing to do with what they actually and genuinely believe.

Radical ideas only come when a nation is in a desperate situation. That’s when the change to left or right happens and there will be no centre party anymore. The more bad news we hear on the TV/radio the more we go into a fighting mode to change. So a government, amidst all the doom and gloom, always (tries to) make sure the nation is fed by some good news on a regular basis. Drip feeding the good news.

      The latest “good news” story is that we will be out of recession by the second half of this year. Hmmmm, we will have to see about that. Under the condition of course that we as a nation are prepared to loose our incomes.”

    • The only concern there is if the banks have dug holes in the UK, Spain, US and Greece, do they have any residual value at all? Any “New” bank here will be trusted by the people moreso than the old offenders so what would the existing cabal bring to the party as regards investment returns?

      They’re like dead jellyfish – useless but full of stings.

    • Ennis1

      David, if you have not done so already, could you explain in a future article (or a reply here) how exactly 2010 will differ from 2009? Very interested to know what to expect. Always enjoy your articles which make so much sense.

    • wills


      Exactly, the media fanned the flames and pumped the misinformation and participated in the great Ponzi property bubble swindle and so are culpable of dereliction of duty, and still are as stated.

      The way out is what it is and the jailors will try whatever to make sure they loose nothing and gain everything.

      The jailors are everywhere, banks, media, corporations, professions, education, everywhere all hooked into this mercantilist jailor economic system.

      And the lower downer jailors are shouting their heads off about the banks the banks NAMA NAMA and it is no surprise in a system which inflates Ponzi property bubbles even the insiders are expendible at some point and it now is clearly evident they are.

  10. ABS – I am not a mechanic but I always thought it means ‘good breaking’. Why do the banks have to mash up our english and make it an accelarator? I was reminded of the the times under communism I had a project in Novi Pazar in Bulgaria .I hired a car ( lada) to drive from Sophia and during my trip my breaks became my accelarator and I was only left with my hand break to stop the bloody thing.To make matter worse the engine over heated ….and thats another story .
    My project was a venetian gold coating and hand painting glassware factory ( Lebed) and the glassbottling factory beside it .Exceptional gifted artists worked there in the freezing cold and sometimes never got paid.Their product was fantastic and I have some of it at home now.

  11. Solpadeine – I am told this is one of the best new remedies in chemist shops for headachs.What we have ahead will warrant us all to use them more often.I did not sleep last night because of this article .It’s absolutely terrorising.
    I saw something else in this story too .I noticed David gave us two ‘systematic dates’ namely March and July .When I read that it shocked me big time.
    Later in March to early April and again in July we have the next two big ‘MOON WOBBLES’ .
    We have seen what happened in the recent one over Xmas and I said then before its arrival to stock up on your ‘hot water bottles’.I have not read into the exact planetary positions during these forthcoming moon wobbles to give more clarity but I had intended to do so later .Now that seems urgent due to these financial revelations.
    For those who are interested in moon wobbles its a very dangerous time .

    • wills

      John ALLEN.

      Be much appreciative if you can take the time to comment further on moon wobbles upcoming and d’s second stage cod liver oil truth.

  12. tony_murphy

    Thanks David for this article.

    I’m currently reading “Newspeak in the 21st Century” which while being a bit long winded, I’m not going to put it down. It’s an eye opener. I used to think for example that the BBC was an organisation which could be trusted, but this book sorts out my illusion. I have since stopped watching and listening to all BBC news type programmes. I filter everything I read and see now.

  13. Well done on another attempt to get people see the light David. The ” Drivel” is spawning faster than a bullfrog on speed. It must be disheartening some mornings to wake up knowing what you know yet witness the destruction of our country.

    We tried last year to visualise what one billion amounted to and it came to a monumental tower of 500 euro notes. Since that didn’t grab the public imagination, I’ve got the calculator out over the cornflakes (The Quails Eggs are gone – too expensive).

    It turns out that a 50 Euro note measures 140 mm x 77mm.
    Thus a simple calculation reveals that one billion Euro covers an area of 33 Irish acres (or 21.63 hectares).
    Given that the land mass of the Republic covers 70.282 sq km then , with my trusty calculator, I work out that covering the whole of the country with 50 Euro notes comes to 32.5 Billion (give or take since no-one seems pushed about the odd million any more).

    So we need to plaster the whole country twice over with 50 Euro notes to get somewhere close to the national debt.

    Must go off and do something more productive now.

    Great article.

    • hololia

      don’t believe the sums or your calculator is not so trusty .. Rep of Ireland is more like 70,000 Sq KMs not 70 Sq Kms anyway you’re out by a little bit …(2 orders of magnitude)
      to cover ireland with my calculation we’d need

      32 counties – 7831 Billion
      26 counties – 6518 Billion
      Offaly – 185 Billion
      Laois – 159 Billion
      Laois/Offaly (constituency) -344 Billion

      if anybody knows the area of Clara (Offaly) we can see how many 50 euros it could be covered with

  14. G

    @ Bamboo

    Testimony #3

    Mary Duffy, clerical officer, Department of Education, Tullamore

    “In September 2008, my husband found himself standing in the swollen queue at the local social welfare office. He was granted unemployment benefit of €204 per week in January 2009.
    In August 2009, we discussed our mortgage with the bank. Our only option was to hand it back. So the day we had dreaded so much had arrived.
    On my son’s first day at school we moved into rented accommodation in Tullamore. Now my husband’s benefit of €196 per week has ceased. We are currently lving on my modest salary of €451 per week. Rent cost €625 per month, not to mention doctor’s fees and so forth. My son suffers from asthma so we always have at least one doctor’s appointment per month. My son still thinks we are on holiday. He asks about his home, and why we are not living there anymore”.

    Testimony #4

    Conor McDonald, Clerical Officer, the Revenue Commissioners:

    “At present I am earning €420 per week. I have a family. I have a one-year-old baby with a second one on the way. We live in a council house in north Dublin built (40 years ago).
    If you look at these figures there is no way that they add up at all. We have to borrow extensively on credit cards to actually make up the figures. Luxuries for me are not about holidays or a new car. It is actually about having warm water to shave or wash in or to do the dishes in. These are the realities of the situation.”

  15. And even when the country implodes with public service strikes etc and even when the Jeremiah prophet´s (David) plan is finally followed and the bondholders are forced to negotiate there will be thousands of hard luck stories from lower paid civil servants (as above) and nothing will change for them.
    Nothing will change for the thousands of young people living in negative equity shoeboxes-they will never begin the process of trading up to proper family homes.
    Nothing will change for the unfortunate young people (My own daughter) sucked into Fianna Fail´s Ponzi property racket through the latter day quango:
    http://www.affordablehomespartnership.ie Fianna Fail suckered everybody-even those sucked in by the above , who would in the normal circumstance have evaded the negative equity trap and not bought a shoebox .
    The banks and Fianna fail suckered everybody who took out fixed mortgages at the highest interest rates-in panic of even worsening interest rates.
    Now there will be a clandestine enquiry-blanketed in total secrecy-as usual.
    Fianna Fail=Gestapo= Mafia.!
    Nobody does it better!

    • G

      “A generation of financial “ideological engineering” has told people to welcome asset-price inflation (the Bubble Economy). People became accustomed to imagine that they were getting richer when the price of their homes rose. The problem is that real estate is worth what banks will lend — and mortgage loans are a form of debt, which needs to be repaid. ”
      Full article – http://www.counterpunch.org/hudson01262010.html

      • lff12

        That I think is correct. Incorrectly-valued assets based on speculative best-case valuations hiked land and building values. The second part of that was the vested interests involved – there was so many who had personal interests in accelerating values they would never dare “talk” down values or allow falls. That, for example, is why even rents remain stubbornly high – for example, if you look on Daft.ie, 80% of ALL residential rents on offer in Cork at the moment are for properties valued at 600 euros a month or more. With a median wage of 29k per annum, this means that a person would still be paying about 30% of their after tax income on rent. Prices still have a long way to drop in the property sector in order to become “affordable”. But landlords tend not to reduce rents because of a fear of a snowball effect – which in reality is happening as landlords eventually are forced to offer reductions as their existing tenants leave and they cannot find new ones.

  16. G

    Yes, the ‘Affordable’ homes ‘Partnership’ was neither affordable nor a partnership in the real sense.

    Truly Orwellian, another landmine unfortunately.

    • Bamboo

      I know someone who is offered to buy an “Affordable” home in my little town. Any advise as whether he take up on that offer?

      • G

        Hard to when you don’t have all the facts, it works for some people, problem is you are slightly tied in, unable to make internal structural changes, issues around selling, in any case, you’ll probably get a house on the market cheaper than on the affordable housing scheme (despite the government efforts to inflate same), people are putting in all kinds of low offers and they are being accepted – it depends on the individual circumstances, location etc – I visited friends living in a wonderful ‘affordable home’ in Co. Clare, lovely house, nice garden, wonderful views, I would have said yes to that possibly because I would have made it a permanent home.

        • Bamboo

          Thanks G, as always

          • G

            Bamboo – let me give one example I came across today. A terrace house with Sherry Fitzgerald in a mid-size Cork town, three bedrooms, garden etc, small but solid.

            Friend contacted them, it was originally on the market for 150,000, this quickly dropped to 100,000, she negotiated for a while and put in a take it or leave it offer of 50,000 and negotiated – lump sum up front followed by payments over several months etc – her offer was accepted this morning.

            Her attitiude, buy in small, and build up, she’ll sell in 5-10 years or may lease out and move onto another property using the house as collateral, many ways to skin a cat!

            No heavy, life sucking mortgage and possibilities for the future, including converting it into a commercial, main street property, which would generate some nice income (if so inclined). Time for creativity.

          • Bamboo


            I really appreciate you following up on this. I’ll forward your post to him and I am sure he’ll be delighted to hear this type of info/trend.

      • Ruairí

        They were looking good (on paper anyway) and relative to open market properties when you considered that the local authority was a buffer and the deposit size was so low. But that’s all changed. As with any house, they are subject to the rules of property. If the friend has any kind of a deposit and secure income, the market may yet produce some gems. At any rate, they will be dealing with the banks directly now anyway.

  17. Deco

    On Tubridy (Family Firm RTE employee) this morning.
    [ Good morning, it's the first day of Spring, Spring has spring. Roll on the good times. The Good times are here ].
    Tubridy then went on to cover how we need to sell Ireland more. And later started a whinge about there being too much of a “whinge factor” in this country.

    David is 100% correct. A landmark article. Everybody in Ireland should read this – and wake up and see what is really going on in this country.

    • tony_murphy

      Tubridy from wikipedia

      ” Niall Andrews, a maternal uncle, was an MEP, while another maternal uncle David Andrews was a government minister.[7] Tubridy was educated at Blackrock College[12] and University College Dublin, where he studied Arts. He was a member of the Kevin Barry Cumann of Fianna Fáil while in UCD and was active in the UCD Students’ Union, as well as the Dun Laoghaire branch of Ógra Fianna Fáil. Two of his first cousins, Barry Andrews and Chris Andrews, currently serve as Fianna Fáil TDs, with the former Minister of State for Children in the government of Brian Cowen. His grandfather, Todd Andrews, was a prominent associate of Fianna Fáil founder Éamon de Valera and held a number of posts in semi-state companies. On the Tubridy side of the family, Ryan is the grandson of TD Seán Tubridy.
      One source[7] says that Tubridy is a nephew of Dorothy (Dot) Tubridy née Lawlor, widow of Captain Michael Tubridy (d.1954).[13] Michael Tubridy was an international showjumper from Moore Street, Kilrush, Co. Clare.[14] Dot Tubridy, an anthropologist, has long enjoyed a reputation as `friend of the Kennedys’.”

    • Ruairí

      Tim’s much quoted “confidence (trick), confidence (trick), confidence !! (trick)” Cowen moment on the Late Late Show is worth recalling. Unfortunately, we need Jean -Claude to share our exuberant optimism about our future. And he ain’t bitin…..

    • Deco well spotted , I heard it to and switched back over to the jedward station and fluffy ray darcy
      And soon we’ll have Charlie Bird back home walking through the ghost estates but at least he’ll be able to go have a pint after with the lads.
      We have been fooled by clever marketing and an over supply of Sky TV , drunk and high on cheap credit and a general apathy , ah sure it’ll be all right and sure what can you do about it ?
      The National Media here are simply I’d say afraid to stand up as their commercial adverstisers could pull their campaigns and if they Make a Front Page Stand against this crony ism and bad management they can kiss good bye to any Governmental advertising .
      This is The state of the Nation, while this Titanic is going down , our upper class have all the life boats they need.
      All of us on the lower decks …..Well Who cares ! ….
      We Need a New Political Structure and New Parties , a system where politics is a social reward not a personal gravy train.
      Just Look at RTE and Fat Gerry Ryan and the politicians trying to loose weight , how did they put this weight on ? …
      We are such a small country , our Right and Left and Centre of both , all drink cheap drink and eat lovely food in the luxury of the Government buildings .when they are not out having 5 course meals with upper society.
      There is no Green shoots and how our recovery will be export left when we have been doing less manufacturing over the last decade to concentrate on glossy buildings and shoe boxes for the peasants.Apert from our Foreign Software and Drug Firms who are simply here because of the generous grants and tax breaks we give them , so on paper it looks like Ireland Inc is exporting . Unless our Farmers can break free and sell our cattle to the Arabs ..we are screwed.

  18. Bamboo

    @ G,

    Thanks for this G. Much appreciated.

  19. If John & Mary bought an “affordable” home from the quango for 196,000 Euros when the mugs in the street were paying 280,000 Euros, then the “clawback” on selling within 20 years is 30%.
    example Scenario : – If the Market Value of the Affordable Home Decreases:
    If John and Mary sell their home and the market value has decreased from €280,000 to €260,000 then the clawback would be based on the lower market value of €260,000 less what they paid €196,000, which is €64,000. So they have to pay back €64,000 to the local authority when they sell in addition to any money owing on their mortgage.
    (Facts from the web site)
    Now my question is if the market value of the 280,000 shoebox shoebox has fallen to a now realistic 160,000 Euros, but they paid 196,000 Euros they are in new market value negative equity of 36,000 Euros.
    My two questions for leaving cert honours maths students is:
    1 how much money do the sellers have to pay back their own bank.?
    2 How much money do they have to pay back the Affordable Home Quango?
    First question is easy (probably 36,000 Euros-although they probably borrowed 20,000 from their parents in the first place which would reduce their debt to the bank to a modest 16,000 Euros.
    Now can anybody answer the second question??

  20. The Eye

    Hi Folks, I lived in Russia during that era also and one of the points of interest for me between here and there is if there was a major F**k up in an industrial plant its the top brass that takes the fall here its always the little people.
    On another note you can look at all the stats. and forecasts you like but its a very simple equation no employment no recovery as a small business owner myself nothing is being done to give me any reason to want to employ any more people everything is stacked against me in fact if I wasnt a slave to an upward only commercial lease Id be gone to a country thats business friendly in a heartbeat.
    Lastly on a different note I would like someone to explain to me not only why if we are a country at the end of the fuel food chain are we giving away exploration rights but why are we not even talking about it?

    • ps200306

      I completely agree about the exploration rights. We are potentially giving away the family jewels. Now, I don’t want to be naive about it — oil and gas exploration needs technology we don’t have ourselves, and you have to pay companies to DO have it. But we should at least know what we are paying, and see the calculus that shows it’s “worth it”. Even Iraq beat voracious bidders for oil exploration down to less than $2/barrel in December, after they’d refused to even bid at more than that price last June.

  21. As for Tubridy,The good times will last forever for the most boring fart on the airways (I lost the pleasure of watching the late late show and now turn off my radio between 9 and 10 in the morning) as long as citizens keep getting screwed for a rip off TV licence .!
    He gets paid a sinful salary for talking tripe.
    The monies collected in TV licences should be distributed to struggling-but quality radio and TV stations-that dont repeat government propaganda ad nauseam`!

    • The Eye

      Hes shite but better the the man who doesnt know hes own boundaries Pat Kenny.

      • G

        @ The Eye -

        I have to take exception to your previous post in relation to something I wrote.

        I thought it profoundly ignorant and immensely disrespectful to refer to a good friend of mine in the manner in which you did.

        If you can’t be civil in your comments then I suggest you take yourself and your ‘gutter mind’ off somewhere else.

    • Dilly

      I have had no TV since just before Christmas, I moved to a cheaper rental property to save money, and just haven’t bothered hooking up the cable. I don’t miss the TV at all to be honest, and do just fine with my Internet and books. It is actually quite refreshing. I will have to get cable though, because when friends call around they start complaining when there is no TV to gawk at.

      • Deco

        That’s terrible. Our adveritising sponsors might stop paying good money to insult your intelligence.

        How can big business be expected to control a country when people turn the TV off ???

        I am thinking that in five years the internet will have completely replaced television except in the trailier trash sector of the market !!!

    • Eireannach

      Tubridy appeals to Irish bourgeois mediocrity.

      That is by far the largest market in Ireland – whether it’s wedding planning, wine advice, quality but affordable furniture, education for the old professions (dentistry, medicine, law, etc).

      That’s the centre of gravity in Ireland – property-owning bourgeois mediocrity.

      • Deco

        Tubridy regards himself as a celebrity expert in RTE. I don’t think it is within the remit of the public boradcasting bill to be paying celebrity experts stupid amounts of money.

        Plank can at least demonstrate an ability to ask serious questions and conduct an interview with people of intelligence. With Tubbers it is all about celebrity topics and nonsense.

        Of course this is not just an Irish phenomenon. It is a big feature of the media-consumerism-superficiality saturated English speaking societies. Tubridy is not in the past. Now, he is in the now – in the ruling system. Our advertising sponsors are delighted.

  22. I find it difficult to believe that a clerical officer-even in the first year of the scale is earning only 451 Euros weekly?
    Is this true?
    Can the poster of these hard luck stories give me evidence or a government web site where Clerical Officers wages are posted?
    I know that overtime has always been a normal element in their total income but I find the figure above difficult to comprehend?
    What about additional allowances etc etc.

  23. Thanks D great article again

    I like the “‘incantation’ approach to economics” metaphor a lot.

    Propaganda, secrecy, self delusion can’t completely cover up the wreaking of our economy by our present Government and its project through NAMA to wreak our future.

    Eventually reality comes knocking on the door!

    Bottomline we don’t have a government strong or bright enough to let the banks fail as this equates to letting FF power slip away.

    Bondholders must be brought into the equation to avoid bankrupt defaulting of our banks and subsequent loss to them as well.

    I suspect when NAMA evaluations and transfers can no longer be put off, the errors of judgement of NAMA(Not another Mess Again) will be laid bare and this scenario will come about anyway.

    ECB and IMF looking at NAMA returns may overrule the local zombie partnership of FF and IGP and force a cleanup.

    As NAMA slowly unravels, and our poor cleanup efforts are perceived as a threat to the stability of the Euro along with the poor efforts to restore fiscal stability in Greece and Spain.

    The false propaganda of recent times of how well Ireland has responded to its challenges through the recent budget will be laid bare as well!

    If you blunder around blindfolded in the dark, there’s bound to be other surprises as well!.

    • Deco


      House prices always go up.
      Enjoy the celebrity lifestyle.
      Doing the shopping in Manhattan this year.
      Bought an apartment in Budapest. (Did not get to see it yet….).
      Got drunk over the weekend twice. Came into work hungover. (But still think that we should be paid more in this country than people in Eastern Europe, etc..)

      people make all sorts of stupid statements about which consumer lifestyle group they belong. And it spreads like a contagion of stupidity.

      Interestingly enough it was Eddie Hobbs that informed me of this on a radio interview years ago. Where is he now ? (IBEC got rid of him)…

      • Ruairí

        Deco. You said “Doing the shopping in Manhattan this year.”

        Let’s talk about self-serving lobbyists: – let’s talk about IBEC and ISME.
        IBEC, SFA and ISME have pointedly attacked croo-border shopping as we all know. Unpatriotic (as Europeans??) and all that sort of jazz.
        Well, just for sh1ts and giggles (ref Austin Power), let’s ask ourselves why they have been so less vocal about all of the frequent flyers to Manhattan for their shopping trips?
        Could there be a positive correlation between their lack of ponitification and the generous support of the Dublin Airport Authority? Among the highest fees from the semi-state companies was €154,000 from the ESB. In second place was a €136,000 sub from the Dublin Airport Authority, closely followed by €123,000 from yet another state monopoly, An Post. Surely not??

        And then there’s the aul banks: -
        Big banks provide the second most identifiable source of IBEC funds. The Bank of Ireland, a long-time friend of IBEC, leads the subscribers with an annual fee of €200,000, while AIB and Ulster Bank both gave €194,000. Irish Life paid €133,000. The new ‘lean and clean’ National Irish Bank is giving €64,000, while the two building societies — EBS (€58,000) and Irish Nationwide (€14,000) — topped up the generous contribution from the financial sector.

        Recovery hype? Recovery TRIPE.

        @ darraghG, if you are a regular reader of this bolg, you will see a mountain of constructive suggestions. Some bluesky material, some well worked arguments. All seeking and offering solutions. Abre los ojos O-O and best of luck with the business too. Its a great time to carve out a niche. Genuinely, hit them hard.

      • Ruairí

        Deco You said “Like a contagion of stupidity” This is bang on. On the money. Straight to the heart of it. This reminds me of the law of “social validation” as discussed by Malcolm Gladwell (www.gladwell.com) in the Tipping Point and also by Seth Godin’s ‘Unleashing the Ideavirus’ http://www.ideavirus.com.

        Ref: – “The 12 Universal Laws of Persuasion” Kurt Mortensen. http://www.redorbit.com/news/science/76163/12_universal_laws_show_theorys_insight_into_reality/index.html
        The Law of Social Validation. “[W]e tend to change our perceptions, opinions and behaviors in ways that are consistent with group norms.” We want to be liked by others and feel connected; we’ll often change to fit with those others.”

        It is INCUMBENT on regulators and gatekeepers across all walks of society (appointed to the achievement of outcomes, not efforts) to ensure that

      • Ruairí

        Deco You said “Like a contagion of stupidity” This is bang on. On the money. Straight to the heart of it. Splendid :-D Because it again points to the core problem: – ‘long game’ regulation to guard against our natural social behaviours expressing themselves. This reminds me of the law of “social validation” as discussed by Malcolm Gladwell (www.gladwell.com) in the Tipping Point and also by Seth Godin’s ‘Unleashing the Ideavirus’ http://www.ideavirus.com.

        Ref: – “The 12 Universal Laws of Persuasion” Kurt Mortensen. http://www.redorbit.com/news/science/76163/12_universal_laws_show_theorys_insight_into_reality/index.html
        The Law of Social Validation. “[W]e tend to change our perceptions, opinions and behaviors in ways that are consistent with group norms.” We want to be liked by others and feel connected; we’ll often change to fit with those others.”

        It is INCUMBENT on regulators and gatekeepers across all walks of society (appointed to the achievement of outcomes, not efforts) to ensure that we do not get to race to the bottom (or top) as we see fit. It is here that the fault lies. It is here that the banking enquiry would start and finish. Not with punters, innocent, compromised or otherwise. We appoint people to achieve outcomes, this is STILL not happening. This is not complaint, this is laying the ground morally and intellectually for action. As we also have, as a society, appointed other checks and balances to guard the gatekeepers. We call them the President, the Gardaí, the Attorney General etc etc. I could go on. Truth is being compromised right now as we analyse yesterday’s lies.
        Yes, there may be shades of anarchy and shades of schadenfreude on this blog at times, but I for one seek an alternative playing field. I do not accept breaches of rules and bending of rules to suit the losers.

  24. Original-Ed

    This recovery hype is only Sych- Ops to get people spending so that tax revenues will start flowing again.

    “Psychological operations (psych-ops or psy-ops) refer to the planned use of psychological knowledge to influence groups, organizations or populations to act in certain ways. Although associated with guerilla warfare, rebellion and subversion; many marketing and political strategies include psych-ops techniques … often called “office politics”, “hostile takeovers”, “social engineering” or “effective marketing”.

    An organization can protect itself from psych-ops manipulation by recognizing the warning signs, defusing the tactics and convincing its members to commit to a common mission.”



    • ps200306

      A recession is psy-ops too. Recessions are all about loss of public confidence and and swapping the willingness to spend for saving for a rainy day. I wouldn’t be too dismissive about the need to restore public sentiment … although it has to be based on certain fundamentals too which are not exactly looking so great right now.

      • Original-Ed

        It would be a noble thing to help restore sentiment but for the fact that the resulting revenues will be used to prop up the bankrupt banks. It’s only a cunning move to transfer peoples savings from one side of the banks balance sheets to the other.

      • Ruairí

        Sentiment has its place in both trajectories of the economic cycle. But it would be foolhardy in the extreme for our government to be promoting consumption when what is clearly now needed is saving (paying down of debt) as per our current place in the cycle. The consumption required is merely to get one a*s off a musical chair and hopefully get yours or mine on it, coupled with the atmospheric music of boom times a comin’

  25. Original-Ed

    Sorry – should be Psych -Ops

  26. Malcolm McClure

    David and The Eye: I had some slight empathy with your earlier curiosity about The USSR way of life.
    As a student, concerned about the possibility of an imminent nuclear war with them, I hitched to Berlin and visited the Soviet occupied zone. Walking from West Berlin to East Berlin and observing the differences between those shop windows for opposing cultures, it became abundantly clear that the western way would prevail. That border crossing was shut down that weekend, as I left Berlin heading for Munich across East Germany, and I heard later that they had started building the Berlin wall.
    Propaganda works best on youth, as I still remember being influenced in those days by red Chinese news sheets in good English that were distributed to schools and by a republican propaganda sheet about gerrymandering in Derry.

  27. DOBrien

    Read Peter Suderland’s views in Saturday’s Irish Times just to see how big business views the world-wide recession and banking crash – it’s a case of everyone else is to blame except the poor banking elites. Thankfully President Obama has these guys in his sights – at least in the USA

  28. Tadhgd

    I emigrated in 2004. I didn’t really mean to but I knew a friend in Luxembourg who was enjoying it. All my family lived in Cork and I was had been in Dublin 2 years and a bit disillusioned so I headed over more or less on a whim but with a job secured assuming I would be back soon. From afar I watched the property mania at home and often wondered how people were affording these houses etc but didn’t really dwell on it as it didn’t affect me directly. It was always my intention to move back but it was never pressing. Now however I am about to get married and the times well I guess they are a changing. Myself and my partner would both like to move back. Lux has been great to us but home is home. We both have secure financial services jobs here, health service is good and standard of living is honestly superb. However it doesn’t feel like home here, we miss our family on occasion and other intangibles. I guess the point is that it isn’t as straightforward as just people leaving Ireland behind and then all will be plain sailing. Ireland even with all its faults should still be a place where we shouldn’t be embarrassed about wanting to live which is what I feel sometimes when I read a lot of negativity towards it on here. I don’t think life is going to be a bed of roses when we do decide to relocate but I do hope it will be the right decision in the long term.

    • Deco

      Taghgd – if you look back up the page you will see how somebody bought a house in a midsize town in Cork for 50K. That is a good way to restart life back in Ireland.

      Builders selling houses are desperate. If you have the money you can call your price and when you walk away you will get a plea to take the house at the price you want. Forget what you hear on the media and from “the estate agent you would recommend to an enemny”. Anecdotal evidence points to the contrary.

      And in 12 months time it might be even easier. Well done. You did the smart thing so far !!!

  29. Ruairí

    Firstly, an overdue left hook to the sunshine economists David. Well done. Not an easy thing to say in one’s own field either.

    The major problem for Ireland is that the ECB will accept only AAA assets from March, but we don’t have any AAA assets.

    You say: – “Our government debt, the least risky (apparently) asset in Ireland is not even AAA any more. The ABS packages of our mortgages are clearly nowhere near AAA and will be further downgraded as mortgage defaults rise.”

    This article spells out the tempestuous road ahead http://www.moneyandmarkets.com/the-next-contagion-2-37578

  30. ThomasFergus

    Thanks for your article and your reply. Calling it as it is really boosts my morale, sapped as it is by non-stop lies in the press. The biggest disappointments for me are The Irish Times and RTE, the former drifting ever rightwards and with its own vested property interest following the myhome.ie debacle; the latter because it has become a shameless mouthpiece of the Government.

    A case in point was last night’s news. The main headline was that the Government was “considering” setting up a “panel of experts” to look into helping out homeowners (that’s those under 40, for those over 50 have no mortgages), and would come up with something in 6 months, following the “decision of PTSB to raise interest rates by 0.5% this week”. The station interviewed that Green patsy Eamon Ryan (see Deco’s link to the Times above for how shallow and gutless the greens are) and that talking head with Ulster Bank , “economist” (sic) Pat McCardle.

    Of course the real story is that thousands of young home owners are about to be tapped up by the banks here, fresh as they are from having gutted the taxpayer to pay off the debts on their own crazy gambles and keep the disgraceful show on the road with NAMA. RTE could go out and survey the devastation wreaked across suburban Ireland by this vain attempt to keeep bank shareholders (those pensioners who I note are backing FF in droves again according to opinion polls) and bondholders (foreign money lending bloodsuckers) afloat.

    Knowing that this is the case, it is most reassuring that you have faith that this charade cannot continue. What I’d like to know is, what movement can we join to stop the continuation of this blood letting?


    • G

      Irish Times and Irish Examiner both gave Bertie the front page photo op, both seem determined to assist his ‘long march’ to the Aras – obsequious.

  31. Contagion a’ La Carte :

    In the latter part of March and early April when the sharp horns of the ram lift up it’s head to the sky on the sparse earth around Dun Aengus it’s ancestor will likewise do the same around the Pantheon .In those moments the sparks will rise and the spirit of the intellect will rouse to a new anger while holding firm on the edge of a great height its stern poise to confront with force .Its feet griped to the limestone holding itself from falling down over the hight and might of the glory in a world now disapearing to be no more.The battle of all battles , the clash of horns entangled together against the enemy in a tangle of knots that leads to a downward spiral into the vortex of Fianna Fallllll.

  32. The Eye

    The derivatives problem that nobody is talking about that the Banks have will make Nama funds look like a 4 year olds piggy bank.

  33. Original-Ed

    Will the EU move on us after Greece? It now looks like they’re doing an IMF on them.


  34. Philip

    I suspect if you wandered into yer average ward for the severly depressed, you’ll be looking at a lot of bankers. Only the most sublimely deluded can pretend to believe they will get away with what is coming down the line. You have to hand it ot RTE et al…they sure know how to keep people from the pointy bits of the economic news.

    I know that all the large unions here have their own economists and who are fully aware of where we stand. And I expect there are similar in the upper echelons in the PS with a similar view. There is a lot of wait and see nonsense going on right now. No one really knows how to climb down from this monumental cockup. We are worse off that Greece as a proportion of our GNP and worse off than Iceland in terms of leadership.

    Anyone noticed just how low key all the opposition lads have become? And where is Mr George Lee? Not a squeak out of him.

    As I see it, David has made an excellent diagnosis of our situation. The cure requires changes at the molecular/ genetic level of this nation of ours. The delivery mechanism for the cure is either via a virus or a full reincarnation. Now given the likely scepticism on being born again, it looks like a viral approach to change will be our only option, assuming the ECB does not decide to irradiate the lunacy with swinging cuts.

    My advice is…forget them all…ignore the radio/ telly etc and get back to the community where it all started – let the virus of change start there.

    • Eireannach

      The community?? What community would that be? ‘The Rebels’ of Munster dream of destroying ‘The Pale’ Leinster in rugby. North side Dublin and South side Dublin are different worlds. And lets not forget the ‘community’ vibes of Ulster.

  35. The Pimpernell

    Reading these posts regularly there seems to be a great deal of discord in Ireland. I have recently moved back from having lived in the UK for 20 years — I am completely disillusioned with Ireland and the problem seems to be with politics here.
    Our politics hail from the civil war where we don’t seem to care who rules the country just once it is not the UK!
    Speaking to canvassers that usually come knocking on doors at election time I always ask “what does your party stand for”, ”what set of political principals do you have as a guide”, “are you left/right leaning in your political perspective”?
    Not one of these canvassers has been able to answer any of these simple questions!!!
    Something has to change, we need some direction and someone to lead. Our current collection of politicians are careerists and few have a clue about the fundamentals of business and they certainly seem to have a poor grasp of macro economics.
    Ireland can be a great nation, with an important place in the world, we simply need a clean slate and a new start.
    David certainly has some good ideas and his opinion holds a mirror up to our leaders but until we get rid of the apathy that exists in the country we will never be a great nation.
    Your thoughts?

    • Bamboo

      The Pimpernell

      I guess we’re all waiting for the day that any government to put their hands up. It needs to get real real bad to the level that the majority of the population is affected. I think for the moment the majority are still ok, some are sitting high and dry, some enjoying the fact that they didn’t fall for the rat race, etc.

      By that I mean that this majority are not homeless (yet), still can buy nice food, clothes, go on their holidays, afford their cars, flat screens TVs, American fridges, etc. Their family and circle of friends are not affected (yet). It all seems to be like a scene from a doom type movie and they are watching from the side lines with their popcorns.

      As long as a government can produce some “good news” on frequent basis things will not change.
      The latest good news is: Minister for Communications Eamon Ryan has announced that the Government is committed to helping homeowners struggling with mortgage payments. However, the Department of Finance has insisted that the Cabinet has not considered proposals on the matter to date ..

      Mr Ryan said yesterday that the Government is considering introducing a range of measures before the summer to assist homeowners struggling to pay their mortgages.

      This type of practices eases the anger and panic among the public. That’s why FF is getting better ratings. The reality is that people in severe financial problems need a solution NOW and can’t afford to wait any longer. This is only an excuse to buy time over and over again.

  36. Alan42

    This is just a joke at this stage . The banks have told the Dail that even with NAMA they will still not lend . Now the valuations are even worse than expected with further discounts and recapitisation and more montains of personal defaults coming on stream .

    Can somebody please answer me as to why we just don’t let the banks fail and start again . There must be a bank somewhere in the world that wants the business of 5 million people .

    • Ruairí

      Hi Alan42, I recall an English businessman who was determined to set up his own bank.

      Also worth a read http://www.smartmoney.com/investing/economy/How-to-Start-Your-Own-Bank/

      “Hate your bank?” Now that’s one reserved way of putting it :-D

      Incidentally, Eireannach, this article on SmartMoney.com is worth a look I think. As this is possibly the sort of community effort / thinking that Philip is getting at. A step back (worldwide) from the “safe” arms of corporates who claim all will be well. Just trust ‘em.

      Branson also was reported as about to set up an online bank to catch the wave on UK sentiment http://www.huffingtonpost.com/2009/05/17/richard-branson-plans-lau_n_204455.html Perhaps we have a Beowulf here that could walk the talk and pull the rug from under our guys, government included. I wouldn’t be surprised if its been looked at hard already by the Barbados crew.

  37. Alan42

    I really think that FF / Greens are just waiting for something magical to happen .

  38. wills


    Calling it for what it is. A scam market.

    Russia in the end became a scam market, communism merely a wrd to hide the scam behind.

    Ireland is a scam market as is USA UK europe minus germany which still heralds savings and real productivity.

    Scammers and the scammed.

    Insiders can be scammed too depending on closeness of insider circle to the magic money making machine.

    Ireland a democracy is a scam.

    Ireland is a jailor economic system / slave system.

    The market system in Ireland, USa, Uk, Europe is one mega central banking system scamarama.

    if you work your labour in a real way for a fair return you are rejected and put to pilfering on the scam farm, only the clever and strong with fighting spirit can resist the scam tyranny, but, most who wanna keep out of the consumer debt scamarama are terrorised into it and preyed upon to sell themselevs into debt bondage and the POnzi property bubble scam delivered debt bondaged en masse, but not for the elites, oh no, the elites have no debts.

    Not really, the developers are not really bankrupt the businesses are insolvent but not them and the lower downer insiders, they are in debt bondage and now its all about NAMA for d’home, domestic home NAMA.

    The elites must hold the lower down insiders keep them sweet, avoid any slippage in numbers over to the outsiders over to the real workers.

    Its a war between savers and quick buck scammers.

  39. wills

    The Scammers all know who they are from top down and the savers / real workers know who they are and the two do not mix.

    Which one are you poster.

    A scam merchant or a real worker.

  40. Colin_in_exile

    Great article David. However I think its more lies than hype.

    And, after watching RTE’s Nationwide this evening, I’ve lost all hope for Ireland. Tonight’s programme featured a muslim headscarfed woman from Sudan, employed by Iarnroid Eireann as a civil engineer, and we have thousands of our own civil engineers on the dole. Political correctness is driving this country over a cliff.

    What “cock and bull” story did she tell when entering the country? We’ll never know because to cast some light on an issue like this is akin to being one of Hitler’s henchmen.

    • Malcolm McClure

      Sorry Colin_in_exile, I can’t let you get away with those comments about Huda Yusif, whose contribution to Nationwide I have just watched. What an attractive, lively and intelligent addition to Ireland she has made since she arrived from Sudan. Her soft Dub lilt shows that she grew up here and probably was educated as an engineer here. When you were in exile I hope you were as appreciative of the culture you worked in as she obviously is as a permanent way supervisor on Iarnroid Eireann.

      • Colin_in_exile

        Sorry Malcolm, I did not pick up any Dublin lilt, more of a Sahara twang.

        I was exiled in the UK, a fellow EU state which allows freedom of movement for workers. Last time I checked, Sudan was not in the EU. Most native Brits I worked with despise the Muslims who have invaded their land, and since I was a guest in their nation, I felt I had no right to interfere in their own “islamification” issues there.

        What was so intelligent in what she said?

        Its a pity the whole culture appreciation you espouse is not recipricated in their lands. This week, I heard guest workers from the Philippines working in Saudi are being coerced into converting to Islam to keep their jobs. Maybe we should ask your friend Huda to convert to the main religion of the land to keep her job?

        • Malcolm McClure

          With respect, Colin_in_exile, it is dangerous to aggravate an old wound in the Irish body politic that was beginning to heal. Religious prejudice is a staple in stirring class hatred, used by Irish politicians for generations untold, that invariably leads to disaster.
          Whether you like it or not we live in a multicultural world, and when you voluntarily select another country for your exile, you implicitly accept that things must be done their way, abiding by their laws. If a minority in that country choose to break anti-prejudice laws, that is no excuse to emulate them. I spent several years in muslim countries, learnt sufficient of their language, and mostly enjoyed the experience, finding the Wahabis honorable and co-operative in a business environment and other Sunnis friendly and accommodating to western values, whilst respecting their own culture’s essential requirements. In my opinion, Palestine is the key to most of the problems the west has with muslims. Fix that and the world can live in reasonable harmony, respecting each others cultures for what they are worth.
          Perhaps Huda’s family arrived seeking political asylum? Who care’s? She has established herself as a real asset in her own right.

          • wills

            I can hear the disney theme tune playing in the background………….

          • Colin_in_exile


            I’ll start from the bottom up.

            How do you know she is a real asset? Do you know her, and if so, please tell us how she is an asset?

            I care about how she arrived here because she and her family do not belong here. Why not travel to neighbouring countries like Egypt / Saudi Arabia / Eritrea / Libya if political asylum was required?

            The excuse of Palestine is totally bogus, and you should know that. There are about 20 fault lines in this world where muslims are engaging in provocation and expansion, off the top of my head is Mindinao (Phils), Southern Thailand, Central Nigeria, South Ossetia, Kosovo, Armenia and Cyprus. If Palestine was handed over to Arabs and all Israelis were expelled, you will still have muslims harbouring thoughts of being a victim.

            You left that muslim country you lived in and returned home, why did you do this if you loved their way of living and all that jazz?

            Majority of native Brits I met, about 98% to be honest, do not like this muslim immigration. They were never consulted by British Government if they wanted this immigration or not and urged Irish people not to make the same mistake in Ireland as the UK had done.

            Multiculturalism is bogus. No one asked for this, it has been foisted upon people. Look at Malaysia, supposedly a modern muslim majority multicultural country, and Christians there are not allowed to use the word “Allah” for God, even though Christian Arabs used it many many years before Mohammed starting having his so called “visions”, and you’ll find numerous churches have been burned down.

            Irish churches are in rude health compared to before. Excellent relations between Catholic and Protestant clergy and congregation, and long may it continue.

            By the way, how do you know Huda is beautiful? She was “hiding” her “beauty” by wearing headscarf. You see, that’s the point of wearing it, so you’re not tempted to rape her because she’s hiding her beauty.

            Tadgh, in Afghanistan in the 80s, Afghan children ran up to Russian officers with warm welcomes and boxes of sweets, and when opened a ….tick tick tick….boom!

          • Guys get over it she is no different than the token wheel chair bound person CIE would have taken on , the rest of the staff are all cousins , brothers ,sisters and friends of their families , but doesn’t it look good and shows how multi cultured even our semi state bodies now are !

        • wills

          islam the religon of slicing off female genitia.

          • Malcolm McClure

            Fortunately, Wills, you stoop farther than I care to reach.

          • wills

            I ask you is it a fact female genitalia is part of islam ritual,,,,,?

          • paulmcd

            Wills, Check this: “The traditional cultural practices of FGC predate Christianity and Islam. A Greek papyrus from 163 B.C. mentions girls in Egypt undergoing circumcision and it is widely accepted to have originated in Egypt and the Nile valley at the time of the Pharaohs.”
            So, if you need to know anything more go and ask your mummy.

          • Tadhgd

            I work with plenty Muslims and also play sport with a few more. In my experience they are friendly and generous. Always look forward to the end of Ramadan when they bring some traditional sweets and pastries to work. Am glad to have had my eyes opened a bit..

          • wills

            My mummy is no longer with us, but i get your drift, you are offended by my disgust at islam and other religious rituals of a type you bring more attention to.

          • Sile na Gig – she predates the circumcission in the Nile you refer to .

      • wills

        What culture are you talking about. The Gombeen culture is it…. The nod and wink culture…. The peado culture……… The smash the child into submision culture for thinking out of the box……. The brokerage politics culture…….. The begob come in to me parlour culture……. no no the pumping sh1t and p1ss into the harbours of our country for decades culture……. no not that the bejasus look at yer man who the hell does he think he is culture get the b@astard……..

        • wills

          no…..not that either…. the, cuture of lying….., no not that,….. the culture of violence and blowing women and children into smithereens for three decades,….. no not that culture ,.. the culture of shamrocks and leprechauns and rainbows ,,…. no not that either,.. the culture of writng and poetry like yeats who detested the irish greedyness and joyce who detested the irish incestuousness and beckett who detested the sodden culture of hypocrisy and sham,…….. no none of those,……… oh i’ve got it,,,,,,, the culture of cronyism…………. he who punches hardest swag bags the mostest,……..

        • wills

          moreso observations of facts, unfortunately, each one a measure of our culture and a disaster.

  41. paddyjones

    David wrote an article recently about the party being over and we are now tidying up….well I think the party is still going and will only end when the ECB and others stop lending to us.
    Repaying our national debt of 120 billion is going to be impossible but to make matters even worse we have to make budget cuts in 2010,2011,2012,2013 and 2014. This is to get us back to borrowing less than 3% of GDP. By 2014 our national debt could be 175 billion at the very best. All the while our GDP will probably fall for the next year or two. This is an impossible situation to be in , I feel we are not a good credit risk for any lender and the funds will simply dry up.
    The goverment can’t raise taxes any more because of diminishing returns so the only other alternative is to cut spending again and again until 2014. Public sector workers are not going to like it but their salaries will be cut again next budget and more after that as well.

    • “The goverment can’t raise taxes any more because of diminishing returns so the only other alternative is to cut spending again and again until 2014. Public sector workers are not going to like it but their salaries will be cut again next budget and more after that as well.”
      A grim scenario,but the quangos and semi states like the ESB fat cats have not been touched as of yet.
      Expect long destructive strikes,and the remaining American multi nationals exiting the country before that hapens.
      next will be no further finance from abroad and no wages for any of the public sector/semistates/quangoistas/FAS /HSE crew etc etc.
      The sooner it happens the better for everybody.
      It will be a very painful rebirth for the nation of Ireland.

      • wills

        Tirnanog 33 -
        D’s second stage for 2010 explained. Nice one.

      • Philip

        The whole institutional stucture of this country will be blown to bits and any other remaining semi-states or other vaguely state aided entity will be impacted as well. This is now a given. All I want to know is what next?

        What is viable in the post financial apocalyptic Ireland?

        I believe we are headed for a 100% externally governed state. This will be the price of negotiations with our creditors by mid to late 2010. The “Lads” will retain a few cushy numbers as MEPs and some will be locally jostling for local european governship positions. One for Dublin and one each for the provinces.

        Is this really a bad thing? Maybe David had missed a key essential aspect of the Irish Diaspora… Ireland was never home to the Irish – even those who live on it. Maybe we need to embrace our emmigrative tendencies and save the world from itself :) Maybe we are the quintessential virtual nation.

        Alternatively, stay at home and get to know your local community and have a simple life. Internet window shopping is all you’ll be able to afford, so close that laptop and sit down and tell us a story!

  42. Tim

    Folks, our natural resources must be addressed in any recovery-plan. Check out our bi-diversity mapping, here:


    I also gather, from the newsletters they send, that http://www.spiritofireland.org is gathering momentum (can’t happen soon enough, if you ask me!).

    • Philip

      Spirit of Ireland will be a Siemens/ EDF/ you name it financed operation to make Europe carbon free – and only if it makes sense…which is currently very doubtful.

      Ireland bio-diversity is a scientifc curiousity no less or more important that elsewhere in Europe.

      We (Irish) do not control ireland courtesy of disasterous policies. It is a leveraged vehicle for enriching a few without the people’s say so. Important you let that sink in, accept it and ask…now what?

  43. “One of the key reasons that it may make sense for some severely underwater homeowners to default is because they can’t rationally hope to have equity in their home for many years to come. If circumstances dictate that these homeowners need to move, or no longer have the means to pay for their mortgage a few years down the road, they will likely still be in a position where they will have to foreclose or short-sell, rather than sell their house on the open market through the normal process.

    Even if these homeowners remain in a position to pay their mortgage for years to come, the lack of equity in their home will keep them out of the homebuyer pool, even if, under normal circumstances, they’d like to move up to a larger home. These factors could help keep the housing market stumbling along for some years.

    Additionally, for the housing market to truly find itself on a sustainable path, we’d need to see home prices fall back into line with historical norms.”
    (This is an American view/ quote ,of theAmerican property bubble,from an American analyst.!)
    We are a Hell of a lot closer to Boston than Berlin,at present..

  44. David_Back_From_US

    David – I’m curious about the scenario where Ireland does not leave the Euro – when would you predict the govt could balance its books?

    I think there is about a 22 (?) billion deficit currently:
    * Stamp duty is out as an option
    * Exports are out, because companies aren’t competitive. Banks still restrict credit, pay demands are high (due to Celtic Tiger mortgages), energy costs are high, Sterling remains weak, many rents remain on riduculous upward only clauses.
    * Raising taxes won’t generate more intake, because country hasn’t anything more to give. Tax intake in 09 was down, despite the taxes being higher in 09 rather than 08.
    * Unions will fight tooth and nail over more pay cuts, resist efficiency measures, so services spending won’t go down much
    * Welfare demands keep increasing as unemployment continues to rise / wage cuts continue
    * NAMA won’t make a profit for a decade or two while there is such huge oversupply of ghost housing estates and retail parks. And we’re probably paying a few billion on interest payments for it each year?
    * Money spent on borrowing goes up by billions as the govt is forced to look beyond the ECB for lenders, who charge less favourable interest rates. This particularly applies if Greece goes belly up.
    * Banks require recapitalisation as significant numbers of loans go sour. And as ECB hikes rates, more customers will miss payments, meaning more bank losses.

    Have got depressed writing this out. But surely the sheer weight of repaying interest on the 10s of billions we borrowed in 2009/2010, and paying more billions to rescue banks, will mean that even with a strong pick up in the rest of the world (and thus more revenue from our exports), our country will be debt-laden/highly taxed/depressed for a decade?


    • Philip

      The country as a financially viable entity is over. Our resources are sold off, we have no capital or cannot raise capital and we really cannot pay for public services. Our negotiating position is 100% blown.

      Just leave or settle for having a simple life or hope the Germans take over. I really do not see any more alternatives.

        • paddyjones

          Emmigration is now one of the few remaining options to thousands of Irish people, sure you can stay but be prepared for a low standard of living. The question is where can you go ….that depends on what languages you speak. If that is only english then options are Australia, Canada or Britain. The best option would be to learn German or French they are closer to home and with Ryanair it is a good deal cheaper. These countries have cheap price control rents and providing you are fluent and well educated then prospects are good.

      • Colin_in_exile


        I can’t see any silver lining on this huge dark cloud hanging over us.

        Shure have a pint and everything will be grand? The trouble is I could never drink and feel sorry for myself at the same time.

    • Alf

      This is gloomy stuff.

      But I believe there is a conceivable way out. Ireland still has the banks assets. If the creditors were dealt with the banks are worth something. David suggests that after this give them free (a prime position in the Irish market) to a bank with capital to continue in their shoes. This could be cheaper than the State doing it. But the State could risk and ultimately get any reward.

      But how would all this really help? Firstly, there would be no incentive to prop up a failed property market. This is happening because the falling house prices (impaired bank assets) are forcing cash injections from the State. Secondly the prices would fall, perhaps crash, and it would allow a true bottom to form where supply meets demand. Those with available money will appear when houses get cheap enough. This in turn will attract speculators and is the road to recovery. Much lower house prices, means lower rent and would mean new jobs would be more viable. Mortgages based on bubble prices could be repriced and reorganized as part of the deal with the creditors.

      This is happening because the State refuses to negotiate on the banks. Who knows why but if it tried this route interested parties would appear. The creditors will need to accept reality but it will be better to have less of a good thing than zero from a bad thing. But does Ireland have to wait until the its back is against the wall and it gets the worst possible deal?

  45. Tull McAdoo

    “The Brother” is back eating again at the table of the digs, a fact I’m sure ye are all glad to hear! We hav’nt heard much from him since his outburst above in the Dail bar, during the, what I’ll call “the early revelations” of the Banking shenanigans. Well for those of ye new to this forum, ”the brother” took it upon himself to sort the whole mess out, just after the guarantee by Linehan and so retired to the bathroom of the digs with four large books on Economics and one smaller book on the life and times of Lon Chaney, that famous old cowboy from back in FF’s early days when everything was in black and white ala Dev/ McQuaid and Pat mc Ardle of the Ulster Bank I think or was that Donie Cassiddy the new Landlord to the BOI in Mullingar….anywhooo back to “the brother”
    Well now Dooley the other lodger nearly choked on one of his Tullamore sausages when “the brother” announced that it was the contraction of GNP as opposed to GDP that was posing the biggest obstacle to recovery and could be clearly seen by rising unemployment, falling real transactions and real exports as opposed to the charade of transfer pricing, unsustainable property taxes and the other plethora of figures making up this GDP coming from a totally discredited Dept. of Finance and the Central Bank. ECOMOMIES “the brother” explained do not run on Politically motivated and Spin Doctor generated Financial reports.!!!!
    I pulled my chair back a bit from the table because I knew by the look of “the brother” somebody was going to get both barrels and it was’nt going to be me.
    “When Ireland adopted that Euro it was on the basis that our Economy was stable, and above board, but that has turned out to be another pack of lies from Bankers and Regulators who were trying to hide the sins of the past” said “the brother” and I’ll be taking the tram into the city tomorrow to gather up all the FOI requests it takes to bury these skeletons for once and for all.
    I’m telling ye now “the brother “ wont let this rest once his mind is made up, just like the time he gave up eating eggs much to the Landlady’s dismay, but in the heels were dug and all the arm folding across the chest by her nibs did’nt change that fact. No sir “the brother” still wont look at an egg. Goodnight to ye now and safe home. Tull Mc Adoo.

  46. G

    Michael Hudson -Obama’s Junk Economics

    “Obama claimed that unemployment would be much higher if they hadn’t been bailed out. So the giveaway of public funds was all for the workers. The $13 trillion that has created a new power elite was just an incidental byproduct. Unpleasant, perhaps, as American democracy slips into oligarchy. But the least bad option. People might not like it, but Main Street simply cannot prosper without creating hundreds of Wall Street billionaires……………

    So the rest of us must wait for wealth to trickle down. The cover story is that, like it or not, this is how the world works. At least this is the argument of the lobbyists who are drafting and censoring laws and signing off on just who is acceptable to run the Federal Reserve, Treasury and other public-subsidy agencies. The working assumption is that the economy cannot recover without enriching Wall Street.

    In fact what the economy needs is to recover from the Bush-Obama supposed cure, i.e., from the mushrooming debt overhead. It needs to recover from the enrichment of Wall Street. It doesn’t need more credit, but a write-down for the unpayably high debts that the banks have imposed on American families, businesses, states and localities, real estate, and the federal government itself. ”


  47. Tim

    Folks, Peter Connell on how AIB is making the case for increased public spending:


    …. and Ireland in firing line as Obama targets overseas tax breaks:


    • Deco

      That second link is a serious concern. America has a jobs crisis. And the American worker and American graduate will demand repatriation of the workforce.

      Ireland needs to move fast concerning this. Have the ‘drinks cabinet’ got any strategies for dealing with this apart from a few run of the mill statements concerning the “smart economy” ??

  48. Philip

    Folks, it’s back to basics or back to our communities. I have been waffling a bit about the latter of late and it’s about time I become more specific (yawn!!)

    We need to rebuild a community based on a working class ethos. These have been the only real communities which spawned any real positive change over the last century. The curse of community evolution is that as it evolves, we get a middle class of cliques and an upper class of clubs.

    So Ireland is just a collection of cliques and clubs who still find it so hard to find a plumber or a painter. Professional / burgeois classes with their clubs and cliques seek to differentiate rather than integrate to form communities.

    We should move our thinking of the working class man/woman of today as likely to be well educated, probably with a masters degree or two and useful with a hammer, spanner or paint brush. Remeber all them Polish people we had wandering around the place of late?

    When I say, it’s a case of being back to our communities, I mean as fellow working class – well educated and with no airs of BS professional wannabes. Clear thinking and a full working knowledge of your neighbours within a half mile of you.

    This is our only way out. The cliques and clubs are dividers and full of contrived hatred for those who do not wear the right tie.

  49. Riggs


    While some of the members’ contributions are excellent and written with intelligence, I am concerned that your blog has now become the residence of anarchists without remedies. To make matters worse I now read of nazi idealism and racist slur.

    What is going on?

    Yes Ireland Inc is in deep, but rants from what appears to be a handful of “regulars” will not help us out of the mess.

    I’m all for free speech but your blog is rapidly becoming a fertile ground for fundamentalist views.

    Don’t believe that you intended it to evolve this way?


    • Dilly

      The thing that scares me more, is that very few people are ranting. Everyone has their heads in the sand, hoping for some magical recovery.

    • Bamboo


      Completely 1oo% agree with you. If this trend continues count me out of this blog.


    • G

      Yes, there have been, just recently, totally inappropriate views expressed on this website, one way of driving people away I suspect.

      My stomach turned on a few comments especially personal insults, such comments should be removed by the moderator immediately in my view with strict guidelines on the posting of personal, racial or religious abuse.

      Those who post such comments should not be allowed to post here in the future.

      As the situation intensifies, it is getting slightly rough, so maybe time for ground rules as I am inclined not to post when the subject or in receipt of vile comments.

    • StephenKenny

      I agree with this sort of bad manners is simply wrong. There is not more to be said on that front, and I speak as someone on the other side of the fence.
      But I would also caution us all against failing to take an equivalent stance against those, on this blog and elsewhere, who are supporting, or proposing, policies that will result in severe hardship for other minority groups, the old, for example.
      Where have we got to when we are in a situation where were a group to make a racist, or a sexist, or a homophobic, comment, there would be national outrage; the newspapers, television, and radio, would be bursting blood vessels; but when a group do the equivalent of hijack the arms of the state, and make off like bandits with the public’s money, we shake our heads and discuss misleading legal nicities?

      My old dad used to tell a story of a friend of his who worked for one of the big manufacturers of tinned dog food. He used to say that his friend could see when the economy was in real trouble, because dog ownership fell, and their sales rose. Before you say anything, I suggest you think about picking up a tin of Choice Chunks from the local supermarket, opening it, and making what you can of it. For yourself.

      Given that we’ve had this discussion here before, I already know at least one criticism of this line of reasoning – that I shouldn’t link the one with the other – I’ll answer it in advance: Read it again, I’m not. I merely question the moral state of the nation when the one causes outrage, while the other causes little more that hushed shakes of the head over a cup of tea.

      In other words, if you are outraged over the one, and not the other, then I would suggest some serious soul searching is called for.

  50. Incident

    yeah time for a spring clean alright!!!

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