February 21, 2010

Let’s get logical on the euro

Posted in Euro · 214 comments ·
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Business in Ireland is on its knees. Ask anyone involved in the retail trade, the advertising world or, more tellingly, anyone looking for a job, and they will tell you the same thing.

Nothing is happening, absolutely nada. So what are we going to do about it?

The government was slapping itself on the back last week as the National Treasury Management Agency (NTMA) managed to borrow yet more money. The government’s spin aimed to show that, in some way, Ireland has pulled away from the other delinquents in the eurozone. What it didn’t tell you is that we are paying more for money than either Spain or Portugal.

The facts are as follows: not only has our government failed to distance Ireland from the other vulnerable members of the Euro club, but we are still regarded as a greater risk than Spain or Portugal .This is despite the fact that the financial markets have been focusing attention on them, not us, in the past few weeks.

There are a number of reasons for the gap between the government’s spin and the facts, but the one I would like to focus on is the most obvious. Our Department of Finance – which is at least partially responsible for this mess – seems to believe that economic success is measured by whether or not we can borrow on international markets. But when you have a single currency and an EU backstop as good as in place, bond issuance tells us very little about the economy.

The truth is that Ireland doesn’t have a recovery strategy aimed at reigniting economic growth and employment. We have a debt management strategy aimed at pleasing the bond market. The way we can titillate the bond market is by promising that the next generation will pay for the mistakes of the last generation, and that the relatively poor (the citizens) will pay for the very rich (the bank creditors).Why wouldn’t the bond market like to hear that?

It’s win-win for them and lose-lose for us.

Is it any wonder investment banks are patting us on the back? They have managed – together with the mandarins in Merrion Street and Brussels – to turn Ireland into a large debt-servicing vehicle for past debts whereby we are capitalists in the boom, when a few get very rich, and communists in the bust, when we are all responsible. By limply playing this game, rather than thinking for ourselves, we preserve the Euro status quo and no one – least of all the political elite – gets embarrassed.

But what do we, the people, want? Do we want an economy that is capable of growing to reduce unemployment? Or do we want an economy which simply exists to service debts? The choice is pretty simple. If we want the former, we have to act radically to save the day. If we are satisfied with the latter, then a prolonged period of unemployment and emigration lies ahead.

Let me sketch out to you what is likely to happen in the years ahead, if we stay with the present course. Before we do that, let us remind ourselves where we are and how pathetic the government’s misinformation actually is.

The Irish economy has contracted in nine out of the last ten quarters. Unemployment among young men is over 30 per cent and rising rapidly. Emigration is, not surprisingly, increasing. Prices are falling by 4 per cent per year, which means that the real interest rate – the interest rate adjusted for inflation – is close to 10 per cent for most loans.

The banks are broken and are in a competition to get deposits in the door – rather than loans out the door. We are facing a monumental contraction of credit, as banks try to pay back money they borrowed from shortsighted, and ultimately reckless, creditors in the boom. That gap between loans and deposits is €120 billion, close to 100 per cent of GDP.

On the national balance sheet, the asset against these loans is property, which is so worthless as to have ‘‘no market’’ for it. We have over 300,000 ordinary people in negative equity. And the rest of us are underwriting Nama, and God knows how much it will cost.

Despite this vista, Ireland is lamentably uncompetitive. If you take the reality of people shopping in Newry – which is the most common-sense test for Ireland’s lack of competitiveness – we are still way too expensive.

Against this background, it isn’t surprising that the government’s fiscal deficit has ballooned. In fact, it can’t do otherwise. And with prices falling, people are postponing spending and therefore credit is contracting.

This means retail sales and employment are likely to keep falling, which in turn implies that tax revenue will be weaker than expected and government spending higher than expected, so the Department of Finance’s budget estimates will not be met. This spiral is amplified by the fall in the working population as immigrants leave and young Irish people up sticks, pushing down house prices further.

These characteristics are the vital ingredients of what used to be termed by economists in the 1980s ‘‘failed budget stablisations’’. Economic history is full of examples where a government tries and tries again to stick to a budget target, largely at first, by cutting spending. When that fails, it raises taxes and ultimately, when that fails, because it stalls the economy, the government gives up. It comes under public pressure, while the financial markets stop giving it the benefit of the doubt.

Caught in the vice of a public that has got used to a certain living standard which is now slipping away and a bond market which realises that the rhetoric soars way above the reality, the government, or a new one, goes the other way and reverses policy.

This precipitates capital flight, irrespective of the currency regime, because capital is fleeing the twin risks of taxation and default. The entire edifice crumbles in chaos and we start again.

Membership of the euro almost guarantees this outcome, because the state can neither inflate away debts nor devalue to energise the exporting sector and to generate the growth that is necessary to pay the old debts.

Ultimately, in a democracy, something has to give. What gives is the status quo, and normally with it, the exchange rate commitment. This might seem a bit over the top to you, but the story of all crises is that what seems extreme now becomes logical, what is radical becomes consensus and what is termed impossible today becomes probable as events change.

The best historic example of this was the collapse of the gold standard in the 1930s. In the 1920s, the only voice arguing against the gold standard was JM Keynes, and he was regarded as eccentric. By the mid-1930s – in the face of the depression – all countries had abandoned the gold standard as an anachronistic relic and had begun to inflate away old debts to get the economy moving.

The gradual questioning of economic orthodoxies takes time. It might take years of needless underperformance where unemployment remains incredibly high, real interest rates do too and defaults are the norm, not the exception. Ultimately, the old way – in our case, adherence to the euro – is thrown out. The only question economic historians of the future will ask is why didn’t we act earlier and prevent all the pain.

At the moment, even suggesting such ideas is heresy. But so too – back in 2002 – was forecasting that we were in a credit/ housing bubble, after which houses would collapse in value and banks would fail.

I truly wish this wasn’t the case for us. I wish we could avoid having to make the hard decisions, but we can’t. Looking at the trough we are now in, it is difficult to see an alternative. However, if we do what is logical, there is nothing to stop this country growing rapidly again very soon.

That’s the prize. Isn’t it something we should entertain? Or are we going to do what we did in the bubble: attack the dissenters and slap down sceptics with the refrain ‘this time, it’s different’?


  1. Yup, if it’s between us being bankrupted and bondholders. I choose bondholders. If we can’t borrow so much in future it may be a good thing.

    • walnut

      Leaving the EURO is folly. Anyhow’s it is set to weaken dramatically over the next 12 months. I’m looking for parity and below against the mighty greenback…buy dollars, wear diamonds!

    • Jonathan Hannon

      Regarding david’s point on us becoming capitalists in the boom and communists in the bust, it reminds me of a quote from the great gore vidal. “When it all goes wrong(free market capitalism) it’ll be socialism for the rich and capitalism for the poor” how bloody right he was.

  2. Tim

    David, I agree; we may only have one month left. It is time to act.

  3. Hi David,
    I was discussing this very situation with a friend of mine in Cafe en Seine
    Having discussed at great lengths he decided to send this open letter to mr.Cowen
    And you’re right ‘this time, it’s different’
    to read letter follow link http://www.thepressnet.com

  4. ConcernedCitizen

    what happens to our debts if we do leave the euro, do they be denomintaed in the punt nua or do they stay in euro. Is it possible that we could leave the euro and default?

  5. Bamboo

    Thanks David,

    You mention ‘no market’’ and “Nothing is happening, absolutely nada” which is quite confusing with what I see today. I expect there is absolutely no movement on the property market.

    However, I just drove home from the airport and a little lunch and on my way home I see a new housing estate of about 100 houses in the process of being erected. This project has been going on for about 6 months and is in full swing. Some walls have been put up, some already have roofs and looking at the remaining land there are more houses to come. I also talked to an auctioneer today and he told me he’s been very busy the last two months selling houses.

    I am curious if some of our posters are seeing the same thing happening in their area and/or hear similar stories from auctioneers. Is there any forecast or expectation that such housing estates can be sold in the near future? I am totally baffled but what I am reading from commentators and what I saw and heard today .

  6. Malcolm McClure

    Let’s consider a simple scenario, so that we can get our heads around what David is suggesting.
    Let’s assume that the government is not going to hand out conversion calculators, so the switch back to ta New Punt has to be a simple €2.00 = NP 1.00. Of course the markets will shortly devalue the NP towards parity with the Euro, nominally halving our debts. However as night follows day, devaluation causes inflation both of prices and interest rates and we’ll quickly be back to square one again. After that, if the world economy doesn’t improve, we will experience hyperinflation on the Reichmark or Zimbabwe scale. Any takers for this chamber of horrors?

    • tony_murphy

      In the UK, with Gordon and Alistair printing money and devaluation of the currency, the problems of economic meltdown are not as bad as they could have being. There isn’t deflation, jobs are being lost – but not at the same rate as Ireland.

      Whats happening in Ireland as David has described is dreadful.

      “The truth is that Ireland doesn’t have a recovery strategy aimed at reigniting economic growth and employment. We have a debt management strategy aimed at pleasing the bond market.”

      Ireland needs to be free of the Euro. Exports will increase and people will buy more locally. Yes there will be inflation because of oil prices etc, but it’s the only option to get and keep people in employment and for the Irish economy to get back on its feet

      • Deco

        I would not be so confident about the Gordon and Alistair double act fixing British economy. Conditions in Britain are also dreadful. The entire asset base of Britain has been hammered because the banks have lost more than half of their value. Effectively Britain has to print of money, to make up for the scale of the losses, and the follow on deflationary results. Simply put, the volume of virtual money under Brown went way out of whack with the real economy. And then it responded on the downside. And the way to deal with this was to devalue the Pound.

      • wills

        Tony murphy.

        COncerning your post at 6 ref to UK print roll,. can i add that, the UK can back their bonds up with real asset wealth,. they keep it quiet but it is the case.

        i.e UK will start pumpimg oil outta the seas near falkland islands next week. 6 billion barrels of it.

    • Alf

      Hi Malcolm,

      It’s not that simple. This would be only true if Ireland produced nothing, had no goods to export and no services to render; Had no competitive educated workforce to hire and generate a profit etc. Price of currency is always dictated by how much demand there is to do business in the area that governs the currency.

      A new Punt would fall to a level that matches the demand for trade in Ireland and for Irish services; which is currently much less than the demand to trade with Germany. Any value over the real demand would be quickly wiped off. The bad side of this is the punt would be worth less but the good side would be that Ireland would quickly become a cheap place to do business. This would give the currency upward pressure at some point.

      Zimbabwe’s currency problems are not because it has its own currency; They are because the economy does not have sufficient reason to invest and therefore no foreign demand to deal with them. If reasons to invest, such as a cheap educated workforce, or cheap goods etc then demand for the currency will rise because investors will quickly see the bargain that can be found there.

      There is a second advantage of control of a currency. Governments can use the strength in demand to print more of it and stimulate further investment. It is very similar to how start-up companies on the stock market issue shares; diluting the base but ultimately reinvesting for future growth and therefore benefiting the whole. This may seem counter intuitive but it is actually the main idea behind currency.

      Obviously a company who inflates the base with no real assets will just end up with worthless shares; but this will be because it had no assets of value in the first place. The problem is that Ireland is in the process of losing one of its most valuable assets. Its young educated workforce.

      • Malcolm McClure

        Hi Alf,

        “A new Punt would fall to a level that matches the demand for trade in Ireland and for Irish services;”
        “but the good side would be that Ireland would quickly become a cheap place to do business”.
        Without strong reserves, (which we don’t have) it would be impossible to maintain a fixed exchange rate with the Euro. Therefore neither foreign businesses in Ireland nor businesses abroad would accept letters of credit in unstable NPs, so the Irish banks would still have to operate a dual system.
        What would happen in these circumstances is that the poor Irish punter would have to deal with the banks using an official exchange rate, whilst a black-market rate thrived for foreign transactions. If anyone thinks that the present situation favours the financial spivs, just wait until there is a black market in Euros. and Sterling.

        Ireland would be a cheap place to do business for the oligarchs but for the rest, every vestige of financial responsibility would quickly evaporate and earnings would be spent as quickly as possible in the local pub.

    • Ruairí

      Buy a good wheelbarrow, for the long haul (no pun intended!!), for when you’re bringing your shopping money and then bringing your goodies home http://www.dyg.ie/accessories/fort-siteblazer-wheelbarrow

    • s1lverbullet

      how about this one …. stay in the euro but let the guarantee run out and let the banks go bust. obviously we must guarantee our citizen’s deposits(up to a limit) but why should we pay for bondholders idiocy. set up a new state bankfor us and screw the international markets. Tap up Chavez in Venezuela for 50 or so billion at low interest to help us break free from the globalist elite. sound good??

  7. paddythepig

    The retail trade is in many sectors an anachronism. The Irish middleman deserves to be taken out, thank god for the internet.

    Our debts will still be denominated in Euro in David’s scenario. Only way out will be to default on them. That will be interesting. It will be funny to see the local and foreign pension funds suddenly taking a hit with their worthless commercial paper ; whatever will our future pensioners (some of our resident posters here) think when their pension money has gone walkabout? Some of our posters here then might shout ‘Leave the Euro, default’ and then change their mind coz ‘oh shit me money’s in the credit union’. And as for me An Post savings .. where are they?

    Change of heart. Jean-Claude, take us back!

    Then, arise the Punt Nua, it will be gas to see the premium the bond markets put on buying debt denominated with a jacksroll currency, by a jurisdiction hooked on overpaying their population, and sponsoring every hairbrain scheme they can think of. The scramble to bring spending back in line with expenditure to convince our creditors-to-be would be interesting to observe, and it wouldn’t be the softly softly approach we are currently witnessing. Jack O’Connor, and the thousands hanging on his coat-tails will suddenly sing a different tune.

    I’m not sure how the export sector will be re-ignited, since we don’t really export a hell of a lot. Listen to George Lee ; only 4000 out of 700000 jobs in the boom were export oriented. So exports ? fuggetaboutit.

    Only hard money will make the delinquent Irish get down to brass tacks, start innovating and producing, instead of borrowing consuming wasting and whinging. Time to get the thinking caps on.

    Of course we could keep the illusion on track, and just print more and more money if we don’t want to play by financiers rules. That’s the road to Harare.

    Paddy

    • Deco

      We are now in the scenario that we need a continual massive trade surplus in order to bring sufficient volumes of money into the economy to counterbalance the amount that must leave to pay our enormous debts.

      And apart from that, we are living beyond our means, as a nation. This is not a CJH joke. But if you look at the way Irish people are spending money compared to a country with a similar resource base like Denmark, you can see that Ireland is living expensively. The Danes have their sandwiches in their lunchboxes, but we have evolved to the point that socially large portions of the Irish population are looking down their noses at such practices. This type of nonsense is unsustainable and has to stop.

    • ThomasFergus

      So I take it you disagree strongly with David’s thesis then?

      Do you think these deflationary budgets will get us out of this mess?

      Just asking……

  8. Deco

    I read this article earlier (SB Post) and I was not sure what to make of it. I think that we should be logical about the entire economic situation. But my logical analysis tells me that the Euro is not the problem. The problem is the cost of production across the private and public sector, and this is high because we have a lifestyle that would make poor old James Howard Kunstler cough up his locally produced muesli. Apart altogether from Kunstler’s critique of modern suburban conspicuous consumerism as being an never-ending chase of “something-for-nothing”.

    Just to put this in perspective, the left leaning pro-Labour Party newspapers in Britian were calling for dual approach Keynesian stimulus packages and borrowing/money printing. (by the way the British Labour Labour Party can call itself Labour being the first of the species, just like the British Post Office can call itself the Post Office).
    Here is an article from the main pro-Gordon Brown newspaper, concerning public sector reform.
    http://www.guardian.co.uk/commentisfree/2010/feb/21/nick-cohen-public-sector-waste

    We can see that there are strong similarities with the McCarthy Report here, and all the quangos.

    We need to get our costs in line. We need to all work much harder for less money. And we need to live within our everyday incomes, and pay down the enormous debts.

    We have found the problem and the problem is us. Saying we need to quit the Euro is an admission that we are not able to fix the problem. In addition we will have to pay back these enormous debts in Euros, or else British pounds. Paying back debt in British pounds is easy if you have Euros to do it. But if we have Punt 2.0, then paying that debt will be an astronomical objective.

    The first thing that will happen when the Punt 2.0 is declared, is that the Euros will flow out of the country completely undermining what is left of the capital base of the economy. You will see a flood of people switching money into German banks in particular. Because let’s face it the first thing that will happen to Punt 2.0 is that it will dive downwards. Great for exports, but real wages will be forced down. And that is the only way out of this mess. Real wages need to drop. The solution whether we stay inside the Euro or outside the effect is the same. The minimum wage and the Irish dole are going to be dropped. Not by Kildare Street, but at the insistence of the ECB. Both are functioning as impediments to the hiring of young people who have no experience and lower economic output per cost input.

    There is another question about this whole debacle that concerns me. It was put to me like this by a member of the agricultural community. It is the theory of “when you dig a hole, the clay has to end up somewhere”. Ireland is in an enormous debt hole. Where is the clay that was dug out? A lot of it was spent propping up the extravangent lifestyle and the consumerist excess. And that amounted to an awful lot of the waste.

    But there has to be some of it in bank accounts in Lichtenstein or somewhere also. We had a scenario where there were enormous profits being made from rezoning, and property development. Yet the profits from these two activities are supposedly gone in the squeeze. I get the feeling that the accounting and legal professions are hiding a ton of deceit. And we should expect this deceit to be at it’s most extreme once in Dublin where the profiteering was the most extreme. The main dvelopers in the city controlled land banks to keep them going for years. They did not need to borrow to buy more land like some of these small scale operators in the Midlands. Operations like McInerney Construction might be loss making now, but they should have enormous cash reserves. Perhaps an analysis of their accounts might tell us more about the real state of the construction barons ?

    • What’s your stance on NAMA Deco?

      • Deco

        Needlessly Allocating Millions to the Abyss….
        NAMA is nonsense. The Establishment is demanding it. And the establishment always gets what it wants in this country. But, I will tell you this. All the political parties are hoping that FF get it initiated so that they will not offend the establishment, and still manage to con the voters into thinking they are against it. You can listen to the various forms of PR that they all engaged in. Only Jackie Healy Rae said he was 100% opposed to it – and he got bought off with commitments for the locals in Kerry. The rest all postured about it, and made sure that it got throught, either by voting for it, or by making sure that when they were voting against it that they left enough of their own party outside the Dail so that it would get through.

        By the way, I don’t think the establishment wants an election. The next government will most likely be an FF-ILP coalition. This is something that nobody is talking about, but that is the way the numbers work out – and as usual you will have the ILP carrying on like they did in 1992, and like the GP are carrying on now, about having to put the nation first and get their backsides on ministerial mercs, etc….

        We are sliding into a financial cathastrophe.

  9. ConcernedCitizen

    @Deco – If wages are dropped surely there should be an equivalent drop on the debt owed otherwise how would repayments be made?

    • Deco

      The problem is that the banks in other Eurozone countries and Britain are owed these debts, and they dictate terms. I can’t imagine them consenting to payment denominated in the Punt 2.0.

      The debt will be Euros, and the money to repay will be in Punt 2.0. And actual process of paying the debt will weaken the Punt. There is nothing wrong with a hard currency, provided you have the discipline to operate it. We don’t seem to have the discipline. Neither does Portugual, Greece or Spain.

  10. Deco

    By the way, the argument that the ECB facilitated the excesses has enormous validity.
    1) Interest rates were far too low for Ireland in the period 2002 – 2007.
    2) The transnational flow of Euros into the Irish economy was never questioned by the ECB, or the CBoI. The ECB badly slipped up, especially in respect to the flow of capital into the Spanish banking system during the Spanish property boom. The EU enthusiasts in the Irish Times and various pro-Brussels quangos here will not admit this.
    To survive the boom, you had to know this. Your documentaries provided advice to people to help them survive.

    • s1lverbullet

      i dont think the ecb slipped up. expansion of credit then contraction = recesion/depression. cause and effect. this was well planned out( same as fed reserve in US)

  11. Deco

    The introduction of Punt 2.0 will place control of the currency in a body that would be even less accountable than the ECB. In Ireland we have this rule concerning paying for access to internal documentation in the state institutions and organizations.

    Will we operate the Irish Central Bank any better than any other state institution ? There are institutional consequences. You can bet that AIB, BoI and many other interests will have an interest in rigging the Punt 2.0 to suit their own interests and preserve their existence.

  12. David where do we look while we are held under a captive state :

    St Malachi’s predictions
    Nostradamus
    Mayan Calander ceases in 2012
    Book of Revelations

    Its worth reading Igor Panarin’s predictions and the break up of USA in 2010

    Dun Aengus emulates the real experience of a time of before and and a time after that ended up with a semi circle made by both man and nature.
    This is the YOYO a new punt.

  13. Tim

    Deco, that’s a really good and important point; David’s idea is predicated upon a logical approach to economics and how it can and should be used to serve the people in a society; but we do not live in a normal and logical society. Our leaders are not interested in using a logical approach to serve the citizens.

    The govt/banking/IBEC/ISME axis is only interested in the illogic of attempting to preserve the status quo at the expense of our society-at-large.

    In such a country, even the most logical, tried-and-tested solutions that succeeded elsewhere, could well be disastrous for the Irish people.

    Without,first, a clear-out of the above-mentioned culprits who caused the mess, David’s solution cannot work; but, remember, if we do not take this article in isolation but, rather, take it in conjunction with all of the others, we can see that DMcW has advocated the removal of those who caused the problem and stated clearly, that they cannot be the ones to solve the problem they caused.

    Change of government, prosecution of bankers and regulators, as well as manipulators in IBEC of all of the afore-mentioned is an awful lot to achieve PRIOR to switching currency.

    It may be impossible.

    • Deco

      { Our leaders are not interested in using a logical approach to serve the citizens. }
      Too right. They are trying to preserve their own power. We need to scrap the mandatory charges to find out what is going on in quangos, semi-states, institutions, etc…
      I am not attached to the Euro for the usual idelogical attachment to centralization that comes from the chattering classes. For pragmatic reasons. I doubt that the Euro will end up becomming another Weimar currency-simply put the Germans, the Dutch and the Finns would not allow it. I think that anything is possible if the Straffan Clique take control. And we can be sure that the cliques that control Ireland will get even more control.

  14. Tim

    Folks, this is interesting as context/political milieu:

    http://ow.ly/19GyH

  15. joe252

    Well, I don’t believe leaving the euro will solve any problems. We have tied ourselves to Europe so tight, that even breaking away from the Euro would bring us down. There is no will for this in any of the Political Parties (That might be in Government). All of the advise they are getting from their own is leaning further into Europe. Depending more and more on Europe. The People would not tolerate a move away from Europe now. We are Model Europeans now and for the good of it or the bad, we are hear for the Long Hall. We need to build the local economy, make the Minister open up the banks to the small Business. Let NAMA take those business out of the Market that are just servicing bank loans and will never ever see a profit, e.g Hotels. Some BIG Bars in Dublin. Close them down. There are projects that are ready to be built, we will never get labor and construction as cheap again. It makes sense to build a school now for 3 million or wait 3 years and pay 10 million. That is the only way forward.

  16. wills

    DAVID.

    You write………………..

    “Our Department of Finance — which is at least partially responsible for this mess — seems to believe that economic success is measured by whether or not we can borrow on international markets. But when you have a single currency and an EU backstop as good as in place, bond issuance tells us very little about the economy.

    The truth is that Ireland doesn’t have a recovery strategy aimed at reigniting economic growth and employment. We have a debt management strategy aimed at pleasing the bond market. The way we can titillate the bond market is by promising that the next generation will pay for the mistakes of the last generation, and that the relatively poor (the citizens) will pay for the very rich (the bank creditors).Why wouldn’t the bond market like to hear that?”

    I write……………………………………

    APPLAUSE APPLAUSE APPLAUSE APPLAUSE

  17. MT25

    I would like some opinion on this. emphasis below is on currency backed by renewable energy – which may be ill thought through. I would like to hear thoughts on any “also ran” competitive currency solutions. Cheers for reading. Posted first in reply to Tim and cbweb on last article blog.

    - Can we introduce a second currency to operate alongside the Euro?

    - Localised currency (Island of ireland or just ROI)

    - Not necessarily legal tender – voluntary code of acceptance

    - For such currency to thrive it should have intrinsic value or v. strong backing

    - Obvious solution is energy unit (e.g. kWh)

    - Could be restricted to renewable energy.

    - Affords people of ireland via government and semi-state energy providers to effectively print new money as energy credits – a form of quantitative easing.

    - Could contribute directly to social welfare and civil service payments.

    - Could part compensate for pay cuts in private sector wages.

    - Provide long term local economic stability by buffering fluctuations in Euro (or local ability to use the Euro) with ability to earn real value redeemable local currency.

    - Increase the country’s “flirt” factor by encouraging production of renewable energy and leading the world in establishing a global universal currency concept that is acceptable to all localities.

  18. wills

    David.

    You write………………………………….

    “Is it any wonder investment banks are patting us on the back? They have managed — together with the mandarins in Merrion Street and Brussels — to turn Ireland into a large debt-servicing vehicle for past debts whereby we are capitalists in the boom, when a few get very rich, and communists in the bust, when we are all responsible. By limply playing this game, rather than thinking for ourselves, we preserve the Euro status quo and no one — least of all the political elite — gets embarrassed.”

    I write ………………………………………………..

    APPLAUSE APPLAUSE APPLAUSE APPLAUSE APPLAUSE

  19. wills

    DAvid.

    You write……………………………………

    “But what do we, the people, want? Do we want an economy that is capable of growing to reduce unemployment? Or do we want an economy which simply exists to service debts? The choice is pretty simple. If we want the former, we have to act radically to save the day. If we are satisfied with the latter, then a prolonged period of unemployment and emigration lies ahead.”

    I write …………………………………

    GIVE THAT MAN A CIIIIIIIIIIIIIIIIIIIIIIIIIIGARRRRRRRRRRRRRR!!!!!

  20. If we’re going to exit the Euro, but stay in Europe, nationalisation of critical assets is required. We need fuel for energy so we’ll see Shell in Court. Same for windfarms. Tariffs will be needed on imported food and foodstuffs to bolster homegrown agriculture. If FDI is going to take advantage of a devalued and ttherefore more competitive economy, hard currency windfall taxes are the price, else we’re just laundering money.
    If the devaluation amounts to say 20%, then thats the bottom rate of tax too, kicking in at 12k. Institutions taking cash deposits invest those funds in Irish domiciled company bonds only. Commercial “Banks” go face the market.
    Credit Unions set up Business incubator units with staged SME loans controlled by “Gates” evaluations.
    And give A45 some teeth.

    Apart from that, David might as well have entitled the article “In Gods name, I don’t hold a grudge, but will ye please listen to me this time”
    Krugman has said this two days ago and the English chap too. The Euro is systemically flawed. Are we not better to get out now while we’re relatively ahead before the whole “Great Lie” becomes apparent?
    Like, what if the Germans have been cooking the books? Remember Hypo??

  21. G

    As a student of history, I have to agree with the dangers highlighted in David’s article, I don’t think its an over reaction, to echo Gustav Stresemann ‘we are dancing on the edge of a volcano’ and the unthinkable may yet be our reality……

    I am just shocked by the inaction of government and the business as usual approach by all parties, still no mass political meetings, no major address by Gilmore in Cork, I find it astounding, this is precisely the time that these guys should be travelling the country. Its supposed to be a national crisis, but you’d hardly know it, 30% unemployment among under 25s is disastrous, 500,000 unemployed is sucking the life out of a state which sees declining tax take, tip in consumption etc

    Prices seem to be falling slowly but not across the board and stealth taxes like car tax remain high while our roads have declined (see Cork-Limerick road, death trap), groceries and clothes prices have dropped, supermarkets offering two for one, greater competition from Lidl and Aldi, but restaurants and pub prices remain high, petrol too.

    House prices have fallen generally, but people are playing games trying to keep them inflated, saw a few simple cottages in Crosshaven, but they still 30% at least over-priced and require work, so people are responding in different ways to the crisis, some carry on, others like David are blowing the whistles………..

    Cowen is nowhere to be seen, Harney is quiet, still no national address, just Ministers resigning and a cabinet going from one crisis to another, I’ll be surprised if the government can survive the next few weeks, they are on very thin ice, maybe a new government with Labour playing a leading part might usher in an era of ‘hope’……..I don’t think a national government is the way to go, I don’t want to see any member of FF around a cabinet table, a clean break, a game changer is needed, that might give us the collective breathing space we need.

    The government has pandered to the markets, financial institutions (banks are actively ringing account holders to get them to increase their deposits & bansk leverage) and the two big brothers, US & EU, but domestic events may yet surpass them all……….an election now would see FF decimated, and a civil war break out in their ranks, with Cowen put out to pasture – the most despised Taoiseach in Irish history. The Greens will vanish down the memory hole. A new government may also give greater flexibility when it comes to the range of enquiries which have to be started, but its all a bit cosy in the Dail so Gilmore may not follow through on this.

    The lack of stimulus & positivity is astounding, the draconian budget set the tone and gave an insight into the civil service mindset (people who have never taken risks) to implement deflationary measures, knocked the confidence out of the country as well as 10-20% of public servants wages, money that could have been spent in the real economy, keeping people in jobs and government revenues up – but it was not to be, we have to take the lash – well working people and the unemployed.

    I think we should have borrowed more if possible and inject it into the economy along with a jobs strategy, training and an opening up of the universities with our best people focusing on creating new businesses, taking risks on new ventures, and focusing on green technologies, nationalise the banks, and if we are going down at least let us go down fighting, I would rather make a stand than surrender the keys to the house to the financial institutions (both domestic and international)………

    apologies for the seemingly rambling post…………….

    • Hi G,

      yes, this lethargy is astonishing, but I see no change in that respect. A football event brings more people under one flag than anything else these days.

      It just is too quiet here isn’t it?

      • G

        It’s astounding quiet, I have tried to reason it with people, the response has been:

        1) What would taking to the streets achieve?
        2) People are too busy struggling to survive.
        3) People don’t want the hassle as they have up until now lived comfortable lives.
        4) It isn’t that bad yet.
        5) Protest achieves little if anything.
        6) What else can the government do?

        Those are the main ones.

        • 7) McWilliams……Shure he’s all Doom & Gloom
          (That was said to me by a struggling small businessman)

          • Ruairí

            8. “We have turned the corner Ceann Comhairle”. It’s just an aul recession, shure it’ll pick up bise………

        • One simple thing we can all do – close our accounts with BoI, AIB, Anglo and PTSB.
          Move your cash to a credit union or to Ulster Bank.
          Vote with your Euros. I’ve done it. So have members of my family and I know of some businesses doing it.

          • Or should we move it to Germany or the US for safekeeping until the risk of Punt v2.0 blows over??

          • coldblow

            From what I have been told you can’t move your money to the likes of Germany unless you can show that you live there.

            I was always concerned that in the event of a devaluation domestic savers would be hammered while the “connected classes” would simply move their hard money back in from offshore to pick over the carcass. That’s what’s at the back of my mind when I called (not entirely tongue in cheek) for full transparency of everyone’s personal finances, a kind of citizens’ FOI, showing income, assets and cash flow.

          • Ruairí

            +1. At Coldblow, I have moved albeit small amounts of money to UK to reside in a Euro account before alchemy, mouseclicks and whatnots turn it into filthy gold in Zurich for me…..

  22. Good evening,

    fixing systemic faults can always be achieved, but, and I can not over stress that point enough, to expect the very people who caused the mess to be the ones to fix it, with respect, is the very definition of insanity.

    The people who were in it up to their very necks are still governing us left, right and center, they are still covering up the truth behind this mess and abuse their power to manipulate the situation for the worse, not the better, their motif clearly stated by Cowen himself, the relationship to coalition partners is as good as ever and he expects nothing less but to serve the full term until 2012.

    Not only is this an economical irish bankruptcy but a moral bankruptcy at the same time.

    If Ireland does not succeed to exchange these people and their backbenchers and bribed independents then I do not think that fixing systemic faults will be very high on the agenda anyways, why would they?

    Now that we get shares in BOI instead of the proposed cash, it is NAMA = NADA!

    The biggest Heist in history is not over yet, it continues to perform, and as I predicted, germany is a good example of how things will turn into a war against the unemployed and the impoverished.

    You are unemployed? You expect unemployment benefits or social well fare payments from the state? Right, here is a job for you, we pay you 1 EURO per hour, if you should refuse that job, your payments will be cut. Here is a shovel, go and clear the streets.

    Science fiction you say? Nope! Reality in 2010 in Germany.

    • G

      It’s reality in Ireland too, a cousin of mine lost his job, aged 50.

      To keep the social welfare office off his back, he took a ‘community employment’ position in his local GAA club, so he turns on and off the lights, sweeps the place but it is destroying him, stripping him of his dignity, he has a great wife, very supportive, but their must be stress in the household……………

      He is one of the most decent men I know, there is nothing I can do for him bar shake his hand and offer a word of encouragement, it is so frustrating………………..the good are being hounded, threatened and sold down the river, while a former minister who disgraced his office portrays himself as the ‘victim’, it is truly a perverse world……….but I suspect things will go on, I can’t see Ireland doing an Iceland or Greece on it, with the people calling the shots………….

      • Robert

        G,

        Sad story about your cousin there – I hope things work out for him and his family.

        There are, of course, many other dreadful stories and when you consider that Mary Coughlan recently stated (on BBC 24 News – Hardtalk) that current emigration is occurring because young people like to travel and have fun – Well there really isn’t much hope is there?

        • OMFG…. all I hope is that she finally digged her own grave with the hangar six story.

          This tall woman has the political sensitivity of a warthog.

        • G

          @ Robert – “There are, of course, many other dreadful stories”

          indeed, its always the specifics of a life or a story which bring it home, not the cold statistics rattled off robotic-like by Cowen before he shuffles off to lunch.

        • liam

          The Coughlan: “..we’re doing well compared to some other countries..”

          So we’re ahead of Zimbabwe and Niger, well done Mary. The interviewer exercised remarkable restraint but the subtext of his questions was very clear. No doubt as a ‘Brit’ he was well aware how a more frank approach might go down with the Irish audience. Why is there not one single journalist in Ireland, a Paxman type who is prepared to take these people to task? To box them in to a corner and feed them back their own bullshit?

      • They push these people into a vicious cycle they never will recover from.

        But I beg to differ G, no way it is like in germany, FF is just starting to learn how to do that right. The germans were always exceptionally good in implementing a totalitarian bureaucracy. Very efficient bastards.

        Since January this year, a new legislation came into power that will collect all employment data in a central place, this means in reality, that figures such as how often you were sick, how often you were late, whether you are union member or not, and more, is stored and can be accessed by all government departments in germany, social wellfare, Arbeitsamt (FAS), health insurance and more. A fool who thinks that employers would have no access.

        The orwellian age is upon us, the incumbents have a lot to be sacred of, and they abuse their power to stay in power.

        In Germany we have academics on 1 euro jobs.

        • G

          @ laughinbear – Yes, I agree with you, just wanted to mention that things have tightened up here for a lot.

          I am aware of some of the systems and offices having lived in Germany for a period, not a good place to be unemployed, very tough and those living on the streets are unlike anything you see here, yes a bigger population, but the gangs I used to see and the hopelessness outside the Hauptbahnhof always startled me, used to give a young person sandwiches instead of money, often wondered what became of her, cold world.

          • It is nearly turning into a slapstick character, if it would not be so serious!

            There are people in Berlin who refuse to take handouts and pressure for 1 Euro jobs from social well fare departments and their derogative methods, they make a living from collecting bottles from the street, which they bring to a collection place and receive cents for each bottle.

            Guess what, the state has been really complacent in that respect and finally implemented a policy that each of them has to pay taxes on the bottles they collect from the street that other threw away.

            They have to write accounts now and declare how many bottles they collected on a daily basis, and pay taxes for each bottle collected.

            Some things truly leave me speechless….

          • G

            Nothing like Germans bureaucrats for closing off loop holes………….unrelenting…………….. might have to look at Kafka’s ‘The Trial’ this week…….

            Meanwhile, back at the ranch…….

            Land valued at €31m worth just €0.6m now
            http://www.irishtimes.com/newspaper/ireland/2010/0220/1224264880680.html?via=mr

    • Ruairí

      “fixing systemic faults can always be achieved, but, and I can not over stress that point enough, to expect the very people who caused the mess to be the ones to fix it, with respect, is the very definition of insanity.

      The people who were in it up to their very necks are still governing us left, right and center, they are still covering up the truth behind this mess and abuse their power to manipulate the situation for the worse, not the better, their motif clearly stated by Cowen himself, the relationship to coalition partners is as good as ever and he expects nothing less but to serve the full term until 2012.

      Not only is this an economical irish bankruptcy but a moral bankruptcy at the same time.”
      Governor Patrick Honahan agrees, but points out how difficult it may be.
      http://www.newstalk.ie/news/news-headlines/governor-says-bankers-who-acted-illegally-should-be-jailed/

      Regarding what you said about welfare recipients, that is scandalous, unlike your usual posts and not a runner.
      Most of the 500,000 people who now find themselves claiming benefit and (in a reduced timeframe due to government foresight in 2008, at the same time as they said there was no crisis) will in a short time be claiming jobseeker’s allowance, have worked for possibly 10-15 years each and paid all of their taxes dutifully. You now unfairly beat them with a stick for being victims in a perfect storm that they did not design. Unlike your usual posts. A faux pas?

    • Ruairí

      LaughingBear, if you were playing devil’s advocate with that German scenario, apologies for my half-reading your further contributions and trajectory. If I haven’t misread you, well then I think some will be attracted to populist nonsense (battle parameters set by those in charge) and some will be repulsed by it, having worked for years and only now feeling what its like to be unemployed. Remember, you can’t GET a job, despite the terminology. You must be OFFERED a job. Some may be dossers, but most people, unemployed, employed, public or private, are mere victims of structures over which Joe average has zero control. Wait……..that’s what government and social partners are for………

  23. wills

    David.

    On the ‘we must exit the euro’ to save the situation I reckon this idea is merely the surface narrative of a deeper problem.

    A hidden structure of crony networks and elites operating the levers of powers with pinky and the brain imagineering think tanks dreaming up of new fiat paper money scams and focusing in on the euro is missing the point.

    Exiting the euro will not make the under lying problem which caused the credit crunch to go away.

    As long as the medium of exchange is weaponized and used to pollaxe citizens into debt bondage the socio economic system we all live and do business in will continue to move in its boom and bust cycles, will continu to move in and out of its POnzi scams, will continue to service a corrupt political over class and it will continue to preserve the mercantilist framework in which the free market enterprise system is imprisoned in putting it into the service of financial technocrats and oligopolistic moguls and pirate hedge funds and keeping a jailor system tight shut locked under pad lock and key holding the ‘outsiders ‘ prisoners.

  24. Robert

    Sadly I have to report to all bloggers that I’m am to be prosecuted by the Director of Public Prosecutions and I will have to attend court (for the first time) shortly.

    What was my offence you may ask? Did I run a bank into the ground, retire and give myself a 28million pension before handing it over to te state for bail-out?

    Did I perjure myself by providing, under oath, deliberatley false information to a court of law?

    Err . . . No. . . . . . . . .I am to be prosecuted for not displaying my NCT test certificate on my car.

    Now as a secondary school teacher tis will mean that I will have to take an afternoon away from the students I’m preparing currently for the Leaving Certificate . . . . .. .

    Is this the sort of thing that happens in banana republics?

    • Tim

      Robert, I believe, if you go to your local Garda station and pay the fine, you will be better-off. If they don’t drop the case, entirely, the judge will wave the case, if you have paid and shown “contrition”.

      Though, I acknowledge your frustration with the injustice of it all, as well as the difficulties of trying to afford the money to pay the fine, given the extreme cuts and levies you have been suffering since last November-12-months.

      Sorry for your trouble, but it is best to avoid court-hearings. No good can come of your appearance there.

      • Robert

        Thanks Tim – The date is set so I have to attend. I have the NCT cert. I’ll just turn up with it I suppose.

        • Tim

          Robert, it is critical that the Gardaí have it “to say” to the judge on the day that you have also turned up at the station and paid the fine.

          Please, trust me on this; play their game, just this once.

          Then attend and it will be waved, as “resolved”.

          • It is good advise that Tim gives here Robert.

            Do not get caught up in their mills, alone, on your own you do not stand a chance.

            Another scenario in deed if 5000 people would not pay it and would be summoned.

    • Bamboo

      Robert,
      Sorry to hear that but Tim’s advise sounds very good.
      My little story: After driving for 6 years in my old car, a NCT tester decided that my license plate is not the correct size. I rang around and got the NCT rules out from a website and I came to the conclusion the NCT mechanic was wrong. I appealed it and had to do a retest and pay the 28 euros anyway. Five men stood around my car on the NCT car park with their measuring tapes and stood there for around 15 minutes. Then a mechanic drove it away for some reason. Few minutes later I got my NCT certificate and the mechanic said: OK, here is your certificate. Wasn’t expecting any apologies or explanation and didn’t get any of course. I took a deep breath and walk away.

  25. On managing the crisis via spending cuts; Here is an example from real life.

    My Lady works as a personal care assistant, you probably know that people in this job are severely underpaid.

    I guess you have to have certain qualities in the first place to be able to do a job like this. I freely admit, I more than likely could not do what she is doing.

    She is daily on the front so to speak and on top has to deal with paper pushing bureaucrats that never in their life experienced this job in the first place, but, and this is crucial write the policies and change the goalposts, again, without any hands on experience what is required in a demanding job like this.

    To make a long story short, she got a call from the office, to …. and I quote…. to not use as many pampers anymore on incontinence clients.

    I shit you not, pun intended!

    • G

      My grandmother worked those jobs all her life, she outlived by 25 years the people in the house she cleaned for 40 years, her second job was a hospital cleaning position (her husband died young and she had 5 to raise).

      I spoke to her today, she told me from the two cleaning jobs (the hospital one in particular was very rough, with patients often neglected by nurses, with her doing her best) she was paying tax of 60 pence in the pound and for what? So that all these jokers in the Dail and semi-states get golden handshakes when they fcuk up!!!

      Makes me angry everytime I think about how hard she and others had to work, when you see the squandering of resources and inflated wages for those on top it makes me ashamed that I am Irish, thought we were better than this.

      • Don’t be ashamed!!!! No way!

        Too often I hear this from my irish friends.

        I am not irish, but I chose to live here, because first of all I very much like the REAL Irish mentality, kind and warmhearted people in deed. I chose to live in Donegal because of the true irish character I find here in the landscapes and the people EVERY day.

        It was nothing but a handful of unethical people with no principles and no moral foundations that caused us to be where we are, and of course complacency on our all books, we allowed it to happen.

  26. The Euro is NOT OUR PROBLEM. , it does not matter what you call our Currency , The Punt, The Pound, The Dollar , The Ying Wang , The Paddy Currency.
    It is our Mindset that is our REAL Problem , just look at the week in Politics land that has just past , the BIGGEST Airline in Europe wants to bring 300 jobs here and because the Head man wears jeans and trainers , the Beards in Suits refuse to give up their large canteen simply because of personalities !.
    A little man with a big moustache slanders and political opponent and when the story breaks he first gets a vote of confidence, then 140 characters via Twitter gets him removed ( while of course he’ll hold his pension and big salary) , while the same week Bank of Ireland owes €280 million to the Tax payer and they Don’t pay up ! how much coverage did RTE give that story ??
    Our Elite simply don’t care what is happening here the Anglo gang have their villas and nest eggs stashed away, our Universities Professors can’t spend each week the salaries they are paid , the mandarins within the Finance department still take their long lunches in Dublin’s finest restaurants ( no packed lunches for them boyo’s !) .
    The simple truth is the divide is widening daily here the land owners who were paid over the odds for their plots are still taking their sun holidays and ALL OUR POLITICIANS are still playing ‘THE GAME’ while the established political commentators are still talking about the Government being in power for another Two Years !.
    If Gormless knew any thing about a Greener society he would be in with Lenihan and looking for a stimulus package to encourage the development of Wind Farms, Wave power, Algae fuels and building environmental self sufficient schools, but he’s not as he is too busy watching his bank balance rise each week he stays in with Drunk Biffo playing the game.
    I was sickened today reading in The Sunday Indo about our Great Property Developers helping with the refurbishment of a chruch in Rome , and why wouldn’t they when they done such sweet deals the last decade buying Church lands to build shoe boxes on , the great Christians they are !
    And look at the amount of coverage the Head Shops were given last week , why don’t the Media give as much attention the The Publican trade when you consider every A & E that is still open were again over loaded with Drink related cases.
    Ireland is Economically and Morally bankrupt.
    What I worry about is how many more Honest People will have to be made redundant , or subsidies, or how many more sons daughters and whole famlies will have to leave before the Rest of us wake up and say Enough is Enough ?

  27. David
    This week pressure should be put on Senor Jose Manurel Gonzalez -Paramo, at the EXceutive Board of the ECB. As if he signs off and gives an all clear Green Light to Nama. it will be disaster- as with lasy weeks decision about the Bank of Ireland loans of 31 Million being valued at 600K well now those naughty donators to the Vatican ( suspicious) expect still only a 20/25% per cent haircut with their Anglo loan book! well that is madness- as if the real values are 70% off – the state / peoples money! etc should not be lettign NAMA mismanagement at the outset – like Greece has been doing since 2001 thanks to a select group of Bankers !!

    • Deco

      Let’s not forget the major FG backer, and radio magnate, who believes that he can take over Indo News Media and control public opinion. His radios successfully pummelled George Lee, and scored a serious damage limitation exercise for Kenny-lite. Denis O’Brien also managed to get his name written under a niece peice of immortal Renaissance Art. Oh yeah, and he is not tax resident here. A bit like Bono – he has definite views on what happens to other people’s PAYE and likes to project these views continually in their faces….

      • The Eye

        Nice tender work from his buddy Lowry too.

        • Deco

          It will be amusing on DOB’s radios to see what becomes the top story.

          i) The SR Technics row between MOL and a selection of quangos who are the wing of the establishment as exercised in Dublin Airport. DOB is on the Aer Lingus side, and is a major shareholder in a company that is waving the green jersey a lot, but which sends it’s aircraft maintenance contracts abroad. A bit like Dinny’s taxes I suppose. DOB is a lifelong enemny of MOL. Who remembers those hilarious Ryanair ads with “Fly to Malta with RyanAir – you only pay taxes” pictured beside a cartoon depiction of Dinny smiling like a Cheshire cat. DOB, RTE, and the IT will all be doing their best to undermine MOL. MOL has them all lined up like ducks on a shooting range. Only IndoNews Media will be assisting O’Leary.

          ii) The Lowry predicament as a result of the upcoming release of Tribunal Findings. Before Kennylite came along Dinny wanted Lowry to be Taoiseach. Dinny got his mobile phone licence. Sir Anthony was big time annoyed and switched from FG to FF. So Sir Anthony’s hacks did some digging and found Lowry’s extension. And now Dinny wants to take over IndoNews Media. Well…..go figure…..Dinny is another individual who fails the Liam Griffen test of public trustworthiness….DOB keeps company with the wrong sorts….

  28. Deco

    The real problem in Greece is actually getting worse. Currently because of all the strikes, Greece is actually cutting off it’s nose to spite it’s face. In face the Greek is a country in acute paralysis.
    http://boombustblog.com/Reggie-Middleton/1322-Will-Greece-Set-Off-the-Pan-European-Sovereign-Debt-Crisis.html

    This is a fascinating and detailed breakdown of the PIGS – and tries to grapple with the question – how bad are things and who will default next. Portugal is left out, because it is seen as the one least likely to collapse.

    http://boombustblog.com/201002081311/What-Country-is-Next-in-the-Coming-Pan-European-Sovereign-Debt-Crisis.html

    As you can see Ireland and Spain get lots of Red boxes, and are both in much worse condition than Greece. The problem is that Greece has paralysed itself to the point where it is actually doing itself massive damage. This would suggest that the denial and anger stages in Greece are being accentuated.

    Lastly, there is the problem of Euro area government bond auctions in coming months. Italian state bonds are 85% bought by Italian banks/citizens. I expect these to continue as before. But the country that surprises me is France.France has an enormous amount of debt to sell. For it’s size Greece also has a lot of debt to redeem from April 10 onwards. This is going to be an enormous problem. Given that the Greeks have no intention of sitting down and figuring anything out, that the Netherlands has already indicated that they will not give one more Euro to prop up the corrupt Greek political establishment, and that Spain has an awful lot swept under the carpet waiting to roll out, I think we can expect the Greek situation to get worse. This is bad news for other PIGS, because rating downgrades tend to be contagious.

    • Malcolm McClure

      Deco says: “Portugal is left out, because it is seen as the one least likely to collapse.”
      Portugal is going to have to find a quick Billion from somewhere to fix Madeira.

  29. Question:

    What is the reason behind the European commission banning banks to pay back cash, which allegedly prohibited BOI to pay back the 250 millions?

    They said: the European Commission has placed a “coupon-stopper” on the banks while it considers their restructuring plans. Under Bank of Ireland’s internal regulations, this automatically triggers payment in shares.

    So, the european union makes a decision on irish banks within weeks, said Lenihan this morning. But I ask, when the taxpayer injected 3.5 billion into AIB and BOI, the deal the public was told was different or do I see that wrong?

    To me, admittedly no knowing enough about this whole shebang, but it appears as if they are changing the goalposts as they go along and as they see fit to suit themselves.

    • How crazy is that?

      The bank’s stock fell by 5.5 per cent, losing 7 cent to €1.19 just after 10.45am.

      So on the day Lenihan get’s his shares, they are already loosing 5.5 %

      • Tadhgd

        The shares are issued at a price of 136c, equivalent to the average for the last 30
        trading days, and give the government a 15.7% stake in the bank on top of its
        warrant entitlement (25%). So in effect the shares are already down closer to 14% as they are now trading at 117c

        • Unbelievable, they are still at it with full whack and the government plays their game. I can not but think that they are still gambling away our very future and the future of our children.

          So, instead of getting back the badly needed cash from the banks as the public was made believe.

          250 million is not being payed from the kitty, and now we are holding nothing in our hands but already devaluated and worthless shares.

  30. SLICKMICK

    Almost all of the new private secor jobs were dependant on increased population and rising employment/incomes.With these 2 positives turning negative shiops, restaurants and other domestic service providers will continue to shed labour @ a rate of 100k per annum.Employment in construction is heading for the same level as 1950 by year end!.British supermarkets are cheaper than Irish wholesalers!!.

  31. laoislad

    I agree with a lot of the comments made above about the calamity that we call a government. I saw something in the papers yesterday that caused me even further worry. While it is not directly related to much of what has been discussed above about our exit from the Euro, it does relate to the performance of the government and the future for our economy. I see that 48% of maths teachers in secondary school are not qualified to teach maths. How did we get to this point? How much of this stupidity exists in other areas of the public service? The great Government hope for the future of Ireland is “the knowledge economy”. To use a hurling analogy, how can we have a good senior team if we do not put the time and effort into the underage teams. I know from personal experience with two kids in secondary school that the teaching of maths and the science subjects is appalling. While we can talk about passing on debts to the next generation we are doing something even worse, we are passing them on debts and not giving them the skills they will need to succeed in the 21st century. It is depressing in the extreme. Of course I know how we got here, the worst Taoiseach since the founding of the state spent 10 years telling everyone how great they were as he doled out the riches of the Celtic Tiger to his inner circle of developers and unions without one though about the long term future of our country. Bad and all as Bertie was, I now think that Cowen may be even worse. Unfortunately there does not seem to be ONE single politician who has the vision to get us out of this. I emigrated in 1988 to return in 1999. I now think it not only looks like the emigration boat for my children, but I may have to join them too.

  32. Malcolm McClure

    ODE TO PAT NEARY
    The day is cold, and dark, and dreary;
    It rains, the wind is never weary;
    Be still, sad heart! and cease repining;
    Behind the clouds the sun is shining;
    Thy fate’s the common fate of all,
    Into each life some rain must fall,
    Some days must be dark and dreary,
    Even in D4 and cold Dun Laoghaire.

    (With apologies to H W Longfellow)

    • Tull McAdoo

      @ Malcolm “and cold Dun Laoghaire” sure wont Gormless heat the place when he gets his new incinerator up and running. It will also have the advantage of providing a bit of heat for all the people waiting to catch the Ferry, sure we cannot have our Taxpayers standing around in the cold while there waiting to say goodbye to their loved ones, no Sir , were above all that now, Ireland has moved on from the last recession,…. sorry I’m RANTING AGAIN …….OOPS and shouting……

  33. JRedmond

    I’m confused, the government are concentrating on getting Ireland back on track – This is the first thing thats required right!! All I hear is negative comments, should we not be supportive, should we not be positive about our future economic outcome. What are the altenatives if we think Cowen is leading us down a manhole. I would prefer to see a plan to recovery rather than reading all the negative comments.

    • Bamboo

      JRedmond,

      I agree with you and I have added my bit of negative comments myself. For so long people have been in the dark and think they are on their own with this.

      But don’t you think this is a forum to bring out all of what is hidden from the people and a revelation to many of us? Certainly to me it is.

      This is a forum to learn from and inform each other. Don’t you think it is only understandable that many posters are negative because of that lonely anger.

      Once we’ve gone through this period of anger then better times will come. When these better times will come and how we get there is very much depended among others of a forum like this to inform each other of the truth.

      It is up to each poster to filter out and recognize the difference between negative comment which is anger, the valid comments and the pure informative comments.

      • Tull McAdoo

        @Bamboo, please do not buy into the FF Spin Bullshit, which say’s that any criticism of Government policy equates to talking down the Economy, is unnecessarily negative, yada yada yada and all that other crap their party hacks like to say when they LURK their way onto this and other forums, and in the media generally.

        • Bamboo

          Tull McAdoo, Don’t worry. I old enough and seen enough not to buy into anything what the GOV is saying. Not only the GOV, but other bodies like media, ESRI, FAS, etc.
          It is through this forum that I found out that I am not alone in this. Unfortunately many young people have fallen for it and I am constantly trying to make a balance between what is in my eyes a lie, a propaganda, daylight robbery and or a plain scam. Maybe have a look at my earlier posts.

        • liam

          Its funny, I can’t tell if this guy is for real or a plant. Its not an uncommon opinion, but I suppose a lot of people have swallowed the cool-aid on NAMA, FF, the Euro, Lisbon etc etc.

    • Tull McAdoo

      @ JRedmond “I’m confused, the government are concentrating on getting Ireland back on track”
      The FF party is concentrating on getting itself and its cronies back on track with the help of the taxpayers. …Hope this clears up your confusion.

      • JRedmond

        I find it hard to believe that the Cowen government would forsake the Irish people and economy for their cronies. Im not a fan of some of the decisions they make but what would the other side do. And how can we as Irish people stand up to some of the bad decisions that are being made.

        • wills

          Moreso a case of ‘putting one s own selfish interests first, getting greedy, and not knowing when to STOP before ones own feathering of ones own nest means someone else is paying for it’.

        • Bamboo

          JRedmond,

          “And how can we as Irish people stand up to some of the bad decisions that are being made.”
          I’d suggest by going through to what all posters have to say including links, take a deep breath and make your own judgment and act accordingly.

        • liam

          “I find it hard to believe that the Cowen government would forsake the Irish people and economy for their cronies.”

          The you are labouring under a delusion as to the purpose of the Irish political system in general, and FF in particular.

  34. MK1

    Hi David,

    The thing about changing currencies is that its all about timing. As a country that has both government, business and consumers in major debt amounts in euro, its senseless now to leave that currency and work off a newly created nua punt.

    Leaving the euro would not allow us to default, wipe out our debts to manageable levels and carry on as normal economies should.

    There is no magic bullet to pay for the cost of the ‘excesses’ and mismanagement of the past. The only ‘magic’ bullet is pain, lots of it for lots of people.

    You mention the Newry v Dundalk retail prices ‘barometer’ a lot. But get down to the brass tacks of getting Dundalk competitive to Newry. It would require:

    1- reduction in minimum wage to NI levels
    2-reduction in social welfare rates to make that viable
    3-reduction in business costs (including rents

    Thats all. Simple, isnt it? The only problem is that no-one is going to volunteer to take the sacrfice and the hit. The public sector, no way. ESB workers, forget about it. Those on social welfare, are you mad? Those on the minimum wage, are you having a laugh?

    The thing is, there are other areas of the economy which should be dealt with first. You said way back, forget about the past as to why we got here, but that is brushing the mistakes of the past and ‘paying’ those for their ‘moral hazard’.

    Until Seanie Fitz and others at Anglo etc are in jail and their assets nationalised none of the sectors mentioned (public, minimum wage, social welfare) could even contemplate taking a hit.

    The pain has to be intoduced fairly, and that is very difficult indeed. Part of the problem is the politicians yet they are in charge for the solution. As you say, nada!

    In the meantime, Ireland has dillied and dallied since the foolhardiness has become apparent and stuck its head in the sand, held its breath and hoped it would go away and the rest of the world will diminish the impact of our fall.

    What a sorry mess this is …..

    Alas, leaving the euro now is like trying to jump off a runaway train. Better stay on and make the passengers pay, wouldnt you think, including those in 1st class.

    MK1

  35. wills

    Posters.

    Banks now paying taxpayers in share s as opposed to cash as promised in lieu of gov buy out last year.

    Nationalization by stealth.

  36. ps200306

    I see lots of ideas floating around here, but — call me cynical — I’m not really seeing any viable solutions.

    Leaving the Euro? … all liquid assets will flee the currently instantly at the first mention of it. There will be serious inflation. People think the cost of living is high now? Wait until the Punt Nua, coupled with the pressure to keep wages down, which after all is the whole point of the exercise in increased competitiveness. All we will see is the actual busted nature of our economy and the degree to which we have been living beyond our means. We shouldn’t need to leave the Euro to find that out.

    Plus, leaving the Euro is of value only if we are a major exporter. Most of our exports are just accounting tricks to allow American exporters to avail of Irish corporate tax rates. There’s no other reason why the US would have such a crazy trade imbalance with Ireland. If those multinationals are rattled by our switching to some new funny-money we are “hosed”, as they say in American.

    Let the banks fold? Sounds like a good idea in principle — why should we carry the can for corporate malfeasance. (Especially since the idea that we are somhow going to restore the banks to functioning, lending entities is the biggest lie our government is circulating right now). On the other hand, consider a few of the creditors who will be more than a little peaved. The UK is into the Irish banks for $200 billion. Remember that little spat with Iceland, where the UK threatened to deal with Icelandic assets in the UK under terrorist laws if the Icelandic banks didn’t honour UK deposits? Folks, this is the country with which we do a third of our export trade, and against whom we hope to increase our competitiveness. How do you think we will look when we scupper their pension funds etc., and their newspapers start reporting that we are economic terrorists? Let’s just say that a “Buy Irish” campaign might not go down so well.

    Someone else suggested creating import tarriffs. To do that we would have to leave the EU, not just the Euro. We’d be kicked out of the WTO as well. That would not be so good for international trade, no matter how wage competitive we were. Total non-runner.

    Build roads and schools while prices are cheap? Might create some temporary stimulus. But the public debt chickens that have already come home to roost are pretty terrifying. And we’d be relying on foreign loans to do it, which might not be very forthcoming once we show that we are intending to be economically isolationist.

    Green jobs? This is another red herring created by socialist tree-huggers. There will certainly be some sort of green economy as fossil energy prices increase. But it will be against a background of overall increasing energy prices — people talk about wind and solar becoming more viable and that’s true, but only because the general energy supply situation will be deteriorating, not because those sources are intrinsically good ideas. The general economy will be hit hard by rising energy prices. Ireland is in a particularly bad situation in this regard.

    To the person who suggested nationalising resources and seeing Shell in court:- have a look at how that’s worked out for Hugo Chavez. He reaped a windfall for two years of high energy prices. Now he’s stuck without the technology to further improve Venezuelan resources and the international oil companies won’t touch him with a barge pole. Perhaps we can play hardball with any future resources, but honouring the deal with Shell is a good idea. Small countries tend to overestimate the value of their national resources. The New Zealanders have been moaning about theirs, forgetting that they are so marginal that it took thirty years before anyone would take an exploration lease for nothing. And to the idea of having a new currency backed by energy:- good idea … if we HAD any energy to back it up with. We are a net importer of energy, in fact we are more heavily reliant on fossil fuel imports than most countries in Europe, having high car commuting rates, and nothing much in the way of hydro or nuclear resources. Without wanting to state the obvious — an energy-backed currency must actually have fungible energy to back it, otherwise it might as well be backed by leprechaun gold.

    Export-oriented job creation sounds like the most sensible idea, but how do we do it? All our potential trading partners are in financial messes of their own. And there has to be serious doubt over whether Ireland has the entrepreneurial spirit to do it anyway. Our current right-of-centre government is more nepotistic and cronyist than truly “business-friendly”. And at the other end of the spectrum are socialists like SF whose manifesto lists employers only third (behind the unions!) in a list of four parties who could contribute to job creation. Is there anyone credible in the middle? My vote is certainly up for grabs to any credible party, but I doubt if I’ll find one come election time.

    I’m trying to think of a reason for a scintilla of optimism … but I think we’re fokked.

    • MT25

      ps200306

      thanks for commenting on my post. “an energy-backed currency must actually have fungible energy to back it, otherwise it might as well be backed by leprechaun gold.” This and other points you make really highlight what we need most. Energy. We have to liberate as much of the stuff as possible if we want to ever be competitive again. Especially in export markets. If as you feel exports are the most sensible way out of this then we need to start producing energy to feed the system. A tandem to the Euro currency backed by this capacity could generate momentum in getting energy projects off the ground. From small scale CHP to Spirit of Ireland type projects.

      • ps200306

        MT25, I couldn’t agree with you more. Our energy options are limited, though. I truly hope Spirit of Ireland has the right idea, but I have some doubts. Maybe something will come out of left field. I don’t think wave power is going to be it. Maybe high-altitude wind, e.g. Spirit of Ireland on kites (I kid you not). Whether or not we manage to become a net energy exporter, we do need to do something serious about our own fossil fuel dependence.

  37. Bamboo

    ps200306,

    Interesting points you are making. No matter what it boils down to a new thinking, delete the current GOV, insiders, etc. Reformat the system, reboot and start from scratch with a new operating system.

  38. As much as Day follows Night so should normal economic trade follow a recession.Economics will not solve anything neither will logic so just stop trying to bite your tail .
    To understand the solution you must understand that banking is not about money stupid.

    Banking is about TIME .

    What we all need is TIME .

    So what is Time .What causes the full moon every month , what causes that day follows night , what causes winter and summer etc etc

    Where does this lead us to then! We as a people decided one day a long time ago to measure time uniformly and part of that process required the invention of a ‘watch’.
    Some Day Some Time we will have to Stop TIME .

    At that moment we agree that we dont exist anymore .

    Then we start Time again from the beginning with nothing and start again.

  39. @Coldblow,
    If you are correct and ordinary tax payers hard currency savings can’t be moved to the resort of least risk then is it Gold (or silver). Or maybe even Chinese government stocks. One things for sure, this crew here aren’t going to invent some clever term like Quantiative Easing to snaffle my few bob. If Davids Euro viewpoint gains currency, my currency is off and me with it.
    Enough would be enough in that scenario.

  40. Ruairí

    We should earnestly try to re-win ground in the whiskey market. Establish a brand for each county, preferably custom stills, not centralised ones. It would clearly be of huge export potential (let’s subsidise it to the Chinese and Indians and have USA foot the subsidy; after all, they used the same trick on the Native Americans). It would also be a synergistic move to help draw cash here .i.e. tourism.

    http://www.businessandleadership.com/news/article/18419/leadership/diamonds-are-forever
    Teeling owns Cooley. My ancestors sold Brett & Codd to Locke’s, back in the day, which of course met its demise in1957, but is now back as a brand.

    From that interview with the kind of entrepreneurs we need now; in spades: -
    ““The very best industry that this country can have is whiskey,” he says. “We’re perfectly suited climate-wise: it uses Irish air, Irish water, Irish time, Irish grain and it’s all exported. We had 60pc of the world market at one time, and it was an industry that should have lasted. Instead it declined to 2pc. In the early 19th century, there were 1,100 distilleries in this country. By the time I looked at it in 1970, there were four. And in 1986, there was one.

    “The reason is absolutely elementary: there was a change in technology — developed by an Irishman — using columns instead of pots, but the Irish distillers said: ‘Nah, this is not whiskey’ and wouldn’t accept it. They fought for 80 years to try and change people’s perceptions and failed. They continued to make the big, heavy Irish whiskey in pot stills, whereas the Scots took the Irish invention very quickly and made cheaper, lighter whiskey that was easier to drink. The Irish wouldn’t change and really didn’t until the late 1960s.”

    Having spotted the opportunity, Teeling finally took a gamble on setting up his own distillery and bought an old potato alcohol plant in the Cooley Peninsula in Co Louth in 1987. He readily admits that it wasn’t the wisest decision to make, given the difficulties of getting into a market that is essentially controlled by big players such as Pernod and Diageo globally.”

    • Ruairí

      Of course, if the industry foundered, at least we could drink the whiskey before the bondholders / banks came for their blood. But houses, sure what good are dem yokes in a sea of houses?

    • Ruairí

      And again, quoting from that same article referenced above: -

      “Teeling is characteristically outspoken when it comes to the economic crisis in which we find ourselves today. “The first thing is we all knew it was going to happen. Every last one of us participated.

      “The burst had to come,” he continues. “I would have bust all the banks because capitalism doesn’t work if you’re going to be rescued. Nobody has paid me for all the dry holes I have drilled.”

      As for the future, Teeling believes we have a few tough years ahead, and that we will all have to get used to the idea of a lower standard of living. He says he would — reluctantly — raise taxes. But, above all, he says it is time to move resources from the non-productive sector into the productive sector, which he lists as manufacturing, services and farming.

      “Farming and secondary sectors generate wealth. The tertiary sector does not generate wealth. Go back 25 years and you had the Michael Smurfits, Tony O’Reillys, Tom Roches, Don Godsons and Denis Brosnans — they made it in industry because that’s where the opportunities were. Move on and suddenly you could double your money in a property, so you get the Sean Dunnes, the Bernard McNamaras. Why wouldn’t they become billionaires? That’s where the opportunities were, the tax incentives. That’s all gone now.

      “We have to get people back taking the risks in the productive sector. We’ve got to incentivise young people — young political leaders, young social leaders and young businesspeople. I think there’s a need for decisive leadership and I think that’s going to come from the young. We need new, fresh blood.

      “We had our chance and we blew it. Now we need to clean things out, so the next generation has a clean balance sheet and can make their money.”

      Imagine just one John Teeling in our cabinet. But then, what in the name of God would an opportunity-seeking brain like that, and a creator, be doing in Cabinet? Especially in Ireland.

      • Tadhgd

        There are ops guys on Eur 130,000 pa in a well known distillers down south some don’t even have a leaving cert. Fact. Unionised to the hilt. This is why in a few years there will practically nothing manufactured in Ireland – even less than now. We are way too expensive and it’s too late to change because the horse has bolted and is in Mumbai or other by now.

  41. coldblow

    Here’s an interesting article from yesterday’s Observer.

    http://www.guardian.co.uk/commentisfree/2010/feb/21/will-hutton-economics-recession

    I’m not trying to provoke Deco, by the way! In fact, I’m just making suggestions and this rambling post reflects my confused thinking. And of course there is the standard health warning that while progressive solutions may seem reasonable in ‘real’ democracies they are even more fraught with risk in a crony state like Ireland (was it Tim who said something similar earlier?). But then you have to ask yourself: what’s the alternative?

    For me a lot of it comes down to who I trust. I don’t trust most of the economics profession based on their past record, and I don’t trust any of the parties in the Dáil. Even if what they say seems to make sense it is to be treated with due scepticism. ‘Fraid I don’t trust much of the public either! It’s a big mess but that doesn’t mean that govt. inaction can’t make it a whole lot worse. And then there are numerous quarters where it is probably sensible to dismiss everything they say just because they say it, as a matter of principle.

    It reminds me of what happens (apparently) on crashed planes – many just sit there in shock while the odd individual (DMcW) gets up and makes his way to the door. It’s a start at least.

    As for my savings – F**k it, I’ll leave ‘em here and see what happens… Well, at least for the time being – let’s not get carried away folks! I guess I’m just lazy…

    • Malcolm McClure

      Coldblow: I have a lot of time for Will Hutton and his thesis about the morality public debt is worth considering. Of course the argument should not be
      “Are we passing on a legacy of debt to coming generations?” but should be “Are we passing on the benefits of civilization to coming generations?”

      A lot of mistakes were made during the boom years in both economic and social realms. We were responsible, and we are paying the economic price in unemployment and the social price in drug fueled gang warfare. But things could get far worse if the the fiscal belt tightens too severely.

      Public servants may still be over-paid by international comparisons but they provide a much-needed skeleton of stability throughout the nation. That role used to be fulfilled by the church but it will take many years and real vision, to restore its house to acceptable levels of widespread public confidence.

      It is hard for young people to accept that they may have to wait several years for green shoots of recovery to improve their standard of life. It is harder still to convince them of the simple pleasures of living within limited means, after years of hedonistic excess. But talented and educated people within and out of public service can show them how to make the most of inhabiting and understanding their home communities. Giving young people the role of becoming community improvers and helping them achieve what they think needs to be done locally will improve the quality of life for us all.

      We have all failed, but we can still help the younger generation to repair our failures.

      • wills

        Malcolm.

        Great comment and excellent comment back coupla articles on fenians and D4.

        On the ‘we have all failed’, I can only speak for myself on this one but, i can safely assert based on putting my role in relation to the great irish POnzi scam under scrutiny and under challenge from me that I did NOT fail.

      • Bamboo

        Malcolm McClure,
        That role used to be fulfilled by the church but it will take many years and real vision, to restore its house to acceptable levels of widespread public confidence.
        Do you think that the church in any shape or form will survive?

        • Malcolm McClure

          Bamboo: It can survive, if it adapts its Columban roots to the modern era. Religion is a complementary philosophy to Science, (not its opponent), and it can gently cultivate ‘the willing suspension of disbelief’ without which life for most people would be very dull.
          But that is a discussion for another time entirely.

      • coldblow

        Some interesting points, Malcolm.

        I apologize in advance for the rambling.

        I’m not sure that public servants provide stability. On an individual, personal level sure but institutionally? Well I think they impose ideology – see eg John Waters on fathers’ rights. (Possibly got the wrong end of the stick there)

        Re “we have all failed”, yes I agree to some extent both by going along with it (passive, as you say) and in the more particular sense of the middle aged cleaning up (David’s Generation Game) as a demographic group at the expense of the young. By the way that smart lad from the Student’s Union on PK last night (Cóman Ó Broin I think) really nailed it when he responded to the FF and FG spokesmen: they did nothing to call a halt to the bubble nonsense.

        Certainly many people gained from the bubble and having been obliged to sell up 14 months ago I have gained an insight into how they will react. They will be want to protect their windfall gains (“savings”) at all costs and to that end they will insist on remaining in the euro. They’ll settle for the bird in the hand (unless I’m underestimating them).

        I see my own “savings” as being partly made up of economies, delayed gratification and work and partly (mostly) sheer good luck (ie windfall). There’s an illicit whiff about them. I discussed this with another colleague in the same boat and he had the same feelings.

        I think people, not all perhaps but maybe a majority, have an idea of natural value in their heads, as part of a wider value system including justice and fairness. (To go ‘all psychological’, a subject of which I am quite ignorant, I’d guess that these are mainly the introvert half, the extraverts by their nature tending to accept any given situation and just working with it.) So on occasion I have simply refused to pay for things because the price was unreasonable, even if it was easily affordable, and I know many others have done the same. However, in a bubble these values are put to the test as there is no obvious rational argument for earning something by honest labour when you could earn multiples by property speculation. Then, to quote Andrew Mooney, you are convulsed in cognitive dissonance. Logic no longer ties in with reason.

        I’m off on a tangent here by now in terms of responding to your post, of course. David’s devaluation idea is a means of restoring the balance and is proposed because the alternative of waiting for costs to come into line would take years. It also has the virtue of social levelling so that everyone is obliged to enjoy “the simple pleasures of living within limited means”, and I’m not being smart at your expense here. You wake up one day, hear the news and discover that your savings have halved.

        It is now obvious that the govt and state see their role (as they have always done) as defending the sacrosanctity of wealth and debt and not the well being of the tribe as a whole (to borrow your own term). The youth on last night’s Frontline have clearly cottoned on to that. If the status quo cannot be shamed into reform what will it take?

        Finally in my original comment I was hard on economists. I hadn’t set out to do that, it just came out! Now I follow the debate on the Irish Economy site as well as I can and I find them all clever, informed, witty and articulate, so I don’t know why I said it. I think it must be a vague feeling that while they are doing their best they are operating within a discipline that by its nature tends to uphold and justify the status quo. It recalls your remark some weeks ago when you were in the company of movers and shakers and found them all capable and well-intentioned. Maybe, but I still wouldn’t trust ‘em, I really wouldn’t. I know Crotty maintained that classes as a rule operate for their own advantage whatever other impression they choose to give or whatever individual exceptions might be found within their ranks. (or maybe it’s just sour grapes…)

    • Deco

      Coldblow.
      Thank you for the link. Basically Will Hutton wants Britain to keep on borrowing. Britain is probably bankrupt. The last thing Britain needs to do is keep digging.

      I am extremely sceptical of Will Hutton. This is because from experience he has made some serious errors of economic judgement over the past decade.
      In fact I have heard Will Hutton come up with some extemely daft conclusions, and seriously flawed positions.

      Hutton predicted a gigantic collapse for China and wrote a book about it, called “The writing is on The Wall”. To Hutton it was inevitable. In both editions.
      It sounded great. And many in the West wished that the Chinese Establishment would be knocked. And that the Chinese would stop looking contemptuously at the decadent West. According to Hutton China was a restive society and an economic bubble built on worker ants who would create internal strife. one that could go into civil war (again), or become nationalistic and warmongering. China’s leadership was not responsive to the needs of the population as was occurring in the West. The leadership was exercising too much control and the society was inherently flawed as a result. Hutton completely failed to grasp the strategic thinking that the Chinese are doing. Hutton got that badly, badly wrong. Hutton completely underestimated the regime’s ability to provide the material wealth desired by the population. He failed to see the growing financial power of the Chinese, as evidenced by the body language at the Copenhagen Conference the Chinese decided to act uniliaterally, and then dragged the Russians along with them. But I suppose Will Hutton sold many copies and personally did alright from it :)))
      In the Amazon.com website Hutton’s analysis of the then impending gets supportive reviews from the Irish Times, Magill Magazine and RTE. (And we all know how well they are in economic analysis – visions come to mind of glowing articles in the IT Business Supplement on the leading lights of the property bubble).
      If anything the Chinese have gone from strength to strength since Hutton predicted their impending demise from withing. There are problems in China, but there are problems in other large countries also. China has a massive stockpile of US dollars and a growing stockpile of Euros. China is taking over massive stakes of the resource base of the Third World, and propping client states. Bear in mind also that large sections of the Chinese population are extremely nationalistic, and extremely proud of their country. Hutton’s analysis has the raw ingredients of a perceived insult to the Chinese – even if he never intended this to be the case.
      Bear in mind that any problems that the Chinese are enduring are minor in comparison to the progress that the entire society is making. There are problems in China. But people underestimate the degree to which hard work and the traditional Confucian value set actually provide China with an ability to deal with these problems. We will not have to find a way of helping the Chinese from collapsing. If anything the West is too busy preventing states like Greece, Spain, California and New Jersey from collapsing….

      I remember listening to Hutton speak eloquently concerning the nature of employment at the “Work Foundation” which is a New Labour quango in the UK. I expected him to know what he was talking about in this area. However, again he left me uncertain. Hutton gleefully boasted about how the celebrity industry has become a bigger source of employment income than agriculture or steelmaking in Britain. He was extremely positive about this. I sat there thinking to myself – this chap Hutton is a complete nut case !! Basically Britain should produce more Beckhams and less food, in future. I suppose it follows the fact that the British have gone from watching gardening programs to watching so called “talent show competitions”. Food is a necessity. The quest for fame is fleeting and pointless. I found out later that this was one of Gordon Brown’s main advisors in the area, and is a big Brown supporter. Suffice to say that Hutton is actually providing journalistic support to the growth in the superficiality in culture, with him providing economic qualification of celebrity culture. Hutton made no comment about the problem in Britain concerning the large proportion of bad quality work coming from British construction workers. And nothing concerning the fact that there is a large number of British workers who are classified as too sick to work. In percentage terms it is one of the highes in the world.

      I don’t know if he still holds the same views on celberties and food. Massive quantities of food are shipped in from France, Benelux, Denmark, and Ireland – into Britain every day, while English fields lie emtpy because British farmers have insufficient funds to feed themselves let alone the masses in the British cities.

      There was also a time in the mid part of the decade when Hutton lambasted the conservative approach to finance of the Centre-Right government in France. They were responsible for the economic condition of France because they were not doing more to push up property prices like was then occurring in Britain. Something needed to be done to whip up French consumer confidence. He enthused that higher property prices would create greater consumer confidence and that this would solve the employment problem in France. The property collapse in Britain, mitigated somewhat by a currency collapse of 30%, and the long line of collapsed British banks suggests that the Gaullists in France were completely correct, and that Hutton was wrong.

      I hope I don’t sound as if I am provoked :) I actually amused every time I read something from Will Hutton. The English is perfect. The structure really does sound impresseive. And he brings in all sorts of images and analogies that seem relevant. He really does bring the reader along. But the economic logic is always flawed. And his recommendations usually direct us towards JM Keynes and increasing the state deficit/money supply. His grasp of economics is limited to rehashing Keynes in the modern environment as being firstly relevant, and secondly the best solution.

      Hutton seems to go from one erroroneous episode to the next. And still people take him very seriously. He does have some things to say about workers rights which are valid. In fact this is the area where he excels. And he does perform an interesting critique of some of the aspects of capitalism. But there are also times when he can be as daft and predictable. There is one thing that he never grasped about Keynes. Keynes advocating downpaying the national debt when the crisis passed. He has a lot in common with most politicians who call themselves Keynesian in this dimension : ))

      In conclusion, for somebody who often writes about economics matters, all we can say is that Will Hutton has an excellent command of the English language : ))))

    • Deco

      Coldblow – you are correct in not trusting anyone in the Dail. They spent ten years arguing about how to spend money on their constituents until we became completely indebted. Not one of them said consistently – let’s set about setting money aside for the rainy day. In fact when McCreevy suddenly came upon the idea on 2003 they all lambasted him, inside his own party, and on the opposition, expecially Joan Burton – saying that he was taking money out of the economy. And then he got shafted. The rest is history.

  42. Ruairí

    Imagine Agenda-style online interviews between David McWilliams and John Teeling, between David and Michael O’Leary, etc etc. I’d pay a micro-payment for that. Others?

  43. Philip

    Seems a move out of the Euro is just another element of uncertainty introduced while all else in and out of Ireland is uncertain.

    Will the Euro survive the next 18-24 mths? 50/50
    Will the world economy recover in 2010/11? Financially maybe. Socially No. It seems pretty bad.
    Emigration increasing? To where? for who? un trained builders etc. really?
    Structural Unemployed – ye skilled structural engineers, ye auctioneers etc… What about them?

    I know there is a lot of negative comment and justly so. But alternatives expressed in traditional terms of leaving the country or expecting a world recovery etc etc is not going to happen.

    So what about NAMA? it’ll be as stable as the Euro in my opinion. David decribes the end game only too well.

    Let’s remember what our aim here is…Stability with less Anxiety. Right now, all I see is more anxiety and creating more instability is not going to alleviate it.

    Sorry about the ramble. But, this is a very complex mess in a world that is morphing. It is not just Ireland

  44. Alf

    “I truly wish this wasn’t the case for us. I wish we could avoid having to make the hard decisions, but we can’t.”

    Hi David,

    Your analysis is spot on but I sense hopelessness in the comments and it seems that fear rules the day. Let’s face it folks, the current path is not working. If you fear leaving the Euro you are missing the point. The alternative is going to be worse.

    The analogy to the Gold standard is a correct one. The end result will be the same. The more we fight this the harder its going to ultimately be. Ireland can’t cut, tax and debt-laden its way into a Germany. It is sheer insanity.

    There should be no reason to fear capital flight. There is no reason that Euro bank accounts could not be allowed. You could have a Euro bank account and a Punt account but, just as you would in a foreign country, you would have to convert to spend. This would give the new Punt pricing strength.

    But one thing is sure; Fears need to be addressed. There is a lot of fear out there and the State and its crony network will use it to their advantage. The ECB wants the taxpayer to pay for its own incompetence and the faults in the Euro. The crony bank network wants the taxpayer to pay for its mistakes and its is working. Ireland is in the process of doubling its national debt for them and there is not a squeak about it on the media. They will continue to use fear and lies to control until the majority of people understand just how bad the current path is. Only then will there be any appetite for ‘radical’ ideas.

  45. Eight Financial Fault Lines Appear In The Euro Experiment!
    http://www.marketoracle.co.uk/Article17332.html

    • Gordon T Long has just discussed what Furry T Lugs is worried about.
      What if Germany and it’s banks are far more exposed to failure via CDS & CDW & ETC’s than anyone really realises?

      Nice article southofdub.
      Cheers.

  46. MaxKeiser

    Closer Political Union is a more likley outcome of this current Euro crisis

  47. wills

    Posters.

    Dennis the menace gordon brown on the back foot on his ‘bullying’.

    His PR stunt on ITV last week now nothing but a jailor stunt to elicit sympathy from the very chislers the system brown runs has imprisoned.

    • wills

      …………………the BASH STREET KIDS…….!!!!!!!!!!

      FREE THE BASH STREET KIDS from BOSS hog jailors running the jailor system in all walks of life.

      Expose the mechanics of debt creation and bring down the walls of the monetary jailor system.

      • wills

        The jailor system is very accurately broken up into its nuts and bolts in above article.

        The jailors are a bunch of boss hog greedy b@stards who game the gullible using all the levers of power at their disposal.

        They pose as the saviour and the carer and will gut you with a knife when no one is looking to make a fast buck.

        Ireland social fabric has been torn to shreds by the people in power across all social spectrums and the running of the economy and politics is another de facing of our culture courtesy of bully boys in power who care for nothing but their warm comforts and thumbsucking ways as they conspire to do whatever is needed to preserve their bendee comfee womfee blankee they arrived in here with that buffers them from a moral conscience.

  48. wills

    Posters.

    Kangaroo court in session above.

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