March 31, 2010

Like war in the trenches, NAMA plan is pure folly

Posted in Irish Economy · 367 comments ·
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Last year I remember watching the ‘Who Do You Think You Are?’ programme on RTE featuring the eminently likeable Simon Delaney. The unfolding story of his grandfather in the First World War was extraordinary. Using records from the Guinness brewery, an odd mention of the British Legion in a newspaper and British military records, Delaney pieced together the drama of a young Dublin man caught up in the madness of the western front.

Using records from the Guinness brewery, an odd mention of the British Legion in a newspaper and British military records, Delaney pieced together the drama of a young Dublin man caught up in the madness of the western front.

Delaney’s family story is similar to that of thousands of other families whose grandfathers fought in the Great War only to be ostracised when they came home. It was therefore right that President McAleese paid homage to the fallen Irish dead at Gallipoli in Turkey last week.

However, the thing that captured my imagination in Delaney’s story was not the greater significance of history being written and rewritten, but the small details. Small details such as the fact that in four years of war, and after millions had been slaughtered, Delaney’s grandfather found himself in 1918 more or less where he had started in 1914. This pathetic return for so much carnage reinforces again just how appalling the tactics of the generals were.

The wonderfully vivid but tragic expression attributed to the German high command during the war that the British generals were “donkeys commanding lions” certainly rings true when you look at the military record. Now I’m no expert on wars and military strategy (I will leave it to my colleague Kevin Myers), but it seems that the Germans were full of admiration for the bravery and tenacity of the average British and Irish soldier, but were thankful that the higher up you went in the British army, the more stupid the people became. “Asses” was how a German general described the British top brass.

But it appears that history is full of these examples and it is often noted that generals have a tendency to “fight the last war”. I suppose that this is only natural: after all, most of us are only the sum of our experiences, so we learn life-lessons from old scraps and skirmishes and we apply them to the next challenge. But sometimes we are faced with a totally new situation where the old rules don’t apply and simply sticking to what might have worked in the past only makes things worse.

For example, in the First World War, the generals’ game plan had not kept up with their own technology and they committed millions of men to trench warfare which led to mass slaughter. As soon as the armies got bogged down, advanced artillery meant that they got stuck, each negating the other. The generals’ response to this was to feed more and more lives into the grinder. Rather than change tactics, they presided over mass, senseless murder.

Here is a great example of where “fighting the last war” caused enormous damage to an entire generation.

But the phenomenon of those with responsibility and power fighting outdated wars extends into the world of business, finance and economics. The mundane world is full of examples where pride, vanity and an unwillingness to see that the ground has shifted leave once powerful companies and countries languishing, while new competitors seize the opportunities. We see many examples where ideology and dogma dictate the response to a crisis and the authority of a hugely powerful institution evaporates because it is unwilling to change in the face of new challenges.

The Catholic Church in Ireland is a good example of this. The cardinals and bishops, like the First World War generals, thought they could do what they have always done and the problems would go away. But the world had changed.

So it is easy to see how entrenched ideology and an unwillingness to reassess the problem you are dealing with affects both your starting and, ultimately, your finishing point. Now, with that in mind, consider NAMA.

On Monday, on ‘The Last Word’ radio programme I suggested the alternative to NAMA which is to simply get the creditors of the banks in a room and tell them we can’t pay all the money back and even if we could, we shouldn’t because the game has changed and keeping the banks afloat will not get Ireland out of recession.

Unlike the First World War generals, we need to admit that the old rules don’t apply any more and thus, we need a totally new game plan, not an intensified version of the old plan, which will only cause more unnecessary misery.

The presenter Matt Cooper responded by asking me the very logical question: “Do you think that there is so much political capital sunk into the NAMA project that they will not change it now, even if other plans might be better?” Fair question, until you think of the idea “political capital”. Political capital is all about prestige, vanity and sunk costs. It is a meaningless concept, but one which causes the establishment to “fight the last war”.

Political capital is therefore not an asset, but a liability that weighs us down and prevents us from changing. Like the soldiers in the trenches, we the taxpayers are being asked to go over the top based on blind faith in an establishment that tells us there is no alternative — when there patently is.

The alternative is the old fashioned rules of capitalism, which reward success and punish failure. So when a business fails like AIB is failing, the assets are sold and the thing is closed down. The creditors take whatever they are given. In the case of bank failures, the state guarantees depositors’ funds under a deposit insurance scheme and we start again.

Sure, Irish prestige is dented and our status is affected because some might say, “advanced countries don’t behave like this”. But the damage is already done — not by what we do now but by what we did over the past few years.

Now think of the Government’s latest hare-brained move announced last night, which will see us owning the banks, which are the problem not the solution. It is difficult not to see that NAMA has become an article of faith and ideology. It is the “last war” scenario.

We know that the facts on the ground have changed dramatically. When NAMA was announced, the idea that we the taxpayers might cough up a bridging loan for the banks’ property portfolio was based on the notion that the property portfolio was damaged but still worth something.

That’s when we were reassured that the cost to us would be capped by discounts of 30pc. Now, with yesterday’s announcement, we know the cost will soar as the “assets” are discounted by 50pc. And there is worse to come because, according to NAMA, 43pc of the loans to be transferred to it are ‘land’ (ie green fields and land less than 30pc developed) yet only 23pc of yesterday’s figures are ‘land’ — meaning the news on this front will get worse. Based on the estimates we will shovel billions of euro into the banks to keep them open.

We have also been informed that €8.3bn will be transferred to Anglo now. Additional support will be required to the tune of €10bn. So that is an extra €18.3bn for Anglo alone. AIB will need another €7.4bn to keep it open. Irish Nationwide will need another €2.6bn and Bank of Ireland will receive €2.7bn from us, the taxpayer. But these figures have been calculated by people who have constantly underestimated the scale of the problem, so why trust them now?

NAMA and throwing money at our banking system is the financial equivalent of trench warfare, billions will be wasted and we will be left with the bizarre situation where even the winner loses.


  1. mediator

    It can’t be just political capital, and they can’t be that stupid or ignorant.

    All I can think of is that “the powers that be” have told Messrs Cowan and Lenihan that they have to do this? Possible?

    If FG are really against this they should be mobilising mass street demonstrations

    • GF

      I am not an economist or an accountant, so I ask this question humbly and in the hope that the experts who read this website can comment/inform me on this opinion:

      Taking a line from the excellent HBO programme “The Wire”; is this country ever going to “follow the money”?

      For example, let’s take the €400m odd paid for the glass site in D4. We all know now that it is roughly worth €40m (if anyone was willing to pay for it). So the Banks/Borrowers have lost €360m, which we the people have very generously agreed to pay off (I don’t remember signing anything as a taxpayer to that effect, but that’s a whole other story).

      So the €360m is gone? Wrong? The money was not burnt or wallet stolen, someone has that money. Someone in Ireland got paid €400m for that site and they in all probability still have the money.

      This site is just ONE example, all that money, every cent now going into the Banks/Nama is sitting in someone’s pocket. The banks borrowed the money from aboard, lent it to insane developers, who paid insane prices to “People” (individual/company/government department/etc) for land/properties.

      Those “People” still have that money.

      If we follow that money, to those “People”, I believe the entire truth of the corruption, the lies, the backhand brown envelopes, the huge hidden fortunes, the real benefactors of Nama, of bailouts, of the pure greed will all become self-explanatory. And then we can retrieve some of those loses from the corrupt.

      If we only take the top ten developers — where has their borrowed money gone, who got it, and what did they do with it? We are taking somewhere in the region of tens of billions, where is that money now????

      Technically, those “People” should have banked that money in Irish Banks, Irish Banks that now need funding. I am so confused. Please help.

      • You are not alone GF. This is such an obvious question and one I have been looking for an answer to.

        The silence is deafening and it leads me to believe that we are not getting to the truth because they all have too much dirt on each other.

        Look at the system. Even TDs are into property. That fact alone means that the system is corruptable and not fit to serve the needs of the Irish people.

      • wills

        G.

        GLAss bottle site loss, where is the 360,000,000 question.

        Check this out.

        The loan loaned out to but Glass bottle site is shared by Anglo and AIB.

        The ‘loan’ extended for its purchase is like all loans accrues into peoples accounts.

        So, there does not exist 360,000,000 in cash paid out for this site.

        So, here is where we get into the scam that is nama.

        The ECB will pay in cash to ANGLO cash for the bonds they get from NAMA for the ‘loan’ which never existed in cash in the first place.

        • wills

          I am repeatedly blogging on this for months and months asking David to blow the whistle on it cos when one examines the NAMA project through the lens of the fact that the so called toxic loans never translated into anywhere near those amounts in cash terms we enter into a whole different universe of fraud and conspiracy.

        • Deco

          The DDA debacle is another can of worms. Something very fishy going on in there.

          I did not know that AIB was involved. Here we go again. This is going to get very nasty. And Gormless is part of the coverup. “Don’t mess with my ministerial pension”.

        • Bamboo

          G,

          I think you’re absolutely correct here.
          This is normal practice in Spain for any property, big or small. Why should that not happen here in Ireland? This 360,000,000 is only to prop up the prices even more and of course for the surrounding areas.

    • HanoiJohn

      This is Chicago School Economics 101. In 1982, just before Argentina’s Junta collapsed, they did one last favour for the corporate sector – Cavallo, president of their central bank announced the state would absorb the debts of all the muultinationals and domestic firms that had borrowed themselves to the verge of bankruptcy. This meant that these companies continued to own their assets and profits, but the taxpayer had to pay off between $15-$20 billion of debt: amongst the beneficiaries where Citibank, Chase Manhattan Ford and IBM. Rising interest rates in the US meant that this debt spiralled to $65 billion by 1989. Chicago school economist’s pulled off the same stunt in Chile at the end of the 70s. The banks aren’t the problem. It is a government who bought into a political and economic ideology in 1989 and are following it through to the bitter end. Treason is putting it mildly.

  2. ste

    The figures that we are talking about here are so unbelievably massive that I don’t think that people can ever actually understand the scale of what is happening. I am 28 and I cannot see myself living in this country during my 30′s. I cannot stay in a country that is attempting to take my future. I am deeply ashamed of my country, of the greed and corruption. I am ashamed of the people in power and of the people who still support them. For today, at least, I am ashamed to be Irish.

    • Dont be ashamed ste. I know what it is like to be in your 20s and waiting for your life to start. It can feel like hell sometimes.

      Stay and fight. That you feel shame proves that you are human it means you are a good person. We need all the good people we can get because evil triumphs when good men turn and walk away.

    • Deco

      ste – if you don’t have a mortgage, and you can live frugally, then you will survive. Just work hard and save.

      And exercise your conscience when you spend money. Don’t pay for the price rigging oligopolists that control Ireland through IBEC. Instead support any competitor that attempts to undermine them. This is ‘return fire’ for what they are doing to us.

  3. G

    We’ll give you (ECB) money, we’ll tell the hidden hand to stay away and you do the right thing for the sh*t you got yourselves in with your shoddy regulation and lunatic bankers – the people will have to take the heat but they’ll get over it if they are told ‘there is no other way’ – standard mafia principle.

    He often quotes “the maxim of Thucydides” – “the strong do as they wish, and the weak suffer as they must” – we are the very weak, the bust flush………

  4. Agree wholeheartedly with D’s point of view. Supporting NAMA we are being asked to join ‘The Charge of the Light Brigade’

    This morning we had Eamon Ryan of The Greens ‘more Fianna Fail than Fianna Fail’ hauled out on Morning Ireland to defend the madness, save Ireland’s tiphead.

    He cited Alan Dukes, Chairman designate of Anglo, as an expert on why Anglo should be saved, no conflict of interest there for their both, if you believe Lord Haw Haw.

    Curious piece of information in support of not saving Anglo given by Dukes was that the new rules for capitalisation, a leap ordered by the Regulator, from approx 4% to 8%, would be an extra cost for the wind down. What?

    Surely if the bank is being wound down, the bank would be closed immediately for new business?

    Agree with D, urgently to save the country the long term unknown damage costs of keeping Anglo on life support – leading to the slow strangulation of the Irish economy, needs to be addressed in a sit down of decision makers.

    The Regulator needs to be involved, The European Commission could be asked to support,

    Anglo needs to go the way of Washington Mutual.

    http://bit.ly/9zGF0C

    “The bank holding company filed its 521-page Chapter 11 plan late Friday in U.S. Bankruptcy Court in Delaware.

    “The plan, which still has to be approved by a judge, would set up a $7 billion trust fund for paying creditors, including the $4 billion in deposit accounts that JPMorgan had claimed for itself.”

    Dukes, Cowen, Lenihan, the Greens, FF have a sentimental attachment to Anglo.

    We have a disaster worse than Bush Katrina disaster from our leaders.

    Time as D says for the leading players involved to sit down and work through the details.Crazy to keep Anglo going.

  5. Puschkin the Black and White Cat

    I went to Ollie’s last night, all was normal, few had any idea of what had happened. It’s just too complicated, how could the deregulation of 1988 affect us today, and what does it mean to me? I believe NAMA should be described in the following way:
    1) Health and infrastructure (already 20 years behind Europe) will slip a further 20 years behind.
    2) Employment will be severely impacted and we will return to the 50’s and 80’s times of high emigration.
    3) Education, schools will suffer.
    4) Tax will rise to 1980’s levels.
    5) Crime will rise.
    6) People must be forced from their homes (already happening).
    7) Property will be kept artificially expensive by a factor of 100%, that is, where I should pay 120,000 for a three bed semi I will (forever) pay 220,000.
    8) Power will be concentrated in the hand of very few which will stifle all hopes of reform.

    • ThomasFergus

      But these laudable descriptions will be torn apart by the media and the vested interests that control them, and a gullible public will fall for it like they do every time….

      e.g. 1) that’s public sector pay, and the public sector is ruled by treasonous trade unions who have destroyed this country and don’t live in something called “the real world”.

      2)true, but people who leave can’t vote, and there’ll be 200,000 such angry voters gone by the next election. This is the most important plank in the establishment’s strategy. It’s often shamefully called “the release valve” of emigration.

      3) see 1.

      4) True, but all the cute hoors dodged tax in the 1980s, and left the PAYE worker to pick up the tab, the majority of which…see 1.

      5) That’s where Dermot “tough guy” Ahern comes in, to tackle the “scumbags” and protect the people by drastically reducing our liberties, following another searching Paul Williams article in the News of the Screws and some scaremongering against “liberal intellectuals” who would rather see these scumbags own the streets….apparently.

      6) These are young people, so everyone else can say…nobody forced you, I would never have got a mortgage for 10 times my wage etc.

      7)Lawywers, bankers, accountants auctioneers, pols etc are 100% OK with this, and they will pay fortunes to PR spivs and the corrupt media to spin Nos. 1 to 6 to keep us distracted from 7.

      8) Welcome to Ireland, it’s been ever thus since the Famine.

      • Tim

        ThomasFergus, this is an excellent highlighting of the media spin; well done.

        Lost in yesterday’s NAMA news was the new “Deal”, which assumes that public sector workers will be willing to do even more work for their now vastly diminished pay. It assumes the workers will not object to the re-writing of contract law, as their job contracts are torn up and re-written by their employer and managers.

        Just watch the media spin over the next week and a half, as ordinary decent working people will be called “lazy”, “militant”, “hardliners”, etc., when they (I hope) will reject this new “Deal”.

  6. suonish

    “In the case of bank failures, the state guarantees depositors’ funds under a deposit insurance scheme and we start again.”

    Could you expand on this – I think it’s key. It was the reason Lenihan gave in the Dail yesterday for not shutting Anglo. Didn’t he claim the state would have to pay €70bn out to depositors?

    • Malcolm McClure

      suonish: Nail on the head.
      Imagine you are a fly on Lenihan’s office wall a few months bak when Alan Dukes is called in.

      “Alan, its like this. Those banker b’tards rushed us into giving all their depositors and bond holders the guarantee, saying that Ireland would be a basket case for years if we didn’t. That guarantee expires in October. Your mission, if you accept it, is to take this Anglo abortion and nurse it until then, otherwise we’ll have all hell to pay out to all and sundry.
      We want you to keep Anglo afloat until end year, promising the earth but spending as little as possible. Meanwhile, we’ll run the NAMA flag up the pole to see if anybody salutes. Doesn’t matter if they don’t, because we’re going to nationalise AIB and Boi in the springtime anyway and sort their loans out separately.
      Just before Christmas we’ll announce that despite our best efforts Anglo has gone Its highly regrettable, but it’s not covered by any guarantee. Depositors, shareholders and bondholders have had fair warning, but that’s life, I guess.

      Remember. Alan, Mum’s the word.”

      • wills

        Malcolm McClure.

        Insightful angle on the ‘madness’.

        Question though, if true, your angle, it raises the whole question concerning why offer guarantee in the first place and who did the gov protect in ANGLO for short span of time before the Oct 2010 times up.

        • Malcolm McClure

          Wills: Seems to me that if they had dropped Anglo like a hot potato then the government would have been liable to pay everybody everything.
          If they can hold off until after the guarantee expires, then they can walk away from that corner of the wider mess and the international market will just shrug:
          “Well what did you expect?”
          Meanwhile, its just a front, with nothing big going anywhere.

          • s1lverbullet

            HOW ABOUT THIS ONE?. LET THE GUARANTEE RUN OUT AND FUCK THE BONDHOLDERS

          • s1lverbullet

            Only problem Malcolm is that they will extend the guarantee for another 5 years when the current one is close to running out

  7. [...] sort of way. Economist, David McWilliams, compares it to the folly of trench warfare in WWI. You can read it all here. Summarising the scale of the bailout, he says: We have also been informed that €8.3bn will be [...]

  8. G

    Good books on the First World War – we probably will all back to reading by candlelight after what was announced yesterday……..

    A. J. Taylor’s ‘Origins of the First World War’

    Barbara Tuchman ‘The Guns of August’ – one of President Kennedy’s favourite books, not sure he learned the lessons though.

    John Keegan ‘First World War’

    60,000 British troops were killed on the first day of the Somme (well portrayed in the film ‘Oh What A Lovely War’ – we’ll probably be making ‘Oh What A Lovely Bailout’ in Ardmore Studios………..

    I recently discovered completely by accident that my great grand-uncle was killed on 16.07.1916 on the Western Front, incredibly I contacted the records office in London last November, on January 22nd last, one of their researchers contacted me to say she remembered my letter, that she was researching another soldier when she remembered my relatives name and came across his records buried deep in the files, what are the chances of that! Ar dheis Dé go raibh a hanam uasal

    The final line of your article David is excellent – lose, lose situation for sure. We are definitely sinking into the kind of the mud that consumed so many in Northern France.

    Despite everything, declining wages, looks like longer hours, indebted country (and no doubt declining services), I am still reluctant to leave Ireland, its in the balance, but I want to stand and fight.

    • suonish

      Fair play to you, I’m outta here. I’ll come back and fight when that sodding generation is dead. Nothing will change till then.

      • G

        If we don’t do something now, the next generation who are inculcated with the same sickness of greed, will repeat this situaiton, we have an opportunity to change Ireland, we have to hammer Fianna Fail so bad that they don’t recover for 10-15 years, they need to go to Republican values…..but it may even be too late for that………..

        • Ruairí

          I think its too late to ‘resurrect’ the old FF spirit G. They’re too busy playing plastic Republicans (ahem, not plastics folks!) and attacking the Greens over the God-given right to shoot and kill any animal that’s impudent enough to walk the land that they won off the British. Yes, that”s John McGuinnes and apologists like Tom McGurk rabbitting on (apologies rabbits, no pun intended) like Charlton Heston on a bog defending his little croppy acre agin’ d’aul Brits and they schkinnin’ his rabbits for centuries. The dirty divils.

          No, FF are too busy towcowing to lobbyists to do the right thing. Their idea of Republican is grounded in codology; agin’ the Brits but FOR NOTHING. Not for meritocracy., not for compassion re animals, not for compassion re the paye or public workers of Ireland. And definitely no compassion for the 500k unemployed as, if they did, they would have ordered the Gardaí into FAS once again to figure out how in the F**K it could cost €900k per person for a jobseeking course that got NOBODY any jobs. Any PAYE person would be fired for a wastage of 1% of that ‘per person’ waste. http://www.sbpost.ie/news/failed-work-programme-cost-state-almost-900k-per-person-48270.html

          There is NO responsibility for anything in government and semi-state circles. This is a waste of human talent, a hiding place for scum and fools and a deadly accurate analysis of the top management of those circles; wise men and cabinet doyennes most definitely included.

          I will fight and expose them at any opportunity. I urge anyone with a small donation seeking a home to help out http://www.thestory.ie; our own http://www.wikileaks.org.

    • JJ Tatten

      Standing and fighting is probably no more difficult than upping sticks and rebuilding a new life elsewhere only to discover that there’s a new foe to fight – albeit with the constitutional framework and mass of will to do so. If you were able to allow yourself the luxury of living elsewhere for 6 months – I doubt you would be so keen to stand and fight in Ireland. I’m very proud to be Irish – but I don’t have to bang my head against a brick wall of idiocy, gombeenism and indifference to prove it – and neither do you. Sometimes you have to choose your fights carefully – one where you have at least a slim chance of winning. Good luck with your decision.

      • G

        I can leave, I have savings, no mortgage, no debt, no children, no relationship ties but I don’t think its the road for me, as I said under review, but there could be opportunities to propose and do things now which were unthinkable a couple of years ago, class ceiling is cracking, time to put a foot through it?

        • suonish

          My decision was simple: my family is more important to me trying to change things here. I’m not going to consign them to what looks like decades of crushing debt and taxes. I, or my children, will never pay taxes in this country (by emigrating, not evading!!) until all the NAMA crap is off the national balance sheet. I simply refuse to pay for the mistakes of others, life is too short and there’s living to be done.Similarly, I moved all my savings out of the country yesterday. These are probably the most effective ways I can protest. If enough people did this, the whole charade would collapse. And money, including mine, would pour back in as soon as the thing was done right, as David outlines.

          • ImOff

            suonish. I signed up here having read this post of yours. When you speak of moving savings out of country the whole ‘off-shore’ thing comes to mind. Have you moved them in advance of leaving the country or can one do this as a matter of course and continue to live in Ireland?
            We have some savings that we’ve worked damned hard and we can’t help feeling that they’re resting in a shit-heap that may swallow them up. We’re giving serious consideration to upping sticks and doing our own bailing out, so to speak, but such a move won’t happen in the short term. In the interim can I open an account in Holland, for example

          • suonish

            ImOff, I don’t know and wouldn’t give financial advice on a public forum anyway. In our case, my better half is from another country, and has bank accounts there. Its not an offshore tax thing, but now that you mention it, I better check into better myself. You could open up an account with Rabobank here, and your money would effectively be ‘out of the country’. Out of the corrupt system anyway. Sorry I can’t be better help.

          • Bamboo

            To open an account in Holland you need to have a permanent address or a statement from a Dutch employer.
            FYI: I bought a car in Germany some time ago to travel through Europe. I needed to have it insured and taxed it of course. You can only pay through (your own) German credit card. To have a German credit card I needed to have a German bank account. To have a German Bank account I needed to have a permanent address. It took me one month to organize that but it was worth it in the end. I’ve closed my bank account when I was finished traveling.

  9. I heard Joan Bruton also use the trench analogy though she added the barb of us being under the foot of the British commander. Is there any chance of hard information coming from our well-educated economists and politicians?

    When BL says that it is cheaper to “give” Anglo another €18.3bn compared with incurring a cost of €30bn that makes sense to me but surely the economists and opposition have devoured the breakdown of the €30bn – how much of it is owed to benign creditors like credit unions and (our) pension funds and how much is owed to less benign commercial investors? Unless we have examined this in great detail then isn’t it a bit clownish to dispute that it is better to spend €18.3bn on Anglo than €30bn?

    Also with the NAMA announcement yesterday did no-one think to ask why the LEV being 10.51bn actually represents a haircut of 34% – why is the 8.5bn being paid less than the LEV? Is the €370m first tranche subject to claw-back, review, dispute procedure? When will NAMA start spending the €5bn on completing projects and giving badly needed employment? Why do we still only have round estimates for Anglo – €10bn, 50%?

    • Philip

      The 18.5 billion sucks working capital out of the economy. The 30bn loss is merely a a number on someone’s statement on what is owed to idiots who bought into this nonsense. If they are told to go swing for it, there’s many to replace them. Get real.

      • The €30bn also sucks capital out of the economy because of the State guarantee including the guarantee to depositors. Telling our credit unions who have loans with Anglo, telling domestic pension funds paying people’s pensions in this country to go swing? Maybe it comes down to that (and what would be all the consequences?) but until someone gets the numbers and shows the costs and benefits, then it’s clownish to say that spending €18.3bn is not better than spending €30bn.

        If €20bn, for example, of the Anglo liquidation cost would be payments to ordinary investors who don’t have importance for our economy (like credit unions) then I think letting Anglo go to the wall might be the best option. But no-one seems to have the information either way and that’s where economists, the media and academia should come in and they’re not.

        • G

          €30 billion is borrowed money excluding interest, add that, no one has a clue if it will end there, plus consider the cost to the real economy, that money could have been used for the benefit of the State (health, education, infrastructure, start-ups, employment programmes), it is an astonishing double whammy.

          Bank should be wound down, the brand name is worthless, who is going to do business with it?

          A State bank should be created to get money flowing again to businesses, we have to create jobs and get things moving – the Live Register has increased again and will go on rising. 433,000 now unemployed http://www.irishtimes.com/newspaper/breaking/2010/0331/breaking28.html

          FF have put political and business priorities ahead of the taxpayer, but then when was it ever different?

          Linehan has no idea where this thing is going and the people in the Dept. of Finance have consistently got their figures wrong, there is no reason to believe them on any of this stuff.

          A new, Labour led government would be of help, need to clean out the cosy capitalists.

        • Philip

          Point taken. The only way to find out is to pull the rug from under it. If we can find money for unknown unknowns then there are more easily found ways of compensating the known knowns.

  10. SM

    Politicians are never the top chain of command. Most western democratic politicians who achieve any kind of high office are already bought or being blackmailed in some way.

    No matter what we say or who we vote in, the international power elite will always be the ones who call the shots.

  11. DarraghD

    The greater issue here is that we as a people are running with this for a minute, it says more about us as a constituency of people than the state of our country at the current time. We are saying that our image and our standing is damaged by the state of our banking system and the state of our economy. We say our standing is actually damaged further by our government doing the wrong thing and standing behind the banks, this is seen apparently by the markets as “probably taking up the wrong position”…

    I reckon people who are not standing with Paddy’s Green Shamrock Shores at the moment are more curious as to why on earth a country full of what are apparently highly educated, wonderfully motivated people, would run with any of this for a second, would accept it, why they are not downing tools and making a decision that a day’s work does not get done again, until… Well, the question obviously arises, until we achieve or hope to achive what exactly???

    Until we achieve a general election…??? Maybe, so we can vote in an even bigger clutter of assholes who reckon that the way to administer a country is to get elected to government by compensating every loo-laa with an investment grievance, from taxi drivers to Eircom investors???

    We are in a very sorry place indeed, when there is actually nothing worth protesting for, because it apppears to me that the entire political class in this country is retarded. They distinguish themselves from normal copped on, logical, rational people, especially in their manner of speech, the second they open their mouths, you just wait for the horse shit and the incompetence to come out.

    Enda Kenny, Leo Varadkar, you can tell by listening to their uppedy, manufactured, stiffened, marble mouthed, pseudo-authorative language, that they are as incompetent as Martin Cullen, Noel Dempsey and the rest of the terminally retarded within Fianna Fail.

  12. hibernian56

    How do we stop this David. Our political system is so skewed that the normal peasantry have no mechanism to instigate a vote of no confidence in our leaders.
    Surely there must be a way to stop this madness.
    A decision like this cannot be left in the the hands of two drunken liars surrounded by incompetents.
    This is so frustrating, €30 Billion would sort out a lot of real problems in this country.
    If they had any honour they would fall on their swords.

  13. FF/GP continue politics of Information asymmetry in an act of political self preservation!

  14. [...] the economics of closing Anglo and the LEV on the first tranche.  Prominent arch-critic of NAMA, David McWilliams recalls Joan Bruton’s speech in the Dail last night and likens the Irish taxpayer to the [...]

  15. Philip

    None of potential losses that are being spouted out by the like of Lenihan and Dukes in the event of closing banks are impactful to the taxpayer in the way they imply.

    There’s the so called 30bn “loss” which would result if there was a firesale of property….hello!!…you mean taxpayers would only need to pay 30Bn less for property in ireland…that is all Lenihan is saying. The crystallising of the losses hits the banks and the idiots who took the punt…

    As for the other “losses”…we have our bond holders and shareholders. Again, these guys will get skinned for taking a punt. And yes it will damage our credit rating, but it will not in any way damage our productivity and WILL make us vastly more competitive.

    All this nonsense about losses needs to be put in context…caveat emptor mr Bond Holder and banker.

  16. It is just a staggering number to get your head around.

    Whether it is 22 billion or 32 billion going down the toilet it really doesn’t matter. The banks must lend 3 billion each to existing business over the next 2 years and all I can think of is what if that 22 billion were to be put into indigenous businesses who would be able to kick-start the economy and hire many of the 430,000+ unemployed.

    What the “Smart Economy” strategy gets is a meagre 20m per year to be handed to Enterprise Ireland. And for that the banks will get billions to survive….

    I am shell-shocked as an Entrepreneur to think how much has been lost, not by the property market, but by the lack of vision.

    • Philip

      We are hovering up taxpayers hard earned cash to balance a number on a ledger entry. There is no way we shoudl pay the equivalent for 4 x large hadron colliders and get nothing back.

    • G

      Titantic losses for sure.

      Hope broadcasters etc do not prejudice any case against former bankers. Tubridy was banging on insanely this morning.

      Lawyers could argue that the lads will not be able to get a fair trial given what has been said on radio and in print, comments have prejudiced things………………

  17. MK1

    Hi David,

    Yes, your analogy is quite right, we the foot soldiers (the people) are being sent out from the trenches to our slaughter. The 1st tranche of Nama could be seen as the 1st trenche.

    > the damage is already done – not by what we do now but by what we did over the past few years.

    Exactly, moving of the deckchairs cant resolve the problem. However, we are giving the limited lifeboats to these that least deserve it, and the women and children and many men are being drowned in other people’s debt and mistakes. What a mess, eh?

    I do want to pick through some errors in your article though, on the figures at the end:

    > we were reassured that the cost to us would be capped by discounts of 30pc. Now, we know the cost will soar as the “assets” are discounted by 50pc.

    But the bigger the hit the bank has to take on any loan it transfers to us/Nama, the better. So 30% was worse than yesterday’s average of 47%. The snag of course is that we are caught on both sides of the equation so the better the disccount for Nama, the more we must give the banks/insts in recap.

    > Bank of Ireland will receive €2.7bn from us, the taxpayer.

    No, BOI who gave out better loans than all others (discount in this tranche at -35%) needs 2.7b to meet the capital adequacy rules, but is aiming to get this on the private market, not from us/Government. Naturally, we will be the stop-gap if required.

    AIB’s 7.4 billion is also partial.

    There is still a lot of playing to do. Of course, all of this is still only a 1st tanche of Nama, there will be more.

    figures from yesterday:
    AIB 23b
    BOI 12b
    INBS 9b
    EBS 1b

    No figure was given for AnIB as it is being finalised but if the total is close to the full 77b as earmarked earlier that would make its loan-book transfer to NAMA around 32b, bigger than AIB.

    As a percentage of their business, clearly AnIB and INBS were the mad men in all this, INBS even more so percentage wise with BOI the best of a bad bunch. However, given that in traditional banking bad loans are set at 0.5% (yes, thats a point five percent) all are failures:
    1st Tranche:
    EBS we pay -37% of 140m => 90m
    INBS we pay -58% of 670m => 281m
    BOI we pay -35% of 1.93b => 1.25b
    AIB we pay -43% of 3.29b => 1.87b
    (estimated) AnIB we pay -50% of 10b => 5b

    Of course, the decision by our Government to guarantee the banks deposits as well as its loans was a ludicrous decision when viewed now, but hey, I called it so at the time. A decision that will cost us 40b or so, and who knows. You see, listen to me and I’ll save yiz 40b ….. ! ;-)

    In Iceland they voted 90%+ against bailing out their Icesave+co banks. In Ireland, we dont have a vote, some democracy.

    MK1

    • Deco

      Hold on……we do have a vote in Ireland….but only when the constitution requires it….and the political and commercial establishment has to consent.

      When we vote the ‘wrong’ way, we get a chance to vote again, at the behest of the ‘leadership’….until we vote the ‘right’ way….which is usually the way that the leadership wants

      • lff12

        We need more than voting, we need lynching.
        You’ve got to set this in context against people who after years of struggling to either pay obscene rents or a steep mortgage, watching in bewilderment and wondreing where this celtic tiger thing is, that passed them by, is now stripping them of their jobs, their dignity, and the roof over their head, as this madness goes on.

        I hope FF are made to pay for this electorally for decades to come.

      • “and the political and commercial establishment has to consent”

        This a glaring fault line in the constitution and needs correcting

  18. For war analogy’s I think you should be using The Battle of little Big Horn, and the Irish people are Custer’s troop’s ,..we are about to be annihilated;.
    Throwing 31 Billion , that is 31,000,000,000, into a failed banking system is utter madness, most people don’t or can’t comprehend these figures so let’s take the social welfare payment for a single man €196 for a week or an annual payment of €10,192 . So we are giving to the Banks the yearly payments of 3,041,601 single men’s unemployment payments which they have to scrap by on now.
    Or take the still over valued 3 bed house at €220,000, so we are buying 140,909 houses ! … or why not bring it down to new cars since Lenihan was able to use as signs or recovery the number of new cars been sold this year , take the average car at €15,000, yesterday our Politician’s voted to buy 206,666 Bill Cullen would love that !
    Or as I heard on RTE it’s another €27,000 of debt to everyone in the country.
    The problem we have now will be paying back this debt , how are we going to do it with a falling work force ? And why should the ordinary person now have to pay this penalty for the greed of the minority, not every one gained from ‘the Celtic Tiger’ sure we got cheaper loans and took a few sun holidays but we were not all taking weekends to the Villa in Spain or had the membership in the nice golf clubs.
    Unfortunately the majority here have been brain washed by watching the 40″ TV and been bombarded over the last decade with the glossy magazines, all you have to do is look at the latest poll of Ireland’s top 100 from RTE , which included Ronan Keating, Louis Walsh and Stephen Gantley …Jesus who did they survey !!!.
    While again yesterday when the figures were been announced , there was Quinn Insurance been put into administration.
    How much bad news can we take or are we willing to accept before we take to the streets ?..The only person I have heard on National Media asking this is Matt Cooper.
    We really do have to sober up here , the Italian Mafia have nothing on our own MaFFia ,.. we are the foolish Paddy , it’s time we took a stand before we are all wiped out ..

    • G

      Unlike the Irish population, Custer got what he deserved. He was warned several times not to push things by both his own people and by the Native Americans, but he was an egomaniac and a cold blooded killer.

      It was standard practice for Custer and his men to target women and children, they had done it so many times in the past. Indian warriors normally put down their weapons when they saw their women/children surrounded by cavalry.

      At the Big Horn, Custer and his men were trying to get in around the back of the village so as to get to the women and children, the b**tard was cut off, pushed back up the hill and wiped out. I wonder what went through his head before the arrow? Hubris followed by a relatively quick dispatch! (Nemesis)

      It was a pyrrhic victory for the Lakota and Northern Cheyenne for which they paid a major price, and never recovered (not unlike the Irish now).

      When Custer lay dead, two Indian women drove arrows through both his ears, so that Custers soul would heed the kind of warnings in the afterlife that his earthly existence failed to take on board.

    • Deco

      YEs. Little Big Horn. Lots of arrogance (pride) in the build up to Little Big Horn. And still the lesson was lost on us.

  19. Eireannach

    Friends, countrymen, do not despair. Le me make the case for why you shouldn’t despair for Ireland.

    Firstly, let’s recognize something important about the breakdown of out society. The Murphy & Ryan reports, and the revelations of disastrous insane myopic bank-lending and ‘investing’ have all come to light in the last 2 years – but the actual wrong-doing occurred in the PAST – in the case of the banks, up to 2007 or so. If you went back to that past in a time machine, most people were so myopic they thought everything was going swimmingly and they were too busy to address any of the countries mentally ill complexes and sick delusional fantasies.

    We are now dealing with the illnesses we built up in our PAST. We are looking into our nation’s shadow self, and it is ugly. We have to do this before we can heal. Many young couple I know with mortgages have STILL not looked into the shadow side of their debt, to face the horror that they are bankrupt. They are still meeting their monthly repayments, but look out to the horizon, they are bankrupt. The denial of bankruptcy – government level, corporate level and household level, never mind moral and spiritual and cultural bankruptcy – is falling apart.

    It is the culture of denial, of coverup at all levels, that is falling apart. What is being revealed is impressive in the full revelation of it’s awfulness.

    Secondly, the best-selling books in Ireland ATM are DMcW ‘Follow the Money’, Shane Ross ‘The Banksters’ and so on. First we have to confront the horror of our own PAST, then find the strength to face it and it’s implications, then inform ourselves about the issues, and only THEN come to agreement about what new measures, institutions, procedures and standards of practice we should put in place in the aftermath of the collapse of the existing pillars of society.

    Unfortunately, NAMA may well go through before we are fully ‘awakened’ to face our shadow selves at all levels. That would mean the pain we have to face is greater than it might otherwise be.

    But the GOOD NEWS is that denial of facing the shadow self is over for the Irish psyche – I will toast to that!! The cost may be exorbitant in squandered treasure (NAMA) but there will be no more ‘let’s pretend’ culture in Ireland, especially if NAMA goes through. We will feel the pain at every level of society for so many years to come that the Irish psyche of phoney ‘wealth’ and phoney ‘good-cheer-even-though-I-have-a-mortgage-and-both-you-and-i-know-its-killing-me’ BS is DYING and will soon be DEAD!!

    Good riddance. So chin’s up folks, after the storm, the sun comes out. David said that when he ‘walked through the Valley of the Shadow of Death’ he would ‘Fear no Evil’ because God’s ‘rod and staff’ comforted him. I am comforted by the fact that the rod of heaven – the lightening strike of bad karma hitting the nation of Ireland – will get us back to the path. But my goodness we have strayed so far!! Hence we can’t even get it together to stop NAMA. So we need yet another clip of the rod of heaven. But we will learn in the end. The process of purification of our values and behaviours has begun.

    • I disagree.
      Notice that Fianna Fail still has a substantial hard core of support despite the worst bloodletting of the Irish “tribe” in history.
      This is incredible. Obvious many are still doing very well thank you.
      Given that only about 60% of the populace actually exercise their democratic privilege-and the Fianna Fail troops are as regimented as the Waffen SS when their backs are to the wall; I despair of any real change.
      The main opposition are in many ways a mirror image of Fianna Fail
      and Labour have pinned their colours to the big unions mast.
      Where does hope lie?

      • Eireannach

        @Tiranog33

        Hope lies in the fact that even with FF in hunkered-down formation, with FG being nothing more than ‘not-FF’ and Labour representing the beardy cowards in the Big Unions, insofar as none of the above honestly confronts the shadow-side of the Irish psyche, they will fail to change the country.

        If Ireland is a demoralised ship, with a think idiot at the helm, a drunk first mate and so on, we will change all the staff, but the ship will still be going in the wrong direction. But we WILL notice we are going in the wrong direction, the suffering will be so great.

        The hope, the ONLY HOPE for Ireland, is that delusion and myopia are eventually exposed, after all other options are exhausted.

        I’m afraid to confirm the fears most of us have that this process will take another few years yet, but it will happen. Our turn-around to good, wholesome, healthy habits, institutions and behaviour will be commensurate with the extend of our visceral suffering.

        As it stands, we are in deep, deep, deep denial. I haven’t even got started on the dire hydrocarbon energy situation coming down the line for Irish car owners and for oil/gas electricity generation. But first the unwind – as we can see, it has a long, long way to go. But it WILL unwind, therein lies the hope of a new tomorrow, a new Ireland, which WILL come, eventually.

    • Deco

      Eireannach – intellectually we are trying to recover. It is not the ‘recovery’ that Cowen and the media is talking about. It is something they fail to envision. Their recovery is 2005 all over again. Rather it is a recovery in the sense that we are better at analyzing our own situation and making better judgements. So yes, people are waking up.

  20. sean79

    The one thing I am grateful for is that the financial markets in the States went into meltdown when they did.

    Otherwise, I fear we would be in much greater trouble than we are at present. Another few years of light touch regulation and FF doing nothing to stem the fuelling property bubble would have have totally bankrupted the country.

  21. MK1

    Pushkin> Property will be kept artificially expensive by a factor of 100%, that is, where I should pay 120,000 for a three bed semi I will (forever) pay 220,000.

    You are right, that with NAMA being a contoller of vast swathes of property, the net effect will be that all property will be kept artifically higher than if market conditions prevailed. I dont know if your figures are accurate but we are all caught by it, as it feeds into rents, commercial rent, commercial property and hence keeps ALL services and products higher than they could have been.

    I agree that our political system is not able to match the people. But people choose the political system thaht they want. If FG/Labour are not protesting enough, there is nothing to stop you as an individual from organising and doing so.

    I wish there was a new political force for people to rally around? Tim, will you establish one? David will you? Will anyone? Surely the time is ripe for one?

    Agree too that the amount earmarked for EI etc is paltry compared to what will be given to the banks to shore up failed property investments of the past and already done, its a sop.

    Also of note yesterday was this promisory note aspect. In other words, long term debt as there is no chance in hell we could get it on short term and quickly. Hence, we pay more.

    Ironically, capital adequacy from ‘olden times’ was 25%. With Basle I which only came in in 1988 or so, capital adequacy requirements were reduced further to about 8%. Basle II and further reductions again. And banks were generally allowed to keep less, which meant they had more to lend which fed into the credit supply and the bubble. This has all been playing out only since 1988!

    How are institutions were allowed to go as low as 4% is nuts. And now the new ‘tough’ requirements is bringing us back up to 8%. And AIB’s recent stessed book was somewhere at 32% and that shows us how bad the credit bubble and the over-lending became.

    MK1

    • MK1, I was only looking at People Before Profit’s web site last night and they are asking for a donation of €10 a month, while I would agree with a lot of their principles, where is an un employed person going to get €10 each month to fund a political party, this is what is so wrong with Politics , it is simply all about money

    • Tim

      MK1 Please come to the Radisson Blu in Galway, Easter Monday.

  22. tony_murphy

    I remember watching a “Who do you think you are” on Dan Snow, a BBC presenter. His grandfather was a General during WW1.

    It was quite shocking how the generals just sent troops over the trenches to certain death. They set in a chateau 8 miles from the front, never visited it or knew what was really happening

    http://www.guardian.co.uk/world/2008/oct/19/somme-haig-snow-british-army

  23. liam

    The WWI analogy is interesting. By 1918 however, the western allies had replaced most of their General staff and the final counter-offensives that forced the Germans to the negotiating table involved tactics and strategy that more closely resembled 1940 than 1914. Though its always popular in Ireland to knock British leadership, a more interesting parallel may be drawn with the final collapse of the German Army, which was precipitated more than anything else by resource constraints that didn’t affect the Allies so greatly. German offensives of 1918 by a superior German force were failures, exposed this fundamental weakness and forced the German commanders to recommend a armistice to the German leadership.

    The Irish ‘Generals’ are insisting that we commit precious resources (and unlike the Germans, resources we don’t have) in an all-out offensive of a highly dubious nature. NAMA is Ireland’s equivalent of the German spring offensive of March 1918, its a one-shot deal and if (or when) it fails, there is no plan B.

  24. This is also war between the securely employed in government Quangos and state service- and the poor and the unemployed.
    Cowan has just done a sweetheart deal with the big unions-the usual capitulation and U turn exercise to strong lobby groups- for which this government is infamous.
    If we have a war analogy the millions of jews who had their wealth stolen by the SS could be equated with the millions of irish citizens who will now be set upon with a plethora of new taxes, to fill the financial gap represented by leaving the almost half a million public servants, alone.!
    http://www.youtube.com/watch?v=r6EeX1VZ4wA

    • Deco

      Tirnanog – CJH pioneered this as a vote geting strategy in the 1980s with deals with securely employed people in quangos, semi-states and D2. y CJH would always lavish the union bosses heavily. He was effectively buying votes. Ahern did the same thing. And now…it looks like Cowen is doing this also.

    • Tirnanogg33, at least for the start of this week , the Government has done a deal with the unions ,..but will the members accept this deal as built into it is the factor of things not getting any worse,.which it certainly will.
      So we are going to see further strikes across all services as funding will just not be there.
      We are going into a very Very dark period in Ireland and nobody ( well apart from a few here and other internet sites ) shouting STOP .

    • If the public servants are looked after then the poor and the unemployed will be defenceless.
      Irish public sector unions are a disgrace to human dignity.

    • Tim

      tirnanog33, that deal is rubbish. Public servants have not been “left alone”. They have taken a 20% net pay cut, or paid for 4 day week, while working 5.

      The new deal requires even more, extra work from them, simply for the promise not to cut their pay any further until 2014!

      (If you do more work for free, we wont punish you further, by stealing more of your pay, until 2014, when we might!!!???)

      The deal also requires that contracts are torn up and re-written by the employer and managers.

      Getting close to the notion of slavery, now…..

  25. Deco

    The First World War – four years of total stupidity which nobody was able to prevent and which caused to some degree every war in the twentieth century with the possible exception of a war between Bolivia and Paraguay in the 1930s. One one side a line of Imperialists, and on the other side a line of Imperialists. Both sides lost. But that did not end the imperialism.

    I am reminded of a poem, about the sense of total disenchantment from the ordinary soldiers, over the leadership, that I had to cover in the Inter Cert English course. I think it ended with a line about the old generals being able to go home and die in bed, while all the young men were murdered by machine guns in mud.

    If I was to use a First World War analogy of the current crisis, the similarities between Cowen and Tsar Nicholas II come immediately to mind. Two blundering fools who feel obliged to be all the time “going forward”, not knowing where they are heading, stubbornly refusing to listen to any contrary argument, both in a silly game of nonsensical escalation of commitment that will ultimately achieve nothing except the ruination of everybody below them.

    Gallipoli is also another interesting point. There is a book on Amazon called “The Peace to end all Peace” concerning the errors in British Imperial ambitions in the period. David talks about “Donkeys leading Lions”. Well them “Donkeys” took over the Middle East and it has been a seething wound ever since. In retrospect the Turkish did a better job of running the Middle East than the Arab soldier/tribal elites who are in power now. And the Turks definitely did a better job that the Imperial powers. After the Turks withdrew the entire region went into reverse.

    Perhaps McUseless might also apologise to the Turks for the fact that Irish soldiers were taking part in an invasion of their country, and that this was completely unwarranted. (Turkey was a crumbling empire itself at the time, and was hardly in a position to take over the British Empire, which controlled one quarter of the earth’s land mass and most of it’s oceans). We might also apologize at killing their young men when their young men were defending their homeland less than fifty miles from Istanbul. Irishmen were in the wrong place at the wrong time, obeying orders, completely mislead by the Irish political establishment of the day. And dying in droves. It was the ultimate virtue of the age. Everybody in Europe wanted to die for their country and be celebrated as a hero. (It sounds kind of super-ridiculous now). (By the way it still is seen as supemely virtuous in certain parts of Ireland-so we cannot criticize others). In the end the collapse of the Turkish Empire caused nothing but problems. If only the Turkish Empire had survived, the Middle East would have stumbled along as it had the previous three centuries. It seems that we were only temprorarily dishearntened from involvement in foreign misadventures and lemming like behaviour. We have had a recent age of Imperialism, with new weapons of mass destruction to make us feel powerful. (well it was also the age of Freud, so the bigger the weapon the greater the comfort in having it). Weapons like property schemes, bank bonds, hotel properties in London, penthouse apartments in Manhattan, loans, and sums that never added up. Let’s face it Anglo Irish Bank literally did behave as if it was a world conquerer. And BoI wanted to be there also when it tried to take over Alliance and Leicester. Luckily that flopped. That also worked out badly for the ordinary foot soldiers. The lessons from that have not entirely sunk in either. If you went to an Irish pub on the continent, it would not be hard to find another Irish person who will try to sell you local real estate.

    I wonder….does the civilian descendents ot German High Command still think that we still function as “donkeys leading Lions” ?? Let’s look at the “leadership” to see….Cowen, Calamity, Dempsey, Johnny Cash…and in Britain….Browne, Mandelson, Harman, Byers….there is substantial ground to justify the argument that both countries are still lead by a bunch of spoofers and incompetents.

    The survivors are those that stay away from it all as much as possible.

    • liam

      Niall Ferguson produced a pretty good read on WWI some years back (The Pity of War: Explaining World War One 1998). Its controversial enough, running counter to the orthodox wisdom on the course and outcomes of the war, but most interesting was the examination of the context in which the war began. There seems to have been a certain inevitability to how it all played out once the shooting started. The flashpoint of WWI was the culmination of years of folly, incompetence, arrogance and fear. Its outcome defined the political landscape of Europe and maybe the world for a century.

      I don’t think I need to spell out the parallels with the current crisis to people here.

      • G

        Reasons can be sumed up -

        1) Old scores to settle (Franco-Prussian war being the big one)

        2) System of military alliances

        3) Ludicrous arms race

        4) Underlining ethnic tensions (especially Austro-Hungarian Empire)

        5) Human hubris and folly

        6) History of militarism as a means of resolving ‘issues’ — Von Clausewitz‘s quote “War is a mere continuation of politics by other means”

  26. Deco

    I get the impression that we are getting full support from the EU Commision and the ECB if we go ahead with NAMA, bailing out INBS, ANIB and the EBS.
    http://www.breakingnews.ie/ireland/commission-to-probe-anglo-recapitalisation-452138.html

    Now, to me bailing out INBS is even more absurd than bailing our ANIB.

    And I am wondering why this has to proceed. Basically, there is a game in progress that is a confidence game. The entire project is about propping up confidence in the EU banking system. And if this is the case, then there must be bigger basketcases in the EU banking system than us.

    • MK1

      > I get the impression that we are getting full support from the EU Commision and the ECB if we go ahead with NAMA, bailing out INBS, ANIB and the EBS.

      Yes, we are getting lots of support as the existence of the euro is at stake. They will have their say and I notice that they were a major input of the valuation process that NAMA have used. Of course, NAMA and recapping the banks distorts markets, but the EU will turn a partial blind eye to this unless other banks cry foul, as in the case of ABN AMRO and Fortis.

      We are still in a mess though even with the participating nod of approval from the EC …. they are party to the mess rather than neutral.

      MK1

  27. laoislad

    I know this will not be much comfort, but this link shows an interview with an American Academic and author which shows how similar we are to the US in both our banking and Govt. problems. You really only have to change the names and this guy could be talking about Ireland. My memory may be dodgy, but I think David interviewed him for his last TV series.
    http://www.investmentpostcards.com/2010/03/31/bill-black-%E2%80%93-to-rob-a-country-own-a-bank/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+wordpress/VYxj+(Investment+Postcards+from+Cape+Town)

  28. Incident

    What in “gods” name have all these “learned” articles on the history of humanity got to do with what happened to Ireland yesterday?

    The only issues to be addressed are as follows

    1) The removal of the current administration, not because it will change anything dramatically, but a general election will implement the utter demise of Fianna Fail and therfore cronyism at all levels. It will also ensure the obliteration of the Green Party and its idiotic, weak and pathetic subservience to its partner in government.

    2) It must occur before September and before the “guarantees” are either re-instated or re negotiated and entered into law. Our new administration, obviously a combination / rainbow “affair” will then be compelled to approach the Irish question from a completely different aspect.

    This change is fundamental to the survival of Ireland as a Nation and our future generations.

    • Incident , your spot on . But we also need a People’s Mandate , of honesty one where the quango’s get broken up , HSE and Semi states cull their top heavy management teams, where bank managers and CEO’s get ordinary wages, where we bring down the number’s of T’D's , get rid of the Senate talking shop. Implement the McCarthy and Murray reports. Bring Fingleton et al to court take their pensions and even imprison them.
      Take over the empty housing estates and clear social housing waiting lists. Let our ex pats come home give them a FREE House and Commercial premises if they open up a business.
      Do a deal with these bond holders, begin a heavy investment into wind farms off shore and wave power,
      Cancel the agreement with Shell in Mayo.
      Finish up the Moriarty Tribunal. Bring our Judges pay down, and get in business people like Fergal Quinn and Michael O Leary along with Shane Ross honest individuals , shake up the department of Finance any one in there with a degree in accountancy or business or economics get rid of them .
      And stop voting for 1916 parties just because your parents voted for them.
      It’s not rocket science …..we need a Revolution a cultural and economic one, other wise Ireland will be worse off than it was back in the 1950′s

  29. tony_murphy

    dukes says that money required to fix anglo is dependent on property market. where does it all end, when will the stop asking for money.. alan dukes doesn’t know.

    we know..

    nama screws everything

    the 72 billion loan book is the answer

  30. ocallaghanr

    Q. Why did they call the Irish Pound the PUNT?

    A. Because it rhymes with Bank Manager

  31. Deco

    Story # 2 today is Quinn.

    Sean Quinn is an industrialist. Sean Quinn is being run down by the media these days. But Quinn is actually somebody, that we should be grateful for, to some degree. Quinn’s business model is to enter oligopolistic markets and to undercut the existing market players. Quinn has done this in Cement, in Glass, and in Insurance. Quinn’s insurance arm no looks like it will be sold off, and the money will be used to try and rebalance the rest of the Quinn business.

    Sean Quinn only made one mistake. But that mistake was the biggest mistake in Irish business history. Basically Sean Quinn believed all the hype about Anglo Irish Bank, before Anglo Irish Bank got sussed out. Quinn was not alone. Permo also beleived the nonsense coming from Anglo-at an even later stage. And for that mistake, Sean Quinn will pay dearly. Sean Quinn must be cursing the day he ever got entranced by all the bullshit coming from Anglo Irish bank, and all the media hype from Anglo Irish Bank.

    We will all pay for Anglo Irish Bank. But, I doubt that you will find anybody in Ireland who will take a hit as large in absolute terms as Sean Quinn.

    It is in the country’s interest that Sean Quinn’s industrial concern survives. We do not want to return to the day of there being only one cement manufacturer in Ireland, and that cement manufacturer being a corporate cousin of a large bank, through shared directorships and equity holdings. And Ireland needs as much industrial employment as possible.

    For elements in the media, there is a great reward from denigrating Sean Quinn. It is the type of posturing that must surely attract advertising revenue from what is now the largest industrial holding company in the state, CRH. And of course it’s corporate cousin, plus all the in-laws etc.. As Shane Ross state before, the relationships between boards of ISEQ companies, and the cross -equity holdings makes them all very “incestuous”. And the media, apart from the good Senator, nver comments. So making fun of Sean Quinn is good for business if you know what I mean. “Our advertising sponsors”.

    I don’t know if Quinn Holdings is part of the IBEC lobby group. Chances are that if Quinn is an oligopoly breaker, that Quinn is not part of IBEC. In fact Quinn’s commercial history would indicate that Quinn is the type of competition that IBEC is formed to prevent in Irish Commercial life. IBEC are the number 1 gombeen protection racket in Ireland. And Quinn does not fit in to their plans any more than Michael O’Leary. This means that the demise of Quinn is a boon for IBEC. (and of course the ISEQ ‘clan’ are the backbone of IBEC). So here we go again. The Gombeen element in Irish business will take over again. Just like the old days.

    Sean Quinn should be a warning to the rest of the population, that if you do business with the Straffan Mafia in Ireland, that you will always end up the loser on the deal. Irish business circles are still rampant with deceit.

    Also, we must commend Quinn for being a taxpayer both in Ireland and in the UK. I am saying this because this has become the exception rather than the rule in Irish business. In the context of so many rich business men engaging in high profile gestures whilst sticking two fingers to the taxpayer, Quinn’s normalcy is the be respected. Quinn can claim some moral superiority to the other forms of lowlife hypocrites who dominate Irish business like Denis the Menace, the ‘Kaiser’, Screw You Too, the “three amigos”, and who seem to regard taxes as something befitting the ‘plebs’ in the PAYE sector etc…

    • Deco

      I get the sense that Quinn is a suitable candidate for being made an example of ?

      I reckon the real solvency of other large Irish Financial firms is in even worse order. Quinn Holdings is a model of transparency compared to Ireland’s largest bank. I am sure that John Allen, who has more experience of the largest bank would concur. I mean Quinn Holdings is not asking for equity injections from either the public or private sector, like the two large banks. It is conceivable that Quinn could go to court and claim that his company was not treated similarly to other private capitalistic concerns like the Duopoly. This would be based on legal precedent. If this occurred it would become a major setback for the government’s plans to sink billions of equity into failed Irish banks like ANIB, INBS – and possibly slim chance outfits like the Duopoly.

      If Quinn is outside the IBEC/ISEQ tent, then this makes Quinn a suitable candidate for the cane. This is to make it look as if the rest are disciplined little boys. (and they are a boys club). It will also be interesting to see reaction North of the border. The SDLP has already expressed concern. We might see the loosely allied UUP also express concern, in an attempt to embarrass the DUP/SF coalition into saying something about industrial policy-an area where neither are have any competence. The UUP would be quick to exploit any unfairness from Dublin towards a Northern business as proof that business in the South is dominated by market rigging concerns, and another reason to keep away.

  32. DarraghD

    David’s last article pointed to the avoidance of reality by the use of what could only be described as using plain English words, in a different context than the rest of us understand them to mean…

    The same is happening in Leinster House today, Cowen says he cannot be accused of being a traitor. He is not prepared to even discuss the not insignificant matter that he put the interests of his colleagues, his party, banks and developers, before the interests of the vast majority of the citizens of the state. Now I’m no lawyer, but this sounds fairly close enough to what I understand the word “treason” to mean.

    But no, we must suspend all logic, understanding and rationality as we relate these things to the words of the English language. Because Brian Cowen says so, we must refect upon our understanding of the meaning of the word “treason”. We must find another definitition for the word, because our currently understood meaning of the word “treason”, would in fact mean that Brian Cowen was in all reality, a party to treason against the state.

    The only conclusion I can come to is that there MUST be something in the water in this country that causes people to tolerate this bullshit and messing.

  33. [...] David McWilliams writes about it on his blog here. Comments RSS feed [...]

  34. Alan42

    They took out 4 billion from government spending this year and a further 3 billion will be taken out next year further fueling the depression .
    They are giving 18 billion to a bank that does no business ???
    There are over 300,000 unemployed . Thousands in negitive equity which will not even be repaid in a lifetime . The only plan for ‘ economic recovery ‘ is to borrow more and more . They link the economy to their ability to borrow . There is no plan !

    You people are crazy . They will screw Ireland for decades .

    • It makes you ask if there is any point at all in working. What is the point if we are all going to be skint for the rest of our lives?

      • Dilly

        I have been thinking that myself lately. Sign on while doing jobs for cash. Two fingers to Fianna Fail/Greens.

        • But Dilly don’t you know that is illegal?
          Tut tut.

          The boot is on the other foot now. Thatcher and her cronies used to call unemployed people scum and said we should all get on our bikes. Meanwhile they they were the biggest crims of all and became millionaires through their war mongering and the dismantling of funancial regulations.

          Absolutely disgusting people.

          • Deco

            Ah yes….”illegal”….that is a description that has still not been formally applied to
            i) the 80 Million Euro plus loan to Seanie that was never on the Anglo accounts
            ii) the Multi-Billion Euro loan between Permo and Anglo when Anglo’s accounts were being resolved
            iii) numerous incidents of overcharging from AIB, NIB, etc. etc…
            iv) The Fingers pension plan
            v) The fact that lots of developers have millions stashed away in other accounts and they are not going to hand these over to NAMA
            vi) The fact that some NAMA developers are resident in Switzerland, Cape Code, Marbella and don’t seem to want to come home to cooperate with NAMA
            vii) The Dublin Docklands Fiasco,
            etc.. etc…

            But thankfully Dilly will get prosecuted and fined so that Dilly will not get out of line. We can’t allow that to happen…..

            We are stepping on a threshold of a new concept….”to well connected to be made liable for one’s debts”

  35. paulmcd

    I feel we have all become victims of molestation in the form of MINISTERIAL TAX ABUSE. If you are in the public service you are experiencing a Ministerial triple-whammy form of abuse: Not only are you bound to pay increased pension contributions, but the billions which were being set aside for those of you who will be retiring in the period post-2025 have been unceremoniously dumped into the banking black hole. In addition, you are expected to help bail out private pension funds who are supposed to have invested significant sums in Anglo bonds. The country continues to be so badly mismanaged that public servants can no longer count on a “GUARANTEED PENSION”.

    I note that Éamon Gilmore has accused the Taoiseach of ECONOMIC TREASON. At last, we are hearing language which is appropriate for the circumstances. The Taoiseach says he would never accuse another Irishman of such a thing. He is in no position to accuse anyone of anything. I hope to live to see the day when our lame-duck politicians in the FF/Green axis of self-serving incompetence and greed will be held accountable for neglecting the interests of the vast majority of citizens and actively supporting this insidious form of molestation.

    We are being governed by pigs and if we sit idly by, then it is we who will have become stupid inert donkeys.

    • Well said. Pigs is what comes to my mind when I think of these people. They are traitors to Ireland and I have no compuction whatsoever in labeling them as such.

      Irish people are usually too nice to say what they think but it takes people like us to poke the nest from time to time.

    • Eireannach

      @paulmcd

      The public are as self-serving as the politicians.

      We need to have the courage to admit that. The situation may change in time, I think it will, but for now it’s every man and woman for him/herself at every level conceivable. That’s what debt does to people, it terms them into hyper-myopic ultra-short-termists.

      • I agree but I am reluctant to blame the Irish people. I believe that we are in the process of a collective awakening and have faith that the Irish people will rise from their slumber.

    • Deco

      I disagree concerning the ‘economic treason’ at Cowen. Stupidity is more accurate I suspect, but Gilmore knows that it does not sound tough enough.

      • paulmcd

        Deco, Treason is a form of betrayal, and, in my book, denial of reality and continuing on an economic path which is patently destructive is economic sabotage and a betrayal of the nation.

        I believe Cowen when he says he would never use these terms when referring to another Irishman. He is monumentally lacking in economic know-how and management ability. With a modicum of either he just might have called some of the banking saboteurs to book before they inflicted major damage upon the whole nation.

        Let him try to redeem himself by being more pro-active in holding people accountable. He could start tomorrow by calling on Fingleton to hand back the 1 million euros he promised to repay. More likely he would say that it is a Nationwide management responsibility.

      • Bamboo

        Stupidity?
        Cowen is clever enough to react on Gilmore’s accusation with such fury and passion. The ‘economic treason’accusation was going to come up any day and of course Cowen knew this all the time so he has been rehearsing this drama act. Great display though.

        • suonish

          Bamboo,
          I appreciate what you are saying about Cowen and deviousness. But great display? Maybe I’m just to cynical, but I was brought straight back to primary school. And In the playground that is ‘our’ Dail, Gilmore just said: ‘Get in goal, you fat f**ck!” He’s well practiced. The fat f**ck.

          • Bamboo

            funny you mention primary school. At primary school when a child comes home with a bad mark for a test, the child always says that the whole class had a bad mark. So it doesn’t look so bad, does it?
            Cowen is doing the same thing. We are in a crisis but so is the whole world.

      • suonish

        WTF?? I didn’t. I this where the plamasing culture originated? I remember being lambasted for getting a ‘good’ in music. And can we PLEASE stop comparing ourselves to the rest of the world. We are NOT all in it together in a yellow submarine. We cannot PRINT OUR CURRENCY.

  36. David, this is very close to the truth and does more to explain the minds of these people than would any amount of economic analysis or number crunching. I am afraid that ‘advanced’ countries have a much worse record than Ireland. Ireland does not attack other nations and we are a peace loving country but Irishmen did pay sacrifice in disproportionate numbers to fight for what they thought was freedom. It was all a big lie and what they got instead was a stifling mind prison that held this country back in ways which is still coming to grips with.

    It is interesting that you should use General Haig and his ilk to illustrate the concept of crazy power without responsibility. My parents god rest them used to swear under their breaths whenever that name was mentioned and this was 60 years after the
    slaughter!

    60 years after Nama people will do the same when they hear certain names mentioned and the history books will show that even after the carnage of two wold wars those in power were simply not interested in what happens to their fellow man. They also have the cheek to call themselves good catholics but that is another story for another day.

    Stupid male pride, dogma and an inability to admit even the most innocent of mistakes are not the credentials of any leader, yet admitting to and learning from our mistakes and the folly of some of our ideas is what makes us see sense and helps us to get through this life with a clean conscience.

    This is all very basic stuff really and when one steps back and takes a higher level view of life we can begin to tell the forest from the trees. These people could never do such a thing because they have been sucked in and they have been blinded to such concepts as right and wrong, patriotism, honour.

    Charles Joseph Minard’s 1861 thematic map of Napoleon’s ill-fated march on Moscow should remind us all of how blind and stupid power can be:
    http://www.csiss.org/classics/content/58

    Lions led by lambs is was another metaphor use to describe the ww1 gererals and this
    diagram explains this idea brilliantly. I am sure some economist could modify it to
    illustrate the stupidity of Nama for all the good it would do.

    I am glad that many people in this forum are prepared to fight this madness and it helps me keep faith in my fellow man. Some days it is difficult and your article made me feel beter because it reminded me that the sacrifice made by others who went before us has not been in vain. Whatever the colour of our skin or what religion we are at the end of the day we are all Jock Tamson’s bairns and we all have to sweat under the same sun.

    I remember the day my father explained to me how his father survived a bullet wound
    in the Somme only to be blown up in his bed during ww2 with 10 other members of his
    family. Something like that can skew your opinions on life but how he managed to
    explain it without self pity or bitterness was remarkable.

    These characters dont exist any more and and instead we are landed with a shower of

    crims who would all be walking about in jack boots if it were not for the selfless contribution of that golden generation. I wonder what will Irish children and grand
    children in the future call our generation?

    • Eireannach

      @Pauldiv

      Future generations will not have a high opinion of this generation. When they hear of figures like 30% of cars on the roads being luxury models, this just as oil production peaks worldwide and goes into decline, such that future generations will be lucky to be able to afford a plane flight, they will want to vomit in disgust at this generation.

      The pot-bellied, golf-club swinging, luxury car driving ‘Dads’ of today will be the objects of contempt of their grandchildren.

  37. MK1

    The 100% guarantee put us on the hook for AnIB and others, and here is what I wroite at the time, 1st Oct 2008 in reply to David’s support for it:

    October 1st, 2008 at 8:04 am
    Hi David,

    DavidMcW> By coming up with a unique, Irish plan – guaranteeing all deposits –he has instilled confidence in the Irish financial system.

    Guaranteeing deposits of 400-500 billion is one thing, but the key aspect of this proposal (it is not yet enacted, it was a 1 page press release!) is that the LOANS the banks have received are guaranteed. Yes, it is perhaps unique and Irish as you point out, perhaps too much paddy-whackery, because like a badly written insurance policy, problems could come home to roost, very major ones. What it doesnt deal with and which is the underlying problem, are bad debts. It also doesnt solve the problem that banks have getting interbank money and on the now inflated LIBOR rates.

    DavidMcW> Most importantly, Irish banks are now safe.

    No, Irish Banks are NOT safe. All the Irish plan does is state who will pay for cleaning up a mess when a bank has problems (ie: it will be you and me, the taxpayer, our children when they pay tax and those taxpayers not born yet) should the worst come to the worst. It does NOTHING to change the underlying landscape of the banks problems. It may have changed some perception. It may allow the banks to get some more credit. But it wont stop people reneging on their loans and loans going bad, which is the underlying problem.

    DavidMcW> when everyone else around him was losing their heads the minister kept his.

    IF we have to, in the end, pay out say 10% of the 400-500 billion of deposits and a percentage of the loans the banks have (which are much more I’d imagine!), perhaps people in hindsight will be saying that the government who decided this DID lose their heads. The cost to Ireland and our economy could last for a generation or more as the taxpayers pay off what would be a hugely increased government debt.

    DavidMcW> upside outweighs downside

    Well, its a gamble as we dont know what the magnitude of the downside will be. It all depends on those loans and the ability of people to pay. Its an insurance policy. Like Cowen said, it will cost us nothing if we dont have to pay out on any policies. If we do have to pay for a lot of car crashes, it will be all downside.

    CREDIT = HEROIN
    I’d like to leave people with an analogy of what the credit hyper-binge has been about. Think of heroin as the currency. Banks are the drug dealers. They are supplying heroin to the masses. The world has binged on this credit heroin. We need it to get by. We are addicts. Like any addict, we need it to function and to live. We have got ourselves into such a state that we need more and more to function. The drug dealers are no longer dealing with each other due to shortage of supply. The central banks are ‘helping’ by providing their own heroin at increased levels which are unprecedented.

    So, what has the Irish Government done in this analogy? They have stated that any heroin drug deal and supply, whether an abuser stashes some in a bank, or whether a bank has borrowed some heroin from a major supplier, is that we will honour any deal, good or bad. The government will pay for the drug. The catch is that the estimated amount of heroin held in bank stashes is 400-500 billion and on the supply side the banks owe probably a multiple of that. Our government itself already owes 40 billion of heroin itself (ie: national debt), is spending 40 billion of heroin itself this year (and only getting in 35 billion) and will have to borrow some heroin for itself.

    Its a guarantee that would affect the lives of many for decades to come if it is called upon.

    Of course, it does nothing for the vast swathes of heroin abusers who need the heroin to survive (those who have taken loans out).

    (figures are ballpark and may not be exact)

    MK1

  38. stephenm

    Why don’t you make an appointment with someone in power and explain all this to them instead of just in the papers to us – from what you are saying we are in the sh1t big time like never before and you can see it more than anyone else – as you let us know of your predictions after the event –
    YOU now have a duty to get in front of these retards and make them change this NAMA crap around –
    I don’t want to read about what you have to say in the next few years – ha ha told you so !! – what good is that to anyone –
    get out there and get this sorted

    Stephen

  39. I heard Dukes on Newstalk today make the astonishing revelation that its very conceivable losses at Anglo have not bottomed out. Further falls in the property and they’ll be back to the taxpayer for more.

    In all of the understandable emotion whipped up about Anglo, its important to keep the thinking caps on.

    Re extra €10 billion that came out in the Dail yesterday according to Dukes today, ‘impairments will be bigger because the property market is a moving target.’

    So the money going in will form part of a bet on property roulette.

    It’s hard to pin down Dukes on details on the cost of winding down Anglo. These guys including Cowen are big into the politics of fear and innuendo, Ireland Inc will crash etc. But they conceal and hide the true facts of Anglo’s position from us.

    According to Dukes, they’ve examined this scenario and it will cost more than keeping it going. I presume he means if Anglo gets lucky on the property roulette wheel.

    European Commission doesn’t trust these guys and is ordering an investigation.

    Dukes needs to publish along with the Anglo results this week the audited figures that underly his position for keeping the black hole going.

    We need to cost and publish a set of reasonable scenarios that would put in black and white figures the cost of an immediate closure, including the cost of closing over a short period of time.

    Let the figures be published and speak for themselves.

    Senior bondholders do not have to be protected.

    Keeping Anglo alive in its present state makes us a laughing stock on the world markets!

    • Eireannach

      The boil of denial is about to burst.

      Not just corporate debt like Anglo-Irish, but also Household debt, as friends of ours – or perhaps you, dear reader – turn the page and start confiding in friends and family that yes, the game is up.

      The full extent of the shadow side of Ireland will burst onto the surface and it will be ugly.

      We’ll wipe it away and life will go on.

      But first, things have to come to a disgusting, ghastly, ugly, pimply head.

      • Deco

        The entire Irish economy has become an overleveraged debt instrument, with everybody celebrating the ‘wealth’ that it provided, and the media provide positive reinforcement for the feelings of euphoria that came from this cycle of self congratulation.

        And now everybody is trying to save themselves. The entire public discussion with regards to finance and many other aspects in the years 1996-1997 has been proven to be a mountain of BS.

    • Couple of other things came out today.

      One was the reduction over a number of years reducing from 16 to only 3 economists advising the Dept of Finance during the time of the blanket guarantee.

      Secondly, the night of the blanket guarantee, when Lenihan and Cowen were being conned by the bankers, Lenihan and Cowen and the Dept mandarins could have phoned the European Commission and gotten access the expertise they had available to advise a responsible solution, which they could have chosen to ignore.

      They decided not to, instead phoning Europe next day to give the Irish solution, the crazy guarantee, to the surprise of European heads of state!

      The Banking Inquiry needs to look carefully at the actions of responsible/accountable decision makers in the Dept Finance during this period.

      They’ll probably find a closely knit anti intellectual cartel of politicos, Dept Finance mandarins, developers and bankers with taxpayers on tap for the bubble Ponzi scam.

      An infection of our democratic system, a boil that still needs to be lanced, by removing the administration responsible for it along with black hole Anglo.

      When are the decent people of Fianna Fail going to refuse to support the present government, clean up their own party and give taxpayers a better deal with a new government and an end to toxic Anglo.

      Are there any decent Fianna Fail TD’s prepared to vote against the party that’s ruining our State!

    • The Anglo situation with regards to Riverdeep/Houghton Mifflin Harcourt/EMPG is not clear.

      Did Anglo stump up several billion when Lehmans pulled the plug?

      If that money is secured on worthless shares, then will Anglo need more govt cash?

  40. The Anglo proposals are totally off the wall.
    The latest figures your Government are proposing to flush down this toilet is a step to far
    we all know very well that these figures are again just a drip feed into the general media even as I write this posting,
    Allen Dukes, the nominated CEO of this Toxic entity has come out this morning (a day after the funding announcements) and said that the extra Euro 10, 000.000.000:00 on top of the already 4, 000.000.000:00 and the 8, 500.000.000.:00 will not be enough, further funds will be required and this is only for the Anglo Irish catastrophe.has anybody askes what is the 8,500.000.000: actually for? What are they paying off? Derivative contracts that are due and are losses?
    Or is it??? What about the huge losses in the COD’S
    I believe that the banks Allied Irish Bank, Bank of Ireland and Anglo Irish Bank are all hopelessly exposed to huge losses as a result of Derivative trading
    They should be asked to come clean and give categorical assurances on their Derivative Trading losses now!

    • Agree, the whole Credit Default Swap insurance angle including Derivative Trading for Anglo and the other banks needs to be laid bare.

      If Anglo and the other banks are exposed to this kind of derivative trading losses, the taxpayer needs to know.

      A proper inquiry led by a decent judge with power to compel witnesses. Fast. Similar to the Madoff trial. Bring back Drumm, disgusting he should be flaunting it in the USA while this is going on in his wake.

      Time to end the lies and cover ups. Let the whole truth come out.

      • Deco

        Drumm can be summonsed on the basis of an extradition warrant. To set up an extradition warrant, evidence needs to be collected, formalized, and charges need to be prepared.

        On the other hand, the yanks owe us for the use of Shannon. Therefore the CIA might do us a favour and bungle him into a plane and send him over :)
        I think that Drumm is only half as interesting from the viewpoint of NAMA as a certain big fish living in Switzerland, and who has no intention of letting NAMA access his assets.

        • Deco

          I don’t know how many of you seen Charlie Bird trying to interview David Drumm in his bolthole in Massechussetts.

          It is fairly obvious to me that David Drumm is what is commonly referred to as asshole. This is exactly the type of self serving gombeen who you would expect to find running a bank like ANIB. Concerning professional references for David Drumm, you will find an excellent write up on his careers acheivements in Phoenix Magazine Dec 2009.

          Now it is obvious that Drumm can afford to repay his loan from Anglo Irish Bank. He is living in a 4 Million Dollar house.

          Perhaps somebody senior in the Irish government could phone somebody senior in the US government and then the US authorities could ‘instruct’ David Drumm that he is not welcome in the US if he is a bit of a Fuld or a Madoff at home. I would like to know Drumm’s status in the Us with regard to residency.

          On the list of people that deserve to be made accountable for the current mess, David Drumm is top of the list.

  41. [...] plan ,pure folly David Mc Williams explains ,but there is no mention of the Derivative contracs Anglo is holding along with the AIB and [...]

  42. Deco

    This commentary about Ireland having a ‘proper’ ‘austerity’ package thing is nonsense. There have been no quangos eliminated. There have been no layoffs in D2. There have been no layoffs in the hierarchy in the HSE. There have been no layoffs or pay cuts in any of the banks. A broad income levy, and a public sector pension levy is all that happened. The pensions at the top in the state system are outlandish. There still is massive overmanning and layering in the state system. Work practices are not efficient.

    To fix the economy, the two most important things are to reduce the cost of doing business in Ireland, and for Ireland to really mean business. And in these two dimensions there has been some improvement. In the first we had some deflation. And in the second we have seen many people respond as individuals to the crisis that they are dealing with, and remedying of some aspects of state policy. But the improvements that have take place thus far, are inadequate relative to the size of both the unemployment level and the debt level.

    This idea that we are to be congratulated for what we are doing is greatly misplaced. The fact is that it will take a lot more hard work, and toughness to solve this than anybody will admit. The current ethic of self-praise for baby steps while leaving massive areas out of sight, is illusionary and dishonest.

    • Deco

      Concerning ‘austerity’ Cowen, Harney, Ditherer, McUseless, etc.. don’t look like as if they are going hungry….Time for another pay cut for the political establishment.

  43. Afternoon,

    Thanks for all the comments and suggestions. My hunch is that it will get worse and that these are the best figures they could get away with putting out. What about all the sub-NAMA mess, ie the loans of less than 5 million which are now impaired and in many cases worthless?

    There will obviously be no investors coming in as any recapitalization needs to insure not only that the banks are viable, but that they have enough money not to go bust again! Without full knowledge of where we are going, no new private money will arrive, no matter what the terms.

    On MK1′s point (and one he is right to ask about) what about the guarantee back in 2008 and my suggesting it to the Minister? The key then was to prevent a bank run and I had seen this type of policy work in Sweden and Switzerland, however, I had stated that the two years would give us time to see what type of mess we were dealing with. Two years was to be the life of the guarantee not more. Now we know, so the guarantee can be allowed lapse in October as envisaged in Sept 08. In fact, we can use the threat of the lapsing guarantee to bring the creditors to the table.

    Extending it now, knowing what we know is a disaster; using it as a giant ticking clock, running down the creditors options would still work, if we are prepared to accept that default/repudiation is only viable solution.

    Best and thanks again for you time and comments, David

    • ps200306

      David,

      How can we calculate the costs (and risks) of that approach. The Irish Times today claims the cost of letting the banks fail is “unquantifiable”. The average punter wants us to take the least cost, least risk option … but nobody seems willing or able to put precise figures on any of the options.

    • paulmcd

      David,

      The fact that European leaders are not prepared to allow banks to fail is at the root of many of the problems in the EC, but overwhelmingly so in the case of Ireland.

      In the US the cost of trying to save Lehman Brothers would have been incalculable. In fact, some have argued that the problem was not that Lehman Brothers was allowed to fail but that it had been allowed to succeed in its operations for so long.

      Last year, 140 regional and local banks were allowed to fail across the United States, but we did not hear news about these failures. These failures are continuing at a more advanced pace this year. Perhaps, if we were more aware of this phenomenon we would not be so hesitant in letting go of Anglo and Nationwide.

    • @D 39

      “Extending it now, knowing what we know is a disaster; using it as a giant ticking clock, running down the creditors options would still work, if we are prepared to accept that default/repudiation is only viable solution.”

      If Anglo is allowed to go its merry way, the guarantee will only be an irrelevant sideshow. The economy will be sucked into its black hole.

      Anglo needs to go. Switch off the guarantee for Anglo and signal this for October.

      But Clean the rest of the banking sector. Give the cleanup part a FIVE YEAR GUARANTEE to show the cleanup comes with due diligence and is serious.

      Anglo needs winding down asap as its currently infecting our very ability to guarantee anything!

    • G

      Part II of the debacle as you say are the amounts under €5 million, and house reposessions, with rising unemployment it is inevitable…………….when that wave hits things will get even more ‘interesting’……….

      oh, what a lovely war…………………

    • MK1

      Hi David,

      We should be thankful that you read any of the comments on here.

      > My hunch is that it will get worse and that these are the best figures they could get away with putting out.

      I tend to agree, it is a risk that this first tranche is the best of a bad bunch. BOI’s CEO did state though that their future transfers to NAMA would be in and around the same 35% haircut for them, but seeing is believing.

      Plus future injections of capital cannot be ruled out.

      > What about all the sub-NAMA mess, ie the loans of less than 5 million which are now impaired and in many cases worthless?

      They are handled by the institutions managing them themselves and taking on new capital as they are written down. Their haircut though could be equally around the same and may indeed be better (or worse). There are clearly ones that are next to worthless.

      > There will obviously be no investors coming in as any recapitalization needs to insure not only that the banks are viable, but that they have enough money not to go bust again!

      Also any private funding gained recently by AIB and BOI was government-backed and at higher market rates. Thats why clean new fresh banks would have been better for Ireland Teo. We are using the sick banks to build on. Crazy. Thats why the ‘lance the boil’ policy was the best option as far as I could see.

      > what about the guarantee back in 2008 and my suggesting it to the Minister? The key then was to prevent a bank run and I had seen this type of policy work in Sweden and Switzerland, however, I had stated that the two years would give us time to see what type of mess we were dealing with. Two years was to be the life of the guarantee not more. Now we know, so the guarantee can be allowed lapse in October as envisaged in Sept 08. In fact, we can use the threat of the lapsing guarantee to bring the creditors to the table.

      I had intended to mention the 2 year duration of the guarantee, where you and others have stated that it should be allowed to lapse. However, my fear back then was and is that once you give a guarantee for the loans, its much harder to extract yourself from that guarantee.

      A guarantee for 100% of desposits is one thing, and yes, it would prevent a bank run and maintain trust, but guaranteeing loans is close to madness.

      > Extending it now, knowing what we know is a disaster;

      I agree. But the risk back in Oct 2008 was that we didnt (nor did the banks) know the scale of their mess. They were still in denial and believing their own mantra. BOI only had 1% as a bad loan estimation. Our government went blind into giving the guarantee, and generations will pay the cost if it continues.

      The question is why would a government do it and so quickly? People talk about cronies but it is more than that. Clearly, Sep 2008 were scary times internationally as inter-bank funds were hauled back in.

      But for us locally we had a run on shares, if you will, with BOI, AIB and AnIB shares decimated. Now, consider that many pension funds had shares in these bluechips, as well as individual investors of course. The case of Sean Quinn in Anglo is well known. Shoring up the banks in perception was to me an attempt by the government to somehow save Ireland Teo and her funds investments in these banks. Thats why they were perceived as our Irish banks.

      But as you David and others have pointed out, the money is gone. All the government could have attenpted to save was the perception, the trust. The bad loans were and are there whether recognised or not. They certainly werent recognised in Sep 2008.

      And NAMA is a major attempt of propping up the sick animal. It can only cost the people both directly and indirectly. The money gained by counter-parties such as in the Sean Dunne deal in Ballsbridge is gone. The ONLY way to possibly get the money back would be some form of clawback of those that gained, but much of the money is no doubt off-shore so we can never clawback enough.

      Keep up the good commentary David,

      MK1

  44. Deco

    Ah, yes. Self – Regulation. Sure everybody does self regulation. The banks did it. The accountants. The speculators. The Estate Agents. And now head-shop owners are into self regulation as well.

    http://www.breakingnews.ie/ireland/head-shops-to-draw-up-code-452178.html

    When you don’t want ‘regulation’ to interfere with your profit making, you form an association and try ‘self-regulation’. I wonder will they be setting up a fund for compensating the relatives of people who die from overdoses, or to pay for their liability for the mess that the hospitals have to clean up ? Eh, most likely, they won’t.

    • Deco

      This is the problem when the lobby organizations like IBEC are effectively running the country. You get every village idiot trying to form their own mini-IBEC. Our democracy has been taken over by IBEC and the “corporate governance”.

  45. Rheinmeister09

    From someone living in the US for the past few years through the mess of the banking sector here and watching what goes on at home a few things strike me about how Brians Cowan and Lenihan and the country in general are handling and reacting to the situation there. First off, when you consider the mess that Wall Street made here that arguably started this siuation in the first place NOT ONE BANKING EXECUTIVE has been made to pay for their mishandling of the respective banks that they were in charge of. Madoff operated his own company and even though the SEC and Wall Street was warned that his was a house of cards waiting to fall nobody did a thing. At least Fitzpatrick and the rest of the clowns in Anglo are been held accountable and prosecutions will hopefully follow. On the other hand I am still somewhat puzzled that the smaller banks/building societies like EBS and Irish Nationwide were nt forced to merge to create a viable alternative to them existing apart. Surely they would have been able to write down some of the bad debts on their balance sheets and reduce the amount of recapitalisation needed from the govt now. NAMA is a curious facility and unless you have a crystal ball at your hands its very difficult to say whether it will work or not. The reaction in the Wall Street Journal this morning was that based on the discounts applied yesterday the property that NAMA will take over needs to increase by 10% over the next 10 years for the country to make a profit – here’s hoping that that’s true…

    With regard to the level of unemployment in a small country like Ireland it beggars belief that the unions can go on strike and refuse to take a pay cut when their pay makes up the biggest burden on the govt at the moment. When recession hits, regardless of who’s responsible for the mess, everyone takes a hit. We have a president here who is trying offload a trillion dollar health care reform package that our childrens children are going to pay for and the economy has still not shown any signs of real recovery for all the money that was supposed to be used to get the banks lending money again. On top of that cuts are been imposed across the board. But you know what as annoying as it is to have to take responsibilty for someone else’s mess it has to be done….

    • ps200306

      >> “based on the discounts applied yesterday the property that NAMA will take over needs to increase by 10% over the next 10 years for the country to make a profit — here’s hoping that that’s true…

      Residential property is going to fall by at least another 10% this year. Until NAMA came along, the one ray of hope in all this was that property might become more affordable for Joe Public. Now Joe Public’s gain is also Joe Public’s loss and vice versa.

  46. Deco

    NAMA. Here is what you are getting. A lot of property in London. The problem is the price. The price was from the peak of the market. And forget about the price declines. The decline is doubled when you factor in the fact that Sterling plummetted against the Euro in the intervening timer period.

    http://www.independent.ie/business/commercial-property/hot-property-linked-to-toxic-loans-2118154.html

    As far as I know, the Battersea power station does not generate any power. Well that sounds like a great investment. The London property portfolio will probably be moved out of NAMA first, as it will not slump property values in Ireland.

    Other “assets” include a 50% share of the K-Club. (Maybe we might get Seanie Fitz to buy that to keep out the riff-raff). A more realistic option would be to tempt Smurfit or one of his pals to buy that 50% share and own the K-Club outright ??
    Dundrum’s Large Shopping Mall/Retail Centre will also be included. (I suppose it would be uneconomic to knock it ?? ).

  47. John Q. Public

    Does anybody know what sort of people work in nama? Are they the same kind of people you would find in a bank who look after loans? Are these loans over €5 million and the toxic debts now in better hands? Are the banks not better off holding on to performing loans over €5 million and just getting rid of the toxic loans, at least that way they will get some money in? Instead both are shifted to nama in exchange for a bond, not cash (there is none) but a bond. That puts nama (the tax-payer) in a position where it owes the banks for the long term i.e. we will be bled dry for decades. This does not seem like a real rescue operation as there is no initial cash injection to the banks, nama are just going to do their homework for the banks for decades and paying them for it. What a Paddyirishman situation! Why can’t the banks look after their own problems. They could rent out those vacant apartments to immigrants cheaply, that would save the tax-payer shelling out €500 million per year on rent subsidies.
    One final thing, today BOI announced that they are to sell a financial institution up the north for €7 Billion. Why were they not made do this when this mess started? The re-capitalisation process remember? The financial regulator pounced on Sean Quinn quick enough but left the banks alone.

    • Deco

      Sean Quinn’s shortfall is a pittance compared to the situation in AIB and BoI. But they are much better connected. It remains to be seen if there is a reaction north of the border concerning Quinn. The SDLP have said that they are concerned. With a UK General Election coming up, we can expect the Ulster Unionists to use it as an excuse to take pot shots at the DUP and SF over Dublin treating a NI business less fairly that the well connected in Dublin. It would be like the UUP to exploit the distrust amongst both sides of Northern society of Dublin business cliques, to get votes for the UUP at the DUP’s expense, and for the SDLP at the expense of SF. And the DUP would be unable to respond.

      Unlike the D4 Financial Institutions, Quinn’s Finance arm actually has a viable strategy for getting itself right. The business plans of INBS, EBS, ANIB have more holes in them that a Swiss Cheese. Permo is a slow motion train wreck. AIB are keeping strangely silent. They have been inconsistent in this crisis. And BoI have been talking themselves up, and are now offering mortgages to UK customers providing a clear indication that they are intellectually in the same state as they were before the crisis begun – so I reckon BoI have still not learnt enough to be ready to get out of this.

  48. paddythepig

    “In the case of bank failures, the state guarantees depositors’ funds under a deposit insurance scheme and we start again.”

    In the current environment, where all the institutions are insolvent, and paranoia is at an all time high, how much would this cost?

    If I look for insurance for my house, and it is virtually certain that my house will be burnt down, how much would an insurer charge me to the insure the house?

    Answer : minimum, the price of rebuilding the house.

    Paddy

    • Tim

      paddythepig, plus “site-clearance” cost for demolition of shell, removal of rubble, excavation of existing foundations; Then, the rebuild.

  49. philo

    With all due respect to David McWilliams, he plays his part as much as our bankers, politicians and property developers have in maintaining a system that discriminates against the many and is controlled by the few.

    We live on a planet that has a finite amount of resources. Our day to day life’s are constructed to increase productivity. We are machines that perform tasks. We work for companies that need to increase there productivity year on year to exist. These companies together with individuals make up the economy of the country. GDP (Gross Domestic Product) as a country needs to increase and grow each year. And I go back to the point that we live on a planet that has a finite amount of resources using a system that requires infinite amount of resources to continue to exist. Its absolute madness when you think about it.

    We are sold the illusions of freedom by conforming to ever greater systems of control. By debating on the level of weather we nationalize or let banks go bust is irrelevant or even how we manage or control these institutes. Because by going to that level we are assuming that society must function on profit and growth, and that for profit and growth we need an exchange system i.e money. To manage money we need banks. These banks need to make profit to function optimally. To manage banks we need central banks, and on and on and on.

    We play a game that already has the outcome predetermined, That is so deliberately complex we can never or will ever truly understand what the game (system) is that we partake in. And that is what I mean in the opening paragraph, we think about how we tweak and change the superficial aspects of the systems believing that this is power and freedom. This tweaking of the system or moving of the players is nothing more than pruning the branches of a tree were the roots lay well and truly out of sight. And the very act of Participation reinforces the robotic nature of what we have become.

    Do any of us truly understand what the concept of money is?
    How it derives its value?
    How does it come into existence in the first place? And by whom?
    Who does government borrow from?
    And from where do those lenders get the money from?
    Why has every county in the world got national debt?
    And to whom are these national debts owed to?

    And I could go on and on

    Phil

    • wills

      Phil.

      Your odious contention that DMcW’s shares the same ‘suit of clothes’ as the banksters and mafia developers is incorrect.

    • Deco

      If David McW is part of the clique, then he let them down by telling us that the boom was all based on borrowed money six years ago….

    • philo

      I have no contempt towards Mr McWilliams. I am trying to highlight the fact that Mr McWilliams as most people do put suggestions forward that deal with the superficial. Its as useful as suggesting by changing the colour of the car that is about to run you over is going to somehow do you less damage.

      I would request you re-read my original post.

      The systems in place today are rotten to the core. Be it political, financial, educational, religious etc. They are set up in such a way that the system must prevail at any cost. The fundamentals that need addressed are way beyond what is explainable on a blog post.

      As simple as I can make it. People like David McWilliams are put forward as the alternative bringers of change. In my opinion this is purely an illusion. I believe that he sincerely believes in what he does is right and yes he is putting forward different opinions. Its hurricane season and he’s is rearranging the furniture in a house made out of straw.
      If the basic structure is flawed, corrupt or whatever to start with then until you address that, any other changes are at best temporal.

      I ask again each person reading this post do you understand the concept of MONEY?

      How is money brought into existence?
      Why do sovereign states hand over the power of creating money to private cartels?
      If all the debts in the world were paid off today how much money would there be in circulation?
      Why does nearly every country in the world have a national Debt?
      To whom are they in Debt?
      If society needs money to function then why put the control of its creation into the hands of private cartels that are unaccountable?
      Why was usury forbidden and frowned upon by nearly every major religion in the world?
      If the amount borrowed is only ever brought into existence and then interest is added then how can the debt ever be paid?

      People we can never understand and debate on the level of sublime mortgages,hedge funds, toxic assets, foreign investments bond holders etc because it is deliberately complex that the average person says I haven’t a clue how it works so I better leave it to the people that do. And even with well educated people like David McWilliams they can never get a straw house to stand up to a hurricane as it’s the structure that needs to be replaced not the furniture within.

      Phil

      • wills

        Phil.

        i agree on the paper money fraud and central banking system tyranny been the real story and at the heart of all the other stuff.

        • philo

          Hi Wills, that is it and now the smoke and mirrors begin again. The furniture is being rearranged. It is all so sad We have become a society of robots dumbed down to become blind followers.

  50. wills

    Posters.

    We are been told now ANgLO give us the biggest losses in Irish corporate history and the new CEO is on telling us all how appalling it all is.

    I find this disgusting. Everyone knew it was an outrageous bubble and we have Ivan Yates on rabbiting on on Newstalk that we need to fix capital reserves ratios NOw, where were all these people and their outrage during the so called SCAMARAMA BOOMTIMES I ask shouting STOP.

    • Deco

      Wills – I have been told that a caller to the Joe Duffy show earlier today had some relevant news.
      Seanie Fitz was a director of Aer Lingus. (mmmm….did he study aviation at college ??)….And if anybody has ever been a director of Aer Lingus, then that person is entitled to free flights for life. (This should be scrapped). This adds insult to injury. Anyway the rumour is that Seanie is on the Med. We do not know his motives.

      I also find the current media coverage concerning the current banking crisis a bit questionable. The same people who told us that the boom was really, are now providing coverage for the bust that resulted from the boom being phony. It is all a bit pretenscious. There is an integrity problem in the media !!!

      • Deco

        I forgot to mention. The rumour is that he fled last night.

        And David Drumm won’t do interviews either. In fact Drumm is extremely ignorant, and seems to have contempt on the Irish taxpayer.

        • wills

          Deco.

          Charlie Bird RTE 1 tonight literally knocking on Drumms 4,000,000 million dollar home poking his nose in the window and Drumm ducking behind the couch shouting out ‘charlie is that you charlie’. This is just awesome in the sheer scale of its audacity.

      • Dilly

        Yes, the people who championed the boom, they have changed sides and are now hiding at the back of the mob shouting “Burn the Witch”. They are now standing behind the people they used to make fun of for being “cribbers and moaners”.

        • Deco

          Yes….Classic example of the changed sides approach is the Irish Times. They were the number 1 cheerleader of excess in the serious media. TV Tripe were even worse than RTE, with all the consumerism, shopping, retail therapy and property in the Sun nonsense.

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