April 12, 2010

Embrace the unpredictable

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In a crisis, what seems initially radical and impossible to contemplate can quickly become consensus and mainstream.

The sands are shifting so quickly under our feet, a thought that can seem fanciful at breakfast can be plausible by lunchtime and become government policy by night.

Think about the economy and how we have moved. A few years ago, suggesting house prices would crash violently was dismissed by the mainstream as radical – the currency of ‘‘self promoters’’ and ‘‘cranks’’.

Similarly, in 2007/06 anyone who questioned the banks and their robustness was slammed as unpatriotic or naive. In September 2007 in The Generation Game, I described Anglo Irish as ‘‘an out of control hedge fund’’ that would ‘‘go bust’’.

The mainstream guffawed and rubbished this notion. Even late last year, questioning the wisdom of the euro as constituted at present for Ireland and Greece was equally looked on as radical.

The Economist magazine described my suggestion that the euro was not appropriate for every European country, Ireland included, as ‘‘plain potty’’. Guess what? This same magazine has spent the past few months questioning the wisdom of the euro, the very article of faith that was supposed to be its doctrine last November.

Now we can all be wrong and only an eejit thinks that he has any monopoly on the truth, but time and again in a crisis, the only rule seems to be that there are no rules. And, if we adopt an almost childlike curiosity and flexibility to problem solving, we can sometimes get closer to the outcome than if we dismiss the unthinkable because our adult mind has told us that this is not possible.

Another way to look at this is – as the Prussian military genius Von Clausewitz stated – ‘‘the best laid military plans never survive the impact of the enemy’’.

Therefore, we would be wise to embrace the notion that everything is unpredictable and what is ‘‘outside the box’’ today can be ‘‘inside the tent’’ tomorrow.

Interestingly, once an idea gains credence the opposition to it falls away, which may have more to do with human nature and that thing about success having many fathers while failure is an orphan. As a result, there can be contagion in ideas as well as in financial markets.

New ideas, like new paradigms in markets, can spread rapidly to become conventional wisdom.

Armed with these few observations, let’s consider why banks or nations default on their obligations. Defaulting sounds off the wall, but it happens regularly. Until recently there was no real suggestion that Greece might do such a thing.

However, Greek bonds are now trading at an interest rate of above 7 per cent. This is higher than Icelandic bonds, implying that the financial markets believe a country in the euro, which has met every debt interest payment so far, is a greater risk than a country outside the euro, which has defaulted on everything. By the way, it is also higher than Colombia – a country with a history of defaulting.

A recent book called ‘This Time Is Different: Eight Centuries of Financial Crisis, by Ken Rogoff and Carmen Reinhardt, two famous US economic professors, evidences that since 1945, the average time between a serious financial crisis and the default is three years.

There is a pattern in all crises and defaults, which is more or less the same in every country.

In the immediate aftermath of the financial crisis, the government believes that the national bond market can be used as a giant skip into which the sins of the past can be thrown. Debt begins to rise and if there is a banking crisis, the debts of the banks are transferred to the taxpayer.

This pushes up the debt to income ratio rapidly. But for awhile there is calm.

However, bubbling under the surface are doubts and these doubts trigger changes in what the authors call the ‘‘tolerance of debt’’.

The authors argue that once the debt to income ratio goes above 60 per cent of GNP, both the citizens’ tolerance of more taxes to pay the interest and the markets’ tolerance of politicians’ soothing words, begins to atrophy.

Greece is in this position now. For the Greeks the two alternative routes are whether to default now or wait for the German and IMF led bailout and contemplate what is called ‘‘internal devaluation’’, which means letting rising unemployment and falling wages bear the brunt of the economic pain.

We face the same choice. For the political elite these are just words, but for ordinary people unemployment and wage cuts are real.

My suspicion is that Greece will default. By this, I mean it will repudiate debt by renegotiating the terms of the debt simply because the population won’t tolerate the hardship associated with unemployment and rising prices. Greece also realises that the financial markets are forgiving. They are forward-looking.

What happens if this occurs? Well, it changes the game. If Greece defaults in the euro, the precedent is set. Ireland is likely to be next because we are now firmly in the danger zone where debt to income is above 60 per cent and exploding. Examine these figures: In 2008 our debt cost €1.5 billion to service. This figure had jumped to €2.5 billion in 2009 – an increase of €1 billion, or 66 per cent.

But if you look at our debt servicing costs as a percentage of our tax revenues, the picture is much more worrying. In 2008 we spent 3.8 per cent of tax income on debt servicing. In 2009 that figure was 7.7 per cent, an increase of over 100 per cent year on year.

This trajectory gets worse. As a government’s income is reduced, it borrows more money to close the gap, which in turn, means a greater amount of tax will have to go on interest payments the following year, which will lead to a greater deficit.

Also, as the government is forced to use more and more of our money to pay off its debt, it becomes unable to invest in productive things that would increase the growth rate of the economy.

Today, our national debt stands at 57 per cent of our GNP. But after the bank bailout (€54 billion for Nama and €18 billion for Anglo) debt rises to 108 per cent of GNP. This is not counting the money for Bank of Ireland and AIB.

So quite apart from the deteriorating situation due to the gap between spending and revenues, 50 per cent of GNP is being spent on the banks.

The problem is that none of this spending increases the productive capacity of the nation. The government, by keeping the banks afloat with our money, is in fact investing in land. But land has no productive value. So all the money is spent and all the debt is amassed, but unlike other countries who have debts, we have no infrastructure to show in return. All we have is fields in Athlone, revamped golf courses and zombie hotels.

So are we headed for default?

I know this sounds like heresy now, just like property collapses, bank failures and problems in the euro sounded heretical in the recent past. But they happened. Again, events – once they move in a certain direction – tend to follow a similar path.

Take the following example, from my own experience in Russia in 1998. In June 1998, the IMF announced a bailout for Russia. At the time, the newspapers said that the crisis was over and the IMF had saved the day.

The main banks and brokers announced it was an opportunity to buy Russian bonds again.

However, a wily old investor called me and whispered: ‘‘Now is your last opportunity to sell’’. We did.

I sense that smart bond investors will use any putative EU bailout as the last opportunity to sell. The clumsy ones will buy, believing the government and brokers’ spin.

But as they realise that Greece’s problems haven’t gone away, the positive euphoria accompanying the EU bailout of Greece will dissipate.

When the bond market panic ensues, contagion will take hold and Ireland will be next.


  1. —- WELCOME TO THE CAYMAN ISLAND—-
    or…. Ugland what?

    Ladies and gentlemen, this is your captian speaking, welcome to the cayman islands, the weather forecast for the next few days is fantastic, outside Temperature is currently 31 degrees celsius or 87 degrees fahrenheit, the capatin and his crew would like to thank you for flying with …..

    Yeah, that would be something now, wouldn’t it?

    I know, but I am not taking you to the caymans for a pleasure trip, well, I’d love to, but for now I rather continue my quest for Anglo’s subordinated and senior bondholders.

    So, it seems as if the Minister for Finance himself does not know who they are, we don’t know who they are. May be even Alan Dukes does not know who they are.

    Who the Hell knows them anyway? Good question!

    Remember Parmalat?

    The multibillion dollar accounting fraud events that were on a scale like WorldCom, or Global Crossing. Transactions structured by U.S. bankers, overseen by U.S. accountants, and requested by Parmalat executives and lawyers were combined to create a company whose debt was ultimately understated by $10 billion and whose total net assets were overstated by $16.4 billion.

    The number of complex bond financing and private stock placement deals conducted in offshore banking havens has blown out of proportions during the past 10 years. Probably 650 billion USD of these transactions were routed through the Caymans alone in 2006.

    Why do I point that out?

    Because the Bank of America transactions were run through a nonprofit entity that was set up by the Cayman Islands law firm Maples & Calder. This non profit was the very same nonprofit entity that was put in place to hide the shell firms that brought down Enron. Enron, the world’s largest energy trader until 2001, set up 441 companies on the Cayman Islands in a massive accounting fraud. Maples and Calder, the largest law firm on the island set up five Parmalat related entities at the law firm’s address in their headquarters.

    How is that for starters? Hold on, it get’s even better!

    Maples & Calder has offices in locations around the world, in Ireland, and on the caymans, their headquarters are in Ugland House. Ugland what?

    It is a five story building holding approximately 18,000 companies. Yes, I know, this must be very big five stories I hear you saying, but nope, it is not. It is just that, an ugly building, and probably the most famous five story building in the world.

    It is also a symbol, a symbol of scam and fraud concentrated in the few square foot of this building. It is the epitome of what is wrong with the way capitalism is executed and abused by golden circles, governments and companies, banks and their respective lawyers, all cashing in wages on a scale you can’t begin to imagine, abusing the system in totally unethical ways, ruthless and in ways that have brought us to the point where we are today.

    People loosing their jobs, workers rights are threatened, people are in arrears, businesses are closing left, right, and center in the country, people are getting sick from stress and worries, families are breaking up, urgently needed professional people are leaving the country, and no one is accountable in politics. Yeah, right! Unjust enrichment is what comes to my mind when I think of Brian Cowen who gets his disproportional salary every month. He should pay back his entire salaries as Minister for Finance from 2004 -2008 instead of being payed as the ‘Leader’, what a joke, of this country.

    Step down Cowen! You know that you will not be here until 2012, so I suggest you step down now, you are disgraced either way, but it is no big deal you know, on the contrary, it is the culture that you and your party friends implemented and cultivated here, people are not held accountable, they rather “resign disgraced”, laughing all the way to the bank, cashing in a lump sum on top of ridiculously high pensions they are payed until they are in the box.

    The White House pointed to this building in the capital city of George Town, and it has been the target of withering scorn from American politicians for several years; Obama frequently mentioned it on the 2008 campaign trail.

    “Either this is the largest building in the world or the largest tax scam in the world.”

    Now, you probably already guessed it, Maples &Calder together with London based Bingham McCutchen are the legal representatives of senior bondholders in Anglo Irish Bank!

    Have a look for yourself, the entry of their website:

    http://www.maplesandcalder.com/

    Does it inspire confidence in you?

    Yeah, me too! Advising on the Laws of Cayman Island, Ireland and British Virgin Islands, right. Aren’t our Anglo Irish bondholders a lucky bunch to have such excellent advice, and who represents the Irish people’s Taxmoney, oh yeah, that’s right, Brian Lenihan, our Minister for Finance, who allegedly does not know who the bond holders are.

    On a side note, funny thing, I started to use the spell checker of my new text program to make it easier for the reader, and to hopefully not offend your eyes too much with my less than fluent english, and everytime now ‘Lenihan’ comes up in the text, it suggests ‘Lenin’ instead, poor Vladimir!

    I think this explains to a degree why we were pointed with fingers at us, as the flippin financial wild west? Eldorado for fraudsters and Banksters like Fitzpatrick and so many more? Just look in what good company we are there, right inbetween the Cayman and Virgin Islands, exquisite, isn’t it?

    Well, may be I succeeded to trigger your curiosity eventually a little bit more now when I dare to ask, who the Hell are these bondholders and the legalities attached to their bonds?

    Honestly, I wish the phones in DOF and Anglo would not stand still, ringing day in day out, inundated by people asking questions and demanding Informations on the bondholders of Anglo. I wish Anglo and DOF would be flooded in thousands of postcards every day, picked up in and send from the post banks that they intend to close, and that are socially so important for rural Ireland, postcards calling for the immediate Anglo closure and repudiation of all Anglo debts, subordinated and senior. I wish people would start picketing in front of Anglo, and hey before I forget it, a note to the unknown chap who parked his giant cement mixer in front of Anglo blocking the entry. “Chapeau! Loved it!” Civil courage is urgently needed in this country, before it goes down the swanny completely.

    How dare they, the elected representatives, our government, how dare they not to tell us! How dare they to insist on the utmost secrecy and investigations behind closed doors.

    Well, they dare, up to their neck in it themselves, because they have policies in place, standards, and a phletora senior civil servants implementing policies here since decades, and lawyers covering up.

    It comes in handy I guess that Lenihan is a legal eagle himself, and I am sure he is covered by not divulging this information, in opposite to the Irish Taxpayer, who is not covered, but misrepresented by NAMA and their systematic overpayments!

    Best
    Georg

    A YEAR AGO IN IRELAND:

    Irish Times, Wed 04 Apr 2009
    State to buy bank loans valued at up to €90bn

    ASSET AGENCY:The government will buy between €80 billion and €90 billion in property and development loans from the State’s biggest lenders in a bid to free up lending and repair the banking system. 


    A new State-controlled company, the National Asset Management Agency (Nama), will be set up to buy the banks’ most troubled assets — land and development loans, associated borrowings and the property asset securing them.

    • ops…sorry, I forgot to safe the spell checked version.

    • —- CALL TO MAPLES & CALDER DUBLIN—

      MC: Good morning how can I help you.

      LB: Good morning. I was wondering whether you forward me some legal information to my email. What Partner in your firm is looking after Anglo Irish Bank?

      MC: I don’t know, I give you our website and you can….

      LB: Thanks, I have your website URL.

      MC: So what are you looking for?

      LB: The names of senior bond holders in Anglo Irish Bank and legalities attached to their bonds.

      MC: I am not sure I can give you that information!

      LB: So, who could be sure?

      MC: Hold the line please.

      ……

      MC: I am transferring you the secretary, just a second…. click… ringing… ringing… ringing… Hello, I am not at my desk, pleas leave a message….

      I am leaving my phone number stating that I have a legal question, and call back Maples & Calder again right away. The same pleasant voice singing;

      MC: Hello Maples & Calder, what can I do for you.

      LB: Hi again, I just called and you wnated to transfer me, but I ended on a voice mail.

      MC: Yeah that’s right, I transfered you to Karen, Secretary of Noalig Murphy, who is a Partner and looks after Anglo Irish.

      LB: Excellent, I left my number, thank you, and have a nice day.

      tbc.

      • ps200306

        LB – brilliant.

      • paulmcd

        2005 Profile of NOLLAIG MURPHY

        Partner
        A&L Goodbody

        Nollaig Murphy is a finance and capital markets lawyer with specialisms in the areas of structured and leveraged finance, syndicated lending, derivatives, and securitisation and repackaging.

        Having trained with McCann FitzGerald Dublin, Nollaig joined A&L Goodbody following a number of years in the finance practice of Clifford Chance London, where he specialised in syndicated and structured lending, in particular advising financial institutions and venture capital houses on leveraged finance. While in London, he also spent over a year on Merrill Lynch London’s Repackaging and Credit Products desk advising on a wide variety of credit products.

        Nollaig currently advises many leading domestic and international financial institutions and law firms on leveraged and structured finance transactions, and has recently advised on a number of award-winning international securitisations. He lectures widely to domestic clients on structured finance issues, and is a member of a number of industry working groups in the financial services industry.

        Nollaig was recently nominated by international peers as one of only three Irish lawyers to be included in the International Financial Law Review’s ‘Guide to the World’s Leading Capital Markets Lawyers’.
        *********************************************

        CURRENT PROFILE
        at MAPLES

        NOLLAIG MURPHY
        Partner, Dublin
        EXPERTISE
        Nollaig specialises in banking and capital markets, in particular in the areas of structured and leveraged finance, securitisation and repackaging, syndicated lending and derivatives.
        PROFESSIONAL BACKGROUND
        Nollaig joined Maples and Calder in 2008. He was previously a senior partner with a large Irish law firm. Prior to that, Nollaig spent a number of years in London at Clifford Chance and Merrill Lynch. Nollaig is recommended in the 2009 edition of Chambers Europe, Legal 500 and IFLR1000.
        EDUCATION
        Nollaig is a graduate of Trinity College Dublin.
        BAR ADMISSIONS

        1995 – Admitted as a solicitor in Ireland.
        1996 – Admitted as a solicitor in England and Wales. (Does not practise as an English solicitor).
        AWARDS & RECOGNITION
        IFLR 2005 Securitisation Deal of the Year. ISR 2005 Deal of the Year. IFLR 2006 Restructuring Deal of the Year. IGB 2006 Deal of the Year. Finance 2008 Capital Issues Deal of the Year.
        RECENT ARTICLES
        Maples and Calder Advises on Innovative Financial Services Deal
        Maples and Calder Advises on Innovative Financial Services Deal
        Maples and Calder Advises on Launch of Inaugural Irish Exchange-Traded Commodity Transaction
        Maples and Calder Advises on Inaugural Gold-Backed Certificates Issue
        Life Settlements: US Treaty Access and Irish Investment Vehicles
        AREAS OF EXPERTISE
        Finance

    • Malcolm McClure

      Laughingbear: Thanks for a brilliant piece of background research. What I’d like to know is, if an individual armed with a computer and a phone can raise the questions that you do, how come that the traditional media are nor congregated outside Ugland House in Caymen and Maples and Calder in Dublin videoing all comings and goings, getting interviews and posting results on Youtube, twitter etc. etc

    • Deco

      Maples and Calder….They need a new slogan….
      Howabout “The investment advisor that you would recommend to a friend” ?

  2. Lenihan & Cowen is chasing the crisis precisely because he and others will not consider every eventuality. To consider the best course of action it is necessary to put every different option on the table and debate the merits, risks, benefits and dangers associated with each. This has not happened in Ireland and what is happening is taking too long.
    Regardless of what this government do, no one is going to support their actions.
    The current elected government and permanent government (ie. civil servants in various departments) have proven themselves to be unable to govern effectively and should stop digging a hole…… unfortunately this also extends to a wider circle of people who have effectively been in control of this society and economy for the past 8 to 10 years. Into this you can throw so many, including publishers, editors, bankers, union leaders, legal people, regulators, journalists and more. Effectively, there is a whole cadre of fools who were in charge and are still in charge and asking them to step aside is like asking Turkey’s to vote for Christmas.
    What they are failing to see are the dangers. To date there has been no rioting or civil disobedience, however already there is subtle evidence of potential for things to ignite.
    If this ruling elite continues I believe someone, if not many people, will get hurt. What you can be sure we are going to see over the coming years is a return to the black economy the like of which hasn’t been seen since the eighties…… this will further exasperate the governments problems, but will be completely understandable.

  3. liam

    Clearly this is a fantasy article, given that we are now lending money to Greece…

    I’ve decided the only thing that matters is the destruction of Fianna Fail. If we cannot accomplish this, nothing else matters.

  4. MK1

    Hi David,

    Yes, thinking the unthinkable can indeed help. But these are reactions to not preventing the unthinkable from happening in the first place with proper structures and regimes in place to prevemnt excessive credit form flowing through our property sector and businesses, etc. Perhaps by NOT thinking properly is how we got into this mess.

    DavidMcW> The authors argue that once the debt to income ratio goes above 60 per cent of GNP, both the citizens’ tolerance of more taxes to pay the interest and the markets’ tolerance of politicians’ soothing words, begins to atrophy.

    But the thing about debt is the ability to pay, the trust worthiness of the payee, etc. And countries like businesses use debt as a tool to compete. Take country/business A that starts on the same footing as country/business B where both have no debt.

    Then, A borrows 100% of its revenue (or GNP) to invest in itself and increase its output, and income. It uses that income to pay off its debt in parts, say over a 20-year period. Meanwhile, B doesnt take on any debt. What will happen after 20 years? Will A be ahead of B? Most likely it will. Debt therefore in and of itself is not a bad thing. Its a tool.

    However, if country A borrowed 100% and wasnt able to pay off its debt, it could end up in a debt spiral, and after 20 years be worse than B.

    The 60% figure quoted is surely arbitray as it depends on the interest paid. As you will know abiout the G-men and the Gombeen Man is that if high levels of interest are charged they can keep any business/entity in serfdom.

    The same goes for countries and their debt, its not the 60% level that matters, coincidentally the same level as the euro/ECB targets, but what interest rate is charged on that debt level and the ability of that country to pay PLUS the level of debt other countries have accrued, etc.

    Japan has 200% debt or so did I read, the US, Italy, UK even are as bad as Greece, but bond markets are all about trust. And trust was lost when Greece cooked their stats/books about their debt. There is no appetite for Greek debt (at the same rate as German debt).

    The world is awash with debt “opportuity” anyway as bank debts are transferred to sovereign debts, so Greek state debt is just being squeezed on the margins as a pariah.

    Btw, in terms of Ireland or Greece leaving the euro ….. the euro project has faults. Remember those targets of 60% debt and 3% debt pa limits. Those rules broken by all and sundry. The euro if it fails si due to human error and failings, not the system itself. Have Belgium ever met the euro criteria? Not once. Italy, Not once either. And the list of rule breakers is long.

    Meanwhile, lets keep throwing the proverbial at the Greek fan … makes simple and good copy for the media and the amateur analysts, dont ya think?

    MK1

    • liam

      Japan’s debt as a proportion of GDP is around 200%, second only to Zimbabwe but my understanding is that debt-to-GDP ratios ignore the difference between internal and external debt (or to paraphrase you slightly, the ability to pay your foreign-held debts). Since most of Japan’s debt is internal, the default risk is very small. They, like China, also own huge quantities of US debt.

      • Deco

        Ah yes….Japan’s holdings of US Treasury bonds..For them to be of any value, Japan needs to find another entity which is willing to part with 700 Billion USD in exchange for Treasury bonds. So, ‘sayonara’ to that :))

        But your point about Japan’s debt being owed internally is correct. In order to repay it, taxes must go up on something. But by repaying the debt to Japanese citizens, the Japanese authorities are effectively sending money back into the economy, and increasing the supply of money in their own economy. Therefore Japan has a structural problem with regard to it’s own debt and money supply. And it is mostly internal. Japan could deleverage itself, by taxing itself to repay itself.

        • liam

          Thanks Deco, interesting. Would that not also be the case for any bond from any country owned by any other?

          Its probably also helped Japanese exporters quite a bit to lend to the US so the US can buy Japanese goods and services. I wonder to what extent it would make a difference if the dollar de-valued or the US defaulted, and how much of that debt they have already got ‘back’ in the form of exported Toyotas and consumer electronics?

          I think its the case that the Bank of Japan holds Japanese Government debts rather than individuals, though how this arrangement works in practise is a mystery to me. While it appears there is this structural problem, the whole thing seems to hang together well because of 0% interest rates, therefore zero cost of borrowing. But maybe deflation factors here, as does demographics. I profess to knowing very little about this stuff, part of the reason I am here. But this is very off-topic, sorry.

          In any case, my original point, which of course you got, is that I’m not sure you can easily compare a country like Ireland to a country like Japan based on a ratio between two (fairly sketchy) figures of merit.

  5. “Today, our national debt stands at 57 per cent of our GNP. But after the bank bailout (€54 billion for NAMA and €18 billion for Anglo) debt rises to 108 per cent of GNP. This is not counting the money for Bank of Ireland and AIB”
    David this is not the full picture, I was at a meeting last Wednesday in Bray, the meeting was hosted by the labor party, and Pat Rabbet was the speaker on the subject of NAMA. He stated that the entire cost for the bail out of Anglo Irish Bank would be in the order of 40, 000.000.000:00 alone!
    This did not include the proposed bail out of the Quinn Group; anyway, I asked him two specific questions on NAMA, namely
    - AIB Investment Managers have invested €17 million each for a combined 51 per cent shareholding in National Asset Management Agency Investment Ltd,

    Question 1.
    - How could he or anyone else allow, these corrupt banks now to take control of the (special purpose vehicle) SPV (51%) over nearly 70, 000.000.000:00 worth of property for this paltry sum Approx 51 million euro. This is equivalent to letting the foxes mind the chickens. His response was the NAMA board would maintain full control of all NAMA operations.
    This is just plain delusionary!

    Question 2
    Was he aware of the derivative trades of the various banks and what were the losses that these banks were withholding?
    Why was it necessary for the NAMA board to hire a company with the specific purpose to trade such derivatives?
    I got no satisfactory answer to this question
    And then came the bombshell, he said that the Department of Finance did not share the figures is has with the opposition parties in the Dail.
    I was shocked.
    So the opposition in the Dail are not aware of the full facts as to the overall disaster that is now the financial institutions?
    So the Government are putting out figures every other day and the opposition are reacting then the latest figures?
    His whole stance seems to indicate that he was happy to continue operating within a system like this.
    Indeed he said that the political system was not at fault for this sorry afire it was the Government parties fault!
    As a result of this meeting I am disillusioned even more as I believe that the countries opposition parties seem to believe that they will in time just walk into power and they will then carry on with the musical chairs political system we have in this country.
    What a joke!
    The bottom line is no one outside the current Government has all the figures and what we are been peddled is lies dam lies!
    Here is some more information on the high-risk derivative game NAMA is
    https://mail.google.com/mail/?ui=2&ik=fedc8e9f29&view=att&th=124f28a38749b131&attid=0.1&disp=inline&realattid=f_g20bfl8i0&zw

    • Deco

      Two very incisive questions. In order to piece everything together, it would be necessary to read everything about what occurred in Sept 2008.

      One of the most amazing things was the fact that the two largest banks were begging for help. Another amazing fact is that Lenihan was presented with an opportunity of kicking INBS, AnIB, and Permo out within weeks for various irregularities, but he let them escape on each occassion. In particular, Lenihhan could have used the Permo to Anglo loan revelation to throw Anglo out of the guarantee, because Anglo’s “assets” were “cooked”.

      As regards the political system not being at fault, if we examine the performance of the entire Dail as a whole from 2000 to 2008, we can see consistent evidence of politicians across the political spectrum were behaving like economic dunces. The biggest debates of that period were about how to spend the money as fast as possible. In reference to his own parties Finance spokesperson, Joan Burton, there was that incident where she told Six One news “The problem is we are in this recession, because we have no money, that is the problem we have no money…the government is not doing enough about this….”. Rabitte’s position on you second question seems to carry an assumption that the crisis is lifeline to certain political careers.

      A coverup by the drinks cabinet ? It certainly looks like that is exactly it to me.

      Shane Ross had interesting things to say on this matter in the final chapter of his book “The bankers”. Basically, Cowen and Lenihan were confronted with the bankers being able to bring down the country, and they bailed out the bankers to prevent it happening, (and thereby preserve Cowen’s career). And also we must examine what Lenihan said to David McW … “things are worse than even you say they are, and we know how bad you say they are”. Lenihan was probably more concerned about the political establishment and it’s credibility, and wanted to avert an Icelandic meltdown. There was an enormous amount of fear going around at that time.

      If Rabitte really wanted this information, he could raise it in the Dail. At the very least it would call the bluff of that pretenscious actor, Dan Boyle, and the rest of the GP..Alternatively, if constituents of Jackie Healy Rae were to demand to know :)))

      • @Deco,

        Couple of things from The Night That Brought Us To Our Knees, Daniel McConnell, Sunday Indo, April 11, p29

        “The Government, spurred on by the fury of ECB boss, Jean Claude Trichet at President Bush’s decision to let Lehman’s fail, was determined that no Irish bank would fail”

        Night of Sept 29, crisis meeting was called for chief executives and chairmen of BOI and AIB

        “It has repeatedly been denied that there was any contact from Anglo on the night of September 29. To date there has been no evidence that there was contact, even though sources within the bank say they expected it to collapse the next day….”

        Isn’t it odd and strange there was no contact with Anglo?

        Seems to me AIB and BOI were being probed for their responses. Anglo would fall in with whatever its political masters decided, that’s why
        their presence not required.

    • @5 macholz,

      re “Was he aware of the derivative trades of the various banks and what were the losses that these banks were withholding?”

      To be fair, nobody outside the insiders knows what those figures are, opposition parties, journalists. They have been repeatedly asked for.

      It has been revealed Sean Quinn was involved in CDS(Credit Default Swap) trading. You can bet your ass if he was, everybody in Anglo was.

      Its a constitutional and legal disgrace that Anglo has been bailed out with our money and we don’t have the figures you mention, including a complete list of all liabilities, bondholder identities, transaction dates, purchase dates/purchaser identities, who did what, when, where and how.

      It should be sent as a brochure to every household in the country.

      Could you shorten the url you have above at http://bit.ly/ and repost it, as its not working.

      By the way, isn’t the DoF legally obliged on budget day to present accounts to the Irish people re expenditure/liabilities, so who processes the accounts relating to government debt and Anglo liabilities?

      Is it Ernst @ Younge or Maples & Calder passing private memos to our new resident dictator, ‘Mr For God’s sake, don’t let the public know about it’, Cowen.

      This has now become Ireland Inc’s second set of books. All debts guaranteed no matter what the scam.

      Time was ‘witholding of information relating to a crime was punishable by law, now this is government policy’

      We need people to dig out the facts, the more whistleblowers the better!

      • The Eye

        Fits in well with a post he had already in international swaps and DERIVATIVES.
        I smell a large Rat. When will we be drip fed all of the truth? the amount of Anglo in in Debt so far does not add up.
        Is it possible Anglo is being used as a derivative bin also?

  6. Deco

    I read this article yesterday, and the first thing that hit me was the parallels with Nicholas Taleb’s concept of ramdomness (the Black Swan event). And that when a completely unpredicaable event occurs, we get massive gyrations economically. The West is going through a repeat of what happened in 1998 in emerging markets. Except the West is making a dogs dinner of solving it. In fact the West bailed out the emerging markets for the sake of expansion of influence in 1998, and in the process created the dot-com bubble. But that analysis is not part of the official history. The dotcom bubble was caused by nerds not central bankers printing excess money and driving asset price bubbles. Afterall, there are powerful vested interests interests in seeing more asset bubbles.

    This morning, the official story (RTE, IT, Bank Economists, Irish Investment industry correspondents, etc…) is that the Greek bond crisis has been solved. (Again). This must be the fourth time in as many weeks that the Greek problem got ‘dealt with’.

    I am not sure how Merkel will get the money when the German Parlaiment already decided to not throw taxpayers money at the Greeks. And the Netherlands has made it even more clear that Dutch taxpayers have also had enough. Britain is in no position to bail out the Greeks, considering the scale of Britain’s problems. Now, after that most of the remaining countries are offering to borrow money so as to pass on to the Greeks. This is in effect a market price floor mechanism for Greek debt. There will be contributions from fellow PIGIS who are intent on maintaining a coverup of their own problems, by covering up Greeces. Ireland will throw almost as much money at Greece as Ireland wanted to throw at Quinn Group. Personally, I reckon we have more of a chance of getting the money back from Quinn. The employees of Quinn Group mean business. The employees of Greece Inc mean basketcase economics, irresponsibility, selfishness and entitlements’r'us.

    The real problem, as the Bundesbank senior figures, seem to repeatedly comment, is that Greece has not solved the problem of it’s fiscal imbalances. And the one country that has not intention of fixing Greece’s problems…..is Greece !!!

    But neither have any of the other PIGS fixed their problems. Ireland is claiming top of the class spot for only borrowing 20 Billion Euro a year. (which sounds to me like a joke). Spain is even lazier, not even bothering to make an effort at fixing it’s fiscal problem. ‘Maniana’. Instead the Spanish Prime Minister is throwing more money at the problem than anybody else, and fixing nothing, in an attempt to borrow his way out of the debt problem. (Unsurprisingly Sarkozy remarked “but, he is not intelligent”). In the end this will sunder the Euro.

    Greece never had a property ponzi-scheme on the scale of the members of STUPID. So Greece is getting punished hard, and Ireland and Spain have managed to escape any serious analysis. Commisioner Barrosso has also managed to escape any scrutiny.

    Fixing Greece is all about containment of the contagion, and suppressing fear. This is the same psychological approach to problem solving that has come from most Western leaders since the crisis became. This is more evident in the English speaking world. Basically, we are seeing the jawboning assault method of how to defeat an economic problem. The past three years is a series of chapters which involve jawboning as a failed method of fixing the problem. In fact some of the ideas coming from Western leaders are fundamentally flawed. And still the same incompetent solutions flow forward. When jawboning fails, there is a stimulus package, as an effort to coverup all the errors of judgement evident in the jawboning offensive. Followed by borrowing increases, and money printing. The Irish Times has, in it’s editorial a contribution by Paul Krugmann, telling us that inflation will solve the problem (money printing). (I don’t care if he got a Nobel Prize – so did Teddy Roosevelt, the Grandfather of yanqui Imperialism). Basically we are getting a coverup. This means PR stunts to alter the perception that their is a crisis, accompanied by money printing to make things look flush again.

    We have also seen a tendency of “escalate the commitment”
    in the response. This means more stimulus packages. More bailouts. More financial carpet-bombing. I am reminded of the Viet-NAMA chapter in David’s book. Basically the LBJ doctrine of dominoes is being replicated in the EU Commisions approach to Greece. Greece has to be carpet bombed so that Spain does not collapse next and collapse the Euro project. (Forget Ireland, we are irrelevant – much as we love our own signifigance in the world). And Robert McNamara’s approach of a saturation level offensive has has been replaced by a saturation borrowing ‘stimulus’ packages.

    This approach has been one of the hallmarks of the way that West has dealt with most policy areas in the last twenty years. If something is not working, do not question the underlying premise, but instead increase the offensive. This means that the cost goes up, and new problems emerge in addition to older ones. But in the short term the political careers are safe.

    We have heard phrases like “to big to fail”, “to well connected to fail”, “too big to Nail”. Now we have too big to Bail. And Spain is too big to Bail in the Eurozone, and Italy might someday be in the same category. In the US, California will be ‘too big to bail’. And on the world stage the Japanese deficit is heading for “too big to bail”. The US Government bond market is also heading in the same direction. Ireland is bravely declaring that ‘too big to bail” does not exist, with the Anglo and NAMA programs. (Frequently in life we see the word ‘bravely’ accompanied by the word ‘stupidly’). The US has already decided that FMAC, and FMAE are also not “Too big to bail”.

    This will be the next development. Governments, the financial sector and the media sector all singing a chorus of support for programs that fly in the face of “Too Big to bail”. The “Too big to Bail” problems have already started emerging.

    Failure is inevitable. Escalating the commitment means that the failure will be shoved out into the future, at which point it will be gigantic. This is the biggest problem that we face. And this is not just the policy framework of the Irish government. The UK, the US, Spain, even Dubai are all doing the same thing. Trying to continue the charade. The STUPID charade. They are escalating the commitment, throwing more resources trying to prop up the ponzi scheme. It is possible that they succeed in the short-term, at a cost of super-inflation like in the 1970s. But the problems will come back at a later date again. But cost is an almost forbidden topic. A bit like everytime somebody mentions the cost VietNAMA, and the official response is all about LTEV. (Ask the Japanese about LTEV – they have be waiting for it for 20 years).

    I expect somebody from the government to attack David for the article above. So as to provide reassurance to those that trust authority, or benefit from it. And we should also expect saturation level sports coverage over the next few weeks, so as to saturate the minds of a sizeable share of the population, and motivate them into setting the tone for the rest.

    • Malcolm McClure

      Deco: Thank you for this well-thought-through piece of analysis. You say “Escalating the commitment means that the failure will be shoved out into the future, at which point it will be gigantic.”
      If the failure is gigantic it will affect all countries. If that happened, those contemplating emigration to a foreign land should remember that they would just be another blow-in. Would it not be less hazardous for them to stick with the auld sod, where they can at least call on family support through the crisis, which won’t last for ever.
      That return ticket from Aussieland won’t be worth much if BA or Quantas goes bust. The streets of Sydney already have plenty of their own native didgery-doo players to support.
      Anyone got thoughts about realisticl scenarios of a ‘gigantic’ failure so that we can think them through?

      • Deco

        Malcolm.
        It probably would make more sense to stick to where they can have an informal network for support. People should not worry BA or Quantas going bust. Singapore Airlines will probably still be in business. But as you say, there are only so many didgery-doo players that the market can support. We in the West have all become a very much centred on the superficial. In the real world the superficial always falls apart. Superficial fixes are not working. The way to survive, is to thing in the real sense. Real skills, real intelligence, real information, (not infotainment) real jobs, real wealth, real growth, real intellectual analysis, real relationships.

        In order to survive in a superficial world, the best strategy is to “Keep it real”.

  7. Jody Corcoran, Sunday Independent, April 11, turns the spotlight on the 700 people in Department of Finance and the following internal review. Does it get to grips with how DoF got it wrong bigtime between 2004-2008?

    Does it provoke the accusation DoF is in major need of systemic redesign from the ground up, that it is in need of major reform. No,

    http://www.finance.gov.ie/documents/publications/reports/2009/Dfincapacityreview09.pdf

    No, things are fine, clap us on the back…

    “Dept Finance
    Capacity Review

    Financial Services — While a significant upgrading of knowledge and expertise has been achieved through close working and engagement with the Central Bank, Financial Regulator and the NTMA and also through interaction with financial and legal advisers,
    specialised tailored training would be beneficial for the financial services area. Where required specialist skills cannot be sourced from within the Department, flexible
    arrangements should be in place to source the required expertise from other public or private bodies on a timely basis. The new working structures put in place in response to the introduction of the Bank Guarantee have been very useful in addressing cross-cutting dimensions of policy and legislative issues that arise in relation to the financial system. These should be maintained and developed further.”

    Reading above, DoF is the puppet of the government, only hope is that Honahan from the Central Bank can achieve a significant upgrading of DoF personnel. Nothing about the lack of phD expertise, relationships with Irish universities, comparitive review to other countries best practice. They live in a cosy bubble, not in the meltdown world.

    D writes
    “A recent book called ‘This Time Is Different: Eight Centuries of Financial Crisis, by Ken Rogoff and Carmen Reinhardt, two famous US economic professors, evidences that since 1945, the average time between a serious financial crisis and the default is three years.”

    …”The authors argue that once the debt to income ratio goes above 60 per cent of GNP, both the citizens’ tolerance of more taxes to pay the interest and the markets’ tolerance of politicians’ soothing words, begins to atrophy.”

    “Today, our national debt stands at 57 per cent of our GNP. But after the bank bailout (€54 billion for Nama and €18 billion for Anglo) debt rises to 108 per cent of GNP. This is not
    counting the money for Bank of Ireland and AIB.”

    Thank you DoF, thank you, Cowen and Lenihan. Thank you for “debt rises to 108 per cent of GNP”

    Thank you FF for your scammy DoF?FF/wild west banker led property bubble banker fueled by uncscrupulous bondholders, sucker bankers and politicians and developers.

    According to Laughingbear @ 1

    “Now, you probably already guessed it, Maples &Calder together with London based Bingham McCutchen are the legal representatives of senior bondholders in Anglo Irish Bank!”

    May I thank you on behalf of the firms above, however tarnished their names may be through other scams, Enron?, as Laughingbear points out, for the bondholder windfall usury schenanigans that has brought Ireland Inc to its knees.

    They offered you money for virtually nothing, now you got to pay it back!

    Yes, Ireland Inc’s debt is in the trillions, just keep those taxpayers on the leash, keep up the payments to us bondholders, thank you for your guarantee, especially Anglo’s, be sure to extend it come September!

    We lend to suckers who think like Cowen and Lenihan and Seanie they’re ‘on the way up’ . We lend to the same suckers on the way down. We bondholders the big gainers have sucker punched the Irish gombeen paddy’s, Cowen/Lenihan & Co.

    Taxpayers are the big losers.

    As for Cowen’s patriotism, Pearse and Connolly and the other volunteers must be turning in their graves.

  8. Philip

    I wonder if all we are witnessing is the natural progression to the end of the existing structures are we know them. Being internet driven it just looks a lot faster and more dramatic and our real-time communications creates tactics that drive info flooding and coordinated tactics between governments that want to keep the status quo. Can you blame them? I mean, what is the alternative? Did someone say hit the RESTART?

    150 years ago and even before the ticker tape and the telegraph, collapses were never big becasue they were never coordinated.

    If you wnat to get out of this mess, you need to shut down all comms fo about 3 months. . Like the Irish Famine where over-reliance on one foodstock led to a disaster, homogeniety in our financial structures is similarly flawed. Just look at the Euro. I know somemight like to entertain the idea that once we get the right process in place, all will be well – yeah right.

    I dunno if David is right or wrong. Who’s to say? But one thing is for sure, it will not stay on the current trajectory for much longer. Something will give in spite of the best will in the world to prevent it.

  9. Original-Ed

    There’s a good dose of reality in that article – I find it difficult to see how we’re going to get our deficit down to 3% by 2014, unless the economy is put on steroids and that’s not going to happen.
    It looks very likely that eviction is going to be our destiny.

  10. [...] Embrace the unpredictable,By David Mc Williams Embrace the unpredictable [...]

  11. Thermus B. Airgetinin

    Sorry if I’m going off topic but I just have to get this off of my chest. If I owned a company and needed someone to run it for me.. and if that someone after 4 or 5 years trying.. ran my company into the ground, sending my workforce onto the dole and leaving them with the very real danger of not being able to pay their rent or feed their children… should I get rid of that incompetent asshole or give him another chance? Thats the dilemma that we face shortly up here in the north. In 5 years, I have’nt had a politician darken my door, yet in the last 2 days alone, there has been a steady build-up in the parade of political parasites vying for another stint at the “trough” Should I even vote? Didn’t Noam Chomsky say that all these “parties” were singing from the same hymm sheet, that the best indication of who was giong to win an election was to look at the “donations” to their campaigns. Politicians don’t give a flying f**k about you or I. If you listen to or believe their guff about making things better for us, you deserve all the shit that a pretty much unregulated, out of control, over fed bunch of assholes is apt to produce. Is it any comfort to be told that this is a global crisis and not entirely our politicians fault? Is it any less gauling to be told by the pricks that they “did nothing wrong” when its so glaringly obvious that they did nothing right! If no one voted what would happen? would we be worse off than we are at present? When we’re cajouled into voting for these parasites, are we not filling and placing the troughs for them. We’re told if we don’t vote, that we are dis-enfranchising ourselves from the political process, that we will have no say. Ask yourselves in all honesty, when did you ever have a say? Once that vote has been cast, you’re opinion counts for jack shit as their gravy train trundles off on a new 5 year “mandated” beano. Politicians are dream weavers, likeable (most times unlikeable) liars, scallywags, gombeens and rogues all rolled into one. Why oh why oh why on earth should anyone vote for them? Advice please.


    • Didn’t Noam Chomsky say that all these “parties” were singing from the same hymm sheet, that the best indication of who was giong to win an election was to look at the “donations” to their campaigns.

      Yes, that’s correct, and I have a lot of time for Noam in deed.

      The colorful stories on Irish Republic campaigning, that everyone of us probably has plenty full would be a bestseller if collected and written in the right way.

      In the last local election, if memory serves it was June 09, I got a call from our councilor here, who I Involved because a long promised, contractually promised payment had not come through yet and the lack of it dragged me into serious trouble.

      Hence, I put the pressure on to the best of my abilities.

      He chose to finish our conversation with words that triggered a painful and long lasting laughing attack after I hung up the phone, hence I will never forget them:

      I quote!

      Well Georg, I would appreciate if you could go to all your neighbors and let them know that I would like to be re elected.

      I answered: Don’t worry and hung up.

      • Here is another one. When I moved here another election was coming up, and some FF members knocked one Night at the door.

        Their inly interest was to find out whether I am on the List.

        I answered, that to the best of my knowledge I would not be on this voters list as I am not Irish and also just moved here.

        Awww, Jaeysuus, not to worry, we sort ya out.

        3 days later I had a card in the post, spelling my name in a french way, now I was on the voters list.

        When I went to vote for my first time in the local Hall, to my great astonishment, I was handed a PENCIL.
        Yes, that’s right, not a document proof pen, no, but a pencil instead that can be manipulated with a simple eraser.

        Now, I made a funny remark about that to the kind lady who was sitting there donating her time for the cause, and asked for a document proof pen instead, but she declined and insisted that this is the required tool for voting.

        My head was spinning, and I went to the box to make my vote, x-ing the box I chose approximately 30 times with a lot of pressure, and when I returned, to put my paper in the box, I opened up one hand and held it towards her.

        She looked astonished, and I said, I was promised 50 euro from each party, do you pay me?

        She laughed out loud and I left.

        I am still puzzled by this, and I assume it is the german genes in me that trigger this, then again, yes, I am the inventor of the sceptic tank.

  12. [...] mcwilliams, greek bonds, simon johnson by John P. Muldoon I usually read David McWilliam’s column in the Sunday Business Post. They are informative and easily understood. I also read articles by [...]

  13. Dilly

    The Market Oracle 10th April.

    Casey Stengel, manager of the hapless 1962 New York Mets, once famously asked, after an especially dismal outing, “Can’t anybody here play this game?” This week I ask, after months of worse than no progress, “Can’t anybody here even spell financial reform, let alone get it done?”

    We are in danger of experiencing another credit crisis, but one that could be even worse, as the tools to fight it may be lacking when we need them. With attacks on the independence of the Fed, no regulation of derivatives, and allowing banks to be too big to fail, we risk a repeat of the credit crisis. The bank lobbyists are winning and it’s time for those of us in the cheap seats to get outraged. (And while this letter focuses on the US and financial reform, the principles are the same in Europe and elsewhere, as I will note at the end. We are risking way too much in the name of allowing large private profits.) And with no “but first,” let’s jump right in. ………………..

    http://www.marketoracle.co.uk/Article18539.html

    • @ Dilly 11

      I wouldn’t stick the Fed on a pedestal. Arguably Fed policies under Greenspan
      and Bernanke, low interest rate borrowings plus a private cabal of ex banking/financial industry leaders favouring banks over taxpayers have led into a global meltdown. There’s a pic of the regulators under Bush and Greenspan with a wirecutters symbolically cutting up regulations?
      http://bit.ly/aiUcz8

  14. Incident

    Nollaig was recently nominated by international peers as one of only three Irish lawyers to be included in the International Financial Law Review’s ‘Guide to the World’s Leading Capital Markets Lawyers’.

    Who are the other 2 as they are clearly knee-deep in the shit?

    • Doesn’t bode well for Biffo & Co, just change the names around:

      “The 2,300-page government-commissioned report detailed a litany of mistakes made in the lead-up to the bank meltdown, an event that wreaked political and economic havoc in the tiny island nation.

      Pall Hreinsson, the supreme court judge appointed to head the Special Investigation Commission, singled out seven former officials including then Prime Minister Geir Haarde and central bank chief David Oddsson for particular criticism.

      “The commission finds that these seven have demonstrated gross negligence in the discharge of their duties,” Pall Hreinsson told reporters. “They had the necessary information, but did not act accordingly, each pointing the finger at the next person.”

      Hreinsson said that a parliamentary committee would consider whether legal action should be taken against the seven, rounded out by Oddsson’s co-governors Eirikur Gundason and Ingimundur Fridriksson, former finance minister Arni Mathiessen, former banking minister Bjorgvin Sigurdsson, and Jonas Jonsson, former director of Iceland’s financial services watchdog he added.

      The report found that the country’s three leading banks – Glitnir, Kaupthing and Landsbanki – simply got too big and overwhelmed its financial system when they ran into trouble with excessive risk taking.”

      • Deco

        I don’t understand why Cowen is in charge of anything considering that he was Minister for Finance when all this excessive borrowing was going on…..FFS David was talking about it on the TV…..people were realising that the whole thing was propped up by German pensioners like “Udo”…..And the Clowen never seemed to register any of this…

        If anybody has to resign it should be Cowen. And replace him with somebody who does not drink. We have had enough of drunken leaders. CJH. Whiskeynose from Fagans. Clowen.

  15. wills

    David.

    The point of article then is that ‘insiders’ are gaming the national bond issuance to self serving interests above the welfare of the country and the ‘outsiders’.

    Nothing surprises. If Anglo can secure 22 billion euros out of sovereign state of Ireland to receive a get out of debtors prison free card.

    If ireland s citizens can be put on the hook in responsibility for 55 billion euros in order to bail out predatory lending private banks inflating property price bubbles and putting people into misery en masse, anything is possible, right!

    Check this out.

    ‘Earlier this month, Czech Central Bank Vice Deputy Mojmir Hampl said the IMF fueled Eastern Europe’s crisis to create a situation that would compel regional states to request the help from the globalist loan sharking operation.
    “He said that the institution, which offered emergency funds for Hungary, Lithuania, Ukraine and Romania, misinterpreted some data because they are looking for new clients as the leadership changed,” HotNews reported.’

    Funny how it is ireland received 55,000,000,000 euros so fast from ECB which is very close to IMF.

    Whether one likes NAMA or not does not take away the fact Ireland is now in 55 billion euro debt to ECB which means alorra different eventualities for us.

    You owe someone a few grand and it alters the relationship instantly.

    55,000,000,000 owed whether we like it or not puts ireland into a new paradigm in its relations with its master ECB.

    • wills

      Which ever way one looks at NAMA Ireland is under new management and hidden interests sitting over there in the ECB will soon be in charge running things here through the ‘insiders’ who’ve sold out to an international bankster cartel.

    • Deco

      “…..the institution, which offered emergency funds for Hungary, Lithuania, Ukraine and Romania, misinterpreted some data because they are looking for new clients as the leadership changed,”

      Alright – so basically…..the IMF takes an interest in the leadership changes….or to use the term coined by Bush&Blair….”regime change”……the IMF is able to act as some sort of ‘regime change institution’.

      It is a pity that the IMF never went to Iraq…..we might have had regime change without the bloodshed….oh hold on….Iraq did not need the IMF….because Iraq had oil…..therefore the IMF were no never going to get into Iraq…..therefore the other approach to regime change was chosen….Now I get it.

      • liam

        Iraq was not about regime change, it was about a massive injection of public money in to the US high-technology industries. War is the most profitable enterprise known to man. One of the first things Obama did was to try to kill the F-22 programme, a most pointless and outrageously porktastic weapons system. Military spending is pork spending. Pork spending = power and votes. Politics = local, always.

        Amazingly, Americans are comfortable with US companies outsourcing everything to a supposed former enemy including most consumer hardware and electronics. They have no problem with Chinese iPods and computers, and I’ll bet there are computers made in Shanghai in the Pentagon. The most practical solution for the US military would therefore be just to buy the Su-37′s (or cheaper Chinese licence-built equivalents) the Raptor is supposedly designed to defeat. I think we know the chances of that or the chances of any major US weapons system being bought off-shore or outsourced.

  16. Deco

    Well….there I was thinking that the Irish government have no more money….what with NAMA…..and Anglo…..and maybe Quinn Insurance….and the Duopoly are not finished yet….they will need a few billion each….AGAIN…..and then we have the scheme (I chose that word deliberately) whereby Irish Life will dump Permo (before Permo becomes the Irish WaMu) into a “3rd force in banking” along with such entities of “systemic imporance” (quoting official documetation) as INBS and the EBS….
    And now we are going to try and turn the car industry also…
    http://www.marketwatch.com/story/ireland-to-provide-6815-grant-for-electric-cars-2010-04-12

    Oh, yeah and I forgot…in addition to paying excessive salaries for wasters like Clowen, McUseless, Calamity and Densey….plus the staff of Anglo….and the hierarchy of former PDs in the HSE….plus…..state jobs of rejected GP councillors from last years local elections that are light enough to ensure they can remain active in polictics…..Plus….department of finance officials who don’t read smallprint…..and it seems Dept of Fin officials who don’t do finance either….

    and we are also going to be propping up the Greeks to the tune of 500 Million (for starters – wait until Spain needs a bailout). (As long as we don’t start offering the Greeks advice).

    The Irish taxpayer has an awful lot of obligations that are going to stretch sometime into the next century……and this government seems to be very generous with money that does not belong to any of them…..and for the most part…..money that has not even been earned yet….oh…hold on….that’s us !!!

    I think we have a fundamental self-respect problem !!!

  17. paddyjones

    Ireland will be the next Greece no doubt, Greece has a debt of 300 billion for 11 million people we have a debt of 140 billion for 4 million people. My confidence in this country to correct itself is non existant.
    The only way to correct the economy is to drastically cut public spending. Cut public sector pay futher, cut social welfare, cut the HSE, cut education. This economy needs some serious surgery. Raising taxes is not an option.
    Our borrowing costs are going to go through the roof raising money on the bond market next year will be comparable with Greece.
    The EU will need new rules as the current system has failed , tackling the debts of the EU will be the main focus over the next few years as rising borrowing costs and threats of default will be massive.
    Deflation has taken hold in Ireland , property will fall another 50% over the next few years. By international standards our property is seriously overvalued still.
    I have moved all of my savings out of the country via Rabobank , collapse is imminent!

    • @paddyjones,

      What’s best method to move savings from here to another country?

      • Deco

        CBweb – you need to ask those that have done it before.

        You could ask George Redmond, former planner in Dublin Corporation. He was caught transferring money to the Isle of Man, years ago…..

        And then there is the option of asking Michael Lynn (if you can find him)….

        Or maybe ask the dirty dozen how they got the digout to Manchester….

        Or how about asking “Mr. Swiss Cheese” how he managed to relocate to Switzerland himself his family and his money as a means of avoiding NAMA ?

        Or you could ask Drummer Boy (though it a long way to go just to get the same treatment that Charlie Bird got)….

        Yeah, lots of prominent Irish people have already found ways of transferring their money abroad…and they could give you excellent advice……you just need to chase them down and ask….but you will have to to the end of the line after NAMA, the Revenue, the debtors, etc…. and then wait your turn…

        • @Deco,

          :Point taken:) I meant legitimately. But we should all know how they did it as well. To get it back, why arn’t there police warrants out on these guys? Personal guarantees? Anybody seen bailiffs visiting these guys, or passports cancelled. Instead, their debts are written down! Hasn’t Seanie already another job on NAMA Advisory Board? What about extradition? Seanie’s son paid well over a million for NYC pad, money is proxied out to family, nepotism is a well used device see Quinn Group.

    • coldblow

      In February Rabo’s reply to some queries on my part included the following:

      “You must be a resident in the prospective country to hold an account there [I had suggested Holland!]. In the highly unlikely event that Ireland will be deemed bankrupt [I thought this quite plausible and had mentioned it to them], RaboDirect customers monies are safe etc”

      I was wondering if David was dropping a hint in this article. Oh, I dunno. I moved my SSIA out of Irish Nationwide into Postbank a short time before Joe Duffy’s programme sparked a run. I only found out, weeks later (and after the guarantee) that they hadn’t opened the account after all because they needed another look at my passport or somehting. Not much use in the event of a bank run and I still haven’t heard from them since they announced their wind-up. They probably didn’t get my change of address. LOL.

      Anyway, Rabo offer 100% guarantee for the first 100k so I am moving some money there just to spread the risk. However if we end up being thrown out of the Euro or Germany pulls out etc I presume all funds held in Ireland will be devalued (I mean revalued of course!).Then foreign money will return sniffing around for bargains – we all saw this in a flash a couple of years ago, hence my call for full financial transparency for all citizens, a kind of extension of FOI. Anyway, pulling a fast one over one’s fellow citizens is a trifle undignified (I know, they’d do the same to you!).

      Over on irisheconomy just 3 or 4 weeks ago they were laughing at the very idea of a default. One poster was advised to have a lie down. Brian Lucey said we’d weathered worse in the 80s. I wouldn’t care to bet against DMcW. I hope he’s wrong – we will see.

  18. Deco

    Poland has lost many great leaders, intellectuals, planners, and true servants of the Polish nation in the terrible tragedy in Smolensk. These are the people who provided intelligent and unfaltering leadership to Poland before for decades, including the oppressive period under communism, and even during the brutal Nazi occupation. For Poland this is a tragedy, in human terms and in terms of cost to the society. However, over the coming months, we will see the Polish people come together again to help one another, and to rebuild again, just like occurred many times in the past. Because Poland has a tradition in it’s society of intellectual renewal and rebuilding it’s leadership. Despite all that Poland suffered in the 20th century, the Polish people were able to make a much better utlization of the freedom that was gained in 1990 than any other country in the former Communist bloc with the possible exception of the Czech Republic. (And the Czech Republic shares many of same characteristics in this regard to Poland, in respect to it’s determination to renew intellectually).

    And while we look at the destruction wrote upon Ireland, by our own leadership, the wholescale incompetence, who did not need any outside assistance, we must take note of something, that to me is glaringly obvious.

    We need to eat some humble pie, throw out all a lot of the Bullshit that is persistently clogging up the Irish mainstream mindset, get rid of the complacency factor, fight the intellectual dishonesty, the endemnic culture of compromising to authority and might when we know that it is wrong, and start to learn something from Poland.

    And I am not just talking about how to do a full weeks work, or how to do your job properly-which are two concepts that a frightening number of Irish people don’t seem to care much about.

    If the Irish “leadership” disappeared, RTE would tell us that it was a tragedy, but a large proportion of the Irish population would not believe them. Many would regard it as a chance of getting a chance to start afresh.

    The Irish concept of management has failed. The Irish concept of authority is seriously flawed. Which is why we need Mr. Elderfield. Which is why so many had to quit Ireland, because they represented an intellectual challenge to the gombeen element which seems to be in charge of Ireland. The Irish flourished in America, because America was all about opportunity and merit. The only things that worked for Ireland were EU transfers and a helping hand from Big Brother – the Irish in America.

    The events of the last forty years, and perhaps even further, have shown a persistent tendency towards self-harm, deceit, corruption, dishonesty and mismanagement in Irish institutions both public and private. In Ireland the gombeen element is still firmly in charge. And now, maybe now, we can see how this can be changed.

    • Bamboo

      The Polish people that I know and talked to (from over qualified office cleaners, tradesmen, IT people, and friends) are much happier here in Ireland than in Poland. Generally they think it is much more expensive here. Not sure if they don’t want to insult anybody by complaining about Ireland but I get the impression that the satisfaction rate is much higher to be here in Ireland. Maybe being a foreigner in general is a reason not to have any interest in our internal Gombeen state of affairs.

  19. liam

    David,

    Great article but I can’t help but wonder how any of this helps us. At least, not with the immediate problem of FF still being in power.

    I don’t doubt that a great deal of thought and nuanced fine tuning goes in to these articles and no doubt you will have reflected upon the advice you dispense here and how it can be applied in a host of contexts. So with that in mind, perhaps its about time for you to embrace the chaos yourself?

    Mention has been made here of the night of Sep 29 and the institution of the Irish Government’s blanket guarantee of the assets. We’re all familliar with the whole garlic etc episode so we know the story from your perspective. Perhaps the problem was too interesting, pr perhaps there was just a little ego at work (how many Irish economists have the MoF showing up at their doorstep looking for help?), who knows but you utterly failed to appreciate what you were dealing with. If you had taken a moment to think about who it was that you were talking to and the nature of what Lenihan was in the midst of (the pressure he was under from his own colleagues and the banks, the relationships there should have been known to you) and factored that in to your response I’m betting the advice you would have given would have been quite different. I tihnk it would (and should) have been more along the lines of “do not commit a cent of state funds to these banks”. David, in years to come (if not already) you will look at that night and realise that you aproached the problem as one of economics and you provided the advice of an economist. You will realise that this was perhaps the biggest mistake of your career.

    Now I appreciate that everyones a critic and that is not why I am writing this stuff here, nor is it to have a go at you. But, we need to get these motherless swines out of office, and in a constitutional manner. You have casually admitted here and no doubt elsewhere that you gave this advice in good faith and I’m not asserting otherwise. But I don’t think thats an entirely honest answer either. Given that the consequences of NAMA might turn out to be at least as bad as if the guarantee was never put in place to begin with, I think you need to be a bit more up-front about your role in it and admit clearly and publicly that the advice you gave was done with extremely poor judgement, lacked forethought on your part and with perhaps not a little ego in play you underestimated the extent to which Lenihan and others would flush the Irish people down the toilet to save their careers, and not own up to their own failings.

    We need people to lead the charge against the Government who are prepared to call them on their treasonous behaviour. And as you have said yourself we need people unencumbered by the mistakes of the past. We need you in the field, with a bayonet, gutting these f**kers, not sniping from the grassy knoll. You can argue all you want about sticking to the economics facts, but you’ve invited other people in to your world now through your books and articles and to deny that using economics to affect a political end would seem disingenuous.

    I realise the following is totally unfair, but you get what you get in life, not what you deserve: in your position, you are unfortunately either part of the solution or part of the problem. Which is it to be?

    -Liam

    • severelyltd

      There is more than one way to skin a cat.

      The veil that covered the workings of Irish financial dealings has been partly lifted and nobody likes what they see. It is hard to fathom the scale of the problem or the solutions to it. I would think most people posting here are ahead of the game relative to the majority and being privy to more information has left us mildly agitated to say the least. We are where we are as is everyone however that does not mean we are not able to change or influence the game. We still live in a country with laws and a constitution no matter how much some people abuse or corrupt it for their own benefit. A little bit of creative thinking and will power can go a long way.
      I suggested to David through twitter if he had ever considered setting up his own good Bank. It may sound mad but if you cannot beat them then you join them and attack from the inside. Although this kind of action could readily backfire if mishandled I can see many benefits both financial and political. When you think about it such a scheme would not even need Davids support just his endorsement. This could even be expanded to the insurance and other arena’s which are not even elaborate scams. There is a big market for ethical institutions something this country is devoid off.
      It is unfair however to say David needs to be more involved as he has provided more exposure on the crisis than anybody else. I have read enough comments on this blog to know that there are many intelligent people with a wide variety of skills who all share the same outrage and all feel helpless. The only way that feeling will end is when people join together with a common goal to fix the wrongs that have been perpetrated upon them. The turn out for the anti-NAMA protest may have numbered mere hundreds but revolutions have been started with much less. To succeed you need good people , a plan , and a desired destination. The times they are a changing.

      • liam

        Thank you for your patient and considered response, I do appreciate it. There are a finite number of people in Ireland who are in a position to formulate and/or champion the plan and destination of which you speak, and our host is amongst them. None of them appear to have the initials TD at the end of their name, so it appears that movement for change will have to come from somewhere not inside the existing leadership.

        I agree that its unfair to ask the question of McWilliams, I’ve already said that, but I also said ‘everyone’s a critic’ so I don’t think its unreasonable to ask for that question to be considered. With every new revelation I ask myself the same question. I have to, my future quite literally depends on it.

        I take your point about learning curves, and isn’t that what these articles are all about? I know enough to get exercised about this stuff but I also know plenty of people who are smart enough to figure this out and will do nothing and take no interest because life is too short for lost causes. TINA appears to be winning the argument even when people know its a lie because people feel powerless to do anything about it. Again, back to the same central question.

        I have a terrible feeling that I will end up by the end of this year leaving this country for another thirteen years and come back to an FF government and essentially nothing changed because we sat around discussing problems and not solutions.

    • Josey

      Liam,
      Obama is still in Iraq and Afganistan and talking about Iran…..why?

  20. ps200306

    Gurdgiev:

    “Given the systemic nature of distortions, subsequent exits and scaling back of foreign banks presence in the country, the lack of transparency and fairness in the property markets, it is now virtually assured that post-crisis interventions Irish banks and property markets will remain in their zombie state. Japan-styled recession is a looming threat for Ireland Inc.”

    http://trueeconomics.blogspot.com/2010/04/economics-12042010-namas-economic.html

  21. Deco

    The latest update concerning Greece.

    http://www.rte.ie/business/2010/0412/greece.html

    As I indicated already, this morning it was a case of Greece got the bailout that the Greek government was seeking. Again. This is a routine.

  22. Alf

    “This trajectory gets worse. As a government’s income is reduced, it borrows more money to close the gap, which in turn, means a greater amount of tax will have to go on interest payments the following year, which will lead to a greater deficit.”

    Bleak as this sounds, I think David has even been too generous. Watch as the EU starts to criticize Ireland for taking action which it encouraged. Truth be known there are many to blame outside of Ireland for this fiasco. One thing is sure though, the economic illiterate politicians and their greedy cronies will be the last to admit to it.

    The Greek bailout really looks like using a sticking plaster for a heart attack patient. The problem is that those who propose the solution are the ones who created the mess; The Euro project was misconceived and fundamentally flawed; it was sold to the EU nations by economic illiterates looking for an easy way to prosperity. Well there is no free lunch; no quick fix. Greece needs to devalue. Greece needs a different currency to Germany. Greece has never been a Germany and it will never be a Germany at this rate; most definitely not by continuing in the Euro-zone.

    Maybe this result was inevitable. Cheap money flooding into immature economies, without the ability to absorb it, leading to massive debt. The economic equivalent to giving a 2 year old son your credit card and then being surprised that he couldn’t pay it off. Well now he is way overdrawn; but instead of taking it away, we now extend the limit.

    Similarly for Ireland, the cronies that created the problem are left to fix it; creating NAMA and bailing out worthless banks. Let’s all pay the casino tab of the gamblers as we go bankrupt in the process – because casino’s should always win, right?

    I don’t think I’ve seen such a clear cut case of destruction of a nations finances for the benefit of few – ever.

    • liam

      How true. The basic flaw of the EU seems however to be the pursuit of a monetary union without first establishing a fiscal/political one. Quite a peculiar experiment.

      • Josey

        Who’d want a political union with former dictators and imperialists?

        • liam

          Thats hardly the point. Besides, the Irish quite happy to build roads and railways, fund our education system and promote our language and culture with wealth derived from said imperialism, and I don’t anticipate a consumer embargo on German cars, Belgian beer or Spanish and French wine because of the sins of their forefathers, being terribly popular.

        • coldblow

          Well, it’s a point worth making. While we all hope that;they have turned those corners for good you can’t be certain.

          Linked (in my mine anyway) to this is an interesting recent article from Hutton about the dangers of international cooperation failing. (He’s very pro-EU by the way.)

          http://www.guardian.co.uk/commentisfree/2010/mar/28/will-hutton-china-germany

          QE etc might work for Britain and other economic powers but the danger is that the likes of us will be left twisting in the wind.

  23. Ref cbweb says @5 macholz,

    My apologies for the non functional link and getting back so late!
    here it is in black, white & red

    PRIVATE INVESTORS will be able to participate through the asset managers of the State’s largest banks and Aviva in investing in a majority stake in the special purpose vehicle (SPV) behind the National Asset Management Agency (Nama).
    The structure and shareholding of the SPV is expected to be announced shortly by Nama.
    A group of fund managers, including the asset management units(another name for derivative traders) of AIB, Bank of Ireland and Irish Life & Permanent (IL&P), is expected to invest some €74 million, matching a €26 million investment by the State in the SPV.
    The Government has set up the SPV with private investors to buy the loans with Nama as a way of keeping the agency’s estimated €54 billion debt off the State’s balance sheet after it purchases loans with a face value of €80 billion.
    The SPV would issue two types of shares with Nama holding the majority of voting shares, giving the State control over the entity but leaving private investors with majority ownership of the equity.
    Discussions on the structure of the SPV have taken place with the asset management firms, led by the Irish Association of Investment Managers. The €100 million invested in the SPV will be used as capital for Nama, which can borrow up to €5 billion to finance unfinished development projects.
    Irish Life Investment Managers (ILIM), ILP’s fund management division, Bank of Ireland’s New Ireland Assurance and Aviva Investors are expected to lead the private investments in the SPV.
    by SIMON CARSWELL Irishtimes.com

    Now on to Financial Derivatives,
    A financial derivative is a contract specifying a payoff calculated by some formula based on the yields or prices of a specific collection of underlying assets. Consider the securitization of debt: a CDO (collateralized debt obligation) is a security formed by packaging together hundreds of home mortgages. The CDO is supposedly safer than the individual mortgages, since it spreads the risk (not every mortgage is supposed to default at once). Furthermore, a CDO is usually divided into “senior tranches” which are guaranteed not to drop in value as long as the total defaults in the pool does not exceed some threshold; and “junior tranches” that are supposed to bear all the risk.
    Trading in derivatives brought down Lehman Brothers, AIG, and many other buyers, based on mistaken assumptions about the independence of the underlying asset prices; they underestimated the danger that many mortgages would all default at the same time. But the new paper shows that in addition to that kind of danger, risks can arise because a seller can deliberately construct a derivative with a booby trap hiding in plain sight.
    It’s like encryption: it’s easy to construct an encrypted message (your browser does this all the time), but it’s hard to decrypt without knowing the key (we believe even the NSA doesn’t have the computational power to do it). Similarly, the new result shows that the seller can construct the CDO with a booby trap, but even Goldman Sachs won’t have enough computational power to analyze whether a trap is present.
    The paper shows the example of a high-volume seller who builds 1000 CDOs from 1000 asset-classes of home mortgages. Suppose the seller knows that a few of those asset classes are “lemons” that won’t pay off. The seller is supposed to randomly distribute the asset classes into the CDOs; this minimizes the risk for the buyer, because there’s only a small chance that any one CDO has more than a few lemons. But the seller can “tamper” with the CDOs by putting most of the lemons in just a few of the CDOs. This has an enormous effect on the senior tranches of those tampered CDOs.
    In principle, an alert buyer can detect tampering even if he doesn’t know which asset classes are the lemons: he simply examines all 1000 CDOs and looks for a suspicious overrepresentation of some of the asset classes in some of the CDOs. What Arora et al. show is that is an NP-complete problem (“densest subgraph”). This problem is believed to be computationally intractable; thus, even the most alert buyer can’t have enough computational power to do the analysis.
    Source http://www.freedom-to-tinker.com/blog/appel/intractability-financial-derivatives

    Now tell me that any or all of the Irish Banks had such bright sparks working for them to spot these potential loss making investments
    Or am I write in saying they would have just bought these assets, on recommendation from brokers like maybe Goldman Sachs perhaps? In the belief that they were buying something else like insurances against potential losses on other perceived risky assets??

    • MK1

      Macholz, the problem with a lot of CDO/CDS/MBS type of investments was not only the obfuscation techniques of ‘dodgy assets’ as collateralisation was performed, with loans chopped and re-packaged, but the classification of the risk by the rating agencies on these entities.

      Rating agencies (S&P,Moody’s, Fitch, etc) collectively (seemingly) blamed the failure of mathematical modeling and quantitative analysis techniques used across the industy to assess the risks correctly. However, there was clearly financial incentives by all and sundry to rate classes higher than they should be and so over the years these techniques developed and gained a momentum of their own.

      “We” are lemmings ……

      MK1

    • @machholz

      Thanks for that. Isn’t it amazing

      “AIB, Bank of Ireland and Irish Life & Permanent (IL&P), is expected to invest some €74 million, matching a €26 million investment by the State in the SPV.”

      So these banks with one move flush out their toxic rubbish. Lets say €74 million, which for arguments sake, lets say has been written down by 50% in the transfer to Nama. Now they get opportunity to buy it back at lets say 50% discount on the above figure, €37 million. Instant gain of €37 million if they can sell at the price of €74 million above. Another hidden bank subsidy.

      Re derivatives, correct me if I’m wrong, but the concept more easily understood looking at its origins in farming. Farmer would sell a field of planted grain in the spring calculating into the selling price the likely selling price of that grain harvested in the following Autumn. Problem with derivatives based on other assets, eg a field of houses sold at a certain price with 100% mortgages to people unable to pay back, bundling thousands of these fields into a paper investment fund, say ROTCO and selling these bigtime into the marketplace.

      My understanding is that Irish banks were not significantly exposed to this kind of rubbish debt, our meltdown being mostly asset based property bubble. Still, without seeing the paperwork figures, its hard to say what exposure eg Anglo has.

      Sorry to blow on about this especially to you guys who know this stuff a lot better than I do! I’ll continue:)

      Good to see Alan Barrett co author of latest ESRI Report openly criticise the government for the wasted money in bailing out Anglo and the lack of information in support of the Anglo/government bailout position.

      OT Re blogging/posting compared to taking to the streets, I believe it far more effective to blog/share information/probe/discuss/learn/open up cans of worms for people lucky enough to be able to do this. Hopefully eventually through this process good information filters out.

      For a little inspiration around this on how the individual can make a small difference, I recommend the Storyville documentary on Daniel Ellsberg Policy Analyst for the US Defence Department, whistleblower who published the Pentagon Papers exposing the lies behind the Vietnam War, which later led to the downfall of Nixon.

      “storyville dangerous man in america”

      Of course, your posts may have no effect whatsoever and be a load of rubbish, which is cool as well:)

      • bit more info re the SPV’s came out from oireachtas committee hearing on nama. Apparently, the banks involvement indirect coming from their investment arms e.g for pension funds. They buy in via government bonds delivered at 4%, more detail feel free to dig around.

  24. wills

    Posters.

    Wide open comments tonight and alot to ponder.

    We cannot escape the basic fact though the banks knew it made a property bubble and knew it would pop and knew they would call in the ECB fire men to put the fire out with lorry loads of freshly minted cash.

    We can never get away from those facts.

    And the rest of it is incidental.

  25. Liam 18
    I am getting tired of writing and not seeing any changes ,so I am with you on this one!
    Iam ready to leave the PC and head for the streets!

  26. Josey

    Friends,
    yes writing here can be frustrating….but let’s be very careful about taking to the streets. Agents provocateurs might be amongst us. Let’s not get distracted from our goal of a PEACEFUL change in this country.

    We’re not Ireland INC. we’re a sovereign country of men women and children…we have a soul not just a bank balance.

    Oiche mhaith

    • liam

      Nobody here is seriously advocating for laws to be broken. Quite the contrary in fact, I see a lot of calls for the law to be enforced.

  27. murray

    This guy NOLLAIG MURPHY is a traitor to our country. SCUM BAG

  28. strathspey

    @ Alf (21)
    How typically Irish. Blame everyone but ourselves. Our mess was certainly not caused by Germany.

  29. —- BLOODHOUNDS —-
    2006: Maples & Calder opens office in Ireland or, Briefing Jack Bauer!

    …Is the Satellite in position Cloe?
    Give me 15 seconds Jack!
    Ok, but hurry up they are approaching form NE…

    The hugely successful 24 series is an interesting, nearly religious phenomenon, and offers enough for an entire essay on the ways this series is presented and why the public is so fascinated.

    NAMA’s own projections estimate 2,600 million Euros to be spend on legal fees, accountancy professionals and property valuations.

    They estimate 260 million of fees to be needed per annum over 10 years time.

    If you ever built a house in Ireland, and if it was not a high efficiency pre fabricated HUF or DaVinci Haus, then you will know that the estimate is just that, a figure that usually is around 20% -30 % higher when the final costs are on the table.

    64 legal firms are to advise this bureaucratic monster our government saw fit to implement against the will of the people of Ireland. The list is long, but Maples & Calder grabbed my attention from the moment I saw they are appointed to the panel, and they are unique to the list.

    Maples & Calder opened their Irish office in 2006, now wasn’t that excellent timing in deed!

    They are corporate law specialists, and in no time quadrupled their share of the advisory market to Irish investment funds. (Lipper Report) In 2009 they increased their market share by 320%.

    In November 2009 they advised 15.6 % of funds serviced in Ireland. In context, in 2008 they had 3.7 % market share.

    In July 2009 Source UK, was launched on the Iseq. It is a joint venture between Morgan Stanley, Goldman Sachs and Merrll Lynch, a physical Gold exchange commodity platform on the Iseq. Maples & Calder were the legal advisers. This was the last of the 13 ETF’s and 22 ETC’s that were launched and are now domiciled in Ireland. (ETF, exchange traded funds, ETC, exchange traded commodity)

    In deed Source UK, had choices, and their jurisdictional shortlist had Cayman Islands, BVI, Luxembourg and Ireland as possible locations for their financial product platform.

    The reason the were advised to go to Ireland was simple. Financial services infrastructure was there, well, this was in place in other locations as well, but the main reason was the funds regulatory regime in Ireland.

    Well, we learnt what that was all about when the truth about the former chief executive of the Regulator, Patrick Neary enlightened us! Let’s just quickly remember the events concerning Anglo.

    TOP SECRECT
    CTU CLASSIFIED DOCUMENT
    TO: JACK BAUER ON PRESIDENTIAL ORDERS

    03/2006:
    Maples & Calder corporate and compliance specialist, pay around 60 Euro rent per sq ft for the 30,139 sq ft (2800 sqm) on fourth and fifth floor at 75 St Stephens Green. Located on the site of the former headquarters of the Department of Justice. May be some cayman woodoo is involved here? (GRINS)

    02/2007:
    Our very own and much beloved Sean Fitzpatrick deliberately lies to the AGM that he is confident and happy with risk management in place and has absolutely no concerns about the bank’s exposure to the construction sector. Fwiw. In November 2007 I warned amongst friends in public forums that the total collaps is inevitable, in quick succession figures such as 7,000 million were wiped of the Irish stock market. Bertie Ahern said to people holding up red flags “ Why don’t you go and kill yourself?’

    11/2007:
    Anglo CEO David Drumm states ‘These results might silence a few people’, when they reported 46% increase in pretacx profits to 1,200 million. Well, later we learnt how Ernst & Young was involved in possible accounting frauds concerning this Zombie bank.

    07/2008
    Sean Quinn buys 15% stake in Anglo Irish. Well, also here the recent events taught concerned citizens quite some lessons into the overall dealings of our fine legal, accountancy, business and political elite in the country.

    09/2008
    Lehmann! Anglo’s looses 50% value on 29th of September, a day later, in a panic, and the only one in Europe, Lenihan states that loans and deposits in Irish owned banks and building societies are guaranteed by the state until 09/2012. This move was hasty to say the least and one wonders, as the reactions of our european partners were nothing short but utter astonishment and disbelief, one could conclude that Lenin did not go through extensive consultations with our partners.

    12/2008
    Drumm and Fitzpatrick resign instead of being arrested by emergency response units and sub consequently sent to Guantanamo for in depth interrogation. Come on, the Yanks owed us, Shannon and so on, we could have asked a favor. Seems like creative thinking is not the strength of our politicians.

    01/2009
    Patrick Neary resigns as well. Should have given him the same ticket to Gitmo!

    02/2009
    Well, by now we should have achieved discount for the tickets, Irish Life and Permanent CEO Dennis Dasey resigns – Does anyone here have Jack Bauer’s cell number? – Massive accounting fraud on the horizon. Eight billion dummy deposit to deceive the markets and shareholders. Anglo lent 10 clients were 451 mios to buy bank Anglo shares, in an attempt to manipulate their share price. PWC’s reports that Anglo’s top 15 clients of in excesss of 0,5 billion

    So far the incomplete but essential quick executive summary for our Jack Bauer briefing.

    On the first of October 2007, Nollaig Murphy at this time in A&L Goodbody and now Partner at Maples & Calder wrote :

    NEW TRICKS

    Twelve months ago, a large part of the new growth could be partly attributed to Ireland’s popularity as a collateralised debt obligation (CDO) location, in particular managed CDOs and CDO tranchelets, which were both very hot areas in the market at the time. The Irish legislature had previously introduced a blanket VAT exemption for investment management services provided to Irish structured bond issuers, representing a saving of 21 per cent on what would normally be relatively substantial fees.

    …. Ireland is now the leading European onshore jurisdiction for special-purpose vehicles (SPVs), with in excess of an estimated 2,000 incorporations a year, more than double that of two years ago…..

    ….
    Rather like the CDO legislation mentioned previously, such a legislative move has led to an increase in business as in addition to now being a lower capitalised vehicle, such Irish issuers have never had a requirement to retain a minimum profit or ‘turn’ unlike some rival jurisdictions in Europe. A classic case of this innovation was the recent Channel Capital CDPC transaction. Channel Capital, an Irish Section 110 vehicle, is the first credit derivative product company (CDPC) to be established in Europe. CDPCs are highly rated (triple-A) investment companies which sell protection through credit defaults swaps to take credit risk to gain return on capital.

    ….
    Although recent events have led to a hiatus in certain sectors of the market, the variety and depth of the Irish transactional portfolio in structured finance bodes well for future growth of the industry. Rather like the Celtic Tiger, the prognosis is healthy and steady as she goes.

    President: Yeah…. Steady as she goes! – She shakes her head in disbelief – Did you hear that Jack?

    Jack: Yes Madam President!

    President: Jack?… You know what I think?

    Jack: Yes Madam President, I do in deed!

    …..tbc.

    • @laughingbear:

      1. Merrill Lynch were advisers to Dept Finance on the night of Sept 30.

      2. From your notes, “In July 2009 Source UK, was launched on the Iseq. It is a joint venture between Morgan Stanley, Goldman Sachs and Merrll Lynch, a physical Gold exchange commodity platform on the Iseq. Maples & Calder were the legal advisers.”

      So, Maples and Calder were legal advisers to Merrill Lynch and you’ve connected Nollaig Murphy to Maples and to Anglo. So now we have Maples, Merrill, Anglo and DoF in bed together on night of night of Sept 30 2008, so what makes Anglo untouchable?

      Apparently, head of ECB Jean Claude Trichet was furious the US let Lehmans fail and didn’t want any Irish bank to fail, if so, why? Especially since its now present and future ECB policy to wind down rogue banks, plus Schauble and Merkel were not consulted by Lenin on the banking Guarantee?

      The Great Anglo Schenanigans Mystery deepens.

      Will the current banking inquiry be able to see the documents and give us the answers we need?

      Any whistleblowers care to spill the beans. Anyone from the FF Ministry of Coverups like to speak up? Why not a judicial inquiry led by a decent judge?

      We’d have more information if we lived under Lenin. Oops, sorry, we are living under Lenin.

      • OK, so Anglo saved by guarantee to live another day, financial meltdown averted, need for a fast decision understood whether you agree or not.

        The question is, in the light of day over subsequent months, when the documentation is examined and Anglo’s damage exposure realised, why is it better to save it than to fail it?

        Evidence/proof required asap?

      • Two things:

        Colm wrote:…..Any whistleblowers care to spill the beans. Anyone from the FF Ministry of Coverups like to speak up?….

        1.

        Yes, I would like to emphasize this!

        If anyone wishes to share evidence or insights with me in the light of the film, ANGLO IRISH BANK- The Irish love Story, that I try to get of the ground, or in the Light of my investigative postings that I contribute here.

        You can contact me in confidence at

        anglolove@ireland.com

        Kindly note:
        In former times, I was accredited member of the Press in Germany.

        I am not member of any party on Ireland or abroad, I am a concerned, well, more than concerned citizen,

        I am not writing/filming for the press, I do that for the people of ireland, and people who know me since more than 20 years know that I will NEVER disclose my sources if they wish to stay behind the scenes. This is written in stone and you can fully trust me on that.

        2.
        If you are interested to become a sponsor or investor in this film project, you can contact me at the same email above.

        Thanks
        Georg

        • IMPORTANT

          While obvious, I feel I should say it anyway, please, under no circumstances, do not send me informations that you might wish to share with me to this above email, for security reasons!

          The email is there to get in contact with me, and I have other ways to transfer sensitive information.

          P.S.

          You might also consider to share informations with WIKILEAKS instead:

          http://wikileaks.org/

          Thanks
          Georg

      • Yes Colm, this goes deeper, MUCH deeper!

  30. Josey

    with Greece taken care of for now,
    we’re down to PIIS.

  31. NAMA LIVE

    The heads of the National Assets Management Agency (NAMA) and the National Treasury Management Agency (NTMA) will appear before the Oireachtas Joint Committee on Finance and Public Service at 2pm today, Tuesday, 13th April in Committee Room 2, Leinster House.

    This Committee can be viewed on-line at: Oireachtas Live

      • @laughingbear,

        thx for url, got some of that

        16billion, 20% loan book transferred only, mostly AIB/BOI loanbook.

        No business plan yet from NAMA on what they intend to do with the moved assets? Expected by next June.

        Over a billion per yr to be paid out of expenditure annually from exchequer over 10 yrs,total 10 billion part of annual borrowing requirement, promisory notes issued to banks.

        There will be impact regarding business plan when €32 billion was expected performing on €80 billion portfolio now revised down to something like 27% performing?

        Also valuations done against date 30 September 2009 or thereabouts, there’s an issue if values fall another 50% or more or even less, more taxpayer loss.

        This was all BOI/Anglo stuff and could be the best of it , so this probably an exercise in window dressing.

        All they did was let the valuators at the loan books to sort out the rubbish, bad/incorrect documentation, missing titles apparently all an even bigger mess than anticipated. If this was AIB/BOI what’s Anglo like?

        Anglo/Irish nationwide have to submit reconstruction plans to ECB, that should be a full comedy standup gig due by June next.

        NTMA/NAMA are answerable to the Minister of Finance, expected to collaborate with DoF, so DoF gets the boot there.

        Revised plan for Anglo will come in May, no information whatsoever about that.

        However, the Frankenstein is not working until they try to move the assets onto the market, and believe it or not, they’ve no plans for that yet!

        It will be interesting to see the market reaction when NAMA jumps into the market place and tries to offload assets.

        Anglo, seems to be deeply mothballed, hardly any information forthcoming at the moment.

        There was discussion around the proportion of rolled up interest that comprised loan transfer. A concept I’m only vaguely familiar with, so if anyone wants to give a definition…

  32. —-ARE YOU NOT SCARED? —-
    or, shoot out in South Dakota

    I had a lengthy conversation with a colleague in germany last night, and he was asking me, ‘Are you not scared?’ referring to my activities.

    Well, I was shot at by racists in South Dakota in a town where a Sign Post was attached to the entery of a Saloon stating NO PRAIRIE NIGGERS, reffering to native americans.

    I picked up a 357 magnum Marlin (level action) and shot at racist activists that were trying to hurt young horses in the fields by driving golf balls to thier heads from a short distance.

    I was locked up in a high security prison in the US with a murderer and a child rapist for 14 days because I overstayed my visa and was put into body chains when transported to the airport like a terrorist. (My known activities with native americans contributed here to their hospitality!)

    I had a close call in a deep diving accident on the Maldives.

    I have an extensive background in advanced close range combat techniques and thankfully only twice in my life had to take advantage of this.

    Once, I was in a near air collision.

    I nearly lost my life in a car accident.

    After devoting 15 years to a career as a concert pianist, and accident crippled my hand.

    Scared?

    Yes, I am scared that the truth, will never hit the light, or only when it is long overdue. This is what I am scared about.

    (shrugs)

  33. tony_murphy

    I think the Cowen, Lenihan + rest of the drinks cabinet know very well that Ireland will default eventually.

    They are bluffing.. A bit like the bank guarantee to buy time. They are simply buying time.

    They have been busy coming up with schemes to allow the “masters of the universe” / “friends of fianna fail” a means of extracting whatever they can from the fine mess they created together. They are grabbing all the money they can get their hands on now before everything goes completely titsup

    I wonder how many of friends of fianna fail have moved money from Irish banks / credit unions in the past 18months?

    Anyone with any money left in an Irish bank needs their heads examined if you ask me.

    • Deco

      If Cowen was not Taoiseach or even a politician….would he be able to apply himself to anything else ? Same with regards to Coughlan, Cullen, Martin, etc….

      These are people who wanted to make their careers in politics. Careerists, to the exclusion of all else. Problem solving or wise sensible leadership is just not something that these clowns are into. And worse than that, we rewarded this sort of mediocrity and slick hard sell gimicky for decades.

  34. G

    Ireland is a bit like Xanadu!!

    These are not purely economic decisions, they are massively informed by political considerations, the direction to bailout out Anglo and those associated came from elsewhere……remember Thucydides’ quote “large states do what they want, small states do what they must!”

    Citizen Kane – Opening scene
    http://www.youtube.com/watch?v=AczT1Cp-m7A

  35. Deco

    Here is an appraisal of Morgan Kelly from the IT. Some biting commentary at the bottom of the page by means of some of his quotations.

    http://www.irishtimes.com/newspaper/education/2010/0413/1224268218570.html?via=mr

    He has very serious things to say about the social fall-out from the Boom-Bust, Asset Prices Crack up. Even if you heeded his advice and David McW’s advice, you might still not want to live in a society that has cities that are becomming more like Cardiff, Glasgow and Liverpool by the week.

    • Morgan Kelly on the ball especially when it comes to criticism of Lenin and NAMA(Not Another Mess Again).

      Oireachtas Committee today, McDonagh and Corrigan,

      Begorrrah twas like watching The Hurt Locker guys fiddling with a roadside bomb telling us what they’d done and delighted with themselves so far…we cut the wire on the left, nothing happened, everybody happy…ok sure there are plenty more wires, its not dismantled yet, but we’re gettin there……

      We havn’t really addressed a business plan to dump the stuff, but we have a new board, they’ll do that…:)

      Sweden in ’92 had it all sold off by ’95, these guys havn’t begun to mess with it, or apparently havn’t a notion how to mess with it.

      Here’s an investment tip, Demolition, Specialising in Rural Ghost Housing Estates built on a pyrite bog, you can’t miss.

      • Deco

        There is a rumour about a stretch of motorway also built on pyrite rock….you know the road that Gormless did not have to sign off because Dick Roche did it 24 hourse before Gormless became minister “there is nothing I can do about it now” ….and then into the ministerial prius he placed his backside….and the rest was history…

  36. Deco

    This is a commentary from the IT concerning the Icelandic report on the banking meltdown there.

    Here is something I find really amatuerish.
    {
    In Ireland, the board of the Financial Regulator has nine members, six of whom were politically appointed by the then minister for finance, Charlie McCreevy, in 2003. Despite the shortcomings of this body, all of these individuals still sit on the board of the Financial Regulator.

    McCreevy’s appointments included barrister Gerard Danaher, who incidentally donated €1,500 to Eoin Ryan in 2004 and continues to serve in an overlapping role as a director on the Central Bank Financial Services Authority of Ireland.

    Deirdre Purcell was also appointed by McCreevy and remains on both boards. Why was a fiction writer politically appointed to oversee the financial regulation of our banks?
    }

    Why did Charlie McCreevy put somebody with no experience of the banking sector, no quanilifications and no training on the board of directors of two seperate boards with respect to bank regulation. I mean is it any wonder that they could not see what was happening. Also, how come nobody on the opposition benches kicked up a storm concerning this.

    The entire board should be removed on the basis of incompetence, and because they are clearly neither qualified or experienced to run anything.

    This is the stink of nepotism and political patronage.

    In fact the appointment of these clowns, including GreyBore’s biographer, to the Regulatory Board for the banks IS A SCANDAL AND A DISGRACE !!!!

    To bring the thing full circle we have McCreevy getting a loan from ‘Fingers’ without a proper credit committee assessment. Instead, it seems that ‘Fingers’ just clicked his ‘Fingers’.

    This country is loaded with institutional amateurishness. I wonder are McCreevy “banking experts” taking any pay cuts out of the current State Pay Deal. I wonder are they making a contribution to the pensions they will get for being…his mates ?

    This is obscene !!!!

    • @Deco 38,

      Maybe not as amateurish as you think, political patronage, croneyism, your puppet on the board, turn a blind eye to corruption, job done.

      I would think Danaher I’d imagine very inclined to guard the construction sector upon which financial and legal services depend?

      Same process across the quangos gets us to where we are now.

      Lets get real then, quasi-autonomous non-governmental organisation Quangos scrap them all!

      • Deco

        I agree. Get rid of all the quangoes. The lot of them. Because they are all infected with nepotism and political appointees.

        Then six months after getting rid of them all we will see if anything happened that justified the re-establishment of any of them. Most likely none of them will be needed.

        The manner in which quangoes are being ‘staffed’ is obscene and ridiculous. For example the ex-Toaiseach’s ex-girlfriend on a handy earner on the Consumers quango. It is obvious that she does nothing. And then we have all the rejected GP councillors who stayed loyal to Gormless and who got rewarded with state jobs at the taxpayers expense.

    • Deco

      On second thoughts maybe I am entirely wrong. Maybe we should add Deirdre Purcell’s books as a mandatory part of the Economics curriculum in Third Level, so that the undergraduates cn all get to see inside….
      the mind of one of the great geniuses that are employed in banking regulation in Ireland……along maybe with Patrick Neary’s work….

      And besides …. is it not highly appropriate that somebody with a proven record in writing a few hundred pages of fiction…..that put most people to sleep…..is put on the board of the board supervising banking in Ireland….

      Deirdre Purcell….bank regulator…..yet another example of Ireland as a Banama Republic….you could not make this stuff up !!!!!

  37. wills

    Posters.

    Round my way there are skips all over the place.

    Teams of 2/3 builders carpenters etc beavering away doing nixers a plenty.

    It is a sight to behold and it sparked off 2 weeks ago.

    People are spending on fixing up their property.

    And they are all doing it in a domino like effect and spending in the same numbers.

    The NAMA effect.

    The NAMA cash is rolling in from the ECB on the QT.

    Today in dail (thanks for link bear) the NAMA CEO said the gov have issued 3.5 Billion NAMA bonds to banks and he did not know whether banks had cashed bonds at ECB and he was not going to ask them either it is none of his business he said.

    Well I reckon the banks legged it to ECB and cashed the 3.5 Billion.

    And if they did it technically means the banks are now today 3.5 billion cash richer than three weeks ago and 3.5 billion approx less weighed down by toxic loans.

    The 3.5 billion in ready minted cash when fanned out through the fractional reserve banking model magically transforms itself into multitude of more billions.

    So, the word is quietly whispering out to the banking customers in the know with the bank managers bent ear get going again on the property game.

    This is concerning. NAMA is a ploy to get a property bubble going again and a second bite at the cherry. This time though the banks can go again and now know for definite the gov will be there to pick up the tab.

    • Bamboo

      Same around my way Wills. Skips all over the place and everybody is building extensions or doing things to their house.
      I’ve planned three years ago to do a small extension but because of the ridiculous quotes I received from builders I’ve scaled my plans down.
      Have started the process all over again and I contacted 12 builders. Four actually came to asses the work and I’ve got 4 quotes. The others didn’t how any interest. Also costs of material is the same or higher.

      Have no idea what is happening with the construction workers so called “desperate for work”.

    • I would like to add another view to that as I have a skip in front of the house, as many others as well around here, and builders are in my place for the next two weeks.

      The reason in my case is simple, just recently our insurance claim was processed that we had to put in because of damage to the house caused by the unusual cold winter we had here. In my case a backboiler bursted in an open fire place (THE MESS!), pipes bursted in walls and in floors.

      I know from at least 5 other people that are currently dealing with these damages. I assume that such claims are somewhat in the same time frame.

      Just a thought.

      • wills

        Another angle on it laughingbear, and damage repairs makes sense.

        But, can there be another run at a property bubble about to be attempted by the property lotto winners from the last bubble?

      • Bamboo

        I have three grown up children. Sometimes they stay for a couple of months or more and then they move out again. So I am expecting this pattern to continue for the next couple of years and more. The family home is thus becoming an in between place for when they finally move out. I assume this is happening for many families.

    • @wills 39,

      There’s a problem though. Nama havn’t even a business plan ready for dumping stuff back onto market, earliest by next June.

      All the propaganda about an upturn, prices hitting the bottom. They’re tryin to kickstart an engine that’s flooded with property oversupply.

      Nama damage will take a while to fully kick in.

  38. @David,

    If I recall that correct, on RTE’s prime time tonight you said that knocking down the houses, technically would contribute to ‘growth’, did I get that right? – I might have been distracted at this part, as my dig is in pain. –

    Why is that? Because people are employed to perform the job?

    • Bamboo

      I think we have to define “growth” again. What happened in the boom years is one type of growth but do we really want that? It was certainly a growth that was forced upon us whether we like it or not.
      To be honest the sustainable growth/economy is a fantasy. It is a popular word at the moment and that is all what it is. As soon as there is growth than we are satisfied. But people are not allowed to consolidate their satisfaction. There is always a spanner in the works and we are again inundated with all types of products, lifestyle changes and the whole cycle will start allover again. Electric cars? A bit like replacing old TVs with flatscreen TVs and then with HD ready TV, Blu-ray, etc, etc. Is this growth?
      As soon as there is recovery of some sort, we will start the cycle all over again as that is human nature.

      • yeah,well David’s comment just triggered this funny picture to a degree.

        On the one side of the road you see people in need of homes and people who’s home was repossessed staring over to the other side in utter disbelief and on the other side you have some chaos who knock down houses, and smack in the middle of the road is Lenihan, hopping from one foot to the other in sort of a victory dance and in his best Sunday preachers voice shouting to all of them, GROWTH, CAN YOU SEE IT? GROWTH, THERE IS SUSTAINABLE GROWTH! I TOLD YOU, WE TURNED THE CORNER!

  39. ps200306

    David – you made a good job on Prime Time persisting with the point about propping up NAMA. Minister Ryan was embarrassingly evasive on both this point, and later on the electric cars issue, which I’m sure you’re glad you missed.

    HOWEVER … we’ve got to stop talking about the 22 billion being “wasted” on Anglo as if we could get away with it scot free. By the best estimates, we can at best save a couple of billion by letting Anglo’s subordinated creditors go swing. Not to be sneezed at, but it is mischievous to suggest that there are tens of billions being wasted unnecessarily. Oh, and we can’t do anything until after the guarantee expires, as you pointed out tonight.

    • ps200306

      Grgghh. I meant “propping up ANGLO” of course.

    • @ps200306

      So yu’r acting on trust tens of billions are not being unnecessarily wasted even though you propose to pay back bondholders 100 cent on the euro not e.g40%.

      So what are the best estimates, been looking for these for a while, nobody else has the figures! Depending on who you listen to Dukes, Lenin, Clowen the wind own figure is a moving target.

      But they won’t give the figures and apparently sensible and clever people like yourself are not demanding to be given them.

      So who are the Anglo bondholders? What of senior bondholders? What of an ECB supported wind down and write down of Anglo debt.

      22 billion is being totally “wasted” on Anglo, poured into a toxic black hole by an incompetent and corrupt government in a treasonous betrayal of taxpayers.

      Them’s the dumb facts. Prove em wrong! I reckon the taxpayer can be saved at least €15 billion in a proper and decent wind down for Anglo.

  40. Some great stuff here on this post.

    I saw DMcW on the Vincent Browne programme via the web.

    I saw Tony Blair turn into an old man in 5 years.

    You can’t solve it all on your own David.
    This rot has gone on for longer than we’re about.
    You won’t solve it all on your own and this life is not a rehearsal.

    Bi curamach a mhic.

  41. I havent been able to post here so often lately which may have met with a sigh of relief from some quarters.
    The site remains one of the best sources of analytical analysis and an historical record of events which will lead to God knows where.
    In filling my fridge, to survive, and to protect my marriage, I can’t spend the amount of time here that I spent before.
    With the greatest regret.
    Henceforth I have to confine my comments to brevity and in particular, when I agree with a pert comment, I will reply thus;

    WHALOAB.

    Not too difficult to figure out.

    Not saying goodbye folks, just heading for Lurker Land.
    Sorry about that.
    Cheers,
    F

  42. Deco

    Yesterdays link to the IT commentary concerning Iceland, the investigation carried out into the Icelandic banking crisis and the muppets who are placed in charge of regulation of Financial Services Regulation in Ireland.

    http://www.irishtimes.com/newspaper/opinion/2010/0413/1224268226037.html

    There are remarkable similarities between the route to the meltdown in both Ireland and Iceland.

    Except Iceland is trying to find some accountability. And Iceland is trying to be honest about the crisis and stop covering everything up.

    And lastly, Iceland has got rid of the incompetent clowns who created the problem. In Ireland they are mostly still employed, and no doubt looking forward to nice fat pensions.

    Cull the quangos. It is the only way to de-nepotize Irish institutional life. In fact it would bring a massive improvement in Irish society. I am not talking about cost. I am talking about removing the incompetence.

    • Deco

      Some of the comments to the link above are informative.

      The only way to get rid of these muppets is to tell the German government that the muppets in charge of Financial Services Regulation in Ireland when Depfa went to the wall, and cost the German taxpayers 102 Billion Euro.

      Because the evidence is that the German government is many times more likely to serve the interests of the German taxpayers, than the Irish government will serve Irish taxpayers.

      Laughing Bear….perhaps you could oblige ?

      • Deco

        It would be very entertaining looking at the clowns in the DoF run around like headless chickens at a demand from the ECB to get rid of the board members regulating Irish banks. And the embarassment inside the official reply, would be worth watching :))

  43. Deco

    The current cover of Phoenix Magazine (for those who wonder what is the current feeling in Ireland)…
    A picture that says it all.

    http://www.thephoenix.ie/phoenix/welcome.do

    Highly relevant cartoon commentary also…

  44. @furrylogs

    Best of luck,

    Volunteering comments here on Ireland Inc debacle at the moment of its crisis is well worth while.

    Keep up the good work!

    cheers

    Colm

  45. Freethinker123

    actually i’ll let the man elaborate himself, just replace the word Americans with Irish

    http://www.youtube.com/watch?v=xIraCchPDhk&feature=related

  46. poyais

    I read the book David mentions (“This Time is Different: Eight Centuries of Financial Folly”).

    It shows that virtually all countries in crisis eventually choose some form of default — either real or effective (for example by currency devaluation).

    It only gives one example of a country going to extremes to pay back all its debts in real terms — Romania in the 1980s under Ceausescu. This resulted in abject misery for the population [1].

    Neither ‘Total default’ (Russia/Brazil/Argentina) or ‘Total payment’ (Romania/Ireland) seem like appealing options.

    So what can we do since we can’t devalue our currency?

    I would advocate “voluntary debt reprofiling”. Negotiate with bondholders to repay the full face value but over a longer period. By extending
    the term you effectively achieve a form of currency devaluation (because of inflation over a longer period) while still remaining in the Euro. This is what Uruguay did in 2003 [2] and managed to reach agreement with 90% of foreign bondholders

    [1] http://en.wikipedia.org/wiki/Nicolae_CeauÅŸescu.
    [2] Voluntary Debt reprofiling: The Case of Uruguay, http://r0.unctad.org/dmfas/docs/steneri.pdf.

    Note: Reference [2] includes excellent details of the bond restructuring process, the final agreements reached with the various bondholders the effect on Uruguayan sovereign borrowing rates, and subsequent economic recovery.

    • @poyais 48

      Not read the book, but its on the way!
      thx for links, we got a lot we can learn from Uruguay. Seems “voluntary debt profiling” or leaving the euro our only option!

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