June 2, 2010

NAMA just a bailout for the professional classes

Posted in Banks · 159 comments ·

For the past few weeks, Irish banks have not been able to borrow abroad in any manifest way. The market is now as good as shut to us as money retracts from risky countries like Ireland to safer locations like Germany. This pattern is unlikely to change any time soon as the financial world comes to the realisation that the bailouts of recent months are only postponing the day of reckoning.

As credit dries up here completely, the entire bank and recovery strategy of the Government is unraveling and NAMA will be exposed as little more than a class rescue scheme for investors and developers. The cost of trying to stop the market doing its thing — falling — will sky rocket.

Ultimately, our government bond market will seize up, because the Department of Finance is using the bond market as a big skip into which it is throwing all the rubbish of the boom. This policy needs a willing buyer of all these bonds and the buyer needs to believe that “countries don’t go bust” as the chief executive of Citibank announced weeks before the Latin American debt crisis of the 1980s.

There will come a time, possibly sooner than we think, that the sums here won’t add up and the market will panic. In fact, the panic will have less to do with sums and more to do with sentiment. As sentiment gets worse, some of the inconsistencies of NAMA which were swept under the carpet in the storm of government spin over the past few months will be exposed and re-examined.

The first thing to be questioned is the language: think about the title, the National Asset Management Agency. But there are no assets. There are only liabilities. If there were assets, there wouldn’t be any need for NAMA in the first place. And the liabilities are getting worse.

Nor is it national, because it only covers loans above €5m. And nor is there a management agency; what there is is a bunch of civil servants doling out jobs to, guess who? The same bunch of insiders who caused the problem in the first place.

So the man who valued, for example, the Dublin Glass Bottle site at over €400m, John Mulcahy, has now been given the job, by Nama, of valuing the same property at considerably less!

The lawyers for Bank of Ireland remain the lawyers for Bank of Ireland, but they are also, inexplicably, the lawyers for NAMA. Arthur Cox don’t seem to think there’s anything wrong with being the lawyers for the seller, Bank of Ireland, and the lawyers for the buyer, NAMA.

Why has the Law Society not said something about this? I am not a lawyer, but if I was looking at this country’s potential and I asked myself, have they learned from the crisis, have they changed? I’d see something like a huge law firm working for both sides as a worrying sign.

Then if I thought about the financial infrastructure what would I see? I’d see that the auditors who signed off on what we now know to have been Anglo Irish Bank’s fictitious balance sheet — Ernst and Young — have been given the job of auditing NAMA. So having failed to spot what might turn out to be a criminal conspiracy at Anglo, Ernst and Young are awarded, by our Government, with a hefty fee from NAMA.

And what about PricewaterhouseCoopers (PWC), auditors to Michael Fingleton’s little outfit, Irish Nationwide Building Society? They, too, have been rewarded for failure with a gig at NAMA.

If I was a savvy investor looking at Ireland, asking myself “will I move into this country?” maybe I’d look at NAMA and realise that it is waltzing the country up a credit cul de sac. So I’d wait.

Let’s examine this inconsistency at the core of NAMA now. Think about how it will work and remember my hunch that it was constructed in part to bail out the professionals who didn’t like commerce but needed fees.

Anybody who’s ever speculated on financial markets knows that you don’t want to be the only buyer in town. NAMA will end up owning all the real estate in the country. It will end up being the biggest estate agent, the biggest hotelier, the biggest owner of golf courses. And we are assured, even though there is no evidence, that it’s going to buy all this stuff cheaply. But the problem is, once it has bought all this stuff, it has to sell it to someone.

And the only way you sell if you’re the only buyer is by selling at an even cheaper price than what you bought the stuff for. That’s the way markets work. But because NAMA was conceived by lawyers, civil servants and academics, they forgot that bit and it’s the taxpayer who will in fact subsidise the professional and property insiders twice: first by bailing out the banks, and second by selling land that we now own at rock bottom prices back to possibly the very people who owned the land during the boom.

NAMA is a class rescue scheme for Ireland’s professional classes, conceived by one of their own, implemented by them and designed for their benefit.

Worse still, it is entirely predicated on resuscitating the property boom that caused the recession in the first place. Without a strong recovery in property, NAMA won’t work, but with a strong recovery in property Ireland won’t work because we will be back to where we started.

The financial markets have seen through this and are refusing to finance the Irish banks. Isn’t it about time we saw through this carry-on too?

  1. Might NAMA say that it negotiated below-market rates for the third party professionals and indeed NAMA is reported as making a “profit” on due diligence fees this year because it apparently entered into a contract to recharge the banks a minimum of €125m and the actual costs will come in at €100m?

    Might NAMA also say that there is a limited pool of professional firms in the State with the presence and experience needed to deal with NAMA’s business and inevitably the same players will constantly turn up and that there are Chinese walls in firms acting for both sides of a transaction?

    If John Mulcahy did indeed value the IGB site at €412m and it’s now worth €60m, a fall of 85% then is that not similar to other falls we’ve seen in development land — what about that field in Athlone that lost 90%+ of its value? So you might say that John Mulcahy was valuing “correctly” according to the general market at the time.

    “And the only way you sell if you’re the only buyer is by selling at an even cheaper price than what you bought the stuff for” That would be true except NAMA doesn’t have to sell today — you know that David, the whole idea of a NAMA 7-10 year timeframe was to allow a degree of recovery so that more buyers would enter the market to take the stuff off NAMA’s hands.

    “Worse still, it is entirely predicated on resuscitating the property boom that caused the recession in the first place.” That’s not true. By reference to indices the first tranche had a current market value on 30th November 2009 of 100. The long term economic value was calculated at 111. At 30th November, 2009 according to Permanent TSB we were 29% off the peak of 141 (we were 35% off the peak at the end of March 2010 at 91.8). So NAMA needs to see us get back to 111 to break even and that is still 20% off peak of 141. So it’s wrong to say NAMA needs to see us get back to peak values — it just needs to see us back to within 20% of peak over 10 years, and that’s only if borrowers don’t repay their loans. That’s an analysis with respect to residential property but commercial looks similar.

    There are many areas where NAMA deserves to have crap kicked out of it — its lack of Business Plan, Codes of Practice and exclusion from the Freedom of Information Act — overall transparency, would be one. But let’s see some of the actual results first, before writing it off completely.

    • Excellent example of how one
      can be duped by spin, propaganda and falsification of figures, but we won’t be taken in by such spinning of Greek sirens :

      Before dealing with the figures you quote, let me take you in on the big scam the figures ignore. If you were taken in, don’t be too embarrased:)

      The figures are predicated on current market prices taken in the instances you mention November 2009 and 35 March 2010.

      Even so, note the downward trend and the unalterable economic facts of our situation of recession over the medium to long term, say next 10 years.

      You need to take a walk and remind yourself of the following when you see a ‘house for sale’ sign.

      You have to remember the market that house is selling into is an artificial market that’s been artificially spun and namified by effectively NAMA taking over all the rubbish that won’t sell.

      Out for a walk, I pass by apartment blocks kept out of the market. Nama has a tsunami of over supply that if put on the market would change instantly so-called indices for property including commercial property prices mentioned in those massaged TSB figures. Also cost of renting. You mustn’t believe any of them!

      Here’s what you swallowed:

      1. By reference to indices the first tranche had a current market value on 30th November 2009 of 100. Is one pound of sugar 100% of two pounds of sugar! No, its 50%.

      2. Re “we were 35% off the peak at the end of March 2010 at 91.8″

      So how do they arrive at that figure? Ask them? I love Math, I’d love to know.

      Here’s a few Q’s:

      1. How many property transactions are these figures based upon. What was the volume of lending that passed through the Permanent TSB loan book at end of March 2010 compared to even 30th November 2009.

      Can they show you figures for 30th November 2008?

      Based on a calculation where the flooding of commercial/residential property was withheld from the market by NAMA during the periods your figures refer to eg “first tranche had a current market value on 30th November 2009 of 100″, is just plain ludicrous! Getting back to 111 is crazy especially when you examine the portfolio of our corrupt developers. Over supply of shopping malls, ghost estates in the countryside where nobody wants to live.

      The plain fact of it is, TSB and NAMA also know these figures are ludicrous. Otherwise, if they were true, wouldn’t those figures be reason enough to do as they ought, organise a firesale. Pay off the debts or whatever portion of them can be raised in a firesale. Save us all this NAMA distortion effect on the property market and our economy. We didn’t need NAMA, the banks could have been left with the job of cleaning up their own mess. Sure they’ve little enough to do at the moment. NAMA is just another cam quango jobs for the boys.

      The only part of the Nama portfolio that can possible make a buck is the overseas one. Hey presto, we’re also heading into a wordwide recession!

      Great article D.

  2. MT25

    Thanks again David for your insightful take on the stomach churning reality of corruption in action. The institutions involved in this mess will hopefully one day have to explain to their shareholders – and the Irish people how they walked a tightrope hoping to reach the other side but fell into the self made swill and crap beneath them. The same swill and crap that the rest of us are already enduring.

  3. Discrimination / Ostracisation

    I meet people daily to assist them complete and declare their income tax returns every year.Recently I have noticed those in the taxi business the hardship all of them suffer .These people have been displaced by the policies of the government in recent years.
    Yesterday I had an appointment to meet a Limerick Taxi Driver and he rang to tell me he had to cancell it because he had been waiting in the taxi rank since early that morning and had not taken any fare and could not afford to get off that rank otherwise he could not buy himself food to eat that day .He never did that before and all of this made me really think.
    Monday I was with a taxi driver and his wife and she was crying because her husband was not bringing in enough and would only average €100 profit per week .She was enquiring about her rights to social benefits and found out that her foreign neighbours not only received a lot of benefits but also received very kind treatment at the social welfare office.She said she was been ignored and badly treated.This kind of story is common and not the only one.
    Last week another taxi driver was very worried how will he get a loan to buy a new car to comply with the new taxi regulations .All the banks have denied him to date.He was distraught and saw no hope in his life.

    How low does all of this victimisation have to go to register the truth of what is happening in our small country today.Regulations are sometimes designed to cause hardship to some sections of society.We need to wake up now.

    • Malcolm McClure

      John ALLEN: Your taxi driver clients may draw comfort from this comment by Nicholas Taleb.
      They know as much about what is going to happen tomorrow as Lenny.

    • Garry

      +1 David and John Allen

      namawinelake amazing so much text so little insight.

      (not that i disagree with you, its that theres nothing to agree or disagree with)

    • Colin_in_exile


      We’ve the lily livered right on happy clappy united colours of Benetton liberals to thank for allowing foreigners to be treated better than our own in this land. Last Thursday evening, I passed by Sarsfield Street rank in Limerick, all 10 taxis waiting for godot, 8 of them were of African origin (just an observation, I’m not racist).

      Now, some balance is required for your defence of the taxi drivers. Before deregulation, taxi plate owners (most drove their own taxis) were minted. £30 per hour is what the earned on average (drivers who were not plate holders earned a little less because they paid a rental fee each week to the plate holder). It is not a skilled job, anyone with a driver’s licence and a sense of direction and some local knowledge can perform adequately. Taxi plate holders, pre-deregulation, had a sweetheart deal with revenue. It was assumed they earned only a nominal wage, something like £10,000 per annum, and the plate holder went to his accountant to contrive this income statement. Everyone knew these plate holders were earning multiples of this, tax free. I hope you’re aware of the many taxi drivers who own property in Spain, Bulgaria, and Turkey etc…

      So, Mary Harney decided to do something about this, and deregulated the market. It meant drivers who did not own a plate could end their cosying with the plate holder and get their own instead, after furnishing their local council with €6,000. Thousands of new plates were issued as a result.

      Now, if only Harney could do the same with the civil servants and the bankers and the parasite classes, then we’ll have some fair play, but I sense she’s unwilling to do that.

      • silverbullet

        Colin ,you speak of the old guard who held the nation to ransom and not of the present incumbents who were conned from the outset.
        I was one of those who invested in the industry and believed I had something to offer ,so with my €20,000 I became a cabbie.
        Unknown to me gov’t grey suits saw a useful “toxic dump” for social welfare deadweights and sponsored them in to the job through various schemes such as the “Back to work enterprise allowance scheme thereby creating an unlevel playing field.
        We too are victims of light touch regulation and are now a failed experiment in free market economics.
        With sentiments running as high as they are at the moment don’t be surprised if the gov’t create an Irish” Derrick Bird”

        • Colin_in_exile


          Taxi driving should not be a full time job, it should be part time, to respond to periods of high demand such as Friday & Saturday nights, Christmas Holidays and Third Level Colleges end of exams. To contrive a full time job out of lazy Sunday afternoons, Monday Mornings and Tuesday Lunchtimes is irrational. Taking a taxi is a luxury in every other country and so it should be perceived here too.

          I’m sorry for you, you were sucked in. I also did some part time taxi driving in the past, and I could see the trend happening before my eyes with the taxi ranks choca bloc most of the time, so I didn’t continue it.

          Its an extremely unhealthy occupation also, high stress levels from traffic congestion, seditentary work which leads to obesity problems for many drivers, so my advice to you is to limit your hours to no more than 25 hrs a week, get plenty of exercise your body will thank you for it.

          • Bamboo

            I am sorry to hear that.
            The way the taxi development – is going it looks like Ireland is most likely going into a situation like in many Asian countries. (and I am sure in other parts of the world) In these countries almost everybody who owns a car goes into the taxi business. It is a very efficient way of replacing (GOV funded) public transport. IMO the GOV is letting our public transport go to ruin by letting the taxi business grow its natural course. There is simply not enough of a market to make pub transport worthwhile in Ireland. Public transport overheads will become unmanageable in the very near future and the GOV is implementing a plan to let private individuals take up this opportunity to make an income out of it. At first I thought this will take some time but the recent developments make me think that this system of will come sooner rather than later. Not only here in Ireland but in many densely populated areas in Europe.

            For example in Thailand you can get a taxi from and to anywhere at anytime. You don’t even have to phone or look for a taxi, as there is always someone who has a car and willing to make a few bob. On a more official level there are the (travel) agents in the more touristy areas who can arrange anything for you and thus your travel arrangements. So it is made very easy, efficient and cheap for tourists (and anyone) to travel. In fact it is a very efficient system.

            European GOVs are only interested in public transport when it is worthwhile and for the overflow transport requirements it will encourage taxis to compete with each other so much that it will become like the Thai example.

    • Malcolm McClure

      John ALLEN: At exactly the time you posted this about taxi drivers, a taxi driver in Cumbria started shooting people dead.

      • Malcolm McClure – Only you know the power of the sub conscious mind is greater than the mortality of what the eye sees.Don’t tell anyone its a secret.

    • Black Cat

      I had an experience at the social welfare a couple of years ago and I think that they are probably harder on the softer applicants and more accommodating to the ones that scare them.

  4. The Eye

    Hi John in the same way that you can’t accuse Israel of being very unfair in their policies or you become an anti-semite. Having a discussion regarding the amount of non E.U residents working here and claiming welfare makes you a racist. Its always the do gooders the P.C bounty hunters that pay sweet F.A to the state in TAX…..those with the free tickets are first to go boo.

  5. There is nothing new here see http://www.rte.ie/player/#v=1074035 Limits of Liberty. This is the same old corporatist state since the beginning. The populist are to blame for allowing this. False promise after false promise it is time we copped-on but I very much doubt we will.
    Simple answer is that, the people have to grow up and realize that the state is not the answer. Government needs to be cut at the knees or even at the hips. They are stuck in every facet of our lives and making a pure balls of everything they touch. That is of course as David points out except for the insiders. SIMPLE LIMITED GOVERNMENT as we outline here http://irishsovereignty.wordpress.com/2010/04/06/irish-sovereignty-party/

    You may ask “why do we vote these people in?” Many people have this “special” relationship with their T.D. and councilor. It all “what can I do for you”. Until the people cop-on and realize they are not their T.Ds special friend and if they do get a benefit it was robbed from someone else there will be no change or the change will be from bad to worse.

  6. John the Taxi situation is symptomatic of the larger contraction of the economy. Lack of or significant reduction of consumer spending filters through to cost cutting and more efficient use of discretionary spending habits that in the past were providing the income for service industries such as Taxi, Hotels, Pubs and other non-essential service providers.

    In a profession with limited scope for earning from an alternative source this results in market forces (which apparently do not work for banks) culling the excess with the associated hardships you illustrate in your comment.

    As for the social welfare position of the neighbours (irrespective of their race, creed or colour) there is a lack of appreciation for those who seek to provide for themselves and when things so bad are punished twice. First in their pocket for taking the risk and secondly by the social welfare safety net that they are excluded from because they tried to remain outside of the burden of the social welfare net.

    I have blogged many times about a third punishment for entrepreneurs who tried and failed that the state needs to fix and that includes the 12 year bankruptcy law which is a punishment for failure. This is totally against the “spin” of growth of indigenous “Smart Economy” businesses who take the risk, but fail (for whatever reason) to survive the current financial crisis. This burdens the individuals who might (on the other side of the recession) be the very ones who would be able to rebuild their businesses and reduce unemployment.

    As for NAMA. This is a VIP (Vested Interest Participants) vehicle and as David pointed out even to Irish citizens the appointment of insiders (limited skill set or otherwise) is a ridiculous claim. We churn out 50+ thousands of graduates each year and many of them are professionals that served their time working for the major law and financial firms and could just as easily play a role as they are all governed by the same legal and financial regulatory bodies.

    At the end of the day you will find that it is the interns within those large firms that will take the burden of the work until the details have to be signed off by the partners.

    • Agree with your views on need to reform bankruptcy laws plus John earlier on the policy disaster wreaking havoc for taxi drivers from John earlier:

      Not unrelated,I saw Miriam do a Primetime from Athlone, bunch of business people and politicos discussing the state of play in Athlone last night.

      Batt was there talking about his alleged economic turnaround with rehearsed 3% increase on this and that index. Miriam was apologetically light as usual because well, she’s lovely but is rarely adversarial or confrontational enough. To be fair, in Batt she’s up against a master of spin and she aint no Madame Guillotine.

      In the round robin style format of questioning, some amazing stuff came out.

      Its strange when people become accustomed to the unusual and the bizarre to the point where they’ve accepted almost normalised bizarre realities, a syndrome that obviously not only effected Germans circa WW11 regarding the jews.

      In Athlone this translates to attitudes regarding property development in the town. Pop circa 20,000 but due to bad planning, developer/banker madness call it what you will, the town has shopping arcades all over the place with empty shops and struggling businesses barely hanging on, if not already closed.
      These businesses were in receipt of massive loans from the banks all of which need to be repaid.

      Batt shrugged off the global financial downturn of 2008 as the cause, but the tide was on the turn. He compared unemployment at 13.5% in Silicon Valley to unemployment in Ireland at around the same.

      Nowhere was there any conception that bad planning/over supply of both commercial business and property
      in such a small hinterland of consumers would lead to inevitable insolvency and default.

      Bad government, unregulated banking, developer driven croney lending, corrupt and incompetent
      planning was not discussed.

      The only positive was the opportunity for businesses to gain the experience of failure. Actually this is a good thing. Many of the business owners should learn from the mistakes they’ve encountered in Athlone and put their hard gained talents/experience to better use in more fertile places abroad. Unlike earlier recessions opportunities in nearby economies are also few and far between.

      Sure maybe that’s the plan anyhow. We’ve seen it all before in the B cowboy movies. The evil cattle baron, gang lord, moves into town and drives out the opposition picking up their business remains while the good people get forced out.

    • Deco

      Yes. But questions have to be asked about the course mix of the graduates that we produce.

      There are far too many lawyers. And not enough technicians. It takes 10 years to make a lawyer, in an expensive uni like Trinners or Belfield. And there is no market for them, even with the complexity of the Irish legal system, and it’s arcanely complicated (sophisticated) processes. And what to lawyers create ? Most of the time they create trouble, conflict, and more laws.

      It takes three years in an Institute of Technology to create a technician who can go straight to work generating real wealth and products for the world.

      The powerful people in our society have made a choice on who gets to live it up. Maybe the Tribunals are responsible (due to their chronic inefficiency).

      The real problem is the professional ethic in our society.

      I would describe it as the FAI ethic of professionalism.

      Carry on with whatever sloppy amatuerish selfish shite you can get away with, and spend whatever it takes telling people that it is professional, by means of a well financed coverup.

  7. You’re on the money, again, David. Seems to me the economy won’t go round if MOST people don’t have a dollar in their pocket, so why do we only bail out the high flyers of finanace whose risk management let the whole system down?

    It’s fair seeming to say that the Greeks lived high on the hog and now they don’t want to pay the penalty for having done so, but maybe a better interpretation is that they are standing on their hind legs (the horrible bank deths notwithstanding), not prepared to be further done in the neck by the big boys.

    We’re having our own troubles down here in Oz with the big mining boyos who’ve been ripping Australians off mercilessly. Now that the government has proposed they pay a 40% rent on their net profits, they scream blue murder: they say the world’s coming to an end.

    Around the world, the big boys have been stealing the peoples’ rent and taxing us to a standstill. IMHO, we need to reverse the process, not bail the b******s out.

    Oh, to be in their position: make squillions in the good times and get bailed out in the bad!

  8. bmv

    During the last Rose of Tralee, one contestant who worked for Arthur Cox said what David has said here. That the company represents both Nama and The Bank of Ireland. When she was questioned on this by the interviewer (Ray Darcy), she said that the lawyers for NAMA were on a different floor to the lawyers working for the bank. i.e., they are in the same building! Does this define corruption?


    By stating the obvious, nothing will change!

    Politicians in this country have reached a sacrosanct state by which they become untouchable.

    Logic, reasoning, undeniable facts, nothing has meaning anymore in this country of corruption, denial and arrogance. I only wonder what this arrogance is based on?

    After leaving department of finance, the most right wing ideologist of FF was sent to Europe as a Commissioner, he now has joined Ryan Air as NED.

    Back in 2007 a german diplomat who called a spade a spade had to make a formal apology for his speech.

    I laughed out loud when I heard that, and a lot of my friends in Germany asked me what the Hell was THAT?

    Well, let’s look back for a second, the german ambassador Christian Pauls stated:

    - Junior ministers here earned more than the German Chancellor

    - Some 20pc of the population were public servants.

    - Our “chaotic” hospital waiting lists would not be tolerated anywhere else.

    - Wage demands were too high.

    - Our immigration policy was wrong and we had learned nothing from Germany or the Nordic countries.

    - He also cited the doctors’ rejection of €200,000 a year posts on the basis that this sum was “Mickey Mouse” money and referred to the former dominant position of the Catholic Church within the country.

    Well…. I see nothing explicitly wrong in what he stated there, being known to somewhat spice up his speeches with thoughtful provocation.

    His listeners, mainly members of the German Federation of Buying and Marketing groups, representing medium-sized businesses, loved his delivery.

    Pauls called Ireland a ‘coarse place’.

    Make no mistake about it, the ways of the Irish are well known amongst other european countries.

    Remember David’s article about Gombeen man, and may be remember what Ideology these Gombeen men truly represented.

    There are no significant numbers of people on this site here that would make a difference, in fact it is a hardcore fan club that repeats the obvious over and over again.

    To leave you on a positive note, this country is fucked! It has sold out and treated it’s own citizens as peasants, and as peasants the public acts.

    Bye bye….



    • Deco

      Brings back memories of the time that Jack Lynch made a state broadcast on television to apologise to the Irish people for not keeping unemployment below 100,000.

      The current crop of wasters have no shame or sense of decency.

      Instead on the day, when it is clear that nearly 7000 people were put on the dole last month, Cowen is telling the Israeli government how to behave, and his ministers are peddling lies about “the recovery”.

      • Colin_in_exile

        I do hope the next Israeli spokesperson asked onto Irish media, could advise Cowen to look after 440,000 of his own people before he becomes a “useful idiot” to the Israeliphobics.

  11. The Eye

    “Hell on earth is a place with no reason”.

  12. Incident

    Agree with Laughingbear, same old gang rehashing the same old shit.

    This blog with the exception of its author is a talking shop for f****d up heads with no audience to rant to but themselves.

    • The Eye

      Does that mean your one too?

    • Deco

      alright…incident….obviously those that are not happy with the current state of this country are screwed up.

      And I thought that this description was relevant for those that continue to believe everything is OK. Incidentallly in the old Soviet Union, they used to declare that critics of the regime were mad.

      • @DEco,

        Yer not screwed up at all, mate. I certainly amn’t. Here to shine a little light on the darkness in Ireland Inc.

        Re posts on this blog maybe someone should post a health warning:)

        Before reading posts on this forum, you may need to be level headed and not prone to depression or mood swings or any form of substance abuse.

        Otherwise, you might make any of the above conditions worse!

      • Black Cat

        I actuallly enjoy (if enjoy is the right word) the posters more than the main ariticles – laguhingbear, deco, john allen, cbweb, colin in exile, dwalsh, wills etc etc. all providing insightful comments at a time when its hard to get any real information from the mainstream media about what our situation really is

        • silentobserver


          • Julia

            Ditto as well. But listen guys, do any of you have jobs. Or are you just not that busy. Speaking as a member of the underworked, overpayed teaching fraternity, I just never get a chance to read these conversations til midnight – busy eating chocolate and painting my nails. Anyway I love these posts as well as the articles. Learning, learning, learning.

          • Julia – There is lots of work everywhere the problem is there is no-cash .You are being paid from German borrowed money and when that dries up then all teachers will be paid in stipends or denominations .Prepare for new currencies like ‘ yoyos’ , ‘fiat puntos’ and ‘quango mangos’ ( decos favourite ).
            We all on this site ‘feel free’ which is something many others cannot do so we are printing our own issuances in thought for what it is worth.None of us mean to be pessimistic rather instead to be objective and factual and focused on the real issues that really matter.There are many teachers reading this site and they continue returning so we must all be doing something right.
            We all want to hear more from you after you get your holidays.

          • silentobserver

            Whatever you do, please keep reading Julia- hopefully there is still power in numbers to eventually affect real change. (And yes I work- self employed parent, and grandparent)

  13. David – I dont think your article is very logic :

    You are trying to transpose fixed values over variable values to suit your arguement. NAMA is designed to buy time to allow some sort of equilibrium to establish itself.

    I dont know if it will work – but I do know its the best shot in town at the moment. Thats based on not having heard any REALISTIC alternative.

    Property Values: A strong sustainable property market is a good thing so long as it is driven by the strength of an economy (not the other way round as happened in the Celtic Tiger binge).

    Home is pride and place and so deserves a good value. If we can upload that into Ireland Inc. – then I think we can create a great country to live and work in.

    We dont need a population of 120m (Liam) as in Japan. We actually need to strongly regulate the numbers of people coming to live here – because a low density population is, in my opinion, very desirable.

    I apologise to some of the posters for not having the time to give detailed debate. But sometimes generalisations have to prevail – otherwise the devil in the detail might curtail us actually getting anywhere…….


    • silentobserver

      What does “A strong sustainable property market” mean? Shouldn’t any essential item only be worth it’s components, and labour to make it?Pricing it any higher gives competitive advantage to other states/races that don’t harbour the dominant , oft witnessed property gene that seems to kick in here at about 25!

  14. The Eye

    A huge problem here is that the people whereby money magics itself into their account every month via the Taxpayer are in charge, with no understanding of how money is made or works .

  15. econarchist

    Great article, David, it sums up the reason for Nama’s existence and the main players in the scam. The only people you left out were the government but I suppose that’s a subject for another article. Apart from their close association with the developers, they’re probably trying to buy time until the next election in the hope that they can keep the property market fairly stable until then.

    Whether or not Nama eventually achieves its aims, it will involve a huge transfer of wealth from working people to the land-owning elite. If it’s a failure the tax payer will pick up the bill. In the very unlikely event that it’s a “success”, it will be paid for by gullible house buyers who will fall into the same trap as others in the past ten years or more before house prices crash again. Either way, money will be diverted away from more productive areas of the economy.

  16. dwalsh

    The main socio-economic process of the early modern period was the transfer of power from the secular and ecclesiastical aristocracies to the merchants. This is what the French Revolution and similar events were really about; the bankrupting and overthrow of the aristocracies; and the ascendancy of the merchants. They knew better than to attempt to rule directly or publicly; and so they have ruled indirectly through a professionally staffed management agency called government.
    Our governments are middle-management agencies running our countries on behalf of the financial oligarchs.
    The merchants and their hand-maiden science built the modern world and have brought us unprecedented levels of social and economic freedoms and benefits; there have also been costs. But at this point their system is no longer viable; the social, economic and environmental costs are too high. They have taken us as far as they can and like the aristocracies before them their era is passing.
    I believe we may be in the process of a breakdown of the system of the merchants and a transfer of power to a new elite and a new socio-economic system which will form the foundation of the next level of human civilisation…an integrated global civilisation.
    Meantime we must pass through the breakdown crisis and hope it will not be as loony as the French Revolution was.

  17. Deco

    The problem with the “professional” class in Ireland is that they work like amatuers. The have the FAI ethic of pretending to be professional – it is only an official title. Classic example is that clown who valued the Glass Bottle site.

    When the property boom was in it’s high summer phase, the media regarded the ‘investment’ in the glass bottle site as a dead cert to make billions. Now, they are all scurrying for cover trying to be critical of the entire event. I bet none of them have any grasp on what is currently going on.

    David – your article needs to be read by the ordinary people, especially those in the competitive (non-sheltered/non-chartered/non-rigged) part of the private sector. In other words the part of the economy that brings wealth into this country, and which should be in control. Except, instead, due to the level of centralization and layering in the state, and the complexity of the Irish legal codes, the gombeen element is in control. And let’s not forget the governing party, IBEC, and the main opposition party, ICTU in the creation of this farce.

    { the professionals who didn’t like commerce but needed fees.}.
    God – we have lived with the insufferable arrogance of these people for a long time. Our Shamocracy has no interest in disciplining these people and forcing them to stop their power broking and extortion on the rest of us.

    We need reform – reform to end the economic rent seeking that is rampant for the “fees” brigade.

    • The Eye

      In the movie “The Untouchables” they go recruiting police officers “from the tree rather than picking rotten apples off the ground”

  18. Deco

    Of course the problem is that many of these professionals bought these big old expensive “piles” in places like Carrickmines, Milltown, Glenageary, and have massive mortgages, at the height of the madness.

    So NAMA will provide them with the fees they need to hold onto the piles and keep young Ross and Sorcha in boarding school. And the rest of the population can queue up like the 140 applicants for a job in a chipper in Letterkenny last week. And with the inside information they will be able to get commision from the buyers also. Ireland is a small world. And Dublin’s professional clique can be very cosy – to the point of being stiffling.

    The real economy is what is happening in West Dublin/E Kildare/Cork/E-Galway. That is where the money that is going to have to pay for a lot of this farce. This is where the hi-tech sector is located.

    Middle Ireland is stretched by the cost insfrastructure and is a place of low wages and low margins. Council taxes, stealth taxes, environomental charges, fees, etc.. make business in the main part of the economy very very tough. Just look at the decline of Limerick and you get the picture. Dell moving out and nobody moving in. We need to get down our cost base – and neither IBEC nor any of the political parties seem to want to cut their cloth to measure.

    Is this all a plan for a Smart economy ? No….I think I remain sceptical….just look at the evidence….it seems to me to be a bailout for the well connected.

    Let’s call it the sly economy. There is a difference between sly and smart. For your survival, it is critical importance that you should know.

  19. Tull McAdoo

    I think it’s just a bailout for the Status Quo, as I always suspected it would be. Remember the old status quo has been very good to Fianna Fail, as it has seen them in power for most of the time. All the Party faithful have good jobs in all Departments of Government, Quangos,etc. Access to power at every level, even down to the local BANK manager for a soft loan, and discreet write-off when things go pear shape.
    Contacts all over the place for entry to Colleges, football matches, Chelthenam, Croke Park and so the list goes on…….
    Being friends with Fianna Fail was like being friends with Imelda Marcus, Mugabe, and so on.
    The working classes have to be fleeced in order to pay for all the conspicuous consumption, much favoured, among the D4 set, who seem incapable of generating their own wealth without the assistance of their pals in various Government Departments, who gladly come up with new regulations to supplement the already burdensome tranche from Europe, making Ireland the most compliant Country in all of the European Union. So there ye go, we are tops in some thing’s which are absolutely choking us to death, we are tops at finding new rent seeking measures to placate an ever demanding D4 Cabal. We are tops at pricing ourselves out of every market, except the local subsidised ones where Capital Projects become the monsters we have grown used to.
    To cut a long rant short let me say this, one of the first lessons I got in Economics was about what Markets would bear without collapsing. Somebody should have explained these basic principles to the powers that be, regarding Taxpayers and Tax receipts.

  20. wills

    David, excellent piece on NAMA and its conspiracy afoot going forward and it’s true functions,…..

    - Preserving the ruling interests and occupiers of the centers of power vanguard.

    - A further opportunity for a fast buck in the passing of the property boom toxic wastage over to joe taxpayer and his kid’s.

    - A further consolidation and tighter grip of the ruling oligopoly class on the free market and its bounty.

  21. Alan42

    The problem with this GFC / debt crisis or whatever its called these days is that nothing is real . Greese has been put on the long finger , nobody knows whats happening in Anglo which sucked in another 2 billion yesterday . The EBS is now under state control ( that used to be called nationalization ) dittio with Irish nationwide . NAMA will make a profit 200 years from now . Nobody is talking about personal debt / SME debt in the banks . We have suspended dealing with people who can’t pay their mortgages until sometime in the future . Most Irish businesses were boom dependent ( my goldfish could run a business in a boom ) so where are all these jobs that they keep on linking to future growth going to come from ? Correct me if I am wrong , but is 1 or 2 percent growth not really a flat economy with little or no job creation ?
    Why do people get so upset over centralised government in the EU and removing power from the Irish government ? That was the whole idea of the EU from day one . How can you have a single currency with 16 different finance ministers who don’t even speak the same launguage pulling in all different directions . ?

    • Deco

      { The EBS is now under state control ( that used to be called nationalization ) }
      I am laughing at that. The official explanations are out of Monty Python at this stage.

      Officially we are not nationalizing any of the banks. Fergus Murphy, CEO of the EBS knew this was going to happen, because he declared that the EBS “was of systemic importance” when at the same time he was telling everybody that the EBS was a solvent institution that did not make the same mistakes as the others.

      Lesson number 1 from the past three years. The official story is always a pile of steaming horsemanure.

      What next ? Fergus Murphy getting an important job in NAMA….or appointed to run a quango…..maybe he will be another NED…..hey….maybe he already is a quango NED….wonders never cease…

      Sack the people who appoint these idiots.

      And the Irish concept of management has failed. Abysmally failed. Bring in new blood. Let the younger generation take over.

  22. thughbyrne@eircom.net

    Hi David, I like your stuff but…I’m just wondering if theres a tendancy to go overboard on the negativity bit. I read a fella called Joern berninger also (jberni1 on google), He’s unfalteringly negative also and I just wonder if theres a bit of wishful thinking about a lot of commentators. Yep, the politico’s and the professional classes are crooks largely but what else can we do but attempt to deal with thesituation as we find it and with the tools at our disposal? In the 1840′s we had the famine, millions died on roadsides or emigrated,any revolution? Nope, we soldiered on, wrongly I think, but thats what we did, and thats what we’ll do now i reckon. Having said that I have a wind up radio and a hand operated water pump in case it all goes poof! Joke..sort of

  23. stiofanc02

    David, As you always say, life is stranger than fiction or in your own words, “you cant make this stuff up”!!!!!

  24. paddlemeowncanoo

    The state of affairs gets more and more depressing by the week. Its simply going to take too long to fix so I am looking for suggestions on where to move or invest my money (80k). Please people, give me some serious suggestions

    • Black Cat

      Methinks Germany or one of the Nordic countries or Canada but I’m not so worldly wise – would like to hear peoples opinions on the prospects of the UK

    • wills


      Put 20 G’s aside for savings and bail out money.

      Spend the 60 G’s on pet projects such as projects with a great humanitarian cause.

  25. Peter Atkinson

    David I think at this stage your point has been hammered home loud and clear.Its just that Smalltown want to believe this SIV (might as well be an SUV for all its worth) called NAMA is the new Economic Boom.Instead of “filthy brickies” we now have “filth bankers” riding up and down the financial ladders pissing on top of anyone who has anything left.Think on people.From first hand experience the property market in the North and the Uk as well as Spain is starting to pick up without divine intervention.NAMA is the soft landing that was spoken about two years ago and with Bulldog Cowen threatening the Israelis with dire consequences can we seriously believe let alone trust a man who rubber stamped a ponsi scheme in the Docklands.I think not.

  26. Tim

    Folks, Michael Taft on the Ernst & Young report …. and the inter-relationship of it all:


  27. goldbug

    Derivatives Made Simple

    Easily Understandable Explanation of Derivative Markets

    Heidi is the proprietor of a bar in Detroit. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

    Word gets around about Heidi’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Heidi’s bar. Soon she has the largest sales volume for any bar in Detroit .

    By providing her customers’ freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Heidi’s gross sales volume increases massively. A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi’s borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

    At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets. Naive investors don’t really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

    One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi’s bar. He so informs Heidi.

    Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since, Heidi cannot fulfil her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.

    Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

    The suppliers of Heidi’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds, her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations. Her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

    Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion dollar no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Heidi’s bar.

    • Deco

      This country is not run for the benefit of a bunch of useless, layabout, alltalk and no application alcoholics……oh….hold on a minute….it is !! …..”The drinks cabinet” !! and then look what happened to Nell McCafferty when she said the rumour that everybody has been saying for years…..

    • wills

      This would be a banking driven POnzi scheme and the bestest fastest way for private bank credit providers to make profits on the way up and on the way down and write off the losses.

    • dwalsh

      Good explanation goldbug. How derivative chicanery can be called ‘investment’ or even ‘business’ beats me. It should be illegal; instead it is unregulated, unreported and untaxed.
      According to Webster Tarpley there is an estimated 1.4 Quadrillion of the stuff out there. The sub-prime derivatives are merely a tiny fraction of the total toxic mass.
      The derivatives bubble is the real cause of this global crisis. The toxic mass of phoney metaphysical financial assets is literally sucking all the real wealth out of the physical economy – like a black hole.
      We are in an embrace of death with the parasitic beast that financial capitalism has become.

    • re “At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS.”

      One way was to launch a range of new financial products based on DRINKBONDS, ALKIBONDS and PUKEBONDS. This was the stinkBomb range of CDO.

      stinkBomb was based around the following:


      Collateralized Debt Obligation
      An asset-backed security backed by the receivables on loans, bonds, or other debt. Banks package and sell their receivables on debt to investors in order to reduce the risk of loss due to default. Returns on CDOs are paid in tranches; that is, the individual loans backing each CDO have different levels of risk, and investors are paid out according to the level of risk they have acquired. Banks offer higher interest rates to investors willing to buy CDOs backed by higher-risk loans. From a bank’s perspective, in addition to reducing risk, CDOs also reduce their capital requirements because they can raise funds through the issue of CDOs. While, theoretically, CDOs can be backed by mortgages, one usually refers to these as collateralized mortgage obligations.

      Many banks such as Lehmans saw other banks begin to make huge profits based on products such as the above.These profits enabled such investment banks to increase their staff by the thousandfold. Some corporations such as Enron began to issue new CDO’s, new products built eg on energy securities , but these weren’t built on real market prices, they were built on ‘mark to market’ prices, the CEO would say in ten years these bonds will be worth a hundredfold and he would sell them at a discount of 20% off their peak derivative value in 10 years to his clients.

      stinkBomb was managed by a thousand investment managers given jobs straight from school by the bank and were sold everywhere locally and globally.

      One bright spark was given a million bonus for the following because he knew a bit of Math, can’t show it cause WordPress Math plugin not installed so I can’t show it to you, something like

      stinkBombPoowee == (Drinkbonds/2 + ALKIBONDS * Math Equations + Pukebonds/ Math Equations) + PukeOnMe(a derivative based on Pukebonds)

      Bright spark legged it when we asked him about his equations. But not before a staffer before he could unravel more found one error. Bright spark went all red and began to cry before everyone!

      When someone told Berni Madoff the story, he gave a strange smile and said ‘you don’t need equations’ , you can fix those later. You just need someone to trust you that the CDO you are selling them is good!

      Have a good day:)

  28. Hugh Hendry here


    Tip toeing through the caja tulips

    “BBVA which is regarded as a well run bank with strong international operations is facing difficulties in getting short term funding in the US commercial paper market according to WSJ.This is a classic contagion effect with even stronger players paying for the sins of weaker and incompetent companies.It is not a surprise that investors would be wary of lending to any Spanish bank even if it is one of the stronger ones.”

    @Deco, you were right. According to above even so-called safer and larger Spanish banks are in danger.

    Same pressures being faced by banks in Greece.

    Seems a lot of dark clouds gathering. Will it rain?

    • from above:

      Gillian Tett Financial Times re markets makes the ominous opening comment ‘just as they were worrying about the sub prime loan last year in the US system they are worrying about the European banking system’

      Appears to me from this crow’s nest:) therbe a storm building, me hearties, could be a tornado. Only question is the Fujita scale of damage, is it going to be 1 or 5?

      Hope it clears the present crowd out. Better it happen sooner rather than later when damage could be much worse.

      Tip, Harlem Globe Trotters in Dublin this pm:)

    • Deco

      I got my information from Edward Hugh, an English economic commentator living in Spain, and observing what has been happening over the past decade. He has given a long list of warnings to anybody who would listen. But unfortunately, nobody has been listening. Nobody.

      Problem number 1 for Spain is not the banks – it is the unemployment problem. It is not reversing. Unemployed people don’t put down mortgages for houses. There is also a productivity problem as reflected in the trade figures.

      This has very serious ramifications for the Euro. Italy has enough old money from previous decades to stay solvent. Greece, Portugal and Ireland are small. But Spain is very large, and accounts for a very significant share of the Eurozone. Therefore such warnings should be heeded.

      • Unemployment in Espana now at 20.5% and rising! Will their banks survive the present upheavals? 19 cajas considered under risk. Will the mergers work. Or will it be like AIG and Bank of America where both came within a hairs breath of going under. Who will win, the bull or the matador? Endgame approaching. I think same as Anglo when they try to merge the cajas, damage will be found to be understated and losses can’t be absorbed by cajas or main banks. Then its only default time or more euro ECB schenanigans, does the ECB have enough to bail them out? I’m off, have a good evening and thx

    • Deco

      CBweb – thanks for that. I looked at it last night. I think Hendry is correct. Talked about allowing capitalist consequences for capitalist failure. And commented ‘you are going to have a recession anyway’. This is essentially true. After an asset boom gone sour, recessionary times are completely unavoidable.

      Hendry’s most alarming point was that the inter-bank lending market has frozen up again. This is news to anybody who is listening to the Irish media.

      Hendry is correct, on this also, it would seem.


      Thanks for indicating this CBWEB. It is very relevant. Roubini warned of a double-dip, and it looks as if his theory is coming correct also.

  29. Deco

    Some info concerning the NEDs in the EBS from Senator Shane Ross.


    and earlier cronyism


    The mood of the net public…

    Actually you peasants should stop slagging of Fergus. Fergus is very important.

    Recently IBEC had a “Financial Services Ireland 2010″ conference. It was held on April 10, in the Four Seasons Hotel in D4. (can somebody please tell me who owns the Four Seasons hotel currently – it was passed around between a few banks….maybe it is the flagship for the NAMA hotel chain now ???).

    So here you go. Fergus is giving people lectures on how to run financial institutions only six weeks ago.

    I think that the attendees to that particular conference might want to ask for their money back. Because he is not as smart as he needs to be in the matter of running a financial institution.

    And now you are probably asking, how come he got such a prominent role. Well it turns out that within IBEC, there is a Financial Services Working group. (really it is a lobbying group – like all the other parts of IBEC).

    And Fergus Murphy, CEO of the EBS (not officially a nationalized financial institution-but something else instead), is the main man in the IBEC Financial Services division.


    There you go. Being useless, and looking for socialism for your bank does not harm your position in the hierarchy in IBEC.
    I quote “FSI Executive Board”….”The current Chairman of the Board is Fergus Murphy, EBS Building Society.”.

    By the way, Fergus thinks that INBS (a competitor surely) should not be allowed to fail.

    Here is some background about Fergus. He is a “safe pair of hands”. Perfect insider material. The type of muppet you would expect to find in IBEC.

    Here is an interesting quote from a troublemaker of the EBS hierarchy.
    {Their obsession with PR, how things are ‘seen’ by the members and others, and this fear of what the AGM will bring each year is not serving the shareholders, and that has to change.}.

    In September 2007….{
    Murphy said at the time that the society had around €500million – or 2.5 per cent of its total loan book – exposed to ‘‘development finance to the commercial property sector’’. He said he expected the EBS ‘‘to be around for another 73 years’’…}.

    I am sure there are other quotes in there also.

    By the way, no point in protesting about IBEC having a failed banker running their Finance section. They don’t give a toss about you or your taxmoney.

    • Deco

      Oh, this is what it costs to employ somebody who runs a bank that is begging for taxmoney….


      And here is a history of some of the manoevrings going on in the EBS, and the top brass trying to preserve their right to be careers….despite the mess that they were involved in…


      Actually, having got the low-down on FM, I have to say, that compared to Fingers, Rich Gouger, and Baby Doc, Fergus is mild and harmless. I mean he never had any of the nonsensical overdrive that the others had. And he came into the EBS when the damage had been already done. But his pay might have been a bit much. I mean Obama gets less for running America.

      • paulmcd

        Extract from CIROC report, Feb 2009

        “The annual base salaries of the chief executives of EBS Building Society and
        Irish Nationwide Building Society should be in the region of €360,000.”

        • paddyjones

          It is important to note that the NAMA money is coming from the ECB. I do not know what possesed them to lend NAMA about 40 billion euro without any publicity. Greece is getting 110 billion and the whole world knows about it.
          There must be an army off ECB employees working on just the “Irish problem” not to mention the EU commission employees working on the individual Irish banks.
          We must be thankful to the ECB and the EU for helping us out in such a manner.
          They choose to invest alot of time and money in Ireland. If I had money to invest somewhere it would not be in Ireland , I would never again buy Irish property, Irish shares or even leave my money in an Irish bank.
          This all begs the question why are the EU and ECB investing in Ireland. I think they are mad !!!

  30. I was listening to Drivetime yesterday and Olivia O’Leary .She said the following:

    one life of an american is equal to four lives of a european is equal to 100 lives of san salvadoreans;

    in samespeak couls we say that here in this scholarly island the following;

    one fianna fail td is equal to four professional / bankers is equal to 500,000 displaced irish workers incly those who have emigrated.

  31. leonardjos

    Were KPMG not the auditors for Irish Nationwide, and not PWC as stated?

  32. We have moved ON – next on stage – forget what you remembered as in PIIGS thats history ……..start thinking new again about …’.Black List’ ….. if you want to know we have become members of this default club ( pardon the pun) by default.

  33. I have decided that instead of allowing Konstipated Kown bury me down I will instead do the honourable thing and keep my own dreams and become millionaire again.Furrylugs and I are alligning our stone circles limestones in each of our back gardens to face south with a copper pot in the middle .We think that the archimedes principle will work for us when we expect so much of the € bn of euros displaced from Merrion Sq and Treasury to fall into our pots . Our Gold will be better than the Gold Standard.
    Anyone can do it .

    • If you look at Kowns face and think of a stone you will see konstipation .How can you expect to draw blood into our national economy .He is stoned faced and cold.Something has got to crack.

  34. Economic apartheid is no remedy for a cash flow shortages but this is what is happening .New fault lines are forming and some families will dissapear down ‘swallow holes’ never to be seen no more.Simply Gone ….imithe …as laithear …..amach….kicked out. So much for nationalism and republicanism….even community spirit.Does anything matter anymore?

    • G

      Not ONE among us to make a stand and I include myself in that.

      Just shows you what it takes to be a leader, massive vaccum, corruption destroying everything it touches and still the deafly silence that comes from inaction.

      Tail & legs.

      • @G

        Its Called Democracy!

        You may choose
        To be a scout?
        Point out what you see?

        Leave it to others
        To manage the cavalry?

        They may not like or agree
        With what you see?

        Its called democracy!

        • coldblow

          You have a way with verse, Colm, you really have. Doesn’t Tom Garvin say something about “free riders”, ie the majority of us, who don’t choose to participate actively in the political process? Mind you, I wasn’t very persuaded by his history of modern Ireland (can’t remember the book’s name I’m afraid). Despite that I’m convinced that democracy is abused by those who operate it.

          • coldblow

            This might appear to be going a little OT but I think it’s relevant to the article and this part of the discussion.

            I googled Garvin and free riders and got this interesting analysis:


            As far as I can understand his argument I find it convincing. But I’d take issue with him on one issue, where he refers to Ireland being debt free in the past but up to its neck in debt now. I still haven’t seen anything to beat Crotty’s analysis: the state balanced its books alright, but only at the expense of those who emigrated. The state in other words served to protect the privileges of the owners of private property in conditions (ie postcolonial) where the latter did more harm than good.

            So, at the risk of misrepresenting the reviewer, he seems to see then vs now as not-so-bad vs crap. Whereas I see it as crap vs crap.

    • Black Cat

      Try and watch ‘journey to the edge of the universe’ on national graphic hd – its the best thing I’ve seen on TV in yonks – and it takes you out of this depressing perspective

  35. paulmcd

    I have witnessed a number of property cycles, since early 70s, and I would say that the last major peak happened in the early 80s. I bought my first house — a 3-bedroom semi for which I obtained the most generous 90% mortgage available based on a max of 2.5 times my gross income for the max duration of 25 years. It was 1981; the market was reaching a peak; prices fell about 25% over the following 7 or 8 years; and did not regain 1981 levels until the early 90s. (County Louth)

    I will now list the MAIN reasons why I believe today’s property recession will last much longer than 10 years

    Major differences
    1. Compare limits on the maximum amount — 80% mortgages or 90% for first-timers, 25-year max, max 2.5 times multiple of main income earner — as opposed to the maximum limits available in recent times shown under 1 below
    2. There was little or no surplus of newly-built housing units — emigration high and unlikely to fall
    3. Interest rates were at double-digit levels and more likely to fall than to rise
    4. Prices fell c 25%
    1. Lending terms at the peak in 06/07 were too generous — 100% mortgages, 40-year terms, up to 8 times joint incomes — and will have to become more restrictive
    2. Vast surpluses of new unsold and unsaleable homes — emigration relatively low but is rising significantly
    3. Interest rates low and more likely to rise than fall
    4. Prices already down c 50%

    Assuming no change in my existing level of income, I would expect Dublin 2 city centre one-bed apartments to bottom at c €120,000

    • paulmcd


      In 1973, a report known as the Kenny Report recommended that development land should be priced with a 25% mark-up on agricultural land prices.

    • paulmcd

      Somebody might like to tackle how the question of higher tier-1 capital ratios will affect property lending and prices in the longer term.

      This ratio may have been as low as 6% at the peak of the property boom and our Financial Regulator is advocating a level of 10%. He must realise that 10% is still not enough – simply the most tolerable and realisable level in an era of huge financial strain.

      More realistic levels would be in the region of 15 – 20%; and I even listened to an interview with Alan Greenspan were he mentioned a figure of 30%. Seems that 30% was the standard in another era.

  36. Coffee Orgasms

    I have just read this mornings Irish Times front page where it attemps to explain that coffee does not increase our alertness or wake us up.They call this science research.
    I must say its impossible to believe what these findings are .I cannot function any morning unil after I have had my cup of fresh strong roasted arabica lungo coffee .I believe these samplers had an inferior granule or it was weak .
    Monks in the midnight desert in Egypt discovered coffee and learned to stay awake to pray while they consummed the flavour of their coffee.Every coffee drinker knows their favourite coffee .They know how it marks their day .Coffee is the inspiration to the day ,the beginning of what we want to believe in , the way we want to cope with the changes around us .How can we live without it .Every drinker believes that their coffee has their special DNA inscribed inside its grain and when the grain reaches our palate we accept it to be our own and those that come after us and even expect our offspring to give off that DNA odour at that exact moment they are born as verification who really was the creator of this new life.
    Wars have been won and fought over coffee .Coffee has been an economic commodity for some nations who built their wealth upon it .Germany initiated coffee in Europe with Roland ,a nephew of Charlemaign, who won the battle of the Saracens at the walls of Vienna ..
    Today we need to find our own battle and to fight for what we believe in and to win .We need to build on our dreams and to remove all obstacles in our ways.We need to arrive at the walls that stop our dreams happening and to remove the viruses that kill all we dream for.We must find our own Mozart and listen to our hearts and then rhyme and reason to our dances.

    • G

      @ John Allen – I woke up in the middle of the night with these words in my head and my brain telling me they are attributable to Abe Lincoln (will have to check):

      “Lunacy hangs over the heart of those who condemn poor men, women and children” .

      I jotted down in my notebook which I keep close for such ‘events’ so I wouldn’t forget.

      I got out of bed as it was light outside, I looked out the window at 4.40am and the sky was multicoloured, pinks, blues and a kind of golden colour – a portent for the future or the onset of madness?

      Something told me that Abe Lincoln was Piscean like myself, I checked later, he is Aquarius (born Feb 12, 1809.)…………..

      This NAMA thing must be really affecting me………..

      • G – There is hope .Laughingbear is amazing how he can show you in print the rainbow imprinted in stone on the shores of Donegal .I am sure he will join in and explain what I mean .
        Stone is selective what sunlight it allows in and repulse and is is that decision made by stone that is the only part of the rainbow that stone dresses with .
        In other words Kim KOWN only gives us propaganda to suit his pocket and his bogeymen.

        PS Pisces do have great deep intellect to retrieve the subconsciousness thus reason they are the most intuitive .I might add that Abe’s Aquarius sign might be the link to Nama you were saying because Bacon of Nama is also an aquarius and the right hand man of Lenny.Something must be happening G !

    • Black Cat

      Caffeine became essential during the industrial revolution when people had to stop functioning in terms of daylight hours and get up at unnatural times to work in factories etc. People who lived on the land regulated their body clocks according to a natural cycle but now we live by the clock and the coffee pot

  37. MK1

    Hi David,

    I fully agree with you on NAMA, and the possibility that it will drive us into the ground.

    Note that the process of purchases/transfers to NAMA is only at the early stages so its STILL possible to stop NAMA IF there was a change in power in the Dail. The people of Ireland can still stop NAMA IF they want to. It may require a “partial” revolution though. So sitting at home watching NAMA and the Dail on our HD widescreens may be stealthily costing/”robbing” Irish citiziens 10k or 20k or whatever it is a head, whether they/we realise it or not.

    DavidMcW> the buyer needs to believe that “countries don’t go bust” (Latin American debt crisis of the 1980s).

    But did those countries actually go bust and never pay anyone a cent back ever again or did they just default for a time only to re-emerge years later and pay off their debts once more. Granted, there is some debt lost, but the rule DOES apply, as long as countries have millions of people that are willing to stay in that country, then they will pay off their debts, whether in part or in whole, and over the long term, most countries pay off their debts approaching 99% of the whole. Hence, investors are delighted to get 8% bonds and 10% bonds from Greece.

    Interesting to hear Buffet talk yesterday in front of that US committee that a bubble is like a narcotic. I am on record saying something similar, using the heroin label for credit yet I got ‘bashed’ for doing so as it was taken as extreme.

    The only way to prevent bubbles is by market regulation yet human financial systems time and time again dont catch them.

    One way perhaps to STOP a bubble in its tracks is for Governments to introduce a Bubble Tax, at a rate of 100% on any capital gains or any gains made. In that way, the market “flippers” will stop as there is no benefit for them to continue. Only people that actually need that product will buy it, and prices, should in theory stabilise.

    I also think that a smart CLAWBACK TAX could tax anybody fairly who made a killing during any bubble expansion if for some reason the regulators ‘missed it’ on its way up or for some reason thought “this time its different” or “its supported by fundamentals”.

    Any other ideas/suggestion to get the human race to manage its ‘narcotic’ like bubbles and credit?


    • MK1 – Clawback Tax as you describe it is never operated by Revenue .A restropective tax is always a non runner unless you can link it to an existing operating mechanism enacted under the Finance Act. Otherwise tax as you describe it would be unreliable and uncomfortable and cause investors to leave our shores. Revenue must always remain within the remit of the Finance Acts .

      • coldblow

        John, I don’t know about the technicalities and maybe you’re right. But allow me to rephrase it a little: Revenue must always remain within the remit of the will of the people.

        The majority of us a little less uncomfortable, perhaps fewer leaving our shores?

        Doesn’t your line of reasoning really just fit too snugly into the old argument which is always trotted out: if you tax them they’ll only take their money abroad? Fits in nicely with “The banks must be saved”. “There is no alternative”, “We all lost the run of ourselves” etc.

        If we had a Euro (or as you put it a fiat punto) for every time it’s been repeated, we’d probably be a billion or two less in debt.

        • coldblow – reconciling the will of the people with the finance acts philosophically speaking should be straight forward but that is debateable .Generalisation is not as easy as it sounds.Clawback tax not already included in Finance Acts is always unjustified and not equitable and does not operate in Ireland .
          Tax law is a powerful tool and must be encoded to do what the will of the people want and not what Lenny&Kown deem fit to do for themselves .The reality is the will of the people empower Lenny&Kown to write a carte blanch .

          • coldblow

            Unfortunately your last sentence is correct and is the nub of the problem (cf Laughing Bear’s comment). However I disagree on principle (seeing as I know FA about it) that clawback is always unjustifiable and its operation in Ireland should be examined. This sounds to similar to the approach with the banks for my liking: listen, we know what we are talking about, you lot don’t, so just let us get on with it, alright?

            I am particularly keen to see a clawback on bankers’ and developers’ gains. On philosophical and other levels. Technical onsiderations are technical considerations.

          • coldblow – clawback on bankers in crime is not tax so your search to clawback on criminal intent (say) is a comepletly different matter.You are now talking about something totally different from the Finance Act.Except to say that the word ‘clawback’ is not used rather instead ‘ date of the criminal intent’.

      • MK1

        Hi John,

        I described the ‘Clawback Tax’ elsewhere in more detail. Its not a retrospective tax, but instead is a tax based on current wealth and can indeed be implemented via a Finance Act. Such an act could describe that the tax (lets call it the Consequential Levy on Asset-bubble Wealth = CLAW) uses wealth that was gained during the bubble years (and that still remains) less 500k say, and tax that at 50% or indeed higher percentage (as 20% was already taken in CGT at the time).

        The CLAWback tax is one way of getting some money back that has been ‘lost’ to the economy. It wont get it all back, or come anywhere near paying for BaNAMA. And we need to make sure that we tax on ANY person that stays in Ireland for one night during that period and got a windfall – there is no non-residency allowed. Let the uber-wealthy people move away if they want to. It will not be a loss.

        Btw, I didnt get to include on David’s article and point out in agreement of the terrible practices of Auditors in our shameful financial industry. ANY auditor should be debarred if they allowed bed and breakfasting of the likes of 2billion. For example Ernst & Young. However, auditing malpractice has been going on for years yet our system turms a blind eye. But its part of why our system is sick, and that goes for other countries too.


  38. If you should have watched the last hour in the dail, you might agree when I say this entire system is utterly dysfunctional!

    Point of order… dang… you are out of order…. order of business… dang…. you are out of order…..resume your seat… dang dang dang dang….

    If you ever had a chance to compare these sittings with other democracies around the world, you might find this to be a ridiculous kindergarden. DANG

    • laughingbear – it must be a different rainbow

      • I am sick of procrastinators, time wasters, bullshitters, con artists in needle stripes, politicians turn bankers, and a public that gives a flying bull about all this. hence I decided to ‘turn Irish’ and get on with my life instead of trying to help solve what no one wants to solve.

        I have better things to do than to waste my time with liars who continue to speak with a forked tongue, people who kiss the arse of bankers on purpose to maintain their own position in politics and power.

        The day this Irish public will stand up and voice their opinion in a loud and clear fashion that they demand this government to step down, close Anglo and have public inquiries in all matters concerning banks and politics, this will be the day I stop taking pictures….. go figure!



    • laughingbear – fantasic art .Congratulations.

    • Dilly

      I was doing IT work in the Dail back in the 90′s. I was shocked at the way they carry on. They did nothing all morning, then pissed off for a long lunch. They reminded me of Roman Senators.

        • wills

          Dilly, politics is all AUTOMATED.

          The ‘work of politics’ is merely about showing up.

          The ‘legislation process’ is AUTOMATED.

          The ‘work of politics’ is back at base back at the clinic and in ireland all driven by whats called ‘brokerage politics’.

  39. G

    “There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”
    РFr̩d̩ric Bastiat

  40. Philip

    It cannot go on indefinately. Weather is not bad of late. People and BBQs are out and no one gives a toss. Contentment reigns. No one dares speak of the unspeakable. It’s only a matter of time before desperation sets in.

    450K officially on the live reg. and I suspect another 100-150K simply becasue they were self employed.

    I really empathise with many of the above who feel like throwing in the towel. As a nation we are the most conservative and gentlemanly of revolters this world has known or….our black economy must be a lot lot lot bigger than anyone imagined. I suspect the latter.

  41. @ Deco 30


    thanks for nb Bloomberg link http://bit.ly/9bf1zC info here nb updated to today Jun 3

    “Banks are parking cash with the ECB amid investor concern that a 750 billion-euro European rescue package may not be enough to stop the crisis from spreading and spilling into the banking industry. The ECB said on May 31 that banks will have to write off more loans this year than in 2009 and their ability to sell bonds may be hampered as governments seek to finance fiscal deficits.

    “The banking crisis is back,” said Norbert Aul, an interest-rate strategist at Commerzbank AG in London. “The news flow over the past few weeks has spooked banks and since nobody knows how exposed individual financial institutions are, it’s deemed safer to park cash with the ECB rather than lend it on.”

    Banks are the key and it appears a game of hangman is beginning with no one wanting to lend to each other to be the last one caught holding the toxic sack of debt from another bank going under!

    Re quantitive easing for the euro Interesting comments from Goldman Sachs rep on parity discussion in video above. Seemed adamant against
    euro parity with dollar. Parity would mean a huge competitive edge for European sales into the US auto industry for example, or would he have other reasons to be against this, maybe they want the edge on naked shorting against the euro, who knows?

    Note Spain downgraded from AAA to AA+


    ‘Debt ring of fire, us, uk, italy, japan, italy, portugal, ireland’


    “They recall that in the early nineties crisis, a fast, housing-led recovery, solved an enormous finantial problem. Now they pray for a similar outcome. But with the highest inventory of unsold houses ever in history, and the international financial unrest, it is more than unlikely that there is a housing-led recovery this time.”

    Cajas hold up to 50% of Spains banking business. They have till end of June to do a massive restructuring they must do to qualify for bailouts. They are in serious trouble. Excellent article here:


    Coming 4th of July should bring more than fireworks! Is there enough to bail out the whole caja savings bank sector along with the other fiscal deficit problems Spain has == No!

    Great weather, make good use of it, folks!

    Probably going to be meltdown eventually. What’s going on now, austerity packages/mergers/wind downs is

    damage limitation and chance to put on life jackets, launch life boats.

  42. Anybody else get ‘your comment awaiting moderation’ comments?

  43. @Deco 30

    Thanks for nb Bloomberg link http://bit.ly/9bf1zC info here updated to today Jun 3

    “Banks are parking cash with the ECB amid investor concern that a 750 billion-euro European rescue

    package may not be enough to stop the crisis from spreading and spilling into the banking industry. The ECB

    said on May 31 that banks will have to write off more loans this year than in 2009 and their ability to sell bonds

    may be hampered as governments seek to finance fiscal deficits.

    “The banking crisis is back,” said Norbert Aul, an interest-rate strategist at Commerzbank AG in London. “The

    news flow over the past few weeks has spooked banks and since nobody knows how exposed individual

    financial institutions are, it’s deemed safer to park cash with the ECB rather than lend it on.”

    Banks are the key and it appears a game of hangman is beginning with no one wanting to lend to each other

    to be the last one caught holding the toxic sack of debt from another banks going under!

    Interesting comments from Goldman Sachs rep on parity discussion in video above. Seemed adamant against
    euro parity with dollar. Parity would mean a huge competitive edge for European sales into the US auto

    industry for example, or would he have other reasons to be against this, maybe they want the edge on naked

    shorting against the euro, who knows?

    Note Spain downgraded from AAA to AA+


    ‘Debt ring of fire, us, uk, italy, japan, italy, portugal, ireland’


    “They recall that in the early nineties crisis, a fast, housing-led recovery, solved an enormous finantial

    problem. Now they pray for a similar outcome. But with the highest inventory of unsold houses ever in history,

    and the international financial unrest, it is more than unlikely that there is a housing-led recovery this time.”

    Cajas hold up to 50% of Spains banking business. They have till end of June to do a massive restructuring

    they must do to qualify for bailouts. They are in serious trouble. Excellent article here:


  44. Tim Comeback – I think we should expect his arrival from tomorrow evening he is never short of FF backbencher political forethoughts .Arise Tim school is over you are on holidays again.

  45. Tumbrel Cart

    The Germans have a word called Gotterdammerung, a word associated with the violent end of a regime. Ireland needs cleanse itself or it will rot and perish. The current ruling class, most of whom were born with golden spoons in their overactive mouths have destroyed the country. While I regret to say it, no person in their right mind would lend to this Irish regime. They need to be removed en masse. Gotterdammerung.

  46. G

    The war is not meant to be won, it is meant to be continuous. Hierarchical society is only possible on the basis of poverty and ignorance. This new version is the past and no different past can ever have existed. In principle the war effort is always planned to keep society on the brink of starvation. The war is waged by the ruling group against its own subjects and its object is not the victory over either Eurasia or East Asia, but to keep the very structure of society intact.

    George Orwell
    English essayist, novelist, & satirist (1903 – 1950)

    M. Moore

  47. @ Deco 30, I’d a contribution to thread 30 but it got moderated out, so decided to blog it instead, here’s the link:)


  48. [...] write thinking of economist David McWIlliams’ recent paper in the Irish Independent in which he drops something of a bombshell explaining that Irish banks haven’t been able to [...]

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