June 30, 2010

Failure to tackle economic crisis a shocking own goal

Posted in International Economy · 120 comments ·

The ‘Financial Times’ might not be the most obvious place to go to for football commentary, but in Simon Kuper, the financial paper of record has one of the most engaging football correspondents in the business.

His article on the demise of England’s soccer team got me thinking about the economy. On Monday morning, Kuper made the following observation about England’s defeat to Germany:

“It emerged at half-time that Lukas Podolski, Germany’s winger, had hit a top speed of 31.5kmh. His teammates Bastian Schweinsteiger, Mesut Ozil and Thomas Muller all exceeded 25kmh. They flitted past Englishmen such as Gareth Barry, John Terry and Matthew Upson who were stuck at 21kmh.”

And anyone who saw Ozil skin Gareth Barry for Germany’s fourth goal could be mistaken for thinking they were watching an over-35s Sunday morning team pitted against the Usain Bolt first 11. The English seemed to be playing a different game to the Germans.

And that is the point, they were.

The Financial Times’ point is that Germany have adapted to the new game which is a game of speed, whereas England still opts for lion-hearted, stout yeomanry in defence and heavy-set, beefy lads up front.

Whether you agree totally with this analysis, the central idea that the English are being left behind by the changes in the international game is hard to disagree with.

Here is where the comparisons with sport and economics overlap. Twelve years ago, Germany was thrashed by Croatia in the World Cup; they were also unimpressive in the subsequent European Championship. They regrouped and apparently instructed their youth coaches to focus on speed and passing accuracy. Two of England’s tormentors on Sunday, Mesut Ozil and Thomas Muller, were 21 and 20 years old and are the product of this new thinking.

Germany had a footballing crisis and reacted to it. The crisis gave the Germans the opportunity they needed to change. Ireland is having its economic crisis, but are we, like the German football authority, going to take this as our opportunity to change?

The rules of football have changed because different teams have emerged with different skills and the game has moved on. The teams that are successful are those who have gone for passing and speed. So England, Italy and France have been sent packing, while Uruguay and Germany prosper.

The Dutch have always passed and put great store in teaching children to pass and pass and pass again, letting in football parlance, “the ball do the work”.

Argentina have always played this way. The thing I love most about Argentina is the diminutive size of their forward line. For years Argentina favoured the small, quick, skillful, little guy over the lumbering, “belt and braces” target man. From Diego Maradona, to Pablo Aimar, to Javi Saviola, to Carlos Tevez and Leo Messi, there has rarely been an Argentinean attacker with flair above 5ft 7! They have set the standard and others have followed.

If world football has moved on, so too has global economics. The model of land, banks and credit as a wealth generator has been exposed lamentably. Any country that tries to resuscitate that will be as guilty as the football manager who sticks to two hulking centre-halves to play against skillful, quick attackers.

Countries, after a crisis, should identify the problems and never again repeat the mistakes of the past and move on. Countries should also be aware of what is happening elsewhere to see what the rest are doing.

Unfortunately, our reaction to the crisis has been a predictable effort to protect the positions of the “insiders” who got us into this mess.

The present government policy, through NAMA and bailing out the banks, is trying to put the “humpty dumpty” of the “feudal” land economy back together again. In this effort, it is being ably abetted by the professional “fee takers’ who dominate the advisory game in Ireland. This week we see just how significant these fees are. NAMA will dole out €2.8bn in professional fees alone!

But this reversion to the property carry-on will only make us revert to a landlord-based economy, which has more in common with the 17th Century than the 21st Century. The professional class of fee-takers is a dressed-up version of the old-fashioned gombeen. They create nothing but curry favour and are paid a fee to stand between the citizens and the creditors pretending to act in the national interest when actually they are acting in self-interest.

All the while, the rest of the world moves on.

And if we want a real game changer we must move on from the tyranny of these “fee-takers” and an economy that celebrates “wealth-makers”. We can see this in the countries that are doing well, they are countries where nimble brainpower and enterprise rather than brawn and property are rewarded.

One thing we see throughout history is that the government of a country simply has to set the tone right and invariably the entrepreneurs do the rest. The recurring idea appears to be the government should invest in infrastructure at all costs. Infrastructure enables growth. Look at so many of the spurts in economic activity — they were prompted by innovation, which accompanied massive infrastructure investment.

For example, the invention of refrigerated ships led to a boom in agricultural exports from Uruguay to Argentina and prompted the grandfathers of the present wonderful footballers to emigrate from Europe. Or take the more recent invention of the internet, we see that infrastructure does not in itself create growth, but it does enable growth.

So the State must get its infrastructure right. In a recent report on telecoms (www.tif.ie) it was calculated that a full roll-out of broadband in Ireland would cost €2.5bn — or about a tenth of the cost of the Anglo bailout. So this State is prepared to waste €22bn on Anglo and not invest productively in telecoms. Extraordinary.

This week, The Economist Intelligence Unit and IBM business have released ‘e-readiness’ global rankings. Ireland has come in 17th (or in World Cup parlance, a second-round knockout).

If the Government’s knowledge economy stuff is to have any basis in reality, we need to be in the top five globally, which is currently: 1. Sweden; 2. Denmark; 3. US; 4. Finland; 5. Netherlands.

In football, how you react to the crisis is as important as the crisis itself. Do you learn any lessons? Do you see what the rest of the world is doing and adapt? Or do you bury yourself in nostalgia and play to stout defenders — all heart no brain — and try to stick to what you have always done? Do you defend the system rather than the result?

The choice is yours? The stakes couldn’t be higher.

  1. MK1

    Hi David,

    I hope you are enjoying the world cup. Not sure if the lessons of football can directly be applied to the world of economics, but howandever … lets concentrate on the economics.

    > Ireland is having its economic crisis, but are we going to take this as our opportunity to change? The model of land, banks and credit as a wealth generator has been exposed lamentably. Countries, after a crisis, should identify the problems and never again repeat the mistakes of the past and move on. The present government policy, through NAMA and bailing out the banks, is trying to put the “humpty dumpty” of the “feudal” land economy back together again. One thing we see throughout history is that the government of a country simply has to set the tone right and invariably the entrepreneurs do the rest. The recurring idea appears to be the government should invest in infrastructure at all costs. Infrastructure enables growth.

    Agree that this is an opportune time to address the problems. One problem we have is that the current Government are PART of the problem, but alas are in charge of investigating the problems and implementing solutions and changes. We as a nation therefore are stuck with the ‘lunatics in charge of the asylum’. Hence we have NAMA and 22billion being sucked into AngloIrish, paying for mistakes of the past and preventing market forces from operating.

    In terms of infrastructure, etc, agree, e-infrastructure is as much as important as roads, transport, etc. We are probably spending enough on transport infrastructure as do not have unlimited funds that we can borrow to build XYZ and pay over 20 years. We should be taking stock rather than building ‘roads that will be underutilized’, just for the sake of providing construction jobs. We should be very carefully managing the level of infrastucture, now is probably NOT the time to get into even more debt to pay for it.


  2. Tull McAdoo

    Its worse than you think David, our fools have managed to get us relegated from the first division. All these over-weight or over leveraged property galoots have elbowed their way into the team under the FF management, the original Celtic Tiger has been shafted back onto the bench with no offer or stimulus to play.
    You are right its like all these fools you see in the parks on Sunday Mornings, wearing corsets etc. to hold back their gut or middle age spread that comes from failure to keep fit on an ongoing basis as all Business’s have to do. You see them out throwing the same old shapes that might have worked years ago before others wised up. They hope for some obscure mention on the local rag, and use that as a justification to turn up next week, and bore the shit out of everyone with their lack of enterprise, ability and foresight.
    Time for new management David, Time for a new team David, Time for FF love affair with land and property to end David……. Time for someone to call Time on this whole sorry mess as it really is getting embarrasing watching a bunch of overweight, heavy drinking, out of touch Politicians and their backers bounce around like Elephants in their own livingrooms.

    • Garry

      +1 Tull
      Although as an over 35′s footballer myself, I mightn’t put it as harshly.

      Ireland is like a pub team, with player/managers (Frank 40 houses Fahey, Ivor the Fiver Callely etc. etc.) More of a old pals/drinking buddies thing than a football team. A few new lads turn up, fit, can play a bit but will be left on the sideline. They might get a few minutes if one of the lads has a hangover and is a bit late. But as soon as the buddy turns up, he’s on… So the new lads f*** off, the results get worse, but you’ld never believe that if you were to listen to the talk in the pub, it’s always the refs fault.

      Its not even right to run an oul fellas football team like that, everyone wants a game but it takes integrity to be a player/manager.
      The country is being dropped down the divisions just so our player/managers can continue to get their game.

      • coldblow

        I just picked up 5 a side again this year having played my last game as a student in April 1979 (4 terms consecutively finishing bottom of the 6th (bottom) division in the intramural league). This instils character. Over 35s is kids stuff!

    • Deco

      +1 Tull from me also.
      Team Ireland has the biggest wasters making the most influence. Some of the players are putting in heroic performances. But they are carrying team mates who are pals of the governing body, the committees, the team boss, etc….

      Team Ireland is held back by the Rody Molloy factor. Useless people in authority who resign when they are an embarassment to their cronies and who get paid ridiculous amounts in golden parachutes to get out of the way. And they usually get replaced by similar wasters.

  3. Malcolm McClure

    Enterprise, like football, is about vision. You pass the ball into the free space, not where your team mate is, but where he will be when the ball gets there. Like Apple, you design an iPad, not for a market that exists but for one that will have people queuing overnight to buy it when it is announced. Apple scored another goal with iPhone4, despite Adobe suggesting it was offside because it didn’t support their antiquated Flash technology. The linesmen correctly kept their flags down because the promise of html5 kept Apple onside.
    If anybody in the government wants to learn about vision they should study Apple very closely.

    • Hi Malcolm,

      Dunno if you’re baiting me there re Adobe and antiquated technology. Not a greatly talented developer myself but I share some of its passions and I better declare my interest as a volunteer Adobe usergroup manager of http://www.meetup.com/augdublin for many years. We get some well received support from Adobe and meet New Horizons, Great Strand St, near Halfpenny bridge, 2nd Thurs each month. Come along to our next meeting: ‘haXe is an open source project consisting of a programming language, a framework, and a compiler that can target several platforms including compilation to swf and js files.’July 8. While Adobe have made the flash platform open source, Apple much to the chagrin of developers have their own proprietory technology, they won’t let you look into its wall of secrets. Iphone has been a hit but eventually will be overtaken by Open source Android platform. Go for a better value netbook rather than a limited Ipad: OT Time mag July 5 interesting article on Tomas Eddison, you know the guy who invented the light bulb, but better known as the inventor of R&D, surrounding yourself with a factory team of developers and moving along towards a goal with them.Same issue has an interesting article on Goldmann wreaking of Cedar Rapids through a mixture of CDO’s and SIV’s with Paulson’s fingerprints. Re thread above on lack of expertise at government level, I think it more important to point accusing finger in this regard to DOF, though Kowing Lenny and gang arguably have attained number one gomspot. Their ‘think tank’ tanked and has been found severely wanting. They need a first rate team of economists tuned to international finance to avoid mistakes of the past and to score goals for the future. Its a no brainer to succeed we need to focus on science and engineering. Note Finland has passed a law making it a right of every citizen to at least 1mb of broadband, how cool is that? As D says we need some Keynesian spending to go on to get our cool construction workers doing worth while projects and to get people back to work. Here’s some cool projects, some footage been done on these already: tourism based around escorted walking holidays to Ireland’s scenic spots. They need infrastructure. Decent facilities, cheap/good food restaurants, nb toilets of a highly maintained standard in public areas, rubbish collection. 2 in particular, Bray Head should have proper accessible walkways with covered in glass view platforms, Howth Head the same. Upgrades of the tourist activity infrastructure with corresponding good value, good quality pricing will meet an immediate financial reward and create jobs. Michael O Leary will leave Ryanair in a couple of years and would make a great Minister for Tourism after they hand him Aer Lingus….it will only happen with Cowen…kOWING…Gone

      • Malcolm McClure

        Hi cbweb: I’m not an R&D person myself but over the years I have often been a user interface with good and well-funded research types in science, engineering and IT. Over the past couple of years I have had many opportunities to discuss progress with a cutting edge software developer. He spent a year developing Flash websites including all the 3D whizz-bang stuff. Then he realized that lively stuff on Flash only works well with the very fast processors that most of his target general market don’t have yet. So he moved into Objective C development, a very steep learning curve. However he quickly realized that Apple’s Obj C language is much more efficient in processing time and much lighter on battery life.

        Those are key desirables in mobile devices. Apple contributed webkit free to html5 and is part of a consortium to push H264 as the standard video codec along with partners in MPEGLA including Microsoft, Panasonic and Sony. Google’s Android supports Flash but it only works on very fast processors that most mobiles don’t have yet and it drains their batteries quickly. Google are pushing an alternative called theora or something but sadly for them it uses some MPEGLA IP.

        Your suggestions for re-employing construction workers are far too timid. Ireland needs a really big deepwater port somewhere in the southeast. This will require moving a mountain of dirt but Ireland is full of diggers and men who can use them. A developer close to me is using a whole range of his idle construction machinery to landscape his garden at the moment.
        It just needs someone with vision at the top to give these guys a really big and practical challenge. The pharaoh’s had the right idea when they said ‘Make me a Pyramid’.

        • Hi Malcolm,

          I’d rather have this conversation with your developer friend than through 3rd party and its not appropriate for me on this site to become techy the way your points deserve. Put it this way, amongst other things I’m a developer for mobile and with Flash 10 support for hd video and 3d its brilliant for what its intended purpose is and I’ve developed for longer than the short one year of your developer friend. Adobe is also a leading member of the consortium you mention. Objective C is open source and doesn’t belong to Adobe or Apple. Its classes, methods and functions and language is restricted and only allowed a proprietary subset access of by Apple and is not allowed free rein. Android is a hog on battery life but batteries and processors improve all the time. I’ve a Nexus One and neither on Android which is Linux based or Symbian or Ericson phones is the flash player a hog on battery life and Android runs fast with good battery life on this phone. Plus you won’t get any worthwhile 3d graphic/gaming support on Objective C, which is more of a communications/data manipulation platform. Last year or so I’ve been dabbling in java, a more advanced form of Objective C, developers these days need to be cross platform as much as possible. Overall, its good to know a little about everything, and something really good about something, still striving for the latter though I’m hampered by the fact I’m an old, fat, wise fart:)

        • Yeah terrible to see those diggers going unused. Your idea re deep water port sounds good, but I recall a decline in shipping at ports all around Ireland from Harland to Cork. According to good grief gurdiev and there’s a planned decline in capital spending as Kowen Kowing Gone continues his rampage through our economy. As D infers more Keynessian spending is needed at this time, not less. But you see the banks don’t want that. They want all free money available to go on reparations to German, French and Swiss bondholders. Thinking caps need to be put on and on and on on the need to make a marriage between capital investment and most efficient return on investment via new job growth.

          • Malcolm McClure

            Hi cbweb: My vision would be to create a European freeport area as an ‘Irish Singapore’ in 40 square miles of one of the “W” counties. This would be run efficiently by its own government and would pay a fixed proportion of its annual profits as tax and rental to the Oireachtas.
            Otherwise it would be governed separately from the rest of Ireland (which might learn a thing or two from a well managed neighbour).

  4. Original-Ed

    Excellent article – reluctance or inability to change is the road to extinction in all evolutionary processes. Our policy makers are literally analogue men in a digital world when it comes to the importance of broadband. The feudal land based values still have priority among our elite because of the inherent insecurity associated with living in a country that has always been dependant on another for its survival – today on multinationals. We were never buccaneers.

  5. Colin

    Hi David,

    Great article, and you clearly understand the beautiful game (is there anything you don’t understand now?) and this article reminds me of something Kevin Myers wrote a few months ago about how Ireland, England, Scotland and Wales no longer produce high quality footballers as they used to before. A lot of it has to do with the environment we live in now. As Graeme Souness said on RTE last week, he grew up in Edinburgh in a neighbourhood where no one had cars parked outside their house, leaving the streets free for kids to play in free from traffic and obstructing parked cars. Look around now, the street I grew up on and played football on during winter evenings under “streetlights” is now terrorised by cars speeding up and down at 70kmph and cars parked outside nearly every house.

    We know how useless the FAI are. We know they won’t change for the good of the game here. Under 10s should not be playing 11 a-side matches on full pitches. That should begin at Under 14s, like they do in the Netherlands. From aged 7 to 13, Dutch kids play 5 a-side only, on high quality playing surfaces, allowing the kids to develop their ball control and passing skills.

    England failed because Capello put his trust in chokers (like Barry, Johnson, Green and Upson) rather than creating a well balanced team of youth and quality proven experience. This would have been my team;

    -Joe Hart-
    Gary Neville#(C) – Sol Campbell# – Michael Dawson – Ashley Cole
    Theo Walcott# – Paul Scholes* – Frank Lampard – James Milner
    Steven Gerard – Peter Crouch

    Key; # Omitted entirely from squad. * Not given sufficient time to consider coming out of retirement.

    Note; Rooney clearly either unfit or his heart is more Irish than English.

    • Deco

      The chief concern of the FAI is publicity.

      In fact, I have been reliably informed that the FAI spend more on publicity than any other organization in the country. I was shocked when I was told this. In any case the FAI spend a lot on publicity.

      The key objective, is to keep the sheep sheepish. Er, sorry, keep the fans paying up. And when the fans won’t pay up, Ditherer and Johnny Cash can always be relied upon to suck the money out of the PAYE taxpayer.

      FAI – the start of FAILURE.

      • paddythepig

        What a load of rubbish. Look beyond your prejudice, and you’ll see a lot of good work coming from this same organisation as well.


  6. The fundamental truth about this article is that the insiders are playing Fiddleywinks while the rest of us are togging out with round shaped balls. Two different games in town. NAMA Utd will never get up to promotion levels and the outsiders aren’t even shown the rules of the game, let alone be allowed to play.

    Back to work.

  7. David.

    ‘The present government policy, through NAMA and bailing out the banks, is trying to put the “humpty dumpty” of the “feudal” land economy back together again. In this effort, it is being ably abetted by the professional “fee takers’ who dominate the advisory game in Ireland. This week we see just how significant these fees are. NAMA will dole out €2.8bn in professional fees alone!’

    For anyone operating in reality on a daily basis the assertion above found in Davids article is a fair and empirical assessment of the situation the ‘outsiders’ are faced with, I reckon anyway.

    This is the lens through which everything else in ireland can be seen for what it is and put in its right jig saw piece place.

  8. Malcolm McClure

    In todays FT http://www.ft.com/cms/s/0/3c25c36c-83af-11df-b6d5-00144feabdc0.html
    Suds says:
    “Herman Van Rompuy, the president of the European Council, has been charged with making recommendations to the council on the reform of the eurozone’s governance in October. It is both desirable and inevitable that his proposals will represent a substantial step forward in the integration of the European political economy. Recent experience points to a more binding surveillance of national economic, not merely budgetary, policies.”

    So its goodbye to national sovereignty, except for UK and a few other stragglers.
    This is what we sacrifice in exchange for writing off €1.7 Trillion debts. Seems like we’re being sold down the river into perpetual economic serfdom.

    • Hi Malcolm, thx for the very interesting link to Suds article. I find his article however to be a bit of a pain in the rump:) Particularly the following view: “Without the single currency, Europe would be an economic wasteland. The cost of not having the euro would have been far greater over the past two years than the cost of having it has been over the past three months.” Lets think about this. The euro brought access to underdeveloped economies like our own, cheap loans. The property bubbles of the PIIGS would not have happened without the EMU. The fact is they’ve happened and Suds blathers about lessons to be learned and Stability Pact not having teeth and so forth. What Suds does not say and what needs to be examined is the role of the ECB and bondholder banks of lenders/savers Switzerland,France,Germany in the creation of the meltdown. Sure there has been lack of political governance at European and local level. But also there has been a severe pillaging of countries effectively given unrestricted 100% mortgages by banks. The types of financial controls now being brought to bear by Obama were not in place as bondholders poured money into Anglo. At least, though controversial in the case of Goldman Sachs and other big player banks as we found Goldman being paid 100% on the dollar by AIG, in the fall of AIG, we found banks had taken out large insurance on losses against CDO’s and other derivatives. What insurance against loss had the ECB required of lender banks, or of Anglo. European banks awash with money ran a lending spree that went amok. That’s without getting into the argument that the EMU was less about political unity than an opportunity for banks to package large CDO’s for the German, Swiss and French banks and selling them as bonds to the likes of Seanie et al. Bondholder banks were given regulation free rein. As individuals go, Jean Claude Trichet has a lot to answer for. He was against Lehmans being let go, what’s his responsibility for unregulated lending, what’s his responsibility for not bringing in banking controls? Puppets like Suds and Lenny don’t want you to go there! Its a hobbyhorse of mine, but I’ll mention Honahan again in the context of his remarks that there had been enough of an inquiry into the banks and we didn’t need more. I’d like a lot more on the flavour of the ten biggest lenders who were given billions by Anglo. How much were they given? How was it spent? Audited proofed accounts please? Who managed these loans? Story of? Documents please? OT Seanie in the courts in fear of bankruptcy at the moment wants Anglo to do a ‘private arrangement deal’, he’s arguing the creditors will gain more from a private arrangement than one under bankruptcy. Now we’d all like to see the sordid and hapless details of this, wouldn’t we? Pity our goms didn’t do a private deal on the €22bn like 10% on the euro:) Let’s ask more and more and more questions of the banks, compared to the response of congress to the banks re financial meltdown of 2008, the response of local gom politicians and even more so the response of european leaders in spite of all the meetings recently has been little to none. But then their eyes are set at the roof falling in, €750bn war chest to buffer the likes of Greece and Spain smacks of a bankers victory over the incompetence of EU leaders rather than a solution to the role of pillaging banks hoovering up all euros.

      • Malcolm McClure

        Hi cbweb: I agree with your comment about Suds’ article.
        I am very anti people like Suds and Van Rumpuy whose objective is a federal Europe leading to a world government. Their strategy is to gain people’s and countries’ obedience and eventual enslavement by persuading them to borrow beyond their means. To learn how this works read the paperback published a couple of years back ‘Confessions of an economic hitman’ by John Perkins.

        Ireland and many other erstwhile independent nations have been enslaved by this strategy. It was done deliberately by merciless Fedora or Nadal personality types whose will to win exceeded by far any other human emotion, as the hitmen usually leave a multitude of broken lives in their wake.

        Their rationale is ever ‘We know what’s good for you and the ends justify the means’.
        Obviously the Taliban have decided that they are not going to play that game.

        • Thx I’ll look out for that book. I think your fear of world government is very valid. I suspect its already happened. I’ve been very interested in the way the euro has been moving on foreign exchanges in the past few weeks. I believe its value is being manipulated by both the Fed and the ECB who’ve worked hard to pin it around the €1.24:$1 mark, the Fed don’t want currencies spinning out of control so it’ll be interesting to see how Greece/Spain shake em up as time goes on. Globalization is certainly here. World government through the banks, a bankocracy as D says. Wills puts this aspect very well and much better than I can.

  9. @Malcolm.

    Is it any wonder this is happening when what we are all stuck with is ‘money creation’ in the hands of private corporations.

  10. ocallaghanr

    Is the international game changing all that much?? Sure, the balance of power is shifting – from nation states to greater economic areas, from the west to the east – but I would contend that the game is still the same. It is in the interests of the political and economic elite to be separated from the mob, that way they can’t be held accountable for ripping them off – this has been the way since the days of tribal elders and pagan priests who lived off the surplus production of neolithic farmers.

    The cycle of boom and bust hasn’t gone away, those in power just acted as if it had. Risk remains, its just that for the last few years some people were convinced through fancy math that it (risk) was a thing of the past.

    No, I don’t agree that the game has changed, its exactly the same game we’ve always played – it’s just that our club owners have moved further away from us, from Dublin to Europe and beyond. Enabled of course by their use of advances in technology and its consequent effect on social and economic governance.

    If we really want to change our own circumstance then we have to stop playing this game altogether. We have to drop the ball, walk off the pitch, deny them the ticket sales, stop buying the jerseys, quit forking out for the pay-per-view.

    A new game is called for.

    • Agree, one can re shape a new system at a local level, starting with one person, themselves, and generate an interest and see what can happen next, keeping it buoyant and fun.

  11. Deco

    Excellent article. Enjoyed the cartoon about Biffo. There are strong similarities between the performance of the England soccer team and the Irish state. Something which the ‘slag the Brits’ brigade in this country seem to be blind about.

    I was reminded of Biffo on Sunday Afternoon. Pat Spillane was commenting on the decision making on the Dubs sideline. Spillane pointed out how Dublin used a defensive strategy in the League. Then Wexford outfoxed them in their first Championship game, and the Dubs boss had to change. So he opted to use an attack strategy. And it won the game for Dublin. Then the Dubs faced the Meath. Having trained under two different strategies, it was not clear what was going to be strategy. The Meath strategy was much simper, every player to take responsibility for his area/opponent. Apart from that every Meath player reacted to the situation as it unfolded. It was more decentralized, was simpler, and left no room for confusion. Spillane commented that none of the Dublin players knew what what the strategy was, because there were too many strategies, and they were looking for direction instead of creating it. Simply put, the Dubs boss had to much control and was too sophisticated for his own good. And as an indication that he really did not know what was going on, he refused to do media interviews.

    In Ireland at the moment it is like that. Except the management of Ireland Inc, is worse than anything Pat Gilroy can produce. The management of Ireland gets away with it because they don’t have competition. The boys in the Sky-Blue lost because of being asked to work on two contradictory strategies in parallel, and were beaten by one strategy.

    Now. Just look at the myriad of strategies coming from this government, in respect of the state’s approach to the running of the entire country/economy.

    We have the NAMA strategy. We have the ‘Knowledge Economy’ Strategy. (And an inbuilt assumption that we can create wealth by being smarter than everybody else, and by doing less work than others). We have the ‘we must pay the bondholders to safeguard our reputation’ strategy. We have the Long Term Economic Value Strategy. We have the ICTU strategy (maximize public sector employment). We have the IBEC strategy (minimize private sector competition). We have the Chambers of Commerce strategy – tell people to spend. We have the ‘lower our costs’ strategy. We have the strategy of making more quangoes. We have the strategy of eliminating quangoes. And we have the strategy of amalgamating quangoes but not improving efficiency, so as not to offend union bosses. We also have the K-Club strategy. We have the ‘save every bank at all costs’ strategy. We have the ESRI strategy (talk the situation up, and it will all work out). We have the GP strategy – Ryan and his electric cars. We have the DoF strategy. We have the Bertie Ahern strategy that is still relied on a lot of the time. And now we have a “borrow 5 Billion for rail links to compete with the buses” strategy.

    Loads of strategies. Lets be honest here. It is a mess. Put them together and you get a maze of incoherent nonsense, committee think, analysis-paralysis, reports, consultants reports, etc… Everybody is lying back expecting somebody else to do the hard work, and absolutely no team spirit. There is a lot of rousing talk. (Don’t confuse team spirit and lemming group spirit – one is the characteristic of winners, the other the characteristic of losers.) In fact when you have too many strategies, you have a lot of inefficiency. And Ireland at the moment is very inefficient. This is exemplified by the cost of living report.

    Hopefully, anybody who has read this far will know see why Cowen came to mind. Basically, Cowen presides over many conflicting strategies, believes in all of them, is telling everybody that victory is a foregone conclusion (because of all the strategies), prevents his own players from doing as they see fit-because he thinks this infringes his own authority, and is reacting incorrectly to everything that happens. This is a recipe for disaster.

    Looking at England might give some people in this country Schadenfreude. But Schadenfreude is delusional nonsense, and will not fix anything. In fact if anything that sort of mentality will make things worse in Ireland. Never mind the English soccer team – I listened to Vince Cable on the Beeb this morning and it is clear that the new UK gov sees things that the previous one never grasped. So like the Germans, the Brits are getting their act together in economic planning terms.

    However, the match in Croke Park, on Sunday showed us in very clear terms what mismanagement, and even a slight amount of nonsense will end up. The nonsense in Dublin football is miniscule compared to the nonsense coming from the various elements having a say in this country. The proportion is much much higher. And yet that match also shows us that the solution is also within us also. But that is not going to happen, at least not for a long time.

    • Deco

      By the way, Richard Curran, of the Sunday Business Post – was also critical of the complexity of the approach being taken and the centralist tendency of the state to over-regulate everything, except big business (which gets rubber stamped rather than regulated).

    • re “And now we have a “borrow 5 Billion for rail links to compete with the buses” strategy.” I missed that one in the papers.

      But in a declining fossil fuels, rising cost of oil, getting people off the roads, expanding and making the rail network and public transport more efficient, could be a winner?

      Long haul juggernauts dropping their load in Cork, loaded onto trains and being collected in Dublin docks, would help as well. Did we need all those super highways all over the country?

  12. So you are saying, when the Government brings on the Economic Crouch in the last 10 minutes, it is time to really worry?

    • Deco

      I would be more inclined to see the government leaving him on the sideline and doing like Capello did – putting on somebody who proved that he was not going to score anything, like Hesky.

      Just look at who is running the banks. All subordinates who helped preside over the growing implosion over the last ten years. The Doc, Rich Boucher, Gillian & SunGlasses, etc…

  13. Deco



    Of course this is probably within the rules. But equally, it is also possible that civil suits on the basis of misrepresentation could eminate from this. I mean GS were saying one thing and doing another. I imagine shareholders in Bear Stearns, Lehman Brothers and AIG must be furious.

  14. Thx again D for great article. There’s a severe lockdown in Ireland INC against any of the innovative approaches to the economy that you mention. It would appear those with nimble brains are regarded as threatening outsiders. The logical consequence of this view is that the insiders croney nepotism weltanschung world view is brainless and devoid of any possibility of an adequate response to change in a changing world. Change for the better is something that should be sought and embraced rather than denied. Typical of this fear of change is the approach to the banking crisis. Little even in the sought for banking inquiries of Honan et al is prescriptive rather than descriptive. So were left with the question, So What? The only so what is pay 22bn to Anglo no matter what the consequences. Overall the answer to that question is null. In fact, keep as much of the banking system under cover as possible. Disappointingly, we have Honan offer the view publicly that we need not proceed with any further inquiry into the schenanigans. Other economies have begun to move forward. Here in the US financial overhaul has emerged from (USA Today June 30) “House Senate Conference Committee”. “On several fronts it would deprive big banks of money streams they have usurped and come to see as their right”; “The measures would greatly limit banks’ ability to: force retailers(and, by extension, their customers) to pay outrageous fees for routine debit card transactions; maintain highly leveraged balance sheets to beef up profits and bonuses while putting taxpayers on the hook; and operate as casinos by betting on risky financial instruments known as derivatives…The legislation attempts to limit the risk taking by banks, particularly huge ones that can bring down whole economies if they fail. It does this by, among other things, requiring them to maintain higher cash reserves to buffer them in times of financial crisis..In place of the awkward and unpopular bailouts of 2008, it would set up a rapid resolution process for failing institutions that resembles what the Federal Deposit Insurance Corp, does with smaller banks…For consumers, the bill would create a new bureau to write and enforce lending rules. And, in the wake of “liar loans” that contributed to the subprime mortgage fiasco, it would require lenders to verify borrowers income and assets. Imagine that.” Yeah, imagine this if it had been enforced for our billion plus developer, politico, croney loans”

    To use another metaphor, the only way forward proposed for Ireland Inc is the way of the moose. The moose has this unfortunate propensity during darkness crossing the road when confronted with oncoming traffic. It doesn’t move out of the way, simply stares at the approaching car headlights.

    Ireland Inc instead of approaching the future with innovative, imaginative and creative thinking, unfortunately instead, has become a moose standing and frozen in croney darkness, staring into the headlights of oncoming financial disaster.

    so whaT?

  15. Colin

    I’ve noticed before how Pravda’s No Frontiers show always plugged Aer Lingus flights, always highlighted Dublin & sometimes Cork Airport as the only departure points, Shannon, Knock and other Regional Airports never got a look in for this shameless promotion.

    So Michael O’Leary had enough of this bullsh1t and took Pravda to court and won!


    These holiday programmes were interesting and informative in the 80s and early 90s. This is no longer the case in 2010 where people can examine different holiday destinations with the click of a mouse, without some D list celebrity making an A list lifestyle for herself at the expense of the licence fee payer.

    • Well said, Colin. RTE travel programmes seem to exist solely for the purpose of giving presenters and their buddies inappropriately expensive holidays at our expense. And when was the last time they said anything critical about their holiday destinations?

    • Deco

      The most hilarious part of the “No Frontiers” travel program is the bit where they send (fund) a celebrity (usually another RTE ‘name’) on a family holiday. To check out the destination, of course.

      I remember they sent (sic) Ronan Collins and family to Florida to spend a few days in Disney. Not as bad as FAS. But, I wonder could the money not be better spent on other purposes than giving Ronan Collins a free holiday ? And it is not just Ronan Collins either.

      In this country where you can get away with bankrupting a bank and suckering the taxpayer with a bill of 24 Billion and counting. But if you decide not to pay your TV licence, you get sent to jail. And all so that Ryan Tubridy can earn more than the US President, for spouting endlessly about celebrities, and other such drivel. Clearly filling people’s head with mush is an important task.

      Something very wrong about all of this. RTE – fuelling your indignation.

    • After a 10hr plus red eye flight from LA yesterday, only delay our family had was waiting for an Aer Lingus Heathrow/Dub delayed for 2.5 hrs plus – technical problem, replace tyre/brake pad. For security ’1984?’ reasons they couldn’t put baggage on an earlier flight though these were leaving after our delayed one and before it finally went. Passing by the hangars on leaving the airport brought memories of quango DAA, hangar 6, and all those airport jobs gone to Hamburg plus the new terminal building they spent too much upon…

      • Actually, forgot to mention another delay, M50 at 7:30pm was gridlocked for 30 minutes, why wasn’y it built as a 5 laner for half the price? Great holiday though:)

        • Without a doubt Colm, you’re suffering from PHD or Post Holiday Depression. Shocking affliction. I recommend 20 yr old Chivas Regal(A well known health suppliment down these parts).

  16. crossroads

    DMcW >>This week, The Economist Intelligence Unit and IBM business have released ‘e-readiness’ global rankings. Ireland has come in 17th (or in World Cup parlance, a second-round knockout).<>We should be very carefully managing the level of infrastucture, now is probably NOT the time to get into even more debt to pay for it.<<

    Borrowing isn't so much the problem as what you do with the money. Putting current and future generations into hock by pouring 22bn into the blackhole of Anglo is a shocking waste. DMcW's point is that putting 2.5bn into developing a proper high-speed ubiquitous network is a proper investment in creating the infrastructure for the smart-economy, both to attract innovative global companies and to stimulate the creation of home-grown talent.

    It goes hand-in-hand with supporting our education system and developing and nurturing talent in scientific, technical and creative disciplines.

    Smart-Economy talent, like any other talent, cannot develop to world-class standards without access to the knowledge and tools of the job.

  17. http://www.independent.ie/business/irish/doubt-cast-over-claims-that-recession-is-over-2240995.html

    And many more cogent doubts cast here.
    Brian Lenihan has performed an excellent service in providing Gaelic-Prop to the massed ranks of these so-called financiers in the “Markets”. Armageddon was staved off over the last two years but sadly, as the serious analysts pointed out on here, there was no covert plan B to protect the Irish People. We still pay the same price as the rest of the invalids to borrow money. Austerity now begets sterility.
    The country is stagnating and a comparison between the reactive capability of our Civil Service “Intelligentsia” to the moribund, dogmatic EU apparachiks reveals Ireland to be a microcosm of crass ineptitude straddling a whole continent.
    The finance ponzi boys and girls are safe out. A whole new generation of money lenders have learned that money can be made from misery too.
    We as a Nation have elected, condoned and even supported abject cretins.
    Until we as a Nation, as has been discussed here many times in the past, accept that we have not matured, that collectively we have a moral and intellectual deficit and that our sense of being is absent, until then further discussion is vacuous.
    Feineachas is our tradition and can rid us of a contrived imperial malignancy imposed through conceit and manifested in the abortion of our Constitution, itself an alter ego protest countering submissive suppression.
    Wayne Rooney is too thick to be a great footballer.

  18. Tull McAdoo

    One interesting fact to emerge yesterday, after it had made its way out through the heavy mist of spin and misrepresentation I might add, was the fact that groceries and the basic commodities still remain 30% above the Europeans in price terms that is. I say price because I am never really convinced about quality but that’s another issue.

    Now in the face of a massive depression and economic collapse it did surprise me that ,let alone had these grocery retailers maintained their margins in Ireland but they had maintained their differentials with their cousins in Europe, NO mean feat of price gouging If you ask me.

    I don’t mean to make light of this appalling lack of community spirit, we are all in this together and we are where we are… botoxology we have been treated to of late but the one thing that stuck in my brain having read these reports was….” The last one’s to starve in a depression are the suppliers of food”. I know how I will be positioning my family fortunes in the future, forget about gold, bonds etc. the real wealth and big margins are in your basic bread and butter. Although having printed all that maybe Deco nailed it a long time ago when he said “ bread and circus’s “
    So there ye have it folks after all my years giving economic advice I have it down to the following choice, invest in bread with a choice between butter and circus’s as a hedge.

  19. Philip

    Guys, as I maintain all along, us Irish may whinge a moan, but in general we are well off. Life is proceeding as normal. No riots, no sense of revolt. I cannot believe it’s a matter of taking it on the chin – stiff upper lip etc. But then do we ape British policies. So I am optimistic that all is not lost. A swingeing 25% cut across all gov depts, dump a lot of regulation and ID cards – which should mean the depts should have more than enough resources left over to do some real work for a change.

  20. Philip

    Knowledge economy is a misnomer for being organized to cope with the new realities in highly outsourced and majority temporary contract labour (meaning insecure) environment. Domestic market has yet to leverage the knowledge economy in the same way as the Irish exporters.

    Knowledge economy is taking over with or without the Government’s consent. It is the new multinational with fewer boundaries and lesser affiliations without the bureaucracy.

    • Deco

      Philip – you are correct. The knowledge economy is happening anyway, and has nothing to do with government policy. But they will claim credit for it anyway. At the ILP conference last month, an activist even told the audience that the knowledge economy came out of Micheal Dee’s head. Calamity seems to think she invented it herself. More of the hard sell nonsense.

    • Philip. The next revolution in wealth creation ‘coming soon’. Meanwhile the owners of the means of production keep an unfair percentage of it all for themselves.

      So we can have our knowledge economy and in time bit by bit we will get it as broadband is painfully slow rolled out. But, the wealth created will be re allocated up the pyramid and into the coffers of the jailors leaving the crumbs of the profits generated for the underlings.

  21. coldblow

    Relying on my memory, Ron Greenwood as manager of West H*m put down his team’s defeat in the first leg of a semi-final agains Eintracht Frankfurt to the fact that the English game was a good 20 years behind the Europeans technically. And the Hammers were one of the ‘flair’ teams then – this was I think a little bit before Jack Charlton took Boro to the top of Div 1 with his brutal kick and rush style. I mention this only to illustrate the contemporary amnesia in discussing any topic, as if it had never been noticed before.

    Even so, given the right conditions (wind, rain, cold, proper referees, proper leather balls, a grey northern industrial wasteland backdrop with perhaps a hint of melancholy in the air – plus a few seagulls – and without the altitude, humidity, 100 degree temperatures, vuvuzelas, Mexican waves, face painting exhibitionists, corporate guests, cheating, diving, bizarre FIFA rulings, families on holidays, etc etc), in other words in ‘normal’ footbal conditions, England, and indeed Ireland or Scotland, could still succeed with a direct yet attractive physical approach as an antidote to this boring ‘ball holding’.

    And, David, it’s not about the most attractive footballing team winning, nor any pleasure in seeing them get screwed by a crowd of chancers, it’s…

  22. Deco

    Enda Kenny has just appointed Michael Noonan as Finance Spokesperson. This is unbelievably stupid. FF must be absolutely delighted. Noonan was instrumental in gifting the 2002 general election to Ahern. All the Noonan promises will be recirculated by FF if there is a general election. Chances are FF will go soft on Noonan so that Noonan will not be taken out of Finance.

    Is Kenny really serious about the economy, when he puts that clown in charge of the Finance brief ? The economy is in crisis, and Kenny has moved two economists out of position. Could Cowen get any luckier ? At exactly the time when FF backbenchers start to get doubts about Cowen’s leadership.

    • Colin

      Its half time 0 – 0, in the dressing room Richard Bruton complains and tells the manager Enda Kenny that they should be 4 – 0 up at this stage, having missed a penalty, missed 2 sitters and had a goal unfairly disallowed. Kenny tells Bruton to shut up, and substitutes him there and then with Michael “Heskey” Noonan, even though his record never been that good, especially lately.

  23. Deco

    Concerning the drive to have/become a knowledge economy…..it is very difficult to go from a Bullshit economy like we had in the Ahern years, to a knowledge economy….without a very deep and probing analysis of our own attitudes to education, information, personal development, state over-reach, transparency, market freedom from oligopolistic control, financing, and training.

    In fact, I would say that while some people get it, a lot deliberately don’t because it is in their vested interests to go back to the insider driven ‘arrangements’ that used to control the economy, and which almost collapsed in 2008.

    The problems here are best exemplified by the way that our first foray into the knowledge economy from 1998 onwards ended up in a debt binge with results that were miniscule relative to the debt buildup. Somewhere along the way, bullshit took over from knowledge. Even before it took over, there was an awful lot of it flaoting around. So now, we must be honest about this.

  24. Bruton get’s enterprise, how convenient! Do these guys have not a penny worth of pride and self respect, ops sorry, of course they do not!

    This country is fucked up beyond repair, then again, no one but the Irish public is to blame, they had ample time and opportunity to do something about it, now, it is too late, and they can all be Irish again, eventually piss a shamrock in the snow or rip off their own country men. Great!

    As this government in Ireland has outlived all legitimacy, this site here has outlived it’s purpose, the articles are nothing but a repackaged same old – same old, and the populistic metaphors are going from bad to worse, of course, soccer being ‘on the ball’ right now.

    There is no journalism involved anymore, this economic spillage can be produced by anyone who can read a newspaper and write up a few paragraphs, it serves a self interest, commercially leaned purpose under the cover of Irish altruism, wait, I take that back, you are right, there is no McWilliams merchandise, not yet…. not yet.

    Wake up! This is getting utterly ridiculous.

    “Yet another brilliant article by DMcW …” blah blah blah

    If Ireland has nothing more to offer but a few populists to criticizes and take out this government and from a new state, if this is the state of intellectualism in Ireland, so be it.

    You all are much better advised to read and study/digest Constantin Gurdgiev’s or Morgan Kelly’s material instead, they actually have something serious to say!

    I wish you well, but I can not stand this endless palaver here any second longer, and sub consequently I leave this economic soap opera theater, it serves no more purpose but self preservation.

    Enjoy the show, and do not forget to plant some potatoes, this is all that is left for Ireland to do.


    • Rubbish and sour comment.

    • Deco

      Giving Baby Brute Enterprise is something I have to question. I mean does he actually have experience of enterprise. I suppose he has read about it, and has a Masters in Economics. Therefore he knows more about it Enterprise than ‘Loooo-esssss’ O’Rourke, Calamity or Batty. I think that Baby Brute might own farmland, which he lets to other farmers – because they have more enterprise in them than he has. Gilmore is in a similar predicament. I mean how can these people know anything about enterprise, when they steer clear of it.These people regard enterprise as something that other people are supposed to do. [No doubt, they are good at calling out to "celebrate enterprise", etc...].

      Still, putting Noonan in charge of the Finance brief, is unbelievably ridiculous. That is the big red plastic nose decision of the year.

      In the Big Tent in the Kildare Street Circus, an old clown/performer from yesteryear, has returned to step into the limelight.

      We must keep debating and discussing, because these clowns are incapable of analyzing our collective predicament.

    • Laughingbear – I agree and was the reason why I never responded in the last article .Much was written recently by others in newspapers in the last week about DMCW and there is possibility that his star is waning now .Why buy a dog if it wont bark for you?I am sorry David but I am not alone in saying that .

      • I vehemently disagree. I am reading these papers too and I read it as sheer envy due to Davids success at the abbey.

        Be careful not to project one’s own wishful thinking onto others.

      • Good evening Folks,

        I feel I should explain this a bit more detailed, so I make the time to do that.

        I am grateful for David’s work so far, I mean it… but…

        Times changed, drastically, and it is not enough to cash in your payment for a weekly rebel speech in the print media or being payed to entertain a establishment that applauds and does NOTHING!

        I mean, we know at length that he has worked in emerging markets etc. etc., yes, no one claims he would not have a certain expertise as a trader and economist, but there is a big difference between stirring the shit and moving it!

        I can not over stress enough, the REAL work that Constantin provides on a nearly daily basis, I have no idea where he get’s the energy from, most be a russian thing (grins), but his stuff has depth and is well researched and shows an excellently informed opinion.

        I bet my bottom euro, he is a much more feared debate participant than David ever will be, hence they cut people like C.G. somewhat short as I witnessed on RTE. In a real and fairly moderated somewhat intelligent debate, these government muppets would not have stood a chance against Constantin! But this is Ireland, this was Pravda TV.

        Hell they do not even know how to debate here anymore, all they do is use their TV time for propaganda and the moderators gladly let them away with it.

        When I saw David on prime time the last time with Miriam, I was shocked to see how very weak he came across in deed. I seriously would have expected such performance from wimpy George Lee, but not from David after the way he wrote here. Where was the sharp and analytical brain, where was the bite and the no bull attitude, zilch, nothing, wiped away by the Rubens-Grin of our RTE mum, who was apparently astonished that she makes quota because of her tits and blue eyes and that people call in to make comments about her allegedly missing underwear while she was reporting on most serious issues.

        Is she really so naive in real life as she always comes across on the screen? She must be if this really astonished her one iota!

        I did not voice my opinion about all this until now when his re vamped website came up. It is my opinion that David fills in the rebel position in the Irish media landscape, nothing more.

        I wish to emphasize, this is not to attack David personally, absolutely not, and of course it is entirely his choice how he ‘capitalizes’ on his popularity. But there is another side to all this as well, the participants here, to which I count myself to a degree, for several months I did some serious work and research into the matters discussed here and posted the findings, so did others.

        Naturally, at some point you ask yourself, why was there never a prominent link provided on his homepage to the ‘Close Anglo Now Petition’, I explicitly asked for it! Or I would ask, why did he not start one here himself, really capitalizing on his popularity?

        Bottom line, for me personally of course, after the investment of time and efforts I made here, the return is not enough, and I feel I am providing a service to the DMcW brand if I would continue to post here, and this I have no interest in at all! Looking at the re vamped site, it truly is a ‘brand’ he is building and nourishing, which is totally legit and fine of course, only, I am not payed to provide my brains for his brand, and I fail to see an altruistic red line on this site, let alone a minimum political activism presented here.

        I guess, to a degree, it was wrong expectations from my side! This site does not intend to serve a political activism purpose, and one can easily be mislead to believe that, well, call me naive now, LOL,but I believed it for a short while at the beginning.

        John, I did not read what the papers wrote about David. Actually, I am not reading Irish papers anymore as I used to, it is a total waste of time in my book, the recent stage managed FG events give evidence about it.

        Without a public that makes clear demands, there is no change possible in this essentially right wing country.

        Thanks and all the best

        • Georg.

          What a loaad of ‘ol cobblers your posting there, again. Try not to pin on David your own expectational hopes for the future and then when what you’ve decided for the way David should be in *your* own mind is not matched you go personal on him, which is what the rest of the naysayers are doing too.

          David’s website is polished and snappy and smart and you don not like that, thats then a matter of artistic taste not a sign of anything else.

          I too saw D on the show you write on and to describe it in the terms you do and call it the way you’ve done above is inaccurate and not true.

          You want David to do what, torch the dail on fire and run down to the central bank and demolish the building with a mallet, and then what.

          This is all about changing hearts and minds and showing people through lightness of being and aplomb the information which will solve the confusion and fix the plumbing and get the way things are done around here back to common sense econ 101.

          • oh my…. see, this is exactly what I mean…. palaver and fanboy blah blah

            I did not see his show Wills, and I did not read what the press slandered about. However, I do not wish to disturb this comment page (not forum!) further than I already have with my admittedly blunt critic, and I shall leave it at that.

            All my best

          • Georg.

            SHOW = PRIMETIME that you mentioned.

            I have not seen D’s work on at the Peacock.

      • Colin

        I disagree with you John, but you’re entitled to your own opinion of course. David has educated the nation in socio-economics and kleptocracies as well as modern day gombeenomics. I’m certainly grateful for his service. A true patriot.

    • I shouldn’t feed a troll comment but clearly blinkered anti Irish agenda comment.

      Thanks to D and other posters who constantly maintain a high level of informed articles, links and commentary from which I continue to learn a great deal.

  25. Noonan will always be the Village Schoolmaster who seeks to snoop out the bullyboy at the back of the class and pile up his snide remarks in that process .He is an Old Dog that cannot shake of his old spots and can never change his narrow mindness and predictable vocabulary of a know all that knows nothing about Finance.His bullwork tries to raise a false air of a west limerick knight of darkness that will never show any light in a flashbulb.

  26. paddythepig

    You don’t need to be an economist to be Spokesman for Finance. A sceptical and questioning mind is a very good start ; Noonan fits the bill. I welcome his appointment.

    There is little or no correlation between soccer and economics. Had Frank Lampards goal stood, as it should have, who knows what would have happened. The Germans may well have caved in with the shock of losing a 2 goal lead in 2 minutes, and the whole premise for David’s article would have been invalidated. How fast Lucas Podolski can run relative to John Terry is of little relevance ; in soccer, the first few yards are in your head. Clever positioning and a good first touch can buy you a headstart.


    • Agree with your analysis of the England game. I think though posters on here are missing the point. Davids footballing idea is merely an analogy he is using to decipher ideas.

    • Colin

      England’s main problem was not finishing top of their group. Poor team selection is the root cause. They allowed the USA to take that honour. A confident England would have wiped the floor with Ghana, and be looking to get past Uruguay in the quarters. This would have built up huge momentum. Beckenbauer, the clever old fox was proved correct when he predicted England would regret not topping the group.

  27. paddythepig

    Nor should we eulogise too much are Argentinian football. Everyone remembers the ‘Hand of God’ in 1986. People forget the shenanigans and the cynicism they displayed in 1978 when they hosted the tournament – http://en.wikipedia.org/wiki/1978_FIFA_World_Cup. This culminated with disgraceful cheating in extra time in the final against Holland. Every time a ball was played towards the Argentinian defence, their defenders caught the ball. No-one was even booked, they should have finished the game with a maximum of 9 men.

    Nothing to do with economics as far as I can see, but worth pointing out seeing as they seem to be flavour of the day. The only lesson I can see is that in life, you can cheat and get away with it.

    People have short memories, and often rose-tinted glasses as well.


  28. hi, thanks for all the helpful comments as always. george and john allen thanks for all your contributions over the past months and years. unfortunately you seem, from your comments, to have been swayed by what others write about me many of whom are defined by nothing more than the quality of their own sneering. that said, thanks for your time and i hope you find a vibrant forum elsewhere. all the best and hope things go well for you in the future, david

  29. Good Morning David ,
    Last night there was a healthy discussion and I hope that none of it is seen to be an attack on you and what you believe in.It was meant to add to what you have been doing and to evolve what you want to do.I dont believe those other journalist nevertheless neither do I ignore what they say.I will always read your articles and books and will continue to encourage everyone I know to do likewise.Maybe we might call these moments as a ‘Moon Wobble’ July 3rd.
    I hope that you have a great week end and that your spirits remain high.


    John ALLEN

    I am not going away from this site just lying low as is furrylugs in his garden.I hope all the rest of the fans make more comments in the coming weeks.

    • John,
      I’m more lying at periscope depth than lying low. The target will hove into view eventually and when it does, I’ll have all 4 bow tubes loaded. This summer recess could be just the opportunity.
      I normally steer clear of someone elses arguments but I’ll comment on what I’ve read above and the comment runs like this.
      David McWilliams is ostracised by many of his peers for speaking out and indeed acting out in relation to the truth.
      I have said this before, now I’ll say it again. This is a lonely furrow for a relatively young man to plough and it must be taking it’s own toll. I wouldn’t fancy it, though given the chance, I’d probably step up too. My day will come and I won’t be found wanting when the call comes. Meantime I hang on these articles and comments, from all our contributors, as I do those various analyses of Dr Gurdgiev.
      David has been accused in the past of contradicting himself yet when he concentrates on consistency, he stands accused of syncophancy or worse.
      When it’s a novel article, I say so. When it’s simply consistent with the plain truth, I don’t need to comment. Just being here should be enough to indicate assent.
      So to nail my own colours to the mast, if intelligent Ireland were to lose this site, one more step would be taken into the abyss of inane rhetoric so ably dissected here by our regular contributors. I’m lazy. When I read a new article, I just step back a couple of days and let Deco, Tull, Wills et al articulate what I’d like to say. They’re much better at it and it saves me clogging up the system, unless I’ve something to say that I feel passionate about.
      I’m musing here but if David had a big GAA jaw, hairy ears and monosyllabic speech, would the Irish public accept him more readily? Probably. We don’t really do masses of blonde hair, quiet comment and steely conviction. If David were British in Britain, he’d be the Nations celebrity pin-up Economist. Here he’s the smart arse public schoolboy buck that talks down the country with doom and gloom. That’s what I mean about Intellectual Deficit. On that note, the guys I mention above and many others, could collate their collective comments into the definitive analysis of where Ireland failed as a State. Because that is what we have done. We have failed to maturely govern ourselves. All of us.
      Ripping into one of the few people who allow unmoderated comments on their site is a sign of the strength of the man.

      I have the stern tube loaded too, just in case some frigate sneaks up from behind.

      And by the way, for the record, I thought it was a bloody great article.

  30. gquinn

    Hi David, Keep up the excellent work and its great that you can bring complicated international finance and economics to the average guy on the street and they understand what you are talking about. Well done :-)

    This is what we have learned in the last few days. All the claims for people claiming unemployment has soared in the USA. The home stimulas has stopped and as a result home sales in the USA has fallen by 30%. The markets are basically saying that the reason there is growth (very small amount) is because of the stimulus packages that the USA has given out and as soon as the stimulus stoppes then the economy will dive back down into recession thus creating another World wide recession. Also the Baltic Dry Goods index is still plunging which is also saying that international trade is slowing down big.

    The unemployment numbers for the USA are out at 1:30GMT today and they should be up.

  31. Tull McAdoo

    I have been trying to tease out why Fianna Fail let the Country down. We all know this has been happening for years and years, and it follows the same pattern, time and time again, with their leader usually leaving under some cloud or other, disgraced but still in denial.
    It finally occurred to me that FF could be suffering from a prolonged dose of Groupthink, and that it was this Groupthink as part of their inherent culture that leads to the disasters that we have seen for generations.
    To make groupthink testable, Irving Janis devised eight symptoms indicative of groupthink (1977).
    1. Illusions of invulnerability creating excessive optimism and encouraging risk taking.
    2. Rationalizing warnings that might challenge the group’s assumptions.
    3. Unquestioned belief in the morality of the group, causing members to ignore the consequences of their actions.
    4. Stereotyping those who are opposed to the group as weak, evil, biased, spiteful, disfigured, impotent, or stupid.
    5. Direct pressure to conform placed on any member who questions the group, couched in terms of “disloyalty”.
    6. Self censorship of ideas that deviate from the apparent group consensus.
    7. Illusions of unanimity among group members, silence is viewed as agreement.
    8. Mind guards – self-appointed members who shield the group from dissenting information.
    Groupthink, resulting from the symptoms listed above, results in defective decision making. That is, consensus-driven decisions are the result of the following practices of groupthinking
    1. Incomplete survey of alternatives
    2. Incomplete survey of objectives
    3. Failure to examine risks of preferred choice
    4. Failure to reevaluate previously rejected alternatives
    5. Poor information search
    6. Selection bias in collecting information
    7. Failure to work out contingency plans.
    Its scary stuff when you read it and think about it.

    • gquinn

      I can go one better.

      I have calculated that there is a 14 year cycle. That is a recession and a bull cycle lasts for 14 years. Here are the history of the cycles:
      Start of Bear market: 1952 (The bleak 50′s)
      End of Bear market: 1966
      Start of Bull Market: 1966 (Lots of exports on agri-products)
      End of Bull Market: 1980
      Start of Bear market: 1980 (The Bleak 80′s)
      End of Bear market: 1994
      Start of Bull Market: 1994 (The great tech boom)
      End of Bull Market: 2008
      Start of Bear market: 2008 (Start of a depression)
      Projected End of Bear market: 2022
      Projected Start of Bull market: 2022 (What ever new technology starts to get underway)

      That sw hy I left Ireland in 2005 and I’m currently still in the UK, still working :-)

      • Tull McAdoo

        So you left in 2005, does that mean you wont be back until 2019.???? 14 year cycle???? ah well Irelands loss I suppose, p.s. good insightful mathematicians are hard to come by. By the way what do you think about Fianna Fail suffering from GROUPTHINK.

        • gquinn

          Hi Tull,

          I left in 2005 because by my calculations a bear market would be starting in 2008. Also at the time I knew exports were falling off a cliff since 2001 to the then present of 2005. It was also obvious that Ireland was in a property mania and alot of people were suffering from a lot of property delusions and also massive debt that is still in the country both personal, company and government debt.

          The problem with recessions is that you must act before one happens. It was no good with me leaving Ireland in 2009 with thousands of other Irish people as this would skew my chances of getting a job in my new adopted country. It was best for me to leave Ireland in 2005 in the middle of the boom which I knew at the time will be ending in three years time.

          I will start buying property in around 2015 because property prices should be at very distressed levels and hope of people finding a job will be long gone at this stage.

          Booms and recessions always appear to happen for no reason but once you know the cycle you can be prepared for it. Cycles in each country tells you which way society behaves and in how it exhibs greed and fear. In Ireland our fear seems to last as long as our greed so we suffer from being manic depressed to be manically happy. Maybe this is what government should be trying to change.

        • gquinn

          Hi Tull,

          I think in Ireland we need a serious change in Government. We cannot be governed by people because there father or mother was in government, this is no good and when the country is not governed properly should we really be surprised of the outcome since no one in government has any proper experience.

          Take Brian Lenihan for example what experience does he have of International Finance, you cannot govern a country just based on local finance. Does Brian now what a CDS, CFD, CDO, Securitisation, Leverage actually are, without resorting to his spin doctor for what to say.

          The only reason why he is in government is because the rest of his family are in government and personally I think he has done a very very bad job. I’m a person who works in the City of London in major investment banks. Also does Brian understand how manic delusions happen and to spot one in the progress of a delusion. It’s pretty easy but the concept of a regulator or government offical is that you are not meant to be liked if you do your job properly.

          We need people in government who have the work experience of the area they are governing. A health minister should be a doctor with massive of experience, A finance minister should be a person connected with International finance etc

          • Colin

            Lenihan’s performance to date has been a total disgrace. The Media have taken to him because of his illness. Typical Irish response!

        • @ Tull, plus nice one gquinn on 14yr bear/bull theory but I’m sceptical, mathematics hasn’t solutions to the variables outside mathematics, or though you throw a dice 6 times and each time it falls on 1, as well as asking is the dice fixed, you also need to bear in mind, the chances of it falling on 1 each time remain exactly the same 1:6. Next time it has a 1:6 only chance of hitting 1. And Tull, problems for FF lie deeper than you picture. Parish pump politics, croneyism, nepotism no longer work in a world of more sophisticated governance. The whole electoral system in Ireland needs to be examined, a think thank R & D committee deep examination and critique of our system could be mandated to bring forward proposals for a more professional system of governance, everything from the exorbitant €250,000 rates of pay for ministers, to the numbers of constituencies and reps, party system, should be put on the table with the view to a smaller, lighter and more high calibre system of representation for all citizens…..The question is, would the present incumbents in power want this, not likely!

      • Gquinn.

        A Bear and Bull cycle is a psychological *virus* moving one way or the other. People who choose to participate in the mania or not caused by the virus always seem to come out on top no matter what.

        • gquinn

          LOL, Wills. It’s not a virus at all. Phycology is part of who humans are, it is part of there emotion. To get rid of bull and bear cycle then you need to get rid of people emotions which cannot be done but came close in countries such a the Soviet Union and China. Also look at the book of 1984 as it is structured to tear the human being apart in order to get rid of human emotion so people can follow orders directly.

          In a free market (Capitalism) human beings are free to engage in both buying and selling and of course some people will make money and some people will lose, thats the risk. The people that win generally have huge emotion disiplin and they also use proper risk management and the people who lose geneally have no emotion disiplin and no Risk management rules they generally buy and sell based on how they feel.

          In a Socialist or Communist country they introduce rules in oreder to supposely protect the investor from themselves so that they won’t lose money. They also make sure that foreign investors cannot speculate in there market because if the local investor loses then its best to lose to another local rather than to a foreigner. There are also rules to make sure you can only buy and sell certain amounts as to not harm yourself.

          It is my belief that everyone is thought the wrong thing about investing. There are risks in everything. The stock market, Bond market, Commodities market, Property market and any other market where you can trade an asset are very risky.

          For Example: A person takes out a variable rate mortgage for 20 years at a certain percentage rate. This is a speculation in it self. The person taking out the mortgage is speculating that over a 20 year period interest rates are generally going down thats why he is in a variable rate mortgage and if you think interest rates are going up then you take out a fixed rate mortgage but most people do not know this because they are not taught anything about proper speculating instead they are all lead like sheep to the slaughter. I am always in favour of properly educating people in how to invest properly and wisly and taking the nesecarry risks into account.

          The current crisis came about because people did not believe the property market could not go down. In my view this is very very wrong and now lots of people got burned very badly.

          Bulls and Bear market have always existed and they always will exist because of human emotion, Phycology and people deluding themselves (Crowd behaviour).

          • gquinn.

            One could consign bear and bull spin cycles to the waste paper basket of history by educating people on the long term dividends that arrive in abundance for all when one practices the art of *delaying gratification*. So, as you can see, its not that difficult in finding the solution.

    • Deco

      Tull-thanks for the link of group think.

      Group think prime case study – The Irish debt buildup to the point of being a complete all out binge from 1988 to 2008.

      A lot of the thinking that caused the problem is still in existence. Many still believe in the economics of “something for nothing” and gombeenism. Just look at the local authorities, and all the levies they charge for services. I think that we are very close to the point where the sole traders who pay commercial rates will start to organize and request lower charges/better services. About time. There are thousands of people employed in local authorities doing very little and what they do could not be considered to be ‘work’.

  32. Georg.

    And, this is painful this is, on the *fanboy* daftness your comment s slung my way can I deflect with the following.

    Stanley Kubrick first second and last I am a fan of. Then Freud and Picasso and Einstein. Thats it. I cannot see anybody out doing those three guy’s.

    • Wills,
      You’d have to include Stephen Hawkins, Jung and Plato in that list , surely?

      • Hi furrylugs, for me from my point of view Jung better to stick with freud and follow the Master in an apprenticeship to the bitter end. Unfortunately Jung *jumped ship* and sped off in his own direction and I think Freud was spot on when he diagnosed Jung and his decision making been under the influence of an ongoing father / son conflict, which I think is correct.

        Plato I think, for me anyhows, focused far far too much of his thought on moral law and political philosophy and not enough of his thought spent on the cold war between men and women.

        On hawkins I think, for me, spends too much thought on riddles of atomic and better time spent de – riddling men and women and the riddle of sex.

  33. Philip

    David and all, I would like a more serious discussion on the knowledge economy and indeed knowledge economics (if such a topic exists in profession). More importantly, I think you should have a separate link on this.

    Like many above, I am very frustrated and feel powerless at the shenanigans of the last few years and indeed the last few weeks. I am not at all happy we have any alternative leadership and your “Insiders” Abbey act etc. merely depicts an invidious nature of affairs where it is a loose loose for the common man.

    I am also appalled by the power of the public service (where do I start) and the unions and the fact that Anglo led the world in losses and managed to loose twice as much as the next nearest worst bank loss (in the US) AND that we have a former FG minister of finance collect a 6 figure pension and preside as chairman with no explanation to the public even by way of some degree of succour. Indeed, I believe he completely discredits the FG party for this reason.

    I look at all the facts and figures etc. promulgated by the participants on this site. They are super high quality along with the clearly educated comments alongside them. But…so what? It merely says we are falling and the ground is racing towards us. I tire of such heralded inevitability and have to laugh at the increasing level of emphasis on Green and other Nanny state regulatory issues.

    I think we are in the throes of a redefinition of the nation state. Your ideas on the diaspora is I feel fundamental and works if we combine it with the notion of the knowledge economy. I think people on this site looking for “real” action need to be careful they are not hankering after a return to a better normality. Granted leadership, Vision etc. will always be needed. But will the nation state deliver?

    In a knowledge economy, no one owns my means of production or can claim rent on what I do. I can build my products in India (say) and ship them anywhere in the world and register my offices anywhere and operate out of any bank I choose. This is why you will see zero employment growth while exports ramp – and exports can come from elsewhere at the flick of a switch if threatened by local nonsense. Ireland really is a place where we specialised as supply chain jockeys where a rent was extracted from the means of production (people and land). This is changing. The huge outsourcing to cheaper economies was the first step. Next stage is the denuding of the skillsets which rely on firm infrastructure. The next step will be the death knell – skilled people will see no reason for remaining in a place where it is a pain and will gravitate to where their quality of life is best served. Call it the evolution to a global tribe or diaspora. But the Oirish aspect of it will merely become a memory.

    As for Anglo, the EU, FF, FG and all…let them wither. My bet is on Cameron and giving the government back to the people. He might just find more followers than he expected if he manages to pull it off.

  34. Deco

    Well, even those reformed capitalist former Marxists the Russians are trying the become more entrepreneurial.

    Hilarious. Should we be imprisoning our oligarchs like the Russians ? Or maybe we should be ensuring that the entreprenuers that are constrained by market rigging, nepotism, done deals, closed shop markets, insider behaviour, start getting a chance.


    Even more interesting, the Russians have not formed a committee, or a taskforce. I am sure they have quangoes, but none are mentioned here.

    While our leaders sit around dithering, time-wasting, pretending to know something, and playing punch and judy, the world moves onwards.

    Here is a fascinating quote
    “About one fourth of the 900000 people in Russian jails are accountants, entreprenuers, legal advisors, and midlevel managers”.

    I wonder are Fitzy, Drummer, Fingers, etc… reading this ?

  35. coldblow

    The following has, to my mind, relevance to David’s reference to the ‘feudal’ land economy we are doing everything we can to prop up. Hudson often refers to the role of land as an asset to be ‘financialized’, pledged as collateral for debt. Tull brought up Henry George a good time ago. Here’s Crotty’s view.

    From Raymond Crotty, A Radical’s Response (about 1986):
    “The Irish establishment, more durable than the walls of Jericho, did not crumble when Irish Agricultural Production was published. Indeed, apart from the odd, mainly favourable notice in obscure journals, Ireland and the world proceeded after the book’s publication precisely as they had done before. Academic argument, however cogent, impinges little, if at all, on the course of events.

    “The broad outline and general thrust of the book had occurred to me while still farming full blast in Dunbell, Kilkenny. The essence of my thought was that the land of Ireland belongs to the people of Ireland, equally to the entire people of Ireland. Property in Irish land had been a disaster for the nation ever since its creation by the confiscation of the clans’ lands under the Tudor monarchs; and it continued to be so. Unless the Conquest could be undone by causing Irish land to be used efficiently and once more for the benefit of all the people, the Irish economy could not prosper.

    “The necessary and sufficient condition for having Irish land operated efficiently on behalf of all the people is that it should be taxed to its full annual value. Land’s full annual value is broadly equivalent to the ‘rack rents’ that the Anglo-Irish landlords extracted in the 19th century; or the competitive rents that Irish farmers extract from the one-tenth of all land that continues to be let out on yearly tenancies. The revenue from a tax on land would make it possible to reduce, or to remove, taxes on the inputs to and the outputs from land.

    “A land tax would ensure that only those best able to best operate the land would continue to do so. The others would retire or take up other jobs; or, probably most frequently, give up all but the land that they could operate efficiently. There would be no need for a Department of Agriculture, for the proposed land tax would, far more efficiently than that institution, secure the efficient use of the nation’s land. The savings from closing down this costly Department would make possible further reductions in taxes on the inputs to, and the outputs from, land.

    “The combination of a tax on land and the removal of taxes on inputs to, and outputs from, land would transform Irish agriculture. It could easily cause it to double output virtually overnight. This large and rapid expansion in output would arise because the land tax would replace what are arguably the least efficient farmers in the world by persons who would be likely to be among the most efficient. Expansion would also occur because, as a result of the reduction in the cost of inputs and an increase in the value of outputs, efficient farmers would use many more non-land inputs to produce greater outputs.

    “When I removed with my family first to London and then to Aberystwyth, the farm at Dunbell had been let on conacre, or on a succession of one-year tenancies, during the seven years. As soon as Irish Agricultural Production, with its central proposal to tax away the annual value of land, was published, I offerred the farm to the Irish Land Commission, because by then property in land had become obnoxious to me.

    “Property takes different forms. Property in things which people produce but do not consume, or capital, has been the key to man’s realization of his vast potential as a rational being, without which he never could have raised far above the brute beast. But property in land I now perceived to be hardly less socially inequitable than property in man, or slavery, which Aristotle describes as “the first, the best and most useful form of property”. Indeed, some might deem property in land to be more heinously anti-social. One recalls, for example, that while a million Irish people starved to death during the 1840s so as to maintain or increase profit from Irish land, the negro slaves of the United States of America, without any augmentation from the slave trade which by then had been stopped, were increasing in numbers by 2.5% annually. This was possibly the highest rate of natural population growth in the world at the time. Indubitably many starving, rack-rented Irish peasants, if given the choice, would have opted for slavery rather than be the victims of property in Irish land.

    “I would have escaped sooner from the burden of of land ownership but to have done so would have exposed me to the charge of first selling land and then proposing to tax its value away. Offering it to the Land Commission at their valuation, following publication of my book, appeared to be the least culpable way of disposing of a disagreeable responsibility. It would of course have been possible and profitable to to have retained the land and to have continued to draw the conacre rent. Unless Irish economic history was to be turned on its head, that rent could have been relied upon to increase over time at least as rapidly as the cost of living. The spoils of the system could in that way have been used to sustain such efforts as I could make to end a system which appeared to be utterly incompatible with the social wellbeing. There were good precedents for that sort of approach: the illustrious Frederick Engels used the profits of his textile mills to sustain himself and Marx in their onslaught on the capitalist system which generated those profits. For my part, I was unsure of being able to sustain a committed attack on property in Irish land if I continued to profit from that institution. Moreover, even the minimum effort required to manage land being let on conacre had become impossibly tiresome, distracting my modest capacities from the imore important task of understanding why the economy failed to serve adequately the Irish people.

    “Ireland in 1966 was experiencing its age of ‘economic miracles’, as Garrett Fitzgerald was given to describing the recovery from the depression of 1958. The last thing Ireland was interested in just then was the sort of radical reform necessary to rectify the underlying structural defects in its economy. These latter would only surface again, in magnified form, when the state’s credit was exhausted and it was no longer possible to pay with borrowed funds the subsidies that financed the Irish ‘economic miracle’.

    “There was no question of being able to return to Ireland to participate in implementing radical reform. Nor was I willing to reintegrate back into the Irish economy, holding there whatever appointment was available and serving a socio-economic order that was inequitable and ineffecient in the extreme and was bound to fail sooner rather than later. It would have been perfectly possible to continue as a lecturer in Agricultural Economics at the Universtity of Wales. Life was pleasant in Aberystwyth; it was a very civilized existence, and our children were doing well at school. With a publication of some substance to my name within five years of appointment, there was the expectation of at least normal advancement in an academic career. The snag was that I was not cut out to be an academic. Time to move on.

    “The ‘development industry’ was in the full flush of its early growth in 1966…”

  36. Coldblow.

    Ireland can as a political and social entity do what Crotty brilliantly states.

    One acre of land can be made available to every Irish citizen over the age of 21 for the princely sum of I cent and this acre can never be sold on for a price higher.

    • gquinn

      It just does not seem like a fair society to me.

      Why have conditions and regulations and what happens if someone gets a piece of shit of an acre and can’t grow anything like in the bog lands around Atlone or Longford?

      What happens if I have an acre in Monaghan but I now want to move to Kerry because my family is from there?

      I suppose there would be many other factors to come about and then you would probably introduce new regulations to take care of a few things into account and as the more problems keep progressing then you have a beurocratic nightmare and then BANG you have a civil war and the whole of society has plunged and tore itself apart.

      • gquinn.

        This is a fair point. Of course the acre of land has to function no point otherwise. As a community if everybody knew they had a plot of land coming their way for next to free it would instantaneously diffuse a massive amount of tension and worry out of the system and free peoples energies up for creative endeavour.

        One thing is certain. It would be alot more productive for the community as a whole than what we havw which is a system making people go into decades of debt just to get a roof over their head, this is utterly bonkers and insane.

  37. Gombeenism /World Cup Rules/ Mafia / Mossad/ Secret Service / Irish Financial Regulation / FBI

    What is the difference ? Answer : None -Other than geography .

    Where do Illegal Irish Passports be obtained in Dublin?

    Answer : An Irish Mandarin who speaks Gaelic, drinks in Nesbitts/ Dohenys ,watches GAA and is not married.

    Why are the Politicians of USA and Russia rubbishing away the recent spy scandal ?

    Answer : Because to acknowledge the truth would reveal more than we already know and cause a World Wide Financial Depression to go deeper.That means everyone looses more. Thus best policy is damage limitation exercise.

  38. Reality Check

    David, as you know On Wednesday last European banks had to repay 12-month loans of more than 400 billion euros to the European Central Bank (ECB). These loans bolstered them at the time of the global banking crisis. They had the option to borrow from other banks at rates of 0.30% to 0.35% for three months… or to roll over their exposures with the ECB for three months paying 1%. Hence, any bank that can borrow from normal markets should do so, because the rate differential is large.

    So the exercise was seen by the markets as a test of how much confidence European banks have in each other. The result was very positive: European banks borrowed from the ECB less than half of what the market expected, and there was a large reduction in the number of banks that borrowed.

    The conclusion of the market- is that the top banks in Europe are in good shape, and the problems of over-exposure to Greece and others is restricted to a relatively small number of second-tier banks.

    This seems very manageable and will be dealt with by consolidation with much heavily capitalized and larger banks. But the real story will be the new stress tests and the results that will be revealed over the next few weeks.

    The stress tests that the U.S. undertook last year gave confidence to the market and allowed them to raise capital. These stress tests should achieve the same thing.

    We already have some results, mentioning that the three top German banks got passing grades. Similarly, as we articulated, the top banks in most countries will be in the same shape.

    I think the events described above have bolstered AIB and BOI and will not lead to the armageddon you have repeatedly wrote about on these pages.

    • Malcolm McClure

      Hi Reality Check: Your observations would be valid were it not for likelihood that bank parameters you quote were pre-arranged to look good. Trouble is that nobody believes bank balance sheets any more. As the American sticker says: “In God we trust: everybody else pays cash.”

      Translating what John Mauldin says about the parallel situation in the States:
      “All the real data is pointing to a slowing economy. It puts us closer to deflation. It is not the headline data per se we need to think about. We need to start thinking about what the Fed (ECB) will do if we have a double-dip recession and start to fall into deflation. To stimulate aggregate spending when short-term interest rates have reached zero, the Fed (ECB) must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys. Will they buy more and varied assets like mortgages and corporate (i.e. bank) debt? What will that do to markets and investments?”

      Will bank shareholders find that (yet again) their equity has been diluted when the truth comes out?

    • Hi Reality Check,

      Interesting post but alas some of the assumptions you make are off the mark, if not naive. Firstly, re stress tests, you have to ask what exactly are the stress tests. Are they based on capital to lending ratios of 8% or 13%, you bet they’re not. And, as you say, we await their results. Why doesn’t the ECB bring forward the Basel 11

      Re “European banks borrowed from the ECB less than half of what the market expected, and there was a large reduction in the number of banks that borrowed.” ECB for obvious reasons is the lender of last resort and if banks can avoid doing so, they will.

      I’d be curious to know who the lenders are and whether American banks such as Goldman with possible CDS exposure have taken a tactical decision to lend to these banks and prop up the euro.

      Snapshots taken in a dynamic and evolving situation can be wrong. And this is most true of the blitzkrieg of the €750 bn ECB has made to support European banks.

      For example, Ireland INC, we’re told is coming out of recession. I believe, we are only entering the recession. Unemployment here is up 6000 in June. According to the excellent Gene Kerrigan of Sunday Indo, “Insolvencies are up by 27%, with four companies a day going under”.”13.4% unemployment(Iceland is at about 8%). Eircom will shed 2,000 jobs, huge job cuts proposed for AIB/BOI. Capital spending is down and this will lead to more austerity cuts. Next budget with new property taxes or etc to make up for the losses in tax from the cohorts above, further taxes and austerity measures will bleed the economy more. We are already entering the debt spiral downward that will grow in pace as time goes on.

      In Spain, http://bit.ly/9Pzj63 , most Spaniards borrowed mortgages from the savings banks, not the large banks. They are currently in an evolving struggle to survive.

      Basically, the PIIGS, with Ireland, Greece and Spain to the fore, have been knocked down but havn’t been counted out yet. Through various shenanigans including €750 bn of smelling salts, they’re still knocked out, but the markets await the count of 10.

      We shouldn’y expect an Armegeddon moment but maybe look out for a boa constrictor of debt that will slowly suffocate, though you never know, there could be a crocodile out there that could suddenly pull e.g Ireland Inc under water as it fails to see the uselessness of present policies of e.g paying the worst bank in the world, Anglo 2009, €22bn, by Ireland’s worst Finance minister,Brian Lenihan TD, who, on this upside down island, is touted for doing a great job, a possible for next Taoiseach.

      Yeah, I’d like to see the result of those stress test, what’s with the delay, based on http://bit.ly/15Eeb

  39. Reality Check.

    The whole notion of the banks been *stressed checked* and it been trusted is off the wall. If banks are *stressed checked* in an even handed way then their over extended predatory lending a few years ago what happened there.

    Also. the banks solvency problems is another joke. If I pass my personal debts onto my next door neighbour, or, even better my kid’s, I pass my debts onto my kids does that make everything better again in the economy. This is just crazy this notion of banks cleaning up their accounts by passing the rot onto someone else and then the banks declaring themselves ready steady go. Where are we here, this is not free market this is not business this is racketeering the chicago way.

    • Tull McAdoo

      “We already have some results, mentioning that the three top German banks got passing grades. Similarly, as we articulated, the top banks in most countries will be in the same shape”

      Now what I want to know is “who are the WE that you keep referring to” Does “reality check” represent some individual poster or some organisation, given your use of the word WE.????

      Now lets be very clear about what the so called “free market” thinks about the Irish Banks. The markets think that without the guarantee and Irish people stumping up billions in borrowed Euros to bail out these Banks in the form of Capital injections, then these Banks in Ireland would be busted and closed almost two years ago. End of story.

      Stress tests for Irish Banks in the absence of the guarantee and future Capital injections would show that they are totally insolvent and that they have in fact Bankrupted themselves. If the so called Assets that any of these Institutions hold on their balance sheets were to be “marked to Market “ in terms of actual value as the free market strives to do , then the extent of their failure could be realistically guaged.

      The only possibility that these failed Banks have for making money in the future, that the “free market” would believe is the margin they would receive from buying Government Bonds as the coupon on these would be greater than the Interest they pay on borrowed money that they would use to buy them, via the ECB. To put that in context, it means they would only make money by creating a “carry trade “ in the Soverign Bonds of the very people they have been shafting and price gouging since the foundation of the state.

      The rightfull Armaggedon that should have been dished out to these failed entities, has only been averted at the cost of sacrificing Pensioners, special needs Children , Unemployed and so on……

      Let me conclude by saying that your attempt to link “top Banks in Germany” with so called top banks in Ireland is ham-fisted in the extreme, and borders on very distasteful cynisism , the sort of bullshit we use to get from the Willie O Dea’s of this World.

  40. Reality Check

    Malcolm & Wills, my point is that last Wednesday was a very significant event — It showed that the European Banks trust each other at least to a degree that in stock market terms would be termed a “support level” i.e. a bottom in market dynamics pointing to upside potential. Make no mistake, If the Banks did not trust each other at all (due to the perceived level of toxic debt) the help would have been sought from the ECB. Last Wednesday was not a recovery by any means but it was a welcome breather from all the volatility of the last two months. Esp as the credit default swaps on Spain have risen also.

    I would be interested in David’s opinion of the likelihood of the German banks buying out AIB/BOI – the consolidation that is needed in this sector?

    PS Malcolm, Wills, Deco your thoughtful analysis is great – keep it comin!

  41. Reality Check

    Wow Tull, I hope your not part of Zeitgeist or Something :)
    “WE” = the people, investors, the economy.

  42. Reality Check

    BBC commentator has seen last Wednesday in a glass half full way.
    Really what did he expect – The whole crisis to quick-fixed in one day?

    “Update, 12:40: Eurozone banks have borrowed 131.9bn euros of three-month money from the ECB, which is about a third less than analysts were predicting.

    It certainly implies that strains in the wholesale funding market are less acute than some feared, and that fewer banks than it was thought are being deprived of finance from commercial sources.

    That said, 131.9bn euros is a non-trivial sum of money.

    And with the market rate for bank-to-bank money on average 25 basis points – or 0.25% – cheaper than ECB money, it would be foolish to argue that eurozone banks are in tip-top condition: no bank would choose to borrow from the ECB, given the financial and reputational cost of doing so, unless it had to do so.

    Eurozone banks are still on welfare support.”


  43. Reality Check

    Oops should have wrote – glass half empty :)

  44. Malcolm McClure

    Reality Check = Tim?
    — keep it comin!

    • Tim

      Malcolm McClure, It is amuzingly interesting, though baffling, that you would think that, even for a moment; I would never say “euros”, nor would I ever say, “..should have wrote…”.

  45. stanb

    D.McWilliams wrote: So this State is prepared to waste €22bn on Anglo and not invest productively in telecoms. Extraordinary.

    With all due respect I am surprized that you would ever consider Irish government hypothetically “investing” that amount in the telecom infrastructure as being a “good” scenario. Or any government. Would you really trust these people? I would venture a prediction that had they been given that money to spent on building broadband infrastructure, they would first spent 11B eu on consultants (their relatives), hired 10,000 extra office staff (more relatives) and then asked for another 22B eu to finish the job. How could you trust them for what has happened? How can you trust them knowing well, since you wrote about it, how badly did the same elite has been ruining your country during almost 90 years of uninterrupted rule? I am curious why does nobody seem to look at 1922-23 as the key to your present situation?

    Stan (Heretic)

    • Stanb.

      David *holds no punches* on this point you raise in his OUTSIDERS show @ Peacock, which I went along to see last night with Tim.

    • Tim

      stanb, the sentence you quote does not, at all, suggest that our host does, or would, “trust” them; nor is it inherent in the sentence that he thinks €22bn euro should, could, or would need to be invested in broadband. I believe the point being made is a broad one about the priorities of this government, rather than one about specifics.

  46. Deco.

    Check this article out in the Indo relating to property developer who supposedly is bankrupt and yet has managed to still maintain full ownership on 32 apt’s in ballsbridge.


    • All developers in default on their loans should be required to sign an affidavit listing all their assets at home and abroad. Evidence of all expenditure actually spent on developments should be required and matched to loans. Cross collateralization re personal guarantees
      and other assets should be punishable by jail.

      Bank staff plus solicitors who did not do the title deeds cross checking if found at fault should lose their jobs plus jail for developers who pulled this trick.

      Let all the documents be published online on the bread crumb trail above for the billion euro loans. Transparency, openness, accountability instead of hide and seek bailouts to hide financial fraud is needed to stop the rot.

  47. uchrisn

    I think we should ask Japan what they could have done better to manage their stagnation over the last few years. If there was a future graph to be drawn for Europes developed economies currently I would say it would be following Japans trend over the last decade. Japan has also found out many cases of high level collusion and we could certainly do with stronger laws in Ireland to prevent collusion.
    Also we should follow Signapores example on housing. They have 85% of people in ‘social housing’ and 90% of those own their house. Signapores GDP ranks among the highest in the world, so why the snobbery in Ireland about social housing?
    Shelter is a human right. Recently the banks and developers colluded to make incredible profits from what should be a basic human right. A special agency should set up to administer the large number of empty properties to the young people of Ireland in a model similar to Signapore.

  48. uchrisn

    On another note the bailing out of Anglo Irish is just funny. All you can do is laugh at the fact future generations will be slaving away paying for that. Basically one day we heard the news, the goverment had Nationialised Anglo Irish. No debate, no consulation with the people on what was the biggest decisions of the crisis. I then from my limited experience could tell on the day it was a big mistake, basically because Anglo had very little deposits from the normal Joe and had speculated wildly in property whose price was only going to fall. Then I was not talking with the clarity of hindsght but rather the simplicity of common sense. Brian Cowen said Anglo was nationailised to prevent a run on the other banks, however many over reaching banks were allowed to fail in the States. I’m sure another way could have been found. Who are advising the government and what have they got to lose/gain from the situation?

    • @uchrisn Brilliant points and suggestion re duplication of Singapore
      approach on social housing. Unfortunately our Government is part of the rot, so can’t come up with any bright suggestions as it is a stakeholder in returning us to the scams of the past through a policy based on reignition of the housing bubble via NAMA. Agree with all your points re Anglo but would like to add the following: its become apparent through illegal director loans, €8bn share price manipulation of Anglo shares through AIB/BOI scam, the desperate Quinn saga, incomplete record keeping, asset verification, that clearly Anglo was a financial fraud. What should have happened was immediate shut down of Anglo, a calling in of the CAB, and not one penny of taxpayers money spent in support of Anglo. Clearly €22 bn of taxpayers money with a few cosmetic staff changes is a perpetuation of the fraud of Anglo on the Irish people by FF. At best we’re being currently governed by a shower of incompetent gombeens, at worst by a gang of fraudsters, who can only make this recession worse.

  49. Malcolm McClure

    Apropos of nothing, really: I once knew someone who harbored a secret dream to be even more heroic than Walter Mitty.

    • Never mind, Malcolm, we can all be the butterfly, that begins the hurricane, lol. Failure is a learning opportunity only comes from trying, doing nothing is not an option. Success only comes from the stars in the heavens and they are there but for a short time also. OT Tribune carried something about the new management at Mountjoy after Lonergan, they’re about to implement a get tough on drugs policy, nets over the exercise yards. Expect roofs to be lifted by Ahearne! Papers mention things went to the dogs while I was away:0 Good to get in the holiday mood debating stag hunting, didn’t realise they had such a problem with stag hunting in the Dail,

      There’s no loose moose around here,
      only nooses from unemployment,
      crime, drugs and social deprivation.
      To our consternation, its in the constellation!

      Have a good day, y’all

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