July 28, 2010

Selling off state assets on the cheap is just madness

Posted in Banks · 158 comments ·

This Government will not contemplate selling property just in case it would bankrupt the banks. The State’s argument is that the market is depressed so if we were to sell the land, we would not get a fair price for it.

So we will postpone the problem: we get NAMA — a financial skip into which the banks throw their worthless mistakes — and you pay. The logic of NAMA and this Government’s central strategy is to wait for the value of land to improve before selling.

Whether you agree with it or not, this is their logic. It can be summed up by: “Don’t sell land in a depressed market.”

Yet at the same time, the Government has just announced that it will sell real assets via privatisation in a similarly depressed market. So why can it sell ESB — a real company with real assets — and not a field in Athlone which is worthless and should command the price a farmer would pay you to put a donkey grazing on it?

Why is it imperative to sell proper state assets and inconceivable to sell useless land?

This is the part I do not understand. Why does the State believe that it is okay to have a fire sale of the family silver and yet protect the very asset which caused the problem in the first place? How could it be that a depressed market is a bad time to sell land but a good time to sell a strategic electricity company?

We the people are supposed to fork out for NAMA which is paying over the odds for the banks’ and the developers’ mistakes, yet look on helplessly as the State sells — at knockdown prices — those companies that our taxes have built up. Can anyone explain this inconsistency to me?

If you look at what the Government published about the privatisation of everything it can sell, the first aim is: “To consider the potential for asset disposals in the public sector, including commercial state bodies, in view of the indebtedness of the State.”

So the key phrase is the “indebtedness of the State”. But selling big companies like ESB will not solve the indebtedness of the State.

Furthermore, the indebtedness of the State wasn’t caused by companies like ESB in the first place. The precarious position of the State with respect to its finances is a result of the estimated €50bn cost of saving the banks and a reckless overdependency on land and credit to generate enough tax to pay for the State’s current expenditure.

If you don’t solve the underlying problem, the issues will not go away no matter how much you privatise.

It is akin to the alcoholic flogging his house and his car to pay for his drinking; unless he stops drinking things won’t improve. This is why privatisation (the putative cure) side by side with NAMA and the land scam (the obvious problem) will not work. It will make us poorer and make someone hugely rich as the assets are sold cheaply.

Worse still if Eircom is anything to go by, strategic state assets are sold off and then asset stripped by anyone who can raise enough leverage to do so. I gave up counting how many times Eircom was flipped, stripped and flogged on. What is clear, is that each time Eircom was overburdened with debt to make a few quick quid for the buyers, the chances of us having a first-class telecom infrastructure faded.

Think about the challenges ahead for energy. The biggest single economic issue facing not just us, but all of the global economy, is energy. The most far-sighted countries are those which are harnessing their energy companies’ resources to come up with an environmentally friendly and efficient new energy blueprint.

And what do we do in Ireland? We flog our main energy company, which will end up in the hands of a private equity outfit that has little more than a five-year time horizon.

But there will be winners, so let’s see who might make a quick buck in a rapid Irish privatisation. Would it surprise you if it is the same professional “insider” elite being bailed out by NAMA? Well the same lads emerge as winners again.

The stockbrokers who put together (and took a fee from) many of the syndicated deals which NAMA is now buying, take a fee for every new euro of debt we issue. I have been told that entire units of our biggest brokers have morphed from selling equities and land deals into flogging debt. The more indebted the country, the more fees they make.

So the brokers made in the boom and are making in the bust and now with privatisation they will make again because they will get a fee for “placing” the shares of the newly privatised companies with investors.

What about the big law firms, the ones who put the property deals together in the boom? Well apart from being given a gig at NAMA, they will be paid with your cash to issue legal prospectuses, which will govern the terms of the privatisations.

What about the big auditor companies? What about these guys who audited the likes of Anglo and Irish Nationwide and saw nothing at all untoward? Well they will be given hefty fees in the privatisation process to produce audited accounts of our companies.

And what about the geniuses in the Irish pension fund industry, the ones who bought shares in Anglo and the Bank of Ireland when they were in the high teens? These lads will be given another opportunity to shine by being given cheap shares on a plate — for which they will take a fee for buying a company on our behalf, a company which we already own!

Selling state assets for a decent price could well be a clever thing to do, but selling cheaply is always stupid, particularly if it doesn’t solve the underlying problem.

When you look at this idea of flogging the family silver right now, you see that Ireland is doing everything backwards as this Government fumbles from one crisis to another. In economics, when a country or a company gets into huge debt difficulties, the standard approach is to kick off the recovery with a debt for equity swap. This means you tell the people who are owed money that they will have to take shares in the company or in the country instead of real cash, which the country can’t afford to pay.

In Ireland we are doing the opposite: by privatising now, we are selling real valuable equity to pay for old debt! So rather than a debt/equity swap, we are doing an equity/debt swap in a depressed market.

You couldn’t make up a worse strategy.

  1. coldblow

    Just before I go, recent comments on irisheconomy.ie

    “It is the intention of the ECB that Greece and Ireland WILL default. That’s the game.”

    “Did you find the levels of haircut interesting? To me it says that the sovereigns might default on the interest payments, but that the capital might be, eh, ‘underwritten.’”

    Anyone got any idea what that’s about?

  2. coldblow

    Before I go, a couple of comments from irisheconomy.ie (“Stress Tests”):

    “Imposing a haircut on sovereign debt presupposes that European Sovereigns are going to default on their obligations.”

    “It is the intention of the ECB that Greece and Ireland WILL default. That’s the game.”

    Anyone got any idea what that’s about?

    (Thought I’d posted this already but can’t find it here.)

  3. Alan42

    A sale of the Stae assets , even in a depressed market is a good thing . Maybe it will be difficult to find asset strippers and people who are more than happy to load good businesses with debt before fleeing with truck loads of cash in a creditless enviroment .

    Ireland needs to reset the clock . Start again . There is no way that FF /FG or Labour will return Ireland to real growth with a sustaibable economy .

    Only when ireland is free of corrupt FF’ers and a party that that contuines to have Kenny has its leader could it even have a chance in the global economy .

  4. Deco

    Greece was a fiscal problem. But the Greeks are not part of STUPID because the Greeks never managed an asset bubble – despite the ECB absurd money policies from 2003 to 2007. (monetary stimulus via low interest rates). The problem with Greece is that Greece cannot collect taxes or restrain the state patronage system.

    Spain on the otherhand is developing into a complete basketcase. The first sign that a country is getting into trouble is when the leader blames everybody else for his policies not working. Spain’s Prime Minister has blamed the Chinese, the Arab sheiks, the Americans, the Russians, and the City of London for various bad news events regarding the Spanish banking system. The one thing he will not do is admit that Spain has serious problems. And as long as this denial continues, the problem will get only worse. Spain’s biggest problem is the Labour Market. It is badly regulated, and not regulated – depending on what area you are talking about. This is the root cause of the unemployment problem. Spanish Labour cannot compete with labour in Germany, the Netherlands, Poland, or even France. And government policy seems to be to deal with this crisis by helping out the voting blocks of insiders with jobs, who Zapatero needs to keep in power. End result, outsiders like young people looking for work are sidelined and suffer the highest rate of youth unemployment this side of the Mediteranean.


    Now, this has very serious implications for the Euro. Spain is simply too big to bail. I expect this to be the story of 2011 in Europe.

    Which begs the question – given that the Irish media has completely ommitted to cover the story of the continual deterioration of the Spain’s finances, in preference to softy soft depictions of everything being under control, how will the Irish media cover the story next year of Spain causing a massive headache for the ECB ? I mean you can only get away with sweeping the dirt under the carpet for so long !!!

    And secondly, and more importantly, what will it do to the other government bond interest rates in other members of the PIGIS. If the price of real estate in Germany, the Netherlands and Finland increases too much the ECB will be under pressure to increase interest rates. But Spain is deteriorating consistenly, and will be in a bad way for lower interest rates. As indeed with other PIGIS. Expect a line up of the clowns (Cowen, Zapatero, Berlosconi, Papandreou-they are pals anyway) against the bouncers (Merkel, and the PMs of the BeNeLux).

  5. The “insiders” is not just an Irish problem.

    • Cheers, enjoyed that, always been a fan of Elizabeth Warren and great to see she is heading up new Consumer Protection Agency. ‘ Scissoring bureaucracy, consolidating, slimming down, you can’t build a business model around tricking and trapping customers’…some quotes from her…OT pity we don’t have something similar to PBS network here.

      She flags 2988 banks exposure through commercial real estate who will come due for $1.5 trillion loan repayments over the period 2010-2014. These are mostly small community banks many in Georgia, Atlanta already feeling the effects of commercial property foreclosures.

      Interesting parallels with savings banks in Spain?Will the Fed do another TARP or just print money and absorb their losses, this not dealt with in the interview. She maintains she’s a Washington/Wall Street outsider, so she’s highlighting these problems, not describing a fiscal response.

      She mentions the spiral downward, banks exposed through commercial real estate, banks less likely to lend to small businesses, see-through buildings, buildings already built but no tenants in them. We’ve plenty of experience of this here.

      We’ve used the phrase here ‘echo bubble’ and regarding NAMA and the bank bailouts we should be able to identify with her views on the following:

      She discusses the phrase ‘Extend and pretend’ We will pretend the property is still worth the same as it was back in the boom times, and we will simply extend the mortgage. It looks on the books it is of high value and built on underlying assets that remain the same. In reality, the risk of default is increased and odds of foreclosure are very high with this pretence.

      The longer you pretend, the longer it takes the market to get back to where supply and demand match each other. The longer it takes to get the right price back on commercial real estate, attract in the businesses, get the rents in the right place and get this economy back up and booming…we need to get right back down to where supply meets demand.

      ‘Losses in commercial real estate will have to be acknowledged and written down. If banks do this, it will become apparent that they are insolvent….I just refuse to give up’.

      Here it’s welcome aboard to fog NAMA and foggy bank bailouts coining it for the pirates rebuilding the Marie Celeste.

    • adamabyss

      “Everyone would like the world always to be in bubble times’,

      Yeah right Elizabeth, speak for yourself.

      I do like her though. She made a good appearance on Bill Maher last year some time.

      However the whole situation seems hopeless…

  6. Tull McAdoo

    I think it would be fair to say that the “Insiders” that exist in Ireland today are pretty much the same “Insiders” that have always existed since the foundation of the State. Some people would argue and I’m sure they are probably right that some of these “Insiders” are around for much longer and have always presented a safe pair of hands for the British Empire. (I’m sure the history and Governance of the Bank of Ireland for example from its foundation under British rule and its transition to dominate Irish Banking under our illusory Republic was pretty much seamless from the same bastions of Dublin 4 etc.)

    I’m sure Coldblow will tell me that Crotty has outlined this before, which is another reason I will need to sit down and read what that guy wrote, as we seem to think along similar lines even though we are from two different cultures and time zones. LOL.

    So where am I going with this line of thought? Well!! I think the context of the present property bubble is what is causing some of the confusion in people’s minds. We are all too aware at this stage, what Banks rotten with crony capitalism and “insider” patronage and nepotism look and indeed behave like. I’m sure people at this stage must surely realise that these type of Institutions did not just spring up overnight, at the same time as this so called property bubble. No indeed this is how Ireland has done Business, always, with Bank of Ireland and Allied Irish Bank and to a lesser extent Ulster Bank (catering for the legacy Protestants) calling all the shots, controlling everything, playing God to every enterprise, farm, shop, factory etc. Writing off loans for whoever, to protect their own interests, Garrett Fitzgerald (mortgage) and Charlie Haughey (millions) two former Leaders of the Country to name just two of many and illustrate my point.

    I mean to say, you can just imagine the free run these Institutions got under the old regime, under the old Irish Punt, dealing as they did with what we have recently discovered to be a very “understanding” Central Bank(Hurley) and Financial Regulator(Neary). David has mentioned already in an earlier post how these fools flushed away billions of Punts belonging to the People when they tried unsuccessfully to save their own arses and balance sheets, at a time when the Markets targeted the Punt for a run after it smelled weakness and corruption. The weakness then is the same weakness now that is costing us way over the odds in Interest rates on our Bonds and is indeed threatening us with Sovereign default.

    The ease with which people can move from between the Dept. of Finance, Central Bank, Regulator’s, NTMA, and now NAMA, all Government Agencies and onto the Boards etc. of all the controlling Banks etc. has to cause major concern to anybody trying to put the proper stops and checks in place and is a major cause for concern at present. I mean anybody following the criminality on Wall St. and its overlap in the Fed and on Capitol Hill would not want to see the same type of “capture “ here in Ireland, but I’m afraid “capture “ it was and “capture” it is.

    Does any thinking person out there today in Ireland believe for one minute that these Banks did not cover up losses and other legacy issues when Ireland made the transition from Punt to Euro? Does anyone believe any figures that these Banks gave the Central Bank or Regulator or anybody in the past when Ireland was trying to meet its targets for the growth and stability pact etc. etc? Does anybody out there believe that these Banks have the slightest interest in “what’s best for the people and the Country”? Unemployment anybody? Pensioners? Their own shareholders?
    No No and No is the answer, this thing is about Bondholders and that’s all it has been about, especially the famous Bearer Bondholders. Remember Dukes telling everyone that He could not know whom the Bondholders were as they were Bearer Bonds that paid the bearer the amount of the Bond, but what He failed to mention was how these people collect the Interest or coupon on these Bonds. I mean do they send around a Stork in the middle of the night to “bring off” the interest or something? Again more importantly how in the name of Hell do these Bondholders manage to remain so anonymous and get past all this Legislation we have in place to prevent money laundering?

    When Warren Buffet said “ when the tide goes out we get to see who was’nt wearing shorts” or some such, what He failed to mention was that we also get to see the amount of Barnacles and other such like, that has adhered itself to the ships, under the waterline and out of view. These latter characters are the “rent takers”, “free loaders” and I’m sure if you could communicate with these creatures they would tell you they had a right to hold onto “their seat” “ their place at the buffet” “their inheritance”

    Well we cannot communicate with Barnacles, but we can communicate with hard necks, and there is none better than Cowen’s around at the moment. It is Cowen who has decided that this old order will be bailed out. Cowen has become the champion of the insiders. Cowen the son of a gombeen shopkeeper has arisen Thatcher like to defend the status quo. Cowen will beggar this Country if needs be, before he concedes an inch of what the insiders have built up over generations. I’m told you could see the smug look broaden on his auld puss below in Ballybrit when he was meeting some of the insiders he was helping to bail. I wonder would he be smiling if he had to stand among his own people in the dole queue in Tullamore. Nah, that’s no place for an “insider”.

    • Central bankers on TV yesterday extolling the virtues of front loading the austerity measures over coming budgets onto our next budget to appease the markets sounds very much to me panic has now taken hold.

      Clowen is more of a gombeen than even he is given credit for. The dead pirates he’s resurrected in NAMA and the banks will place a noose around his neck.

      Watch out for the double dip, second tsunami ready to take him down along with the financial cronies. He’s sunk himself and Ireland INC in the course he’s plotted.

  7. Tim

    Why Did The Crisis Happen?
    Nassim Nicholas Taleb’s explanation on one page:


  8. Deco

    A while back Vincenzo Bore on this Tonight Show, consistently lamented that there was something wrong with the Irish, that they did not respond like the Greeks.
    Now, I would say that there is something wrong with our response alright. We failed out banjaxed banks and will never see the money again. And anyway more people were agrieved by the Henri handball incident than NAMA.

    But, I don’t think the Greeks are too smart in the way they chose to respond either.


    • Deco

      And Cowen says that his pal Papandreou can be trusted concerning the Greeks returning a 1 Billion Euro plus bailout from the Irish PAYE taxpayer.

      The evidence suggests otherwise…

  9. alpha

    Come on David!!! Trying to find the logic behind the thinking of desperate people???
    What private interest in its right mind will buy these companies???

    Look, the future of this Country as it’s functioning at the moment is worst than bleak. You, my next-door neighbours and I, are all stuck here; most of the rest are leaving. Except if you are a politician, or a teacher with 8 weeks holidays in the year, or a doctor, or a dentist, or a solicitor, or others charging high fees. Or an overpaid professional, or executive, or employee, in one of the state companies. Or a banker, or something of a kind. All of them, generally earning more than in any other Country of the European Union. As somebody said on TV last week: “We are running a kind of a very expensive FAS scheme for professionals and executives.
    When are we going to have benchmarking with the rest of the EU to get in line, according to our industrial output?

    We should establish a MAXIMUN SALARIE of 100000 euro or near to it, in the Public Sector, and also adjust the pensions accordingly, and live with it. And apply a fair tax system so people in the Private Sector who earns lots of money don’t get concessions from the State to pay no tax at all. Only then we’ll have a chance of gathering the pieces and start to rebuild this. Of course that won’t happen, because will be enough for an RTE presenter earning double or triple it, with three months holidays in the year, to go to Court and claim “bridge of contract” or something similar, to put and end to it. Even the judicial system is against us on that!!!

    CONCLUSION: Enjoy the last days of Celtic Carnival!!! We sold to the rest of the world that we were “the leading nation”, and now nobody wants to lend us a dime.
    Soon we’ll have to see the reality of what we are, and not the absurd fiction we enjoy dreaming up to now!!!
    They use to tell us: “If you pay peanuts you get monkeys”. Well we didn’t, and look what we’ve got at the end…NAMA!!!

  10. wills


    What’dya make of this critique?

    We got HAMLET again, *blinded by his own priviledge and too cosseted*, you are, KERRIGAN shouts at you from the audience.

  11. wills


    What’dya make of this critique?

    We got HAMLET again, *blinded by his own priviledge and too cosseted*, you are, KERRIGAN shouts at you from the audience.


  12. Deco

    Ah yes. Here we go again. David might find this fascinating. There was an era similar to the past twenty years.
    At that stage, widows (mainly Anglican, and married to landlords) were the main holders of available capital in Ireland. They provided the capital for a property expansion, and a massive trade expansion in Dublin. These investments were eventually poleaxed by the Act of Union. Today, the wealth is concentrated in those who managed to extracate themselves from the property roller coaster before it crashed. (Classic example the members of the Doyle Family who sold the Burlington and the Doyle Hotel Group). Perhaps the Act of Union is Brussels this time and not Westminster. The end of the Napoleonic Wars also resulted in a temporary depression when the British government decided to pay back the war debts and get it’s finances resolved. This produced a short term hammering, but enabled Britain to lead the Industrial Revolution from 1820 onwards. This effectively was the British deciding on a policy that induced the financial stability that accelerated the Industrial Revolution. This was bad news for Ireland because Ireland had no coal.

    In any case you can all have a look to see the similarities.


    David – perhaps this merits an article. A previous age of opulence and extravangce that did not add up, ended in disastrous consequences, and in low capital reserves being available at the time of the Industrial Revolution. Therefore we must be careful in how our capital is being allocated, with respect to the next technology revolution – or else face economic obsolence. [ I am very confident that none of the idiots in the political or media establishments understands this - maybe some rogue elements in the commercial establishment might understand this, but let's face it - most are still of the business leadership of this country is clueless in this area ].

  13. Deco

    Was listening to some utube comments by Scottish Economic commentator Hugh Hendry. Hendry has some fairly non-mainstream thoeries. Firstly, he thinks that the US and other Western governments will not be able to acheive Quantatitive Easing because they are afraid of the market reaction – and most of their policy framework is concerned with market propping. And in addition the scale of the asset write-downs is such that there is already massive virtual deflation, which is replacing earlier virtual inflation. In both cases this has real impacts.

    He also asks questions about China’s growth story and the economic imbalances that exist but which are not really in the open (because the tide has not gone out).

    I get the sense that US growth is driven by the Krugman doctrine. This means that the growth that occurs as a resulf of heavy government policy intervention, will end up not worth the cost terms debt buildup. In essence, the state’s finances are being screwed up in the long term for the benefit of the politicians in power today. Of course, in this age, this does not work. The approach that will work is the approach that was pursued in the East Asian tiger economies after 1998. It worked for them. It is not even available as an option in the West.

  14. Tim


    Comparative Disinflations http://nyti.ms/97wgls

  15. Deco

    Nepotismo watch …..


    This is a Rody Molloy 2.0 type event. Another semi-state boss who is not able to do his job properly. Another Taoiseach who is his pal. Another massive pension pot for being useless. This country is wasting it’s way into oblivion. How many Industrial Wage level PAYE contributions is required to pay for this clown’s pension, even aside from the costs of his mistakes (as evidenced that he makes a loss on a Port that overcharges to the point that lorries are driving to Warrenpoint and Rosslare to avoid it).

    Ireland’s high cost, excessive compensation level, high cronyism, multi-layered bureacratic model of public sector management is failing.

    Concerning Dublin Port – it will not be privatised. Because nobody will want to buy it, unless the exchequer takes a hit, and the government provides a backroom commitment to facilitating oligopolistic behaviour.

    CIE is run by another of the Ditherer’s mates. And then we have the Dublin Airport authority, etc…etc…

    • alpha

      Deco leaving aside the fact that this global economic system as it’s functioning is unsustainable, the only way to start “to fix” our own domestic economic mess is by starting from scratch.
      We are overpaying ourselves in comparison to others!!!
      So we, the citizens that are footing the bill, should demand benchmarking with other countries in the EU that are in our league so to speak. And adjust the salaries and pensions of politicians, judges, gards, teachers, doctors, lawyers, executives and employees of state and semi-state companies, bankers (now that we own them), and others getting their salaries from the State accordingly. Once this is done we need a government that look for the interests of society in general, and carry out a series of reforms.
      Unless we do it there is no hope at all. It’s clear that if it doesn’t happen, the government will get the money from us. And that the unfair colonial tax system that the British applied in the past, will sound like a fairy tale, in comparison to what’s coming down the line.
      How many times did we hear from them that if we paid peanuts we were going to get monkeys? Well now it’s time to show us what they really are.

      • alpha

        And hand in hand with benchmarking for the Public and even the Private Sector, so a doctor or a dentist or a solicitor and other professionals, can’t overcharge us, with the excuse that the services they offer are better than the rest of Europe, when we know isn’t true. The government should bring down the mortgages people are paying for houses that were overpriced, to the real value of property in the market. And tell the bankers to stop behaving like extortionist’s moneylenders, and start to fulfil a roll in Society according to what society expect of them.

        • Deco

          If the services are better, then why are people travelling to Hungary to get their teeth done ? Usual argument from over chargers – they try to scare you concerning the competition.

          There are massive inefficiencies in the state sector. If these companies remain in public ownership the taxpayer gets scelped. Therefore they need to be made more efficient. The taxpayer is getting an ever lengthening list of commitments. It is getting absurd.

          By the way, what exactly are the 1000 staff in Anglo doing ?

      • Deco

        We certainly overpay ourselves. The clearest evidence is the fact that it requires €19 Billion Euro to run the state. (without consideration of the various money sinks in the financial and construction sector).

        If we example the study of Medecine in University, we can see that this is a classic example of a supply bottleneck type scenario. Basically, the supply of doctors is reduced by various means including large quotas provided to educate non-nationals who go back to their country of origin or who go to the UK, and an inadequate number of places. Add in other sectors like Pharmacy and Dentistry. Now these professions rely on state subvention. There is no functioning market in these areas. In fact, we even suffer because of distortion in the US market – with young Americans studying in Dublin for employment in the US – because the same market disfunctions apply in the US. The medical profession in Ireland have acheived an oligopolistic arrangement with the government, whereby there is no market competition, and the taxpayer provides a high floor on pricing. When it comes to medical specialists, it is even more accentuated. This is basically what you get for being extremely well connected in Ireland. In the case of the medical profession, this goes back to their successful prevention of universal healthcare (Noel Browne’s mother and chid scheme) in 1949 – which was blamed on Maynooth, but was actually really a classic manoevre by the Medical Practitioners. In other words, access to power was used to create “money for nothing”. This is rampant in other sectors as well.

        I have been rethinking the banking problem. The real problem with the banks is not the disappearance of credit, but a write down of assets to the point that the banks have their capital wiped out. Saving the banks, ‘a la Dan Boil’, means enabling the banks to make profits that will repalce their capital. It is essentially a government approved scheme to suck money out of the rest of society and relocate it into the Bank’s capital reserves. For the free marketeers it should be a market distorting arrangement. For the lefties it is even worse, because it makes it an absolute certainty that the Welfare State in Ireland will become bankrupt. In such an environment, the comments of Dermot Ahern are highly indicative of the hypocrisy coming from the political establishment (‘the people need to spend more – savings are too high’). Of course, we now have a massive conspiracy of silence, over the fact that current debt levels, plus current borrowings will bankrupt the welfare state. Basically, nobody wants to discuss this, because it will reduce consumption and undermine the political establishment. And this will undermine the commercial establishment (IBEC). The entire system is in denial. The left is lining up the baddies on one side, and promising the people that they can have their cake if they let in another shower of opportunists. The centre is lost over what to do. And the right (represented by IBEC and 1 PD TD) are maintaining that allowing them to access state funds is in the best interest of all. US Neo-Liberals maintain that the private sector is the best decision making entity with respect to the allocation of resources towards human activity. The Irish maintain that the state is the best decision making body. The Irish Right (IBEC) maintain that the state should be strong and agressive, so as to funnel money to select well connected private sector interests. This is Marxism for the well connected. They are the needy because they are superior to the rest of us. It is a case of bleeding heart interventionism for the snobs who blew it all ‘dude-where’s my bailout’.

        To survive, the citizen, in his private capacity must reject

        i)the Dan Boil dictum (this means the citizen must forget about being fooled into thinking that propping up corrupt financial interests will create wealth – “no, Boyle, the wealth comes from the factories you dumbass”).
        ii) the Dermot Ahern dictum ( this means the citizen must save their resources for themselves in case they need it and not rely on the incompetent state to fix it). (it is a bit much for public sector parasite lawyers like DA to be lecturing us on what to do with our money).
        iii) the Cowen dictum (the means the citizen must ignore the ‘recovery is coming’ stories and base their decision making on their own direct experiences) (Cowen must be the most positive person in Ireland after Dan McLaughlin because Cowen only sees more booms coming, he never sees crashes or recessions coming).
        iv) the ESRI dictum (this means the citizen must assume that jobs will not just appear out of nowhere-the citizens must prepare and not overborrow),
        v) the Calamity/Gormless dictum about the knowledge economy (the citizen must realise that real work is what real matters, getting a PHD is secondary to real world application as evidenced in RyanAir – I mean how many PhDs were in the CBoI, the BoI, AIB over the past ten years – when the man on the street was sceptical of it all),
        vi) the Happy Gilmore dictum – about politicians being all in favour of reform, in theory – but not being prepared to do anything that might really fix the underperformance in the state in reality. This means the citizen must be prepared to not fall for new pretenders with old tricks who are eager to make things even worse than they already are.
        vii) the RTE dictum – support our corporate advertisers – have a good time, and do as you are instructed, the more stupid you are the happier you will be and the better it will be for all concerned, progress comes as a result of everybody being clueless as to what is really going on.
        viii) the FG dictum – ‘we will change matters’ (really FG are just another IBEC proxy-that was why George Lee had to quit, because they could not trust him to find it out).

  16. David says that “Selling off state assets on the cheap is just madness” and I have compared this to Thatcherite policies when I lived Trasna amuigh na Unspeakable Ones.

    In her Indo column, referring to the Unspeakable Effort of AIB to mimic the survival capabilities of a Connemara Hooker in a Force 12 Hurricane, Meave Dineen states;

    “To raise more than seven times your market capitalisation is a feat almost no organisation in the history of capitalism has achieved. To succeed would be an almost heroic achievement, which would justify AIB’s championing of Colm Doherty as the bank’s de facto chief executive. To fail will spell the end of the bank’s claim to be an independent organisation and leave the taxpayer with day-to-day responsibility for another complex mess.”

    Now, how would we link these two disparate events, if we were so minded?

    Well, it’s easy really. All the directors are cross-pollinated. There’s about two degrees of separation across all the major boardrooms of this fair Nepotcracy (Remember I coined that word first before Gurdgiev robs it).
    And , not only being cross-pollinated by virtue of collegiate affiliations, most are genetically interstitial.


    Banjos at dawn to herald the Deliverance of the Insiders and to signal another “Annie Moore” generation of Irish Intellect.

    Knowledge Economy my arse. Hello the White Zimbabwe of Europe.

    • Just in case anyones particularly interested or somewhat unclear, for the record;
      “Interstitial: Pertaining to being between things, especially between things that are normally closely spaced.

      The word “interstitial” comes from the Latin “interstitium” which was derived from “inter” meaning “between” + “sistere” meaning “to stand’ = to stand between.”

      Sounds like a stereotypical evaluation of useless Irish Politicians across the board just sticking their centralised snouts into free market business matters they know shag all about.

      When are we going to get scientists or engineer types up in Dublin?

    • Deco

      AIB is getting soft coverage from the media considering the epic scale of the stupidity that they got involved in. And BoI are not much better – despite all the nonsense that comes from the IT that BoI are not another AIB.

      I think I have figured out what constitutes a semi-state enterprise in this country. An inefficient behomoth with good connections to the political system at the top, oligopolistic business plans (remember the Green Jersey idea of merging AIB/BoI that was flaoted in the IT in 2004 on several occasions – I think suds might have been in favour of it even).

      The real surprise package has been Permo. At the start of this crisis I would not have given them any chance of survival. If we look at the US and the collapse of Wa-Mu or Bradford&Bigley in the UK, we can see that residential superloans are disaster. And sure enough, residential property prices have collapsed. The greater the excess the greater collapse. I still don’t know how this is not yet showing up on the accounts of Permo or the Duopoly Twins. Now, I have been critical of Permo in the past, but maybe I got it wrong. Maybe Permo are the only house on stilts in the Tsumani zone ? (the stilts being the Irish Life part of Permo).

      The strange thing is that Permo might actually be showing the rest of the financial sector how to better run a bank, in the sense that they raise interest rates to cover their debt levels, (sic – official debt levels) and have a tight control of their expenses. And to be sure, Permo have not been elbowing for taxpayers money from the political masters of the tax system.

      By the way, any truth in the rumour that one very high profile financial conglomerate is the number 1 insurer for the Anglo Bond holders ? and thereby the main beneficiary of the Anglo Bailout. I assume that bondholders have insurance – and it was very very cheap in the good old days when Seanie Fitz and Drummer boy were being profiled on the back of Irish newspapers with his golf clubs….. and then, of course, we have the “three stooges of the Financial markets”, the ratings agencies.

    • Deco

      Furrylugs – I am begining to suspect that the ‘knowledge economy’ is a PR stunt to make the population beleive that we will get out of this current debt trap without having to work hard.

      Talk about the knowledge economy is nothing new. It has been going around the US since the early 1990s. It has been used as a means to get those in the knowledge economy to think that they are smarter than average.

      And people who think that they are smarter than average, take above average risks, spend above average.

      People who think they are smarter than average, and who define themselves as smarter than average tend to create above average disasters.

  17. Deco

    Italy. Another country in servious trouble.


    There is pressure in Italy for deflation. But the savings rate in recent years (inspired by low levels of respect for the country’s politicians) has ensured that Italian private sector balance sheets are strong.

    Unlike Spain and Ireland, Italy’s private sector will pull the country out of the crisis. But the political establishment is a silly distraction and for the most part a roadblock to progress. The difference is that Italians are not deluding themselves about the competence of the state – whereas in the other PIGIS, people are deluding themselves within the state.

  18. Deco

    Stock markets are peaking, and there are rumours that the markets will nose-dive from now until November. With this in mind Bernanke has announced that the Fed will fight deflation. This is a bit like King Canute fighting the tide. Presumably the Fed will print money. This will drive up interest rates. Therefore this is a zero sum game. In fact it will make matters worse, because it will spook the bond markets. Bernanke is under massive pressure from the administration over the coming US congressional elections. And Bernanke is always more accomadating than his political masters require.

    The US is sitting on a pensions time bomb, and it is vital for consumer confidence that the stock market gets propped up. A crashing stock market could cause ramifications in consumer confidence and also in the elections. No wonder Krugman wants the US to make up as much money as is necessary to maintain the pretence of wealth creation.

    Print, Baby, Print !!!

    For the Western economic system a calamity has descended into a farce as the political leadership dropped the pretence of being accountable to the many, and proceeded to promise to the many and deliver for the few (who are wel connected).

    The next step could very easily become a total disaster. Krugman and Bernanke are about to run into the bond market. When they are finished the real money will be in Asia, and none of it will be loaned to prop up liberal spending habits in the West.

    • Sure Deco tis as obvious as a sciortáin on a boars nose that the whole system is defunct. They’re all codding themselves. It took me a year to get my head around the basics of economics on here and then another once Wills arrived to see the reality of the whole situation.

      Now that I know what’s real and what’s not , life is much simpler. My original theory of filling the fridge is now more relevant than ever. To that end , the Furry Fridge is full, thanks be to God. However, any interference with the filling of the Furry Fridge is, has and will be met with judicious severity.

      I exist to protect and nurture my own. And protect and nurture my own I will.

  19. mediator


    I like your article but to understand what’s happening you need to look at the macro or
    big picture and turn your reasoning 180 degrees.

    Privatisation of ESB etc doesn’t make sense if you still believe that our politicians have the good of the Irish people in mind and that the Irish state is sovereign.

    What’s happening has been carefully orchestrated by those who hold the levers of international power and is designed to further concentrate power in the hands of an ever smaller elite.

    Lisbon, EU, Financial Crisis, Credit splurge, growth, recession, shock doctrine etc are all
    used towards this aim.

    If you start viewing events through this prism they will start to make sense. The truth is staring people in the face but its as though they refuse to acknowledge the evidence of their senses because it is too unpalatable. Sticking head in sand won’t work, this is happening.

    • @mediator
      100% correct barring you are lecturing the guy who designed the prism. It’s through David McWilliams prism that simple common sense will prevail.
      If the chance be given.

      But is this country, this young republic, mature enough to handle the equilibrium, thrust and equanimity of mature democracy yet?
      Most debaters on here and elsewhere are signalling a propensity towards PotHole Politics. (BTW- I coined that phrase before Gurdgiev robs it too)
      I fear I will see the 6 foot box before I see true democracy in this smigeon-minded outpost.

    • Gege Le Beau

      Answers are there for those who want to see or for those who enquire instead of the ‘knee jerk’ reaction or saying it doesn’t make any sense/is crazy.

      Good to know the mediator is informed and David by logical extension.

  20. http://www.martindardis.com/freedoms_walk_irish_rebel_song_lyrics.html

    Thought I’d post this from a sense of history, seeing that we’re, unfortunately and apparently, heading down this long road again.
    Sad really.

  21. Philip

    Orthodoxy is what the real killer is. And it may indeed be an actual killer for many who walk today on this planet.

    We have the orthodoxy of energy use. Not realising that in fact that 80 years ago, 1 kwhr could help you extract 100 kwhrs for use – whereas we are down to about 1kwhr extracting 10 kwhrs for use. This is where we are with oil and fossil fuel and indeed nukes. The rule of thumb is when we reach 1 kwhr needed to extract 3 kwhrs (as we scrape the barrel more) we run into massively decreasing economies of scale that break a society. Society has to stop or decrease in size to keep energy affordable.

    We have the orthodoxy of finance. Smaller time scales, bigger principals to be paid off on the hope of societal growth to wash it all away. But we are faced with a savage tendency to wipe out the principle asap which slows growth and worse, kills our innovative capacity for solutions that may help us with our energy equation.

    Our politicians, economists and elites are all looking to the future through the lens of orthodoxy. It will kill them all off because of zero faith in what people can do if let.

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