September 8, 2010

We don't have an economic policy, it's all just a big bluff

Posted in Banks · 246 comments ·

ON THE radio on Monday, Brian Lenihan spoke of “not showing his hand” to the European Commission. He suggested that we in Ireland had to “hold our nerve”. These phrases are not normally used in economic policy — rather, they come straight from the world of poker.

This language is appropriate as it probably best sums up the Government’s policy throughout the banking crisis — it has all been a big bluff.

Yesterday, the financial markets reacted to the gambler’s words by selling Irish bonds, thus driving the yield (at one stage) up from 5.78pc to 6.15pc.

Yields came down to 6.01pc, following rumours that the European Central Bank was buying Irish bonds. We are fast becoming a vassal state of the ECB, the only institution prepared to buy Irish bonds.

The ECB is doing this for one reason — to protect the bondholders of Anglo from the default which has to come. In this little game, we issue expensive IOUs at 6pc that the ECB buys with money it prints for nothing to keep open zombie banks that don’t lend. The ECB is doing this not to protect you, but to protect rogue creditors who have no right to expect that they will be paid.

This policy will not only ultimately bankrupt us but will leave us with an economy where small domestic business is hollowed out by the credit crunch, the public sector will be kept on a life-support machine for as long as possible and only the capital-intensive multinationals will thrive. But ultimately for the multinationals, the tax on their workers’ wages will act as a disincentive for them to invest.

When we get real, we will see that Anglo’s debts are likely to be in the region of €36bn — or roughly 50pc of its loan book of €72bn. As the bond market indicated yesterday, we are clearly running out of time, and contrary to the minister’s assurances, no one thinks the €25bn bailout of Anglo is “manageable”. This cavalier attitude to finance is frightening away proper investors. This is exactly how the Greek crisis started and we know how that ended.

The Government is bluffing with our future, and by extending the guarantee yesterday it is simply showing all the signs of panic, rather than firm financial management.

The guarantee, when it was introduced nearly two years ago, was a bluff. It had to be. There was no way Ireland could afford to bail out our banking system — one of the smallest banks in the system has gone properly bust — and despite Mr Lenihan insisting that it will be manageable, it has led to the ‘New York Times’ questioning whether Anglo will bankrupt this country.

Imagine what would happen if one of the two clearing banks went to the wall. There is no way we could afford it and no way that we ever could have afforded it.

The guarantee was a credible bluff two years ago. Now, however, it is far too dangerous and should be dropped unilaterally because to preserve it risks a much greater fiscal crisis. More egregiously, the guarantee is undemocratic. Lumbering the people with the sins of creditors, bankers and developers is unfair and totally unworkable.

This is why the markets are selling Ireland. They have no interest in the bonds of a country whose people have been betrayed by their Government.

AT THE moment, the official position of the Government is that there is no alternative to paying off everyone who ever lent money to Seanie and his gang.

This is complete nonsense and proves the point that this Government actually has no idea what it is talking about. Once you realise that the Government’s experts know nothing, then the picture becomes very clear. By the way, they also knew nothing in the boom, when they predicted that we would have a soft landing.

The proclivity of the Department of Finance to bluff and build up straw-man arguments is not new. Using fear as a policy to lumber the people with the mistakes of Ireland’s institutions is a recurring theme.

At the moment, the canard that is being used by the elite to bully the people is that if we do the right thing and get those who lent to Seanie and the gang to bear the loss, we will lose credibility and there will be a knock-on effect on the creditworthiness of the rest of our society. How could this possibly stand? How could it be credible to make people who didn’t make the loan, pay for the mistakes of people who did? Please explain.

The reason the elite can’t explain is that they have no answer to it. They are bluffing. But why are they spoofing and making such momentous decisions on the hoof?

The most logical explanation is that they cannot handle the truth — that we are close to bankruptcy and can’t afford the bank bailout. But admitting that we have severe problems involves an adult characteristic called responsibility. In Ireland, the little people are responsible, while our tiny elite of leaders are so craven that they will never admit they messed up. So instead, we get spin.

I am reminded of the last financial crisis of 1992-93. Back then, when it was first suggested that the Irish punt be devalued, the elite in government circles argued that if we devalued we would become an international pariah.

The spin from the establishment was that a devaluation would constitute a massive blow to the credibility of the State. Investors would never forgive us and the interest rate in Ireland would spike upwards to reflect the new currency risk. If we devalued, the bond market would close for Ireland and a recession would follow.

When we eventually devalued, having sworn up to the last that we wouldn’t, what happened? Precisely the opposite to what had been predicted by the elite. Money flowed into the country, interest rates fell, inflation fell, bond yields fell and the economy took off.

The markets took the opposite view to the elite. It transpired that the markets didn’t give a fiddlers about credibility, they just wanted the crisis to be over.

Once we devalued, the markets concluded: “Ireland has had its crisis, the air is cleared, now let’s go and make money there.” And this is what happened. The crisis came and went and then the economy rebounded.

We should tell the creditors of Anglo, including the ECB and our own Central Bank, that the game is up and the people won’t pay. The Irish market would rally and the credit crunch would begin to ease.

That’s how crises end — when someone makes an adult decision and takes responsibility.

  1. adamabyss


  2. Puschkin the Black and White Cat

    David, this is to be expected in a one party state where the sheeple have no alternative political party and where the PARTY owns the media, even last Friday we read in the Irish Times about Rob, Bob and Deidre entering the newly vitalised Irish property market with 800k, 600k and 500k to spend, what nonsense. The famine of leadership is so severe that all they can think of is property, landlords are increasing rent to business to cover their losses and ruining good business, a time of Famine has returned, rack-renting and emigration.

  3. “this Government actually has no idea what it is talking about. Once you realise that the Government’s experts know nothing, then the picture becomes very clear. By the way, they also knew nothing in the boom, when they predicted that we would have a soft landing.”

    The above extract from your article is the most important point you have made in a long and everyone in this country needs to get to grips with….. especially the media. There should be no more so called balanced interviews, giving cretins the opportunity to put forward numb nuts type arguments.

    Is it a case that it is too later already.

    One of the main misnomers over the past 2 years is the misguided belief that Brian Lenihan is doing a good job. He is the one who guaranteed the banks and there is no point in blaming his advisers, he is the one who ultimately made the decisions. He is clueless and being a nice guy doesn’t count.

    • Deco

      A lawyer running the economy.
      Would you ask a baker to repair your car engine ?

    • Colin

      “One of the main misnomers over the past 2 years is the misguided belief that Brian Lenihan is doing a good job. He is the one who guaranteed the banks and there is no point in blaming his advisers, he is the one who ultimately made the decisions. He is clueless and being a nice guy doesn’t count.”

      I couldn’t agree more. I’ve been banging on here about how incompetant Lenny is for the last 2 years , but for most people now he is a sacred cow, immune from criticism. You get the following responses from the sheeple;

      1. At least he’s taking decisions.
      Well, Hitler took decisions too.

      2. The other lot are no good.
      Die Hard Fianna Failers will committ suicide before considering changing their vote. Party before country.

      3. Sure, leave the man alone, he’s not well.
      The sick note in Ireland is the last refuge of the work-shy and the incompetant. Surely we need someone who is free from personal crises.

      4. He’s very intelligent.
      Dr. Harold Shipman must have been very intelligent too to pass all his University Medical Exams, and yet he murdered many many patients of his who placed their trust in him.

      5. Sure, Ireland is only a small country, and we had it hard growing up in the 40s and 50s.
      So, there you have it, you’re not entitled to have grown up in a progressive Ireland, its the Ireland that sufficed for your elders with all its faults, is what you’re gonna get, and you should be lucky to have a roof over your head and hot food in your belly and shoes on your feet to go to school in.

      • Fergal73

        Colin, full agreement. The problem is precisely that the Irish electorate have consistently voted FF and provide the excuse for it that the others would only do the same thing! (If so, why not vote for them instead?!)

        Emigrate. You’ll be doing your descendants a favour.

        • Colin


          If emmigrating was so easy, I’d have gone long before now. Countries like Canada and Australia are tightening up. Australia, for example doesn’t want you if you’ve been unemployed for 12 out of the last 24 months (its a bit crazy, but you’d think they would like to make it easier for people who have lost their jobs). Most countries outside the EU don’t want to know you if you’re over 45, and make it difficult for you if you’re over 30. You need a good working knowledge of a foreign language to get employment on the continent, which most Irish people, including most Irish professionals do not have.

          Anyone got any advice out there? Marrying a Sydney prostitute or a New York hooker or a Toronto junkie are not options I’m willing to contemplate.

          • Fergal73

            Hi Colin, sorry it’s tough to emigrate – appreciate that there a multitude of factors affecting one’s ability to flee the sinking ship.

            My advice is to anyone who can – get out now. Ireland hasn’t seen the end of this by a long shot. “W” shaped recession will be lucky. It will more like an inverted correct sign. A brief up, followed by a lengthy decline. What distinguishes Ireland from most English-speaking countries is that the Irish have brought this on themselves (yes, we have, the electorate voted for these clowns, re-inforced (re-elected) the nod and the wink / gombeen man behaviour. Ireland is deeper in the debt pit than any other nation. Our recovery will take more time, even assuming we were governed as efficiently as other nations.

            Emigration will be difficult, but staying means facing a replay of the 1980′s, except it will last a longer than a decade.

            Love of country / patriotism is all very well, but what is there to love?
            An abstract idea?
            The reality of an apathetic electorate, an incompetent (at best) or corrupt ruling class, a countryside that the planners and individual gombeen men have spolied with one-off housing and unwanted estates, an inefficient public sector?

            Lofty ideals were for when the ship was on course to hit the rocks. It’s too late now. Abandon ship, or abandon all hope ye who remain here.

          • Eireannach


            Alors pourquoi la plupart des irlandais ont du mal à parler une langue européenne?

            WHY oh WHY do most Irish people, especially the professional classes, not speak any continental language? Talk of emigration is always to Canada and Australia, whereas we are so free to live and work in the EU, we can actually get our dole payments transferred to our LOCAL POST OFFICE in Germany or France or Italy or wherever while we search for work.

            Europe is massive – a massive opportunity. Why the retrograde reflex to head for the old C19 and early C20 destinations of the New World?

            It just seems lazy to not speak a word of any European langauge. Honest to God! Check out for free lessons.

            Didn’t we all study French or German or Spanish or whatever in school for many years?

            I’m from Dublin but I work as a tour guide of Ireland in the French language. People in Ireland can list off every brand of Champagne, every haute couturier brand of handbag from Paris, every model of German luxury car, and while I’m at it they can tell you every winner of the UEFA cup since the year dot, and who scored, and who gave the vital pass to set up the goal, and who got a yellow card … all this meaningless spoiled-brat ‘entertainment’ rubbish but they can’t speak even a few words in any of the major continental languages?

            It’s shameful and it will have to change as the EU is increasingly becoming one federated market space.

          • adamabyss

            I can speak fluent Hungarian which opened up a world of possibilities including 10 years of work in the Caribbean. I don’t know why people can’t be bothered to learn European or other languages – just pure laziness and ignorance if you ask me.

          • adamabyss

            Also, while I’m on my soapbox and self-promoting, I’ve played semi-pro football in Hungary and the Caribbean and would just like to say what an utter waste of time it is following the celebrity circus that is the game today – the most I can bear is a few minutes watching the goals of the weekend, or the occassional final. Couldn’t agree more with you Eireannach about people getting their priorities arse about face. Nothing wrong with participating in sports of course from a social and health point of view, but the overexposure on TV and in the media is purely a distraction for the ignorance masses from their miserable unenlightened lives.

          • Eireannach


            I totally agree. In an EU of 27 nations, with at least as many languages, to speak only English and not be bothered learning beyond that is worse than lazy and arrogant – it’s inviting others to take you down a peg or two.

            In the future multilingual EU, any CV with languages ‘Native English’ on it, and nothing else, we be put not to the back of the pile, but will get lost in the mediocre CVs that don’t stand out.

            Because believe you me folks – the rest of the EU is moving rapidly toward multilingualism. Join us – or be marginalised (ie. go to Canada or Australia where you fit in).

          • Deco

            People in Ireland can list off every brand of Champagne, every haute couturier brand of handbag from Paris, every model of German luxury car, and while I’m at it they can tell you every winner of the UEFA cup since the year dot, and who scored, and who gave the vital pass to set up the goal, and who got a yellow card … all this meaningless spoiled-brat ‘entertainment’ rubbish but they can’t speak even a few words in any of the major continental languages?

            You mean to say that there are loads of people who are experts in irrelevant minutae that really does not matter…..I agree 100%. That lifestyle BS again getting in the way of being useful and adept.

          • Colin


            Thanks for the info about dole payments abroad. I didn’t know you could do that.

            I had a good Leaving Cert level of French, have rarely used it since then. Might brush up on it now, and pick up some Spanish too.

            I reckon most people viewed learning a language as completely unneccessary, and most Irishmen would view it as something best left to the ladies to master. Can you really imagine an ESB Electrician explaining to a Frenchman how to upgrade a Substation? Yet, his high salary would make you think he should. His workmates would start slagging him, often behind his back, throwing in jibes about being a puffter… know the world of the uneducated Irish blue collar worker.

            You are right, we need to learn more foreign languages.

            So, what opportunities are there for us who are willing to improve our French or German? Can we really pick up work over there? Can an Engineer find employment in France without mastering the language?


            I agree with all you have said as well. Is it true Hungarian is one of the hardest languages to learn. I was there for a few days a few years back and could not make head nor tail of it and learned a total of 2 words, whereas I’d pick up many phrases in nearly every other country I’d visit quite easily.

          • mishco

            Colin, have you ever thought of teaching English? In a country like S. Korea, where I am now, I can still find employment over the age of 60 and I know people of advanced years who teach English in other Asian countries like China, Vietnam and Thailand. Grey hairs actually count for something here. I agree that knowing a second language can help, but for teaching English abroad a knowledge of the main points of difference between English and the language of the country you are in (together with a study of the local culture) is more important than being fluent in the local language. If you really get to like the country you are in, you’ll probably pick up a working knowledge of the language eventually.

            I’ve been teaching abroad for nearly 40 years, and in that time I’ve seen the demand for English increase constantly, with more and more countries opening up, until now I think you’d only have a problem trying to find work in the country just over our northern border, nowehere else! And you don’t even need a qualification to start off (just a degree, for example, here in Korea). You can work for that EFL certificate later if you want.

            So I’d say to all Irish men and women back there (I returned a couple of weeks ago and was glad to get out again!): Get out your old school atlas, find a country you’d really like to see, check out for jobs, and before too long you’ll be on the plane to Ulan Batar, Havana or wherever. I have never regretted it, and I’m sure you won’t either.

          • Colin

            Thanks Mishco,

            I have considered it, and what’s stopping me going ahead with it is that I’d be concerned my engineering career would not be well served by a period of teaching English. I might go to Australia and try to convince some company to hire me and sponsor me.

            I’ll keep you informed on my course of action. Hope Korea is treating you well.

  4. biskalero78

    We are screwed!! Many people through history warned countries about giving the power to a private bank to issue it’s currency. We are no longer a sovereign country period. Sad time for our beloved country.

    “Permit me to issue and control the money of a nation, and I care not who makes its laws.
    Mayer Amschel Rothschild ”

    “The European Central Bank has the exclusive right to authorise the issuance of euro banknotes. Member states can issue euro coins but the amount must be authorised by the ECB beforehand (upon the introduction of the euro, the ECB also had exclusive right to issue coins.”

    • biskalero78

      Are we just going to stand back and take this ? Or are we going to take our country back ? Now is the time for action!!

      • Malcolm McClure

        Somebody on Newstalk this morning asked Pat Rabitt whether he would lead a rally to protest the mishandling of the economy. He replied that in a democracy the electorate could make its protest at the ballot box and he didn’t see that it was his job as a parliamentarian to summon rallies.

        The people of Southwest Donegal would reply ‘What rubbish’ since the government has taken the issue to the courts to deny them their democratic voice, which has been gagged since the Euro-election on 5th June 2009.

  5. Re David’s previous article ” If the government is prepared to risk AIB for Anglo, the lunatics are clearly on the loose and running the asylum.”

    I caught a little bit of Rachel English interview with either
    Daniel Gros from the Centre for European Policy Studies or Global Strategist Donal O’Mahony ….

    I think it was Donal O Mahony made the point coverage abroad eg NYT ‘Can a bank bring down a country’, he said this was also echoing what Irish journalists had been saying about Ireland’s approach to Anglo.

    Donal made reference to booboos by Cowen adding to the international scare with remarks as to possible cost of €70 bn, the lack of decision making, clarity.

    The comparison was also made to FF approach to the banks as Munchausen Syndrome by Proxy, where the patient is made sick by the perpetrator and the perpetrator then seeks attention for bringing about the cure.

    Fair dues for RTE having these people on given the evident irony in the fact Pravda RTE would not be numbered among the critics of FF policy mentioned above.

    Its evident that FF are now internationally seen to be the alarming harbingers of an extended and deepening crisis for Ireland with their ‘long term’ pecunious, most expensive, potentially catastrophic ‘black hole’ solution for Anglo!

    The lunatics have been diagnosed with ‘Munchausen Syndrome by Proxy’

    • Ye have to remember the boys have just come from a free for all borrowing frenzy of ‘ye want €2 bn, more, more’ No problem, ECB with these interest rates its FREE.

      Now they’ve found another kitty to pay for everything, the Irish taxpayer.

      Lenihan has gone through a transformation and turned into ‘Dr Who’ time traveller, who has now conquered the future. No problem, €80 bn, we will pay this back over €80 bn

      Pity no cyborgs from the future can come back in time, a world with Ireland Inc devastated by the crippling reparations of this lunatic government, to stop him!

      Ponzi Lenihan should be in jail along with Seanie, Cowen and the rest of the gang to pay for some of the damage! The US put Berni Madoff in jail. Here Lenihan & Co are making away with our children’s savings! No jail for anybody! Irish mafia style!

    • DavidIreland

      That ‘Munchausen Syndrome by Proxy’ reference was brilliant.

      The last straw for me was FF people spoofing about how some of the foreign press was lauding Brian Cowen. Some of their historical equivalents would have lauded Oliver Cromwell, Charles Trevelyan and all the rest of the chancers that in their own way and in their own time devastated the Irish Nation.

      The biggest problem we have is that no matter what these incompetent people do, 50% (and growing) of the people suspect nefarious motives – looking after their friends, bailing out their cronies, buying time while the economy burns. Another 30% believe they’re just utterly clueless, and the remaining 20% are a pathetic bunch of unthinking tribal loolahs who would vote for them even if they sold the whole Island to the Dutch.

      I’m sick of them.

  6. This trilogy of films about the Economic Horror Show make sense now more than ever because the baying for blood is about to kick in:

    Wallets Full of Blood: Houses on the Moon
    Wallets Full of Blood: Zombie Banker Blues
    Wallets Full of Blood: Roscommon Death Trip:

  7. Duck Science of Economics ( a la Irlandaise )
    sponsored by Feen & Fall a government mafia agency

    Foie Gras all the gizzards until they come to bursting point inside then blow the stuffin out of them.

  8. Gege Le Beau

    Beware of the Irish bearing Property and the Greeks bearing bonds!

    The guy on Prime Time last night was right, Ireland’s credibility is shot to pieces (having the same government has not helped), and the markets know the financial losses are a bottomless pit which will probably bring the State to a halt.

    The link below illustrates what should have happened to Fianna Fail, they should have been booted into the pit along with Fingers, Seanie F. & the Anglo debacle, but their TDs and Senators are up to their necks in property and the banks, I wonder how many are insolvent?

    We have sacrificed everything for a few, future generations, as of yet unborn, have been prostituted at the altar of neoliberalism and the greed of a few so called Irish men and women.


  9. Alan42

    I watched O Cuiv on Primetime and he seems to know what he is talking about . I would buy Irish bonds , whats the problem ?

    David , you can write all the articles you like but the truth is that these people are ok at organising a new set of traffic lights and what not. But when it comes to matters of business and economics they are in way over their head and do not have a clue .

  10. Lius

    All you have to do to see how big the iceberg really is is under the surface is take a look at page 16 of the BIS Quarterly Review

    Irelands total forign exposure is €800 billion which is €200,000 per capita compared to the other PIGS who are only around €25,000 per capita.

    We are 8 (eight) times more exposed than Greece, Portugal or Spain. Very scary stuff.

  11. jgarrihy

    Is there any chance he(Lenihan) is so clever that he is just borrowing what he can while he can knowing full well a default is inevitable now. Its a shot in the dark given his performance so far!

  12. Brollachain

    When I read this, my first thought was that you were the person who (first) advocated that Ireland should issues a blanket guarantee for the banks in 2008.

    On checking, I found that I was partially right but completely wrong!
    eg. Sunday Business Post 19 October 2008
    In his last two columns, David McWilliams called for the introduction of a 100 per cent deposit guarantee. Now he explains what must happen next.

    “By inserting a clause which ties the fortunes of our biggest banks to those far more susceptible to financial ruin, the government has erred – with potentially catastrophic results.

    There is a clause in the bank guarantee rescue plan that has the potential to complicate the scheme by placing the weaker banks in the state on a par with the stronger ones. In so doing, it threatens the integrity of the system. This column has maintained that the guarantee has to be the first phase of a three-phase programme, which would convert a banking threat into an economic opportunity.

    Phase one was the guarantee, aimed at saving the system; phase two was a root-and-branch reform of the banks’ boards and senior management, which got us into this mess in the first place; and phase three was the orderly recapitalisation of the banks, to enable them to lend again and get the economy moving once more.

    …. was the expectation that the government would act in the national interest, rather than in the banks’ interest…. Who benefits from this clause? The people who stand to gain most are the management of the weakest banks because, by tying all the banks together, the government has linked the shareholders of the stronger banks to the balance sheets of the weakest…..More egregiously, the management of the weaker banks – the most excessive cheerleaders and sponsors of the property mania – have managed to hitch their wagon to the stronger banks. Obviously, this is a brilliant deal for the management of our most reckless banks…..A conspiracy theorist might suggest that the weaker banks have pulled a stroke over the bigger ones – AIB and Bank of Ireland – using the Department of Finance in the process. Surely not? Could this happen in our clear-thinking country? Could our Department of Finance favour one bank over another? Never!…..
    For the economy in general, the worst aspect of penalising all the banks for the sins of one is that it smells and looks like the discredited Japanese model. It means that we have tied the whole banking system up in knots. This can only slow down any recovery of the banks.

    It would have been far better to have followed the Swedish or Swiss approach, by sticking to the three-phased programme, weeding out the guilty while recapitalising the system using government preference shares.

    Now we potentially have the worst of all worlds. The moral of the story is that, when you try to satisfy the left- and the right-wing, you end up with a dog’s dinner. This is hardly the best platform for recovery.”

    • Can they be that stupid? Yes, they can! Look at the following baloney from 2008 from finance. Little did they know the bankers most especially Anglo were standing at the casino crap tables with huge losses the extent of which have incredibly after so long a time still not been fathomed and mounting when the following was issued.

      On the face of it, reading below, there’s a capitalisation issue.

      Nothing about the subsequent revelation of TWENTY FOUR BILLION solvency and liquidity problem! from Anglo that we know of so far from Anglo.

      No, the bankers at the crap tables probably figured they could get by with a couple of billion and not be thrown out of the casino!

      Lenihan should go immediately for falling for the crap! Needless to say, to expect transparency from senior management with the Anglo legacy on their shoulders, as David says, senior management should have been removed immediately.

      Our policy of dealing with the banks has been crap and continues to be so.

      “Government Announcement on Recapitalisation

      21st December 2008

      Following on from Government Decisions of 28th November and 14th December on the recapitalisation of financial institutions, the Minister for Finance has this evening announced specific decisions in relation to three major financial institutions. Commenting on the announcement;

      The Taoiseach said:

      “The objective of these decisions is to ensure that the financial system in Ireland meets the everyday financial needs of individuals, businesses and the overall economy. As part of this recapitalisation package, I am very pleased that a number of measures to support small to medium businesses and mortgage holders have also been announced.”

      In relation to Anglo Irish Bank, the Minister for Finance announces an initial investment of €1.5 billion of core tier 1 capital to assist in restructuring the bank’s capital. The Government will continue to reinforce the position of Anglo Irish Bank and will make further capital available if required so that it remains a sound and viable institution. The investment will be in the form of €1.5 billion of perpetual preference shares with a fixed annual dividend of 10%. The preference shares carry 75% of the voting rights of Anglo Irish Bank. The investment is subject to the approval of the ordinary shareholders at a general meeting which will be convened as soon as possible. On the basis of positive contact with the European Commission, the Minister said he was confident that the Anglo proposal will meet with EU State Aid requirements when formally notified in due course.

      Good progress continues to be made in the capital discussions with other institutions. In particular, subject to shareholder and regulatory approval, the Government has agreed with Bank of Ireland and Allied Irish Banks plc that they will each issue €2bn of perpetual preference shares to the State with a fixed annual dividend of 8%. These shares will have voting rights in respect of change of control and any changes in the capital structure. They will also confer 25% of the voting rights in respect of appointments of directors and 25% of the directors on the board, currently including any directors to be appointed in connection with the Government’s Guarantee Scheme.

      All the institutions may redeem the preference shares within 5 years at the issue price or after 5 years at 125% of the issue price. The preference shares are non-convertible and will be treated as core tier 1 capital by the Financial Regulator and are replaceable only with other core/equity tier 1 capital.

      The capital injection for Anglo Irish Bank is likely to take place following an Extraordinary General Meeting in mid-January, and for Allied Irish Bank and Bank of Ireland, by the end of the first quarter of 2009.

      The Government has a substantial pool of additional capital available to underwrite and otherwise support the issuance of core tier 1 capital by the relevant institutions.
      The Government need not be the principal source of this additional capital and encourages each institution to access private sources of capital. Nonetheless, the Government is prepared to underwrite further issuance of core tier 1 capital and both Allied Irish Banks plc and Bank of Ireland have indicated an interest in such an underwriting in an amount of up to €1 billion each.

      The measures announced today have been designed having regarded to the recent European Commission Recapitalisation Communication and are subject to State aid approval.”

    • Malcolm McClure

      One can speculate that the key to this whole debacle is the financial strategy of the resident multinationals who have been using low Irish taxes to avoid higher taxes elsewhere. For this scheme to work there must have been a colossal cash flow through Irish banks at critical times of the year.

      Some of that money caused an average quarterly increase in the banks’ capital resources, which (again I speculate) was deposited in Anglo Irish to benefit from higher interest rates. Seanie, of course lent this largesse out to the developers.

      When Lehmans collapsed the depositor banks couldn’t get the Multinational’s cash back from Seanie, hence the guarantee. The government is now being punished by the EC for its 12.5% corporation tax scam, which attracted the MNCs in the first place and gave birth to the Celtic Tiger economy.

      Obama, of course is equally interested in punishing the MNCs by allowing the Irish banks to implode, so that the MNCs lose the funds protected by the ill-conceived Irish tax advantage on monies that should have been remitted to the USA.

      This would explain the Irish government’s prevarication on the whole Anglo issue, as they are well aware that if they tell the MNC’s that their deposits have vanished into thin air, the said MNC’s will quickly follow with their own vanishing act.

  13. NO HOPE

    You don’t seriously expect them to make an adult decision do you? Take responsibility? Anyone who thinks this government would take responsibility for anything must be smoking something from Jamaica. We have the most galactically incompetent government in the history of this universe. What is it going to take to get them out, so we can get our economy and taxpayers to stop bleeding? Let me tell you. Only when we have the imminent debt crisis fully exposed (in a few months) will the people take to the streets en masse, to get them out. By then it will be too late. The hole is already so big we have little hope of recovery.
    Watch the next budget. They have already “identified” 1 billlion of savings to be pissed away into Anglo. Let`s see where the next 2 billion in cuts will come from to be pissed away into the Anglo black hole:
    Social welfare cuts (fuel allowance, medical cards, dole, single parent allowance etc….)
    Health cuts
    Public sector pay cuts (not a bad thing at all except they don’t consider themselves to be eligible for cuts)

    Interesting to note the posters in the Social Welfare offices. “Due to staffing levels we can only service this hatch from 09h30to 11h30. No claims at this hatch in the afternoon for JSA.” The black comedy is all too clear. No staff available, but there are a line of hundreds around the block waiting to get in, and they have staffing level problems. O`Cuiv instead of getting his 40 000 slaves to work in jobs at the SW offices to ease the pressure, will force his army of slaves to fiddle around at old age homes and after school services to pretend that they are doing meaningful work. Oh, and of course to fudge the unemployment figures so they can try to bullshit the EC that he is actually got a job creation programme. Watching O`Cuiv slither and squirm around the question of forced labour, on Prime Time last night was quite entertaining. He came out all brass neck on Ireland AM last week saying no work, no dole, like a school bully. On Prime Time last night he slinked hither and thither. He never actually said no he would not force his slaves to go to work. Like the school bully who realises he has taken on more than he can chew and backs down when someone half his size takes him on.

    The whole scenario is quite childish actually. Watching FF squirm and fiddle to try to do anything at all, is embarrassing to say the least. It is like watching a child of 3 trying to use a laptop. They try and try and try, and then throw their hands up in exasperation at their lack of knowledge and execution. If we got rid of the whole lot of them tomorrow there would be a market rally. I guarantee that. That is all the world is waiting for. Some competent strong leadership, some evidence of some sign of life in government.

    Sad really………………….

    • Deco

      I am in favour of the idea that leeches should not allowed be get money out of the state in return for dossing around, and laughing at the rest of us.

      Starting with Rody and his space pals in FAS, sNeary on his pension, Uncle Bill, Fingers, the NEDs on the semi-states, The Seanad, the local authorities, the quangoes, etc… A big pay to performance disparity exists and it should be remedied. Any chance O’Cuiv might do something about that ?

  14. [...] you, but to protect rogue creditors who have no right to expect that they will be paid. source has effectively nationalised its financial system for two years: it will guarantee deposits [...]

  15. SandyfordAl

    Just the other day, Brian Lenihan said that pouring money into Anglo wasn’t so much to save the bank as to save our reputation. That ship has long since sailed. For €40 billion I can live with the tag of harlot or Jezebel!
    I don’t recall signing anything to assume the risk for the bank’s careless lending practices yet I’m(we’re) stuck with the bill. Every man, woman and child in the country will owe somewhere in the region of €10,000 just for Anglo and yet hardly any of us even heard of it before we were handed the bill, but in true Irish fashion we shrug our shoulders and accept it. We accepted the DIRT and Ansbacher scams, we accepted the outcomes of the Flood, Moriarty and McCracken tribunals and in fact some of the protagonists’ share of the vote in subsequent elections grew. The government are somewhat expert in group psychology and know that this crisis will pass without anyone taking to the streets or demanding accountability from our politicians, and their friends will come out the other side with their personal fortunes in tact. They’ll have a laugh about all this in a few years as they sip Dom Perignon in the comfort of their tastefully decorated villas in various tax havens like Switzerland or Monaco while we struggle with severely limited government spending, high unemployment and oppressive tax rates. Once again we’re going to try to tax ourselves into prosperity…’ll work one of these times!

  16. RIde the horse until it collapses under your weight!

    AT THE moment, the official position of the Government is that there is no alternative to paying off everyone who ever lent money to Seanie and his gang.

    This is complete nonsense and proves the point that this Government actually has no idea what it is talking about. Once you realise that the Government’s experts know nothing, then the picture becomes very clear. By the way, they also knew nothing in the boom, when they predicted that we would have a soft landing.

    The thought has crossed my mind at the end of 2009.

    The way this government acted will cause the IMF will take over inevitably, like Greece, so you ride the horse until it collapses, and then you resign, cash in your pension and other entitlements, bring your biggest assets out of the country and retire as a very wealthy man.

    Do you think there is a single person left that believes Cowen/Lenihan when they state: We act in the best interest of the taxpayer!

    David’s title statement goes much deeper in deed. We do not have a functioning government at all!

    Just look at the mess in the health service, this in itself should tell you everything you need to know. Then look at the latest government driven scams concerning renewable energy, another bubble they try to inflate as quickly as possible, bending EU guidelines and directives to enable developers to make quick profits, passing motions in the summer holiday to vary county development plans to allow developers to take over all EHSA (environmental high scenic amenities) areas.

    My God, just look at the people who govern this country. Have a good long look at them, all of them, FF, FG, L, G.

  17. Puschkin the Black and White Cat

    I don’t like sending this but …. the truth is never wrong or right it just is.

    Figures are for End Quarter 1 2010

    Total Exposure (Private, Government, commercial). Remember NAMA is “private”.

    Values in US Dollars.

    Billions Population Per-person debt

    Greece 297 11M 27,000
    Portugal 322 10M 32,000
    Spain 1102 46M 23,000

    IRELAND 843 4M 210,000 !!!!!

    Also note:

    1. Ireland has no tourism industry, killed by overpricing and exploitation of foreign labour.
    2. Ireland has no fishing, it was given to the EU in order to get EU grants, industry value given away 500-600Billion, grants received 32Billion.
    3. Ireland has no natural resources, our gas (worth over 400 billion) sold by the state for nothing.
    4. Ireland has no manufacturing at all, nobody can employ workers where the workers must pay mortgages of 300,000 and 400,000 euro.
    5. Ireland has the biggest civil service in the world (per head) and are paid 25% to 35% more than anywhere else.
    6. Ireland has a farming industry in crises, destroyed by years of indecision and EU interference.

    • biskalero78

      People still don’t get it !! It’s called tip-toe totalatarianism. We have lost our fishing waters, we have lost the ability to print our own money. We vote NO to the Lisbon Treaty and they said that was not the answer they were loooking for, so we vote again. When are the people of this country going to wake up!! We have been taken over Financially through means of deception. Can someone tell me for sure that we are a sovereign state ? We may as well burn our constitution because it’s no longer relevant, we are now a non-nation. This is a sad time for the Island of Ireland. The systematic destruction of this country is nearly complete and final. All i can say is “Long Live Ireland, it was not the people who sold u out it was your seudo leaders”

      • Freethinker123

        well said, I think you’ve been reading the words of David Icke!? (Tip Toe Totalitarianism) he was mocked for his work in the 80s..but whos laughing now. I’m firmly convinced that second Lisbon treaty was rigged somewhere down the line, i’m gonna look into that for my own peace of mind soon. but god dam it what a mess Ireland is in i’m in Australia reading this and my blood is boiling I’m near enough thinking of jumping on a plane and coming back just to take to the streets c’mon for f***k sake!!!
        Sovereignty is only relevant when theres a war to fight, otherwise its straight up ‘totalitarian’ globalist/capitalism all the way…to the bank of course

    • Tull McAdoo

      Interesing post there Puschkin, I remember reading the original reports and noted at the time how the 800+ billion’s were broken up, with 40% owed to Anglo/American Banks and 35% owed to French/German Banks, with the remainder scattered all over the globe.So three out of every four Euro is being pulled at from both sides in this North Atlantic tug of love for Irelands future. Hmmm.

  18. NO HOPE


    Why don’t you, Constantin Gurdgiev, Eddie Hobbs and Professor Morgan Kelly get together, and present a comprehensive plan to this insanely incompetent government. We are heading for total collapse at this rate. All that remains at this rate, is for us all to leave, if something radical is not done NOW! Better yet, form a new political party and get these idiots out. The next lot won`t have a clue either because they have had decades of mindless plodding and cannot come up with radical proposals. We need a completely new party with new thinking to change the entire system. Yes, 5-10 yrs of hard work to start to get it right. The alternative is total economic ruin and 4plus generations of unemployment.

  19. ocallaghanr

    Many people knew from the word “Go”, that attempting to save our idiot bankers was an exercise in futility given the excesses of the bubble-nation. The laws of the capitalism that we were so proud of during the boom years dictated that we should have let the weak die out in order that the herd would remain strong. With the money we’ve already spent we could have set up a brand new National Bank and transferred deposits from the idiot institutions to it. Simple.

    When word got out about Seanie et al’s personal loans we knew that the rot went right to the core. And the rot was surrounded by a protective film called the government. The rot remains to this day. Whatever happened to Patrick Neary in the end? Does anyone remember him at all? Why has nobody gone to jail yet?

    I have been posting many articles such as this one on my facebook page ever since this fiasco started, to remind people of the stupidity of their government. I also like to “discuss” the issue with friends and colleagues when I get the chance.

    More often than not the replies that I am getting from people I know to these issues are such like; “Oh well, what can you do? We have to pay our taxes” and “You shouldn’t take it all so seriously, lighten up”

    I have come to the conclusion that it is this apathetic, laid back attitude that is actually the bane of this nation not the developers, not the bankers and not the government. The people get the leaders that they deserve.

  20. Deco

    David is correct there is no economic strategy.

    There is a CYA strategy. There is a reassure everybody that everything is fine strategy. There is a keep IBEC and ICTU happy strategy. There is a prop up the property market strategy. There is a get your party activists onto the state payroll, via quangoes strategy.

    But there is no coherent, intelligent economic strategy.

    If there was, then the labour market would be getting fixed. But the labour market is completely off bounds. Deflation would be allowed to occur so as to enable Ireland to reprice itself competitively. (as happened in Germany over the past decade). Anglo would have been wound down. And INBS liquidated. The EBS would also have been sold. There would have been firesale auctions of residential property.

    There has been readjustment. The entire strategy is to prevent competitive readjustment. Basically vested interests are squeezing the juice out of the economic system with the result that they will destroy it.

    As regards, austerity, you ain’t seen nothing yet. We have only seen phony austerity up to this point, concentrated amongst pensioners and small business owners. The central plank of the governments apporach has been to increase taxation as much as possible. This is destroying private sector economic activity and feeding the undeclared economy.

    It’s not that only Lenihan is hiding his cards. The entire spectrum of society has turned to hiding their cards. Dishonesty was rife in the binge era as everybody competed for everybody else’s money. The BS in circulation was overwhelming. Now the BS has been reduced, but the scheming is as bad as ever.

  21. Deco

    The minimum wage will have to be dropped to a level equal to that of NI.

    The commercial rates being charged by the local authorities will have to be halved, because it is destroying the service sector employment.

    The GP and ILP are pushing behind the scenes for the introduction for property taxes across the board. FG are resolutley opposed. FF are divided. But it is being discussed behind closed doors. In fact it was being discussed even before the crisis began. The GP wanted it in the program for government in 2007, and FF told the GP that FF regarded it as a non-compromisable term of the deal.

    The quangoes will have to be culled. The state cannot borrow money beyond a certain point. And when that point is reached we have to decide whether the money goes to sick people, pensioners, children – or whether it goes to quangoes, consultants reports, Rody Molloys pension etc….

    Hard decisions are now approaching. Real hard decisions, not the nonsense that Cowen terms “we made difficult decisions”. No, they did not….for the most part they dithered, compromised and fluthered around.

  22. Mr Lenihan added that the Government was “satisfied” it could identify what the final cost of covering losses at Anglo Irish Bank would be.

    Two years Folks…. two bloody years they were not able to get a full audit report on the books of Anglo.


    • Deco

      I wonder where are the accounts of Anglo. I mean if it is still a bank, and it has a banking license, then it should have a set of accounts. And these should rest with the Financial Regulator.

      No prosecution of anybody over the Permo-Anglo loan which made anglo look like as if it was solvent, when it was not solvent. This is definitely a case of seeking to convey false information to the market. Why is the ISEQ or the IFRSA not doing anything about this either ????

      • Guess why Deco….

        The corpses burried in Anglo are massive, a lot has been gone already with David Drumm forever. Alan Dukes is “The Cleaner”, like in one of those Mafia gangster films, they guy with the acid solution who makes sure no corpses are left behind.

        Put NAMA into the picture Deco.

        This whole thing screams fraud and deception from day one! Incompetence is the cover under which they will disappear, the blanket of this cover will be “THE ADVISORS”.

  23. What happens if the players at the poker table does a runner ?

  24. Deco

    Having read the article one quotation from the Great Socialist Dithering One comes to mind, with respect to the nonsense coming from the DoF, NAMA, and the Kildare Street circus….

    “ure a waffler…ure a waffler….yahve been wafflen for years…so yah have..”.

    They need to start reforming the state institutions, making them efficient, light and far more intelligent than they have been to date. And much of the state system needs to be wound down (800 quangoes, and countless departments). State sponsorship and involvement in a lot of the non-state sector needs to be curtailed also – including the NAMA nonsense.

    • adamabyss

      What a sleazeball Bertie Ahern really is. When doling out his excuses about lack of responsibility for anything that went wrong under his so-called ‘leadership’ he just can’t restrain himself from recounting that other people addressed him as ‘Taoiseach dis and Taoiseach dat’. Big deal, his time in power was an utter disaster and he’s a worthless and despicable individual.

  25. BrianC

    Ireland Inc is a coop based on cronyism run by stupid politicians exponentially dumber civil servants enabled by self centred personal interest public sector unions facilitated by intellectually barren bankers. They will never accept the truth as they will have to admit that they know nothing about running a country or managing finance and handling international finance. What you have is a coop of parasites living off those who have to work for a living. They are totally dishonest and occuppy positions beyond their ability.

    The Freefall programme on RTE was very interesting. It epitomizes what the state thinks of its citizens ‘a populace of morons’ so dumb down the content so that thick Paddy can understand it and repeat it enough and he will eventually believe it. The Minister of Finance is talking absolute nonsense and as David pointed out statements like ‘hold our nerve’ belongs at the race track and gambling tables. However, such crass stupid statements prove and reinforce the point that they do not have one clue as to what they are talking about.

    They are taking the wrong action in trying to support that which has failed. They are actually rewarding failure. The international markets know this and will continue to punish until they do what is right that is bury NAMA hand the problem back to the banks and dispense with Anglo. Guaranteeing depositors is sanity and affordably within our means guaranteeing shareholders and bondholders is insanity not affordable well outside our means facts well known and accepted by the internaitonal markets.

    JC Trichet represents the ECB and is not the international market. All of the EU will be sacrificied to maintain the needs of Germany and Axel Weber and his cohorts are in firm control. Trichet’s comment that the ensuing financial problem resides solely with the Irish Government is more incorrect than correct. Yes Ireland created the problem with is moronic management but the international financiers who lent money to the financial institutions in Ireland without due diligence are equally if not more culpable. Why should the Irish citizen be forced to underwrite their risk. In previous blogs someone wrote about guarantees. Guarantees are great if enforceable but ultimately in a worst case scenario they can be put where the sun does not shine. If you borrow a relatively small amount of money and cannot pay it back then you have a problem. If you borrow a vast amount of money and cannot pay it back then the lender has a serious problem. This is where Ireland is at in the economic state of things but will not face the fact that is more the problem of others than that of Ireland. Based on the behaviour of our stupid politicians who cannot even work out the amounts of money involved they decide to offer an Irish State blank cheque. They are proving to the international market that they are not up to the task and being led by a few international bond holders which includes Axel Weber who are trying to protect their interests. The Irish Government cannot even decide the course of action for Anglo as they must wait and receive their instructions from the ECB. The ECB is controlled by A Weber who is delaying matters to favour his interested parties securing their positions against Ireland. A Weber et al stupidly lent money to those in Ireland who knew nothing about banking.

    Ireland is now a real third world country run by spin for the benefit of the few influenced by a few international bond holders. This is reinforced by the fact that E Sheehy of AIB and B Goggins of BOI forced a guarantee out of the Irish state with the support complicit politicians in control of an inept overpaid inefficient civil service. All of this unfolded in a back drop where the NTMA would not deposit monies with Anglo. Because Anglo was exhibiting excessive growth rates this unnerved the NTMA and ought to have warranted proper investigation by the financial regulator. Surely the reluctance of NTMA to deposit with Anglo was discussed with M Somers CE of the NTMA in the Department of Finance. M Somers recognised Anglo as a rogue bank and if he held that perspective then so must have his many respected international colleagues. Yes he must have conveyed this view point to the Minister of Finance after all he was charged with running the NTMA and credited with doing an excellent job thus his judgement would be trusted and respected. But the relationship between M Somers and Brian Lenihan soured when Somers made mild unsupportive statements about the proposed NAMA avering to their inexperience in such matters. There is also the fact of a golden circle of board members ‘a cosy cartel of self interest’ ultimately facilitated short term almost overnight transfer of funds from one bank to the other to temporarily bolster balance sheets blatantly ignored by complicit accounting auditing practitioners.

    And to answer the question ‘Can a bank bring a country down?’ Yes it can. It has already happened. The problem is those who are supposed to be in control cannot see it because they do not want to face up to the truth. They cannot face up to the truth because they must must admit they were not up to the task of running a country. They are not fit for purpose. At least in Iceland they recognised the problem and delivered accountability. Brian Lenihan is an idiot when he makes stupid remarks about the decline of the GDP in Iceland trying to undermine their corrective actions. He ougth to face up to the true fact that Ireland is in the same downward predicament and should consider this ‘by defining a problem correctly you will get 98% of the solution to the problem’.

    Welcome to Ireland a new third world state that does not yet know it is bankrupt and somebody should tell the AIB not to bother looking to the Government for a further bailout just go stright to the ECB and when they refuse make contact with the IMF.

  26. Gege Le Beau

    Another fallout from the ‘freefall’ after the ‘free-for-all’!

    Wonder will the link between it and the policies of Bertie Ahern ever be raised by the current presenter of the Late, Late Show and offerer of refuge to Tony Blair.

  27. The gravity of incompetent decisions in the past two years alone, that this fearful and captured government – Hat Tip to Brian Lucey – has taken, appears not be be understood by the Irish Public at all.

    This is literally the only explanation I can come up with to understand this eerie silence in Ireland in the past two years.

  28. Deco

    The Irish concept of lifestyle has become completely unsustainable. And with pride, the people will react and demand that it continue. They will get angry with the clowns in charge and put another collection of opportunist clowns in their place.

    The problem at it’s intellectual source is one of pragmatism or pride. And since CJH Irish people have turned to pride, even those that hated CJH became like him in ways. Pragmatic analysis never mattered, instead there was a “bull-market” in arrogance.

    We still have a failing labour market. For a lot of people that is problem number 1. Australia is coming to the end of a housing bubble and Canada also. Britain is overwhelmed with Gordon Brown era debt. So basically, the way out of this is to eat humble pie and drop the Irish lifestyle nonsense.

    I reckon that it is economically unsustainable. But equally, dismantling the Irish lifestyle concept is also psychologically impossible.

  29. The Professional Bodies that ‘the alleged’ are members of can only have been seen to have turned a blind eye to the Reality and are morally culpable to the distruction of the Sovereign State .Their ethics do not include in their prospectusrs a Social Conscience for the well being of our lost nation.

  30. Philip

    So we default? Then what. Let’s stop going over the reasons of why and so forth (mind you I am very taken by the idea of the banks using temporary slush funds arising out of MNC profit churns and the whole thing being caught on the bounce!)

    Have we enough funds to keep the public service payroll going until the end of the year?

    What happens when we run out of cash? This looks inevitable.

  31. malone

    Mr Brain C mentioned about the Freefall programme on Mon night. I agree it was a very interesting programme but there is a point I think you sould consider as Puschkin the Black and White Cat earler mentioned that the media is owned and governed by the same elite club that also own the banks and run the country. Did you notice that lenehan was given a lot of time on the programme , more than any of the rest of them to give his own “unbiased” opionion? Did it ever occur to you that this could be also a part of the slant put on things put on things like the property porn we saw some years ago. Do you think that the media would allow the disscenting voices to be heard ? The voice that were termed the naysayers , the prophets of doom ?

    There is another comment to be made as regards the media. we have heard a lot in the media about the public and civil service being lazy , incompetant and generally not knowing what they are doing
    I am in no way standing up for them but just to note as I heard a very good comment on the radio once , the media or what could be called the propaganda machine also has churned out a lot of this crititism about the public service and especialy how they are getting extravagent money for sitting on their arses. The members of this elite club that govern the media also have among their members the the rich and extremely rich buisness people of the country , the people who screw the ordinary working people with bad wages so they have have huge profits and for themselves good salaries i.e the Fianna Fáil tent in Galway. Has anybody wondered about this connection i.e the media being owned and governed by the club and its “slanted truth” on one hand and the critism of the public service on the other hand ?. The person that I heard on the radio did and it made a very good argument.

    Mr Mc Williams a question for you , Freefall was an independent production made for RTÉ. If on one hand here in the columns you preach and independant non establishment sermon which at times is very contrary to current thinking but on the other hand you take part in a programme which could be argued is somewhat pro establishment and gives a lot of time to a “spin” artist , is there somehow an inconsistenty here ?

    One final point , somebody mentioned about lenehan having cancer and people should go easy on him. If he values his life and his health why the hell is he still in politics and goverment where lets face it , it is not a stress free job , anybody any ideas ?

    • This is all like a bad comedy and in Ireland you just don’t know who to believe. The Media are doped up because they are too comfortable and you would need to be naive or very stupid to believe anything you hear on RTE, Vinny Broon and all the rest of these ‘news and current affairs programs’ which are seriously suggesting that what they offer is real news. I would have thought that most people would have got this by now but they still expect the media to act with honour. Fat chance!

      They are all in it together. All the same faces making the same useless noises and now we even have D McW on the same program as Lemminghan Et Al. Bad move mine host. It is all smoke and mirrors and at the end of the day you just need to make your own mind up and decide what kinda country you want to leave for the new generation.

      And while we are at it there is more to life than ecomonics and pampered living. Go for a walk and enjoy simple pleasures like the sights and smells of autumn.

  32. kayak

    First off let me offer my sympathies to the good people of Ireland who are going to suffer because of these fools.I nearly moved to Ireland and in retrospect not doing so was a good thing.
    a couple of questions froma foreigner:
    What is “the Irish concept of lifestyle”?
    Why dont the people stage petitions and demonstrations?
    Why dont the media ask the powers to be the hard questions?
    When I was in Ireland the idea I got from the avg man in the pub was that everything is hunky dory…Why is that?
    Is there credible opposition to the current regime to topple them?
    Has all the social benefits maybe created a “sense of entitlement” amongst a certain sub-culture of the population?
    I heard a lot of venomous comments regarding the english[sic] and what they have done to the Irish and they are all justified.Isn’t it time that some people stop blaming and projecting and realising that in this case the Irish screwed the Irish?
    I would value some answers greatly thanks.

    • Colin

      What is “the Irish concept of lifestyle”?
      “I’m alright Jack” & “Keeping up with the Jones”

      Why dont the people stage petitions and demonstrations?
      People know others won’t support them, and be simply accused of being a begrudger and a sh!t stirrer.

      Why dont the media ask the powers to be the hard questions?
      We have little or no independent media, most depend on advertising and sponsorhip and therefore do not want to make waves which will be seen by their clients.

      When I was in Ireland the idea I got from the avg man in the pub was that everything is hunky dory…Why is that?
      Average man is ignorant and places his trust in Fianna Fail, shure didn’t they always look out for the little guy down through the years, says he?

      Is there credible opposition to the current regime to topple them?
      Topple, you mean win an election rather than shoot bullets? There is opposition there, from the far left to Centre right. Problem is FG is very similar in ideology to FF, but claims it would not have taken us where we are today if they were in charge.

      Has all the social benefits maybe created a “sense of entitlement” amongst a certain sub-culture of the population?
      If you’re on about the unemployable, they make up only 4.6% of the workforce. Most of these belong to a community that thinks its racially different to majority of the population.

      Isn’t it time that some people stop blaming and projecting and realising that in this case the Irish screwed the Irish?
      Yes, Paddy always blamed someone else, thats why we have news reports that say “the car left the road and hit a tree, killing 3 instantly”, instead of “the reckless young driver must have driven very irresponsibly with no regard for his or any of his passengers’ lives before the car collided with the tree resulting in the loss of 3 lives”.

    • Deco

      The Irish concept of lifestyle.

      How about the justification that was provided for such massive indebtedness ? Ah, sure….it is only money….time for fun….time to celebrate….time to show off

      It is not about keeping up with the Jones. It is about being so far ahead of them you can shit on them. The most hilarious bit is on a youtube video about the property craze. There is a script of actors holding a the party where everybody has a sophisticated accent, drinks wine, wears designer clothes, and they all greet wach other and say “How do you house ?”. And when the responder indicates that they respond that they have multiple houses, they start grovelling up to the well housed one. It seems that there is a hierarchy on the basis of status. Then an oddball with a border accent walks-let’s call him “Monaghanman” in reference to the giftgrub sketches with Myers and Monaghanman. Anyway, Monaghanman doesn’t get the How do you house introduction. In fact he commits a massive faux pas, by telling the truth and says “I’ve no house, I rent”. The sophsiticated types then poo-hoo and get him shoved out of their ‘conversation’.

      The lifestyle, the pretensions, the bullshit, the 1000 km round trip piss up, clowns queueing up to buy concert tickets that are more expensive than in any other location, the contempt.

      Yes, more than anything else the contempt, and the economic stupidity that comes from the persistent contempt. Based on superficial nonsense and perception driven purchasing.

      But it is not just about consumption. It is also about phantom production. It is about people in many sectors of the economy producing stuff that was not wanted, or often just producing hot air. And especially, it was a case of enlarging the cut, and rip-off Ireland. It was about lying and flogging rubbish.

      We became entered a subprime intellectual state, long before we entered a subprime economic state.

      Stupidity begets disaster. In Ireland stupidity became the mark of sophistication, and this beget disaster. Time for a more humble approach to living. There used to be a Power city TV ad that was titled “This madness must end”. Well, during the years 1998 – 2008, that phrase used to ring in my mind as observed the attempts of other people to make me feel guilty or ashamed at not indulging in the consmerist binge.

      Now, the madness has ended. Now, the consequences begin.

      • kayak

        Thanks for the feedback.I am gobsmacked.Media censoring themselves to please the powers that be?What is the impact on the young people of the country going forward?How long will the effects be felt for?Sounds like there is going to be a mass exodus,but where to?The uk[sic] is also not in great shape by the sounds of things.Australia’s property boom is coming to a end.South Africa’s building boom was partially built on the emergences of the “black diamond” market.The “black diamonds” is degreed black people who got jobs easier due to BEE and affirmative action posts.Buying a home in the suburbs or a second home was now in their reach.There is also lots of cases where a black entrepeneur hits the big time,get’s rich and leaves the township to go and live in the suburbs.a couple of months down the line they will move back to the townships because they miss the lifestyle or build a mansion there,plus rates and taxes are much lower.The concept of “ubuntu” explains their motive to move back as it is much more prevelant in the townships.It’s a pity the posters here is not a reflection of the majority of the Irish population as there is a lot of good comments here that someone with no education in the field of business or economics or business can understand.


    B Ahern made an appearance on the John Murray show on RTE radio this morning.Easily batted a half-hearted attempt by Murray to interview himAhern’s proudest legacy is the road network!.Is O CUIV MORE INEPT THAN HIS USELESS GRANFATHER?.

  34. BrianMc


    The blame & spleen-venting is OK but doesn’t change a thing.
    True Economics: Economics 27/8/10: Manifesto I (?) is something worth contributing to & supporting.
    Remember the opposition in government won’t do it for you.


  35. watching programme on Mon on RTE. Big point that is missed or washed over was jean Claude trichet gave orders to the minister to protect the banks at all costs on the previous sat., and he did. So the story that the government is running the show is just pure bull. they are doing what the ecb and the eu want them to do and this will be the outcome

  36. John Q. Public

    Anybody think this Anglo split is a load of waffle? A pathetic attempt by the government to look like it has a clear plan when it still has it’s thumb up it’s ass? Doesn’t this bank have offices that deal with loans owed to it anyway, and offices that deal with it’s deposits anyway? What have these Anglo workers been doing since it was nationalised anyway? Will the new toxic loans half of the bank be like nama? Will the new ‘funding bank’ give out free toasters or calendars at Christmas? What a load of cock! A PR stunt if ever I saw one. We would be mad to swallow it.

  37. Afternoon all, thanks for all the comments. The RTE programme the other night was a whitewash and I don’t believe advanced our understanding of what actually happened and more importantly, who was to blame. If we don’t pin down that, we won’t know what to learn. On this site I think we are fairly sure of what happened and what to do to get out of it.

    If I hear Lehmans again I will cry. Had I known that it was going to be such a white wash, I wouldn’t have appeared briefly on it.

    Maybe next week’s will be better.

    Now on to the announcement on Anglo today. I have not had time to look at it properly because I am up to my eyes elsewhere, but at first blush it looks bizarre to say the least. If anyone has any views on the thing, please share them. All the best David

    • +1 on whitewash! Clearly edited and cut on intent!

      An the announcement, it is my impression that they will pay all senior bondholders in full regardless the cost to the taxpayer.

      If the news bulletin and my understanding was correct, then they slipped that 21% of them are located on the Isle of Man. A fool who would have second thought of course.

      The truth has been hidden on purpose, political reasons are the motivator. 24 months and no full audit results? What about the ODCE? Why was that task after the PR stunt of a Anglo raid put in the hands of a hopelessly understaffed body?

      On purpose!


      • BrianC

        Yes a brilliant whitewash.

        The Irish Government has finally received their instructions from the ECB as to what they must do regards Anglo. The privy bond holders will be paid off, all orchestrated by Axel Weber.

        The Irish Govt and the Civil service can sit back and relax as the ECB coffers open to pay them as they bleed the Irish country dry. We are back to square one an absentee landlord with a land agent to ruthlessly collect his rent.

        And oh yeah it takes two years to draw up a statement of affairs. They already know the amount they need the permission of the ECB to tell the tenant and the landlord is putting the finishing touches to the fee level to collect the rental amount. Welcome to servitude.

    • Hello David et al.
      What a hell of a week. I’ve been busy finalising the minutae of my new start up business, self funded may I add and keenly so, when the bombshell drops.
      The “Boyos” or insiders as David has tagged them have finally breathed a sigh of relief. Not that the cumulative effects of insipid stupidity have been arrested, but that the shredders have finally covered the collective and copious arses.

      David says
      “”If anyone has any views on the thing, please share them”"

      I’d love to rant on here about the selling out of my country but I need, at my age, to maintain some perspective, if only for sanity. There are far better analytical comments hitherto expressing the sense of betrayal than I could muster.

      The words of this particular song resonate with me, purely because I love my country, it’s people and it’s culture.
      I know David McWilliams is of the same bent.
      It’s a simple song about wrongs to be righted and if one listens carefully to the words, a song that has travelled to todays injustices. It’s all about staying peaceful and resolute in the face of tyranny.

  38. The goal is clear since long, all senior bondholders will be paid, the public will be squeezed to the last drop of blood.

    The Heist continues!


  39. gabe

    What part of capitalism don’t they get? Everyone knows that if you’re efficent you thrive, and if you’re not, you go to the wall! It’s not that difficult to understand, is it? It’s that way in Nature, in the Universe, and it’s that way in business; and all the wishful thinking, and bluff, and B.S. in the world won’t change that. And because of that, the inevitable will happen anyway……….no matter how long you postpone the reality.
    Ireland doesn’t have a Government. It has a small group of overpaid and pampered TD’s, whose main focus is, and always has been, to preserve their own position at all costs (and this includes the opposition). And by the way, how many of them have a clue about business or economics? But then, I didn’t hear many of the electorate complaining when the good times were rolling. So you get the government you deserve. The Fifth Law of Thermodynamics basically states that there is no free lunch in the Universe. But the Irish Elite seem to have proven that law wrong— they got a free lunch!! Poor Mother Ireland! Weep for your children, and their children!

  40. Dilly

    I watched the first ten minutes of Freefall and then switched it off. It was pure rubbish.

    • Deco

      Seems to be a frequently occurring observation on this board. Nobody beleives this nonsense about Lehmans Brothers crashing and everything else being inevitable, and the problem in Ireland is all the fault of Seanie Fitz and the rest of us are absolve of responsibility because we will blame US Republicans (Tammany Hall are angels who do no wrong), Lehmans, Seanie Fitz and the ebbs and flows (to use Cowen’s latest excuse)…

      American joke
      Question : What created the subprime crisis ?
      Answer : Subprime thinking….

      Considering the continual borrowing required to maintain the Irish lifestyle, I reckon that subprime thinking is still in charge….

    • gabe

      Hello southofdub……not off topic at all. The pathetic history of Irish governance goes back a long, long, way; but the trap that the electorate are about to walk into, once again, is that the Fine Gael TD’s waiting in the wings are cast from the exact same mould as those who are now in power. So will anything be different after the next election? Of course not! Just different snouts at the trough!!

  41. We as Irish must release ourselves from the mindset of the Famine and move on.

    • We’re heading for lockdown John. A place where the internet won’t matter and the old networks will survive. An Tuigeann Tú. An Capaillín Bán just took delivery of the coffee machine. See you soon, a chara.

      • Tull McAdoo

        I hope you are not opening this “white horse” anywhere near south Kerry and that it might interfere in any way with my after funeral,cumann meeting and clinic tae and sandwiges. yours Tull McAdoo, South Kerry County Council, and servant of the plain people of the afore mentioned.

        • Now we’ve had quite enough of ye SK lot running across the mountains stealing our women and badgering our sheep. (Or was that the other way round?)
          In any case, we’ll kick our own balls and cumann our own crinnius, gur a míle maith agat.
          But should you overshoot Frankfurt some day, do call.

  42. Actually today was New Moon Day and fitting to start writing down intentions and desires.I am beginning to believe FF must employ an astrologer.This is no accident.

  43. @Pauldiv

    I agree we should enjoy the sights and sounds of Autumn and take regular walks and exercise as an antidote. Regarding David’s or other contributors to RTE’s Freefall ‘freefall’ on good documentary making ‘storm in a teacup’ I imagine particants do so in good faith, don’t have editorial control of the final product, blame the makers.

    OT has Lenihan lost it?

    Heard him on Morning Ireland blowing about the extension of the ‘State Guarantee’ aka ‘taxpayers guarantee’. Would someone tell him the more Nero fiddles while Rome burns, the less meaningful the guarantee. Also he was praising our biggest white elephant of all, NAMA! That hasn’t even begun to work and wreak its potential damage to the Irish property market.

    It would appear the preferred solution for Anglo is to rename the bank and hide its still unfathomed losses for all to see! Then we can pretend its not there!

    At least he wasn’t going on about how well the government’s response to the banking crisis was being received internationally. That canard has been put to bed! There may be a new role for the minister, a remake of the 1933 Duck Soup starring Lenihan as Groucho Marx!

    “All hail his excellency”
    “The Freedom of freedonia rests on you”

    His excellencey: Dear Dentist, enclosed cheque for $500 send it off immediately.
    Aid: I’ll have to enclose cheque first?
    His excellencey: You do and I’ll fire you!

    Humour helps!

    • I’d like to see the budgetary projections and mathematics of a declining population through emigration and escalating unemployment figures reinforcing a declining tax base as a statistical curve over the next five years.

      In particular, what are the average projections year on year over the next 5 for Joe citizen with declining wages, increasing taxes, higher burdens through declining population. Given Joe citizen as part of his ‘work out’ has to pay proportionately for his percentage of €35 bn plus to Anglo?

      I notice the ‘think tank’ get together of FF a couple of weeks ago concerned itself mostly with the banking crisis. No discussion on the budget.

      OT TCD has slipped out of the top 50 universities worldwide, colleges in the rest of the country similar declines. Lack of funding choking off research in TCD. It would seem the policy now is to get students to leave Ireland asap! Expect declining standards everywhere!

      If we don’t get management at the top right, we may as well all leave and leave Lenihan & Co with all the bills. Perhaps declaring each family a limited liability company, if they were prepared to leave Ireland for 140 days of the year, this would generate more jobs locally.

      Don’t even think of allowing them to declare themselves tax exiles:)

      • Using the complex DoF mathemathical model, Two and Two are Four until Tomorrow, we can easily calculate what happens next, given some known factors.

        1. There are roughly 1 million students
        2. There are roughly 1.5 million Civil, Public & Self Servants
        3. There are roughly half a million genuinely unemployed
        4. There are roughly quarter of a million Hopeless & Useless
        5. There are roughly quarter of a million emigrated
        5. From a population of roughly 4.5 million that leaves roughly one million left working in private sector wealth generation.
        6. A large chunk of those, say another quarter of a million are in the FDI wing of the economy, directly or indirectly.
        7. This leaves something like three quarters of a million folks now tasked with the smart,new,knowledge,debt servicing economy.

        Given that;
        a. Everything is now “manageable”
        b. Peter Matthews / Constantin Gurgiev are more or less on the button
        c. Everyone on here are alarmist extremists prone to negativity
        d. We only owe our GNP annually in repayments

        Then in dividing d. by 7. we see that the tooth fairy, patriotically, will have to contribute his fair share as will Lúidín MacLú and his pot of gold.

        All this I have derived from True Economics. Good man Constantin.

  44. Malcolm McClure

    As I suggested yesterday, part of the quid pro quo for the EC bailout seems to be Corporation Tax equalization
    I thought Ireland’s 12.5% rate had been set in stone in the Lisbon treaty?
    How many months will it take for the MNCs to relocate to Sweden or somewhere else with a measure of sense?

    • Tull McAdoo

      It was set in stone Malcolm like Nelson’s bloody pillar and we all know what happened that when his face no longer suited.

    • Malcolm McClure

      Batt O’Keefe and Mary Coughlan have instantly jumped to reassure us that the 12.5% Corporation Tax is not under threat. Just as well, since the government’e entire economic strategy is based on its continuance. Almunia and Obama might have other ideas.

      That tax concession seems to be the only lifeboat on the FF Titanic. Lenihan is doing a sterling job as radio operator, tapping out his SOS messages in Morse code, while Captain Cowen, up on the bridge, turns his telescope astern to consider the ebb and flow of the market tide. Meanwhile the S&P Plimsoll line sinks further and further beneath the economic waves, while the bold O’Keefe, the last remaining bandsman toots his flute and the glorious Mary C, sings a last rendition of “We’ll meet again, don’t know where, don’t know when.”

      • Whilst, to continue the analogy, the normal market forces aboard the Carpathia, which were steaming to our aid, have decided to heave to since, after Captain Gormleys decision to stop burning more fossil fuel, they realised we were a forlorn cause.

    • Deco

      Malcolm – the phrase coming out Michael Martin’s lying mouth repeatedly, this time last year was “CAST-IRON-GUARANTEES”.

      Would you buy a used “Cast Iron GAURANTEE” from a chancer called Michael Martin ? He has gone strangely silent since that exercise in fearmongering last year. Still perplexed at the outcome of local elections that shafted the family business – polyticking…..

      • The problem with cast iron, as you may well know Deco, is that if you give it one good slap of an honest hammer it cracks into several ragged pieces and as such is intrinsically unsound.

        This little known information has obviously never been taught at Clongowes or somesuch elite streaming acadamies.

  45. Tull McAdoo

    We have more bloody awful spin from the Irish Independent today, and it comes as no surprise to me at any rate that Fionnan Sheahan tags on his name to this headline grabbing rubbish which is a clearly structured to deceive the reader. It is only on careful re-reading of the piece in combination with information from other sources that the true picture of what is happening in Anglo Irish Bank emerges.
    It is clear to me at any rate that the headline that state’s that “ Anglo told it will never lend another penny” is a barefaced lie.

    The truth of the matter is that Anglo will only be allowed to make loans to its existing clients to finish projects etc.

    The truth of the matter is Anglo will continue to support the shower of greedy, incompetent, self-centred so and so’s that got us into this mess in the first place.

    The truth of the matter is that Anglo is not open for new business but it will be open for “business as usual” for their insider cabal.

    The truth of the matter is that they are still singing Nama Nama Nama below in Porta Banus.

    So their ye have it folks, take what Fionnan has to say with a big grain of salt ……

  46. Tumbrel Cart

    The reason the government is selling the country, this and the next generation down the toilet is simple. It is personally financially beneficial to the people making the decision to do so. It is economics at its most basic.

    They get to stay in power and situ for longer on very lucrative salaries and expenses. Ditto for the senior civil servants, administrators, professional advising firms, the top bankers etc.
    Every month extra that you can stay in power makes many of them €10,000 or more richer. Treason was often bought for a lot less than that.

    The Irish Officer corps does not do heroics. The country and its citizens are expendable when it comes to the pockets of the these people. Was it ever thus in Ireland? Great little country!

    • Gege Le Beau

      Agree with this comment, and would add that many are holding on to cover their debts and ‘issues’ with the banks, I ask again, how many TDs are insolvent/in hoc with the banks? What about the conflict of interest between being a fully paid public representative and having business interests, massive share holdings or property portfolios on the side? How has this influenced legislation?

      An article along those lines David would surely rattle the cage? Can any of the watch dogs or quangos look into this issue? Do we have a political watchdog?

      The shredders in Anglo must have been doing over time, while other guys got ‘finance’ with no paper work, all legal and above board of course. Democracy my a**.

      • gquinn

        “Do we have a political watchdog?” :- The citizens of the country are meant to be the watch dogs of the politicans. If the politicans are not acting in the best interest of it’s citizens then it is the citizens rights to get rid of there government and to appoint a new government that looks after the rights and needs of it’s citizens.

        The reason why our government screws over the Irish people is because the Irish people allow it to happen but there’s only going to be some much that people will take before we get civil unrest and the country goes into Chaos.

  47. Freethinker123

    “That’s how crises end – when someone makes an adult decision and takes responsibility.”

  48. alanmh

    As a non-economist reading David’s articles, I cant help feeling that there has to be another side to the story, and I would love to hear it so as to make a balanced and informed decision.

    However I never see any feedback in the media to his or Fintan O’Tooles articles. Why not? Why do the people of Ireland accept this? Why don’t the opposition take up the case? I just don’t understand what’s going on…

    What I do know is that I live abroad and am applying for another EU passport as insurance for the future…

    • Here’s the Freefall programme posters are writing about above:

      You can search player for archive material under names/programmes/topics I guess. Newspaper archives/ radio podcasts. Search online coverage at home and abroad.

      For the ‘other side’ for banking inquiry reports

      Transcripts/speeches Dail Eireann

      Should get you going:) OT I don’t think RTE read online blogs for any of their!

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