September 15, 2010

Government's dithering is strangling recovery hopes

Posted in Irish Economy · 183 comments ·

Strolling through Hyde Park in the sun this morning, it is difficult not to get the sense that Ireland is the land that time forgot. The rest of the globe is moving on gradually from the great crash of 2007/08.

Our major trading partner is growing again, its industrial output is expanding and there is a feeling that the worst has passed. The UK is doing just fine, the unemployment rate is 7.8pc, and the economy added an extra 184,000 jobs between March and June of 2010 (the highest rate since 1989).

Even house prices have staged a bit of a recovery with the Halifax house price index showing growth of 4.6pc to the year ending in August. Business confidence in the UK, though still under pressure, is rising.

We, on the other hand, are mired by the worst economic decision-making in any developed country since the fall of the Berlin Wall.

In fact, it is not unreasonable to go further and claim that if you could wreck an economy it would be difficult to go about it in a more effective fashion than this Government and the previous Ahern government have done.

Ireland 2000-2010 will become a textbook case of how not to do it. In economics courses of the future, the Irish disaster will symbolise pathetic and corrupt economic management.

Those who run our country recklessly fuelled the boom with disastrous consequences and now, in the bust, they are making things considerably worse. The problem for us is that the very people who didn’t see the bust coming and cheer-led the country over a cliff are the same people in power now.

Those who warned of the dangerous bubble had to listen to these charlatans sneering in the boom and now that they have destroyed the place, I turn on the radio and they are still there, droning on incomprehensively about things they just can’t understand, because they just don’t have the knowledge.

Thank God the rest of the world is now realising this. I am not just talking about prominent politicians but about the “insiders” — the top civil servants, the top bankers and their professional supporters who tried to rubbish anyone who said their boom was a charade and continue to try to undermine anyone who now is “telling it like it is” to the public.

Monday’s ‘Financial Times’ editorial strongly criticised our Government for its strategy on Anglo and went on to recommend — as this column has been doing for over a year now — that making the bondholders pay is the way out of this mess. The respected economic commentator Wolfgang Munchau declared (also in the ‘Financial Times’) that Ireland is bust and faces a potential Greek-style crisis.

While these comments are not new or in any way unique, they do confirm the growing realisation everywhere that this Government’s banking policy is inept. The reason the ‘Financial Times’ is important is because when it says things or when a Nobel Laureate says things, it gives the Irish economic establishment the “permission” to think the unthinkable. It allows them to peek out of their intellectual straightjacket and begin to do some serious analysis.

We in Ireland seem unable to entertain what some of our own economists have been saying for years, and only when an outside expert suggests something do we feel that we are “allowed” to think for ourselves.

It was the same in the boom. When a local commentator warned that the whole boom was a scam, he was vilified. Then eventually when a foreigner makes the point belatedly, he is listened to intently. There are many reasons for this deeply insecure intellectual position, but let us leave them for another day.

At this stage, we should just note that by the time the ‘Financial Times’ makes its judgment it is already too late. It was the same in the boom: by the time it and other “reputable” publications were writing about the Irish miracle, we were already in bubble territory!

Hopefully the bust will change our obsequious attitude to our neighbours and what they might think of us. We have got to learn to trust ourselves and make economic judgments for ourselves, rather than wait for someone else to twig what is going on here.

Apart from the gradual realisation that we will default, the most interesting, and in terms of contrast, the most stark piece of news to come out of the City of London this week, is that banks have never been borrowing more in the market in order to lend out. This implies that a substantial part of the banking world is back in something like rude health. It also means that for all intents and purposes the credit crunch is over almost everywhere except here.

But not the Irish banks, oh no, the banks here are bankrupt, having to raise capital — now multiples of their total market value — just to stay afloat until Christmas. The Government’s dithering is strangling us.

Now let’s move from the banks and London to the continent where the EU Commission has just upgraded its growth forecast again for Europe. This is good news for the EU but bad news for Ireland.

The reason is simple. We are in a currency union that we have no economic right to be in. By this I mean that we trade less with the euro countries than we do with the UK and the US. This is because growth means a rise in interest rates and the negative impact of higher interest rates far outweighs the positive impact of higher trade opportunities.

Furthermore, you could make the broader point which is that as we have become politically more European, we have become economically more Anglo-Saxon. So we are left with an Anglo-Saxon reality of huge personal debts but the European aspiration of the euro.

The main reason the UK might be getting out of the recession faster is that it dropped its currency to offset the impact of the domestic recession and the budget cuts the government is about to make. We on the other hand are trapped in the euro — a strong currency in a weak country. In the history of economics there are few certainties but one is that a strong currency makes a weak economy weaker.

The most damning statistic of our entire euro venture is that from 1990-2000 when we had our own currency and we devalued in 1993 to get competitive, Irish exports grew by 360pc. Between 2000 and 2009 with our overvalued new euro currency, Irish exports grew by 0.3pc. That says it all really and yes, that figure is 0.3pc, not 30pc!

So when European interest rates rise to reflect the new growth in Europe, Ireland will still be in the doldrums and any rise in rates will prompt a series of mortgage defaults which will clobber the banks.

Turning the corner? Snap out of it.

  1. Great article!

    You have to wonder if we can’t manage ourselves, if we realise the euro is no longer for us, but instead is the way to economic suicide, who do we turn to?

    Which currency should we track? A Canadian dollar/US dollar relationship; or, Sterling/Punt. Either way, we’ve primed ourselves well with Anglo and NAMA for default, for which we wait!

    Perhaps they will get the message from the markets present policy is not working, one gets the feeling the pilot has already bailed out and the crew along with him!

    ( any chance of having most recent comments appear first as it takes time to wade through pages with hundreds of comments from ‘older comments’ to ‘newer comments’ etc )

    I’m hopeful the changes that will inevitably come will be positive!

    • gaffer

      After watching the latest examples of political dithering and lack of insight on RTE’s Frontline last night (Sept.20th), 2 things really struck me.

      1. The incumbant Govt. is too frightened to make any real, significant changes and their policy seems therefore to be sit tight and hope it all blows over by the end of the current dail term. They still are holding on to party political hope vs. acting in the national interest

      2. The opposition, on the other hand, must be terrified that for some reason an election is called before the next budget. The opposition would then have to make all the tough decisions (the necessary revisions and cuts to State services, Public Sector Pay/Pensions, possible temporary leaving the Euro club etc) and incur the wrath of their own supporters. On this basis it suits them to keep the Govt. in as long as possible, so that some reform may finally take place or at least until the IMF steps in and forces some genuine change anyway.

      This paralysis will continue as DMW has already written until something breaks the pattern. Most likely the coming financial implosion he writes about is quite possibly this catalyst we need to force the politicians to deal with the mess we are all faced with.

  2. Philip

    Let’s put it another way. As long as the current bunch of looneys (who cannot tell slurring from hoarseness) are in power, there will be no investment. Ireland is not a place to do business while FF & GP are holding the reins.

    The Euro, the debts etc etc are a side issue which should not be allowed to cloud the fact that we need an environment where someone comes here, has a few bob, feel safe in the knowledge that they can conduct business with ease and certainty. No messing with nonsense rent takers. European bank needs to see who they are dealing with – maybe even lock them up and throw away the key. We are dealing with a ring of economic paedophiles who have no problem blackguarding small and growing enterprises.

  3. Deco

    I agree stronlgy with the commentary
    We in Ireland seem unable to entertain what some of our own economists have been saying for years, and only when an outside expert suggests something do we feel that we are “allowed” to think for ourselves.

    It was the same in the boom. When a local commentator warned that the whole boom was a scam, he was vilified. Then eventually when a foreigner makes the point belatedly, he is listened to intently. There are many reasons for this deeply insecure intellectual position, but let us leave them for another day.

    At this stage, we should just note that by the time the ‘Financial Times’ makes its judgment it is already too late. It was the same in the boom: by the time it and other “reputable” publications were writing about the Irish miracle, we were already in bubble territory!

    Hopefully the bust will change our obsequious attitude to our neighbours and what they might think of us. We have got to learn to trust ourselves and make economic judgments for ourselves, rather than wait for someone else to twig what is going on here.

    There is an irrational, ridiculous obsession with upholding the veneer and being pleasing to look at, that is driving a stupid policy framework. I cannot understand it anyway. And it is obsessively irrational. We have endured two decades of increasing and persistent propaganda about pride, as if the sun shone out Ireland’s ass. Since CJH appeared on the Champs Elysee to be proud, when Stephen Roche cross the line, every pride button has been repeatedly pressed to obloviion. When this crisis began, this should have been a moment of humility, except instead it morphed into another form ‘guarding our international reputation’.

    If you want to see how to handle a crisis by being practical and not being concerned about international reputation, just look at Iceland. Iceland had a woeful reputation, to the point that Gordon Brown decided to treat Iceland on the same basis as ‘axis of evil’ members like Iran and North Korea. And guess what Iceland is getting out of this mess.

    Strangely enough, while the government might look absolutely clueless in purely pragmatic terms, they know that they express the correct psychological cue to connect with a significant proportion of the population on the one side and the commercial etablishment (IBEC) on the other, the union bureacracy on the other (ICTU) and Brussels on the other. In other words they are doing exactly what is expected of a modern political party in a decadent Western society relying increasingly on Asian funding to stay propped up.

    Some American commentators are know saying the dollar is doomed because the politicians keep increasing the commitment level of the state structure. In other words, they are incapable of saying ‘we cannot afford this’. Instead the response is always ‘we cannot afford to be without it’.

    Lastly, I am not so certain about Britain getting out of this mess. Britain’s property market has very strenous supply restrictions in place, which have the effect of pushing up the price above it’s long term equilibrium. There are brownfield sites in British cities that are uneconomic to develop as a result of the restrictions in place. If these were to be removed, then there would be surge in building activity in Britain which would suck in construction workers from here. It would also act as a prop to NAMA and solidify the 25% of NAMA loans on British property. Unfortunately, this does not look like it is going to happen for some time. But if it did it would be more use than the ECB propping up our banks. It is also in the long term interests of British competitiveness.

    • Remember I commented long ago on Britains problems and the concept of the “Realm”.
      It’s in full swing now and that is what David has experienced during his stroll. Yes Britain has a long way to go but they will stick like glue to each other in their own way to pull out of this mess.
      And then quietly, in their own way, heads will roll so this won’t happen again.
      They’re a resilient bunch under pressure, I’ll give them that.

  4. DavidIreland

    Hi David,

    20 years of cronyism, brown envelopes and rip-offs has a majority of the nation very worried about what is going down, why, by whom and for whom. Why are the government doing things that make no economic sense. Are the favours in the “no favours asked or given” being called in.

    Colum Kenny has been writing in the Sunday Independant for the past two weeks asking where did the unrecoverable money that Anglo loaned actually go. Has it been offshored? Maybe David, you could use your good standing to alert the people in a future article to the possibility of a gigantic three card trick being perpetrated on the nation.

    I’m not a conspiracy theorist and I may be missing lots of things but I am worried.

    Thank you and keep up the good work.

    • biskalero78

      You are dead right!! Don’t be thinking your a conspiracy theorist. Conspiracy = an agreement by two or more persons to commit a crime, fraud, or other wrongful act. Now this is by no means believing Elvis is still alive. These are legit questions people have, the word conspiracy has been shaped in the last 50 years to show people who have valid arguments to be crazy loonies. This is how you descredit people, very simple.

  5. biskalero78

    Im sitting here wondering what the hell happened to our country ? Drunk leaders in the morning ? Really, you know we all deserve to go down the tube because we have all stood back and watched it all happening, im not a violent person but the people of Ireland won’t realise the magnitude of the situation until there is blood on the streets and believe me this is not too far away if we keep going the way we are. Sad times…

  6. wills


    At least the Euro is working as a containment mechanism on Ireland.

    Irish society is now at a critical juncture.

    What happens next is truly sociologically going to be fascinating.

    Will the insiders manage to pull this off, or, will it be one stroke too far pulling the crony network edifice down in on itself once and for all.

    I think what we are faced with here is a generational showdown.

    Babyboomers V Generation X.

    In times gone by the elder generation shuttled off this mortal coil quietly and bowed out to the next generation acceding into power.

    Not this time.

    Full spectrum dominance to the bitter end seems to be the modus operandii at stake and the babyboomers are not going anywhere unless carried out on a stretcher.

  7. eamondo

    Hyde Park, one of the benefits of living in London, along with all the other parks. I would suggest that the Halifax’s growth figure is more applicable to the sought after suburbs of London, rather than e.g Sunderland, Goole, Dover, Belfast, etc.

    Whist your “bank/government bashing” articles are totally justified, have you ever suggested that perhaps the black economy of any country is in any way also partly responsible for the harsh economic measures currently in progress in the Republic?

    Whether in growth or recession it is always the case that your 9 to 5 taxed at source workers are subsidizing those who either fiddle the books or are off the radar. I have 7 cousins who I am still in contact with in Ireland, 5 have undeclared incomes “on the side”, which I can’t help but notice are an essential part of their comfortable lifestyles. Quite a percentage.

    In times of recession, the black economy grows as margins are cut to the bone and operating either all or part of one’s business, becomes the “acceptable” way to increase income.

    No one knows how large a black economy is, it can only be estimated. Greece is a classic example of poor taxation collection method; how far behind is Ireland? You’re a good numbers man David, take a stab at it. Perhaps it is time for the Irish revenue to tighten up/speed up its investigation procedure and take the pressure off the 9 to 5 person, thats to say those who are not running a business on the side. Time to give them a bashing too!

    I sometimes feel that those moaning about the state of the economy are themselves part of the problem.

    Move on 12 months in the UK, with the retail industry bracing itself for a sharp downturn, VAT to increase by 2.5%, I can see things this side of the Irish Sea heading the same as in the Republic.

    • Deco

      The system sets out to deceive the people, and then people respond accordingly.

      Officially it is a crime if they deceive the state.

      The state wants to get it’s hands on the proceeds of their labours, so as to keep the “show” running.

    • I don’t know how big the hidden economy is, the adjective “Black” being a bit rude to certain peoples, but shurely it’s not greater than the 24bn dumped into the banks.
      I lived through the Thatcher years in Britain where much ado was made about nixers and foxers by shysters whose policies forced those people underground just to survive, the most classic case being blaming single mothers for the countries woes. When JK Rowling revealed that she was a struggling single mum who got lucky, the victimisation brigade moved elsewhere.
      In a failing society bereft of mature intellectual analysis, the weakest are the easy target.

      Ask any blind carer who lost a fiver a week in the last budget. That fiver was far more damaging to the household than any levy applied to the cossetted ones.

      “I’ve done my bit in cutting back on the Foie Gras, doncha know. These blasted peasants could do without a breakfast or two in the National interest. After all, most of them are fat as moonpigs in any case. And they’re all running round in those white vans fixing taps and all that for cash.Should be a law against it”

      Ho Hum…heard it all before in a Galaxy not too far away.

      • For clarity;

        24bn Euros = 24,000,000,000.00

        5 Euros = 5.00

        And I, me and mine are certainly not part of the problem and neither is any other poor sod around here trying to keep their head above water in a sea of bureaucratic treacle designed to keep Farquhar in his soft pensionable job.

        • eamondo

          A conservative estimate of the “black economy” in Ireland is 14% of GDP (7% in UK), =18.7bn euro or 362 million per week. “My little bit won’t hurt” doesn’t really wash with those seeking jobs within firms unfairly undercut by the tax dodgers, both small and large scale.

  8. manofiona

    Can we keep the Euro out of this? Or at least put its place in a proper perspective? The fact that Ireland trades so much with non-Eurozone countries is not an argument for not being part of the Eurozone. California must do a zillion times more trade with China or Japan than with North Dakota yet it shares a single currency with North Dakota and not with China or Japan (or having its own California currency). Germany’s trade with Slovenia is miniscule compared with its trade with Japan, the US, Russia or perhaps 50 other countries, yet Germany and Slovenia share the same currency. The real issue is that the Euro cannot effectively function as a single currency unless it is as part of a full economic union and that requires there to be a full political union as well. It is because California and North Dakota are part of a genuine economic union (by virtue of being part of a genuine political union) that it makes sense for them to have the same currency even though they are not major trading partners.

    In today’s FT, Christine Lagarde admits that putting in place the rules which Eurozone states would be obliged to follow for their fiscal policies (and sanctioning breaches of those rules)is proving a very difficult task. It is an extemely difficult task to agree those rules and an impossible task to effectively enforce them. It should now be clear that the Eurozone can succeed (and potentially succeed very well) only if the full implications of an effective single currency are accepted ie, genuine economic union, based on a genuine political union.

    • biskalero78

      Succeed ? Im afraid not, joining the Euro was the worst thing for the country. Never give away your exclusive right to print your own money, look what happened to America, a bunch of private banks printing the money for a percentage of every dollar printed. Someone tell me if this is normal ? Look at America, it’s on the verge of collpase , there biggest export is the dollar.

  9. Deco

    { as we have become politically more European, we have become economically more Anglo-Saxon. }

    Very true. We seem to be having Californian consumption and debt levels, and the French ability to generate the sort of employment and business activity that is needed to pay for this. It is a competely mismatched equation. We have been chasing the superficial and absolving ourselves from any responsibility for understanding the rudimentary. Trying to get the best of both, and ending up with the worst of both. We end up bankrupt like Democratic Party run states like California, and with the persistent high unemployment levels seen in France.

    This should not be a surprise because intellectually these are the two directions that we have been following in the past two decades. We have ended up with the reality that we should have expected, expect we completely miscalculated. As David alluded to here, and as Morgan Kelly said the other night, anybody who said it was unsustainable was told to shut up (and presumably stop making an embarassment of the establishment). Roy Keane’s biggest crime in Saipan was telling the world what was going on. He embarrassed the sh1te out of the FAI, and there was an implication on the whole establishment.

    The only country more screwed up, that I can see is Spain with 20% unemployment (and increasing) and bank problems that are swept under the carpet by the ECB, and Brussels, because if known they would sunder the Euro. But at least they have a soccer team that wins titles. We are winners at being proud and going down meaningless cul-de-sacs.

    We are living with the consequences of a collective chase to get exactly what the establishment in Ireland wants for astethic requirements. The Show has ended.

    • Pretty sure California’s major problems started out under Arnie, who is a republican candidate. Though I’ll grant you he is married to a Kennedy.

      • Deco

        Well, the root of the problem goes back longer than that. Reagan was governer in the 1970s, but that is probably too far back.

        The California State Level Representation has been overwhelmingly Democrat for decades. So has New Jersey (also near bankrupt), Illinois, Michigan. There is a definite, and undeniable corelation. And we have Tammanny Hall here also.

        The damage was done long before they decided to make a Movie-Star into Governor. Expecting him to fix is is only for those whose reality is a blur with their cinematic experiences.

  10. Deco

    We don’t bury our heads in the sand in this country.

    We stick our heads up in the clouds.

    It achieves the same effect, to construct your own reality, and thereby completely misinterpret reality. Construct your own reality to meet the requirements of the pride construct.

  11. Gege Le Beau

    Sorry David, cannot accept your opening paragraphs.

    Innocence abroad perhaps,it requires some depth/analysis which may not be possible while walking around the park.

    The 7.8% figure for unemployment is nowhere near accurate, Labour, like all governments, have been massaging unemployment numbers for years. A lot of major British cities are extremely run down, major social problems, enormous inequality and appalling lack of social mobility, high incarceration rates, child poverty is off the scale (worst than most European countries according to an analysis in the NewStatesman), people have got to read Wilkinson’s book ‘The Spirit Level’, where the UK and US have some of the worst measurements across the spectrum.

    From Tim Lott in the Independent: “After 12 years of Labour government, the fact that, for instance, 75 per cent of judges are privately educated, as well as more than 50 per cent of top journalists, when only 7 per cent of the population goes to private schools is a damning picture of inequality in Britain.

    The litany of injustice is depressing. The Russell Group of elite universities has only 16 per cent of undergraduates from the poorest economic backgrounds. In contrast, 68 per cent of top barristers went to private schools. Britain is one of the least socially mobile countries in Europe.”

    In 2007/08, 13½ million people in the UK were living in households below this low-income threshold. This is around a fifth (22%) of the population. Over the last decade, the poorest tenth of the population have, on average, seen a fall in their real incomes after deducting housing costs. The UK has a higher proportion of its population in relative low income than most other EU countries: of the 27 EU countries, only 4 have a higher rate than the UK. The proportion of people living in relative low income in the UK is twice that of the Netherlands and one-and-a-half times that of France.

    The UK is in for a hell of time once the Conservatives start cutting, there is talk of wide-spread strikes from the Unions in an effort to resist the neoliberal agenda, the coalition could be split open on any issue, unemployment is about to go through the roof, and we know the consequences for all aspects of the economy, including property when that happens, plus UK debt is quite frankly enormous and they have foreign wars and defence contracts sucking on the State’s finances.

    There are other countries hanging on by their finger tips (Portugal, Spain, Greece, Italy), once that underbelly of the European project starts to fail then see how the Germans react, this ain’t over by a long shot, especially if the US continues to nosedive, which it is doing in spectacular fashion, when the Republicans sweep into power in November they will block anything remotely progressive, and will cut wherever they can, in the process politically bring Obama’s one term closer to a reality.

    As for Ireland, concur with the points made. Failing State. Anglo will doom us, if it doesn’t, AIB (which is going through a fire sale to try to shore up its blown balance sheet, the jewel of the Polish operations is in the pawn shop), and Bank of Ireland with their begging bowls surely will.

    These bailouts coupled with the complete absence of credit will ensure unemployment hits the 500,000 mark (officially that is, I suspect it is already there), politically we will remain in a vaccum and FF will have their Christmas holidays to once again eat and drink themselves into a stupor (like those going down on the ship of State).

    We are not as competitive as we should at home or abroad, plus we now have inflation, so rising prices on declining wages, no wonder people are turning to St. Vincent De Paul and the Samaritans, sinking ship for sure, where debt free status and cash are Kings.

    “The Society of St Vincent de Paul has seen a big jump in the number of calls for assistance. In the first five months of this year, requests for help in Cork were up 53 per cent, in Galway city they were up 46 per cent and the Dublin region recorded an increase of 37 per cent.”

    • Gege Le Beau

      Despite all the brains, all the ‘dragons’, all the senior and highly paid civil servants, all the finance experts, bankers, stock brokerages, economists, Professors of Finance and Businesses, Eddie Hobbs and other gurus, and anyone else you care to mention, we still had to pay €34 million for external financial advice.

      So we have overspend on road projects and other contracts (waved away by Bertie on the Late Late – Vincent Browne mentioned a figure of €13 billion enough to cover the cuts from the last budget, the coming one and the next if our finances had been managed properly) as well as payments for companies from all over the place, who needs the Greeks bearing gifts when you have the Irish quick with the State cheque book………all bets are off Charlie, all bets are off.

      €34 million spent on Banking Advice by Irish government (and we still got it wrong)

  12. Father-fool-em-all

    The numerous references to “intellect”, or lack of, struck a chord with me. My dear old dad who is now headin towards 75 and who left school and a class of 65 pupils at age 13 always maintained that our guys in politics were not “intelligent” enough. Yep they were cute as hell and applied themselves dilligently to studying the system to the benefit of themselves and their supporters but never thought of the big picture unless there was some gain somewhere for some of their ilk. Now Pops never proclaimed himself anything but an ordinary PAYE worker educated in a class where one could go 2 months before being asked a question but he is intelligent enough to see through our political elite and the system they milk. A system they will defend to preserve to the death. We need the IMF, EMF , ECB or whoever to come in and take control from this gang of pilliging banditos.

    • Deco

      Your Dad – he knows about Common Sense.

      In an age when the media drives the mood of the populace, and bureacracy exists to ‘direct’ the population, common sense is no longer necessary. He is obviously too old to understand, that his attachment to common sense is old-fashioned.

      Try being sophisticated instead. And while your at it, discover the benefits of spending money on a whim and sticking it all on your credit card. In a lonely world, where contempt is the religion, you learn to rely on your flexible friend.

      And now, Common Sense has come back with a vengeance. It always does.

  13. Deco

    A warning to any young people thinking that Canada will provide them with the lifstyle that they deserve. 3 out of 5 Canadians are struggling. Far away hills are green….

  14. Black Cat

    Looking around nowhere seems green, I know some Galway people who have left for the UK already and they seem a little shell shocked by the pace of working life there- do you think Ireland will really get much worse or are we looking at things wrong and is it just a matter of having too high expectations?

    • Cracking exchange over on twitter between Constantin Gurdgiev and Stephen Kinsella. The two boys are debating , since all their economic forecasting of a 39bn final cost for Anglo was spot on the money and ignored, whether they should disembowel a goose and use it’s entrails to catch someones attention in the DoF.

      We need Salvador Dali to return and paint his whole mess. It’s surreal beyond belief.

  15. Gege Le Beau

    Recovery Fades in UK; UK Trade Deficit Hits Record; US Trade Deficit Shrinks; Jobless Claims Drop or Not?

    The recovery in the UK has faded, with manufacturing, housing, and services all weakening in August. In response the BOE Mulls ‘Second Wave’ of Stimulus.

  16. Alf

    Hi David,

    The size of their economic illiteracy is trumped only by their massive inferiority complex; focusing on “what would the neighbours think”. They parrot over and over the
    mantra “There is no other way!” like brain-dead zombies. You can forget logical arguments or facts, company law or even best economic practice. The only “show in town” is to feed off the
    ignorance of the average voter. It’s going to continue for as long as people stay ignorant on the difference between government bonds (backed by tax revenues) and company bonds (backed by company revenues). They will continue to tell us that nobody will
    lend to Ireland (based off tax revenues) because one incompetent bank went bust. They will tell us the “Markets” will turn down perfectly viable government bonds based off the Irish taxpayers prospects just because of one bankrupt bank that could never even earn tax revenues anyway. This lie has to be debunked and countered for the Irish to have any chance at all.

  17. toh

    This mad inferiority complex is not just manifested in the area of economics. Economics is a bit complicated but rock music isn’t. Yet Rock was 30 years old before an Irish rock band seemed to able to make a proper living without being endorsed by our British cousins. We could not even even ourselves to judge our rock and roll bands!

    (I refer of course to the mighty Aslan and Christy Dignam, who are still going strong since the 1980′s without that elusive hit single or CD in Britain)

  18. Colin

    Great article David, you’re in top form lately.

    I just think the government simply doesn’t care what state we’re in. FF know they’ll get at least 45 seats in the next general election so the odds of getting re-elected are good.

    The biggest problem Ireland faces is the section of its people who will vote FF no matter what catastrophe FF inflict on the Irish people. Once we de-program this subsection of society, we can then, and only then progress.

    Keep up the good work. We know the history books will treat you kindly.

  19. doccer

    Very goood David, but remember: our crash started in 2006, when house prices topped off TWO YEARS in advance of the Lehman Brothers crash. We’ve been stagnating for 4 years not 2.

  20. BrianMc

    All (you know who you are)

    Constantin Gurgdiev’s manifesto summarises what needs to be done.
    It probably needs additions & tweaks.
    Got any ideas?
    True Economics: Economics 27/8/10: Manifesto I (?)

    No-one else, particularly in Leinster House, will catalyse change.


  21. Peter Atkinson

    Strange as it seems even Iceland is making somewhat of a recovery.It used to be “change the C for an R and six months” and now its six months the other way.Iceland are six months ahead of any recovery here.We converged and Iceland are heading north and we are heading south.

    Unfortunately we can’t keep joining clubs getting the freebies and when they enforce the rules we want to jump ship.The EU and the regional and structural funds are one classic example.I know the euro ain’t a great idea but unfortunately its here to stay and we better get our heads around it.

    What we would need to stop doing is spoofing our way around the world with the notion that we are some rare exception to economic theory.We spread ourselves thin and they called in our bets, plain and simple.Now take the losses, lick our wounds, get over it and get on with it.The earth shook, the banks wobbled now lets stop holding them up, let them fall and use our resources to rebuild better ones that work for the people and not the spoofers.

    Just look at the 80s.In Britain they enjoyed a boom,short lived as it was, at least they had it, while all we had to look forward to was the champion spoofer CJ waxing on about tightening our belts.

    I firmly believe the hierarchy think that if they hold on to Anglo long enough people will get bored listening to it and forget all about it and it will just disappear.Remember the PMPA/PMPS and the ICI.Nobody talking about those fine establishments these days but only because its nearly 30 years ago.In Ireland traditionally eaten bread is soon forgotten.Let it go and get on with the business of rebuilding the country.

  22. Dante’s Inferno :
    I am sensing the frustration David is experiencing when he observes the ‘new growth’ elsewhere while Ireland lingers in the doldroms. The new hymn sheets in the EU and USA are singing praise to glory while Ireland prepares to topple over and loose its sovereignty.Had David walked closeby along Brompton Road he could have spared himself waiting in a long queue in Dublin and renewed his express passport thus prolonging the renewal date and be ready sooner when everyone will have to jump ship.What replaces the vacuum left immediately after bankocracy? This is a worrying question and increasingly so.
    The Berlin Wall was a cold experience when it was there to visit and native west Germans then were petrified to travel inside or go by train from Hamburg to west Berlin as that train travelled all through east Germany and stopped in a few major stations and checked by armed soldiers with machine guns and alsations both inside and each side of the train for smugglers etc .I use to watch the frozen cold silence of the few native Germans on the train and their fear written on their faces as the soldiers passed by.It was the same as the re-enactments of the world war films as we knew them. Fredrickstrasse and checkpoint charlie were the only other entrances for the public into east Berlin and by foot only.Once on the other side you immediately sense the coldness of life and how slow the pace passed by .Shops were almost empty of goods and packaging was non existant . .I sometimes wonder since did these shops inspire the owners of Lydle and Aldi with their philosophy.Colours were dull and grey and black and the people were relatively ‘skelethel type in appearance’.The last evening on my last day in east Berlin I heard the gunshots by soldiers when they killed a driver of a car while he tried to crash-gate through check point charlie to the west.Sadness filled the air and the public were able to observe the east German soldiers drag away the body of the driver while casting back cold stares at those watching from the west.It was chilling.

  23. RE “.I know the euro ain’t a great idea but unfortunately its here to stay and we better get our heads around it.”

    We need to free ourselves from this lemming like attachment to the euro completing eroding any bargaining position we may have with our political latchicos here in Ireland and in Europe.

    It’s simply not true to say we cannot leave the Euro. Leaving the euro has many advantages for us none the least of which benefiting from an improved cost structure that is currently returning Iceland to growth. We have a large infrastructure ready to boost our tourism industry. A lower cost base can attract foreign investment rather than deter it with overpriced incompetence.

    Our vassal state structural dependency with long term crippling debt reparations tied to an overvalued euro that is ruining our cost base is a recipe for economic disaster. However much our peacock incompetents at EC and European parliament level might attempt through propaganda to brainwash us Otherwise!

    We need a true programme of economic recovery based on default, debt renegotiation and most importantly abandonment of the euro.

    Otherwise its a basket case economy with Sheriff of Nottingham ‘give back the keys’, ruinous employment prospects for the young, emigration, punitive taxes, deteriorating social services particularly in health and education, more social disintegration through rising crime rates and more destruction of our economy.

    • Perhaps the EC might like to pay Ireland to leave the euro

      • adamabyss

        ‘chucking pixies out the country’ haha!

        I’m not a politically correct freak but a little decorum in an article doesn’t go amiss, as well as some proper grammar!

        • In the situation we’re in, in spite of my postgrad quals in English, as a textin Joycean, I couldn’t be arsed about Decorum, grammar, Content is what Counts, not lemming grammar.

          • adamabyss

            True cbweb but it was the journalist who referred to the Roma as ‘pixies’ not yourself. They get a rough enough deal as it is without being insulted and belittled.

          • “They get a rough enough deal as it is without being insulted and belittled” totally agree with you there. OT Hope we get a book out of you on your travels sometime:)Best

          • adamabyss

            Working on that cbweb thanks; whether it gets published or not is another matter. There’s plenty of others on here too who have done their share of exotic travelling…

    • Deco

      In today’s great fairytale of polical intervention and endless quangoes….The Sheriff of D2 has PR and ICTU to tell the peasants that he the Sheriff is the real Robin Hood….and instead of soldiers he has quangoes….as well as a hundred different stealth taxes…..

      Sure it is all for a good cause….bailing out the establishment….

  24. Deco

    I smell a rat.

    Apparently Micheal Martin, a kind of a drier, more suave and more sophisticated version of the ditherer if you like, is the favourite to be the next FF leader. The political establishment seems to only be capable of going from awfully bad to absolutely diabolical.

    • Tull McAdoo

      Correct me if I am wrong Deco, but does Treasury Holdings own the building that NAMA works out of at the moment.? I seem to remember posting something on this around this time last year.

      • Deco

        I think you might be correct there. There was a hullabulloo over the opening last week, and I remember hearing something along those lines.

        wud really like to know who is the banker of choice behind all of this. Now, that would really be enlightening to the public…..

      • Tumbrel Cart

        Treasury Holdings or part of its group owns the NTMA building that NAMA work from.
        So the NTMA pay their monthly upward only lease to Johnny Ronan, every month on time and on the money. Meanwhile Johnny delivers a pile of his bank loans to NAMA in the very same building and says ‘they are all yours, have a nice day, I’m off to Morocco for the weekend’. ‘And by the way, I’ve done a little corporate restructuring, all above board of course!. You get to keep the Battersea loans, I’ll explain the rest later.’

  25. Gege Le Beau

    Neoliberalism is destroying Europe
    by Christian Marazzi

    Austerity and repression won’t bring Europe out of crisis, we need a social struggle against free market politics.

    • Deco

      Well, that would be if there were free market policies in place….Governments bailing out banks can hardly be classified as free market….it is more along the lines of what Orwell described in Animal Farm….IngSoc….Some animals being more equal than others and always having theit snout in the trough.

      If it was a Free market Anglo, Nepoto would be dissolved liquidated businesses by now.

      The problem ten years ago was too much free markets.
      The problem now is socialism for the rich – paid for by everybody else. As Gerald Celente commented these people are so stupid at what they do, that they have to get the rest of us to sweat and toil to pay the bill for their incompetence..

      • silentobserver

        Glad you replied to this Deco, as the problem here was never the free market or capitilism. It was lack of free market transparency and regulatory enforcement that was the problem. My concern when people try to make it ideological, as many are, is the real threat of extremist political groups using it for self serving leverage. That’s what leads to wars. Insolvent companies, whether banks or otherwise shouldn’t be propped up by the state. And no one company, bank or otherwise, should become so powerful that they can threaten the state with economic or social collapse if not bailed out by the state.

        • Gege Le Beau

          Yeah, you’ve got to watch those extremist political groups, you couldn’t have them in Ireland, oh no, we tolerate conservative Fianna Fail economic terrorism, but you can’t mention demoractic socialism……..

          Give me a break, the country is facing the abyss and still people cling on to failure and criminality. Fear, the Irish are masters at it.

    • michaelcoughlan

      Hi Gege,

      The reason we are in the shit is not because of the free market it is because state intervention has made the market un-free and stopped it in its tracks. State intervention has preventing capitalism from exposing the scumbags in the banks and regulators office who knowingly took their obscene salaries when they knew the practices they were pursuing were unworkable. Just to make it clear for you a destroyed Europe is what happens when the Allied Air Force carpet bombs city after city after city in Europe. I don’t think there is any possible comparison between what is happening now and the fate which befell Dresden for example.

      • Gege Le Beau

        michaelcoughlan, double think worthy of George Orwell’s warnings.

        Capitalism exposing the bad guys, have to say that is a new one for me.

        • michaelcoughlan

          Hello Gege,

          I would like to respond to this post by paying you a compliment. Of all of the contributors the one I tend to look for first are yours as I find them the most thought provoking and insightful. I also find your posts very articulate, well referenced and thought provoking demonstrating an outstanding capacity for analysis, interpersonal communication and presentation. May I respectfully suggest you re-read your reply to my previous post and provide an analysis on it free from the sarcasm it currently contains? The free-market is doing exactly what you sarcastically dismissed in you post. It is exposing the grotesque incompetence which became all perverse and per vase in Anglo, the regulators office, INBS etc. Etc. This is why they are so bankrupt! I can also tell you Gege that the message you have consistently preached of the need for a greater sharing of the wealth in society IS NOT BEING LOST on very many people. The following link will show you that the world’s richest capitalist is to GIVE AWAY 85% plus of his fortune.
          May I very respectfully suggest that when you go off on a tangent about neo liberalism, capitalism etc. you do yourself and the very important message you so articulately convey an enormous disservice because you dissipate you energy from the most important points you have consistently preached which is that the wealth in society needs to be shared more effectively. The most important point that I would like for you to take from me is that the wealth creation process itself can never be allowed to be controlled by any other entity than the person or organisation responsible for creating that wealth in the first place. This is because if such an outcome were to prevail then nobody anywhere would bother to create wealth at all. This is because the most important attribute of our human make up is freedom and if you were to control the wealth creating process you interfere with this most prevalent human characteristic. We then would all be truly equal, living in abject poverty due to the fact that little or no wealth would be available to share in the first place.

  26. Tull McAdoo

    “Ireland is different” is something we have heard, from people, who more often than not were ‘plugging’ their own pet project and were in a sense asking people to suspend their disbelief in the impossibility of what was being proposed. Well now I am sure some of ye will be glad to hear that Ireland is indeed different. Ireland has a small open market economy and it is important to understand that when you seek to resolve the present difficulties. People who cite some of the measures that are employed in Germany or Japan or Great Britain and suggest we should be doing the same do not understand the dynamics at work in these various economies.
    Keynes to be fair to him always warned that his policies of fighting recession with stimulus would not work well in small open market economies. Now if you accept that Keynes was a smart cookie then it should come as no surprise to you that the opposite proposal from followers of the Austrian School in particular for allowing the market to find its own level, invisible hand, laissez faire and all that good stuff will not work well either for the equal but opposite reasons. The reason any of these measures will fail is because there are people in Ireland who control the Irish economy and run it for their own personal motives and failings i.e. greed, power, clerical abuse, tribalism etc.
    Take for example Charlie Mc Creevey who introduced a number of policies to stimulate growth in the construction industry and amongst the land hoarding class in Ireland. Now to be fair to Chuckey you could argue that he set up the Pension Fund and pumped money into it from the property bubble and I am sure he thought that when the inevitable bust came in property, this fund could be tapped to provide a source of stimulus to re-balance the economy and after the “reset” we could re-inflate again and Bob’s your Uncle la di da. Now what Chuckles did not anticipate was that the bucks further down the trough i.e. Seanie and co. would bankrupt themselves in this whole process and de-rail the very vehicle that was necessary to carry the stimulus money, that would be available from the pension funds. Chuckles did not factor into his equations that the Banks would bankrupt themselves in a mad greedy scramble for bonus’s and profits. Chuckey you could argue put to much trust in the “invisible hand “ of Paddy Neary and Johnny Hurley and Liam Reilly et al. to keep control of things and keep the Banks from de-railing themselves.
    The upshot of all this is that the stimulus has been diverted away from where it is needed if you follow that school or the “invisible hand “ is frozen and cannot act as the interference that has diverted the stimulus is the same interference that is preventing the market from finding its new equilibrium or clearing price.
    I am just wondering where a fellow could buy a good set of sewage rods to clear the shit out of these drains, as even the markets are starting to back off from this smell. How many bps over mid-swaps will it take for these vested interests to realise that the market is telling them that “the game is up”.

  27. Philip

    As I said above, root cause of why Ireland is faltering (and always has been for the last 100 years or so), has little to do with the Euro or our debt or anything else which relates to external factors. Ireland is simply a terrible place to transact business.

    Brown envelopes & rent taking and any other non productive “compliance” nonsense which is questionable on an ethical basis eats margin. In this internet driven world, the margin will always be tight. It will get tighter as people start to understand its capabilities more and more. We have to have an environment which allows people to make a profit where re-investment makes sense. This means less public service, less rent seeking and freer infrastructure or a property tax that covers same.

    Monkeying with the Euro is not an option for 2 reasons. 1) Our debt is tied to it. 2) It is the least cost way of doing business with the richest region in the world.

    We need to be careful when we go on and on about our Corp tax advantage. It used to be a play for FDI. But our costs rose. Now we are merely churning money for foreign 3rd parties to avail of the advantage. It employs no one here anymore. Contrast this with Germany. Yes they have high Corp tax, but what you are not told is how to offset tax against investment in your own infrastructrue and business using local German services – bringing the effective tax take down to 9 or 10%. But no, businesses here in Ireland could never be helped like that. That would mean the end of gombeenism as real hi-tech took over and Generation X (as someone mentioned above) would have no raison d’etre.

    A positive tax system with thriving environment where one can do business is the key. The rest is merely a distraction. FF and GP and Gombeens have to go.

    • @Philip

      You got it wrong way round.’Ireland is simply a terrible place to transact business’ because the cheap euro provided insiders with the wherewithal to pillage and plunder the bubble economy in pursuit of power, privilege, wealth that until recently came in abundence.

      re 2) Our debt is tied to the euro because of the guarantee. Ending the guarantee and defaulting provides the safety valve to renegotiate debt on realistic terms such as ‘fiduciary responsibility’ and ‘ability to pay’. NB, listen to the markets. Spreads of 6 plus are telling you this is not the least cost of doing business within the euro.

      You have a good suggestion there re offsetting tax against business investment. Great suggestion, but meanwhile the economic monkey house we live in is on fire. It needs to be put out asap. No amount of fiddling here and there with lengthy union negotiations to reduce the cost of the public service or other savings matters a whit anymore. That remedy was for 2006.

      Now its devaluation time! ITs time to stop Whinging, take our heads out of the sand, face up to policy failures, and take the radical action required to get this country onto its feet again.

      When Europe sorts its own problems, perhaps we could rejoin but not at the cost of us being left to ‘swing in the breeze’ for regulatory mistakes made at EC level as well as locally.

        • Quelle charmonte surprise? Cause economy is in a state o’chassis fooled and fooked?

          I don’t crave devaluation, its an enema I don’t want. One way or t’other we’re goin to have to pay short term or long term and very possibly both ways.

          There is no easy remedy to the mess! I stand by leaving the euro as best option under present circumstances.

          • Also the GDP is made up of fairly static export volumes that are not effected so much by currency movements. Also Waterford Glass are gone plus Donegal Tweeds? Plus our manufacturing industry, so they can’t take advantage of any devaluation of the euro against the dollar:)We might gain some extra tourists though!

          • paddythepig

            David is arguing that the 1992 devaluation brought about a 360% increase in exports in the nineties. An equivalent devaluation of the euro this year should bring about a big increase in exports, if you follow David’s logic through.

            The reason we are not seeing the increase in exports like in the 1990′s is two-fold in my opinion. Firstly, the nineties saw a huge increase in multinational exports, the Intels and the Dells of the world. My question to David is whether these exports are in his 360% calculation. I suspect they are. This increase in multinational activity is not increasing dramatically anymore, so the growth we see come from exports from indigenous companies for the noughties. And this is why we see 0.3% – Irish companies do not export enough, and we don’t have sufficient innovation to grab greater market share in the world market.

            That is the real problem which you and David fail to address.

          • Deco

            Forget GDP – As Constantin Gurdgiev points out – it is GNP that actually matters because that is a more realsitic figure of the income that is kept accumulated.


    Any chance of Ireland rejoining the UK?Lol LOl.

  29. DarraghD

    I was reading this article last night and the first thing that came into my head was the episode of Fr. Ted when they had the raffle to repair the roof of the Craggy Island Parochial House!

    Fr. Billy O’ Dwyer, also known as the “SpinMaster”, him borrowing left right and centre to buy up all the tickets for the raffle, the raffle being fixed and the people of Craggy Island all being scammed, sound familar?!?!?!? Similar to what we have going on here also, we only have one record that we can play!

    Craggy Island is where we’re at folks!

  30. bonding

    David, As an ordinary citizen I have not heard debated the case for and against hanging bondholders out to dry. Govt spokesmen allude to terrible potential consequences to any policy except their’s but I have not heard a full explanation of the most likely response to defaulting on bondholders. One could question whether the Govt are acting as they are to cover accepting full responsiblilty for the crisis and resigning in shame. You should publish exactly why it is ok to default and give reasons for following your recommedations. In the likely event of an imminent election it is vital that we are informed of all options. Can we know who these bondholders are? we can only assume that they were fully informed when making a decision to invest in Irish banks. As such it seems only reasonable that they should carry some of the losses as we the shareholders have suffered and as we as taxpayers will have to suffer. Bonder

    • here’s a little bit of background information re default:

      Some precedents for default here: Argentina, Russia, North Korea

      Russia 1998 is very interesting:

      “Declining productivity, an artificially high fixed exchange rate between the ruble and foreign currencies to avoid public turmoil, and a chronic fiscal deficit were the background to the meltdown. The economic cost of the first war in Chechnya that is estimated at $5.5 billion (not including the rebuilding of the ruined Chechen economy) was also a cause of the crisis.”

      You can subsitute pressures here in Ireland such as fiscal deficit, high exchange rate, high cost of doing business, debt reparations, unemployment.

      The answer would appear to be an orderly withdrawal from the euro for Ireland Inc under the umbrella of the IMF and the ECB with debt renegotiation a priority, support depending on a package of reforms already well covered by posters here.

      The alternative is we forget about becoming an economy, that we become a debt servicing agency.

      • michaelcoughlan

        Hi Cweb,

        I feel that all of the above is happening already but we are going to wind up with the worst of all scenarios because it will only happen after the government has loaded the national balance sheet with all of the shit from the banks. If minister Lenihan could regain his confidence and became aggressive in his negotiations with foreign lenders now instead of when the country is totally bankrupt he would save the children of the Republic. Wasn’t here something minister in the proclamation regarding cherishing all the children of the Republic equally? I don’t see anywhere in the document where it states they exist merely as economic cannon fodder sacrificed for the benefit of bank bondholders.

  31. I have clients these weeks complaining to me how foreign traders have set up shop openly in defiance of compliance of tax regulations and under-cutting them and displacing them from trading activity .Lack of National Enforcement of new foreign owned businesses commencing trading is terminating livelyhood of compliant irish citizens.We are now discriminating ourselves into serfdom.

  32. What is perceived to be the case is foreign traders obtain ‘ family/connected loans’ and usually in cash so there is no money trail.Some employ their own and not register them and many arrive from outside the EU.Revenue need to assure their effective enforcement and duties to the national taxpayers and not to be seen as discriminating .There is no transparent procedures in place to convince the registered and compliant trader.

    • Philip

      John, I see your point on the illegal trade and no apparent means of policing. Try this one for size…Say I am a large multinational. I buys lots to make my business tick over. Said buying occurs centrally usually out of some place in the world for everything from raw materials, hi-tech components, to toilet paper and canteen snacks. Do the locals who can supply 99% of this stuff get a look in? Not a chance! They cannot provide one stop shop global account management … as for tax management etc…you are dealing with top class financial book keepers. So the fleecing and lack of opportunity is much wider than a few lads trying to squeeze a few bob.

  33. DarraghD

    Folks check out this clip, David McW get’s a mention!

  34. biskalero78

    “We are grateful to The Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But, the work is now much more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national autodetermination practiced in past centuries.”

    — David Rockefeller

    Open your mind and eyes…

    • adamabyss

      Where did you get that from biskalero78? Is it genuine?

      • biskalero78

        It’s not true ? Oh damn i was wrong, everything is great, there is no world government on the way, although all aspects of our nation are being stripped away, FISHING WATERS, GONE. EXCLUSIVE RIGHT TO PRINT OUR MONEY AND COIN, GONE. OUR ABILITY TO STAY NEUTRAL, GONE ( LISBON TREATY ). IRELAND HAS BEEN STRIPPED OF EVERYTHING THAT IS SACRED. I APOLOGISE IF THAT QOUTE IS WRONG, BUT WHAT I WROTE HERE IS TRUE WOULD YOU AGREE ?

      • biskalero78


    • biskalero78

      They have taken over with little incremented baby steps towards a world government, little steps and no one notices ( the public ) leave the EURO today before there is blood on our streets!!

    • adamabyss

      Purported remarks at a Bilderberg Group meeting in Baden-Baden, Germany in June 1991. The remarks were printed in several right-wing French publications shortly thereafter. Since these meetings are, as the quote implies, secret, skepticism is in order for any alleged remarks from the meetings, particularly one that reads as satire, as this one does.

    • Gege Le Beau

      I thought for a moment it was Bono you were quoting but then I realised it was Forbes magazine and not the New York Times that he had a stake in, how stupid of me.

    • Philip

      Always love a bit of conspiracy. But the reality is we are a more interconnected world. We are now part of a larger organisation. When the world was a simpler place, you could either fit in or fcek off somewhere else usually down the road and find your niche. In todays world of compliance, international law, standardisation etc etc…if you do not fit in, you better have your space ship on standby. Maybe that’s what Dun Aengus is all about ;)

      The multinational for all its faults is really an effective wealth creation vehicle which will – in the main – maximise margin. It has been the leader in leveraging the latest efficiency tools and hiring the best there is to use them. These tools (e.g. internet) have made it very very efficient in recent years and has accelerated an economic race to the bottom for all of us. Our entire economic, learning and advancement strategies have been based on racing towards these efficiencies under the guise of eternal increases in growth and opportunity. And by the way, it would be stupid to blame multinationals because we are all at it. What is now starting to dawn is that the opportunity is becoming less and less available to those who have reached their level of maximum output or efficiency (a problem we all reach sooner or later in our lives). We are effectively painting ourselves into a corner.

      Now we can go on blaming the Euro or Multinationals or Big Banking etc etc etc…the reality is we all like our cheap electronics, and gizmos and cars and lifestyle (which kills efficiency further). And guess what, large supranational world organisations can probably do a better job and given their grasp of media, communications, lobbying etc etc you’ll all roll with it. Because if you dont, that spaceship better be waiting.

      You see, you really do not need a conspiracy. It’s all down to laziness and a lack of awareness of our local communities and understanding what really matters. Taking Ireland as an example..we all want our lifestyles back…we want the banking thingy to go away while not taking a hit to our pensions etc…and so arguments will remain befuddled and FF, GP and the rest can be a pissed as they like and apologiizzzeee…hic! and you’ll be happy. We all want to rent property and make money for nothing. And it’s the same everywhere – UK, China, USA,India, Brazil you name it.

      So what is a big organisation to do when the twats it’s selling to are misbehaving so much. Start managing the twats – that’s what. It’s a marketplace and we sure as hell are not going to let it dissappear…and so it was that Mankind became another cog in the wheel of wealth generation and religion, politics etc were merely the buttons that the experts learned to push.


  35. kayak

    It seems like the irish people in general is being dripfed misery.
    When do you guys forsee the tippingpoint?
    When is the house of cards going to tumble?

    • biskalero78

      It already has, this country is running on vapour. It really is sad to be honest, i mean we were told about our great history fighting off the British to gain Independence. Now within a couple of decades without a bullet being fired we are back to where we started , a nation ruled by a group outside our National Borders.

      • Gege Le Beau

        I heard from a business source that the Brits are back eyeing properties all over the place, naturally with a focus on Dublin, Ireland’s peril is another’s opportunity.

        To be honest, since ‘independence’ we simply traded one overseer for another, a British landlord for an Irish one, we should be ashamed of ourselves, Failed State.

        • Tumbrel Cart

          Well said. A failed State. And this time 100% Fianna Fail to blame. The old history books had some of it right. We were always cursed with our “leaders”. These people have a committed a crime far worse than treason. They have condemned generations to penury.
          And there they are, swilling drink until the dawn in Galway with the country going down the tubes. Well it was the Galway tent that started it. Hopefully it is Galway that will finish it.
          They probably thought they were back at the races. And why not? Another freebie with free drink while the State continues to lavish them with high-roller salaries and expenses.

        • michaelcoughlan

          Well said.

          It is appalling but true we have a failed state. I am still hoping that people of the calibre of Gege and the other highly articulate contributors will assert themselves and renew the republic.

    • Deco

      I do not think the Irish are being drip fed misery. More like they are being drip fed the truth of the situation….and avalanched under a mountain of BS…

  36. biskalero78

    I think people cannot comprehend that this sort of thing is going on. Five Corporations now own all Major News outlets. Federal Reserve Act 1913. This act was voted in couple of days before Christmas when there was no one in congress. What is the Federal Reserve ( a group of private banks printing money and coin for the american people at a percentage for every dollar printed )
    ECB ( 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). Now if you wanted to take control of a country our countries without firing a bullet tehn i think this would be the way to do it, through mass deception and lies.

    “The introduction of the Euro is probably the most important integrating step since the beginning of the unification process. It is certain that the times of individual national efforts regarding employment policies, social and tax policies are definitely over. This will require to finally bury some erroneous ideas of national sovereignty… I am convinced our standing in the world regarding foreign trade and international finance policies will sooner or later force a Common Foreign and Security Policy worthy of its name… National sovereignty in foreign and security policy will soon prove itself to be a product of the imagination”
    German Chancellor Schroder ‘New Foundations for European Integration’, 19th January 1999

  37. Alan42

    Hmmm , Give it up lads . Cowen thinks so little of the Irish population that he will address the nation drunk / hungover . Thousands in negitive equity , 14 % unemployed and personal debt all over the place and they were having a sing song . Garglegate .

    The Disporia must love it . I walked into work here in Oz and a guy came up to me laughing saying ” did you hear about the Irish Prime Minister ? “

  38. Deco

    I am coming around to the viewpoint that the authorities are going to make a bubble in order to end the aftermath of this bubble. Ponzi 2.0. Except it will not work in real estate, because of the oversupply crated by Ponzi 1.0….

  39. Deco

    An analysis of the current state of the US property market. Strong similarities with here.

    Though the clown politicians seem to think that it is all because the banks are banjaxed….no….when you have 465000 people without jobs that includes a lot of young people who are not buying houses.

    The way out of this crisis is to fix the labour market. Nobody grasps that this is the fist step to solving the problem.

    Because as David pointed out, they are obsessed with the appearance of the banking system. It seems to me that the poltical establishment simply do not understand the private sector jobs market. And I reckon that Brussels is even more removed from reality, because unemployment in most South American countries is now below the EU average…..makes you think….are they doing something right…..or are we just led by a bunch of morons….

  40. Tumbrel Cart

    Good article but it is time to move to the detail of solutions.
    Ireland is being bled to death by banks and government. The residential mortgage paydown is approaching €1 billion per month (Central Bank data).Every cent of this money is being sucked out of the economy. ‘The country has been turned into a giant debt servicing agency’ to quote the author.
    The detail might read like this.

    1. Not another cent to any of the banks. Let them manage their own balance sheets. This means banks bringing in the bondholders and telling them the game is up. EU support may be needed for this decision.
    2. If EU support not forthcoming then we should prepare to leave Euro pitching a new currency at a devaluation of about 30% on existing euro.
    3. In the case of a new currency, all State bondholders get paid back in new currency i.e about 30% discount.
    4 Emergency stop of euro deposit flows to ensure liquidity.
    5. Maximum public sector pay rates at €100,000pa.
    6. Surtax of 10% on all income over 60,000 pa.
    7. Immediate removal of all tax reliefs.
    8. Implement property tax.
    9. Massive labour intensive public works scheme.
    10 or 1. Get rid of Cowen and FF.

    This type of detail need to be worked out.

    • @Tumbrel Cart

      We are not going to get ideas like these from pigs at the trough intent not to give up their gravy train. Lets face it, there is already a fortune being made out of NAMA, legal services and otherwise, by the banks and by the financial croney sector, all with bailout money indentured to taxpayers by the government and the EC through debt reparations.

      However, there is a whole unpainted landscape of fresh ideas we need. This narrative of fresh ideas insiders already busy at the trough will attempt to quash if they have their way.

      Clearly we need to open debate to include objective analysis and rigorous examination of a better way forward. We have a tsunami of debt that needs to be dealt with. We may think we are in the doldrums now, but an avalanche is building.

      Denial, falsely censorious and flailing condemnations of international commentators in the Financial press, verbose attacks made against the market bond spreads, are all typical
      features of a default cycle stage that has occurred in similar scenarios in the past..usually signalling denouement approaching.

      We need to prepare for the storm by opening a proper debate around lifeboats, safety jackets, cutting Ireland Inc free of its debt anchorage and leaving the euro.

      Government’s present policy is not working. Ask the markets. Game over. Simples!

      “By 1999, newly elected President Fernando de la Rúa faced a country where unemployment had risen to a critical point, and the undesirable effects of the fixed exchange rate were showing forcefully. In 1999 Argentina’s gross domestic product dropped 4% and the country entered a recession, which lasted three years, ending in a collapse. Economic stability became economic stagnation (even deflation at times), and the economic measures taken did nothing to avert it; in fact, the government continued the contractive economic policies of its predecessor. The possible solution (abandonment of the exchange peg, with a voluntary devaluation of the peso) was considered a political suicide and a recipe for economic disaster. By the end of the century, a spectrum of complementary currencies had emerged.”

      • Tumbrel Cart

        I agree. We are at that Argentina point already. In fact we are long past it. However we do not have the time to long finger this with endless debate that the Irish are so good at. We seem to equate debating with a problem with solving a problem.
        TAgree again that the crisis is a bonanza for some professionals. Advisers to NAMA and others are the new tribunal millionaires.

        I should have put getting rid of government first. My mistake. Up too early, or was it too late!

        • Totally agree, It’s beyond armchair debate, we need an action point list, non negotiables and negotiables, the former fast tracked and package agreed asap and items prioritised with dates and deadlines. Items to include replacing all senior management working in the banks and on NAMA, all senior DofF personnel architects of that mess to go. Quangos gone. Wealth has to be heavily taxed and put to work building the economy.

          Take a bow, posters, we now find Barclays advocating remedies echoed on this list for many a long while now:

          Send Cowen and FF off with a lorry load of crates of stout to lick their wounds somewhere.

  41. Freethinker123

    Well what was put to Biffo at the end of his now infamous drunk interview is only a crumb of the anger of this country, but he none the less srugged it off with words such as ‘defeatism’ for a girl who has gone through the education system done all that she can and has come out to what.. SFA!!! as have thousands, myself included..honest t’god why do all these types in their dam high places become rediculously myopic!!!..’Oh no, we need to go ahead with this blah, blah blah!! will someone open a window for this gobshite and have them listen to the screams and cries of frustration and anger of the very people they are there for in the first place.
    I’ve finally feel to have come of age and look around..and realise what a joke this country really is, how the church and the politicians and bankers of course..all have used and abused the place and its people for decades, but you know what..I’m going to agree with the late great comedian george carlin on this one “maybe its not the politicians who suck..maybe its the public” you get what you deserve etc. we’re all too bus off watching fair shitty and dead enders and bleedin shite factor to care what these people, those who David Mc Williams has by now come to refer to perfectly as the insiders..have quietly and craftely been working away, slowly and patiently under very noses.

    Ireland is broken Bono make it better :P indeed

    • Freethinker123

      I mean really!?..those last moments of that interview he made it sound like a football manager at half time “Will have to do what we have to do” Myopic to the last!

      • Black Cat

        Freethinker I empathise – my younger sister has just finished four years of science at UCC and if she has to emigrate to find a job I will miss her so much maybe it’s a better option than having nothing here but why should it have to be like this – I don’t like the way they are using the pension reserve fund – if we stay and work here all of our lives will we even get pensions?

    • Deco

      You mean The Great Sactimonious One, currently tax-resident elsewwhere, is going to pay up all the PAYE that he has avoided down the years.

  42. Malcolm McClure

    David says: ‘ … as we have become politically more European, we have become economically more Anglo-Saxon.’

    We keep reverting to this Anglo Saxon dimension here. Perhaps the simplest solution to our economic woes would be to shake ourselves free from the burdensome Euro, become the 51st State of USA and use the Dollar or, alternatively, restore the union with the United Kingdom, and use Sterling.

    The Irish Republic, born just 61 years ago in 1948, must now be acknowledged to be a failure. Its conception was the result of an unholy alliance between Fine Gael and Clann na Poblachta, and its birth attended by mass emigration to the UK.

    Could there be widespread support in Ireland for getting rid of its jinxed legacy, bag and baggage, for good and all?

    Or will nationalist pride cause us to confer mounting debts caused by its failure upon our children and grandchildren?

    We need a referendum in which the choices between status quo, becoming the 51st State, and reunion with UK are offered to the electorate.

    • Malcolm – its more like a National Reserve Landscape we are becoming for indiginous mindsets and with a scatter of mini Principalities in Dalkey , Galway and Killarney where Casinos will be operated tax free sponsored by old retired quangos and RTE supremos .Fishing will center in a new base in Bantry Bay under the new Quing Quong Dynasty and the 51st Navy Squandron of the USA will be based in the Shannon Estuary.NAMAland will be all of Dublin where pale skeletal people will live with worry of management .Donegal will annex to Iceland .Cork will fortify itself and claim to be part of the Bourgon Royal Family in France and with a new proclamation of blue republicanism seated in Kinsale.Limerick will have new rebuilt wall fortification with re-inforced Gangland warfare and annexed to Quantanimo .Shannon will have been blown out of existance and used as a shooting practice site for foreign armies.And the rest is at your own peril.

    • Zaphod

      How about we go in the other direction?
      Instead of having huge government distant from the people it should serve, we go with local government.
      Solve the border issue by having the 4 provinces establish their own local government, responsible for the health/education/services in their counties.
      Over this we have an elected/selected group of experts to deal with island wide needs.
      Our own currency too, ridiculous to give that up in the first place.
      Pull out of lisbon, the first result stands as interference from Brussels negates the second one.
      Trade with everyone/anyone.

      Simple and transparent taxation.

      Privatise all semi-state companies and regulate/ensure quality of services.

      Make use of the resources this country has for the benefit of those who live here.
      Give the people control of their country.

      Set the guilty/incompetent who caused this mess adrift, banished.
      Tell the other european leaders where they are and if they can be arsed they can have them.

      • Zaphod: very wishful on your part.

      • Malcolm McClure

        Zaphod suggests: ‘Solve the border issue by having the 4 provinces establish their own local government, responsible for the health/education/services in their counties.’

        I kicked that ball into the box a couple of weeks ago. Though some players jumped, no heads connected with it. Point is that Ireland needs something radically different from what we have had for the past 60 years. Ireland is the wrong size for equitable action because its government gets overwhelmed by vested interests.

        If government were regional it would respond better to local needs. If it were devolved to a larger union, vested interests could be held in check by wider competition.

      • The answer is No, No, No and No. This would result in everything duplicated 4 times. Happened disastrously in the HSE. It swells bureaucracy, indecision and wasteful incompetence. Jobs jumping fourfold by replication everywhere. Gombeen councillors would love this proposal!

        • Malcolm McClure

          cbweb: Spreads are rising fast, and quite possibly ‘The End is Nigh’. However, participants here who have kept cool heads need to consider how we can extricate ourselves from the conceivable resulting mire.
          Regional governments on the Northern Ireland (or Wales) model could be a necessary first step to restore stability, as Dublin will have lost all authority.
          If we have thought about, discussed locally and broadcast about simply understood alternative structures, perhaps we can avoid consequences fomented by folk with nothing left to lose.

          No, No, No and No provides No answers.

        • Zaphod

          Gombeen councillors? the electorate decides who serves as representatives.
          Why would this cause duplication? those services are for the province/county concerned…if they can help with a backlog from elsewhere then why not do so but duplication isn’t an issue. We have more than one school/hospital/garda station…what do you mean?
          Island wide policies/services decided by elected/selected experts.
          No No No and No….?

    • Tull McAdoo

      I am just wondering if Munster let’s say was to declare independence from the rest of Ireland, could we all move to Munster as tax residence etc. and declare this new democratic structure to the EU. We could establish a sort of good country/ bad country and dump all our soverign debt into the bad country.

      We could even let FF remain in power in the bad country where they could borrow and build to their hearts content while the rest of us got on with our bloody lives.
      I would be prepared to represent any of ye choosing to reside here amongst the “plain people of South Kerry” I’m a diamond in the rough people, thinking outside the bosca. Tull McAdoo for president of the new “Peoples Republic of Munster” yaaaahhhhhooooooooo…..

      • Tull – Munster would cecede from shambolic taxes and bad banking practices anyday and allow the NAMA land remain in Dublin and lead the world in new natural resources and wealth creation for the ‘ordinary people of Kerry ‘, only this time all the people will become the odinary people of a new ‘blue republic ‘ and with a red cross on its flag to show trust and solidarity to the monks that arrived there in the first place and gave us our litterature etc.

      • Black Cat

        You mean simple in the sense of voting for Jackie Healey Rae and John O Donohue – the Kerry Building and Farming class love FF I’m afraid

  43. SLICKMICK carried a piece about UK bankers being targeted by the real IRA.Does this apply to Fingers and Seanie?.loL lOL

  44. Philip

    I see Barclay’s are suggesting we need help from the IMF.

    I wonder if FG and Lab have been waiting in the wings for this moment when they can take over. They know FF & GP are gone and the best way to remain uncontaminated is to have them to be seen to have brought the IMF upon us.

    • Tumbrel Cart

      @Philip. You’ve got this the wrong way round. The signal for FF to leave government is just before the IMF come in. It would be bad for the image of Republican Party to be in power when the baliffs arrive.
      They would prefer to try to stick somebody else with the mess. This disgraceful view was articulated disgracefully by Jim McDaid (Donegal FF TD)well over a year ago.
      In any case it is now almost over. The Walton letter will see to that. I expect we will have a new Taoiseach in a week. Or at least have the old one gone and hopefully the government with him.

  45. Interesting here between Max Steiner and Mum Sheikh Woohoo(got spelling wrong:))

    Call for Breton Woods 111

    Re from above, ‘Left and right side investment banking’,

    ‘On the left side nothing is right. On the right side, nothing is left.’

    Could be applied to Anglo’s Asset Recovery and Anglo’s Funding bank escapade… Lol

    • Spreads now gone to 6.2

      The final cost of Anglo, apart from the fact it cannot be gauged because its all bet on the moving target of LTEV (lol), plus NAMA and the cost of bailout of the other banks, escaping the bondholders, is meant to bamboozel (reassure?) markets in our own inimitable Freedonia way??

      • Tumbrel Cart

        There is probably about six to nine months spending left in the kitty. After that its live within your means. Or canned food and shotguns. Pity that ‘our leaders’ didn’t pay attention to Shakespeare.

        “Borrowing dulls the edge of husbandry”

  46. Deco

    Maybe now we have found a significance big enough for our collective arrogance ?

    Let’s face almost everything that came from authority and from the media in 1998 – 2008 was a load of horsemanure. The mainstream viewpoint hammered home every day in the media was bull.

    The real cost of arrogance, when it influences our decision making. The real cost of the failure of authority in Ireland. Now, it should be clear in the battle between authority and truth which is the source of all the things that go wrong….

    So much for the obsession with our perception in the world. It was all a load of nonsense. A lemming like herd of pretenscious unthinking obedient celebrationist sophisticated idiots.

    Who will announce to the nation that we should celebrate our demise like we celebrated the stupidity that created it ?

  47. coldblow

    “… the very people who didn’t see the bust coming…”, so of course some of them are more inclined than others to try to justify their earlier mistakes rather than the common good.

    “… only when an outside expert suggests doing something do we feel that we are ‘allowed’ to think for ourselves” Desmond Fennell was one critic obsessed by this Irish trait. This didn’t endear him. I last saw him on the Bibi Show (remember that) being insulted by Michael McDowell: “You call yourself an ‘intellectual’, well let me tell you, you are no intellectual…” The Irish don’t like independent thought, they seem to be ‘extravert’ as a collective and so what goes on around them, the given reality as it were, is by definition true. As a collective abstract thought does not appeal, only simple narratives. If you have original ideas it’s safer to keep them to yourself.

    The Irish Times condemns this, some Irish moral or intellectual colossus censures that. Who cares? Redemption through broad education? I remember reading one of Naipaul’s articles about Mauritius, which he visited some decades ago: hordes of thoroughly educated youngsters with no work to do. Which brings to mind a dialogue from one of the BBC’s old French courses: a young lady from Mauritius was talking about how she enjoyed life in Paris, as back at home it all came down to who you knew and how well connected you were. If you were “Madame un tel” you could skip the queue in the doctor’s waiting room. Ring any bells?

    “… the worst decision making by any developed country since the fall of the Berlin Wall” I always think of Ireland as developed on the surface but part of the post-colonial ‘undeveloping’ world, to use Crotty’s term. In fact, the oldest member of the club! For what it’s worth, my view is that their economic policy makes sense in the light of its own objectives: only those who have wealth and property, or govt. sinecures or membership of professional cartels, really count, so they will try to preserve these assets. Depositors will want to retain the Euro as this is a strong currency. If austerity leads to unrest there is always the option to escape from the riff raff by cashing in one’s chips and emigrating. It’s been like that for centuries.

    Not sure GB is a good comparison. The Old Etonians are back in charge and I expect their austerity measures will be a disaster. The idea of the EU included prosperity for all. The Neo-Liberal experiment has been a big mistake. Of course Ireland didn’t join out of idealism, although their are European idealists here. It’s shame the deregulation fad penetrated so deeply into the Eurpean banks etc, no doubt under Anglo-US pressure, as much of this mess could have been avoided.

    “… by the time the FT makes its judgment it is already too lat” Paddy Last:

    “And the medal goes to Paddy Last”
    I could hear the village roar.
    “Now I’m first at last” I cried,
    “I was always behind before!”
    (Gabriel Fitzmaurice)

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