November 17, 2010

ECB bailout is the only card we have left to play

Posted in Banks · 325 comments ·
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On Monday morning, on High Street in Kilkenny, I popped into a cafe to grab a coffee before leaving the Marble City following a wonderful weekend of economics, comedy and common sense at the Kilkenomics festival (www.kilkenomics.com).

Just as I was paying, the man who ran this lovely little cafe asked me nervously whether his life savings were safe in Irish banks. He told me he couldn’t sleep at night worried about the risk that his money wouldn’t be there in the morning.

He said he simply didn’t trust them — the banks or the Government — any more. Given what had happened over the past two years, he said, he couldn’t rule anything out. He said that so many unthinkable things had happened — Anglo, negative equity, ghost estates, bailouts, NAMA, FAS scandals, AIB bankers lying about the state of their books — he was prepared for anything now.

For me, this was one significant moment of this three-year-old financial crisis. Here was an ordinary person terrified, not about the value of the house or the robustness of their business, but about the security of their savings. For this reason alone, it would be criminal for this Government and the senior civil servants who pull the strings to prevaricate any further on the bailout offered by the European Central Bank.

Only massive financial aid from the ECB will rule out once and for all the prospect of a bank run in Ireland. Only a huge transfer of cash from the central bank — the economic equivalent of a blood transfusion — can stabilise the patient.

It is deeply frustrating to see a government playing politics with something so fundamental as people’s savings.

Bad enough to have been sold a pup in the boom about house prices and guff about how wealthy we all were, bad enough having tax rises to pay for Anglo, but to see trust eroded so significantly because of incompetence is dangerous.

So let’s look at the big picture. The ECB wants to offer us financial assistance to keep our banks open. Our banks need a huge injection of money. There are only two places this can come from because no one in their right mind will lend to them. The cash can only come from the Irish Government and the ECB. The Irish Government buy the new IOUs from the crippled banks and the national debt rises even more. This is more “cash for trash”. We might as well light a match under the money.

The other option is to admit that the game is up and restructure all the bank debts of the Irish banks. This would involve the creditors taking a significant loss. The creditors are the remaining senior bond holders and the ECB. The subordinated debt holders should be told where to go and stop annoying us. Subordinated capital always gets wiped out in a crisis.

In all cases where there is a resolution of a banking problem or any bankruptcy, new capital takes precedence over old capital. So the lad who puts his cash in now gets all the goodies and the lad who put his cash in before now gets burned. That’s standard practice in capitalism.

So the ECB as well as the Irish central bank have to realise that if we are to have an end to the crisis, they must take a loss. However, it is quite different in the case of the banks at this stage because the ECB will be both the winner and the loser here.

So why would the ECB bail us out at all? Surely, if it was rational it would just walk away from the financial mess that is Ireland? But it can’t. The ECB is actually part of the problem. It presided over the huge lending from German and French banks to Irish, Portuguese, Spanish and Greek banks. This happened on its watch and the whole Euro project is an experiment, so when you realise that the ECB officials have about as much idea as the cafe owner in Kilkenny as to where this experiment will end, you realise that they are in a bind too. And this is the only card we can play. The ECB doesn’t know how to get out of this mess. It is playing a game of bluff with the people of Europe as well.

But we know what it does have. It has money. And we know that we don’t have any money. But we have the best thing in negotiation, we have the element of uncertainty.

If the ECB doesn’t sort this out, it risks the possibility that contagion will sweep away its euro experiment. The interesting thing is that it doesn’t know how to assess this risk. The risk for the ECB may be low if the financial markets believe that Ireland is uniquely delinquent. In which case Ireland is not systemically important and an Irish crisis need not be a euro crisis.

If, however, the ECB believes that financial markets see the euro as systemically risky, then the problem for the ECB becomes much bigger and an immediate resolution of the Irish dilemma is in its interests. This opacity is our only get-out card. We need to play it.

Here are the numbers. As of yesterday, the ECB was sitting on assets of e1,878bn. These are government bonds and bank IOUs which the ECB takes as collateral for the cash it lends to the banks. Interestingly, the Irish central bank’s assets total €185bn.

So, the Irish central bank’s assets are about 10pc of the ECB’s. An unusual situation for a country that is only forecast to add 1.72pc of eurozone GDP in 2010.

If we look deeper, we see that the ECB has lent a total of €516bn to commercial banks within the entire eurozone. The Irish central bank has lent €165bn to banks based here. (Our GDP for 2010 is forecast to be €155bn.) So of all money lent to banks in the eurozone, 31pc is lent to banks based in Ireland.

What does all of this tell us?

That the Irish banking system is bust. But more importantly, the amount of money that is passing through the books of our central bank is completely unsustainable to a country of our size.

But from a negotiating position it tells us that the ECB is umbillically linked to us and can’t let us go. That is our only option now and massive financial aid from the ECB is the only way deposits will be safe. It will not be pretty or pleasant, but it’s what has to be done now.


  1. adamabyss

    subscribe.

  2. John Q. Public

    Will this ECB bailout be at a fixed rate of interest? Anybody see the Frontline on RTE? Constantin Gurdiev is against it saying that you can not dig yourself out of debt with further debt.
    As for the British saying they are going to help us, well it is like two drunks stumbling out of a pub pissed drunk, the PaddyIrishman and PaddyBritishman propping each other up! It is in their interest to keep us on our feet.

    • michaelcoughlan

      Hi John Q. Public,

      The bailout would only work after the ECB takes a loss on its dodgy lending to Irish banks in the first instance otherwise your hypothesis is correct.

    • CuChualainn

      First of all it’s not a ‘bail out’ It’s probably better to describe it as ‘an outcome of technical discussions’ about a series of ‘systemic failures’. Whatever it’s called I think it’s a great idea and should be availed of as soon as possible. After all we’ll be yet again doing our duty as ‘Good Europeans’ by helping to save the Euro and if the Brits get to give us a dig out and they get some bragging rights out of it so what? As long as our European friends insist on us taking the money which we haven’t asked for we should be able to hold out for a good deal. Constantin is very knowledgeable and clever but he is wrong, we’ll get one of those ‘no interest for 6 months (maybe even years??) if we sign up now’ deals so we’ll be replacing expensive credit with cheaper credit. Skips off thinking.. ‘oh goodie, more cheap credit….”

      • Deco

        Giving money to this state is like giving booze to an alcoholic. There is a well establishmed history of disaster, at this stage.

        ICTU are organizing a protest on November, a show of strength to the politicians to make it clear that they are not prepared to compromise over their share of the Irish Lifestyle concept.

    • shtove

      Let the banks go bust. Make the depositors whole. Seize bank assets and flog them off. If necessary, capitalise new banks.

      Should have been done a couple of years ago.

      Doesn’t need more debt. The bail out DMcW recommends is to make the German, French and British banks whole.

      • Gege Le Beau

        Think the point David makes on the ECB in his article a critical, this lunatic lending (€165 billion) happened on their watch, they allowed this monster to be created, all these top paid elites now having the people fitting the bill, scandalous, they allowed it, governments facilitated it through zero regulation and our own banks executed policy – game, set, match -all involved, all guilty, and zero accountability. What a game they play.

        • shtove

          No argument from me. Maybe I misunderstand DMcW, but I’ve found his reasoning confused over the last few years. Plenty of folksy metaphors, but not much number crunching.

          I’m outside Ireland. All my relatives there don’t seem to be having problems, so I wonder what’s really going on. But long term poverty looks inevitable unless Irish people get off their asses and stop the looting of the country.

          Simple slogan: TEAR DOWN THE BANKS. Repeat until people tell you to shut up. Then keep repeating.

        • manofiona

          The ECB’s only role in this whole mess is as a lender of last resort. It never had the power to regulate bank lending: that power was retained exclusively by national governments. In addition, under the relevant EU rules, a bank regulated by its national regulator was automatically entitled to do business in every other member state ie, every member state had to trust that the state responsible for regulation of a bank was doing its job properly. The ECB looks after liquidity but it was up to national regulators to guarantee solvency.

          The ECB has been forced to provide more liquidity than it would like (or is healthy) to the Irish banks because the Irish national regulator is seen to have totally failed in its job of guaranteeing the basic solvency of the entities under its exclusive control and those entities cannot get credit from anyone other than the ECB.

          Now the issue is whether the Irish banks can be weaned off excessive dependence on ECB liquidity. The Irish government asserts that they can but others are unconvinced of this unless the banks are made whole – and believe that Ireland does not have sufficient resources available to it immediately or in the near future to do this by itself.

          The real issue is whether the Irish banks can be made whole at an acceptable cost to Europe: if they can, then European funding for this purpose may make sense – although it will have to be paid back over time. If they can’t, then Europe needs to be prepared to let them go under as part of a complete reorganisation of the Irish banking system.

          These are now European decisions, to be made on the basis of what is best for the Eurozone financial system as a whole. The Irish government is no longer in a position to assert any sovereign authority on this matter: it is simply one participant in the discussions.

          • shtove

            You wish. Government can scotch all your carefully laid plans in abiding by the wishes of the electorate.

            What do Irish people want for their future? Their wealth sapped by compounding interest, or a sharp bust followed by reasonable house prices?

    • shtove

      John Q, take a look at this from Alphaville:

      http://ftalphaville.ft.com/blog/2010/11/18/409191/whos-bailing-out-whom/

      Everyone’s talking about the French and German banks, but the British have much more exposure to the PIG. The Greatest Bank In The World – RBS – has more than double that of the next idiot, and Lloyds and Barclays also near the head of the class.

    • shtove

      Incredible live recording of Cowen selling the country into oblivion:

      http://newsthump.com/2010/11/18/newsthump-radio-news-irish-financial-crisis-exclusive/

      Thank fuck he didn’t opt for the payment protection insurance.

  3. ellend

    I know this is probably a stupid question, but where is all the money that’s been flowing into the black hole of Irish banking over the last 2 years? What reverse Midas touch do they have that turns billions into yet more debt?
    Also, why does the ECB keep funding them? Aren’t they supposed to help banks who have temporary liquidity problems, not siphon money from the real economy into insolvent zombie banks?

    • Deco

      It is a case of real money being used to fill a gap that was once occuppied by virtual money.

      The virtual money being the estimated value of all these proprties. Properties that have now gone down in value. And they will keep going down in value until the Irish Private sector labour market starts expanding again.

      • CuChualainn

        I don’t understand that. Every transaction has a buyer (giver of money) and a seller (receiver of money) Someone, somewhere has the money paid out, and that’s real money surely, sitting somewhere. Maybe it’s hidden under matresseses or all gone walkabout, perhaps to Boston and places like that. It seems to me that its real money replacing that money.

    • michaelcoughlan

      Hi,

      In answer to your question the money was used to repay bank bondholders. It isn’t the banks that are being bailed out it is the bondholders. The ECB keeps funding them because they don’t want all the toxic shite to back up into the european wide banking system.

      • uchrisn

        That is true the europeans dont want a house of cards on the pigs private and soverign debt the euro could go down step in the irish taxpayer to foot the bill

  4. Deco

    We only have one card, and Biffo is bluffo.

    This ECB has to choose between “Print-Baby-Print” (which only sustains more Ponzi-economic activity), and capitalist consequences for capitalist misadventure.

    Taxing Ireland until the bondholders get their money back, as recommended by Suds et al, is completely unworkable.

    This country is literally grabbed by the Balls Bridge bankcentre….

    • That would be Goldman Suds? Whenever I hear him pronounce on any economic topic I think more about how it relates to his numerous business interests than the benefit of the Irish people. People worth hundreds of millions of Euro should kindly F*)k off before suggesting harsh taxes on the now struggling majority. If we’ve no bread I suppose we could always eat cake :)

  5. paddyjones

    I thought we were getting the bailout from the EU not the ECB, that means that all the countries in the eurozone chip in to the bailout and we will be run by the EU. The IMF are also involved they will stump up part of the bailout.
    I thought that the very reason this was brought to a head was that the ECB was reluctant to lend further and urged Ireland to seek a bailout from the EU/IMF.
    The trick FF are trying to pull is that they want a bailout for the banks not for the sovereign debt, in which case they stay in charge of our economy. This is very subtle but I doubt whether it will wash with the EU/IMF who are trying to force us to take a sovereign bailout which will go to the banks.
    With 500 to 600 billion of debt in Ireland I would like to know where the corresponding assets are , is it the commercial property which is worth 30% of original or maybe its 300,000 3 bed semis about the country now worth 50% of original cost.
    Ireland is like a child in foster care soon to be adopted by the EU.
    As for DMcW old mantra of burning bondholders this is not going to happen, at the moment they wont lend to us if we burn them they wont ever lend to us again.
    Ireland is going to ultimately follow the current austerity and the IMF will see that through to the point where we have a surplus never mind the 3% of GDP by 2014.
    There is no easy way out here DMcW, welching on debts is not the way out, austerity and repayment is our only option, there are no cards left to play, no negociating power left, we have to be honest.

    • malone

      David , A very interesting article but you did not mention at all in your discussion about the role of the IMF in this ? Is it a case that the pressure on Ireland at the minute will increase forcing us to accept an IMF bailout for the good of the EuroZone ? As you mentioned in your previous article about the two lads down in the pub saying that the IMF are coming but as what happend in Greece vicious austerity measures were introduced by the IMF in order for the money to be given . Could that be also the same here ? We would have to face the oncoming budget but then on top of that we would have even more rigid controls imposed by the IMF ?
      If the EU see that the Irish people are not making much noise and seem to accept these measures than what is to stop them imposing a lot harsher measures ?

      But as you mentioned David the bottom line seems to be that the German banks want their money back by hook or by crook and maybe by offering a bailout they see it as their only way to get their money back ? It seems that the Eurocrats and
      “Deutschland über Alles ” are very worried about Mr Former Celtic Tiger Bank where normally they would not give a crap about us

      But a lot simpler solution would be to stop recapitalising the banks and let the banks go to hell. As has been said the creditors of the banks would have to line up for whats left , nothing complicated about that. As was said here a few weeks ago a Danish bank failed and there was hardly a mention about it
      The Irish goverment then would have plugged a big hole in its coffers and then could work on re-arranging the deficit and possibly default if necessary or restructure the soverign debt but with the banks having been cut loose the main leak would have been plugged and need not worry.
      The banks would have to fend for themselves. I heard some commentator say the Irish Banks and the Irish goverment are now one , they have nailed themselves to the one mast but has somebody forgotten that the banks here are in private hands and are not nationally owned. who says the govement has to bail them out ?
      And one question that I havent heard asked so far is
      if Ireland were to get aid from the IMF/ECB ,what guarentee is there that it is going to work and plug the hole as it seems that the total owed by the banks is still not totally known and lets say the Irish goverment / central Bank/banking brigade would not be the most professional at debt managment.
      It is a case that Ireland Inc has boarded the Titanic and the ship is now in the North Atlantic ?

  6. Roll It There Collette :

    I think the word ‘ bailout ‘ will have many new meanings before the year runs out ……or should that read ‘ before we run out ‘ …….of our minds .

    Where is the Panic Button Mr President ?

  7. Aras on Fire :

    What candle in which window will the President light to remind us where all our Money has GONE ?

  8. What is the point of Working anymore ?

    • Gege Le Beau

      Its an interesting one, a colleague just gave his notice today, retiring after giving over 30 years public service (with insults, from government ministers about how comfortable public service workers have it, ringing in his ears, that is his thanks for coming to work day in, day out with a disability and doing his best for the people he encountered), he is only going because he fears for his lump sum, pension etc, he won’t be replaced, so who gets his work? you guessed it!

      So more work, less pay and Clowen won’t come out of his office in government buildings to address the Irish people but instead does a Hitler Bunker style interview for the six-one news. Meanwhile Lenny and the Hail Marys told us that no negotiations have been under way and that a bailout is not neeeded, this is the Ireland of 2010. At least Coughlan has kept out of the way, while the Greens are deathly silent. They have handled this disgracefully and caused unnecessary anxiety and stress to people across the land, they are also trying to separate the State from the Banks when we all know they are inextricably linked, they ensured this with their blanket guarantee!

      Election now so at least some badly needed credibility can be restored, out with the lot, new Republic. Edna Kenny looked like a farce in the Dail today, FG couldn’t even pull off a coup. We are ill served at the moment of crisis.

      • Julia

        Excellent article David, as always. And this time just a statement of fact.

        Gege, this has been a depressing day. The N11 was flooded this morning so I had plenty of time to listen to Pat Cox point out that there is no intellectual rigour in Irish political argument. Too right. Rigor mortis more like.

        Brian Lenihan came on and admitted that Europe is his main concern now. He sounded afraid. Everything is moving in slow motion even though now the ECB are here. I think I’ll just listen to Lyric for a few days instead of the news. Or maybe L. Coen to cheer myself up. Maybe I’ll hum ” The piano has been drinking “.

        Never mind. As O Casey said ” We’re all in the gutter, but some of us are looking at the stars.”

        • Gege Le Beau

          Yes Julia, tough times which toughen us for what is yet to come. I am not for turning away or tuning out, I want to know this beast so when I encounter propaganda I can fire off a few rebellious, fact based, bitter experience rounds to shatter the propagandists illusions and dispell their myths, now is a time to look, not look away, the beast reveals itself. Look, listen, learn and never forget or get taken in by snake oil salespeople.

  9. dwalsh

    When will enough be enough? I mean when will enough lying by Cowen, lenehan and Co be enough for the Irish people to act? Even with the IMF arriving tomorrow they are all publicly denying anything is amiss. It really is astonishing to hear them. I particularly despise the Greens – they have no excuse; the rest of them do — they’re Fianna Fail; lying is official party policy.

  10. Georg : Anyone who knows how to sail board knows they have to ‘ bend the knee ‘ and in a wobble it is similar when you are left only with standing room on an over crowded train from Dublin to the to the Culchie Land of Nowhere. So the advice is that the Austerity of Austerities will bring in the new art of standing on a bended knee and unless you enjoy it and I know you wont the pain will be excrutiating as a greyhound pulling at a rabbit.

  11. paddyjones

    Davids suggestion reminds me of a story..my cousin neglected to pay a loan , the bank called him in and he told the bank manager that he owed the bank so much money it was really the banks problem not his.
    He eventaully repaid the loan…..

  12. wills

    David.

    Take the ECB / IMF bailout money and blood transfuse it into the Irish banking system and then shut the banks down and start a new bank.

    Lets do that.

    • Deco

      Wills – you said it was a Ponzi scheme.

      We are going to have to get very productive and very efficient in this country, if we are to get these bills paid out. The ethic of economic gain as a result of playing gains, deceit, overcharging, oligopolistic behaviour, “something for nothing”, nepotism, and “plenty more where that came from” is now clearly redundant.

      Gombeen-onomics is redundant. Stop paying for it, stop buying it, and stop bailing it out. We need to get serious about straightening out a lot of crooked behaviour in this country.

      First place to start would be to reopen Spike Island as a prison for corruption, fraud, embezzlement, deception, market rigging, etc…

    • irishminx

      Is this it Wills?

      How about just telling the banks to get lost and we set up our own financial union?

      Is this possible?

      ?!?
      Minx

  13. padser

    It’s hard to believe ‘ that the role of just one person, that of the former Financial Regulator’ is the cause of all this. The pivotal role of directing and thus influencing “long term” fiscal stability…virtually non-existent!!!

    This is the result!

    • ellend

      The bould FR was busy patronising the nation with this while Rome burned:

      http://www.youtube.com/watch?v=l74083zafAM

      Little did we know ‘It’s your money.com’ was short for ‘It’s your money we’ll be p***ing into a bottomless sinkhole called Anglo while you struggle to pay the (tracker) mortgage on your negative equity ghost estate hellhole.com’

      • padser

        Spot on’ ellend! What I cant understand & assuming the FR was was central to all this is – Why have we seemed to accept that “he made a mistake” or “he fell asleep at the wheel”…these are utterly implausible excuses…their just too damned elaborate!!
        We have to wake up to the reality that FF were complicit with the FR…..and simple notions expressed by Brian Lenihan, that if the FR had a problem he would have came to me ….just doesn’t wash!
        One or the other – or both, should hang for this.
        Now’ I’m not saying that we should have a tribunal or even something similar, we now know that tribunals are just “mechanisms or tools” – to allow the the unimpeachable to live as normal and any outcome is still subject to a real Court of Justice!
        The People of Ireland have to make the decision…..and this involves drastic and immediate Political Reform….long gone the notion should be’ that any small but very influential group of people can subject the entire population’…..to hardship and humility on an International scale.
        We really do have to “Wake Up”!!!

  14. padser

    The sh*t will hit the fan for FF after the budget Install some speed cameras in the Dail n’ see how fast they come running out!
    When they re brand ESB and Bord Gais….FF will want the same…..any suggestions? How about Fianna F**kers

  15. diarmuidx

    As often is the case the real game is often hidden, a little more complex and often very subtle….

    …. Ireland is a pawn to be moved by the more powerful european economic powers (germany) in order to protect their own self-interests…

    … the debt crisis which has now reached Ireland and, perhaps portugal to follow, are not necessarily bad for these powers…..

    this is a currency war…… a trade war …. (and a domestic politcal war for each country)…..

    USA QE2 and 3 , 4 and perhaps 5 to follow is eroding the dollars value. (QE – printing money!)

    lets remember , germanys incredible industrial economy is booming… exports to china/asia are growing……. the yuan is still pegged, somewhat, to a falling dollar, and the yuan will only be allowed to rise in a very slow controlled manner………
    the dollar is falling… ..( reached 1.41 to euro last week)….. so germanys exports are getting more expensive in china/asia!

    “so Ja vat vill vee do”!!!

    provoke a soverign debt crisis … ja.. das is gut idea…..make euro weaker….

    dollar now today $1.349 to euro!

    Thus the “pawns” on the periphery of europe get moved on the chess board, Ireland and Portugal get sacrificed.( Both account for only a very small % of the euro economy)

    This provokes fear in the euro zone, the euro weakens germany becomes more competitive!

    “ja, oui, tres gut”

    of course, our home grown peasants and pixies who have being running this country have really truly failed…. and our economy is now limping and staggering around the battlefield with blood dripping from our self inflicted wounds.

    However we will not be given sufficient morphine, nor will we be let fall, but we will be allowed to remain seriously wounded for a long time, in order to keep a certain fear about the euro.

    And, whenever the euro gets a little to high (versus $ / yuan) … a fresh wave of irish / portugal/ spain banking fears will re-surface!

    what a great game!

    As long as the falling dominoes dont lead to Spain and then Italy requiring a dig out, then the stronger european economies will grow.

    This is now a 3 speed europe!

    The Very Strong, the OK, and the nearly mortally wounded (Ireland).

    Now Ms Merkel, be very careful how you play your hand!

    http://seekingalpha.com/article/237139-u-s-could-exacerbate-the-irish-problem?source=hp_wc&wc_num=1

    • padser

      So’Diarmuid, r u saying that Merkel deliberately said what she said last week? And assuming she seen all this well in advance over the years, is making the best of a bad situation for Germany’s benefit?
      And who is anticipating what Angela Merkel might do?

  16. Representatives of the major opposition parties should be invited/or request that they attend these FF/EU/IMF meetings as silent observers. Given that they’ll be living with any ensuing terms it makes sense that they’re in the loop from the off. If there’s nothing to hide there’s nothing to hide, and their presence might offer some transparency and do something to reassure the nation. Unusual suggestion? – unusual times.

  17. irishminx

    Our Government need to go. And now!

    I have many expletives I want to call them, for the destruction they’ve caused, for their dishonsty to the ordinary Irish citizens and for their dishonour in raping our country.

    How dare they bring fear to our door steps!

    Shame on you all FF!

  18. wills

    Deco.

    Yes, the housing bubble was and is a Ponzi property pyramid scam.

    Yes, the derivatives and CDS and CDO’s etc was the means thru which the POnzi property bubble pyramid scam came into reality.

    Yes the Irish insiders across the white collar class implemented the bubble and creamed its riches.

    Yes the bill and cost from the con is been passed onto the average citizen.

    Yes its reeked havoc into the regular economy.

    Yes the private banks were at the center of the scam.

    Yes the ECB / IMF / etc are part of the Central banking debt money superstructure.

    Now, what next.

    Well we must reverse the country out of the mess in an intelligent way.

    And I reckon this is to shut the corrupt main retail private banks here.

    But, lets shut them down using the system itself to shut them down

    This way will be the quickest and cleanest way to ensure that savers get do not lose their deposits.

    David is getting at this I think.

    I cannot see how Ireland can get of this mess and keeping savers safe without back stepping out of it using our heads.

    • padser

      Lets suppose the banks did go bust two years ago, I don’t think it unreasonable that any gov. in that situation would guarantee the “savers” money and then let the others “investors” go to hell! Thats what should have happened.
      And yes your right…the ‘system itself’ should have shut the banks down, in line with the laws of economics, Boom-Bust!

    • irishminx

      Can you explain to me please what CDS and CDO’s are?

      I am in agreement with you.

      G’nite.

  19. wills

    David.

    I think this is a pragmatic article from D.

    The mess the insider have made it has to be cleaned up.

    Before Ireland does anything new we have to clean the mess up.

    We have to clean up the mess the insiders have made.

    The insides are not going to clean it up.

    I reckon we have to seize the initiative.

    This I think is what D is getting at in article.

    And central is keeping the savers of Ireland keeping their deposits safe for now during the insiders quiet desperation.

    The insiders are on the racks and are becoming highly irrational.

    Lets keep cool heads and figure a way out of this which makes sense.

    Lets use the IMF etc bailout money to stabilize the private banks which are the POnzi bubble machine inflaters and thru this cash infusion then shut the private banks down where the savers get to keep their monies in an orderly fashion.

    Lets then use the opportunity to shut down the private corrupt banks and use it to set up a new banking system, new banks, clean banks and a fresh start.

  20. Gege Le Beau

    Worth watching

    David Harvey, Crises of Capitalism
    http://www.youtube.com/watch?v=qOP2V_np2c0

  21. george

    The game is up!
    We lost all credibility!
    We are bluffing, and Olli Rehn knew it when he came to Dublin last week… we cannot full all of the people all of the time.

    The guys from the IMF and the EU are coming to town to find out the real extent of the bankruptcy, and to find out if there is a way we could pay back, in case they’ll decide its worth to bailout us. Otherwise probably in time they’ll cut us loose and we have to go cap on hand to ask for assistance to United Kingdom or the USA.

    We lost our economic and political freedom and most of our political class is not up for the fight. They were for too long overindulging themselves and the rest of the top civil servants and public employees with better pay, pensions and conditions than the rest of Europe. And all this was done with borrowed money, with the excuse that we are the most intelligent and articulate people in the world. Our politicians deserved to be treated as kings and queens, our doctors, dentists, lawyers have the higher fees in the world because they were the best, our secondary teachers are the cream of the cream,our top civil servants deserved a goldenhandshake, and so on and so on, and the rest of Europeans couldn’t compete with our high standards.

    The Germans have rebuilt a Country that was totally destroyed after the war and we cannot cope with the single task of running an integrated efficient and economic transport service while at the same time we pretend to be world leaders of the “smart economy-renewable energy” movement.

    Today’s reality is that the Irish charm is not enough to pull the wool over the eyes of the rest of the Europeans. And who can blame them when they see that we don’t make a genuine effort to change our bad habits.

  22. tony_murphy

    Well worth reading.. Mary Ellen Synon on the crisis

    http://synonblog.dailymail.co.uk/

    On BBC
    Robert Peston worried investors could be pulling money out of Irish Banks. He reckons a planned rescue better than an emergency one if there is a run on banks

  23. Harper66

    http://www.irishtimes.com/newspaper/breaking/2010/1117/breaking39.html

    Figures being released about the extent of mortgage arrears. I expect more accurate figures to be released as the “Germans” in DOF roll up their sleeves and try to untangle the web of lies and gombeenism that has been the hallmark of this governement.

    Dick Roche on BBC news at ten last night was an embarressment like florrie knox from the Irish RM.

    The governments refusal to publish the “4 year budget plan” until after the Donegal by election combined with the nonsense final figure for the bank bail out in september which did not include mortgage arrears was I suspect the final straw for the powers that be.A decision was made in Europe to call it and call it they have.

    What must other EU countries have thought of us when they heard Jackie Healy Rae demand a hospital for his vote in the Dail? FF, power at any cost….

    I hear alot of small business owners calling for the the IMF/ECB to step in. I dont think they will be knights on white horses comming to save us….my worse case senario would be that FF would remain in power and be able to blame IMF for the savagery that is about to be dealt out to us.

    I strongly agree with the comments made by Will above, this is the time for cool heads and developing possible solutions that is in the best interest for Ireland and its people.

    • Deco

      Worse than Healy-Rae, is that clown Michael ‘Extension’ Lowry, who wants to bring Las Vegas to his constituency….and he says that the government has to change the law to make it happen.

      Obviously, all the currently idle hotels in the NAMA chain are not an option. He wants to build from the ground up. He just does not get it…We got into this mess because of gambling…

      • Harper66

        “We got into this mess because of gambling…”
        Spot on. But what to do….

        Problems -

        1 – Corruption in Politics, Banking,Business and unions.
        2 – Broken black hole all consuming banks.Safe to say no viable banks left?
        3 – Broken economy due to point 1 and 2
        4 – Country bankrupt due to taking on debts of banks. The size of these debts are so large that it is impossible to pay them off. Taxing to raise money is counter productive.The money is not there.
        5 – the storm of private debt default is comming down the tracks…unstoppable at this stage and a certainty after the budget takes more money out of the economy.
        6 – I am comming to the conclusion that when the term contagion is used in relation to an EU country eg. risk of contagion to Spain and Portugal am I to take it that it is EU speak for that country is already bankrupt?

        any other problems I havent thought of?

        any solutions?

  24. idij

    Back to bluffing our way out of it again are we?

    Is the problem not essentially that large parts of system is bust? Irish banks are just the ones that are on the bleeding edge, but they are going to bring a whole bunch of banks throughout Europe with them, which will in turn bring down further banks, etc. As such, no amount of real money is going to be sufficient?

  25. PMC

    People in this country can say what they like about insiders etc… but everyone in this hellhole fails to realise that they themselves hand a hand to play in all this.

    The younger generation couldn’t afford to put a roof over their heads unless they were willing to fork out 350K for a shoebox. Why? Because the bloody older generation won the jackpot by seeing the value of their homes, land etc… increase ten fold over the years, hence releasing equity for second homes with which to rape us again through extortionate rents.

    Ireland has the greatest herd mentality I’ve ever witnessed. Every facet of life in Ireland is dictated by it. A bunch of brown-nosing, bullshitting, dillusional, nosey, conservative, lazy fucking conmen.

    The average Joe still couldn’t give a toss, nor could be arsed even investigating how far this country still has to fall.
    Every second car is a Merc or BMW, which is bloody hilarious given the shit that Ireland is in.
    We’ll be getting used to driving Tata cars from India with the way things are going.

    All this talk of the smart economy is the greatest pile of nonsense, and is simply a hangover from the high horse from which Irish people placed themselves on over the last 12 years.
    Once the corporation tax gets jacked up, we’d be better off re-aligning overselves towards the dumb economy, which in fairness, would be far more fitting as far as the Health Service is concerned.

    The easy-credit, loan approval on the spot bullshit, that took place over the last 10 years was like a lotto win, but now the cash has been pissed up against the wall. It was used arse-ways by the thick farm boys that run this town. The thick farm boys that the nepotistic older generation voted in, as they enjoyed seeing value of their houses continually increase at the expense of “Irelands brightest”.

    This talk of losing sovereignty etc… and how awful it’ll be! The loss of sovereignty will be the best thing that’ll happen to this place.
    It’ll mean that independent outsiders can straighten this shithole and its inhabitants out once and for all.
    It’s as plain as day that sovereignty is something that cannot be handled in this country, so its best to leave it to those can manage it properly.

    It’ll be great to see the back end of the D4 lisp, plans to just “nip” down to Marbella, Xmas shopping trips in NY at the expense of some German saver, 50 inch TV’s because the focking rogby wawrld cop is on….

    • John Q. Public

      Well said PMC. We went from a third world country with tv sets to modernity way too fast. Part of me feels if we starve it will serve us right. Another point people fail to realise is that Ireland itself is part of a wider economy (the EU). Norman Lamont a few minutes ago on newsnight said ‘lets give Ireland help if they want it or not’. We have a responsibility to other EU members and their well-being is our well-being. After all we buy and sell stuff to each other. Let’s look at Ireland from the point of view of an outsider as in a German or a Brit etc.

      • idij

        Any “help” will be in the form of sovereign debt, and it’s use will be to guarantee the loans and investments made by non-Irish investors and banks. It’s not us they are insisting on bailing out.

    • tony_murphy

      PMC are you Van Rompuy in disguise.

      I have heard that argument that Ireland is better run by others many times, well I disagree. I’d rather have cowen and lenihan in charge than the EU bureaucrats, and that really isn’t much of a choice. Swapping one crowd of parasitic gangsters for another.

      The insiders screwed Ireland and continue to do so today and will do so in the future.

      Anyway, so light entertainment..

      http://www.youtube.com/watch?v=RizZxObBWaE&feature=related

      • PMC

        Would be funny alright if it wasn’t so close to the bone :)

        The issue I have with leaving major decisions to the status quo is that its just endless circles of bluff, lies and codology.
        To watch Cowan on RTE this evening defending himself against the blatant lies re EU / IMF assistance over the weekend was something else.
        Anyone notice the sly glances to the bottom right he was taking; clearly there was a note with the buzzwords du jour written on it.

        If outsiders make the decisions, it’ll make the input of self-serving unions, the gombeen government, and every other blood-sucking leech redundant.
        Whether its FF, FG, Lab, it doesn’t matter a jot – This issue awful governance is largely an Irish mentality problem.

        If outsiders entered the decision making fray on a level thats visible to the public, it may even kickstart a new political mentality in this country.
        It may create a breeding ground for a new younger generation to start afresh, without the need to lick endless rows of backsides to create something worthwhile.

        It might be tough for a while, but its the only way to break the fingers of FF and that sly mentality.

        • Gege Le Beau

          Yes I noticed Cowen looking the right of camera, did seem like he was being prompted for his ‘bunker message’, inspired zero confidence, could he not have taken the few minutes to drive to the studio to address the Irish people (are they so terrified of the Haughey parallel – his ghost does seem to haunt the current spectre), how can you believe a man as such after everything he and his party have said has turned out to be completely and utterly untrue. David McWilliams lists is well, and when you see it you think, Christ! This is sheer madness: “Anglo, negative equity, ghost estates, bailouts, NAMA, FAS scandals, AIB bankers lying about the state of their books…..” its almost like a Billy Joel song, we didn’t start the fire………………

          David left out the scandalous condition of the health service where 78 year old cancer patients are left on trollies or chairs, can’t even get a decent bed, while the Minister supposedly responsible but never accountable spends money on lavish trips, hair-dos and all the other trappings of a contemporary Marie Antoinette. Citizens money! I won’t even mention that fella from Kerry who is automatically returned to the Dail after being forced to resign over his expenses scandal.

          Remember it well, Ireland 2010, no place for romantics, just hard, brutal, cool blooded cynics.

    • idij

      Given the amount of money they borrowed, Irish banks can be regarded as little more than a front for European and now ECB lending to the Irish construction and mortgage sector. We know our financial regulation was incompetent, but where were the rest of Europe’s regulators when all this was happening? The ECB’s lending is as far as I can see dumber than most because they knew the bubble had already burst, but continued lending regardless letting original bondholders get paid off and putting themselves on the hook for it. Apparently the European Central Bank has no knowledge of what is going on with banks in it’s area of responsibility.

      • PMC

        I agree – The whole thing is utterly depressing. Peoples livlihoods have simply become second-fiddle to financial and political game-playing.
        The whole thing is rotten to the core and I think everyone is sick to death of it at this stage.

        The more the worlds population increases, the worse these boom-bust scenarios are going to get.
        Population growth, finite resources, political interference, toxic financial systems…. these bad boys will come together some day and we’ll all be sorry boys and girls.

    • Deco

      The way things are headed, you will see those beamers and merks lasting a long long long time…

      We lost our soverignty when we behaving like outlined in your last paragraph.

      Q. What created the subprime crisis ?
      A. Subprime thinking.

      Subprime thinking became fashionable and we collectively lost it….

      • PMC

        There appears to be only one cure at present for sub-prime thinking and that’s a double dose of P45icillin.
        A big bucks public service top job is the vaccine, but that of course is only available to you if you’re schmoozing with your snout in the trough full of shite and nonsense.

  26. KEEP THE IMF MAFIA OUT OF THIS COUNTRY!

    • Deco

      You know there used to be a joke…

      the mafia came to Dublin to set up business,
      but they ran off with their tail between their legs when they realised that the competition from the local crooks was too fierce to allow any openings..

      There is some truth in it. The Sicilian qualities of Carlo Di Chinseli, Lucano, Rambo, Berti….

  27. If you get into a deal you dont understand, youl be scamed,

    • Deco

      That just about sums up the entire economic system in this country….Always be wary of somebody who wants your money and who says that things are much much simpler than they really are…

  28. BrianC

    The situation in Europe is so bad they are looking for an excuse to deliver funding into the broken economies. They have no choice if they do not they great good work (they should hire Donie) will be undone and will send Europe back to the stone age when currencies were not even thought of lucky sods.

    They are trying to leverage Ireland into accepting the bail-loan-out. Once in situ then the others will follow and will have to tell the real truth about their true state of affairs the very same as Greece.

    They are trying to kick start a corpse. The ECB inflated a market and Paddy rose to the top of the pile to grab his share and got proportionally more than the others primarily because Paddy is more entrepeneurial in a solely focused way on property. Land/ property is in our DNA never mind blood and ‘The Field’.

    The ECB put so much money into the system everything lost its true value and the Markets know this and are scrambling not to be in the line of fire. They will be hit no matter what they try to do. All other economies in Europe are screwed except the Germans who performed the oxygen part in fueling the fire so they are actually in the front line and they know it.

    The ECB has no concept of character collatoral and capacity. Why should they when they can print money at the press of a button devaluing everthing in the long run. If they had they would not have pumped such a level of money into Ireland. Maybe they thought they could keep expanding indefinitely. There comes a point when the long run runs out. This is now. You cannot expand indefinitely that is simply living the exponential lie. Forgive me when I get down to it again fractional reserve banking just does not work and the holders of the core capital know this simple truth. They are already out busy fueling China but the thing they missed is the Chinese actually save some 40% of their income and with a work force of some 800 million that makes for a serious reserve. But they will corrupt and inflate their economy unless the Chinese keep corporate control in the hand of the Chinese which it does at the moment.

    Spain is a disaster waiting to happen and so is Italy. Portugal like Ireland is small change except in the case of Ireland they have woken up to the fact Ireland piled in more than thought for cheap money. The majority of the money owed by Ireland some 90% is money borrowed by banking institutions and not the State.

    They always say follow the money. Not fully correct. It should be always follow the core capital. The core capital has been pulled from Europe. Britain HQ of the Finance world accounts for 25% of all the financial transactions in China. The core money is gone to the new Economic Centre of Global Inc which is what it is and nothing to do with sovereignty. There is a run in the Irish Banks already well under way and the smart money has gone ‘the core capital’.

    David is right in a free captial market first in takes the hit and last in gets the spoils. But as evidenced by transmuting bank debt to the elevated state of sovereign debt we are not living in a true capital market. We are living in a highly controlled market and the laggards who are not the core capital at the top of the pyramid are usin their positions to force repayment by foisting debt on to the ordinary joe citizen. Bailouts are equivalent to loan sharking. Debt forgiveness is a far different thing and rarely occurs.

    The Irish Govt need to wake up to the fact they need to put the problem where it truly belongs and that is with the ECB. The ECB need to be apprised of the unsavoury fact that it is itself in a position where the lender has lent so much it is his problem and not the borrowers. Force the ECB to apply debt forgiveness to the vast majority of the debt and arm up Angela to give the bad news to the bond markets that they need to take a hit as her constituents do not want to fund the debt forgiveness and borrow the remaining amount about 10% which is being generous at 2% over a 5 yr term commencing mid 2012. This may focus Angela’s constituents on the fact that fractional reserve banking does not work a fact they already practice in their daily lives as in Germany cash is king where saving is in their DNA as borrowed money must be paid back with the penalty of interest.

    When the Government has achieved this then it should start puting its house in order starting at the top cutting salaries so that no man is worth more than 100K reducing the Dail to 100 TDs. Apply a similar wage structure to the civil service cut all pensions by at least 50%. Give Bertie a bus pass along with the rest of the free loaders and a free pass to the zoo. scrap the great good work quango and send Donie packing along with all other senators. Ditch the Croke Park agreement and get rid of all the quangos. Drop the Environmental crap nonsense. Apply universal health care fire all the consultants if they do not do as they are told and hire elsewhere. Apply a property tax and bring it in over a 10 year period applying very small rates at the start. Apply water charges and hire Irish companies to install the meters and apply the charges over a 5 year period again with a token rate for the first two years. In other words the Government should start earning its keep. And bring in a new law limiting the time that a person can hold public office and find some way to dilute the amount of teachers and solicitors that are in the Dail – cap the amount or something because I am sick to death of them.

    • mishco

      “the Government … should start putting its house in order”

      So a) our current turkeys vote for Christmas

      or b) we get a whole new flock of turkeys who’ll vote for Christmas

      or c) some outside agency forces them to vote for Christmas

      Have I missed something?

      • foi foi moi moi

        yes..a Luger is pressed to the heads of the turkeys and they vote to have x mas all years round …No more voting needed because we know how to run your country more efficently!! Zeig Hail!!!

      • BrianC

        Yes I understand where you are coming from. There is no point having an election as all in the Dail are the same mentaility absoluteley sterile infertile ‘ss useful as a mule’s tool in a stud farm’. It would be a pure exercise of changing the deck chairs on the Titanic. And sadly most of us are third class passengers locked in third class quarters.

        But the next time they call to your door for a vote make sure you get your point across highlighting the level of faith you have in their ineptitude because ordinary joe public has to live with the consequences.

        The minute they accept the receipt from the ECB for for the bailout LOAN they will have a new master who will put the house in order for their benefit at the expense of joe public who remains on the hook no matter what.

        Nope you are not missing anything.

  29. octo

    So, back to the cafe owner’s question…. Are our savings safe in the bank?

  30. Emigrant lass

    Just saw Dick Roche’s interview. He is an embarrassment and if he and the other fools in that shack of a government don’t shut their mouths, we won’t be helped at all!
    It wasn’t so long ago that the governemt were urging the Irish public to pass the Lisbon Treaty, to act as true Europeans!

  31. Now that the cleaners have arrived we should start to see some spectacular changes in this country. Finally!

    The thought of all those protected by nepotism and cronyism wakening up to the stark reality that they contributed to their own downfall by aiding and abetting gombeenism is a welcome one. Let the squealing begin.

    The simple fact is that everyone has a choice in life and personal accountability is a fact of life that some people think does not apply to themselves. You make your bed and you lie in it and as a result of their silence we are now going to witness the public sector getting a spanking. Hip hip. Screw them. They were more than happy to throw the unemployed and the weak to the wolves but they are the ones who are now going to be subjected to a healthy dose of financial and psychological terrorism. The rest of us who have had a head start in matters of real life will cope far better

    As someone said earlier this country is built on bullshit and the peddlers of the Celtic Tiger were dangerous and intellectually challenged sociopaths who thrived on chaos.

    As a result of watching and listening to the Irish media and politicians in the past decade I find great difficulty in believing anything an Irish person says now. The only place I feel I am in the company of sincere and serious people is on this blog. It reminds me that there are still some good solid people left in Ireland

    We are not all in this together as Mary Robinson stated yesterday and I will continue to challenge anyone who insists on peddling this crap. We are not all motivated by money,wealth and property to the point where we would risk ending up in debt for life. Ah but sure renting is dead money isn’t it?

    He who laughs last laughs longest

    • Deco

      Will those who claim “we are all in this together” please volunteer for a salary / pension cut ?

      It seems they are often reluctant to do so. We get Dermot Ahern coming in a merk, lowering the window, telling us that we are saving too much, and then moving off in his shiny state merk. There is a massive lack of logical consistency.

      And we need to bring some consistency. We cannot implement any form of orderly retreat of the current fiscal over-reach, without more consistency.

  32. foi foi moi moi

    Baaaaaaaaaah…….Baaaaaaaaah ..excuse me im just practicing my Irish before i come home for the x mas(from forced emmirgration)..
    sheep thats what ye all are SHEEP..following the herd towards the cliff, French get told your comfortable life is about to come 2 years later and they shut the country down, We are going to the wall , we are a laughing stock worldwide and yet we hide away here on chat forums, talking about what should be done, and others are too blinded by greed to take a day off work to protest incase they loose their job and therefore loose their lifestyle. Are our OAP the only people left in Ireland with true Irish hospitality,PRIDE & COURAGE to stand up get organised and demand change. Shame on ye all..baaaaaaaaaah ..

  33. All citizens ALERT, please note the ‘word’ bailout is now banned throughout the land, all references to negotiations with any of the following, IMF, ECB, EFSF, EC on said word ‘bailout’ also banned.

    Please report any ‘fictional’ witness reports of members of IMF, ECB, EFSF, EC ‘bailout team’ to the Irsh Ghostbuster team of Dermot Ahern, Dick Roche, Mary Hanafin and Batt O Keefe, to get your instant brain swipe:)

  34. Deco

    Very good graph by Constantin Gurdgiev.

    Basically it shows the dynamics of the state finances.

    http://trueeconomics.blogspot.com/2010/11/economics-171110-road-we-traveled.html

    Many comments include words like ‘shame’ ‘embarrassment’ ‘pride’ etc…

    This is an ineffective dimension to analyze the predicament. This is not rational analysis. These are virtual concepts and they really do not matter. I hold the view that chasing virtual concepts got us into trouble, chasing ‘pride’ was a driving factor behind the lifestyle binge. We lost the plot and went virtual. And the media is doing it’s best to keep us virtual, where we are easier to control (for advertising) than on the real. The phrase “keep it real” is as relevant now, as it was during the binge era.

    What matters is the practical position that we are in. We are in a very difficult position with regard to negotiation with the EU/IMF. Even if we wrote off the bondholder debt, we would still have a massive amount of repayment to resolve. We need to evaluate what is going on in the proper practical terms. And we need to move on this like proper problem solvers.

    The Irish concept of lifestyle is under severe pressure and has been proven to be unsustainable.

    Been listening to Garrett Fitzgerald on Newstalk. He says that exports are getting better, but the media are not covering it. This will produce an employment improvement in the next 12 months. But that regardless unemployment will remain high – and this is something that people will endure.

    Garrett Fitzgerald has been saying that the ICTU “is maximizing unemployment” by look after the interests of their own members, (and thereby the position of the union bosses). Looking at the failure to get any productity improvement in the state sector for ten years, this is pointing the finger at the social partnership approach which usually gets no results for those outside the consensu. The fact is that we have many delusions, like the idea that the state can keep expanding and providing jobs for everybody who is in a political party or related to somebody already in the sector. Basically, the state is expanding and taking up more room, like the construction sector did ten years ago. This indicates to me that we are not really seeing overall austerity in Ireland. Some people might be getting clobbered, but there are many who are not.

    He is also stating that income tax will have to go up. I think that we are now resigned to the fact that this is unavoidable. This will affect private sector employment, particularly in the retail sector – and it will also have ramifications on the pursuit for LTEV.

    • Garret squandered any credibility he ever had with his nepotism and croney support of NAMA and before that the whole property bubble saga….perhaps he’s done enough damage…at one point like a jabberwacky estate agent he was attacking his old party for their criticism of Government policy:)

    • manofiona

      Re Garrett FitzGerald’s comments on exports. Because of the 12.5% corporation tax rate, a lot of Ireland’s “exports” are on paper only ie, they represent sales of products or services by multinationals which are artificially booked to Ireland in order to benefit from the low tax. The underlying manufacturing or service may well be carried out elsewhere, particularly so because Ireland is now a comparatively expensive place in which to do business.

      This situation angers other European countries: they provide the infrastructure and the labour for many of those products or services but are deprived of their share of tax receipts from the resulting profits because those profits are artifically located in Ireland.

      It also creates distortions in the Irish economy. It artificially bloats Ireland’s GDP and by extension Ireland’s GDP per capita and makes the Irish seem richer and more productive than they really are. That surely played a part in the lunacy of the property bubble and the extrordinary salaries and professional fees people came to accept as normal and justified . It also creates an artificial benefit for the multinationals on which which they have become dependent in order to compensate for the increasing costs of doing business in Ireland.

      There should be no long-term future for a low tax policy like this whose only real benefit is for the multinationals which use it in large part (difficult to say to what extent) in order to artificially allocate sales and profits (but not necessarily technology or genuine economic activity)in Ireland for purely tax reasons.

      However, since the export sector (real and artificial) is the only dynamic part of the Irish economy, and the government depends to a large extent on corporation tax receipts, it may well be necessary to keep the low-tax rate in place for a while until the Irish economy adjusts to being a normal Eurozone economy ie, until we move closer from Boston to Berlin.

      • coldblow

        Well summarised, Manofiona.

        FDI is a crucial source of well paid employment but it doesn’t seem to have many ‘downstream linkages’ to the rest of the economy. Employment in this sector has shrunk back somewhat in recent years and is expected to decline further. As MH Finfacts points out, without it we’d be on the same level as Albania. The big problem, which was examined here a good while ago, is how can Ireland adjust to being a normal entrepreneurial Euozone country? We are screwed on the macro level (if that’s the right term) throughc debt servicing and a productive native industrial/ export sector just seems to be wishful thinking. But somehow or other we just have to develop one. Some advocate getting there through educational improvements (can’t see it), others a change in attitudes (can’t see it). It seems that there has to be major strategic institutional/ fiscal/ even legal change to drive this?

        • mishco

          Let’s not forget a) tourism and b) agriculture, the two old stalwarts. Even without the major changes you advocate in your last sentence (though I agree they are necessary right now), surely these two are not dead? A couple of suggestions for revitalising them: for tourism, the govt takes over (if they haven’t already) all those zombie hotels and runs a bargain-price chain like the one in France (forget its name). For agriculture, polytunnels. Take a look at the fantastic productivity of the plastic greenhouses here in Korea, or in Japan. Again the govt. could provide loans for the start-up costs and the necessary basic training, and in a few years we are exporting products to the rest of Europe which no one else is growing.

      • @manofiona

        Fair comment. But I believe CT should be raised to 18%.

        Some of the points you make are covered link below by Sullivan.

        The extent to which there is repatriation of profits to Ireland from other eurozone countries, the financial tools used to execute these by way of profit deferrals to the US, or IFSC tricks, work would have to be done to provide the data on this.

        This data is not available and is largely a matter of conjecture. what is not a matter of conjecture is that US multinationals through low tax destinations such as Bermuda and Ireland have succeeded in tripling overseas profits over the past number of years.

        In a time of need for Irish citizens, CT should be asked to pay its fair share in our economic recovery.

        What we do not need here is a false economy based on the paper infusion of CT that does not generate
        local jobs, does not generate real FDI, whose only contribution to the economy is support for inflated energy and business costs.

        Real CT that eg pharmaceutical industry, generates real jobs, and a real contribution to GNP, is of course welcomed. It can easily contribute 18% if the cost of business is brought down along with a corresponding fairer CT.

        The ‘no touch CT sacred cow’ comes from the same spring as that which supports no tax for anyone over a certain income threshold. It has made its contribution to where we are.

        http://bit.ly/8ZUtQZ

  35. We know what the government’s position is on the restructuring of the banks, give the banks a blank cheque and taxpayers will pony up for the bill.

    Only problem with that strategy was, the banks have a hole in their bucket. Whatever is given to them, gets poured away and they are back for more.

    Fortunately, there is a simple solution. Firstly, ignore the advice being given by the Government and NTMA, their banking strategy lies in ruins and failure.

    Take Anglo down as it provides only pure drag on the Irish banking sector and is a bucket hole. Transfer out from Anglo and into AIB/BOI/ILP
    any worthwhile assets.

    Close NAMA, its a white elephant whose ‘pretend’ loan book is one of significant risk to the Irish economy, transfer its assets back to the other surviving Irish banks.

    Clean out and replace the upper echelon management ‘tiers’ of the surviving Irish banks and replace with adequate Irish expertise.

    Give strong support to the recapitalisation of the survivors.

    Radical reform of our Public Service and taxation system required.

    Most urgent of all, election required to end our government by morons. We urgently need state of the art political reform, a new professional political class best on best practice and fit for worldwide competition.

    50% cut in salary for all serving politicians, a vouchered and publicly viewable expenses list, small price to pay for the mess we are in!

  36. bailey

    Why have we to take the money from ECB and give to the Banks. Why can’t the ECB give directly to the banks and they can owe the debt. This way we the citizens will have to pay back the money owed. Will we go down as a PRIORITY CREDITOR on their balance sheet and have to be paid back before another outside bank comes in an tries to take them over at a later stage.

    • +1

      One tragic way of looking at this is that the giant squid suckerholes of the banks have sucked everything from citizens and now have their suckerholes into more bailout money citizens ‘get’ from the ECB. Citizens will have to pay this moral hazard money back! It’s another banking scam to avoid bondholders and bankxters taking a write down restructure.

      One way of looking at this is from the view that the IMF/ECB are afraid we will do an Iceland and refuse to pay bondholders.

      The ‘bailout rescue’ is one way to ensure bondholders and banks are not allowed to fail and get paid back every money just as Suds and John Bruton demand!

      Citizens lose every way you look. The currency of persuasion is a mere, well, if you don’t go this way, its worse that way:(

    • Deco

      { Why have we to take the money from ECB and give to the Banks ? }

      Because the banks are private companies, (even when nationalized) and it is possible that the Irish who have a tendency to not take instructions from Brussels, and act in their own interests, and might walk away from any of those banks.

      This is in effect, forcing the Irish taxpayer to prop up the Irish banking system to an even greater extent. (Taking a look at it from the perspective of the bondholders, and continental banks).

      The ECB created the interest rate policy that was condusive to an asset price boom. We should have been distrustful, but instead we were euphoric.

      Basically, the Irish taxpayer is being made responsible for keeping AIB/BoI/IL&P afloat, and for cleaning up the mess afterwards.

      Let’s look at how this will work out, and what everybody will end up with.

      The EU gets their coverup. The bondholders get their bailout. The bankers get their careers secured. And the taxpayer gets the bill.

      To be honest, we are getting to the point that default would be a more economical option.

    • Pedro Nunez

      If there was ever an indication of the need to reform what goes for a legal system in Ireland this is it, on top of what the law and accountancy firms have creamed off the banksters and NAMA, WTF!

  37. IMF

    The IMF has no right to be in this country, tell them to bugger of and impose their ideology on those who call them.

    Their only interest is DEBT REPYAMENT.

    Debts that no one who reads that here signed off, but a bunch of Banksters and FF politicians.

    Hungary has kicked them out and are doing better now. The refused to accept IMF payments and managed to increase growth.

    When you did not pay the Gombeen man, they sent someone to give you a beating, or break your legs. The IMF is this someone, they are the neo liberal Banking Mafia.

    You shall never forget what Cowen and his ‘Mischpoke’ did to this country.

    TREASON!

    • Gege Le Beau

      Of course, it is not about bailing anyone or granting loans, it is about turning a country into a debt servicing entity.

      The deal that emerges (debt layered on debt) could be akin to the Versailes Treaty which drove the Germans to a very nasty place.

      • War has been declared on the people of Ireland by banksters and their Insitutions IMF AND ECB.

      • @Gege

        Or think of Haiti, who can’t even get the UN in to prevent cholera, debt reparations can have alarming results:

        http://bit.ly/8UDG1c

        “For Haiti, this debt did not signify the beginning of freedom, but the end of hope. Even after it was reduced to 60m francs in the 1830s, it was still far more than the war-ravaged country could afford. Haiti was the only country in which the ex-slaves themselves were expected to pay a foreign government for their liberty. By 1900, it was spending 80% of its national budget on repayments. In order to manage the original reparations, further loans were taken out — mostly from the United States, Germany and France. Instead of developing its potential, this deformed state produced a parade of nefarious leaders, most of whom gave up the insurmountable task of trying to fix the country and looted it instead. In 1947, Haiti finally paid off the original reparations, plus interest. Doing so left it destitute, corrupt, disastrously lacking in investment and politically volatile. Haiti was trapped in a downward spiral, from which it is still impossible to escape. It remains hopelessly in debt to this day.”

        Dail =_= Debt Agency for Irish Lenders

        • Gege Le Beau

          Yes, Haiti is an appalling case study.

          The current public health crises (there are several not just cholera) were all warned about months ago, but the international reaction with the UN as lead agency has not been what it could have been. 1.3 million people still in tents 6 months after the earthquake. Where are the donor nations?

          The thing is Haiti is over a barrel and word has it that negotiations to implement a full neoliberal agenda are going on behind the scenes, so people are left to die in the camps as a form of heartless bargaining chip.

          Ireland although nowhere near as bad as Haiti, is equally over a barrel, the government have little room for negotiating, more of case of listening to the terms and conditions. Their fecklessness, allowing Irish Banks to borrow so much to the extend that is has sunk an entire Republic has to rate as one of the great betrayals in political history. Think Cowen’s interview on the six-one news yesterday (worth watching if you haven’t seen it) spoke volumes. End game.

          • coldblow

            Gege, the neoliberal agenda is of course a big part of the picture, but Haiti is one of the numerous post-capitalist-colonial nations which have failed to develop. Has there been one that has broken the pattern? From what I can see they all have this in common: a skewed, corruption-encouraging, unjust socio-economic system based originally on highly inappropriate institutions of land tenure with consequent extremes in privilege and deprivation and inefficient use of resources, plus an inability to confront vested interests (because, simply, their protection is why the state is there in the first place). Some have tried valiently in the past (60s and 70s) to escape from this heritage by engineering economic take-offs and encouraging native industry or embarking on education drives, but all (as far as I know) have failed miserably. While some of the blame can (and should) be attributed to rigged international trade and finance arrangements I think the main reason is the internal set-up.

            Ireland belongs to this group, by the way. It has been betrayed by its elite, as you point out, but this should be no surprise as “that is what they do”.

            This reminds me of a thought which sometimes occurs to me. You know when you are looking at some famine-ravaged African country and the tv camera shows a shot of a herd of famished cattle searching for fodder on a dusty plain? I think it helps if you consider that. while it looks like chaos there are well-defined structures firmly in place, and it is likely that most of the cattel in that village are owned by one or two men.

          • coldblow

            Actually, India is an exception to the rule, probably due to its numerically vast internal market. But if you’re not on the inside track there life is hard.

          • Gege Le Beau

            @ coldblow – you highlight merely one aspect and not the most important one. been over this before.

            Haiti’s burden of debt
            Feature, February 2010

            Haiti’s debt by numbers
            -$35 billion Approximate equivalent in today’s currency of Haiti’s bill to France for its “lost” colony
            -$750 million Haiti’s debt in 1986, when the US-backed Duvaliers fell
            -$900 million The Duvalier fortune that remains frozen in a Swiss bank
            -$321 million The cost of servicing Haiti’s debt between 1995 and 2001
            -$11 million The amount by which interest on debt exceeded foreign aid to Haiti in a single year (2003)
            -$1.9 billion Haiti’s debt when the US gave $1.2 billion in relief (June 2009)
            -$1,051 million Haiti’s debt today, 80 percent held by the World Bank and Inter-American Development Bank
            -$100 million Projected annual debt repayments for the next ten years
            -5 years Period World Bank has suspended repayments

            Hard to develop with there are two feet on your neck.

            Why the US owes Haiti billions
            http://counterpunch.com/quigley01182010.html

            France owes Haiti €36 billion in colonial reparations

            Give them the money, a level playing pitch and watch things change.

  38. The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum–even encourage the more critical and dissident views. That gives people the sense that there’s free thinking going on, while all the time the presuppositions of the system are being reinforced by the limits put on the range of the debate. – Noam Chomsky, The Common Good, 1998

    IRELAND SHOULD REFUSE TO PAY BACK THE FRAUDULENTLY IMPOSED DEBTS OF GERMAN AND UK GAMBLERS. IRELAND SHOULD NOT ACCEPT FURTHER DEBTS IMPOSED ON THEM!

    • Watch what is happening in the dail RIGHT NOW and read that Chomsky quite agian.

    • coldblow

      Hi Georg, I don’t believe that the Irish, as a people, tolerate a wide range of debate. I think this is self-imposed rather than forced upon them. If you try to engage them in debate you should have no problem among selected family and friends, but if it involves a wider, more public arena, there is a tendency towards indignation and emotion. That’s been my experience anyway!

  39. Deco

    GP Minister Eamon Ryan has declared that “this is a loan not a bailout”…
    Maybe, he should quote the Ditherer 1.0 “it’s a gift not a loan”.

  40. Gege Le Beau

    Open Appeal to the Green Party:

    Dear Green Party Members,

    The credibility of the government with the appalling denials about negotiations with the EU/IMF have seriously damaged the integrity of the body politic. The current political instability has not helped Ireland on the international bond markets and have most certainly driven up our yields. Meanwhile, over 80% of the Irish people want a general election while the Irish Times have published this hard hitting editorial:
    http://www.irishtimes.com/newspaper/opinion/2010/1118/1224283626246.html?via=rel

    Dan O’Brien also writes today: “If ever there was a time to do what is right and honourable, this is it.”
    http://www.irishtimes.com/newspaper/ireland/2010/1118/1224283627146.html

    We run the risk of bringing the parliament and democratic process further into the gutter given what has occurred in recent times from the scandalous condition of the health services to, as David McWilliams notes: “Anglo Irish Bank, negative equity, ghost estates, bailouts, NAMA, FAS scandals, AIB bankers lying about the state of their books” and now IMF involvement.

    All I can do as a solidarity Irish man is appeal to you to restore what is left of the democractic process, please exit this broken, dysfunctional and discredited government. We need change, we need hope, we need a General Election.

    I hope you and your colleagues can find the courage to do the right thing and give us back our democracy, it is all we have left however tarnished and damaged.

    G LE B.

  41. petercice

    sec general of the oced on bloomberg says that there is 2 problems banking and sovergin debt main problem is that one bank has killed the banking sector but the government has stood behind the bank that it is now a government problem and he said because of this it is very unfair on the citizens of the country but that is the position the government has put us in.
    there are talking of up to 90 billion euro in funding at the moment at a rate of around 5%
    god we are totally screwed

  42. Folks, a wee poem to celebrate the day that is in it….

    Welcome UFO’s (from IMF/ECB/EFSF/EU)

    Lenny’s new oxymoron
    Is ‘shared sovereignty’
    let’s rejoin sterling’s NI?
    Almighty Blighty?

    Blow the whistle on our great thistle,
    Lenny The Liar, Moron of our Great Misled,
    The Great Fibber, can’t believe
    Anything he said?

    Eject from euro?
    Obama, can we be the 51st state?
    Say ‘hello casinos’ Lowry Tipps
    Louth lies our secret mischiefs?

    We’re Europe’s economic orphan
    Test tube economy, baby!
    Its time to do our duty
    Sell us out, Lenny
    to our highest bidd er Or?

    • michaelcoughlan

      Two verses borrowed from Luke Kelly’s Poem and slightly altered:

      For What Died the Sons of Róisín, was it greed?
      For What Died the Sons of Róisín, was it greed?
      Was it greed that drove Wolfe Tone to a pauper’s death in a cell of cold wet stone?
      Will Polish, French or Dutch inscribe the epitaph of Emmet?
      When we’ve transferred enough of Ireland to NAMA and be but strangers in it.
      For What Died the Sons of Róisín, was it greed?

      To whom do we owe our allegiance today?
      To whom do we owe our allegiance today?
      To those brave men who fought and died that Róisín live again with pride?
      Our sons at home to work and sing,
      Our girls to dance and make her valleys ring,
      Or faceless men who for Euro and Dollar,
      Betrays her trust to the highest bidder,
      To whom do we owe our allegiance today?

  43. easun55

    a sad day for this great country …
    it people young and old …
    Destroyed by an elitist bunch of community wrecking losers ,who i feel pity and sorry for .
    If one good thing comes of this mess it might be the permanant destruction of the fianna failure party and the rise of new people party.

  44. padser

    What I cant understand & assuming the Financial Regulator was was central to all this is – Why have we seemed to accept that “he made a mistake” or “he fell asleep at the wheel”…these are utterly implausible excuses…their just too damned elaborate!!
    We have to wake up to the reality that FF were complicit with the FR…..and simple notions expressed by Brian Lenihan, that if the FR had a problem he would have came to me ….just doesn’t wash!
    One or the other – or both, should hang for this.
    Now’ I’m not saying that we should have a tribunal or even something similar, we now know that tribunals are just “mechanisms or tools” – to allow the the unimpeachable to live as normal and any outcome is still subject to a real Court of Justice!
    The People of Ireland have to make the decision…..and this involves drastic and immediate Political Reform….long gone the notion should be’ that any small but very influential group of people can subject the entire population’…..to hardship and humility on an International scale.
    We really do have to “Wake Up”!!!

  45. uchrisn

    David should be in the meetings with the government EU and IMF. Or Morgan Kelly and other economists with no real bias.
    Instead there will probably be some consultant who works with or worked with a bank like Merril Lynch, Morgan Stanely or Goldman Sachs. Mr. Sutherland might even do what is is paid so much for and make an appearance lobbying for his clients. These people are trained to think that these banks are at the centre of the Universe. They are also smart and good at making an argument. The government is getting advice from all the wrong people. I wonder if Mr. Sutherland told his bosses that he can control Ireland in his interview.

  46. Philip

    You have to hand it to the irish….

    Less that 2% of economic activity. More that 30% of the trouble for Europe.

    We know how to draw attention. Surely incompetence could not have achieved so much?

  47. Gege Le Beau

    David, do you sleep these days, American journalists showing up at the door these days :-)

    CNN & McWilliams in brief
    http://edition.cnn.com/2010/BUSINESS/11/17/ireland.bailout/index.html?hpt=C2

  48. george

    If the IMF and the EU don’t reduce the salaries, pensions, of the top brass of the Public Sector for at least 1/3 of actual values, and increase the tax of the wealthiest, it will mean that they have decided that the bill only is going to be footed by the ordinary person living from the average industrial wage, and even people earning less than it.

    I hope they will realize that if they don’t force a reverse benchmarking with other EU countries in our own league so to speak, they are going to set a very bad precedent for the rest of Europe. While Mr. Rodriguez Zapatero and the rest of civil servants in his Government are leading by example and had taken a 20% pay cut, that means he is earning 80.000 euro while our Taoiseach (Irish Prime Minister in case one of them is reading it) is earning 220.000 euro and the same goes for the rest of our Public Sectors Professional.

    I am oppose to the introduction of a property tax and water charges, because this is going to affect only people earning little money, and I consider a home a basic human right that shouldn’t be taxed, except if you have more than one house.
    Anyway I would be ready to pay it given the circumstances we are going through, only if I see that the top brass of the civil servants get a pay cut of at least 1/3 of their actual salaries and pensions, and all the other perks they are getting like golden-handshakes, lump-sums, and pensions equal to the last salary are cancelled.

    Also we need political reform and we need to look for a model that suits the society in general. That would allow us to have a Public health system, and a Public Educational System in the lines of the Scandinavians Countries or Germany. But we’ll get nowhere whit this parasitic elite in the Public Sector that are paid for what themselves think they are worth and delivers only a fraction of what they promise.

    • FG policy of axing 30,000 jobs in the Public Service might avoid pay cuts for the rest, do you think?

      • george

        That won’t solve the core problem. The logic dictates that we shouldn’t pay our Professional Public Servants more than the average pay for the same jobs in Europe. But on top of that they get many other perks most of other Europeans counterparts don’t get, regarding pensions, retirement, and holidays. And it makes Ireland a very expensive Country to live for most of its citizens, and very uncompetitive in the export market. And if this readjustment isn’t done properly the gap between rich and poor is going to be even bigger. And this is going to allow all this Professionals in the Public Sector and others, to take advantage of a horrible situation for most of the people living in average salaries.

        OK we have to weed out all the useless Kuangos, but nobody providing frontline services with an average salary should go. Isn’t fair for them, or good for us!
        Only analysing the “Public” Health Service you have an idea of everything that is wrong in this Country. There are doctors earning 165.000 euro paid by the State that are even allowed to use Public Facilities and Staff, to treat Private Patients, where the HSE has managers that earn a small fortune with nobody to manage, where 2/3 of it budget goes to pay salaries, where waiting lists are endless, where in fact the State is putting per head of population more than Germany, Sweden, or Norway, and where in reality the public is getting third world services, and the money is lost in translations between different and useless reports. Isn’t it a crime with another name!
        But the same goes for the educational and administrative aspect of the Country, where the professionals are paid to much.

        If we would have oil offshore and money wouldn’t be a problem all this things wouldn’t make a big difference. But we are living mainly from the Corporation Tax. And all our eggs are in one basket.

        The only way we can make this Country more competitive in economic terms, so also we could develop the indigenous productive sector to create jobs and wealth, that in turn will benefit all of society is to pay the Professionals and others in the Public Sector the average is paid in the rest of Europe, and force them to provide for what they are paid.

        • Re “That won’t solve the core problem.”

          Correct, it will only make matters worse, an excuse not to make the adjustments you write about!

          • george

            Listen may be in useless kuangos we get the 30000 FG is talking about. But the core problem here is that even if those are gone and we pay the rest that are left more than the average European rate, and we don’t demand results, nothing is fix.
            If we repeat the same mistakes we’ll end up in the same situation again. And still the Country will be uncompetitive and the indigenous industries won’t flourish. We need to create wealth, isn’t it?
            Who do you think is more able, a small entrepreneur producing something, giving employment, and getting his money afterwards? Or one of the guys of the “report brigade” with three months holidays, early retirement, and 30 years pension, paid by the rest of us?

          • coldblow

            Hi George, sounds like we need a kwango hammer!

            Which ones do we axe? How about the National Disability Authority? One of its functions is to oversee the implementation by the public service of 3% employment targets for disabled people. The private sector don’t have such responsibilities and in my experience (eg phone cos., banks, tradesmen, supermarkets, hotels, shops selling electrical and other goods, airlines – that’s just a short list, I could surely come up with many more examples) they often have zero customer service while the concept of deadlines seems to be alien to others. But I agree all the same about the quangos, just which ones need to be abolished, and what corresponding swathers of pc legislation cluttering up the statute books needs to be cut down along with them? They are used for political patronage, add hugely to red tape and the national BS mountain, spend too much money on PR nonsense, and are probably overstaffed and mainly not needed. As well as that a few have contentious and tendentious ideological agendas.

          • helvickhead

            Start with NERA please – going around the country putting huge pressure on decent small businesses (just don’t get me started!), then the SFPA who spend massive resources on criminalising fishermen trying to make a living, and there’s lots more. But if these two were abolished I would throw a party!

          • If you axe jobs in frontline services in the public sector, you place the burden of loss on citizens, burden falls not only on those losing jobs, but on the downstream jobs, retail sector employment. Its another loss of services and a hidden tax on taxpayers and citizens to pay for banxters and no tax for the wealthy policies. By all means end quangos and introduce fair pay, make more efficient and professional and send admin staff to beef up frontline services!

    • ellend

      We need political reform NOW if we are to turn this crisis into a crisitunity. We have 166 overpaid incompetents engaged in constituency work instead of making policy. We have a cabinet chosen behind closed doors, accountable to no-one but itself. We have a Constitution that vests executive power in the hands of the cabinet, provides no useful or necessary function for the two houses of the oireachtas (not to mention the pres), and requires all changes to the Constitution to be instigated by and voted for the houses of the oireachtas. They’ve been tinkering at pretending to think about constitutional reform since 1996 (read the minutes of their meetings on the oireachtas committees website if the stress is causing sleepless nights :) but, as has been pointed out on this forum, you can’t get turkies to vote for christmas. I say, it was our mistake to give the vote to turkies in the first place. Time to man the barricades, get out the knitting needles, and if the people are hungry, LET THEM EAT TURKEY.
      Ahem. Getting carried away. All out revolution, anyone?

    • Deco

      I just wonder, will the IMF copperfasten the right of the pen pushers in D2 to get their paid leave of one day to perform the Christmas Shopping ? And the cheque time ? Plus all that mileage allowance stuff, and junket expenses regime with unvouched expenses, plus the time they spend playing golf that is listed as time on the job ?

      sNeary….I have been told…played in Portmarnock a fair bit..much more interesting task than crunching the numbers from Anglo Banglo, etc…

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