November 24, 2010

Pouring more cash down banking black hole is theft

Posted in Banks · 381 comments ·

So the Government finally gave up the charade last weekend and asked for help from the IMF and EU. Following a week when everyone, save certain government ministers, seemed to know what was coming, it came as a great relief to the markets when Finance Minister Brian Lenihan made his announcement.

When markets opened on Monday, the crisis was over. Bank shares were up, our bond spreads moved to levels only slightly above German bunds and investors were tripping over themselves to throw money into the Irish economy.

Hang on, that’s not right, is it?

If anything, things in the market have gotten worse. If we ignore the political implosion here and look to the wider European situation for a moment, we can see how little all the ‘will we, won’t we’ agonising that happened here last week actually mattered.

The markets know Ireland’s economy is not going to recover any time soon, and that rolling over our debt is going to do nothing to solve our problems. Furthermore, whatever chance Ireland has of recovery will be extinguished by a four-year austerity plan.

Having made that assessment of our prospects, the market has moved on. Ireland to them is yesterday’s news. Today’s news is Portugal, which announced a worsening deficit yesterday — despite months of austerity measures. (Sound familiar?) Tomorrow’s news will be Spain, the ’800-pound gorilla’ of the peripheral EU states — so-called because of its huge €1.1 trillion economy. Spain had an auction of short-term debt yesterday that failed to sell the expected amount even at higher yields, an exact mirror of Ireland’s experiences in the bond market in September.

But why do market reactions to developments in the Iberian Peninsula matter to us?

First, the problem with Spain is that it is probably too big to save. Neither the EU nor the IMF has the money to bail them out, and it is unlikely Germany would be willing to foot another reunification-sized bill to save their Spanish cousins. As Olli Rehn put it on Monday: “It is essential to stop the financial bushfire concerning Ireland before it becomes a European-wide forest fire.”

For Mr Rehn, it seems it might be too late. In fact, if there was ever a ‘sell’ signal to the markets, it was Olli’s comments.

Secondly, the EU-wide crisis is an opportunity for Ireland.

In ‘Follow the Money’ I explained the domino theory of international relations that led the US into Vietnam. The idea was to stop the spread of communism in Vietnam before the whole region became lost to US influence. That same theory is being applied to the EU’s actions in the peripheral states. They are fighting in Ireland to prevent a national bankruptcy in order for the whole euro project to avoid a similar fate.

How is this an opportunity for us? Let’s look at the numbers. Taking account of sovereign bond redemptions and deficits, Ireland needs about €74bn over the next four years. The banks are getting €90bn of funding from the ECB and another €35bn from the Irish Central Bank. So, to get everyone off the hook, €199bn is needed. We can add that number to the national debt (net of redemptions by 2014 and cash balances) of €76bn and come up with a total of €275bn. Or just over 200pc of GNP.

There is no hope of Ireland ever being able to repay this amount. Nominally, if there is a large growth of inflation in the European and Irish economy, it might be possible, but with tight monetary control from Frankfurt, that is not going to happen.

So we need burden sharing with bank bondholders to reduce the liability the State has encumbered itself with through the mishandling of the bank guarantee. The alternative being presented by the run on Spain is that sovereign default is not only more likely, but should be viewed as being in Ireland’s best interest. Loading up on IMF and EU debt right now — in order to bail out the banks — only makes sense for us if we have no intention of paying the money back.

The European-wide ‘forest fire’ referred to by Olli Rehn will burn through all sovereign debt as weakness in the unbailout-able Spain causes an existential crisis for the euro. We would default because we would have to. It would be chaotic, and it would probably spell the end of the euro.

It could easily be seen as dishonest for Ireland to take on this debt while aware of what is probably coming down the tracks, but considering how distracted our leaders are at the moment about saving their own skins in the upcoming election, there is a good chance they do not know how bad the situation is in southern Europe.

There is also a chance they have not yet figured out the gravity of the threat the Spanish situation poses to the euro project. But the ‘nobody saw this coming’ argument is tired by now, and cannot be allowed as an excuse any more. It is dishonest to fill our boots with IMF and EU money, but the IMF/EU are being equally dishonest about the situation by giving the money to us.

The honest thing to do is to realise what the problem is (the banks) and admit that pouring further cash into those black holes is theft — from either the Irish taxpayer if we pay the loans back or from the IMF/EU if we default on their loans. The honest thing to do is pass a bank resolution which swaps the debt for shares — a debt-equity swap in the banks — and get that €120bn liability off the national and international balance sheet.

Then we can start to sort out the real problems in the Irish economy, and show the IMF the madness that is contained in their latest spin on ‘expansionary fiscal contraction’ which they published on Monday.

David McWilliams performs ‘Outsiders’ at the Watergate Theatre, Kilkenny, on Saturday and at the Everyman Theatre, Cork, on Sunday.

  1. adamabyss


    • eugenebrosnan

      If it’s endgame and we need to to stop our Ministers throwing the rest down the drain, why don’t you and the other Economists who say we are doomed, our Goose is cooked etc, go to Leinster House on Sat with the rest of the people and call for the Govt. to resign.

      • Fergal73

        Endgame was irreversible once the government guaranteed bank bondholders.

        The time for recovery is long gone. All that is left is to choose which country to emigrate to, or to hunker down in Ireland for 10 – 20 years of a replay of the 1980′s (with admittedly a better a road infrastructure).

        EMIGRATE, your leaders have abandoned you.

        • Dilly

          Better roads, thirty years after we should have had them. A third rate public transport system, at a time when everyone should be using it instead of cars to get around.

          • Fergal73

            The people voted for FF. Why expect to be left anything positive? FF have been a cancer at the heart of Irish life for generations. Isolationist policies of Dev consigned a generation to the boat to England in the 50′s and 60′s. The Huaghey govt of the late 70′s bought the election, borrowing to do so, consigned a generation to the skies to the USA in the 80′s, the Bertie bubble caused some to leave in the 2000′s because property prices were insane, and now we have emigration back for at least 20 years.

            FF put Ireland in this position. The Irish electorate put FF in charge.

            Be thankful for the roads!

          • aidanxc

            Would all of you stop moaning? Seriously, it’s like listening to a broken record. We, the people, have to accept responsibility for the mess we’re in, whether it’s for paying stupid prices for houses or electing an incompetent government.

            We need to stop sitting on our fat arses in front of our computers and get out and do something.

            Do something useful – go create a job. That’s how we’ll get out of this crisis.

          • Colin


            Go create a job? I got a better idea, emigrate and either work for someone for a decent wage and with a low cost of living, or create a job abroad where you will be allowed to thrive without the insiders and the professionals and the elites creaming off your hard earned money.

            There’s no point in trying to make a living in Ireland now, and anyway if you somehow manage to, just remember your children won’t forgive you.

      • kidcurcw

        Correct, when economists with punching power come out and are seen to join the voices of concerned citizens, then the rest of the population will cop on.Credibility is the hinge-pin of all protest.This economic war is having a negative effect on the lives of our children. If these invaders had guns in their hands we would be preparing arms ourselves. For Gods sake listen and take action.This is the modern day version of 1930′s europe. In thirty years time don’t tell your grandchildren that you stayed at home and let everyone else deal with it for you.Get up , get out , get heard. Take to the streets before it is too late.

    • eugenebrosnan

      Gurgiev and Somerville, yourself and Brian Lucey all say if we take the bailout were fucked!! So, WHY WHY WHY are we still tweeting and still posting blogs, still on matt Cooper, Joe Duffy and V.browne shows just saying it! you owe it to us to step to the front and bring the others too.. Before it’s too late!!!

      • Julia

        Good idea. see you there.

      • Sounds like a challenge. Mr. McWilliams what say you?

        • eugenebrosnan

          It is a plea. Enough of this sycophantic warbling!!Everybody giving their tuppence worth!!David said this David said that!!What happened, what didn’t !!It does not matter now… What matters is getting that negotiating team out of Dail Eireann and a nobody like me or all of you can’t do it.. We have to get Mc Williams and the others who know the Govt. are burning the states future to stand up for us… We’ve given enough… We listen to them every day and every night!!They make a good living from this!! PLEASE!!

      • jimaneejeebus

        As stupid as our leaders appear, I think they have always known about how bad the scale of the problem is. I realize that’s a bold statement, and one that will probably not win many friends here. But if one thinks about it logically….how could they NOT have known?

        Our government knew they would need to appease europe [austerity measures...NOT burning the bond holders] in order to be looked favourbly on by the eu in the inevitable bail-out that would ensue.

        Step 2 of their plan was default.
        The procrastination, the positive spins, the placating of the irish people- Lenihan et al knew exactly what they were doing all along….default.

        I know I’ll probably be slated for this point of view, but as stupid as we’d like to believe our government to be, some of them can probably add.

        I’m in no way supporting our government here, I’m just saying that they MUST have known [to some extent at least] the scale of the problem and default was the course of action decided many months [if not years] ago.

        • Harper66

          I agree.It is foolish to simply dismiss the Government as gombeens.The policy followed by Cowen and Lenihan since 08 is classic FF , namely frustrate the system, keeping moving the goalposts and say whatever suits at the time.In other words lie and cheat.

          I dont see you as supporting the government with your statement. I do think FF are eyeing default as the way out of this….flurry knox style.

          • jimaneejeebus

            It’s kind of ironic that the ‘cute whoorism’ which caused this mess *could* get us out of it. Although, I’m not sure if having no option other than default could be described as cute whoorism, but I’m sure fianna fail will try to put a positive spin on it whatever happens!

    • eugenebrosnan

      I want to urge everyone subscribing to this to ask David to get together with the other 4 or 5 who believe wholly that WE CAN’T TAKE THIS LOAN!, to assemble on this point and to front the march on Sat. Fair play to Jim Corr but he’s a guitar-player! The Jack 0 Connors and Beggs are just Union heads!!They both may be good at their jobs but Mc Williams, Guerguiv, Sommerville and Lucey are the top Pro Economists and market analysts!!!They must put their other differences aside and sit or stand together on Sat. They need not say anything excet the word GO!!

    • Nemesis

      The word we need to start using to describe this government is “Kakistocracy”, defined as:

      Government by the least qualified or most unprincipled citizens.

      1829, “government by the worst element of a society,” coined on analogy of aristocracy from Gk. kakistos “worst,” superl. of kakos “bad” (which is perhaps related to the general IE word for “defecate”) + -kratia “rule of,” from kratos “strength, power, rule” (see -cracy).

      “Is ours a government of the people, by the people, for the people, or a kakistocracy rather, for the benefit of knaves at the cost of fools?” – 1876 OED

      How did it come to this? Greed, Ignorance and Stupidity.
      4x4s, 50″ plasma tvs, McMansions, villas in Bulgaria. A corrupt and venal unholy trinity of bankers, developers and politicians. Drinking too deeply from the Neo-liberal kool-aid fountain, cheerleeding from the sycophantic Irish “Independent” (rag), weekend shopping trips to NY and Dubai, Reiki for horses, angel therapy, Cecelia Ahern (p.s. I hate you, you talentless hack), the Lenihan kleptocracy (thankfully cancer, as well as thieving, runs in the family), Alcoholics (Clowen et al) and trash culture (Glenda whore Gilson, Rosanna tramp davidson and the scum they fuck: the cretin Mansfield and fat Johhny Ronan). So long Ireland, time to reap the whirlwind.

      • ouldbegrudger

        @Nemesis, The term “kleptocracy” is more appropriate.
        It simply means that we are ruled by thieves.

        The Republic is dead. Long live the Second Republic!

      • coldblow

        Nemesis, a bit OTT I think. How about sharing your personal experiences? (IMHO these are always interesting.)

      • Deco


        There is an american joke.

        Q. What caused the sub-prime crisis ?

        A. Sub-prime thinking.

        we now have the media providing easy answers and a cast of villians (it was Seanie Fitz’s fault), in an effort to prevent us getting any wisdom from the excesses.

        Every one of us made a contribution to the mess. Everybody. Get that. This idea that others are at fault, and that therefore our own private little smugness can continue is nonsense.

        The entire culture is rotten. Manufacturing of consent. support our advertising sponsors. enjoy the lifestyle. Drink responsibly (because you are forbidden from opting out of it altogether). get on the property ladder before it is too late. Bijou apartment (= small flat).

        The lack of any sense of responsibility, instead the idea that has permeated in modern consumer culture that you grow up to become a big child with spending habits. This is our problem.

        And the greatest threat now is that we might cop on to what is going on.

        • aidanxc

          Hear, hear – great point. “Every one of us made a contribution to the mess.” That is so true and if only people would grasp that nettle we might move on from seeking scapegoats and start looking for a constructive, positive solution.

        • Colin


          Austerity won’t work.

          We all had the opportunity to go mad on a credit binge, many people did, others like me didn’t. I ripped up the many letters sent out to me offerring me a mortgage while I was in full time study.

          I’ve never accepted the concept of collective punishment, not when I was 8 years old and stopped from playing football in the schoolyard because some guy in class was messing and upset the teacher, and not now either.

  2. irishminx

    Touché David. Thank you. I have always loved a straigth talker. I know where I stand when a body says it as it is! Congrats.

  3. Gabriel Cooney

    So, David, why won’t they do it? Surely there is no face left to save any more?
    Any commentators who know what they are talking about agree that a default (at least on bank debt) is inevitable.

  4. Gege Le Beau

    Professor Brian Lucey & Paul Sommerville on Vincent Browne’s show last night came to the conclusion that the debt burden for Ireland is €343 billion, someway north of the €200 or €250 billion figure.

    But the basic premise is correct, there is no way this debt can be paid, so harder negotiations are needed, we either come to some settlement or we default.

    The plan today and the Budget are sideshows from a dying government, while talk of export led growth absurd. Politicially, they continue to disgace themselves by refusing to call an election, there current actions are an exercise in futility. The cut in the minimum wage along with all the other tax hikes, property and water taxes will all hit the poorest, those struggling, the most.

    It is a scandalous day for a so called Irish Republic. Pure Shock Doctrine.

    • irishminx

      I agree. Those poorest in Irish society will be affected the most.

      It is deeper than scandalous Gege.

      • Hu Bris

        So far I have not heard anything about laying a little more of the burden onto the richer members of this so-called society of ours. why is that I wonder?

        • mick.dfarmer

          They will simply pack up and leave, if they haven’t already done so.

        • Gege Le Beau

          I am interested in one item – how much will politicians take a salary hit by? Will Cowen’s immoral wage decline by anything? That surely is an indication of how serious they are, we can all put on sour, hard faces at press conference and look full of intensity, proof as always, is in the pudding.

          • Julia

            According to Vincent Browne there are 37,000 people in Ireland now earning between them 11bn a year (is that right? I think it is) It works out at about E300,000 a year each. These people pay a total 27% of their incomes in tax every year. Info. courtesy of the Revenue Commissioners. These people could afford to pay another 10% without it destroying their lives.
            Do you think Pat Kenny would move out of Ireland, Ryan Tubridy, Peter Sutherland? Many of these people have wives, family, relatives and friends here. Ok, some would leave, but some will leave no matter what.

            As for politicians, if they take a cut, it will only happen if, or rather when, the Croke Park agreement is cancelled. They will not take a pay cut that does not maintain the disparity between the highest earnings and the lowest.

          • Harper66

            Hi Gege,
            Lenihan was on with matt Cooper today.When asked about public servants taking another hit, he actually defended public servants wages – I couldnt believe it after two years of bashing PS workers into the ground he now defends them saying they have taken a 14% pay cut.He obviously has his sights on new targets…minimum wage and social welfare.

            Now to my point -When pressed about the pay of higher paid public servants such as politicians lenihan claimed they have taken a higher cut than the average worker…but i seem to recall something about bonuses for senior civil servants not being factored into their wages so they took a smaller cut.

            Am I imagining it or was a story a year or so back about the cleaners in the Dail taking a higher cut pro rata than the politicians ?

          • Gege Le Beau

            Browne brought out the real Pat Carey tonight when he pinned him on his salary and benefits ‘you are costing the State €500,000 per annum’, how can these people cut the minimum wage, the numbers on it are miniscule, it is absurd, and something thankfully both Labour and Fine Gael are against.

            As for making austerity equitable, you must be joking and yes Harper66, there was a comparison between absurdly paid ministers and cleaners in government buildings, and it worked out cleaners took more of a pay cut.

            How any government minister could not be ashamed to be on 200,000 euro while 460,000 are unemployed and more still will see cuts to benefits and the minimum wage is beyond my comprehension.

        • Tim Johnston

          Because most people are aware that the wealthier already pay a larger share of the burden, that’s why.

          • Harper66

            Those of us actually living in Ireland can see that the wealthier are not paying a large share of the burden.

            Keep saying it however maybe someone will believe you.

            Developer Johnny Rohan sipping cocktails by the pool side Sean Dunne buying 2m dollar property in America…where you are if I’m not mistaken Tim?

          • Deco

            A large part of the reason for this is the ridiculous nature of Irish Company Law. Basically you can have two companies, one for losing money and the other for holding profits.

            Now, into this we must enter the concept of “bank liens”. This means that the bank can sue the owner of multiple companies, to make him repay his debts.

            I just wonder are NAMA doing this, or will they stand off this and allow it to lapse.

            Or maybe the NAMA discount thing is a way of getting the bank out of bank liens.

            Any corporate law experts here on the forum ?

            Or are they all too busy with NAMA ?

          • Tim Johnston

            Who cares what they buy as long as they’re paying their taxes at home?
            Now, if they’re not, that’s another matter entirely and something needs to be done- but we have a progressive taxation system in Ireland, which I assumed to be the root of the question asked by hubris above.
            When I think of the richER sections of society I don’t necessarily think of the richEST – now it seems like anyone earning over 100k a year is “rich”, and fair game for a 48% tax rate.

    • eugenebrosnan

      Yes,this is all true. But if we’re putiing petrol on the fire they, the Govt. must be stopped right now..But we must get Somerville and David and Brian Lucey to do more than just get paid for appearing on shows and telling us we’re DOOMED, ” WE’RE GOOSED” etc…If the one’s that know, really know, then why would they wait another minute???

      • Fergal73

        Do you really wonder why? If you have a good pension set up, a couple of hundred thou in the bank in cash (not AIB, Anglo or BoI), then it’s pretty easy to say “look lad’s we’re screwed”.

        What they mean is that the economy is screwed, but they will be alright. With funds invested across USD / EUR / GBP / Yen as well as commodities (I fancy silver myself), bonds and stocks, these guys are looking at it from a more academic position than younger / poorer schmucks with mortgages and tighter finances.

        I know people here don’t like me saying it, but I have been saying for a number of years on this site that FF would betray the populace. (I viewed the bubble itself as a betrayal because it was clear that it would rob from younger generations as they borrowed to pay for their insanely priced accomodation.)

        Staying in Ireland is like a frog in a pot of water that is being heated slowly. The temperature rises so slowly that the frog never hops out and boils to death.

        Emigrate, FF has cooked you. Get out before your offspring, and their offspring and… you get the idea are cooked too.

        • Colin

          Agree 100% with you Fergal.

          I don’t understand why the place has such a draw in the minds of its people. Maybe its arrogance? Aren’t we the best little country in the world? Are we fcuk!

        • aidanxc

          Emigrate? That’s a great solution. Any other brain waves you’d like to share with us?

          We need to STOP MOANING, emigration is not a solution, it will only exacerbate the problem. Emigration may be a solution for YOU – but it’s exactly that ego-centric thinking which got the country in this mess in the first place.

          Why don’t you go do something constructive. Vote for someone who will make a difference…and go create a job.

          • Colin

            Hey, if you wanna stay in a maFFia run country, then thats your business and your children’s business.

            Me ego-centric? You should stop talking sh1t my friend. I’m in a foreign country, trying to make a start somewhere, even a humble start, I’m prepared to work for less money than you I’m sure and work below my qualifications. I’m humbly looking for work, for a better life.

          • aidanxc

            Well, you proved my point. You are only thinking of yourself. You’re the proverbial hurler on the ditch doing nothing to make things better…just venting your frustration.

            I want the whole country to get out of this mess. I am not looking to improve my personal circumstances at the cost of someone else’s.

            We need to pull together as a country. Accept responsibility for the mess we’re in. Elect a competent government and get down to work to find a solution to the financial AND social crisis.

            Look, I’m sorry you had to emigrate and I wish you the best but I genuinely don’t see emigration as a national solution.

          • Colin


            Just what exactly do you suggest I do after looking for work in Ireland for the last 12 months and not being able to find any? Maybe you have a job, maybe its secure, I don’t. My skills are already suffering through not being used on a daily basis. I don’t see any business opportunities to convince me to start a business. Maybe you could kindly let me know what great business opportunities there are out there in Ireland, and explain to me then why you yourself haven’t explored them and are insisting others should do rather than emigrate.

            Hurler in the ditch? Typical FF style put down! David McWilliams knows all about the ‘hurler in the ditch’ put down too.

          • aidanxc


            Well, I don’t know what your area of expertise is so it’s difficult to suggest something. I have a job but it’s not secure – it’s a job I created for myself. During the boom I didn’t buy a house or a flat screen TV, instead I invested in my little business and that has kept me going so far during the recession – though there is no security.

            Anyway, my point is that there are a lot more opportunities out there than people realise. We need to think differently. We can’t expect ‘others’ to create jobs for us. And fixing this economy will be done one job at a time. Waiting for another Google or big multinational to create 500 jobs is pointless. Whatever you did there must be some way to re-invent how you sell your skills, maybe not directly to an employer but to an end consumer.

            As I said, I wish you the best. I hope you find something soon.

          • Zaphod

            Your happy to take on debt your not responsible for eh?
            I have a few bills outstanding can I send them to you for paying?

          • Colin


            Thanks for wishing me all the best, but maybe you should think before you tell other people how to live their lives.

          • aidanxc


            I think you were the one telling people to emigrate. I’m advocating that we all work together to get through this crisis AND that we take responsibility for doing so rather than waiting on someone else to fix the problem.


            No, I’m not happy about paying off this debt but paying for other people’s incompetence, laziness and greed is unfortunately all part of living in a modern democracy. I want to live in a functioning society and not just focus on the economic negatives.

            Guys, we have got to stop moaning and start finding solutions.

          • Colin


            You advised me to create a job in a banjaxed economy, and then couldn’t tell me how to do it, what sector to enter, or what to provide customers with. I know there are jobs in other countries, that’s why I’m travelling abroad. But you SHOUT at me to stop moaning, and that emigration will only make the situation worse.

            I’ll tell ya, you try living on the dole for 12 months, and then tell me that we’re all in this together. Unless you’re willing to job share, say you work 3 days and I’ll work 2 days instead of you working 5 days, then we’re not in this together.

          • Fergal73


            I gave up on a national solution. Bertie still got cheered in the Dail bar. Th eelectorate have learned nothing.

            Solve your own problems – Ireland won;t help. Rather, with all the debt the government has taken form the banks and made the taxpayers, it will hinder individual development.

            Mexico (and other LatAM countries depend heavily on remittances for foreign workers. Ireland seems destined for the same fate.

            Arise and Follow Charlie!!
            Cheer Bertie and de wins on de horses.
            Applaud FF for bringing in the Tunnel / Luas at near 100% over budget (and years late).
            Congratulate them on the funding for the new prison – inflated prices to a farmer for land that will now never be developed.
            Give them a clap on the back for the families / lives they have wrecked by inflating the property prices.
            “Our banks are sound”

            I’m not whingeing or moaning. This is constructive advice. Emigrate, or your children will be next.

  5. malone

    Could this be a great day in spite of all the madness about the 4 year plan , and goverment spin. Could today be the day that the reality becomes more apparent that the Euro is doomed and that the return of the Deutchmark ,Peseta, Franc ,Guilder, Lira and most importantly THE PUNT is coming ? Has the Euro project fallen on to its own sword ?

  6. John Q. Public

    We will have to default as we cannot even afford the minimum interest repayments of €14Billion annually. David mentioned on RTE this morning that we need a ‘bollix’ to negotiate with bond holders for us the people, a tough guy to ram home the idea that it is in their best interest to ‘take a hit’ on their bonds. In other words ‘sorry lads we ain’t gonna pay’.

  7. John Q. Public

    No malone, we the Irish have created a plague that could spread throughout Europe just like the film ‘Dawn of the Dead’ but we are the zombies this time!

  8. george


    The crowd that wants us to sign up for this bailout, the only national interest they have in mind, is the next cheque in the post.

    What about you and other economists alike, doing a big favour to the people of Ireland, and organise a big press conference in town for next week or so, where you’ll present your case to a bigger audience, that can be seen in national and international news around the world before is too late???

    • george

      And the slogan of the press conference could be something like “ECCONOMISTS FOR A FAIR DEAL FOR IRELAND”

    • DavidIreland

      This is a great idea.

      David, why not gather up all the heavyweights and make the case in a public way – like a Daniel O’Connell monster meeting. All the guys who know what they are talking about lined up on a platform – in contrast to the regime who sold us down the river while getting back-slapped and paid-off by their cronies and who will sell us into slavery to save face.

      Keep up the good work.

    • ouldbegrudger

      Sorry all, but I’ve posted this before :

      “It is usually the guilty that are advocates for collective punishment.”

      • DavidIreland

        No one is talking about punishment here (that’s another issue and maybe for another time). This is about making the argument to the people about our government making another disastrous move with the country – Batt O’Keefe’s poker game.
        What’s wrong with the case being made that the government might be wrong. It’s not as if this regime has got it right in the past, now is it?

  9. malone

    John Q Public , Maybe just maybe we started a chain reaction that has been gaining momentum for quite a long time and like a volcano could erupt very soon ??

  10. Deco

    Alright, finally after two years of dithering over the state finances, we have seen some effort to rectify the fact that we are borrowing 400 Million euro a week to run the state. And sure enough Gilmore says we are trying too hard to do it. And Jack O’Connor (Gilmore’s paymaster) has declared that it will send us to the stone age.

    The sudden realization by Cowen that the state needs to be cleaned up and made more efficient, is as a result of the IMF landing into town and saying -”this nonsense is unsustainable”.

    It is also the first time in a generation that the Irish public has been told publicly, (in a soft manner it must be said), that the Irish concept of lifestyle (and we are all responsible for that) is completely unsustainable.

    We are all being paid too much. From McUseless to Cowen, and the whole way around the block. And this is facilitated by the volume of credit in Irish society, facilitated by the ECB. Therefore we are all responsible for this credit bubble. We have all benefitted from it. It provides social welfare payments way above those next door. It provides better pensions. We get easier personal taxation. And now we are learning that we have to pay for it.

    Now, we have to get our costs into line, and work harder for less money. This is what the “leadership” needed to explain to us. And they dithered around for a long time, and now, as they are about to depart, they suddenly realise that it is their job to tell us.

    Today was a small step towards getting to the point where Ireland means business again. If we had done this two years ago, we would have become more competitive by now, and the unemployment statistics would have improved. The problem is that we would not have tolerated it. We simply had to wait until the IMF were here before we stopped dithering and fooling ourselves about the sustainability of our collective delusion. In other words, we have to see the disaster, and realise the stupidity of defending our pride, before we can get around to fixing anything.

    It is also becomming clearer that the IMF are far more intelligent in their analysis of the situation than Brussels – which seems liable to give the plan the stamp of approval, if the lobbyists are happy.

    • george

      What they have announced today is “too little to late”. Did you read yesterday’s article in the Irish Times: a doctor is paid here 80.000 e. more than in the N of I, a School principal 40.000 more, and a teacher 20.000 more, not to talk about politicians and other civil servants. This so called “4 year plan” is a cosmetic exercise to do as little as possible and to protect their next pay cheque in the post, while you and I are going to have to work until 68 and carry the burden of the bailout.

      I agree that we have to pay less social welfare, and old age pension, and child benefit, and minimum wage, because this Country is too expensive for “normal-ordinary” people, and in economic terms totally uncompetitive. I paid in FRANKFURT AIRPORT half the price you would pay here in the most miserable shop you can think of, for a mineral drink and a chocolate. But to achieve that first we have to start to cut the excesses at the top. And nothing of it was announced today in the “4 year plan”.
      It is a continuation of the same old lie that made us believe that if we paid peanuts we were going to get monkeys. Or that “we deserve it”, because our politicians, doctors, dentists, teachers, and TV and Radio personalities from RTE, are the best in the western hemisphere.
      How daft can they be?

      • Gege Le Beau

        Unter den Linden, Berlin’s main thoroughfare, paid €2 for a coffee, prices for most things were very reasonable and people rent because rents are controlled and tenants well protected, a mature society, not like this banana republic without the bananas.

        • george


          Thomas Molloy wrote in last Saturday’s Independent that a pint of beer in a beergarden in the centre of Munich cost 2.25 euro, but outside Munich 1.50 euro.
          As well in Ireland the man from Insomnia charge for any drink even a cappuccino and a cake 3.50 euro, or I think for a very good sandwich and a drink 5 euro. What really is very good value!!!

          Regarding what you write about the renting sector, what you call “mature society” is the consequence of the State working for the common good, not this bunch of money grabbers doing deals with cronies to exploit the most needed. They are very generous when they have to give money from the State kit, but when it is their own are quite ruthless. This Republic doesn’t have bananas still we have plenty of chimps around.

          • Gege Le Beau

            I am renting an apartment in a block, the landlord who owns the whole block is advertising one of the apartments close to mine, we got one of the lads in the office to enquire, the landlord is offering it for €120 cheaper than what I am paying. I’ve asked him for a little chat, a good old ‘rent review’ given ‘the changing economic circumstances and impending budget’, should be interesting.

            Got to hand it to the Germans on a whole range of levels, sure they’ve got issues, but they don’t tolerate mediocrity, they probably overdo a bit and thought of imposing their system on the world a couple of times, but amidst the bit of madness they do have something going on.

            Heard the next item on the agenda with regard to housing stock is a fire sale, houses by auction where you pay the actual value and not some imagainary figure cooked up by greedy bastards wearing bad suits in some money office.

        • Tim Johnston

          Very few places in Europe offer worse value for money than Dublin, and property prices are the no.1 culprit. I’ll be returning to the country this week, essentially as a tourist for the first time, and am least looking forward to being shafted by the “tourism” industry…

      • Deco

        The IMf have made an issue of the cost of “professional services” here. Basically, if you become a member of a “profession” here (as against being let’s say a electronics engineer) you join a club where you can development an entitlement culture that stinks.

        I know a professional who is milking the system. And when this crisis broke, he was in the audience asking a question (I think it was on Frontline) concerning what cuts the government was going to make, and how these cuts would affect the poor.

        The poor are an excuse for professionals to have a minimum wage. Ireland has too many legal professionals. Completely overdone with law schools. Law has status. Being an engineer in Intel might be of more use in generating wealth for the rest of society, but lawyers have status. And if you have status in Ireland, then you are entitled to charge whatever you like, to drive around in a big car, and to throw contempt at the engineers or the plumbers or just about anybody else.

        This country is loaded down with market rigging practices.

        The IMF has asked questions about it. Eddie Hobbs was been shouting about in 2003.

        Basically, these gombeens need to be deregulated. Yes, that is correct. Put an end to the oligopolistic behaviour. And then people in ordinary jobs can get a more reasonable deal, and will be able to live more affordably.

        • george

          Deco: It’s funny that we brought a lot of foreign workers to cool off the labour market, and to inflate the rent sector, something that was very convenient for guys relatives and cronies in high places, that bought houses. And still many of “the professionals” run a kind of cartel and became untouchables.

        • Hu Bris

          The OECD released a report a few years ago showing that the main driver of costs and wages was the cost for the average worker of servicing a mortgage

          this they claim was due to the rampant speculation – too many people buying houses to rent out, expecting to pay the mortgage from squeezing tenants

          Proper security of tenure (not the farce we have now where all the Landlord has to do is claim he/she needs it for a one of their offspring and they can evict any tenant) and proper rent control would have quietened the property market just when it needed it. Instead what we got was more and more tax-breaks for speculators

          Mary Harney kept claiming that ‘We are closer to Boston than Berlin’ – well Mary I got news for you – Boston had Rent Control and Berlin still has it- so why couldn’t we have had it when we needed it?

          Rent control in Boston began in 1968, when exceptional pressures on the rental housing market prompted the city to enact laws that controlled rents and protected tenants from arbitrary evictions and excessive rent increases. (Massachusetts state law gives tenants some basic rights, but does little else to protect them.)

          In 1975 Boston began vacancy decontrol, but the important protections against arbitrary evictions and rent increases were later restored. By 1994 only 20,000 units were left with fully controlled rents. Three times that number, 60,000 units, had become vacancy decontrolled, where the landlord could charge any rent to new tenants, but they retained basic tenant protections once they moved in.

          Of course the speculators continued to attack tenancy laws and eventually Boston ended up with spiraling rents and a property boom which also eventually collapsed, just like ours – Berlin on the other hand has no such problems

      • ouldbegrudger

        There a simple reason for the high cost base of Ireland – inflation. The entire Celtic Tiger episode was largely a mirage. Charlie McCreepy was presiding over a 20% per annum expansion of the money supply (Credit) during the 90′s. The puzzle, for me anyway, was the fact that this produced ONLY 10% GDP growth p.a. Of course, this miracle was ascribed to genius policies of the FF gov. with the additional yarn about a highly educated and motivated english-speaking…..bla bla. The Irish experience was really a reflection of a much larger inflationary expansion going on in the US culminating in the Dot-Com boom/bust. Such was the panic over this bust (and 9/11 a year later) that the US kicked off an ever larger expansion of the dollar supply. Given the dismal US trade deficit(their main export has been freshly printed dollar bills for years)their price-inflationary pressures were exported. It’s one thing for Ireland to have a huge export surplus(makes us all proud)but the effect is inflationary hence our property bubble. This is how the strict rules governing Euro creation have been circumvented. What to do with all these dollars? Why not lend them back to the US (buy bonds – hence the ‘Bond Bubble’) and, hey presto, you now own some lovely paper assets which form the backing for a giant credit expansion in Europe, China and nearly everywhere else. The genesis of the Celtic Tiger and our present problems originated in New York. If we had allowed Anglo to fail properly much of the pain would have returned to Wall St. The US is bankrupting at least 5 banks every week. If Anglo were based in Wall St it would have been shutdown immediately without having to force OAPs to eat dog-food. Make no mistake, much of our IMF/ECB bailout money is going to end up in the Christmas bonus pools of London and NY bankers. The fact that our government failed to react to the danger as early as 1999, and definitely after 2001, with their spin of ‘nobody saw it coming’ and their hacked CPI reports, makes McCreepy, Ahern, Biffo as guilty as Seannie and Fingers of criminal mismanagement.

  11. Deco

    David – you are correct. In the context of Spanish banks refusing to foreclose on properties in arrears, the Irish autorities have the ECB and Brussels over a barrel. The ECB is pulling out of funding for the Irish banking system, because Merkel needs to convince the German public that she is protecting the value of the Euro and not allowing it to become another Lira type currency devalued by continual debasement. Merkel is in a very tight corner.

    We should require a “right to re-negotiate” with the bondholders. It is clear that the IMF are in favour of this. Merkel has already declared that she consents to it. The bank bonds are sliding everyday as things stand. They should be converted into equity, as you proposed almost 18 months ago – and then we will be ready to restart everything again.

  12. Deco

    I am thinking, perhaps Merkel is watching the Irish situation and realising that it is creating a very dangerous precedent for Spain. Basically, if the ECB has to provide over 1 Trillion Euros (which is where it will eventually end up) in order to prop up Spanish banks holding empty Spanish real estate, then this means that Merkel is politically finished in Germany. It also has ramifications in the Netherlands, where the current government takes a very dim view of the various means employed by the ECB for propping up the PIGS.

    We are now getting to the point that “print-baby-print” is now going to rear it’s head as a get out strategy. Brussels would be in favour of this, except that the two biggest paymasters in the Eurozone, Germany and the Netherlands are vehememently opposed to it. And the biggest paymaster of the EU outside these two, Britain, will not want to be involved.

    In the end, the bondholders who are using every manner of means to minimize their losses from exposure to the Irish banking system, will have no alternative but to take even harsher medicine when the current discrepencies in Spain have to be accounted for.

    • Gege Le Beau

      Spain is the party animal who will bring it all down, Ireland, Greece etc are indeed bush fires, Spain on the other hand is a towering inferno. European project can’t survive a crisis it created.

    • Julia

      I heard an American on RTE yesterday suggest something interesting. I think his name is Mark Weiss.
      Anyway, he suggested that since Ireland, Spain and Portugal are in a tailspin the Euro itself is in big trouble. This puts the three countries in a strong position if we were to work together. All go to the ECB and say we’ll default if you don’t print more money – devalue the whole Euro zone. That would help us, along with bank dept/equity restructuring. There would be inflation, but this is so low in Europe at the moment that it wouldn’t matter.

      Opinions please. I’m not an economist.

      And I know we can’t agree among ourselves I don’t know how we’d do a deal with other countries that don’t even speak the Queen’s English.

    • ouldbegrudger

      @Deco. A controlled ‘print-baby-print’ might not be such a bad thing right now. Rising wages and prices would help much distressed mortgage holders in negative equity by ‘inflating’ their debt burden away. Of course there would have to be measures to protect those most at risk such as OAPs on fixed incomes. The cost base could then be manipulated by controlling wage rises rather than wage cuts. The evil of wage cuts is that the household income drops while debts remain the same. A significant bonus: The ‘too strong’ Euro which is hurting competitiveness re China/US would devalue helping to restore trade balance. If the US and the UK and China are all printing then Europe has to as well.

      • Colin


        Print Baby Print should be the way to go, along with a stimulus, reducing unemployment and at the same time cutting back on all the wasters in the quangos, health service, public service and civil service, in other words, taking on the unions who protect the useless feckers who are useless at their work and are protected from dismissal.

        We have employment apartheid now. Most multinationals forbid unions. Ryanair, who also forbid unions are the most successful Irish enterprise in history. Why hasn’t the penny dropped? Who’s interfering with the penny so it hasn’t dropped on the floor yet?

  13. Philip

    I understood everything up to the point in David’s article where we will default and that it is plain dishonest to be taking any money from anyone any more because payback is not an option. So…given we are all big boys even among the bondholders etc. does the warning of caveat emptor not apply? And furthermore, if the Euro goes up in smoke – which seems inevitable, might it not be a good idea for NTMA et al to get whatever billions they have lying around and convert it to Sterling or Dollars becasue when the Euro thing blows, they’ll be able to pay back the debt on 50 Euro to the Dollar and we are out of this mess fair and square. And by the way…the same for anyone else with deposits in Euros.

    • mick.dfarmer

      Who exactly would we be de-faulting on? Chinese money lenders? Russian Mafia? US oil barons? What would the implications be if we default?

    • Julia

      Who’s the we? I’ve payed every penny back to my bank that I’ve ever borrowed. I’ve never volunteered to pay a bunch of strangers abroad money for the rest of my life that I didn’t borrow. I’m generous but I’m not a fool!

  14. Philip

    Could it be that this was the leprechauns plan all along?

  15. John Q. Public

    malone, if that is true that it will spread Europe-wide then I suggest a two-step strategy.
    1:Send in David’s ‘bollix’ negotiator to stick it to the bond holders and just default.
    2:Quantitative easing on a massive scale by the ECB to most if not all member states.

  16. Economy is being controlled and directed from FF , the Irish banks, a croney financial services sector with support from ‘european partners’.

    We’re not independent and sovereign Iceland whose political call might actually take heed of good advice.

    Any abjurations regarding the pathway we are taking along the lines of DmcW above are simply ignored by our incumbent puppet government who still control the reins of power.

    Economy has been hijacked by a bunch of leprechauns from another age. They’re not about to stop making a bigger mess.

    The budget has been gambled on ‘lady luck’. The alien banks are still on board and now may be fed the Pension Reserve Fund. We’re being inculcated into a non sovereign vassal state dependency on our puppet masters.

    If Spain goes, we could be made part of a two tier Europe along with Portugal and Greece. Its not likely the EMU will allow bondholders to be burned even in that instance as it will damage the main players.

    So we’ll have instead a possible currency devaluation that will inflict even more damage. That is, unless the euro project itself comes apart. If so, its goodbye euro and bondholder bonfires.

    It will be interesting shortly to see what restructuring will mean for the Irish banking sector.

    In summary, sovereignty Gone. The chances of a debt for equity swap for banks with the possible contagion danger for German and French banks, is remote.

    That course of action is something that would befit a sovereign Government, which is something we do not have anymore.

  17. Gege Le Beau

    The thought of Fine Gael taking over feels me with even less enthusiasm, they have already talked about selling off state assets for a song, frontloading cuts etc, the only hope is that Labour will hold them in check and have more human policies, but we are now truly entering unchartered territory, will the political system be able to hold the society together because with each passing day and each successive austerity Budget the rumblings from the street grows, it is getting ugly.

    Strikes me as totally absurd that a government would introduce a four year plan when they won’t be in office in four months. Lunacy. How much time was wasted on it that could have better been spent designing a stimulus plan along with a credible debt plan.

  18. Winter

    Maybe everyone is underestimating Fianna Fail. Maybe for the first time, the self serving interests of Fianna Fail will end up benefiting us all. Perhaps they are actually planning the greatest bank robbery of all time. They know we can never pay it back so they rob as much as they can from the IMF/ECB before we default and the whole euro experiment comes crashing down. It’s equivalent to having a business and your accountant tells you it is insolvent so you go to your bank and get a massive loan from your bank manager knowing your about to shut up shop. In the real world you would be charged with fraud but when the euro disintegrates, who is going to come after us? Will Germany or France invade us looking for their money back? Will the US invade us on behalf of the IMF? Doubtful. They say it takes a thief to know a thief. Thank God for Fianna Fail. Ha Ha!!!!!

    • Philip

      This is exactly what I am suggesting. I believe the Euro is being wrecked because Mr Leprechaun knew he made a mess a few years back.

    • The only problem with your logic is that largely the ‘rescue’ money from the IMF and EFSF/ECB will go directly to the banks and to political FF salaries. Any benefit wont benefit us all though it may as you say benefit the banxters and their political cronies. Plus this is all virtual money, the one figure that is of great significance is the 20-30% of taxation income that will go directly on interest payments. Now, where do you think that money is coming from and going to?

      • Philip

        What I am saying is that default will happen. And same for all EU peripherals. Then when that happens the UK, Scandinavian banks will feel the heat and then Germany. There will be a run on the Euro.

        We are talking of default on a Eurowide scale (which I think will damage Dollars and Sterling etc as well). We are talking of default which makes the existing system of monopoly money non-viable. This is a reset. Has this happened before? Ireland is not in this by itself. All this nonsense of isolationism is meaningless when the rest of the world is that way as well.

        As for FF and the banks etc. they will be be subject to the bull-whip effect of death by financial steroids.

    • shtove

      Hang on, it’s that kind of crap that created this disaster in the first place. We can all spout about politics and monetary policy, but the basic problem was fraud – taking the credit while lying about the ability to repay.

      That cycle must be broken if honest people are to thrive. Otherwise you just hand back power to the bankers at the point where they are most vulnerable.

      • @shtove

        There is a certain political agenda out there that rather than look for accountability and transparency from Anglo and the other Irish banks, who followed the black sheep over the cliff, and decisions made by our political establishment, rather likes to try and distract attention away from their self made disaster onto international currency related, or Lehman’s related events.

  19. liam

    Great article David. I have a question though: this is all very fine for Ireland, even though its the worst of all the end-games that you and many contributers here have been warning about for the last three years, but I’m curious as to what you think the effect will be on the Euro.

    It seems likely that the far less accommodating citizens populations of Portugal and Spain will shortly find themselves facing similar cash flow problems, so I’m interested in the assertion that “tight monetary control from Frankfurt” will prevent hyperinflation in the Euro zone. Just how screwed are the Portuguese and the Spanish? If they end up looking for help, are they likely also to be similarly unable to pay it back? If thats the case, then how does the EU avoid hyperinflation? Or do we all just become slaves filling up German pension funds?

    • abutler

      Austerity regardless of route we choose?

      Default is fine in principle but how will it work in practice over several years, including a possible exit from the euro?

      We would cut ourselves off from any foreign funding, depending on domestic taxation for cash; loose our international overdraft so to speak, if so then its back to austerity and isolation as well!

      The question you have skirted around in your article (whether that was populist on your part or not, but it was a glaring omission) is how do we avoid austerity cuts?

      Without the fuel of international credit, which we would loose under default and with failing banks, depositors hit internally or else a run on all the banks where would the domestic taxation revenue come from plus because of the deficit gap the cuts would still be necessary.

      Remember the last default was when DeValera refused to pay the English our outstanding loans from the land acts at the turn of the century as part of our Independence treaty deal. That default during the 1930’s plunged the country into deep depression combined with the English sanctions. Accepting our total dependence at that time on the English we have a similar situation today except total dependence on the broader international markets, IMF and ECB.

      International isolation through default would not be dissimilar; so I would urge caution and a complete argument with all elements of any proposal (pro’s V con’s) included in all ideas involving default.

      Isolation would loose us our FDI backbone the only hope for this country now rendering our cherished corporation tax rate redundant.

      From my perspective I still have not seem 1 complete proposal to better what’s on offer currently; accepting is a bad situation.

      Either route we choose i suspect austerity is here for a very long time….


      • liam

        Nobody is suggesting that we default. It is a bald fact that we have been in defacto default for two years, ever since the guarantee was introduced. We’re just catching up with reality the last few days.

        It costs 50B a year to run the country, we don’t make close to that in taxes, so austerity, at least for the next few years is unavoidable. The only question that remains is who in Irish society is going to take the hit.

        I have pointed both of these realities out to people when discussing this with friends and others in the last three years and I get accused of being ‘all doom and gloom’ when I calmly and rationally point these facts out.

        We had options when the guarantee was introduced, now we have run out of road due to dithering, fear, ignorance and ineptitude.

        Those are the facts.

        • abutler

          Agree whole-heartedly with almost all of your reply.

          If we rewind 2 years what should have happened is the guarantee on all banks, except Anglo.

          With Anglo
          - Give the depositors 100K max no a penny more regardless of whether its a charity or the queen of England
          - Sell off the loan book to international investor stripping the pension fund bare
          - Wind it down in 3 months

          Anyway all history and what could have been….

          I still think a “swaps the debt for shares – a debt-equity swap in the banks” is default in another name; remember these shares will be worthless and the bond holders will see that as the case: same as default unless we strike Oil or Gold in the preceding years!
          My point regarding David’s article, is in the day that’s in it, his lack of acknowledgement that we have austerity even with his solution (or any solution).

          This is not a “silver bullet” idea to our economic crisis avoiding austerity he should acknowledge so.

          While David always sees an alternative to any economic situation, I find he never outlines risks to his proposals hence I am finding it increasing harder to believe in his articles of late (ie. The Famous Bank Guarantee).

        • Deco

          It take 50 Billion euro to run the Irish state. But this could be definitely done in a more cost effective manner.

          The state is effectively inflating the going rate charged for everything from electricity to legal fees. It is getting an awful bad deal and is subsidising all sorts of disfunctional charging regimes.

    • liam

      David, apologies, on re-reading, its pretty clear where you think things are going w.r.t. my question.

  20. dwalsh

    I would say the government did not request the EU-IMF bailout. The truth is probably that they were pressed to take it. This is really a bailout for the European banks that our banks owe money to. The purpose of it is to ensure our banks keep up their schedule of repayments; and do not default and thereby damage the European system.

    I heard David and Shane on Pat Kenny this morning and I agreed with and saw the rational sense of all they said…I even agreed with Constantine (which was a first; but that may be because all he said was that he agreed with David). But as I listened I thought to myself: this is ‘fantasy economics’. Nothing they say will make any difference whatsoever.
    Why? Because the economic realities of our national situation and the world generally do not function rationally. Politicians cannot act rationally; not because they are stupid – although it often looks as though they are — but because as politicians they are creatures of a system of patronage and control by vested interests here in Ireland, in Europe and the world; and vested interest is necessarily irrationally myopic; especially capitalistic or profit-driven vested interest.
    The crucial decisions that will determine how this global crisis plays out, both here in Ireland and the world generally, will be made in rooms far beyond the horizon of knowledge or influence of our politicians, by people we will never even know the names of. The two Brian’s hands are tied as will be the hands of whomever succeeds them.
    It would require the emergence of a truly remarkable personality, capable of uniting the rabble of local vested interests and standing up to the international capital system, to lead a government that would act rationally in the interests of the Irish people; and I do not see any such person either on the ground nor on any nearby clouds.

  21. The major weakness of political parties in Ireland is just that – they are political parties!
    They are either conciously or unconciously preconditioned. Their vision is either selective or blinkered. As one party herded us blindly to this disaster none of the others even saw the precipice!
    So how about an alternative emergency ruling council? Made up of the likes of McWilliam’s, Ross’s, Robinsons et al who could stand for election as a temporary ruling council for the next 4 years. If elected with over 50% of votes to steer us through this mess, then their mere election has already overthrown our inneffective system of government. (They would have the democratic mandate to strip down Government without the generations of self-serving procrastination that it will take any other party to achieve!)
    Whatsmore they can appoint whatever “bollix” they want to broker meaningfully and competently on behalf of decent Irish citizens. It may seem dillusional but I actually think that over 50% of people are ready for such change and might just endorse it!
    Bring on a bloodless Democratic Revolution!

  22. adamabyss

    David has written a good article every Wednesday and Sunday/Monday for the past two years (almost), that I have been coming to this site.

    Yet he is NEVER listened to, none of his suggestions ever get taken by the useless government and things just get worse and worse. Same goes for any advice given by the other capable economists in the nation – you all know who they are.

    It really is a fruitless task.

  23. Welcome to the Transfer Union of Debt Junkies….

    Boycott Budget! General Elections NOW!

    Sadly though…. what is on offer on the political stage is anything but providing me with hope, but one thing is for certain, this government should not be allowed to suggest or implement one more policy int this country!

  24. adamabyss

    Would love to see a graph over the last couple of years indicating the number of unique visitors to this website. I’m sure it’s rising all the time.

    Can the webmaster faciliate this? It’s not covered by the official secrets act. Could be good publicity for the site.

  25. Clock is ticking, convergence of our politicians FF /FG imposing IMF/ ECB “solution” on fearful shock doctrine population and the endgame of the euro experiment is imminent. Time for action, petition, march, press conference, revolution is now. Otherwise we will all be reading and commenting on how Dec 2010 was the final play for generations to come and all we did was twitter and blog. David McWillaims has said on radio this week that he has no interest in parish pump politics but he would step up to the plate and work for Ireland if asked. We the readers of this blog which has been on the button for the last 2 years have an obligation to promote him as a voice with an alternative solution while there is a chance to do so.

  26. John Q. Public

    Georg R. Baumann ‘Boycott Budget! General Elections NOW!’
    It is irrelevant now who are in power or what cuts are made. What you saw from the two Brians today was just theatre, a PR job to shoe Europe that we are getting our act together. The cast of Monty Python may as well have made a speech for all the good it will do.

    • Gege Le Beau

      The ‘Boycott Budget Campaign 2011′ should be introduced, would drive them out of office in no time.

    • gquinn

      Actually John,

      If this government signs any agreements with the EU and IMF then having an election after it will be pointless because the IMF and EU will then have the power and control of the country.

  27. michaelcoughlan

    Hi David,

    Your article above reflects a post I made on the previous article which suggested that the politicians are playing along with the IMF and ECB to get them into the “kill zone” of default territory. Remember if a soldier is an honest man sent out to die for his country then a good politician is an honest man sent out to lie for his country.

    Perhaps the game is being played by the politicians in full knowledge that they will spring the bank bondholder default trap once the state has a line of credit in place to allow us to reduce the structural deficit in our current account to near zero. Angela Merkle herself said that bank bondholders must share the pain which leads me to believe especially since your last article that the newest capital (in this instance the ECB IMF money) is the only money the politicians intend to repay along with sovereign bonds. Perhaps if we only calculate these figures then the burden whilst very heavy may be bearable rather than unpayable. If we have this line of credit then the bond interest rates shouldn’t concern us for the next couple of years or so.

    With that in mind it is important that every single person reading this web site prepares for the coming bank bondholder default by saving cash at arm’s length from the Irish banks or state to help us personaly get through the turmoil after default. I presume if the banks default on their bonds then the banks will be sold for €1 to protect the jobs as much as possible. Once the whole things settles down subsequently we will recover a lot faster than our European neighbours as we have more young people per head of population than our neighbours only too willing to make money once liquidity returns to the state post default to the banks bondholders.

    For the first time I feel personally that the true agenda of the establishment is apparent and we can plan for the future. We have a great nation with great people. In 1990 we were exporting €18bn per year. Our exports now are in the region of €85bn per year. There is so much to be proud of in our great nation and I would suggest to everyone reading this website the time has come to focus on the solutions to our problems and move away from looking at the causes of it. None of us have any control over the politicians other than at election time but we can control our own actions. Lets lead by personal example and give encouragement and help where possible to our fellow citizens.

    • Hu Bris

      Self delusion is a dangerous thing – especially at times like these –
      This is Brian&Brian we’re dealing with here, not some fiendishly clever political tag-team.

      They are more accurately viewed as a pair of clowning buffoons caught in the headlights of an onrushing juggernaut of Financial apocalypse

      Tweedledumb and Tweedledumber are not some geniuses in disguise, tricking and lying to the bankers, in the service of their country

      They are traitorous craven weasels, lying to their country, in the service of the bankers

      • michaelcoughlan

        We will see.

        • Hu Bris

          what more evidence do you need?
          Really? Do you require a signed sworn statement or something, written in their own hands and witnessed by a notary, or what?

          Maybe a videoed recording of them on the phone to their banking bosses?

          Really, what would it take for you to see what should be obvious to a blind person?

          • michaelcoughlan


            The evidence is the fact that the total outstanding debt is too large to pay. It is a matter of mathematics.

            Default will happen one way or the other. That is all.

    • dwalsh

      Interesting theory. I would be delighted if it were true. There was a text recently sent to Vincent Browne’s TV3 program that addressed this very matter:

      “Who will bailout the IMF when Fianna Fail are finished with them?”

    • John Smith

      Last year our export figure was BEUR 151

    • jimaneejeebus


      As stupid as our leaders appear, I think they have always known about how bad the scale of the problem is. I realize that’s a bold statement, and one that will probably not win many friends here. But if one thinks about it logically….how could they NOT have known?

      Our government knew they would need to appease europe [austerity measures...NOT burning the bond holders] in order to be looked favourbly on by the eu in the inevitable bail-out that would ensue.

      Step 2 of their plan was default.
      The procrastination, the positive spins, the placating of the irish people- Lenihan et al knew exactly what they were doing all along….default.

      I know I’ll probably be slated for this point of view, but as stupid as we’d like to believe our government to be, some of them can probably add.

      I’m in no way supporting our government here, I’m just saying that they MUST have known [to some extent at least] the scale of the problem and default was the course of action decided many months [if not years] ago.

  28. gabe

    That’s all very well, and David’s solution to the banking crisis might well work, if it were implemented!
    But where is the discussion on the longer-term vital issue?
    Ireland is, and has been for quite some time, living way beyond its means. The budget deficit is out of control! The plain fact is that you cannot spend more than you are taking in, yet this is what has been happening. The Irish people have come to expect higher remuneration and a higher standard of living than their counterparts in Germany, Britain, France, or Canada(where I live). How come? Where is the economic justification for this expectation?
    And now, with the Irish economy entering a slow-to-no growth era, it is reasonable to expect that closing the deficit-gap by growing the economy is not going to be an option. That leaves the only other option, namely, a huge drop in government expenditure with the consequent drop in living standards. Add into the mix, the recent IMF/EU borrowing,(which must also be repaid) and it doesn’t take a rocket scientist to figure out that the cuts envisioned by the government over the next few years are totally inadequate.
    And with the opposition (the next government-in-waiting), unwilling to change the way the country is managed (starting with their own remuneration and expenses) I, for one, will not be holding my breath expecting the situation to improve!
    There is a harsh reality coming down the line, and all the spin and bluff in the world will not change that. And the sad thing is, it was all so unnecessary!
    But Sean, and Bertie, and John, and Ivor, and Enda, and the previous Regulator………..and all the rest of the boys will still be able to play golf in the sun………so everything will be grand, lads, just ……..grand!

    • Deco

      I recommend that you all listen, for an interesting perspective on the EU.

      I have to admit in the begining I thought he was talking about Cowen.

      A very telling point was made about the spectre of “nationalism and violence” – we had Sinn Fein Activists breaking windows of rivals offices, behaving as an angry mob in Merrion Square, and behaving in a generally thuggish and aggressive manner.

      We in Ireland are seeing clear evidence that what he is saying is correct. This is of concern.

      • Hu Bris

        are you on drugs?

        • Deco

          No. All that is needed to see what Sinn Fein really represent, is a good sense of clarity, and an aware intellect.

          Beneath the veneer of the soft speaking terminology, the “concern”, and all that bullshit, Sinn Fein are a collection of green-jersey gobshites, angry thugs waiting for a chance to get out, and cynical pretenders.

  29. Deco

    We as a nation are in shock. And we are vulnerable to all sorts of political machinations. And we can be controlled by the media, just look at the Lisbon 2.0 farce last year.

    I actually have come to the conclusion that the IMF can be trusted better than the EU. Maybe it is the influence of the US, Canada, etc.. In addition we are getting a loan from the British without conditions.

    And Michael Noonan more or less said the same thing tonight.

    • Deco

      ICTU is up to something, and are using this crisis to expanding their power.

      There is something very sinister about this, and I intend to get to the bottom of the hidden agenda.

      • Hu Bris

        yeah, them sneaky beggers at the ICTU are to blame for it all, . . . . . . . . . . suuuuuure

        Oh look, over there!! Behind those Bankers and property speculators with the big bags of money and fleet of blacked-out Beamers, there’s an ICTU member cheating on his tax-returns! by doing nixers!! Quick, call the regulator and the Revenue!!

      • Harper66

        I think ICTUs agenda is simply attempting to stay relevant.They will be or have been kicked to touch from the negotiating table by Chopra and the boys and they have lost the support of rank and file union members.

        They do not have the respect of anybody.From what I hear attendances at branch meetings is farcical and the leadership are utterly compromised…Fás bank accounts etc.

        people who are intending to protest on saturday are doing so not because it is ICTU but because they NEED to protest.They need to feel heard.

        I am a trade union member I believe in responsible trade unionism and responsible management a bit like thesis and antithesis to provide an equitable synthesis.

        However I don’t believe ICTU are the machiavellian masterminds you make them out to be.The leadership of our unions are the same as the leadership of our banks and of our country, self serving,greedy and corrupt.

        I think we could

        • Harper66

          Bugger. Typo.Please ignore last line…maybe it was a freudian slip and subconsciously I was starting to write I think we could do with an edit comment feature around here……

          • Gege Le Beau

            There is a rumour we are getting one for Christmas, not sure who started that rumour though………come on David, throw the plebs and edit button like Mary McAlesse throws platitudes at the populace, you are surely good for one by now Gov’nor.

        • Deco

          The leadership of our unions are the same as the leadership of our banks and of our country, self serving,greedy and corrupt.

          This reminds me of various episodes, like the NED’s on FAS, the DAA, etc… the HSE slush fund for SIPTU, etc…

          I think you are correct about this. The rest might be imagination.

          • Deco

            sorry, but I don’t trust ICTU. They have had a lot of influence over the past decade, and they had Santa Claus, (Ahern) in power to give them whatever they want. I am sceptical anbout unions, because they are as liable to sell you out as they are to represent your case. And they are usually rotten with politics and with internal cronyism.

        • coldblow

          For all their faults they nevertheless are, or at least have the potential to be, an organized counterweight to the gombeen class.

          • Deco

            They have promised thus many times. And then we find then cosying up to shysters like the Drumcondra Ditherer.

          • Harper66

            I agree coldblow.

            It bothers me to see the leadership of ICTU. Their silence on certain issues over the past two years has spoken louder to me than any of the empty rhetoric they have spouted.I am thinkning of issues such as the fact massively over paid seniors civil servants and politicians judges et al are hiding behind the decent average workers in the public sector in order to prevent further pay cuts.

            There needs to be a clear out at the top. Dismantling ICTU would be a good start.ICTU has too much to say on issues that are nothing to do with trade unionism.ICTU no longer represents the interests of the average paid worker.

            A return to the grass root trade unionism is needed.

          • coldblow

            Here’s Finfacts’ view on the subject, from a recent post on irisheconomy:

            “43. Michael Hennigan – Finfacts Says:
            November 21st, 2010 at 4:31 pm

            @ Joseph
            Quote “I think I will be joining that protest march next Saturday. A lot will have sunk in by then and there are going to be some jolly cross people around the place.”

            It’s interesting that the biggest protest demonstration in modern times was in 1979 against high income tax rates.
            In 2003, the reliable motivator US foreign policy brought 100,000 onto the streets.
            A demonstration now with many former FF and PD supporters seeking redemption and possibly trade union leaders who drank the soup in the good times with their partners in IBEC, is too late in the day.”

            By coincidence I mentioned that anti-US demo the other day. Where are all those people now?

  30. Rory

    I was explaining to my 10 year old today that Brian Cowen was about to rob more from our family. He asked me why was I letting him, “he is just a little fat man”. I realised he was right, why am I letting him? To hell with this, see you on the streets.

  31. wills


    Great comment above.

    Do you have any idea on why the EU regulatory agencies stood by and permitted the flooding of lending into Ireland by international money lenders?

    If you do be very much appreciative to read anything of merit on this.

    • Hu Bris

      From what I have been able to gather from speaking to a few different people with some knowledge of the situation, the European banks were using their Irish operations as a laundering-service.

      The regulators in their home countries would have asked too many awkward questions about the sources of these funds were they to deal with it through their home-operations. So they simply setup operations here to handle such business, knowing full well that our so-called ‘regulator’ would not ask any such awkward questions, and routed the money through Ireland, to be parceled out as loans here, and the subsequently laundered and made ‘good’

    • StephenKenny

      Since it occurred everywhere, I don’t think that there was anything unique about loan availability in Ireland.
      After the dotcom bust, the reaction of the US Fed and the UK Bank of England was to flood their economies with cash, and make available almost unlimited low interest loans. This saw-off the recession that should have occurred, but only at the expense of a bigger one later.

      I’m starting to bore myself on this pont, but for at least 10 years, and some argue for up to 40 years, this increasing debt in the US and UK, and more latterly Ireland and various other Eurozone countries, has been what’s kept things looking good. For example, UK consumer debt rose by £1tn between the late 1990s and 2007 (it’s still there now). In an economy the size of the UK, that £90bn a year in extra debt is about 6% of GDP per year. Add to that corporate, government, and off-balance sheet government, debt, and you’re looking at a leverage ratio of about 450% of GDP in total.

      So Portugal, Spain, UK, and the US are all also in real trouble. The Asian situation is unclear, although most of them run huge trade surpluses, and have huge savings rates, which provide a cushion, to some extent. China is anyone’s guess (see Jim Chanos, for example), and for Australia Google Steve Keen.

      Fundamentally, we have a globally integrated economy, and the largest bits of it are in serious trouble. If/when the Euro and US consumer slows down their frantic pace of consuming, all bets are off, given it’s effect on the producing nations.

      • Deco

        Australia is has become a proxy bubble on China.

        The Chinese will keep building, until they realise that they have too many buildings. And then we will have the Chinese government making their own NAMA, to keep the bubble afloat.

        • Colin

          I’m in Australia 2 weeks now, and I’ve made a few observations.

          1. There’s a property bubble here at present, and plenty of hubris.
          2. Beer is expensive, bottle of Corona in a bar is E5/AUS$7.
          3. Coffee is expensive E3.50 for a cappuccino.
          4. Eating out is very expensive, more so than Ireland ever was, and at least in Ireland you got large portions.
          5. Thousands and thousands of Chinese students here, is it part of some deal involving exporting raw materials to China?

          Don’t bother coming out here if you’re over 30. Its impossible to get sponsorship from an Australian employer these days. Maybe they know something is coming down the line soon?

          Let me know if you spot RoboAussie in an airport near you with a foreign property portfolio in his back pocket.

          Having said all that, its a great country, wonderful people and lovely climate.

      • wills

        Thanks for comment.

        I do completely disagree though with its central assertion.

        By my reckoning if anyone with their head screwed on in the right direction could see as far back as 2003 that house prices were bonkers.

        So the tap turned on and flooding the kitchen and the banks kept flooding and the EU DID NOTHING.

        This is just not on in my viewpoint.

    • michaelcoughlan

      Hi Wills,

      I am neither an economist nor a banker so I can only offer you my two pence worth. I liken the bank lenders to drug dealers with the exact same modus operandi which is to get their victims hooked on their wares. Once hooked the banks will keep you in a perpetual state of need. The bankers are even more insidious than drug dealers because they take a lien on your assets at the same time they are shafting you by getting you hooked. The guys in charge know that sooner or later the music will stop and at the end there will be an enormous mess to clean up but the cost of doing so is less by a huge percentage than the stupendous profits made along the way.

      Why do regulators look the other way? Because too much money is made in the banking system during the waltz and when the music stops you me and our children pay for the toxic mess paying loans back to the same scumbags who caused the trouble in the first place.

      One more thing this agenda to drive down the minimum wage is more evidence of this rush to keep the citizens subjugated because I for one will never be convinced that the min wage of €8.65 per hour threatened our balance of payments but by reducing peoples ability to save means it will increase their need to borrow to make up for the shortfall in the standard of livening. I can assure you if you are misfortunate enough to have to live on the now 7.65/hr it could mean the difference between going hungry or not before the next pay check.

      Best regards,


  32. 45555

    Events like this trigger political crisis. Anger of the Icelandic public – after the banking crash and during the arrival of IMF – against the government and the bankers was dominant, for a good reason. We were also shameful and guilt- ridden for ‘our’ recklessness. Needless to say confused…

    Here in Iceland the government opposition took advantage of the situation and used the climate to press for elections and so forth. But with the focus on protests and demands against the government, the focus on larger issues was lost. For example the IMF plan.

    Looking back to 2008 I wonder if we did the right thing protesting against our government immediately after the crash. After all it was already exhausted an no less shocked than the public. It was fighting on all fronts. What it really needed was support and pressure from the public negotiating with IMF.

    The situation in Ireland now seems to be similar, it also seems clear that current government is the one negotiating the terms with IMF. Including how the bank mess will be sorted out. And it is impossible to overstate the gravity of that for Ireland’s future. Every single percent in bank debt transferred to the public means great pain further down the road. Might seem trivial now but it is not. This is the defining moment for Ireland, right here right now. Not what government or political party will be trying to clean up the mess in coming years.

    Sure – in the Icelandic case, foreign creditors got haircut. But the leftovers are no fun to carry for the Icelandic economy. David is spot on in this article.

    I suggest prolonged peaceful protest with clear message: No more private debt to the public! Riots are short lived and the focus is quickly lost, and the message to.


  33. StephenKenny

    It’s good to talk, virally.

    In the UK after the property crash of the early 1990s, a big UK bank decided that it was going to launch an advertising campaign to improve it’s image after all the foreclosures etc.They developed a really big expensive campaign, and it ran on TV, radio, and in newspapers.
    Afterwards, they employed a market research company to evaluate how well it had done. To no one but the bank’s surprise, the answer was that it had made things worse. The adverts had started what we would now call a spontaneous viral counter-campaign, consisting of stories of businesses ruined by bad banking, people losing their homes due to bad banking, and so on. The market researchers had a huge list of stories, but no one knew where they were from, They were all “someone’s mate heard from someone at work from their cousin….”

    Everyone just talked, kept talking, and it went viral. Tell the truth, it will out.

  34. concannon

    We are less than 10 years into the euro and nearly one third of the euro members are now bankrupt. What does this say about the euro project where interest rates are fixed to suit Germany, not looking good. We have to let the banks go bankrupt. I heard some economist in RTE saying that if we default on the private debt no one would ever give Ireland money again. He never backed up his reasoning with any evidence. In fact the evidence would show the opposite. The Asian crisis in 98, banks were let fail. Those nations recovered rapidly and are now creditor nations. The only asian country that threw money down the rat hole and kept their zombie banks alive was Japan,and they have lost two decades of growth,and their stock market is way down from its 1990 level . If I were a bond trader and Ireland defaulted on their debt, I would take a hit but I would also get back into Irish bonds to get a bargain, as the fundamentals on Irelands balance sheet would have transformed debt to GDP ratio would now be at the lower end of the scale.To hedge this position I would also go short on the EURO. Maybe Spain will do the honours and default and maybe then Paddy will see the error of his ways and do like wise.

    • John Smith

      You’re right. The best option for now is to default on the private (bank) debt and then pull out of the Euro zone. The Euro zone didn’t serve our interests from the start.

  35. Can we not put a different angle on this ‘default’ thing? “You can have all your money back that you invested but we are going to deduct any interest we paid you before returning it.”

    It works for me.

  36. manofiona

    It is no longer relevant to talk about what Ireland might or might not do. Because of their particular irresponsiblity (in Ireland’s case especially with its banks) the PIGS have precipitated what was always going to be the real issue. That issue is whether the common currency, and more generally the achievement of real economic union, can be achieved and sustained without political union. Europe will attempt solutions, such as we are now seeing, which will not be successful and which will successively push reluctant governments to ever closer co-operation while they continue to deny the fundamental truth. There can be no successful economic union, and therefore no sustainable common currency, without political union in Europe.

    If Ireland wants a future which is not compromised by years of unproductive austerity, the way forward is not to renege on its public debt (which is now effectively European debt and beyond the authority of any Irish government) but to press for closer political union in Europe so that Europe’s resources can be more effectively mobilised in the interests of all Europeans.

  37. DarraghD

    The one thing that does amaze me, is that despite our fury at the basic rule of capitalism being entirely set aside in relation to our debt that is associated with our property crash, on a completely higher level, we are now starting to see that there will be no avoiding the reality that success is rewarded and failure is going to be punished, in a way that will be almost biblical in nature.

    When we default, we will be reminded in stark terms, that we didnt quite manage to accidently invent the economic version of the free energy/perpetual motion machine.

  38. AndrewGMooney

    Tue 01 Jan 2009
    Cowen says he will run country ‘as he sees fit’

    ‘Taoiseach Brian Cowen says he will run the Government and the country as he sees fit and not according to Opposition demands.
    In a heated Dáil debate this evening in which Opposition parties repeatedly claimed the Government was “floundering” in the face of the economic crisis, Mr Cowen said the Government would discharge its responsibility on the basis of his philosophy.’

    ‘The Irish people have been betrayed by their European “friends” as surely as was Britain during the fiasco of the ERM in the early 1990s. Unfortunately for Ireland, there is no similarly obvious escape route. It cannot devalue its way back to growth. It is as permanently imprisoned in its eurozone sarcophagus as an Egyptian mummy in the Valley of the Kings.
    What makes this fate so galling is that Ireland has done everything that could reasonably be expected to set its fiscal house in order, and, unlike others, it has done so ahead of time and voluntarily. Wages, pensions and public services have been slashed, and taxes raised in a manner that makes the UK’s yet-to-bite fiscal consolidation look like a stroll in the park.
    Yet it’s all been in vain. Overwhelmed by the monumental costs of bailing out its banking system, Ireland’s fiscal position continues to deteriorate, forcing the country to cut even further. A downward spiral of growing unemployment, mortgage defaults and shrinking credit has established itself.
    The way things are going, the deflationary funk that Ireland is condemned to won’t end until living standards are returned to those of a Third World nation. This might eventually allow the necessary degree of competitiveness that would allow it to start growing again.
    Even the self-flagellating Germans would flinch at the brutality of the discipline the euro is imposing on the Irish.’

    I read that Denmark has joined Sweden and the UK in offering separate bi-lateral loans. The UK is naked self-interest but Sweden/Denmark appears to be a charitable donation to the beleagured ‘citizens’ of Ireland Inc (sic)now forced to raise funds in perpetuity for ‘Bond Aid’ and ‘Bank Aid’. “Do bankers know it’s Xmas? If they don’t have a taxpayer funded bonus?” etc. I’m confused and surprised that Canada, Australia and New Zealand have not yet offered bi-lateral loan support given the whole ‘diaspora’ debate…. Perhaps they’re waiting for a change of government……

    “The trouble with Socialism is that eventually you run out of other people’s money.” …Margaret Thatcher

    “The trouble with ‘Capitalism’ is that eventually banksters run out of other people’s money” …AndrewGMooney

    “I’ve been dreaming of a time when The Irish
    are sick to death of Fianna Fail and Fine Gael
    and denounce the Tribal Mind that still salutes them:
    will it salute them forever?
    Celtic Blood, Saxon Heart: this I’m made of
    there’s no demon in hell I’m afraid of.
    And I will die…with both of my hands untied”

    LOL! *raises eyebrow* impersonates Declan Ganley, etc.

    best wishes
    ‘An Irish Childhood In Birmingham’
    20:12 20/12 2012
    Live on stage. Connaught Square. Birmingham. E(ire)ngland…..maybe….

  39. HAC

    This is the last chance to do the right thing before Spanish “contagion” potentially mealts the Euro and disolves the European Union.

    David’s economics ” MAKES CENTS” “a debt-equity swap in the banks” right now is an achievable and logical proposal.

    At this stage, what have we to loose only precious time!!!

    The following blog offers further insight regards the present and inevitable contagion happening in Spain.

    The only way is UP!


  40. MK1

    Hi David,

    This is an “interesting” week of developments for Ireland as we are coerced into negotiating some ‘bailout’ funding.

    You are right, the banks are a ‘black hole’ which people dont seem to be resolving. The problem is of course that there are many ‘counter-parties’ to the banks problems which if we ‘burn’ creates more problems.

    Converting debt to equity under normal levels of indebtedness at a distessed business or indeed a bank can be a normal course of action, but do you think any deposit holder would take shares in a bankrupt bank rather than take out their deposit???? The 17 billion outflow in Q3 at AIB is an indication of what depositers want. They want their money back.

    Overall, the problem that the ECB, EU countries and Ireland has is that the crash (and it is a crash) has left us with one massive ‘hangover’ which is nearly intractable to resolve due to its severity and nature.

    The euro project is not at risk, as the euro itself could be devalued, etc. There is no element of contagion, as what we have are banks and countries that are in massive amounts of debt. All we have are ‘myopic markets’ moving their focus. The soundbyte was Greece. But Greece’s problems did not contaminate us, we were not infected, there is no contagion. All these debts are individual. And importantly, to counter parties. It is resolvable but only with pain, and to many EU citizens, and nobody wants to take that pain. Bond-holders dont, Abramovich doesnt.

    What we as a country need to do is to work harder, better, smarter, and get our balance of payments and our act together. This means MASSIVE changes in mindset, where export, export, export is the key, Where taking costs out radically is the key. Where driving efficiency is the key. Internal efficiency, everything, etc, etc …. We need the most efficient PS in the EU. Excessive Salaries need to be cut, cut, cut. Everywhere. Pat Kenny, cut. Anything over 100k needs to be questioned.

    And the wealthy who made money during the boom and are sitting back and laughing at this, HAVE to be taxed. Their windfalls have to be taxed. Its simple as 1+1 = 2, as that is where the money went. You know that question people ask, where did the money go? Well, it didnt all go up in smoke. Its there. Tax it!

    EVEN with all that, we still have to pay off massive debts. Yes, you arer right David, we need to ‘burn’ some of the creditors. But we need to do that carefully.

    There is soo much to do … the clock has ticked and the debts have increased. These things should have been tackled sooner. We need less staff working in banks in Ireland, they should be doing something else.

    So much to do, we are way behind in time, and from actions taken so far, it doesnt look as if there are the collective smarts to do whats needed and whats right ….


    • shtove

      “And the wealthy who made money during the boom and are sitting back and laughing at this, HAVE to be taxed. Their windfalls have to be taxed. Its simple as 1+1 = 2, as that is where the money went. You know that question people ask, where did the money go? Well, it didnt all go up in smoke. Its there. Tax it!”

      Hang on – where is that money, and how does the government tax it?

      The money is long gone. What the government will do is tax the fools who parted with that money in exchange for bubble-priced assets ie. property taxes up to the gills for homeowners. And they’ll keep on increasing income tax.

      If you want the rich to suffer for their giant fraud, then the banks have to be taken out back and shot in the head. That’s it. No bailout.

      Ireland is staring into the abyss. And the abyss is staring back.

      • Zaphod

        The money didn’t go anywhere, it didn’t exhist, that was the problem.
        Money is debt, hence we need more debt to keep going.

        Watch both 1 and 2, you will understand what is going on.

        Check out the central bank driven take over of world governments.

        Either cut loose or merge, it’s like the borg.

  41. SkintPaddy

    We need to wake up and realise that the IMF are a nasty organisation that should be avoided at all costs. But who will lead this revolution?

  42. Agoraphobic

    So If I understand well:

    For America QE II stands for Quantitative Easing
    For Irland QE II stands for Queen Elisabeth II

    After all just going back to source ;) where is the a big deal?

  43. mishco

    As Plato said: “Those who are too smart to engage in politics are punished by being governed by those who are dumber”

    How much more punishment can you take, David, before you decide you’ve had enough? I just hope you’ve already decided this, because Ireland needs people like you to take over, not just talk about what to do, but to do it.

    Forgive me for being personal but, as someone says above, no one seems to listen to you. No one who has any control at least. You have great influence, and now you (and others like you) need control. Surely the upcoming election is the time to gain some control.

    Cometh the hour …

  44. uchrisn

    Someone from Kazakistan must have been reading Davids articles cause they let the bondholders take thier losses on failed banks last year. By all accounts theyre doing much better since then.

    My vision for Ireland from this point is still as David and many other bloggers have been saying – have the banks pass their losses to their creditors.
    Reasons we have been given for not doing that
    1. We have to ensure credit for our businesses and startups.
    As people realised this wasn’t happening, we went onto the next excuse.
    2. Our government would have to pay more to lend money on the bond market and it would be very expensive for us to let them fail.
    As the government paid more for money than Iceland we went onto the next excuse.
    3. As the banks are of ‘systemic importance’ the country would be made insolvent if they failed.
    As we are now insolvent onto the next excuse, now we’re onto scaremongering which works well on the Irish.
    4. We could cause a chain of events culminating in bringing down the Euro.
    So only if the Euro fails then finally the bondholders and creditors of the banks will accept their rightfull losses.
    That’s a threat and not fair. Wheter we save our banks or not is not instrumental in wheter the Euro will fail. Rather a lack of co-operation and fairness between member states or the health of Spains banks are more relevant.
    Their bluff should be called as it should have been in points 1, 2 and 3.

  45. Fellow debt slaves:

    Signs of Hope At Last


    The north east of England generates £55 billions in tax rev each year, it’s population is less than 4 million and doesn’t have a vibrant property market.Squaring the circle between income and spending has to start with costs @ the top, the ppp of the PRESENT Irish min wage is no better than the UK, yet busineses here are whining continually, it was introduced as a trade-off for limitles nos of eastern europeans coming here and pushing housing costs higher and squeezing salaries.Give and Take ?

    • @Slickmick

      Biggest problem facing us is the banking crisis. There’s huge inequity and mess on Ireland Inc that grew alongside the property bubble contagion, which is going to have to be dealt with.

      But some would like us to take our eye off the banking mess which is the biggest cowpat in our faces at the moment.

      Fix the banks first, burn the Anglo senior bondholders and the corrupt financial elite protecting them!

    • Deco

      The NorthEast of England is also extremely over-represented in the House of Common compared to the rest of Britain. This means that it can get political influence easier than other regions/cities.

      It has provided Phony Tony and Stephen ‘you can hire me for political influence, like you hire a cab’ Byers.


    Under the changes introduced by the Bank of Spain in September, lenders must take account of a drop in value of at least 30 percent if they keep the assets for more than two years. They must also make provisions for bad loans after 12 months, rather than as long as 72 months.

    The new rules will lead to an average increase in provisions for 2010 of 2 percent, the central bank said in May. They will also knock off an average of 10 percent from the pretax profit that lenders generate from their Spanish businesses, the Bank of Spain said.

    Missed Target

    Banco Santander SA, the biggest Spanish bank, said on Oct. 28 that it set aside 472 million euros to account for impaired assets and will miss its 2010 earnings goal because of the changes.

    “Banks are in a delicate position,” said Fernando Encinar, co-founder of, Spain’s largest property website. “They’ve realized that it’s probably better to get rid of their real estate rather than prolong the problem.”

    We need more transparency/accountability rules for NAMA like above.

    EG property cannot be held indefinitely, but must be offloaded into the market place after a fixed length of time, 2yrs?

    NAMA will prolong our problems!

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