January 5, 2011

Swiss bank vaults filling up ... with our deposits

Posted in Banks · 182 comments ·

I rarely rob breakfasts in hotels; I don’t usually stuff my pockets with sandwiches culled from the breakfast buffet, but here in Davos, high up in the Swiss Alps, things are now so expensive that any saving counts. This was never a cheap place, but now after months of crises in the European debt markets, it is prohibitive.

The reason is simple: the Swiss franc has risen dramatically against the euro in the past year.

The Swiss franc is the canary in the coal mine of Europe finance. Every time there is a crisis anywhere in Europe, money flows into Switzerland. It is the ultimate save haven. Having worked for a Swiss bank, I remember seeing this first-hand. A wall of money swept through the bank’s coffers at the first sign of trouble.

However, according to friends who work here in the Swiss banking business, this time has been different. Today the deluge of European cash is reaching unprecedented proportions. They have never seen such sums before. They are all waiting for “the big one”. The big one is not Portugal or even Spain, for the Swiss bankers the big one to go will be Italy.

They look down the Alps and over the border to the south with a mixture of amusement and exasperation. Interestingly, the Swiss are more worried about what happens after Berlusconi goes. The view here is, whatever you think about the man himself, his weird coalition at least keeps Italy together. When he goes, the Swiss fear that Italy will implode financially.

And what that means is billions of Italian euro will leave Italy and flood over the border into Switzerland and the EU debt crisis that we have seen thus far in Ireland and Greece will be nothing more than a sideshow.

When seen from the Swiss perspective, the euro makes no sense. They realise that to the north, west and the east, Germany, France and Austria are strong, well-managed econ- omies where the people save more than they spend.

Last night, over a jar, the bankers told me that the flows of cash from Germany have been huge because the average well-to-do German is taking his savings out of the euro and putting them on deposit here in Switzerland. The fact that the Swiss banks normally offer no interest on deposits and still get huge inflows is indicative of the fragility at the heart of the euro.

They also explained that lots of money is coming from Ireland. These guys, who I worked with years ago, have never really seen any business from Ireland and certainly during the boom they looked on with a sense of trepidation because they had seen this before.

Now they are getting calls from Dublin on a daily basis.

They have concluded that this is because the banks and the Government can’t be trusted. These investment bankers — serious financial people — agree that the Irish taxpayer has no business bailing out the banks. At the table last night were two bondholders, men who invested in the Irish banks in the good times. They are now embarrassed because they were taken in by the Irish and European spin.

So here are the so-called mysterious “bondholders” and even they don’t expect to be paid. They made a mistake and they should bear the consequences.

In their eyes, there is now a direct link between the ongoing Irish government guarantees and the flow of money out of Ireland. However, their view is precisely the opposite view to that held by our Department of Finance and the Irish Central Bank.

The bankers here see a pattern which has been repeated in every financial crisis in the past. Initially, it is important to issue guarantees to stop the crisis, but these guarantees have to be credible and have to be limited both in terms of scope and timing.

The more time that goes by, the less credible they become.

The more any government bluffs and provides guarantees, the less those guarantees are worth and it gets to a stage where the guarantees are worthless because the State simply doesn’t have the money to back them up.

So, according to the Swiss bankers, the people — the savers in Ireland — who are supposed to be reassured by these guarantees are actually made more nervous by them!

The Irish therefore respond by doing precisely the opposite to what the politicians and bureaucrats want. In response to more bailouts and guarantees, they take their money out of the country, rather than keep it there. So the guarantees and, of course, the endless bailouts are causing the flight of capital rather than preventing it!

This is the logic of capitalism. When you pile more and more financial burdens on the population in order to bail out the banks and to guarantee banks, the chances of the population being able to pay all this back diminish. This increases the risk. As the risk increases, capital gets scared and leaves. There is a well-established pattern in this development.

First to leave is professional capital. This is the money in the stock market which goes. Then money leaves the bond market. The bond market shuts down. Then the big corporate deposits leave as financial directors of large companies decide that they are not being paid for the risk of holding assets in the crippled banking system. Ultimately, this fear permeates down the food chain and ultimately the ordinary depositors up sticks and head for the hills.

This column has made this point for more than two years now: the ultimate endgame arising from this government’s banking policy will be capital flight. The most damning indictment of this government’s competence is that at a time when Irish people have never saved — or wanted to save — more, we are seeing deposits leave our own banks. Last week, this column discussed the massive switch from spending to saving in Ireland and yet bank results show deposits leaving the system.

And some of that money is coming here to places like Davos. For the Swiss, Ireland is just a microcosm of what is happening all over Europe. For them the deal is very simple. The ECB has to convince German, French, Dutch and Austrian savers that their money is safe in the euro. To do this, the ECB has to convince the savers that it has a credible way of dealing with the banking and debt crises in Greece, Ireland, Spain, Portugal and the big one to come, Italy.

It has failed to do this in 2010. Will 2011 be any different? When seen from the altitude up here in the Alps, the answer seems to be definitely not.

  1. Seven

    Not that I have anything to save, but do you recommend a way forward to the ordinary Joe Soap, who has his bank account (hence his wages) in an Irish bank and his his mortgage in an Irish bank?

    • Fergal73

      Whatever you save is held in Irish state owned institutions. The same goes with debts (mortgage).

      I see little reason in changing your mortgage provider.

      As we have seen, the state does not have the citizen’s best interests to heart, so guard your assets against the state.

      1. Do nothing
      i) The government imposes a limitation on access to funds – limitation on withdrawals as a temporary / emergency measure. Who knows how long that could last!

      ii) (This is a very small risk, but it has happened in South American countries.) You may wake up one day to find your accounts converted into New Irish Punts (without your consent)at a Govt. imposed exchange rate (which will rapidly move against your favor).

      2. Open a EURO account at a non state institution (NSI)
      E.g. National Irish Bank / Rabobank
      This is a relatively pain-free option.

      As your salary comes in, transfer the amount of your monthly savings into the NSI account. Transfer whatever savings you alread hold in the Irish bank out.

      There is minimal risk keeping your salary going into the Irish account.

      3. Open a non EURO account at a non state institution (NSI)
      Do the same as above, but pick a currency e.g. Sterling / USD
      Up to you to pick which currency you fancy. (Over the long term I do not favour the USD though.)

      Risk: Exchange rate risk – if by some miracle the Euro strengthens, then you lose out. There are also exchange rate fees. Some banks provide 0% interest on foreign currency accounts.

      Open a EURO and non EURO account at a non state institution (NSI)

      Move your salary payments so that they credit your NSI account. Use this account to fund your mortgage. At the end of every month, transfer your money (savings) from the NSI EURO accont to the NSI non-EURO account.

      Risk – relatively minimal, though as I undersatnd it, it is technically feasible that you wake up one morning to find that your accounts have been converted to New Irish Punts at the fixed rate (that will work against you).

      Open a non EURO account in a foreign country
      This is harder to do, but you may find it possible to open an account in a bank in another EU country more easily. Pick a non-Euro country – e.g. UK.

      Risk – exchange rate risk.

      Go offshore
      If you have more money – it is possible to open off-shore accounts in Bermuda / Cayman / Belize with relative ease. Belize offers the lowest entry levels (as far as I know) of about USD 20K.
      Risk: Security / stability / future access to funds. There tend to be account charges for maintaining these accounts.

      Safe / Dig
      Convert your savings on a monthly basis into another currency. Bury the money in your garden (good quality plastic bags and a biscuit box work fine!).
      Risk: Someone sees you and steals it. Exchange rate risk. No interest earnings.

      This is my preferred option.

      Buy shares or commodities. Up to you what your portfolio is. The advantage is you own a real asset rather than a fiat currency. Dividends will be paid and in the event of currency crash, you still own the same number of shares and they should recover more quickly than a currency. (Even Irish companies, their share price will reflect their market value – so if a New Irish Punt is introduced, as it devalues, the companies price will rise). (If buying Irish, pick exporting companies!)

      Risk: The risk is that you make a bad investment and lose a bundle.
      IMHO gold and bonds are overvalued.

      • wills

        Well there is a moral code that guides people in behaving.

        Wether one lives by it or not is a different question.

        Swiss banks banked Nazi blood money and pillaged assets, thats a fact.

        Thats the way it is in the real world.

        Money itself is merely an inanimate object. Its either used as a weapon or a tool.

        In the case of swiss banks banking Nazi plunder this is using banking in a complicit way to facilitate the Nazi evil plunder system.

        • Fergal73

          I agree with you Wills. My point is only that as long as the reward is there, some people (bankers included) will act according to what benefits them. Appeals to “better nature” or moral right will never work. (Moral right is difficult to define in any case. For the Taliban it equates to circumcision of females, stoning and other acts most Westerners consider abhorent.)

          • coldblow

            About a year before the WTC attack in New York, I saw a French programme about the Taliban in Afghanistan. From what I remember it wasn’t female circumcision or stoning but shootings in the football stadium and banning music. All music.

          • Fergal73

            They still do stonings in soccer stadiums – half time entertainment.

      • coldblow


        Interesting post. A couple of points:

        Just from following irisheconomy the perceived risk of euro exit (and presumably therefore of waking up in the morning to find your savings in new punts of questionable value?) is very real. (I mentioned in an earlierPaul Hunt changing his tune but having looked again this doesn’t seem to be the case – who cares anyway – but certainly some there seem to have changed their opinion on this.)

        My understanding is that a euro account opened in a Non State Institution (eg Rabo) would be forcibly converted into new punts in the event of euro exit.

        Risk of investing offshore in Cayman Islands etc – in the event of a second financial crash surely the risk here is that your savings would be lost completely?

        You don’t mention opening a euro acoount in a euro country – I don’t think you can unless you are resident.

        • Fergal73

          “My understanding is that a euro account opened in a Non State Institution (eg Rabo) would be forcibly converted into new punts in the event of euro exit.”

          That is why I recommend holding savings in a non-EURO currency or in EURO demoninated assets – e.g. shares. Even though I think that risk is very small (and given the government’s record of terrible decision-making, who knows what they’ll do), the upside to holding another currency is that if the EURO falls in value, you’re making money!

          “Risk of investing offshore in Cayman Islands etc — in the event of a second financial crash surely the risk here is that your savings would be lost completely?”

          You have to pick your bank with care, but most of these banks are pretty well regulated because their countries are heavily dependent on them, they don;t want to risk the reputational damage of a failed institution. (Some have collapsed – e.g. Clico Investment Bank in Trinidad, so care is needed.)

          “You don’t mention opening a euro acoount in a euro country — I don’t think you can unless you are resident.”

          I live in the US now (a refugee from the inflated house prices – I emigrated in 2004 rather than buy at what I viewed as bubble prices), so I don’t follow the regulations closely. Maybe that’s not an option anymore.
          In any case, I don’t recommend holding savings in EURO. While all fiat currencies are artifical, the EURO is the fakest of all – no Federal Government, so no political will to balance the interests of all, instead the strong economies set the rules (France / Germany) and the rest do what they can – but as Greece proved, not even within the rules!

  2. irishminx

    I don’t know one person including myself who trusts the Irish Government, the banks, the ECB, the IMF or even the world bank!

    This is now the world I live in!

    David, you paint a real picture of life now.

    Sad as it is.

  3. wills


    Firstly, i reckon the wall of money is the money printed on the back of the wall of debts thats been pillaged by the insiders and its all flowing out of the rigged economic systems of the countries they all own into safety now that the paper money derivatives insurance fraud scam is now done.

  4. irishminx

    I’d like to know the answer to seven’s question!
    Can you answer it please David.

    I actually get phone calls from friends asking me, where they should put their money!

    At this stage, I say, hide it.

    But I am paid through the bank too and my mortgage is with a bank, so what do I need to do to secure my money? Not that I have much, it’s pay cheque to pay cheque for me!

  5. wills


    Secondly, DAVOS is a fcukn joke. Its a private banking system gangster talking shop but whats so sick about it is that it is xmas wrapped in its affluent pseudo intellectual concern for all the peoples of all the world. Pass me the sick bag.

    • Seven

      Davos is a municipality in the district of Prättigau/Davos in the canton of Graubünden, Switzerland.
      It is located on the Landwasser River, in the Swiss Alps, between the Plessur and Albula Range. At 1,560 meters (5,118 ft), it is the highest city in Europe.[2]
      Davos has a dual claim to fame as the host to the World Economic Forum (WEF), an annual meeting of global political and business elites (often referred to simply as Davos), and the home of the second largest ski resort in Switzerland (after Les portes du soleil, shared with France), serving as the site of the annual Spengler Cup ice hockey tournament, hosted by the HC Davos local hockey team.
      Not a fcukn joke at all, at all

  6. wills


    Didnt the swiss banks take on deposit the the swag the nazis raped and pillaged from millions of human beings before they liquidated the women and children up a chimney stack. Surely these swiss banks are now utterly morally compromised for all time.

    • Fergal73

      Money is amoral. Not moral or immoral. While you (or I) may view ourselves as moral creatuires, if you really think about it, the average person’s use of money is at best amoral.


      Ever bought a piece of clothing and wondered how they could possibly sell it so cheap? The answer is incredibly underpaid Asian workers. As an example, watch the documentary “WalMart – The High Cost of Low Price”.

      Ever bought a factory produced chicken (or eaten a chicken burger)? These animals are produced in appalling conditions, squashed is a better word than cramped.

      So the Swiss bankers are just further along the scale. They accept the money, no (well, now few) questions asked, intentionally blind to the suffering that the money was built on.

      I’m making no comment as to right or wrong, but moral compromise means nothing when the game is not about morality. The game is about the balance sheet and the profit and loss sheet.

  7. wills


    These bondholders who you spoke with who said the banks ought not to be bailed out by the people, love to know if these bondholders are actually putting their money where their mouths are.

  8. wills


    Seems to me to be a sick sorry bunch of sad b@stards who are taking out their fat sorry holes that isnt it a shame the people are bailing the bondholders out. Their still cashing the cheques and going about their morally corrupt murderous business.

    I think you need to get the hell out of that place Davos and go home.

    • dwalsh

      Well I for one am very glad David went to Davos and told us something of what he heard there…so I suggest should you be. Whereas I agree with your estimation of the Davos “knees up” and the banking elites, closing our eyes and stuffing our fingers in our ears and getting all huffed-up wont help.
      Who was it said to keep your friends close and your enemies closer?

      • wills

        I hope and pray to God that they all burn in the fires of hell for their murder.

      • pbesso

        Who was it said to keep your friends close and your enemies closer?

        purportely it is was Sun-Tzu, this has not been proven; however, there is some considerable wisdom in it.

  9. Deco

    Intersting article. To be honest the entire ECB strategy with regard to supporting the Euro can be summed up in one Americanism – “jawboning”. The ECB rate is low, because the PIGS (or the PIGIS) are insolvent, or even worse – and the ECB has to make the costs of maintaining solvency as low as possible.

    To be honest, equally, Switzerland is no longer the rock of solidity that it was in previous decades – because Swiss banks also took a hit, since the crisis hit. It is more a factor of the weakness of the ECB and Brussels. In fact, I would even speculate that as Europe becomes more politically centralized, the more the economic underperformance that results. Compared to other comparable economic units of the same scale, only Japan has performed worse than Western Europe since the fall of the Berlin Wall. In fact, I speculate that Europe has underperformed since the Treaty of Maastricht. Increasing levels of political centralization seem to have robbed Europe of the dynamism that existed in previous decades. The most relevant word in relation to job creation in Western Europe in the past two decades is the word “lethargic”. Only Germany, and the Netherlands, both with an extremely high savings rates seem to be mastering it.

    The strong point of Switerland, seems to be that they were not involved. Switzerland has remained a loose confederation of cantons with less layers of governance, less lobbying, less politics, and less nonsense. In other words, maybe Switzerland has more credibility as a system because it is as simple as it needs to be. Just a thought.

    As a variant on this look at the fact that the EU countries that are outside the Euro project, are the countries that have responded with the most certainty to dealing with the crisis – where several of them were able to offer to bail us out. And then Norway gave us the ultimate digout, buying CRH shares (They should have read Phoenix Magazine beforehand).

  10. Great article. Hope DmcW gets a well deserved break in the mountains. As our own economy implodes, with money travelling out, next up is a wall of bankruptcies, mortgage and credit card debt. Endgame approaches and markets give their verdict on our failed bailout. Paddy’s Day for default if we’re lucky, later on in the year, if we’re not. We’re already sunk according to the markets.

  11. Deco

    David, here is a question that everybody here would probably love to see answered…

    Any sign of “Suds” over there in Davos ?

    As a former GS boss, former Attorney General, and former Chairman with our biggest state run bank, former EU Commisioner, Lisbon re-run advocate, and failed politician, Suds is the type of knowitall that we should expect to see at a shindig of Davos…

  12. irishminx

    Oh Wills you are too cross.
    Take a breathe or three………
    Don’t personalise it.

    With the best of intentions,


  13. Deco

    I personall would never underestimate the financial ability of Italy, or the Italians. They invented banking and much of modern accounting, the limited company, bills of exchange, and the key concepts of credit.

    From what I have been told, Berlosconi has spent the last ten years trying to push the Italians to borrow more and spend more and live like Californians, or Irish people. In other words Berlosconi was behaving like Bertosconi. But there was a key difference. The Irish believed the bull about the strength of the Irish economy that was emanating from the Irish media. The Italians, being far more prudent, and more conservative with their finances, completely ignored these efforts and lived more carefully.

    This is the strenght of the Italian system – even if a clown gets in control of the government, everybody can see through all the nonsense with reference to management of their own finances. In Ireland, the lemming crowd did exactly as they were instructed.

    Therefore I think that Italy is actually stronger than people presume. Italian government debt is 80% owned by the Milan banks – meaning that the Milan banks effectively control the Italian economy. They are far more intelligent that most people give them credit for. None of the Milan banks got caught out with subprime. Exposure to Greece was mild compared to the exposure of the French banking system and the German banking system. The Milan banks spent the low Euro rates era loaning to the one thing they knew they could control – the Italian government. This is also the one place where they can be assured that they will get their money back.

    Another issue with Italy, is the fact that Italy is an exporting country, which tends to make excellent usage of the Italian diaspora in extended trade and commerce. A lot of Italian money went into South America, in the last decade, buying farms, property, and company shares – directly, using family contacts and long term business contacts – often at the price floor.

    Lastly, I think that criticism of Italian economic performance seems to focus on the bureacracy. But the genius of Italian life, is the ability of the citizens to completely ignore it. And the bureacrats themselves seem to know when the rules do not need to be implemented. Here the rules get ignored when the person being regulated has social status – but the context of the issue is o much less importance.

    The genius of the Italian system, is that most Italians know the state is corrupt, inept, incompetent and flawed, and are able to act accordingly. Unfortunately, most people here were far to naive for our own good, in the same regard !!!

    • Deco

      I was in Italy on a skiing holiday in 2002 with some freinds. We got talking to an Italian businessman. He had returned from Argentina. He visited second cousins. He was looking for a ranch in the foothills of the Andes. Argentina had just defaulted on it’s debt and was bankrupt. But he was able to know what was going on, and was able to get relatives to guide him. He was able to see the opportunities. He could list all the opportunities. At the time the media back in Ireland was telling us that Argentina was a pariah state, and a basket case. But this Italian seemed to not be concerned about this. He was confident. He said that the prices were at the floor. In retrospect, this was correct.

      Well, I don’t know if he eventually got what he was looking for. But one thing is certain, he had an investment strategy, and not just a lemming strategy. He was not buying Eircom shares, semi-detached residences in Carlow, apartments in Sandyford, AIB shares, or Irish government bonds. He was doing it based on sums, not based on the RTE evening news, the Evening Herald, the Irish Times Property Supplement, or the latest trend of the lemmings.

  14. I have been wondering why so many Italiens have been visiting the Cote D’Azur over Xmas and not their local haunts in Italy and this has been noticed by the local French press recently commenting on the Italien accents to be heard everywhere .So could the they be also visiting the banks in France too ?

  15. ~I think there must be thousands of Italian banks operating and some privately .

  16. SOMK

    Though I admit to being sympathetically skeptical of writers who have demonised the IMF and their ilk as being wholly destructive organisations established purely to serve what one might term “the powerful”. How else can you justify their actions and recommendations? Did they not see that the major problem for Ireland was this outrageous bank guarantee? Of course they did! Did they act on it but forcing us to act on it? No.

    What you have pointed out here seems all too bloody inevitable and with greatest respect I doubt is beyond the mind of those in the ECB and IMF, and yet either it is, or the IMF and ECB came into this country with cruel and malicious intent, an intent which will probably bite Europe and the rest of the world right on the ass sooner rather than later, when bank after bank collapse like dominoes.

    It seems more likely that it is a systemic fault in the system of modern capitalism, a system obsessed with the competitive attainment of money at the expense of others. Would you and your fellow economists/accountants advise people to move their money abroad? Of course you would it is in their interest. Will this further damage this economy and state so stupidly tied into the banks? Most certainly. And yet that is the morality of capitalism look after number 1, it’s a perfectly valid methodology, one found often in nature of which we are a part of, but it is also one which holds back the potential of us a species.

    Billions of people the world over obsessed with money, mortgages, food, shelter, having to work longer hours to pay for bloated mortgages. Call me an egalitarian Marxist if you like, but I fear the decimation of the middle class in America is one we will soon know very well in Europe as further and further punitive austerity measures are put in place, I fear that we have two options a rapid and thorough reform of the global financial system or a slow decent into serfdom.

    • Julia

      Good point. Good article too. Remember a few weeks ago it was pointed out to us that in fact the IMF and the ECB are sort of part of the banks that our govt has decided to pay back in full. It’s non-sensical, the IMF/ECB loans will be used to pay back other loans to the same body with further high interest. We are bankrupt. If a member of your own family started to do that you would cut off all financial aid to him straight away and send him to the Rutland Centre for addiction counselling.

  17. San Marino is a bank haven principality in Italy …..how safe is it now ?

  18. mully

    As irishminx and seven said what should ordinary deposit account holders do?
    It’s very easy to talk about what others at Davos are saying but what should depositors be doing now in Ireland seeing the government guarantee isn’t really worth the paper its written on? if we all withdrew our money in the morning they couldn’t pay us out.
    I’m sure the swiss banks aren’t getting calls from joe soap in the street but as usual the big guys will be long gone when the small fry get burnt.
    Enjoy the junket and maybe answer their question when you get a chance!

    • beneficial

      A thought that comes to mind convert to Turkish lire account @ over YTL 2 to a Euro on 30 day deposit @ 10.5%
      HSBC / GUARANTEE BANK / these have internet banking. this rate only available on ytl Currency accounts!

  19. Deco


    Two important people described in Matt Cooper’s book “who really runs Ireland” are in Switzerland.

    1. “JP”. ‘Sure JP is a great fella – look what he did for Limerick’. JP McManus. Apparently the Ditherer knows “of him”, but “doesn’t know” him. JP is tax resident in Geneva, as far as I am aware. JP is one of the “three amigos”. As far as I am aware, they also regard taxation in Ireland as “optional”.

    2. Quinlan. Derek Quinlan used to work in the Revenue. Then he left, making use of his knowledge of the complex myriad of Irish tax regulations and loopholes, to make himself available for the real estate sector. If you wanted to demonstrate your status in the professions in social scene of South Dublin, you told everybody that you were an investor in quinlan Private. It was a superleveraged high value asset investor. But something went wrong, because Quinlan is in Switzerland, and it does not look like he is coming home anytime soon.

    There ya go…important members of standing from Ireland who have connections with Switzerland !!!

    • irishminx

      That article left me quite confused DaoudG.

      I’m sitting with it!!

    • Deco

      I read that article, and it raises many interesting concepts which I have never seen in the “support our advertising sponsors” media.

      Really, these celebrity masters of the universe are hooked on their own power, and importance. They want us to listen to them.

      There is another side to Bill Gates that has not been mentioned in the media in a decade. It is the Bill Gates who ran into trouble with Anti-Trust authorities over abuse of market power. It is the Bill Gates who was George Dubya’s number 2 corporate donor in 2000. The number 1 corporate donor for Bush 2.0 was Enron. That speaks volumes. There were numerous market manoevres in the 1980s and 1990s which amounted to hammering competitors so as to become the dominant player.

      In response to the tactics of Bill Gates and Microsoft, the “open source” movement started. An early pioneer of this movement was Linus Torvald who created an alternative free Operating System for the PC, based on the Unix Operating System. His operating system was given the name “Linux”. A history of the ongoing conflict between Linux and MicroSoft shows the true nature of Gates. One hilarious episode, involved MicroSoft buying an organization which created the basis of Unix in the 1960s, the Santa Cruz Organization – so as to deprive parts of the Unix intellectual copyright from the Open Source movement.

      A certain level of the support for Steve Jobs in the IT community is also based on his antagonism with MicroSoft in the 1980s.

      There is more to Bill Gates than Bill Gates would want you to beleive !!

      • A bit of pedantry coming up: Unix was invented in 1969 and GNU was founded in 1983 in response to AT&T copywriting the source code of Unix (which had been developed by thousands of people for free up to that point). Open source predates MS and the rest by years.

        Ironically Linux (which merged with GNU) came in to being because of its creator’s frustration that the open source version of Unix he was using couldn’t be used in a commercial environment.

        Steve Jobs and Bill Gates are both in the business of making money, albeit with slight differences in philosophy that mostly mean little. Like AT&T and IBM before them, they know the best way to do that is to create a monopoly and have dependent customers. If the law allows them to do this, then its the law thats the problem.

        Each is good at something specific that the others aren’t. The idea that there is substantial competition or (even animosity) between Microsoft, Apple, Google, is a questionable one. Hold on while I Google the rest of my answer on my Windows laptop while listening to iTunes…

        I get a pain in me head when I hear eejits waffling on about evil of capitalism. Without genuine competition borne out of the desire for profits, nothing moves forward and worse the people who buy stuff get shafted. It would however be quite stupid to mistake capitalism for an ideology. Its just a tool, like economics.

  20. Gege Le Beau

    Swiss banks filling up with our deposits, should probably be refined to ‘filling up the deposits of the rich who have ripped off this economy off through shoddy land deals and dubious banking practices’.

    The dog in the street knows capital flight has been going on for years to the Caymans, Isle of Man, Bahamas, just difficult to get the data, I suspect it was going on throughout the so-called boom just not to Switzerland, but not it is open season as there are so many other issues distracting the populace, plus these guys like to spread their money around, while the Swiss secrecy laws offer a bit more protection, only punctured by the US in 2010.

    If the boys can cripple an economy with their recklessness, they are easily capable of transferring money abroad, and wasn’t the issue raised with government to track, prevent etc, what has it done, for God sake they’re probably in on it. Dirty, rotten game played on the citizen, time and again.

    Be careful David, few may wish to talk to you so openly for fear their insights may appear on the website the next day, subtlety is a fine art which should be mastered.

    • irishminx

      Hasn’t subtlety and Chinese whispers been the problem all along Gege?

      Isn’t the lack of straight honest to God talking being the problem?

      People need the truth!

      Even if I understand your gentle warning to David.

      I need people, including myself, to do the right thing and what David has done, in writing this article, IS the right thing.

      • Gege Le Beau

        @ Irishminx – you have to know your opponent, these guys play it very rough, one should adapt one’s strategy accordingly, spilling the beans on Brian Lenihan is one thing, with these boys it is something else entirely, it is all quite serious.

    • michaelcoughlan

      Hi Gege,

      You make a valid point about these guys but I would go one step further. A sociopath dosent give a sh*t where his point of view is printed because he is going to keep doing what he is doing no matter how destructive, murderous or antisocial.

      • Gege Le Beau

        Think you misstake them Michael, they care quite a lot actually but yes, they will also go on doing what they like, no prisoners taken.

  21. wills

    Where was the Nazis deposited their swag they raped and pillaged from the women and children?

  22. wills

    Davos is a cancerous pit of money vampires and I cannot recommend to you enough to get the hell out of there now before it plays havoc with your karma.

  23. wills

    Pack your bag David, exit accomadation, get to airport and get the hell out of that goddamned cess pit of murderous gangsters.

  24. Fellow vassals,

    Lots of deposit money got helicoptered out I’m guessing from those who made money out of ‘Tiger’ and are afraid of DIRT changes and unpredictable revenue/DoF

    Listen to boring Chandra Kochhar flag a balance between regulation and changes curbing growth.

    She’s co chair of Davos, World Economic Conference.


    Chandra Kochhar, CEO of ICICI Bank Ltd., India

    They’ve one item on the agenda. How to make more money for banks!No change guaranteed.

    Vassal state we go, ECB is now borrowing for us on the international markets and selling the money on to us at 5.5%

    • wills


      The ECB print the money for the cost of paper and ink. The rest of it is a charade.

      • The ECB vampires flipped us into bailout zombies, we’ve gone from zombie to vassal to bailout in the blink of an eye, next stop is ‘default’.

        • wills

          Interesting conceptualization there cbweb. I think the circle closest circling the Euro money printing presses are thinking too themselves sure why the hell not should one try funnel the cash into a hidden cash ecosystem and salt it away away, anyone else in close enough would do the same surely!!!

        • beneficial

          the way I see it is we have 2 choices : we arrange a loan from the chinese @ 2.5% and tell the ECB/IMF To go F**k themselves. (If Biffo had any balls at the the time he should have threatened to crash the euro unless he got the money cheap ).

          2)Default and go back to metal backed currency of our own.
          Chinese will loan Spain money as they see the euro as a better bet than the useless dollar ( which they want to get rid of quick )Although when the dollar goes down the pan and it won’t be long all other fiat currencies will follow.

  25. wills

    DAVOS is a fcukn joke. Its a private banking system gangster talking shop

  26. Cicero

    David is making important and very alarming points here.
    But the standard of the posts in these comments is so pathetic it poses a risk to David’s reputation – guilt by association!!
    It would help his insights to be taken seriously by intelligent people if his followers on this blog could make more effort to appear intelligent themselves.
    Otherwise he would be better of to close down this rant space in order to preserve his own status as someone worth reading.
    You eejits are actually damaging a commentator whom you admire.

    • michaelcoughlan

      well said.

    • Malcolm McClure

      Cicero: I was just about to write the same myself. There never was a time when cool heads were needed more. But just thinking about Switzerland drives sane people nuts.
      I remember we got around to discussing Swiss bank accounts here a couple of years back. It quickly descended into jokes like this:
      What’s the difference between Heaven and Hell?

      In heaven the French are the cooks, the Germans are the mechanics, the British are the police, the Italians are the lovers, and the Swiss are the bankers.

      In hell the French are the mechanics, the Germans are the police, the British are the cooks, the Italians are the bankers and the Swiss are the lovers.

    • wills

      It doesnt take alot of intelligence to know when somebody is stealing.

    • Harper66


      Regardless of whether your criticism is valid or not experience has taught me it is invariably the ignorant that accuse others of displaying a lack of intelligence.

    • Indeed. The tin-foil hat stuff is starting to emerge. Its only a matter of time before somebody mentions the Illuminati… Pity, as there have never been so many new people here interested in a proper conversation.

  27. Switzerland remains a fundamentally important financial stronghold for the Brotherhood. This is why it is never attacked and never takes part in wars, even when every country along it’s borders is involved. Switzerland is a major financial centre for the people who are creating the wars and so they ensure it is not involved. See how simple history becomes when you know the Agenda?

    Other central banks had been created by the Aryan Black Nobility. They were the Bank of Amsterdam (1609), Bank of Hamburg (1619) and the bank of Sweden (1661), but the Bank of England was the jewel. They were designed to lend governments money that did not exist and charge them (the people through taxation) interest on the debt. The greater the debt the greater the interest and the greater the taxation. Get the idea? We’ve been had and it’s time to wake up.

    Governments could create their own money interest free and have no interest to pay to the private banking cartel. The reason they don’t introduce this most obvious system is because the governments are controlled by those who control the Banks – the Babylonian Brotherhood. They coordinate between their branches in the various countries to ensure that anyone who sought to do this would be crushed economically and politically.

    The main coordinating body between the interconnected central banks is the Bank of International Settlements, based in the Brotherhood stronghold of Geneva, Switzerland. The Brotherhood controls all the monarchies, because they are the monarchies, so they have created and controlled all the political parties, left, right and centre.

    The same situation exist throughout the world where you find the same bloodlines and their puppets in charge in country after country, in front of the camera and behind the scenes. If it suits the Agenda to crash the US dollar or the Mexican peso or bring down a government, or start a civil war, the branch managers in those countries go to work through their financial, media and secret society operations to ensure that it happens.

    In this way the world can be run by a very few people in the City of London and other Brotherhood centres like Paris, Bonn, Brussels, Washington, New York, Switzerland and the Vatican. It is a simple and brilliantly organised structure, ruled from the top with a rod of iron, and no mercy is shown to anyone who does not do exactly as they are told. That’s why it has worked so efficiently for so long. Add to that the fact that the truth of what is going on is so bizarre that most people will not believe it and you have the perfect situation for ongoing unchallenged control.

    Until Now.

    • This is a very interisting post Pauldiv.
      To sum up it seems that when a person goes into a bank for a loan say to buy a house for say 100k (in a few years time), the banker effectively goes into the back room switches on the printer and prints the paper money (only cost is ink & paper). The new home owner then spends the most productive years his life slaving away in an abusive work structure paying back the bank & paying tax to the government in blood & sweat until he is old & banjaxed.
      What a con job!

      • Thats right scania. It is a con.

        The financial sting has operated since the time of Sumer and Babylon to the present day and is based on creating money that doesn’t exist and lending it to governments, people and businesses in return for interest. This creates enormous debts for governments and people and controls them. This works because banks are allowed to lend money thay don’t have.

        If I have a thousand dollars I can lend a thousand dollars. Simple, but if a bank has a thousand dollars it can lend ten times that amount and more, and charge interest on it. If a fraction of the people who have money on deposit at a bank went in today to withdraw it the banks would shut the doors simply because they don’t have it. Money in the bank is a myth and con.

        When you take out a loan the bank does not print new notes and mint new coins and simple types the amount owed into your account. From that minute you are paying interest to the bank on what is no more than a theoretical figures typed into a computer. If you don’t pay back the money with interest, that is your non existent loan, the bank can legally take from you wealth that does exist – your house, car, land and other assets.

        Also money is not brought into circulation by governments but by private banks making loans to customers, so the banks control the amount of money that is in circulation. The more loans they make the more money is in circulation. The difference between economic boom (Celtic Tiger) and economic depression (Now) is the amount of money in circulation. Simple.

        With such as system the private banks, with Freemason and Brotherhood families behind the scam, decide how much money is in circulation and they can create booms and depressions at will. The same thing happens in the Stock Market where these guys ship trillions of dollars a day around the markets, deciding whether they soar or crash and burn. Stock market crashes are not accidents. They are deliberate.

        Most of the ‘money’ in circulation is not physical money because it is not backed by hard assets such as Gold and Platinum. It is a FIAT currency system and the Euro and the Dollar are both FIAT currencies. This ‘money’ does not exist and never has done. It is merely represented by electronic bits and bytes floating between accounts on different computers via credit cards and wire transfers. The more money, existent or non-existent that is in circulation the more economic activity can take place.

        The more money in circulation, the more products are bought and sold and the more income people have and the more jobs are available. Since this is not the case in Ireland then any sane person would deduce that we are being spun a line. A constant theme of the con is to create booms by issuing lots of loans and then pulling the plug. Economists and economic commentators who do not have a clue what is going on will tell you that boom and bust is part of a natural ‘economic cycle’. This isn’t the case because it is a systematic con operated by the Brotherhood to rob the real wealth of the world.

        During a boom people become even more indebted and businesses borrow more money to invest in production technology to meet demand. People are so confident about their future that they borrow money for a bigger house, car and whatever takes their fancy. Then, when we least expect it, the major bankers aided and abetted by the Brotherhood and Secret Society networks create a crash and begin calling in all the outstanding loans. They ensure they make fewer loans than before and this has the effect of reducing the amount of ‘money’ in circulation.

        The reduced demand for products leads to fewer jobs because there is not enough money in circulation to generate economic activity. People and businesses can’t earn money to pay back the loans and they end up bankrupt. The banks then step in and take over the real wealth in exchange for non repayment of the loans.

        This has been happening for millenia but in the last few centuries especially the real wealth of the world has been hoovered up and into the hands of those who control the banking system. As a result the governments and peoples of the world are being bled dry of their wealth most of the world is now living in poverty.

        Instead of governments creating their own interest free money they need to borrow it from the private banking cartel and pay back the capital as well as the interest. In order to do this they have to tax the people on almost everything, expect perhaps fresh air. All this taxation is handed straight to the bankers to repay the loans in the form of ‘money’ which they could have created themselves interest free. Why? They do it because the Brotherhood controls the governemts as much as they control the banks.

        Rather than question and attempt to change this state of affairs the people of Ireland are fed the illusion that politicians and elections actually matter. This is merely a side show and spun by the media to opiate and dumb down the intellectual activity of the population. There is also a moral question – it must make people angry that their brothers, sisters, parents and grandparents are lying dying on hospital trolleys in third world conditions while cowardly politicians vote for and encourage private health interests. The whole state of affairs is unacceptable and any normal person would be outraged at what is going on now. If we don’t wish to change this country, and I mean really change it then we are just as morally bankrupt as the crazies who run the show.

        When our host suggested that we pander to Nova mans sensitivities my heart skipped a beat. This is exactly the sort of leadership this country does not need and which everyone should fight against if the people of Ireland are to ever reach their true potential.

        Good luck.

        • This has opened my mind Pauldiv, an outstanding article. What would happen if you sent it to one of the main newspapers say the Irsih Times or the Independant, would they print it. People need to know this.

      • Dunno about all this stuff about brotherhoods and what-not, but yes, in practical terms a fiat currency operates more or less as you describe. The value of modern currencies is established by Government decree, but as we have seen, you need a functioning economy to back it up.

        That somebody slaves away for their lives is inevitable, no matter if they are paid in Euros, gold or salt.

    • adamabyss

      Until now what Pauldiv? Please continue…

  28. Hughorourke

    There is one important thing we can all do namely at every opportunity demand of all prospective TDs that the bank debt be swapped for equity. Whether it is bond holders or ECB debt we need a single message swap the debt for equity and very quickly our fiscal problem will indeed in the words of Patrick Honahan be “Manageable”
    This is the real issue for the election, forget recrimination and “Parliamentary Reform”. That can all be dealt with over the coming five years. Time now to save 2.5bn a year over the next five years in interest by swapping debt for equity.

    • Harper66

      I agree with you, this election should be run on the economy and in particular bank debt.As you say, what is needed is a mass lobbying of candidates by the people.The point I want to make is in order to achieve this the electorate needs to get informed and active.

      The cuts are begining to really bite into the majority of people at this stage. This will result in anger. This anger needs to be channeled in an informed manner.

      Not so sure about forgetting recrimination however if the electorate does manage to get mobile enough to lobby for the equity swap once achieved it could then turn itself to parliamentry reform.

      Several commentators on this website have floated the idea of creating a website that would serve purely as an information point for voters. There could be articles, audio commentaries etc.

      The purpose of the website would be to list why the way the bank debt was handled is wrong and what could/should be done about it. This could then be emailed around if it worked it could catch public attention and create the type of discussions you are looking for.

      • Harper66

        Excellent idea, there is a need to trawl all the work that has been done on the subject and make it available as a continuously updating resource. It should have a forum attached to allow the general public make suggestions to its build. Am using Flex latest technology to develop a new website of my own at the moment, which will be ready in a week or so, so I’m open to throwing in some ideas to such a project.

        • Gege Le Beau

          I need a website for a business I have started, anyone with contacts for a person who can do a smart, professional job at a low price, not many pages, maybe 5-6 to begin with, content (not images) provided.

        • Harper66

          Hi CB,
          I think it may be do – able . I have no knowledge of website design but could do donkey work if needed.

          I am not sure about the need for a committe at this stage – I agree if it were to develop then something woud need to be organised. Perhpas the best place to start would be with a very tight remit of 3/4 points based on the economy and get that information out?

          Perhaps get a link to it from this an other websites of merit to create a chain?

  29. Hughorourke

    Very good so let us get started. I believe the best quick way into the web right now would be a facebook page. In preparation for that we need to have four very firm objectives.
    My suggestion for four headings are:

    1) BANK FUNDING changed to Equity for present debt holders.

    2) Tax the proceeds of the boom.
    Example €287m paid to South Wharf (AKA Ardagh plc)for a hole in the ground probably now worth + /- a great big 0 after remediation.

    3) Make our Society more equal.
    Consult OECD comparisons and Kathleen Lynch UCD.

    4) Use the Credit Union liquid assets (at least €5bn) to get a truly cooperative banking system e.g. Rabo.

    Clearly we need to negotiate and agree four points that will be acceptable to a critical number (maybe twenty) activists who can channel information from sources like David Mc Williams, Kathleen Lynch and Patrick Honahan into a focused movement.
    Then we could issue carefully researched and presented policies to be consistently and intensively lobbied by an independent and united electorate.

    The reason I suggest four as the number of issues is that we would not dilute effort by straying into many side channels. The current politicians have one very focused aim, namely “Get myself elected again” and they have a myriad diversionary issues on their list to feed us e.g. Abolish the Senate. We could usefully tell them consistently to ignore that and attend to “The economy stupid” In fact on the basis of export figures there is little wrong with the economy if we were to address conversion of the construction industry skills. In fact “Its the banks stupid!!” for the “Parliamentary Reform” crusading politicians.
    What do you think?

    • Nope, disagree with you there. If this project is to get off the ground, it firstly needs a managing committee, who will meet and discuss the project outlines. So volunteers would be needed for that.

      Personally, I wouldn’t be happy unless it had some big names willing to lend their support, people like David, Morgan Kelly, Shane Ross, Gene Kerrigan, Jody Corcoran et al.

      But let me encourage you to do a personal website devoted to your ideas on Facebook. You could lobby around it for support and take it from there.

      I did have a website focused on issues around NAMA. I’ll personally update and revive it for the coming election. I’m also interested in greater collaboration between the bloggers of which I’m one and websites working in this area such as that of DmcW and irisheconomy.ie and http://bankermathews.com

      But individually there has been outstanding work done by individual journalists such as above and eg

      They need to be trawled/listed somewhere central.

      • Could I also clarify the only agenda such a centralised information providing website should have is the provision of Freedom of Information on financial matters related to banking.

        So, it shouldn’t exclude arguments/information on the basis of favouring one side or the other.

        But it should be an easy to use resource that can serve to educate the public on financial matters related to their role as citizens.

      • Harper66

        I agree with what you are saying. I am doubtful about a facebook page alot of them have been set up with limited success. having said that I agree with every other point you have made. I think a simple website would be better, perhaps it could be linked from davids site.

        CBweb makes some very vaild points and from my understanding knows a thing or two about websites!!!

        I think if we were to start something of substance people like David would lend their support.

        I am rushing to pick my son up from school but would like to discuss this more.

    • Harper66

      I seem to have posted my reply to you further down the page (somehow)please see below.

    • Hi, comments below, offered in a spirit of collegiality, nothing personal :)

      1: Good idea, the ECB should take this lot off our hands, as the lender of last resort.
      2: sorry, its all gone.
      3: Bit vague, also Kathleen Lynch gives me a pain in me head every time I see her wafflin’ on the telly
      4: Credit Unions are bondholders in the Irish banks so, if we get rid of the banks, they’re gone too.

      “I believe the best quick way into the web right now would be a facebook page” which will reach about 10% of the population max. Just cos your granny is on Facebook doesn’t mean she actually has a clue what she’s doing. How abut this for a start: talk to you neighbours and sell it to them. If you can convert a real person, you know your on a winner.

  30. Incident

    Have a read of this El Oro Group Chairman’s statement For 2010


    The El Oro Group’s profit before tax for the year-ended 30 June 2010 was £23,397,408 (year-ended 30 June 2009 was a loss of £30,381,174). The Group’s net assets at 30 June 2010 were £70,355,851 or 652.9 pence per share (2009: £51,810,400 or 480.8 pence per share).

    The Board paid on 31 March 2010 a first interim dividend of 12.0 pence per Share for the full year ended 30 June 2010, a final dividend of 5 pence has been proposed for payment on 10 December 2010 to Members registered on the books of the Company at the close of business on 8 December 2010, representing a full year’s YIELD on the mid-price at 30 September 2010 of 4.0%.

    The Group’s net asset value per Share (“NAV”) showed an increase over the year of 35.8% while the FTSE All Share Index was up by 17.1%.

    For when they shall say, Peace and Safety, then sudden destruction cometh upon them as travail upon a woman with child and they shall not escape. (1. Thessalonians V.3)

    The warmth of summer fades along with memories of dreamy days in June, gloriously hot despite the gloom of long range forecasters; the Autumn tints tickle the trees and whilst we can still bask in the glow of a substantial recovery in our main markets, a more chilling expectation confronts us.

    These figures reflect the huge turnaround in our favoured areas of Precious Metals and Resources, along with many areas of British industry. Whilst the Brewers have moved marginally ahead, the mines have stormed forward on their carbon-crusted diet of soaring metal prices. It would be hard to choose between the successes of the portfolio, despite a subsequent pull-back post the year-end which shows some profit taking.

    A few of the portfolio securities held for the Growth portfolio (Guernsey) including Troy, Archipelago Resources, Exeter, Shanta, & Medusa, are described below, and have excelled.

    Within the UK Growth and Income portfolio, exposure to Maudore Minerals, along with trading in Bullion and Mining Shares via CFDs has brought rewards. Many have loped ahead and in some cases shown a substantial second wind in recent weeks.

    Troy’s Casposo mine in San Juan Province approaches production driven by the inestimable Ken Nilsson’s superb construction achievement following the mill’s arrival from South Australia; we are hopeful that new Reserves will in due course be delineated once further drilling takes place; the project has been hugely enhanced by recent rises in the price of both Gold and Silver, and many obstacles surmounted under the capable leadership of its CEO Paul Benson.
    Archipelago Resources, now half owned by PT Rajawali, anticipates reaching production early in 2011. One would normally resent a project coming in some 5 years behind schedule, but at a price difference in Gold Bullion of nearly $1000 we will not complain.

    Exeter is now split between Extorre with its Argentine project in Santa Cruz, where Goldcorp is purchasing Andean Resources for a mammoth sum, and Exeter in Chile high in the Andes with its huge but low grade Caspiche project, containing both Gold and Copper.

    Shanta, whose Tanzanian deposits show every sign of becoming significant gold producers earns the mining veteran Walton Imry a new paean of praise and perhaps the pursuit of more big game; Medusa — whose production in the Philippines has been nothing short of phenomenal and Maudore, in the UK portfolio, appears to be assembling a significant gold resource in Quebec.

    Not to be outdone, James Halstead (UK portfolio) continues to provide a solid footing, whilst MP Evans’ (Guernsey portfolio) hopes are not to be palmed off. The effervescent Cliff Richards’ youthful profile is reflected in the performance of Young’s; Fuller, Smith and Turner’s exemplary dividend and profits’ record gladdens the heart of its shareholders and those full of London Pride, two of the UK portfolio’s Stars.

    The paste jewels amongst this glittering galaxy have somewhat spoilt the party; in our UK portfolio Infrastrata’s delay in finding finance for its Portland Gas storage has resulted in a substantial fall in its price; Amerisur developing oil fields in Columbia, hampered by opaque management, has yet to deliver the results of which it must be deemed worthy, and Sovereign Reversions fell out of its Shelter into the grasp of Grainger (which we hold in our Guernsey portfolio) at a price that perhaps ultimately reflects the catatonic stupor of the housing market.

    Unfortunately our dividend from BP was sacrificed on the altar of political opportunism and $20 billion of shareholders’ money set aside to assuage the appetite of American lawyers, although the damage to the environment would appear to be far less than predicted by the ‘experts’. Sadly neither BP’s reputation nor that of its leadership will be so swiftly re-established.

    The malevolent mutterings of Mr Malema about mine nationalisation are a continuing cause of concern in South Africa, as are the actions of the government of the Democratic Republic of the Congo, in seizing and selling the assets of First Quantum at Kolwezi and Frontier, abetted by ENRC in allegedly buying stolen goods.

    In happier climes, the Guernsey portfolio has also benefited from its holdings in Kalahari which has marked time on its price progress as development of its Namibian Uranium resource run by Extract Resources (also in the Guernsey portfolio), hones its financial structure; we remain hopeful of further progress and a recovery in the price of Uranium as a new generation of power stations come into production.

    We have rewarded shareholders with a second dividend paid in March and now propose a dividend of 5 pence bringing the total for the last year to 17 pence.

    “I place economy among the first and most important virtues and Public Debt as the great danger to be feared. To preserve our independence, we must not let our leaders load us with perpetual debt. We must make our choice between Economy and Liberty, or profusion and servitude.” Thomas Jefferson.

    Charlie Munger: ‘Basically, it’s over’ 21 February 2010.

    Shareholders of long or even recent standing will not be surprised to sense a certain excitement in scanning the daily prices to see the ascendant price of gold, followed, or in some cases fed by the prices of other Precious Metals such as Silver, Platinum, Palladium, Copper and even the humble Cotton thread attaching our buttons to our shirt. Whilst your portfolio has been constructed to benefit from the ownership and production of such assets, we find it hard to exult in the asinine idiocy that lead to this exuberance.

    Delightful as it is to have shaken off, albeit incompletely the incompetent, wanton, greedy, blind and obtuse acolytes of the previous administration, along with their insouciant savants who have wreaked such deep and disastrous damage on Britain and its prospects for years to come; and refreshing as it is to hear the confident and clear voice of our new Prime Minister, we cannot help feel that their sortie, however necessary the cuts with which they intend to scythe down the State sector, will stumble if they heed the siren call of Quantitative Easing; or even the wild comments of the Bank of England’s Deputy Governor Bean, calling for more Spending from the Consumer, an elementary and inherent part of the present problem. Perhaps he should have paused for longer in BP’s Wild Bean cafes before stating his preference for such a policy. The pressures from their coalition allies and mumblings of discontent emerging from within the nation are likely to rise to a crescendo of disgust as the long overdue adjustment in the structure of our economy takes place.

    We are disappointed that an area of Excellence, namely our Armed Forces, and the superb training they receive and impart into civilian life after serving their country, is to be cut further. We feel an essential and productive part of the Nation’s fabric is being diminished, whilst the Foreign Aid Budget remains sacrosanct, sloshing resources into areas where little evidence exists of its productivity or longevity, when undertaken by Government.

    The same has to be said many times over about the ‘ring-fenced’ NHS, whose Gargantuan appetite could surely be tempered by the application of a tourniquet or gastric band. The advantages of an education in discipline and practical training would seem to us to outweigh those of employing huge numbers of mainly overseas people in short term activities within the Health Service. We now contemplate a Navy consisting of Bath-Tub Battleships, and the loss of the Dartmouth Naval Academy, joining the ranks of famous British buildings consigned to the ‘Luxury Apartment’ Sector. Where Nelson once walked, Interior Designers will now ply their craft. We cannot pretend to be reassured by this sea-change.

    The abuse of the Sub-Prime mortgage sector by the Investment Bank hooligans, so forcefully illustrated in Michael Lewis’ book; ‘The Big Short’, led to the downfall of Lehman’s, Bear Sterns, AIG, Citibank, Washington Mutual, Freddie Mac, Fannie Mae, Countrywide, Household, Century Financial and a myriad of others, and yet the response of the Federal Reserve has been to refinance the surviving banks, continue funding the mortgage institutions and offer preferential treatment on repayments and repossessions to the recipients of mortgages who are unable to meet their payments.

    The result is that a tide of effluence has been sloshed over the Taxpayer and Saver, while the miscreants both in the US & UK have departed clutching substantial and often obscene pay-offs; asset prices have been boosted, the dollar has weakened and the dollar price of Gold is at a new high. London restaurants are full of the new Rich, many from far-off lands of which few have heard, and a new Babel of languages is heard on the streets of London. The environs of Cheval Place now resemble Arabian Knightsbridge, especially in summer.

    Into this toxic mix a new Tsunami of ‘Quantitative Easing’ is proposed which will achieve the same as the last one: no material change in the basic economy but an exacerbated impoverishment and indebtedness of the tax payer. The policy is quite simply insane: the legacy of a dead economist from a far-away era, dealing in a world where the West was the only economic power of consequence, and who regularly warned against debasement of the Currency.

    The policy resembles the instruction issued by the Captain of the Titanic after the first impact with the iceberg occurred ‘Full Steam Ahead’. The result as we know, was irrevocable damage and the death of so many from the speedy sinking.

    Capitalism relies on allowing weak businesses to fail and overvalued assets to decline to a price at which someone thinks them worth buying. The Dance of Death between the Irish Leprechaun and the Dwarf Nemesis, or Greek Goddess, has now moved to the Ballroom of the Berkeley Hotel, the ownership of which, which along with that of its venerable partners, Claridges and the Connaught is perhaps the most egregious examples of the collapse of a magnificent mirage, pumped to the full by the front runner of the Irish property boom, the Anglo-Irish Bank. All those sipping champagne or chewing cucumber sandwiches in those hallowed halls can muse on the madness of the European monetary system and its progeny the Euro, whose ‘one size fits all’ interest’ rates has brought Ireland to the edge of oblivion and will probably succeed in the same way in destroying one or all of the finances of Spain, Italy, Greece and possibly Portugal.

    The culprits should perhaps be forced to stand in the ruins of Battersea Power Station on a wet day in November, or even a wet month in January, to reflect on their folly, or in the forlorn court-yard of another failed property empire, the In and Out Club, where in more prosperous times Lord Palmerston reputedly expired on the Billiard Table.

    Somewhere on a plinth the Ozymandian inscription can be carved: Look on my Works, ye Mighty, and despair! Nothing beside remains. Round the decay of that Colossal Wreck, Boundless and bare the lone and level sands stretch far away.

    The great and glorious transformation of Britain achieved following Margaret (Lady) Thatcher’s accession to power in 1979 provided the renascence of the British economy. A combination of stripping away exchange controls, lowering taxes, liberating the State sector into private hands and selling off council houses gave the average Briton a significant capital investment into which he could commit his energy and capital without it reverting to the State. All these measures were opposed at the time by the cognoscenti and those wonderfully erudite economists who poured scorn on Geoffrey Howe’s programme of public expenditure cuts.

    We have today reached a critical juncture in the future of Britain where the State is reputedly regarded as an equal partner and even revered with an element of awe. Taxation levels of 50% and even lower are regarded not only as equitable but almost de rigueur. Every conceivable item of evidence indicates that this belief is both false, futile and counterproductive, just as those false prophets of the early 80’s were so grievously mistaken. Just as the Chilean National Pension scheme when transferred to and transferrable by the individual, has proved to be a resounding success and amongst the best funded in the World, so Britain’s future rests on a return to the incentive of market forces and low taxation and throwing out the failed theories of other worldly-economists and their Fabian ideals of fairness.

    Re-establishing a Private Pension scheme with full tax relief from the wreckage left by Mr Brown could well provide the financial incentive needed to inspire a new generation of investors; whose funds can be used to rebuild Britain as well as restoring the vitality and confidence of an earlier capitalist age. Only by ceasing the obscene assault on private wealth and income will the trickle, soon to become a flood, of emigrating individuals and companies be reversed and Britain once again be able to thrive and flourish.

    Sadly far too few, if any, of those in authority today recall the full horror of taxation at 103% nor the exhilaration and relief when those barbarous shackles such as investment income surcharge, super tax and exchange controls were hewn away and consigned to the furnace.

    The example of progress accomplished without re-imposed Socialist ideals is to be seen today in those parts of the world that we forsook in favour of our allegiance to a sclerotic European union, its ever-expanding raft of rules and regulations and obsession with worker rights, working time directives and other measures inimical to profitable business growth; the latest being Safety controls on Oil exploration in the North Sea, and Mr Barnier’s Financial Regulations. These Countries include Australia with its superb resources base, admirably led for so long by Mr Howard: Its citizens now have the pleasure of perusing English Contemporary Art Shows, an example of discretionary spending last provided during the wool boom during the Korean War in 1954; New Zealand which made a bonfire of its own subsidies more than 15 years ago; and a land so bountiful and blessed that the destroyer New Zealand emerged unscathed from the battle of Jutland whilst its captain wore the grass skirt given by the Maoris, having been promised protection as long as he wore it. Malaysia, now home of Dyson production; Singapore with its authoritarian yet safe society and ever expanding financial sector; and now India whose technical skills, educational breadth and burgeoning population will one day propel it to surpass China as the world’s greatest economic power as it was in the era of the Mughal ‘Akbar the Great’ in 1511 join this refulgent retinue.

    A classic example for those who doubt the importance of a Capitalist economy allied to sound government has to be the contrast between the drive from Buenos Aires to Aeropuerto Ministro Pistarini, sometimes an hour-long journey, during which it is rare to see a car of less than 20 years old. This in a country, which at the turn of the last century ranked amongst the wealthiest three on the planet. A similar journey from Perth Airport to the City reveals hardly a car of more than 2 years old and a road network in the prime of health: this for two countries blessed with a very similar range of natural resources but the former being cursed by Peron and his successors who have pillaged the possessions of a great swathe of the population in the pursuit, it would appear of a better deal for the ‘descamisados’. The reality is that the entire nation has been impoverished, pensions and the national reserves have been seized and its citizens pushed into penury when they should all be rejoicing in the returns on its resources. The ultimate irony is to see the Chinese being invited to rebuild the once wonderful railways wrecked by a previous administration. Only a few still live like Lords on the back of assets beyond the reach of the grasping hand of government.

    The moment of truth now approaches for Britain and many parts of the Western World: will the Irish prefer to honour the promises provided by their government, and bail out the Bank bonds of Billionaire Russian football club-owners, or do as the Icelanders and allow all to be swept away, foregoing the folly of a government guaranteeing bonds beyond its ability to pay? Similarly in the United States where the tax payer has taken on the liability for Detroit tenements, Las Vegas condominiums and AIG Bond Holders to the pent-up fury of the Tea Party and a huge swathe of American society.

    This huge raft of dead or dying assets should be allowed to float on its funeral pyre far out to sea, whilst the survivors can swim to the shore and Robinson Crusoe-like rebuild their lives. The present and proposed policies will otherwise prolong the pain, impeding and perverting any proper recovery. Private enterprise, with its progenitors retaining the vast proportion of its profits, must be unleashed to rebuild our economies. We stand at this significant and perhaps terminal crossroads, and face stark choices: to go with the subsidies such as for Electric cars, to enhance sales of Teslas, the increased cost of power from the Windmill fantasy, inflicting all power-users; workers’ rights and working time directive and all its constraints from the European Union; or the way of the market, with its tremendous improvements in fuel economy in every-day cars achieved by the simple profit motive, and other innovations reflected across a great swathe of our industry. The growth of Apple by a factor of 30 in less than 10 years shows what can be achieved when technological innovation is allied to design brilliance. Happy them to have avoided the curse of Government assistance.

    Ultimately, if Money is allowed to ‘Fructify in the pockets of the people’ all will be well. If not, we will happily bumble along on Boris’ Brilliant Bicycles, their use noticeably absent in the environs of oligarch land in Knightsbridge; wonder at the Wealth of London and its Ancient architectural glories, and try to ensure and enhance our exposure to Gold, Precious Metals and its miners in lands safe from Government assault, along with the Gems of British industry and those of the emerging economies of the World, which will undoubtedly keep on growing whatever setbacks they suffer on the way.

    We look for stability at the head of our Investee Companies, and the traumatic changes within HSBC were for a while echoed at Manchester United: now we hope, happily resolved. Likewise in America, mid-term elections threaten the Obama hegemony, and suggest the ingress of a new slate of legislators, though change on change could perhaps prove beneficial.

    The situation is indeed hopeless, but not serious.

    Your company is in strong heart, ‘in a good place’ and remains excellent value amidst so much dross. As the saying goes, “if you like the Service, tell a Friend, if you do not like it, tell us’.

    We take comfort and joy at the release of the Chilean Miners, and salute the achievement of their rescuers and Country.

    I would also like to thank the many managers and teams amongst our investments, who have assisted in making 2010 such a successful year: a look down the list of our top holdings will indicate whom you should acknowledge. We see no reason why such progress should not continue, in the absence of malign bureaucratic or political intervention (evident sadly in so many countries, not least Australia with its albeit-watered down Resources Tax).

    As always, my thanks go especially to our own team at Cheval Place, who have admirably coped with an ever expanding range of investments and the complications of a Guernsey listing. We are making inroads on these challenges: the increasing dividend is amongst the measures the Board hopes will assist in reducing the discount to NAV whilst exploring other alternatives. The more timely release of our NAV has been our goal for some time, whilst liquidity issues on share dealing remain under review. Whether a dual listing would improve the price visibility and ease of trading is difficult to determine, but shareholders should be reassured to learn that your Board is very conscious of the need to significantly reduce the discount. We are also intent on growing the value of your Company‘s Assets as our prime objective, which if successful should in due course create an irresistible bargain for savvy investors.

    Steven, Abbie, Vicky, Nick and Melwin have all done Sterling Silver Service. Jonathan Persent has taken up the reins at Capita, for which we are grateful.

    I would also like to thank my Fellow Directors for more travelling and more Wisdom and Caution, as the strategic planning and decision making for the El Oro Group is now conducted in the more placid climes of St Peter Port, with brain cells sharpened by a swim in the bracing waters of Fermain Bay, and hunger pangs assuaged at the Beach Cafe.

    None of which would be possible without the support of my long-suffering wife Lucinda, who somehow manages to juggle the care of 4 children, a large home and various Operatic, Parochial and School duties whilst still retaining a smile.

    Our various Brokers and advisers around the World have also performed admirably and deserve a large round of applause.

    C Robin Woodbine Parish


    • Malcolm McClure

      What a load of codswallop. Stinks to high heaven.

    • coldblow

      It’s quite odd. Some of it is (grudgingly) right, some just standard Tory prejudice and he seems to have written it himself so he’s having a laugh. A bit like Seanie? With a name like that (and his wife is called Lucinda too) he’d probably fit in well in certain circles here, perhaps Wicklow? Sounds like he’s living in Guernsey which would explain a lot. If it’s anything like Jersey then they will have a part-time auxiliary police force, private bars and clubs for the youth (hidden from the view of tourists) and will have made a point of never once visiting France.

      • Deco

        You know I would love to get my hands on copies of Seanie’s speeches. I seen a quote from Drumm & Drummer talking about record profits, record projects, three year plans and all sorts of Freudian Inadequacy nonsense. Or maybe a copy of speeches by Fingers at charity events…that would be hilarious…the man with his fingers in a massive pension pot..

        • Can I put my name down for a dvd of our national disgrace, local systemic threat to the Irish economy, Lenny Wrong, for his leaping figures Anglo speeches to the Dail, €3bn, then €8bn, then €18, €24bn, €34 and still counting:)

          We really need a Michael Moore or home brewed Werner Herzog to give us the full story in documentary style!

    • Deco

      I don’t suppose that there was a link for all of that :)

      It does wonders for our self of our own signifigance that everybody includes some discussion about Ireland in their speeches nowadays…it works wonders for the need for pride…for the love of self importance….

      Sure, the worst thing of all would be if they never mentioned us. Oh, to be mentioned at all, in whatever terms is much better to be ignored….

      • coldblow

        Re links, I was wondering if it isn’t what it is purported to be, ie a piece of satire. But it’s too well observed to be a hoax, and too quirky (although on the other hand Hugh Trevor Roper and the Hitler Diaries spring to mind here).

        John Allen once posted some quote allegedly from Marx here and it turned out it had been doing the rounds on the internet and wasn’t genuine. And when you looked at it again it was just vague generalized rubbish, sloppily written and with grammatical errors – Marx as a stylist would never have been seen dead writing it. That made me wonder about this piece.

  31. MadaboutEire

    Plus ca change plus ca reste…….

    More than 40 politicians from political families to contest election. About one in four current TDs come from families with links to the Dáil and Seanad

    MORE THAN 40 “dynasty” politicians are expected to contest this year’s general election, with the Labour Party fielding nephews of former tánaiste Dick Spring and retiring TD Mary Upton.

    Of the current Dáil’s 164 TDs, about one in four come from political families, with many descendants of long-established “names” being offered again to voters by Fianna Fáil and Fine Gael.

    Cllr Arthur Spring, Dick Spring’s nephew, is the Labour candidate in Kerry North, while Cllr Henry Upton will contest Ms Upton’s Dublin South Central constituency along with two fellow party councillors. Ms Upton was first elected to the Dáil in the 1999 byelection caused by the death of her brother, Pat Upton, who was the Labour TD for Dublin South Central from 1992. Dick Spring’s father was the TD Dan Spring.

    Cllr Paula Desmond, who will contest Cork South Central, is the daughter of two former Labour TDs, Dan and Eileen Desmond. Ms Desmond will be the running mate of sitting TD Ciarán Lynch, who is a brother-in-law of Cork North Central deputy Kathleen Lynch.

    In Wicklow, Conal Kavanagh, son of former minister Liam Kavanagh, will run with two other Labour candidates. Cllr Ronan McManus, son of retiring TD Liz McManus, also put his name forward but was not successful.

    A son of the former Fine Gael TD Paddy Harte, Cllr Jimmy Harte, is Labour’s candidate in Donegal North East.

    Green Minister of State Ciarán Cuffe criticised the trend, despite the fact that he has a link to the most famous political dynasty of them all: the Kennedy family. (His mother’s sister, Ethel, was married to Bobby Kennedy.) “Looking at Labour, there certainly seems to be quite a sense of dynasties in operation and seats being passed down. I think it’s good that people are promoted on merit. I’ve always downplayed my own connection. I think it’s important that you make a name for yourself,” Mr Cuffe said. Mr Cuffe is also a grand-nephew of the former Fianna Fáil TD Patrick Little.

    Minister of State Conor Lenihan, a scion of one of Ireland’s best-known political families, said the word “dynasty” implied that relatives acted in unison, which was certainly not the case in his own family. “I don’t think you could say that myself, my aunt [Mary O’Rourke], and my brother [Brian Lenihan] agree on virtually anything. . . I don’t like the term dynasty because it implies somehow that we’re acting in some dynastic fashion and protecting family members of something. It has kind of a Mafia overtone.” Mr Lenihan said the Irish political system was very competitive. “If you’re not up to it you get the electorate to ignore very quickly the fact that you’re a cousin of somebody or brother or whatever.”

    He said dynasties had also existed in the fields of medicine, law, hurling and soccer until quite recently, simply because Irish families were traditionally large and the general population relatively small.

    Minister for Tourism Mary Hanafin, daughter of former senator Des Hanafin and sister of Senator John Hanafin, denied she was a member of a dynasty. “My father was a Tipperary-based senator; I’m a Dún Laoghaire based TD. The name is obviously a political family and a name of public service, but actually not a dynasty in the same way as we think of passing on the seat to somebody.” She cited the Andrews, Cowen and Coughlan families as examples of dynasties. Minister of State for Children Barry Andrews (Dún Laoghaire) is a son of former Minister David Andrews, nephew of former MEP and TD Niall Andrews and cousin to sitting deputy Chris Andrews (Dublin South East).

    Taoiseach Brian Cowen was first elected in the 1984 byelection brought about by the death of his father, Ber Cowen, while Tánaiste Mary Coughlan is a daughter of former TD Cathal Coughlan and niece of former deputy Clement Coughlan.

    Meanwhile, Fine Gael has selected Cllr Paul Connaughton jnr, a son of retiring party TD Paul Connaughton to contest Galway East along with another councillor. In Kerry, the Healy-Raes, Jackie and Michael, hope to continue the family tradition.Other selected Fine Gael candidates from political families include party leader Enda Kenny and Cork South Central TD Simon Coveney. Mr Coveney’s constituency colleague Deirdre Clune is a daughter of former tánaiste and minister Peter Barry, and granddaughter of former TD Anthony Barry.

    Among those also selected are Wexford TD Michael D’Arcy, son of former minister of state Michael D’Arcy; Laois-Offaly deputy Charlie Flanagan, son of former minister Oliver J Flanagan; Roscommon-South Leitrim TD Denis Naughten, son of former deputy Liam Naughten and Waterford TD John Deasy, son of former deputy Austin Deasy.

    Dublin North Central TD Richard Bruton, the brother of former taoiseach John Bruton, has also been selected. Kieran O’Donnell (Limerick East) is a nephew of former MEP and minister Tom O’Donnell; Billy Timmins (Wicklow) won the seat previously held by his father. Godfrey Timmins; Joe Carey (Clare), is a son of former minister of state Donal Carey, while Michael Creed (Cork North West) is a son of former minister of state Donal Creed.

    Among the sitting deputies to run again for Fianna Fáil from political families are Seán Haughey, Limerick West TD Niall Collins and Kildare South deputy Seán Power, Áine Brady in Kildare North, Bobby Aylward in Carlow-Kilkenny, Eamon Ó Cuív in Galway West and Minister of State Dara Calleary, Dublin North West TD Noel Ahern, Thomas Byrne (Meath East), Niall Blaney (Donegal North East), Tom McEllistrim (Kerry North), Brendan Kenneally (Waterford) and Jimmy Devins (Sligo-North Leitrim).

    Labour deputy Seán Sherlock (Cork East) is a son of former TD Joe Sherlock; party senator Brendan Ryan will contest Dublin North, where his brother Seán Ryan was a TD. Among the TDs who will not contest the next election, Fianna Fáil’s Beverley Flynn (Mayo) is a daughter of former EU commissioner and minister Pádraig Flynn, while Fine Gael’s Olwyn Enright (Laois-Offaly) is a daughter of former TD Tom Enright and is married to sitting TD Joe McHugh (Donegal North East).


    • Deco

      Well, it sounds like we have a long list of people who cannot do anything careerwise, else except make promises involving other people’s money (which in any case will be broken).

      The more things “change” the more the stay the same.

      Maybe the solution would be to retain the Seanad and abolish the Dail.

      Just wait and see, each of these aristocrats of the political system will be described using allegories that define them as “safe pair of hands” type candidates. Safe for whom, you may ask….usually it means safe for IBEC and ICTU.

    • Deco

      You know it has just hit me, and I cannot see why I didn’t thing of it before…but all this talk of political reform by the parties is will turn out to be a joke.

      If TDs who are related to the current or previous TDs are elected, then there will be no meaningful reform of the poltical system or the institutional structure of the state. This is because they will fit exactly into the networks of cronies and cliques, and they will deliver some form of “reform” that involves change of aspects that do not represent a setback for their cronies – and which avoids the areas which have never been reformed.

      You will get reform alright, but it will leave the areas that are dysfunctional intact, and might involve screwing up the parts of the institutional state that should be left alone. This will be done to maintain the superficial sense of “change”. A few “old chestnuts” will get a right old roasting – but by and large the system will remain as disfunctional as ever.

      Which proves my point, that we need three new parties to undermine the voting loyalty of the three largest parties and thereby acheive reform. This is not going to happen, so plan accordingly !!!

      • MadaboutEire

        That is the inevitable outcome and one of the main reasons why I posted this article in full. Nepostism pure and simple.

        Labour for Christ sake are taking opportunist former FG’s & even PD’s.

        You will see merely populist things mentioned (few enacted) while all the mainstream parties are pro-EU, wonder if they also support this because no one has said a dam word.

        EU to book a hefty profit on Irish bailout

        Thursday January 06 2011

        The European Commission will book a hefty profit on its bailout loan to Ireland after it raised €5bn at an interest rate of just 2.59pc yesterday by selling bonds.

        The EU will lend the funds to Ireland at an interest rate of 5.51pc. The bonds are part of the solution to the European debt crisis but risk making it worse if demand for the low-risk bonds makes it harder for countries to borrow.

        A spokesperson for the Commission said the “profit” that the EU makes by lending to Ireland will be invested back into the EU budget and will be distributed to EU members at the end of each financial year.

        “The deal went really well,” said Gary Jenkins of Evolution Securities. But he said there is a significant risk of unintended consequences.

        “The deal was done because countries like Ireland cannot borrow and there is a risk investors will think ‘I’d rather have this new product than an Italian or Spanish bond’, making it hard even for countries that have been able to borrow to access the market,” he said.

        The €5bn raised last night is the first part of the contribution the EU is making through the European Financial Stability Mechanism (EFSM) — set up after the Greek bailout last year.


        The bonds will be used as part of the €22.5bn contribution the EFSM is making to the €67.5bn Irish rescue package.

        A second body, the European Financial Stability Fund (EFSF) will contribute a separate €22.5bn to the Irish rescue. The EFSF will raise the first part of that contribution with its own bond deal later this month.

        The EFSM debt is guaranteed by all 27 EU members. The guarantee means the debt has a solid AAA rating.

        The EFSF will expect to pay a slightly higher yield when it borrows later this month. Its debt is guaranteed by the 17 members of the eurozone.

        As far as most bond investors are concerned, both sets of bonds are ultimately guaranteed by Germany and France. The yield on five-year German debt was less than 1.8pc yesterday and 2.08pc for France.

        The €5bn deal was sold in less than an hour after receiving orders for three times the amount offered.


        • Deco

          There is something hilarious about former PDs becoming ILP candidates. Even more hilarious is that Gimmemore is happy with this. Considering the mess the PDs did on the country, with their concerted campaign in 2002 to “make sure that we don’t talk the country into a recession” which preceded a massive credit binge.

          Maybe I am being too sceptical. Maybe these PDs are following in the tracks of the conversion of Bertie the Socialist, who discovered that he really was a socialist.

          It tells us the guiding ideology politics in this country, and in many more…opportunism !!!

          • MadaboutEire

            Has to rate as one of the most cynical developments in politics & does not inspire confidence while candidate selection in the Donegal by-election left a lot to be desired. I don’t expect much especially when I read of ‘Damascus road like conversions’ like this:

          • Deco

            ah yes….if all else try socialism as a career move…the odds are that once you get yourself in as a political representative, you can use other people’s money to buy votes, and get a great career..

            Mind you, if she was really smart she would have figured this out in third level…like the rest of them !!!

    • JJ Tatten

      Interestingly, the Indo refers to potential FF leaders as having ‘pedigree’ when it lists who they’re related to. I though it was called nepotism. Silly old me.


      • Deco

        Well spotted. Firstly, we should note that this is written by Fionan Sheehan – who basically comes from the Micky Martin (Mouse) wing of FF. “How can we nicely screw in such a manner that you feel your self importance totally lifted in the process ? ” Everything is a joke. Personally I reckon that Michael Martin is a phoney, with a genius for acting genuine. It is an act. But then so was Bertie Ahern.

        This also reminds me of a frequently used phrase on RTE concerning politics as a family inheritance.

        RTE journalists talk about the “name”…the Ahern name, the Andrews name, the Quinn name, the Spring name, etc… like as if the family name is some sort of brand. Brand Bullsh1t it you ask me. They were at it a lot in the last local elections. One con artist replacing another usually.

        And several people on RTE use it. It seems to be the standard policy at supporting incumbent families in politics. It is much shrewder and far more sinister than that eijet Fionan Sheehan.

        • MadaboutEire

          Think the photo accompanying the article says it all, if that is the future then I have my next destination picked out.

          • uchrisn

            Mad about Eire, Thanks for the informative post, a new rule to say that you can’t stand for election if you parents and even uncles or grandparents were TD’s would make Irish politics much more open. I agree that you might miss out on a couple of genuine good politicans. However you wuld also cut out so much corruption.
            Personally I think that everyone should check the candidates in their constituency well and try to find as much information about them as possible before voting.

          • MadaboutEire

            @ uchrisn

            exception proves the rule

            Grey philistines taking over our universities
            TOM GARVIN
            Sat, May 01, 2010

            RENEWING THE REPUBLIC: The anti-intellectuals running Irish universities claim, falsely, to be businessmen running enterprises

            IN INDEPENDENT Ireland, in times of tranquillity, intellectuals were commonly dispensed with. The views of economists, novelists, playwrights, sociologists, historians, and independent writers were ignored. Calamity had people fleeing to the arms of Mother Church rather than seeking the advice of lay intellectuals.

  32. coldblow

    Just speculating about various scenarios:

    1 I suppose a Swiss bank account would be useful if Ireland then left the Euro and savings are repatriated in order to pick up bargains under a new devalued currency regime, or just left abroad safe and sound. If the elite has most of its money offshore then I would expect that this is what may happen as any complaints about devaluation or loss of domestically held savings, presumably from (relative) Outsiders, could be brushed aside (“in the national interest”). But this assumes that exiting the Euro is approved by the EU. (I notice Paul Hunt mentioning a Euro exit in a recent post on irisheconomy.ie which I think is a change of mind on his part? Mind you the idea of default was unmentionable only a couple of years ago there too.)

    Any autonomous action by our govt (“to grow a pair” as the vulgar phrase goes) would presumably be to benefit Insiders. Indeed, I don’t know to what extent you can say that any affirmative govt action is by definition harmful to the majority as I don’t know how widespread, if at all, is the belief (or unconscious reflex) by which whatever is of benefit to them is ipso facto to the detriment of the Insiders and vice versa. I also don’t know to what extent (if any) the national debate is engineered to for the purposes of assuring a successful, or relatively successful, outcome for said Insiders. This was always my hunch as to how it would all work out, you know with the Taoiseach sprining the news in an emergency broadcast, with suitably grave demeanour – once, that is, those on the inside track have had a chance “order their affairs”. Probably paranoia.

    2 If it ends in international financial meltdown (as someone recently described it here: if the bubble bursts) then it might turn out that offshore savings are worthless. Also the huge amounts (70bn or 40bn or whatever?) of property held abroad by Irish citizens might be seized by the govts concerned in their own national interest. To some this would be a satisfactory outcome.

    People with little or no money needn’t worry about this and most of them are probably innocent of all these goings on behind the scenes. The Gaelic captures it so well: ar chúla téarmaí; an béal bocht; uisce faoi thalamh.

    Personally, I don’t pay too much attention to what the financial experts say. They got it all wrong so far so why should it be any different now? If you want to put your money offshore I presume you’d need the services of a financial advisor. I mean, just think about that…

    Historically, or so I understand, going back to the Famine and beyond, Irish money was lodged in British banks and helped to finance the Industrial Revolution that among other things was largely responsible for destroying native Irish industry.

    I wonder what Gilmour and his partner did with the profits from their own land sale. Wouldn’t it be interesting if this information was freely available about everybody for everybody? What money and assets have you, where did you get them, what have you done with them?

    3 Another outcome, what David is proposing, is that Irish savings are used productively for the benefit of the nation. This would involve govt, banks and everybody else dealing straight and honestly. Your job is safe, your savings are safe, your dignity is intact.

    I think I’m just rambling now.

  33. Deco

    Ireland’s oldest third level college, has managed to build up a massive debt. It never thought about using any of it’s territory in the centre of Dublin in the boom to pay for this debt either. It is learning to be like the banks, the builders, and the hoteliers….with management continuing to award themselves payrises, spend money they have not got, launch grandiose and excessive projects and look important.


    The knowledge economy is about the application of intelligence to the problem, and not just throwing more money at it…..

    Michael O’Leary went to Trinners and did Busines/Economic Science. He is on the record as saying that it taught him nothing useful about business. It makes you wonder.

    Just wondering…where did Eugen Sheehy, Fingers, Drumm and Drummer(Seanie Fizt) and the rest of them learn about business. I think wherever it was, the course might need to be amended to prevent future recurrences of recent debacles.

    In the Ahern era there was a common refrain of an institution in receipt of state funding making the case for more funding and the Ditherer throwing the money at the bosses running it, as well as throwing in some of his mates into management positions in the said institutions “sure, there you go”. Such flippancy has prepared them badly for economics after the binge.

    Could the bosses in Trinners not have asked their own economics professors in time before this debacle erupted, and thereby have averted this crisis ? Or have they more in common with the bank bosses than the academics in their own college ?

  34. Deco

    Here is a scathing critique of the current US Official statistics concerning the labour market.


    Here is the harshest and most biting argument.
    { The most damning facts that can be garnered from the BLS data relate to how we’ve become a nation of bankers, real estate agents, accountants, lawyers, tax specialists, and fast food fry cooks. Manufacturing jobs have dropped from 25% of all jobs in 1970 to less than 9% today. Jobs in the spreadsheet generating, credit default swap creating, subprime mortgage pushing, frivolous lawsuit filing, tax evasion sector of the economy went from 12% in 1970 to 19% today.

    { Hysterically, the four fastest growing job categories according to the BLS are:

    1. Administrative and support services
    2. Food services and drinking places
    3. Couriers and messengers
    4. Performing arts and spectator sports

    Now, we have seen that America has a defining influence in English speaking countries, in the type of economic and business models that become the latest trend. We see this in the buzzwords that enter the vocabulary like “we can’t talk ourselves into a recession”, etc…. Strangely enough a lot of the above applies to the Binge era economic model here, and in particular in the later stage of the Binge era. The constuuction boom was in effect the construction sector trying desperately to produce as much product as possible for the demand that existed courtesy of social mores, and low ECB interest rates.

    We are all being conned, the Americans and us here also.

  35. irishminx

    I don’t know if anyone saw this?


  36. FAiken

    Italy’s not going anywhere. It’s debt is mostly domestic.

    This is a good interview that discusses what’s likely to happen:


  37. wills


    Davos hit by avalanche every nob head banker schmuck found dead.

  38. John Q. Public

    Is this capital flight not music to our Government’s ears? There is simply going to be less capital to gaurantee! But then the banks could go bust sooner. Hmmm.

  39. Deco

    Well news in this morning is that Beijing will buy Spanish government bonds – as a result of a trade deal. The deal will presumably have the Spanish PM, who is a ringer for Mr. Bean, lobbying for more generous terms for Chinese exports into Europe.

    China is now doing what it previously did to the US – using it undervalued currency, cheap labour, and preparedness to loan others money as a means of increasing the scope of it’s merchantilist policies. This has hollowed out American industry, and now the US is no longer a reliable customer. So China has to create new options, and along come inept leaders in the PIGIS to be used as pawns.

    And the media here has given us this news as a vote of confidence in our flawed economic models based on excesive leverage, excessive government internvention to prop up the rich, and the power of lobbyists in influencing government in so called democracies. Maybe if democracy becomes a little bit weaker everywhere the Chinese Politburo is a bit safer ?

    • coldblow

      I’m not a fan of China, or its CP, but it’s not really a case of what China did to the US but vice versa. Like other countries running a trade surplus they end up with piles of US dollars the only thing they can do with is buying US debt, thereby subsidizing the latter’s ‘free lunch’ over the last 40 years or so (the Americans can just keep on printing the stuff – who’s going to tell them to stop?). See Michael Hudson’s website for details.

  40. MadaboutEire

    How Many Economists Does It Take to See an $8 Trillion Housing Bubble?
    Sticking the Taxpayer (Not the Banks) With the Tab
    By DEAN BAKER, January 6, 2011

    “The answer to that question has to be many more economists than we have in the United States. Very few economists saw or understood the growth of the $8 trillion housing bubble whose collapse wrecked the economy. This involved a degree of inexcusable incompetence from the economists at the Treasury, the Fed and other regulatory institutions who had the responsibility for managing the economy and the financial system.

    There really was nothing mysterious about the bubble. Nationwide house prices in the United States had just kept even with the overall rate of inflation for 100 years from the mid 1890s to the mid 1990s. Suddenly house prices began to hugely outpace the overall rate of inflation. By their peak in 2006 house prices had risen by more than 70 percent after adjusting for inflation. Remarkably, virtually no U.S. economists paid any attention to this extraordinary movement in the largest market in the world.”

    Full article here

    • Deco

      On the subject of economists who could not see housing bubbles, bank borrowing bubbles, credit bubbles, and state spending bubbles….anybody hear anything recently from Dan McLaughlin ???

      I am saying this because Dan McLaughlin is a prime example of the type of “economist” working for corporate concerns or corporate funded US universities who made rousing comments about the “new era” in credit (brought about by globalization, and new credit instruments – like credit cards, liar loans, and SIV/Subprime bonds. These types also told us that it was not a bubble.

      Just wondering where Dan, Austin Hughes and Co. disappeared to…

      • MadaboutEire

        An ‘economist’ for a leading estate agent said 3 months ago that the housing market had bottomed out, yet prices are still falling (I expect the sector to collapse under its own weight, maybe Sept/Oct 2011 or Q1 2012, especially as the economic situation worsens and demand dries up entirely).

        They are just paid employees with titles run out to give the propaganda. Beware of the tyranny of the expert, experts who don’t highlight the biggest property bubble in human history, takes real intellectual rigour to ‘miss’ that. McWilliams is independent in that he works for himself, those inside the tent, well, comes back to Upton Sinclair’s immortal line “impossible to get someone to understand something when their salary depends on them not understanding” (applies equally to bankers, politicians and newspaper editors with their property sections and RTE producers with cheap, house make over programmes, spin the wheel again their Kathleen).

        • Fergal73

          MadaboutEire – 100% agreement with you!

          Prices have long long way to bottom out in Ireland. They are still overvalued (even without a tightened credit market) there is still a bubble, it hasn’t burst yet, only undergone a fairly rapid deflation.

          What will drive costs down further?
          1) Emigration: foreign workers and Irish graduates from 2005 on.
          This will reduce physical demand.

          2) Lower Wages – the 1980′s were a time of wage stagnation for many. The 2010′s will be similar. Prices can;t rise in that envirnment.
          This will reduce ability to pay higher amounts

          3) Higher Taxes – taxes will rise to pay for the increased percentage of unemployed and other state dependents when compared to teh working population.
          This will further reduce the ability to pay.

          4) Interest Rate Rises – interest rates must rise at some point (I have been saying this for ages, I know, but it is true, we are in a period of unprecendented low interest rates. They can’t stay low forever)
          This will further reduce the ability to pay.

          5) The Oversupply of Property.
          Supply and demand always wins out in the end. Rental accomodation will become cheaper. With emigration and reduced demand for the reasons above, purchase prices will fall further.

          6) Psychological Factors
          First Time Buyers all know people who have been stung by negative equity. Why buy (and risk that) when you can rent cheaply?
          Investors – once bitten twice shy (and harder to get credit anyway!)

          I stick with my prediction of a return to 1996 – 1997 pricing levels.

  41. Deco

    We have Ivan Yates talking honestly and openly about the failure of his business earlier this week, and his efforts to salvage all he could for the sake of those who were all involved.

    Now, we have Roy Keane trying to deal with humility over his sacking in an English soccer club.

    “I’m hugely disappointed to be leaving Portman Road,” he said. “Results haven’t been as good as I’d have hoped so far this season and when results aren’t good the manager gets the sack, that’s the game.

    “However, I have a genuine belief we were making progress and that the players have what it takes to turn this season around. We were preparing well for our visit to Chelsea on Sunday and then our semi with Arsenal. Getting to that semi proves what I know the team is capable of.

    “I was also working hard to build the squad during the transfer window, looking at our options to attract new players to the club. I have loved my time at Ipswich, living locally to the club with my family, and have a massive respect for the club, its staff, the fans and the community and I wish them well.”

    With Yates, and also with Keane we see acceptance of failure, a sense of being personally responsible, and being happy with having tried one’s best.

    This makes a very stark contrast with the outburst from the Ditherer earlier in the week, when Ditherer decided that he was getting out of politics. Cynics might say he gave up months ago, given his awful attendance record in the Dail – even though the Dail is located less than half a mile outside his constituency !!!

    Ditherer then proceeded to tell us that he would have been less of a ditherer about critical decisions than Brian Cowen seeking the IMF ‘loan’. Several comments in the newspapers confirmed that Ahern’s comments were not received well by the public.

    Unfortunately, the said chancer will be giving lectures in an Irish University on negotiations (yeah, I know hilarious in the context of the Benchmarking aggeement and Nice 2.0) as well as Peace studies. He also writes for one of Murdoch’s comics on the one subject that he might actually know something, Man Utd. Well, I suppose he has better things to do than attend the Dail in these difficult and tumultuous times. Or maybe he is hiding himself for reasons that he might get fingered with the blame ??

    • MadaboutEire

      On both accounts there was no other option but to face the music, one has his entire business collapse and the other was fired.

      In politics you can fudge the fudge. Plenty of telflon around Leinster House plus a renovated sweet shop.

      Irish Times – Choc horror as Dail sweet shop costs over €1 million

      SOME DÁIL members were choking on their choccies when the new sweetie shop opened recently at parliament’s Kildare Street entrance: just how much did the impressive structure cost?

      The new “An Siopa” was designed by hotshot architects Bucholz McEvoy to mirror the classy entrance pavilion next door for which they won an award.

      They also designed the entrance huts on the Merrion Square side as part of an overall commission from the OPW. All very well, but Olivia Mitchell TD, for one, wondered at the cost of such a glorious chocolate box, in light of the fact that it took about three years to build. “It is effectively a lean-to on a clear site so it is hard to know how it could take so long, especially since the OPW has experience in this area,” she says. “It became a sort of joke in Leinster House, we felt the Taj Mahal took less time to build.”

      Having asked a question in the Dáil, she was told that while the final accounts had not been completed, it was reckoned that the new building cost €800,000 excluding VAT and internal fittings. Total cost then is like to be over €1 million.

      The Siopa is roughly 40sq m (431sq ft) – the size of many a household extension. The latest Bruce Shaw Handbook says that shops are costing around €1,050-€1,600 to build per sq m. Really smart commercial buildings can cost up to €6,000 per sq m, according to an industry source. The Siopa is coming in at around €20,000 per sq m, which may not surprise many a homeowner whose extension ended up costing way over the builders and architects estimates.

      No doubt the costs were eaten up by the impressive building materials, conservation studies and cutting-edge technology: and the fridges deemed necessary to keep chocolate from melting what with all that glass.
      For really hot days, the building has sun visors, window defrosters and adjustable air nozzles.
      As chocoholics know, you just can’t put a price on well preserved confectionery.

      • Deco

        I suppose like all the rest of the parts of the economy that is run by the government it is loss making, and employs a whole plethora of useless morons who are related to TDs, or who canvassed for them…

        I think considering the dire state of the nations finances, it might be appropriate to stick “an Siopa2 on “Ebay” and sell it to the highest bidder (if any can be found). Apart from anything else it is an awful eyesore. The point of “An siopa” is that no TD will be forced to mix with the general public if he does not want to, like for example when controversial legistlation like NAMA is being pushed through.

        They have virtual Kenny, and Cowen’s net broadcasts, and the rest of them twitting away, they are at one end making themselves more public. But when they do their best to avoid us, we see that this is really a superficial venture.

  42. uchrisn

    I wonder if those bondholders you spoke with has insurance on their bonds in the form of credit default swaps?
    When Lehman Brothers went under 2/3 of the bondholders got all their money back from the credit default swap sellers basically insurers of the bonds, namely PIMCO, AIG, Bank of America, Goldman Sachs.
    It was the 180 billion bill for AIG that they couldnt cover forced the US givernment to step in.
    The worlds largest credit default swap holders include the institutions above and others such as J.P. Morgan.
    The US government really really does not want to have to bail out AIG, Bank of America etc again.
    I think the role of the mysterious CDS sellers/holders on Irish bonds has been underestimated. Of course noboby knows who they are but you could make an educated guess and in my opinion it could also leave the U.S. government picking up the tab.

  43. uchrisn

    That is a good insight from Switzerland and many of the top commentators are predicting a rough year for the Euro, with Portugal destined to seek a bailout and perhaps Spain so it makes sense that investors/speculators are getting out of the Euro notes.

  44. adamabyss


    Vietnam looks like the place to be in the next 50 years, massive growth.

    Cute graphics on this article.

    I was in Wales yesterday, I know it gets a bad press on here but the impression I got was they live a more modest live than we do here in Ireland. The pubs were all closed early in the villages I passed through and there was a distinct lack of uniformity in the businesses on the high street, as opposed to here where everything is dominated by the chains. Seems to be a lot more small businesses in operation and the villages retain a rustic look. They might be struggling but at least they are alive, and unlike us they don’t have to pursue everything to the absolute maximum – whether that be having the biggest boom or the worst bust. Just an observational theory of mine – could be way off.

    • adamabyss

      Modest ‘life’ I mean.

      • MadaboutEire

        Just spoke to someone who came back, confirmed your comment, place is really moving but they like the Chinese and Indians have big internal problems as well.

    • Deco

      Vietnam is a country with many advantages. Self-sufficient in food. Hydrocarbon reserves off the coast which are just being developed. High basic literacy rate. Very good business and work ethics. Low levels of debt. Massive labour force just starting out on the productivity drive. Near prominent shipping lanes. And a good work ethic. Also it is an extremely stable society, with no linguistic or religious divides like occurs in Sri Lanka, Malaysia or Thailand. The state is run by communists, but for the most part they are not into interfereing in people’s lives that much, and have not gone ballistic on power or wealth – at least no yet.

  45. Riggs

    Can’t wait to get this man into power!


    • MadaboutEire

      A series of poor leaders in Weimar Germany coupled with a massive external debt foisted on a government under the Treaty of Versailles (1919) (Irish debt is in a similar ball park), led to……….

      “The economic problems that the payments brought, and German resentment at their imposition are usually cited as one of the more significant factors that led to the end of the Weimar Republic and the beginning of the dictatorship of Adolf Hitler. The British economist John Maynard Keynes in his best-selling 1919 book The Economic Consequences of the Peace argued that reparations threatened to destabilize the German economy, and hence German politics.”

      The final payments were made on 4 October 2010, the twentieth anniversary of German reunification.

      At least German leaders at the time renegotiated the initial debt reducing it by 50%, we have no such negotiators, just guys exiting stage left.

      What will be the political and societal impact of Irish debt and the banking guarantee in 2011? Another flight of the indebted to the US, London and Switzerland (ironically enough).

      • MadaboutEire

        Would be interesting to see a comparison of German debt after the war, as a percentage of GDP, with the debt foisted on the Irish Republic (including a look at how much profit the IMF and EU are getting out of the deal), some hard numbers rather than anecdotes/chats would be welcome.

  46. Deco

    Folks, everybody should read this.

    Geithner is Obama’s Treasury secretary. In effect Geithner is the US version of Lenny. Geithner was in the NY Fed when all the subprime bonds were being traded, and he never seen anything unusual. Therefore we can conclude that Geithner only sees the largest and most obvious problems. Now, read the quotation provided by Geithner in this link.


    You will see a softer version of the same thing from Paul ‘more stimulus packages’ Krugman, in the NYTimes in the coming days. Basically Krugman wants the US to keep borrowing, and Bernanke will print to fill the shortfall. This is the doctrine of “print-baby-print”. It is pure nonsense. But the Obama administration was enthusiastically committed to it, until the mid-term elections put the Republican Taxed Enough Already movement into the House of Representatives. The TEA party movement are prepared to scale back US Foreign policy as part of this fiscal retrenchment – which will no doubt shock many considering all the bad things that we have been told by the Irish medi. At the moment there is a standoff occurring in the US Congress over borrowing.

    Now, the administration is trying to blackmail the House to supporting a program that is effectively about more borrowing. Geithner does not even countenance reforming anything to reduce the level of borrowing involved. Basically, like dominant consensus here coming from IBEC/ICTU, the way forward is to keep borrowing, and keep propping up the “too-big-to-fails” of this world.

    Keep stimulating the economy. “Print-baby-print”.

    • thx for link. Also heard this am Obama is to scale back spending on defence to the tune of €80 bn, 40,000 less soldiers and less new equipment. But the scale of borrowing required to finance future spending on Medicare is awesome. Plus the doctored stats on inflation and hidden effects of “print money” against a claimed sprint in growth for the US make interesting times ahead…

  47. Good Q&A on the VHI increases.


    With hospitals turning into trolley camps, clearly health care in Ireland has failed.

    • Deco

      Oh..no…it merely depends on your perspective old boy…it working very well for medical card millionaires, hospital consultants, business change consultants, and all those layers of management etc.. etc..Alright, I am being cynical.

      Has there ever been an audit of the HSE ? ( a real serious audit – not an audit by an accounting firm who are seeking consultancy work in the area, and who represent a conflict of interest ?)

      The HSE is a giant organism with billions of euro going in one end and all sorts of shortcomings, negligence, ineptitude and incompetence coming out the other end.

      People pay for VHI in order to get accountability in the way that they are personally treated if they need to use the Health Service. That is the essence of VHI treatment. And in addition, you pay VHI to get around the delays. The VHI is subsidizing the system, and still the system cannot pay for itself.

      Apart from anything else, if you have junior doctors working 22 hour shifts, then this clearly indicates that the universities are not producing enough junior doctors !!! But it seems that despite all the task forces, and Price Waterhouse reports, nobody has doen anything about this obvious fact…because more junior doctors means that eventually you get more specialists…which brings down the rate that specialists can charge the HSE. There are too many gatekeepers who will not reform their practices, or cut out playing games, and who seem to be telling us that more tax money is the answer. How about some transparency for the money already spent you muppets ? In any case if these doctors were not so well paid we would not have dozens of them throwing money at Quinlan Private (now in NAMA) in order to prove that they are masters of the universe. The state was paying these people through the nose, and they were gambling it on these prestige investment portfolios, trying to outbid the Saudis for London’s Savoy Hotel. (which incidentally they “suceeded” in doing).

      The whole thing is an institution PoS (P for Pile). And we have a half sozzled minister sitting on top of it.

      I was told that in Poland a doctor gets something like €1000 per month of a salary. There is a supply and demand problem, and the IMO are committed to making sure that it never gets fixed. Then to make the whole thing obvious we had the commentary of the German Ambassador Christian Pauls in the matter the other year. Ambassador Pauls was 100% correct. But the establishment ignored this.

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