April 20, 2011

We should go to back of class for economic sins

Posted in International Economy · 96 comments ·

When I was in school, the class was fairly split between swots and messers. But the messers broke into two groups. The first were the hard-core messers — these were the lads who the teachers told us “would come to no good”. If they were caught smoking in the jacks and you had just managed to evade capture, these were the lads who would never rat on you.

On the other hand, the second type of messers were the most dangerous — they were the blokes who wanted to curry favour with the teacher and would squeal on you at the first hint of trouble. They wanted to be treated as swots but weren’t quite good enough, so when they stepped over the line and were snared, they always sided with the teacher and capitulated at the most modest disciplinary threats.

The Irish establishment reminds me of these guys who want to be with the ‘goody goodies’ at the top of the class but don’t have the wherewithal. Worse still, these were the lads who capitulated at the smallest threat from the top, so they are the easiest to control because they don’t have the natural self-confidence and ability of the clever lads, nor do they have the natural self-confidence and defiance of the real messers.

Europe is split between the swots — the countries that owe nothing to anyone — and the messers, the countries who owe their shirts to everyone. Most of the swots are well behaved, looking down their noses in private at the messers, while saying nothing incriminatory in public, preferring to condemn in a conspiracy of supercilious silence. Except of course for Finland, which broke ranks this weekend.

When faced with the distinct division between debtor nations and creditor nations, the cleverest thing for the debtors — the messers — to do is form a coalition of delinquency to strengthen their hand in future negotiations. This is, after all, what the creditors are doing.

If it was in doubt before, it is clear now that the endgame for Europe will involve a massive structured default, so we should decide what side we are on.

Today is the first anniversary of the Greek bailout. Greek two- year interest rates are more than 20pc. Greek government bonds are 11pc above those of Germany. Remember last year’s bailout was supposed to solve Europe’s debt crisis.

Back then, even though Ireland was a financial delinquent, we tried to behave like one of the swots. Our Finance Minister puffed his chest out and told anyone who might listen that “we are not Greece”. But no one believed him. What they saw was a snitch, trying to belittle a nation whose total debt — public and private — is much less than ours. The minister then earmarked €2bn he didn’t have to help these poor Greeks. This cavalier exercise in fiscal delusion combined with belittling our partners who found themselves in trouble did us no favours. We were trying to suck up to the good guys when everyone knew we were no better than the Greeks. Ultimately, the Greek finance minister got his own back during the week the IMF came in here, when he looked at our banking mess and claimed loudly that “Greece is no Ireland”.

Having been so quick to condemn the Greeks and sneer at the Portuguese, we found that we had few enough friends when we needed them last November. Instead of seeking a debtors’ alliance, having the self-confidence to admit that we were weak, and the defiance to point out that it was a mutual creditor and debtor problem, we sought to curry favour.

We displayed the age-old Irish weakness of preferring to be loved rather than feared, to be pliant rather than defiant, to be malleable rather than awkward.

Well, this game has not worked. In the past two days the rating agencies — after billion- euro bailouts and capitalisations — still downgraded our banks to junk status. We know that Greece is on the verge of default. We also know that in capitalism the key concept in a bankruptcy is the idea of co-responsibility, where the creditors and the debtors are equally responsible.

According to the Bank of International Settlements, the debtors of European periphery owe the creditors €1.1 trillion, or €1,100bn. So it is clear this money will not be paid and will have to be restructured.

There are two ways for creditor nations to deal with this. The first is to realise that the game is up and do a deal before the likes of the Greeks default and drag us with them after the IMF money runs out. This would seem silly. The longer they wait, the more likely the anti-euro result of Finland’s election will be repeated in the other creditor countries. The Finns voted that they had enough of paying for Germany’s banks and close to 20pc voted for a party that is against any more money going to the periphery and, by extension, to the German creditors.

Finland’s conversion to fiscal and monetary prudence is at odds with the Finland I first visited in the winter of 1994, when the Finnish municipalities were raising money from foreigners. Finland in 1993, having told the world it would not devalue, devalued overnight by more than 40pc. They consequently “burned all the foreign bondholders” who had originally invested their “hard currency” in Finland on the basis that the Finnish currency — the Markka — would be held stable. And who was in the Finnish cabinet when Finland burned all the foreign investors and put the future of the Finnish citizen before the foreign financier? Why Olli Rehn, of course. The same Olli who says to do such a thing would be dreadful.

When I was there, I was representing the people who were about to commit new money to Finland. And do you know what happened after Finland burned its bondholders via a shock devaluation? Was it cast out of the markets and turned into a pariah?

No: the international banks — such as the one I worked for — were back in, just a year later, lending again. I know this for a fact; I was there doing the lending! Not only were we lending to the Finnish government, we were lending to Finnish county councils and municipalities.

So it is hard to take this new-found Finnish probity seriously. The consequence of Finland breaking its international promises was actually inconsequential. Why was this? It was because everyone understood that Finland with a more competitive currency was a better bet. Similarly now, everyone understands that the periphery of Europe with less debt will be a better bet. A balance sheet with less debt is a better balance sheet and less at risk of future default. Simple.

Now that Greece is on the brink and we have been downgraded to junk-bond status, Spain looks next to go and Portugal is settling into an IMF bailout, 1,000 people a week are leaving our country and the rating agencies doubt even the US’s ability to pay its debts — isn’t it time to realise that the world has changed?

So what do we want, chaos or an organised solution? Maybe it’s time the messers realised that the swots’ solution has not worked. It is time to rethink employing the common sense of the back of the class rather than the elegant theories of the teacher’s pet.

  1. adamabyss


    • NO HOPE

      In honour of the fools who left us with this insanity. That is if you like the Beatles…


      All Ireland`s troubles seemed so far away,
      Now it looks as though they’re here to stay,
      Oh, I believe in yesterday.

      Why Bertie
      Had to go I don’t know, he wouldn’t say.
      I said,
      Something`s wrong, now I long for yesterday.

      Brian Lenihan said it was the cheapest bailout in history,
      Now there’s an overdraft hanging over Eiri,
      Oh, yesterday,
      Brian Lenihan bluffed to stay,
      Suddenly, he went away.

      Why he,
      Had to go I don’t know,
      Fainna Fail and Cowan couldn’t stay.
      I said,
      Something`s wrong, and hundreds of billions have gone
      Now I long for yesterday.

      Gilmore`s boast was such an easy game to play,
      It`s Labour, not Frankfurts way
      Now he needs a place to hide away,
      Oh, I believe in yesterday.

      Economics was such an easy game to play,
      All the hundreds of billions gone away,
      Now we need a place to hide away,
      Oh, I believe in yesterday.

      The IMF are here to stay
      I don’t know, why Noonan won`t make them go away
      Oh, I believe in yesterday

      Brian Abramovitch has billions repaid,
      While most of the Irish have his debt to pay,

      Please Enda, make the IMF go away,
      Alas, we cannot pay, pay, pay, pay,

      We cannot pay, you hear it every day
      Please Enda, make them go away
      But I fear we were duped
      Oh, I believe in yesterday

      Not a red cent unless burden was doubly bent
      What lie, lie, lie, lie
      How I long for yesterday……


      • tommurtagh

        I believe the Presidential election is a window of opportunity. Here is my idea. The group think is extensive, it needs to be challenged. A referendum on the bail out / default will continue to be refused. A solution is to seek a nomination for David McWilliams. It will be difficult to achieve but it can be done. Any comments?

      • coldblow

        “I’m fixing a hole where the rain gets in
        To stop my mind from wandering
        Where it will go…

        “I’m getting around to a couple of things
        That weren’t important yesterday…”

      • stiofanc02

        Funny stuff.Good creative humor.You need to go on that boring,dull,talentless Talk to Shmoe on RTE and liven it up with that one. He occasionally has some people do this sort of thing and this one is worthy. How he stays employed though is beyond me. Turdidy is worse again. Nice one!

  2. ThomasFergus

    Very good article, very apt analogy. But can we restructure/default without leaving the euro? And if we were to devalue overnight, would the insiders have salted the remainder of their hard currency offshore?

    I like the idea of the euro and I have benefitted from it in many ways; like many others, I feel betrayed by the monetarist zeal of the EU and especially its determination to keep all zombie banks afloat (and not for one second do I wish to minimise the criminal role our own government played in this), but we can’t go like this, taking this monetarist pain, with all the attendant emigration, business failures and stagnation. I would hate if we were to revert to an isolationist, head in the sand type scenario that existed during the Dev years, but a people can only be brutalised for so long, and as the brain drain continues, the reaction of the people could be….well… reactionary.

    What to do? How do we default without leaving the euro? How do we reform Europe?

    • uchrisn

      Our banks can certainly default on their debts without being thrown out of the Euro. The government already practically defaulted as not many people believe that the loans will be paid back in full.
      So to answer your question, we can default without leaving the Euro. There is a possiblity, however small, that we could be thrown out of the Euro along with when we continually default on our soverign debt over the next few years. The central countries might vote for candidates who want to throw us out.
      On the second question of how to reform Europe. Thats a big one. The European Council and Parliment have about equal powers. Usually the EU commission makes suggestions to them which they accept.
      The ECB and European justice are indivual organisations not controlled by any of the others. So if you want to reform anything to do with the ECB, that could be complicated. Perhaps you would need a new treaty. Anything else could be done by contacting the EU commission.

    • shtove

      Very good post at Macroman – his style is a bit flip, but he does have a sophisticated view on the politics of this.

      He reckons default and restructuring amount to the same thing.

      But here’s his final paragraph on Ireland:

      “The far more likely shock is Ireland deciding that if Mangler wants to bail out Hypo and Deutsche, she can do it directly. Forcing Ireland to back its insolvent banks is ridiculous and it would be a lot easier to just sell the deposits to RBS, Deutsche, Santander or similar and de-lever the economy. While bondholders would squeal at this, it might be for the best — it is hard to see Irish land values rebounding when the country is saddled with debt and has to go through a fiscal consolidation materially worse than it would be otherwise. To that end, watch the Eurobanks — TMM considers the possibility of rude shocks to be far more likely in the bank senior debt market than the sovereign space.”


      I listened to Kenny’s interview on Bloomberg early in the week. My impression is that Anglo bondholders are going to get creamed.

      • CitizenWhy

        Why is no one forming a betting pool based on who guesses best as to Ireland’s bond pay-off percentage in 1 yr, 2 yrs, 5 yrs? If Greece is now 20%, could Ireland’s possibly be lower?

  3. Deco

    “The American way of life is not up for negotiation” Dick Cheney.

    “We are going to restore faith in the Irish fiancial system” Brian Lenihan, some time afterwards.

    We don’t do humility in this country. Humility in Ireland, frees you from unwaringly paying for the gombeens. Therefore humility, as a potential undermining force against gombeenism, is forbidden by means of a fairly effective set of social mores.

    Our mores with money and finances, go to the very core of the behaviour that wrecked this country. I hope that we start to look at ourselves in the mirror, and start to reform our ridiculous habits, before this country becomes a complete basketcase, whose main function is to keep rich foreigners rich, and poor locals poor. (a bit like in the days of the absentee landlords who basically sucked the country dry in the 1800s).

    By the way, I agree with you concerning the hypocrisy of Finland. It is mind boggling. But then the Finns will draw a hard line as long as they can get away with it.

    To have Ollie Rehn and his pals in the EU commision telling us that cuts for bondholders is not acceptable to the EU and EU rules, but cuts for social welfare is “necessary”.

    And it is not just Finland. The Financial sector in France is influencing policy in both in Brussels, and Paris, to an outlandish and ridiculous extent.

    In fact, it would seem to me that both of the power centres mentioned there, are behaving as if their are beholden to vested interests.


    A list of some of the prominent “absentee landlords”. Barely mentioned in the media. “Support our advertising sponsors”.

  4. Thanks for article and info on forked tongue ’1993 burn bondholders cabinet cheerleader’ olli Rehn.
    It appears to me we’ve blended messer with some variant of the Irish dunce and cloned it into the gombeen variation of begging bowl clueless Stockholm syndrome bent on self annihilation of the Irish economy….will we ever have an economy that works again?

  5. Colin

    Hi David,

    Thanks for pointing out the hypocrisy of Olli Rehn and co, what a bunch a miserable arctic alcoholics. Thanks for giving us the truth about your experience of bailing out a country.

    I’d say that Boyd-Barrett fella was a genuine messer in school. Was he in your school David? Bet he didn’t rat out anyone either.

    • Colin, Boyd Barret wasn’t in school with me but I have known Richard since we were teenagers – actually shared a similar musical taste a punk band called Crass for that matter. I am sure he never squealed on anyone!

      All the best, David

  6. irishminx

    An apt analogy David. I found what you said about Olli Rehn surreal. What was good for Finland then, is now not good for Ireland!

    Our politicians have no testosterone, especially Enda, in my opinion! Plus they are still not listening to us the Irish people!

    What will it take for them to wake up and see what it is they are doing to Ireland!

    Maybe they deserve what will come down the line when we go in to a chaotic default?!? Maybe the Irish people will show their anger then?!?
    Or maybe, we’ll go to the slaughter with our politicians and be slaughtered with them!

    I found the Nyberg report incredibly immature, in that NO ONE was found responsible and accountable, which tell’s me, that we as a nation still haven’t grown up into MATURE human beings.

    Maybe a chaotic default will bring us, Europe & the world to a place where we enable each other to mature!


    • NO HOPE

      Too true about testosterone! It`s been proven that bald men have a higher level of testosterone than full heads of hair. The only prominent baldie around is Noonan, and he has lost his mainly due to age anyway. Seriously, take a look. Either no testosterone, and we all know what produces that (or the lack of it!) or those are wigs they are all wearing!

  7. VincentH

    It should not be forgotten that within the swats there are areas that are net recipients.
    Much like the situation with the farmers here, where the transfers designed to keep people in the countryside was shifted to mean only landholders. The transfers were then used outside the State. Think Kerry group and Glanbia to name but two. Where they then used that cash to fund an orgy of debt purchases in the USA. Where the actual outcome was to transfer more out of a region than the original investment in.

    • Deco

      There was a trend in recent years that could have been called the Irish going imperial, in the business sense.

      Local economies with market rigging, applied against both the producers and the consumers. Business enlarging it’s margins, and the competition authority fast asleep. Throw in the Irish management concept. Keep the minions in the dark, and go on an imperial misadventure. Not just the food sector. In fact in the food sector, it was sometimes daft, sometimes misguided, but rarely arrogant. But we should have analyzed it and watched it.

      Instead, we observed it morph into something obscene in the property sector. The Vulgar age. Quinn took his profits from the Irish property boom and bought the Belfry, and loads of trophies. Swiss Cheese took aim at the Savoy in London, and outbid the Saudis. All over Ireland, there were new versions of Castletown House, and the 18 th Century mansions being built. They were called “Hotel & Leisure Complexes”. Leisure Complex Kitsch. And to get there it was a chopper that was needed. BMWs had got as common as muck. Always go overboard and go higher, was the theme.

      The Irish concept of management gone Imperial, and then disaster strikes. Pride goes before the fall.

      And the working people trying to pay the mortgage, the ESB, the fuel, the kids schooling, etc…

      NAMA owns the hotel and leisure complexes now. People are not using them. Walking to the bus to save fuel now – no need for the gym anymore.

    • Deco

      Vincent H – we need to learn to conserve our capital – and also, our shareholders need to be more conservative in respect to their attitudes to these imperial scale plans. Capital in Ireland is becomming scarce.

      I am also wondering if the tax system is supportive of such misadventures. I would be expecting that it is. This is badly aligned. Money should be reinvested in core production at home.

      Regarding the Dairy sector, I have heard stories about An Bord Bainne – the state agency for the Dairy Sector. Suffice to say, it is an absolute hindrance and prevents any serious scale up of production at home. Another useless quango. We have far too many quangoes that are unfit for purpose, unnecessary or more trouble than they are worth.

      • breltub

        I grew up on a farm, we had our own Dairy and sold the milk directly to people, milk bottle, tin cap, delivered to your door cold about 3 hours out of the cow.

        In fairness to my Father and Uncle they ran a good ship, I was young at the time and my job was washing the bottles and milk tank after Golden Vale too the excess milk no bottled and sold.

        Anyway, it was all shut down. Only big business need apply for a licence to sell milk. You are not allowed to sell unpasteurised milk. So you could only sell to the big milk companies who then dropped their price.

        What people might find interesting. Dairy farmers are paid on the quantity and quality of the milk. The quantity is easily explained but the quality is actually a protein test of your milk. Plus there are bacterial tests in case you haven’t been cooling it correctly.

        Anyway, there is one more story for you. I’ll spare you the other stories about how such things destroy viable businesses and mean people have to go and start subsidy surfing as I describe it. Look at what subsidies are being paid out and alter your business model to suit some EU directive….and that directive was decided by who exactly!

        • Deco

          I heard a very interesting conversation about 12 months ago, concerning the dair sector.

          Apparently one large company decided as a corporate objective that it was going to squeeze many smaller local dairies out of existence in Munster. It wanted a more monopolistic position in the market.

          The Competition Authority refused to investigate due to insufficient evidence. The sole traders in the grocery trade were afraid to testify concerning the inducements given, in case they were made suffer. And of course, the Competition authority has no interest in protecting them – they deliberately ignore such considerations.

          I have long believed that the Competition Authority is a bit like The financial Services Regulatory Authority a few years ago. Basically, it is there to project a veneer. And the purpose of the veneer is to pretend that everything is above board.

          Most of the time, it is not. In Ireland, if you mess with the money stream going to the wrong commercial interests, you very quickly find out that Ireland is a very small country. And the crooks always have sympathy for one another, when dealing with individuals or pressure groups of conscience.

          • breltub

            It wouldn’t surprise me. It goes on at every level in this country. I also know of some of One51′s activities that cannot be discussed on here.
            Corruption and thievery are rife in this country, especially among the corporate players.
            Why work for profit when you can just steal it…

  8. wills


    Maybe the insider banking elites see *debt strangulation* as a fantastic opportunity.

    The article concludes the less debt of the books surely the better.

    But, those who own and run the markets and the determine the flow of funds and capital seem to feast on debt sodden sovereign countries.

    Look at the news today. The exit and entry ports in ireland are been put up for sale, the forestland is been put up for sale. The power stations are been put up for sale. All to raise revenue to pay for debt servicing.

    Now whatever way one breaks this down one will be witnessing a fire sale of valuable assets of the citizens of this country against our wishes.

    And the buyers of the swag will be the very bondholders and their business interests who are holding the peoples economy to ransom and now these bastards get to buy our assets our forefathers paid for and built breaking their backs using basic machinery and sweat.

    I think we all need to get alot more vocal now as these vulture capitalists move in and start picking of the assets of this State.

  9. Again David is on about how capitalism works. That has F**k all to do with this system which is creditism i.e. the expansion of M3 by over 8%pa since the beginning of the euro or over 8% monetary inflation. (this did not lead to 8% CPI inflation but the expansion of the Euro did match Irish house price growth until late 2006 see figure here http://vimtrading.blogspot.com/ ) I think “Burn the Bondholder” will lead to a contraction of this M3? Or do as the Finns did, devalue the Euro. Is this an expansion of base Money to pay the bonds in full?

    As we know David is banker with one foot with the “insiders” and the other with the “outsiders” just like those messers he’s on about. He writes great articles but isn’t giving full clarity. Don’t like to criticise his work but its clear You will need to go elsewhere to gain that understanding.

    • Julia

      I’ve just heard from a German friend of mine that a few trillion marks are stored in Manheim or is it Frankfurt in case the Euro experiment goes belly up. They were supposed to destroy as a mark of their faith in the Euro, but…..
      It will take them three days to distribute them to the German people and off they go again. They look after themselves, why can’t we look after ourselves?

      • Colin

        I wish they would do that, it would solve our problems because the Euro would then face a massive devaluation like 50%. That is like cutting wages by 50%, And property prices would be cut by 50% immediately (If you have Pounds, Dollars, DMarks or Yen).

        Pray to God they have them and intend to use them.

  10. Deco

    We displayed the age-old Irish weakness of preferring to be loved rather than feared, to be pliant rather than defiant, to be malleable rather than awkward.

    That phrase captures the essence of our stupidity, perfectly. Perfectly.

  11. dwalsh

    I don’t expect Europe will disintegrate on account of this; on the contrary it will come out of it strengthened; perhaps in ways we might not welcome. The fall will require debt restructuring and that will give the senior power brokers, stake holders and creditors enormous power over our future; a future I am sure they have already planned out.
    Here’s one I made earlier!
    Clearly the purpose of the crisis is to bankrupt the Western nations as a prelude to restructuring. The ball to be watching in all this is not the mountains of debt erupting out of the very ground; but where all this is leading us to. One would have to be very naïve not to realise that those who own and control the debt creation system must see this as an opportunity not a calamity. Europe’s national assets up for fire-sale! Hello? Ditto for the top Eurocrats. The various power elites and stake holders are thinking outcomes — controlling outcomes. One doesn’t want to squander a good crisis after all.
    I detect a change in David’s tone and message. Wont be too long now.

  12. Dorothy Jones

    David; Dear David
    What happens in 2012

  13. Praetorian

    Schooling has a lot to answer for, the principle architects of our current economic disaster including the cheer leading economists, academics and journalists were mostly if not all, privately educated in elite schools, and also attended Dublin based universities, corporate centres of education that benefitted from the largesse of the banking and finance fraternity throughout the boom and who now go in desperate search of Chinese and US money.

    A quick scan of the main private colleges in Ireland on Wikipedia reveal some very interesting attendees, quite an overlap. Awfully tight game which was played out with appalling consequences on the average Irish citizen, a population that suffers some of the highest illiteray levels in the so called developed world. At least the new Head of TCD gets it and has an air of humanity. He openly stated that the college had failed to allow more access to students from disadvantaged backgrounds, so a glimmer of hope amidst the corporate jargon and cost-benefit analysis that has so be-devilled education.

    Fine Gael and Labour are dead political ducks if they keep up their current ‘banking policies’, some other group prepared to fight for the Irish people will benefit enormously, the vote in tough times may polarise to far left and far right as we are seeing across Europe.

    • Deco

      I think we could also add the leading lights of our main bureacratic (non-entreprenuerial) private sector companies. Classic examples being AIB and BoI.

      These muppets also seem to meet up in places like the K-Club, Portmarnock, Druid’s Glen etc…Seanie Fitz said that most business was done in the 19 th hole. To be honest they have left us all in a hole now. And where are they now. Practising their swing, I imagine.

      The answer is simple. Capitalist consequences for capitalist misadventure. Flush them into the sewer. Say bye-bye. Next time around shareholders will not keep re-electing these clowns and being lazy about examining their real “worth”.

      • Praetorian

        Funny because I passed a Bank of Ireland branch this morning, outside they had a stand which said:

        “home to one million savers, why don’t you become one?”

        They used the image of squirrels sitting on the branch of a tree to reinforce their message.

        I repeat: squirrels!

        I could think of a million reasons not to be a saver with that institution.

        • coldblow

          Squirrels store away their nuts with the idea that they will still be there when they come back for them.

          • Praetorian

            Misleading advertising perhaps given the cleaning out of pensions, shareholders and the Irish State, while the compariso with customers speaks for itself.

          • Deco

            Very interesting line up of investors there. Do not write anything that might get David in Trouble. I mean you can do like Phoenix Magazine.

            There is a business model that I would describe as “Irish establishment method of doing business 101″.

            If you look at the list on the ISEQ, you will see a lot of very prominent practitioners. They do it to boost their own executive compensation.

            By the way, there is a very public and ongoing debate about whether or not the leading lights on NYSE listed companies should be getting such expansive executive compensation policies.

            But I reckon that the biggest rogues on Wall Street are angels compared to some of our home grown “talent”.

            And then we have the IT BS (Business Supplement) giving us glowing tributes of the said “talent” with a cartoon painting on it’s back page every Friday. Not too sure how many times Fingers, Seanie Fitz, and La Bowlera showed up. But it would have been more than once. Which is why I don’t support such craven drivel with the change in my pocket.

  14. Willie C

    Check out what NZ Government are proposing to deal with future asset / property bubbles…

    Far-sighted and progressive…..
    Any chance of our lads looking up from the hole we’re in and contemplating something like this?


    • uchrisn

      Thats interesting, there are many ways to prevent future property bubbles, one of the simplist of which is that one person is only allowed to own 2 properties, as exists in Italy.
      If you look at the graphs of the country by country housing crisis in Europe Italy is the only country which had no housing price drop and so no bubble.

      Actually I was told that Facist Mussolini brought in this law.
      If you think about it the majority of politicans own many properties or have mates/families/funders that do. Then behind them you have many property owners in the country who would not like to see these kind of controls as the value or portential value of their property could be reduced.
      Also in Singapore they have the best housing system in the world and the higherst ownership rations. A dictorship.
      The China have recently brought in measures which have resulted in a decreasing of house prices in places like Beijing since the start of the year.
      The Chinese goverment is not a democracy either.
      I am not suggesting that we have a facist leader but rather that people move away from this 2 wolves and 1 sheep democracy, where the haves (property owners and investors) are eating the have-nots.

  15. paddythepig

    It always interests me to see David talk about devaluation with such ambivalence. Essentially, Olli Rehn stole 40% of his citizens and investors savings, taking the easy way out. He could have chosen the path of true reform instead, but politicians as we all know prefer the easy way out.

    The fact that this get out of jail, liposuction false option is not readily available to the Irish is a really good thing.

    I wonder why did Finnish municipalities need to borrow anything anyway? Couldn’t they pay their own way? Why should this be held up as an example of a positive line of action for a country? Don’t we need municipalities and Governments and societies that can trade and function without the need to borrow for day-to-day spending?

    Another extraordinary thing is this notion we should align with the Greeks and the Portugese. The Greeks have no-one to blame for their woes except themselves, neither do the Portuguese, and neither do we. We might create a temporary alliance to get the best debt resolution deal should one ever arise, like countries voting in the Eurovision ; but boy, we should drop their attitudes like a hot potato once that episode is over.

    • @paddythepig

      Its back to the back of the class for you again.



      RE “I wonder why did Finnish municipalities need to borrow anything anyway?”

      “In 1991 the Finnish economy fell into recession. This was caused by a combination of economic overheating, depressed markets with key trading partners (particularly the Swedish and Soviet markets) as well as local markets, slow growth with other trading partners, and the disappearance of the Soviet barter system. Stock market and housing prices declined by 50%.[12] The growth in the 1980s was based on debt, and when the defaults began rolling in, GDP declined by 13% and unemployment increased from a virtual full employment to one fifth of the workforce. The crisis was amplified by trade unions’ initial opposition to any reforms. Politicians struggled to cut spending and the public debt doubled to around 60% of GDP.[12] Much of the economic growth in the 1980s was based on debt financing, and the debt defaults led to a savings and loan crisis. Total of over 10 billion euro were used to bail out failing banks, which led to banking sector consolidation.[13] After devaluations the depression bottomed out in 1993.”

      The bounce back: The EU were so impressed with their devaluation/reforms they allowed them into the EU in 1995. What? Markets didn’t burn Finland and punish

      So all that media propaganda re burning bondholders/devaluation as not an option has been lies.

      “Finland joined the European Union in 1995. The central bank was given an inflation-targeting mandate until Finland joined euro zone.[12] The growth rate has since been one of the highest of OECD countries and Finland has topped many indicators of national performance.
      Finland was one of the 11 countries joining the third phase of the Economic and Monetary Union of the European Union, adopting the euro as the country’s currency, on 1 January 1999. The national currency markka (FIM) was withdrawn from circulation and replaced by the euro (EUR) at the beginning of 2002.”

      I don’t blame the Finns for their opposition to bailout for Ireland. With Nama, the lack of public sector reform, bloated salary/inefficient semi states, money leaking out of this country by the billions to pay for bad banks, its a waste of money prop for our squealer messers. They appear not to have the wherewithal to take this country back from banker gombeens and the dodgy financial sector, all of which means we’re saddled with the same gombeens as before.

      Did I hear Howlin announce for the sake of competition (what a laugh) they will deny O Leary 25% of the airport, a guy whose expertise could transform tourism in Ireland.

      Anyways, do I detect a welcome ambivalence in paddythepig?

      “We might create a temporary alliance to get the best debt resolution deal should one ever arise”

      Surely this would not mean we should burn bondholders, or campaign for debt for equity swaps, or that we should stand up for ourselves and get rid of our self-seeking, servile, flatterering, fawning parasitical Enda The Hypocrite stance in negotiations with Europe.

      Which hypocrisy is worse, Ollie Rehn burning bondholders in Finland in early 1990′s, the norm for Nordic countries of that time, and against us doing same; or, Enda ‘The Hypocrite’ flagging before election this path, upon taking up office, reassuring senior bondholders, their investments are safe with him?


      “Sunny , I am not familar with the different categories of bondholders, but an article by David McWilliams suggests that NAMA will prevent money from being invested in the country rather than encourage it.
      He mentions that when banks went bust in other countries during banking crisis, international investors were not put off, citing Sweden as an example. This is just one quote from it.

      Most proper investors realise this, which is why money flooded back into Sweden after it let a bank go bust. It is why money flooded back into Finland, the US and Ireland (in 1993) after we broke our promises to bond and currency investors and devalued our currencies. Likewise, in the Asian crisis, investors took their losses on banks and moved on.”

      What serious economist will believe the Charge of the Light Brigade craziness of Honahan, Enda, Lenihan, Cowen to save Irish property from further losses by backing NAMA and guaranteeing the criminal Anglo bank and the extremely incompetent and equally dodgy AIB we’ve had so much trouble with in the past?

      To the Finns, who are doing quite well, unemployment 6-7%, in spite of income distribution gaps growing between rich and poor, we must be a bunch of incompetent pirates trying to lure their money onto the rocks?

      Who could blame them for this view?

      Off topic, time now for the coalition of the damned not to appear on Pravda radio and tv everyday telling us what they are going to do. Do something!

      • In the ask link above excellent suggestion re returning the Nama toxic portfolio to the banks, give it to the bondholders in the form of debt for equity swaps…

      • paddythepig

        Go get some fresh air. Your post is so full of haphazard gobbeldy-gook, dodgy assumptions, and selective misinterpretations, it’s not worth commenting on further.

  16. Just a Thought

    Could the Irish have believed that because of the lack of visibility of Public Investments in Irish Infrastructure that owning more than one property gave them a better sense of security for themselves and their family!

    On the contrary in continental that is never a problem .Thus Europeans only buy a country cottage for the summer and not seen primary as an investment.

    • Praetorian

      I think we are going to have to clarify when we speak of economic problems and the ‘Irish’.

      There is the Irish government which represents the interests of the power elite (the insiders McWilliams has referred to), then there is the Irish people, the two are entirely different and quite separate entities.

  17. BnB

    When the Fine Gael chief whip complained about those scruffy Independent TDs for not following the Dail dress code, he sounded like someone telling off a pupil for not wearing his school uniform. It’s too much of a coincidence that we heard this complaint just before the EC/ECB//IMF troika arrived in Dublin to hand out the exam results to the government. It follows the same pattern of trying to impress those in authority by looking down on others, as David describes.

    Brian Lenihan tried that too but it wasn’t just Greece that he was looking down on. According to Michael Lewis who interviewed him for an article in Vanity Fair:
    “This isn’t Iceland” is what Lenihan actually says. “We’re not a hedge fund that’s populated by 300,000 farmers and fishermen.”

    Now that Ireland has been caught out, the best that the new government can do is distract attention from itself by suggesting “Portugal did it too, they’re just as bad”.

    The only strategy that most Irish politicians seem to have is to lick up and kick down. They are mostly lightweights who are pathologically incapable of challenging authority even though they like to talk tough.

    Merkel and Sarkozy saw this in Enda Kenny when he visited them to demand an interest rate reduction for the ‘bailout’, if a report of the visit leaked to journalist Faisal Islam is true. They knew he was bluffing because they could smell his fear, and they quickly put him in his place.

    • coldblow

      I didn’t hear that. It’s the kind of nonsense I’d expect from them. Did he never hear of Keir Hardie.

      From Wiki “On taking his seat on 3 August 1892 Hardie refused to wear the ‘parliamentary uniform’ of black frock coat, black silk top hat and starched wing collar…”

      I once listened to an old man arguing that the most important quality in a President is dress well. I blame their upbringing.

  18. Malcolm McClure

    I like David’s ‘school cliques analogy’ but Ireland’s espousal of the Euro was more like a marriage of convenience, entered into with great pomp and ceremony and followed by celebratory feasts that continued for several years.

    Now the breadwinners are experiencing a seven-year itch and wondering what they saw in us in the first place. Then they remember their pledge to honour and cherish, for richer and for poorer, until death do us part. But instead of presenting them with healthy and prosperous offspring, we have spawned a mountain of debt.

    Divorce will be messy, repudiating all the ties that bound us. Resentment will flourish on both sides. We will seek new partners, and hope will triumph over experience.

    Would we be be better to seek solace with the spendthrift and belligerent cousin across the Atlantic or with the impecunious and whacky old uncle across the Irish Sea?

  19. coldblow

    Malcolm, if I had to use your analogy then the groom wants a divorce because she can’t pay him back the 100DM he lent her to get elocution lessons and make herself presentable seeing as she has spent it all down the pub and at the hairdresser’s. He’s the breadwinner and a strict Lutheran and he doesn’t want a missus who won’t do whatever the **** he says. Besides, she’s useless at housekeeping and doesn’t even understand the concept of recycling.

  20. coldblow


    I see you have returned to your lads at the back of the class theme, albeit more nuanced this time.

    My sympathies lie with those caught between the authoritarian power structure in the person of the teacher at the front of the class and the even stricter hierarchy (and dress code) of the extended family of baboons at the back. Perhaps consideration should be given to arming all pupils?

    My experience was of England. I spent yesterdau moving house and the old lad with the van (who faced into the mountain of junk with admirable resilience and stoicism) told me about his experiences at the boys’ school as we drove by. The brothers (‘animals’) were brutal to the lads at the back of the class, but these weren’t today’s swaggering louts, by the sound of it, but simply those who happened not to belong to the town’s higher echelons, who sat at the front of the class and got treated appropriately. They weren’t assigned litter picking duties for example. I only have his word to go on, but it has a ring of truth perhaps.

    I always found Gallagher, the Irish American GI in Mailer’s collection of stock characters in his wonderful The N*ked and the Dead, to be convincing. Bitterly resentful after his failure and disapointment within Tammany Hall politics (where the promised job never materialized) he’s really a little **** who gets in with the gang (led by the psychopathic Sgt Croft), a lot like Rick from the Young Ones, but it is true he would never rat on his mates. All the same, when you go looking among the Irish stereotypes that queasy mix of bullying and a*se licking is never far away unfortunately.

    Good article though. It seems that under pressure the EU elites are reverting to (stereo)type. This seems now to be the dorm of an unhappy continental boarding school. Au revoir solidarite, maintenant c’est chien mange chien.

  21. Evening all,

    So now we are going to pay good money for bad toxic loans and then sell good assets – owned by the state – at a deep discount. How will this make us more solvent?


    • Colin


      We need a new political party. Can you have another go, please?

      • adamabyss

        There could be another election around the corner too – sooner than we think so it’s never too early to start preparations.

        I have been to a few Sinn Fein meetings recently but have been too busy in college (and ill this week – bad flu) to get past the basic induction stage. They have the right ideas though.

        I don’t know why people can’t get past their history. A lot of political parties started in times of violence, civil war, etc.

        One aspect of them I’m not keen on is the endless memorials to this and that. I have respect for the history but am more interested in the present and future. I don’t think I’ll be putting my energies into those sort of activities and will be making my views clear on that at the next meeting when I get over this damned bug.

        I thought your ‘Not bad week for us in this regard so far!’ comment 2 days ago was a bit pointless and inapt David as it won’t put bread on anyone’s table. We need more action and less talk at this point.


        • Deco


          To get well from the flu, Zinc supplements, and also Elderberry Extract (Sambucol ?). And drink plenty of water. Best of luck.

          • adamabyss

            Cheers Deco, Thanks, fully on the road to recovery now. Tuesday I thought my head was going to explode! It was worse than Salmonella, Dengue Fever and West Nile Virus combined! (all of which I have had!). I will try to get that stuff tomorrow in the supermarket.

        • Praetorian

          @ David McWilliams

          It’s designed to make us more insolvent. It end result is political and economic control.

          Debt is used as a tool to implement unpopular policies, the prescription comes elsewhere, we are no longer a sovereign, independent country, we were always something of a virtual colony, now it is just more official.

          This policy has been in operation in developing countries for years. Unpayable debt so you are over a barrel and then their emissaries demand a ‘pound of flesh – sell us your oil for cheap, support our voting record’, be organs of capitalist policy, the EU can make all the noise it wants about the 12.5%, and that’s all it is, noise.

    • Malcolm McClure

      “Good money”??? I guess you could say that the ‘curate’s nest egg’ pension fund is good in parts. It forms a fairly negligible proportion of the money that is keeping the country ostensibly afloat, despite its junk status. The rest is just recycled loans and derivatives, fluttering in on a gust of wind from the east, carrying with it the sour odour of ECB executives sweating with fear. As they look abroad, they see the whole Euro house of cards slowly collapsing around them.

      “Good assets”??? Deserted estates, empty hotels, lonely golf courses, derelict glass bottle land, silent construction machinery, motorways from Irish Detroits to the Irish Beltway. (After the Red Cow they can fend of themselves!) —-The whole ghostly fandango.

      Honest money and productive assets derive from honest sweat, which smells quite different. Ask the ladies.

    • Deco

      David is correct.

      Officially we are a sovereign country. The reality is different.

      Our leadership never really understood the idea. They always craved some imperial power to bolster them in their fight to extract resources from the rest of the population. Independence placed them in a dilemma – how could the control the masses, who might take things to their own devices, whenever given a chance.

      Now, I can understand the pensioners on the road in the rain in Belmullet, being pulled away by the gardai, and them saying “these are not our cops, these are Shell’s cops”.

      This is what the state system has become. Robin Hood in reverse.

      The bailout of the financial system is an entire Bellanboy saga, souped up, and filtered through the needs of Ballsbridge.

  22. Julia

    Hi David, just watching VB on media imvolvement in the property boom. No mention of you yet. Anyway, thats history now. What you are saying about good money going after bad is true. But why should we be surprised?

    Here’s something else. Competition for renaming Anglo Irish Bank. Any ideas?

    • Colin

      Its continued airbrushing out of David’s prognostications since he wrote The Popes’ Children way back when. Richard Curran was tonight being hailed as someone who predicted the collapse in property prices. When did he make Future Shock? 2007. Ah Richard my friend, if you had made it in 1997 or even as late as 2002 we might have taken your ‘shock’ analysis as being important.

      George Lee also got favourable coverage as a Jeremiah, but the reality is, that like Richard, George came very late to the party. Anyone who had read The Popes’ Children with an open mind could have replicated what George Lee produced in his own documentary.

      I’m sure David is used to this airbrushing that goes on in medialand. We all know the truth anyway.

    • Deco

      Bank of the Bottomless pit.

  23. Bank of Ireland

    Now that this bank is insolvent and nationalised why should it be allowed to carry an Irish Sovereign Name when it is prudent that our Central Bank should be renamed too and aptly to Bank of Ireland just like in all other EU jurisdictions ie Bank of England , Banque du France , Deutsch Bank etc .

    • Tull McAdoo

      What’s in a name? that which we call a rose
      By any other name would smell as sweet;

      What can I say John, but Paddy Shakespeare was ahead of you on this one…..LOL

  24. Good to see Adamabyss, John Allen are both getting better, if not better.

    A seventeen yr old of mind caught a bad flu about eight weeks ago, high fever for a few days, but lasted a week. After it, I got a cough and avoider of doctors, let it go on, and on.

    So the week before last, I capitulated to the wife and brood, went to the doctor, a little concerned it might be cancer, asthma, or bronchial pneumonia, though otherwise I was fine:)

    It wasn’t any of the above, but was indeed a treatable bronchial condition, that should clear up in a few weeks. Its already improving with the meds.

    This winter has thrown up a lot of bacterial and viral type infections.

    Me mammy says its due to the volcanic ash we’re all breathing:)

    I wonder should I have seen the doctor earlier:)

    • adamabyss

      Cheers Colm, I got to the doctor fairly sharpish and am on anti-biotics which I’m sure will help. No point in messing around. I never thought of the volcanic ash angle, thanks to your Mammy!

  25. Re DmcW, “So now we are going to pay good money for bad toxic loans and then sell good assets — owned by the state — at a deep discount. How will this make us more solvent?”


    Our partners in Europe apart from the bold Finns along with the ECB/IMF are right this minute working hard to find a solution to this.

    We have to keep negotiating with them until they come up with an answer they’ll provide us with in due course>>>Lol

    • Actually there appears to be some confusion about. FG appear to believe proceeds from the sale of state assets will go to job creation. Axing of jobs through the sale of semi states and eg Coillte resources plus our ports, will not happen… FG with the proceeds will pay for new job initiative projects…But the ECB/IMF have clearly told them the money is to be reduced to reduce state debt.

      As we merely have a caretaker government standing in for our banks and the ECB, maybe someone should ask them?

      Dare I suggest the solvency of Ireland is not high on the political agenda of the EU, or the economic agenda of the ECB/IMF? Except insofar as we are to be kept on life support, to pay them back their money!

  26. Tull McAdoo

    The real cost of maintaining the level of inequality in Ireland is really becomming apparent as each day passes.
    Doherty’s 3 million is just the latest in a long line of payments that certain people believe and feel that they are entitled to.
    The problem now of course is that your average citizen has been so weighed down with debt that this inequality is no longer affordable.
    People are just going to have to wean themselves off of this sense of entitlement. Pretty much as Deco has been caslling it for years.

  27. Tull McAdoo

    It has to be a misplaced sense of entitlement, for how else can you explain how the likes of Doherty, Fingers and so on, feel justified in paying themselves such vast amounts of money.

    These people have bankrupted the companies that they worked for. How can failure of this magnitude be rewarded in this way?

    As a matter of fact, I think that these people should have to pay a heafty fine for the devastation and destruction of wealth that they have caused.

  28. gizzy

    Good Morning. it seems we seem to think we have a some sort of monopoly on certain personality traits. Having worked abroad and had Irish and non Irish bosses and colleagues they shared the same traits as us even if sometimes they were just less fun to be around. They like us promoted people above their level of ability because they were comfortable with them or they knew would not be a threat. As a small nation this comfort effect may be more damaging because the circles are smaller. I worked in banking for a number of years and still smile when the media and others portray the top Irish Bankers as some sort of power hungry mighty capitalists. Most were ordinary enough blokes promoted above there level of competence by other ordinary blokes who were (and so it goes on ) Someone coined a phrase I remember in around 2003 called Banking the Management of Mediocrity. That mediocrity is dangerous when mixed with ambition. The same principle is at work in government, civil service, large accountancy, legal semi states etc.The media spent years looking for brown bags and have now latched onto cronyism when I think our biggest failng is the mediocity at all levels of business management public and private.This medicrity breeds on itself. There are lots of intelligent bright energetic people in this country (see how well we fare abroad) but they are not breaking through in sufficiect numbers into poitions of influence. As I said other countries make the same mistakes but the negative effects in a small country are disproportionate.

  29. Malcolm McClure

    Reuters have a thoughtful article today headed “Eurozone may need to rethink anti-crisis strategy”
    It ends:
    ‘In Germany there is an expression “Augen zu und durch,” which loosely translated means: “Close your eyes, continue down your path and hope for the best.” At some point soon, this approach may no longer be an option.’

    Shakespeare, as usual, said it better than anyone:
    ‘Do not, as some ungracious pastors do,
    Show me the steep and thorny way to heaven,
    Whiles, like a puff’d and reckless libertine,
    Himself the primrose path of dalliance treads
    And recks not his own rede.’

    Micawbers beware!

      • “We who lived in concentration camps can remember the men who walked through the huts comforting others, giving away their last piece of bread.
        They may have been few in number, but they offer sufficient proof that everything can be taken from a man but one thing: the last of the human freedoms – to choose one’s attitude in any given set of circumstances, to choose one’s own way.

        – Mans Search for Meaning, Victor Frankl, 1946

    • Micawber Principle

      “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six. Result happiness.

      Annual income twenty pounds, annual expenditure twenty pounds ought and six. Result misery.”

  30. Tull McAdoo

    I am sitting here in Terminal 2 in Frankfurt Airport; my flight to Singapore will kick off at 23.50, that’s 22.50 Irish Time. I am travelling alone tonight, so I have time to reflect on a point I made this morning about consequences of ones actions.

    Things are starting to quieten down here as our flight QF006 is the last scheduled flight out of here tonight. The staff here at the airport are on a “wind down”, chatting, laughing, having coffee. Everything has gone well for them today, no mishaps, no crashes, and no major dramas.

    I even feel relaxed. These people here inspire relaxation. I trust them to get me home. My family depend on them to get me home, while other families depend on this entire industry for their livelihoods and futures. This is not about German efficiency, as this scene here is playing out all over the world as we speak.

    I deal with German Bankers all the time and I have never been of the opinion that they were out to conquer or subvert Australia in any way. The Germans want to do business and they expect me to act rationally when I represent my people back in Australia. The people in Australia who pay me expect me to act in their best interests and have trusted me to do so for many years now.

    For me the consequences of failure are not some reduction in profit, as profits will follow cycles and other variables. It would not even be the loss of my job. Real failure for me would be a breach of the trust that others have placed in me.

    Real failure would be etched on the faces of my family, friends, teachers, mentors, colleagues and all those who have guided me through my career. I would be crushed with shame if I ever made a decision out of self interest that went against their best interests.

    I might be second generation Irish but that is how it was told to me. They are the values that have stood me well down through the years. I refuse to believe that Irish people have lost all that in a single generation….no…..no…no.

    Bunch of Russians next to me here at gate D4, waiting for flight to Moscow, they are in high spirits, seems like such a short while ago that they were defaulting on their debts and they were jumping ship, now they seem excited to be going home…times a great healer……ok …we are being called in to board….

    Goodnight Ireland, sleep well, Tull McAdoo.

    • Philip

      Tull, marvellous post. We need to ensure the t’will do culture dies off and that good solid work with due diligence is the only way. The only way for a good life and a good society. Ireland needs to wake up.

      Read Stephen Collins’ article in todays (Saturday 23rd April) IT. Spot on.

  31. CitizenWhy

    A huge number of Americans now believe that capitalist and Christian values are at odds, and that inequality is too extreme in the USA. What does Ireland think? Happy Easter!


  32. CitizenWhy

    Give the Germans and French credit. They learned from the collapse of the Soviet Union. Privatize state assets, make big money, expand the elite, then consolidate wealth into the hands of the top elite. And the best part is that Germany and France can privatize the state assets of other countries. Ooh La La!

  33. French Connections


    Just watch your piss tax and decaux subsidised by the Irish Revenue Tax.

  34. Saturday Morning

    Newspaper Headline :

    ‘Woman denies biting off testicles’.

    Next to this headline was :

    ‘Ireland was forced by ECB to take bailout, says Lenihan’.

    Are they both the same story?

    • Philip

      Not the same story. For a start, the woman in question would not have found any testicles. Booh Hooh….so Ireland was never taken seriously by Frankfurt bankers and a few guys started making a few undiplomatic statements with no fear of being cowed down by stupid Irish libel laws. I wish I was one of them!

      Frankly, there is an an annoying section of society here that need to wake up and smell the coffee. They are the sheeple and they ran many of our institutions into the ground. The Germans, ECB etc are putting it to the Irish people…are we man/woman enough to NEGOTIATE like mature adults and stop prancing around believing we can engage in histrionics of giving the 2 fingers to Europe. We should take our punches and learn.

      No substitute for due diligence. That said, I am not saying we roll over. But we need to be intelligent and engaging.

  35. Praetorian

    With reference to the role elite private education played in our current debacle, often religious run institutions where a sense of superiority, certainly a sense of being apart or removed from the rest of society is present, it will be interesting to see if old Six-One news covers this story in any depth. Such elitism can only damage a society, especially a country that claims to be a Republic that treats all chidren equally. We know this to be nothing but myth making nonsense, hence the mockery every year with faux commemorations for those who fell fighting for Ireland’s freedom.

    Educational Apartheid in Ireland

  36. What do you think of this?


    I find it insulting to say the least!

    Lenihan pushed legislation through with force, allowing two of the most questionable characters in the country, Healy Rae and Lowry to become the deciding vote on the finance bill, even bribing them with positioons for the family, as we know by now and other stuff.

    He had a choice, to tell Rehn to shove it.

    Pretending he had no choice is adding insult to injury.


    • Julia

      Like Chicken Licken afraid the sky is going to fall.

      • …amazing isn’t it?

        Then you have the stage managed rest of the bunch…. Noonan who re emerged after a period of political cryogenic silence on the Pat Kenny show, fishing brownie points by talking about most private stiff concerning his own, and others tragedy….and before you know it… he is back in the saddle…

        What a coincidence, yeah right!

        Uncle Noonan’s understanding of historical context better not be challenged in a life television event ever, then again, what’s the damage?

        The best comment I have read in a long time was from Karl Whelan:

        ….does raise very serious questions about the role the ECB now plays in European politics. Should the key role in this historic decision have been played by an unelected and essentially unaccountable organisation.

        Thanks!….Yes Karl, yes….!!

  37. Folks…. take a step back from the rotten theater of finance and politics…. enjoy!


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