July 20, 2011

Superquinn saga sums up our economic tale of woe

Posted in Ireland · 122 comments ·
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IF anything sums up what went wrong with Ireland, it is the saga of Superquinn. On the positive side, if anything shows how we can get out of this mess, it is also the receivership of one of Ireland’s best-known brands. Before looking at the receivership and the implications for the rest of the country, let’s consider for a moment Superquinn.

In 2001, Feargal Quinn, a man I had never met, asked me to speak at a conference he was hosting. Now it wasn’t any old conference, it was a gathering of Europe’s top retailers who operate under an umbrella group called EuroCommerce. This organisation represents retail brands and over 100 commercial federations in 27 European countries. These were people who knew their businesses and Feargal Quinn was the president of this organisation.

He was courteous to a fault, which you would expect from the man. But more interesting was the fact that he seemed to know everyone in the business and he understood the business backwards. Here was a retailer to his toes.

As is often the case at conferences, if you bother to listen, you will learn more from the participants than they ever learn from you, the speaker.

The people whom Quinn had assembled in the RDS that day in 2001 knew more about European economics, trends and what was actually happening on the ground than any learned economist. They spoke about interest rates, exchange rates, producer prices, trends in global food manufacturing, sourcing products in exotic locations, the prices of freight from and to China, what was selling in Shanghai and why there was going to be a commodity-price boom in the years ahead.

But they didn’t only know the macroeconomic patterns; they also understood what was going on inside the heads of their consumers.

They knew what was happening to family budgets, they knew what was happening to savings and, more significantly, they understood their customers.

And Feargal Quinn was the guy they all looked up to.

That afternoon, one boss of a huge Dutch retailer told me that Quinn was simply the “best in the business”, that he was always ahead of the game, always knew what his customer wanted and where the customer was going next.

In the 1970s, when he was building the business, Quinn visited the US to see how suburban trends in the States were changing the way people were shopping. But it was more than shopping — he was studying the way we were living and the way our suburban lifestyle was changing everything about us.

He saw that this would happen in Ireland and that Irish tastes would change as global tastes did. He saw the emerging patterns in obesity and the way in which health-conscious Americans were adapting their diets accordingly. He understood that as a society gets wealthier, among the most conspicuous changes are in diet and the way people shop. He also learned from the Americans that the customer is king, or in Superquinn’s case, queen.

The Irish housewife was changing in the 1970s and 1980s. She was more educated than her mother and, unlike her mother, she was working. The explosion of the female workforce was going to change profoundly how and what we ate and how we shopped.

Feargal Quinn understood this, arguably before anyone else. He was amongst the first Irish retailer to speak of the “shopping experience”. He understood human psychology and the fact that we identify with brands and we behave like herds. He copped on to the fact that many rational, clever humans end up identifying with a product or brand. And ultimately, rather than saying: “I like that” product, many people say: “I am like that”. I am a “Superquinny” type of person. Like it or not, that is the way many of us behave.

He put it all in his bestselling book ‘Crowning The Consumer’. But before he wrote it down, he had already put it into effect in his shops. This knowledge was then used to change the face of retailing in Ireland.

I have asked lots of working women whether the Super- quinn experience is different and they have all agreed that it is. Yes, it might be pricier than other supermarkets, but overall it is a more pleasant experience.

Now just before you think this is a PR stunt for Feargal Quinn, all I am trying to point out was that here was a man who knew his trade and you can’t ask for more than that.

When he sold up, it was a sign to us all that the boom had gone mad. He could see that the prices people were prepared to pay for his supermarkets were crazy, so he sold everything he had worked to create.

This was the story of boom-time Ireland. And the story of the sort of ‘financial gobshitery’ that replaced basic economics, driven by greed and hubris.

The bankers who hadn’t a clue what they were doing and mistook a large overdraft for an economic miracle were both in control and out of control at the same time. The balance sheets of good companies like Superquinn were loaded up with debt which would ultimately cripple them because no matter how good a company is — or a country for that matter — if you take on too much debt, the entity will default. And this is what sunk Superquinn.

As the Americans say, “Good company, bad balance sheet”. So what do you do? You fix the balance sheet and save the company. You call in the receiver, ensure the future of the company by telling the creditors of the company to line up in an orderly queue and do a deal with the new owners. New capital always takes precedence and you start again.

Thankfully, this is happening in Superquinn and another proper retailer, Musgrave, is taking the opportunity presented. It is not unusual, it is called capitalism. Some creditors win and some lose and away we go.

Now consider what we can learn at a national level from the Superquinn saga.

IRELAND is like Superquinn: a good economy, hijacked by eejits and financed by fools. The worst thing about a fool is that he doesn’t know he is a fool. The way you deal with these types is you apply the rules of capitalism to them. The same banks that lent to the developers that took over Superquinn are the same so-called pillar banks that we are supposed to save.

So save them — but apply the rules of capitalism to the saving. Tell the creditors to line up and accept the terms. If the main creditors are now the ECB as well as the bondholders, you put them into a room and tell them the game is up. Force debt for equity on them and start again.

The state of chassis in the euro at the moment gives us the opportunity to act, take the lead, be decisive and move on.

One thing is clear, the ECB and the European leaders have no idea how to deal with this crisis, so why wait? How much more evidence of European incompetence do we need?

What works for Superquinn will work for Ireland. Let’s do it.


  1. I love the term “financial gobshitery”

  2. Malcolm McClure

    Excellent article David, but shouldn’t “The state of chassis in the euro” be “The state of chaos in the euro”? I’ve got caught out by spell-checkers that think they know best.

      • adamabyss

        Personally when I went to see that production (‘Juno and the Paycock’) a few years ago, I thought that the play was on the world ‘stasis’ and not ‘chaos’.

        Stasis:

        1. the state of equilibrium or inactivity caused by opposing equal forces.

        2. Pathology . stagnation in the flow of any of the fluids of the body, as of the blood in an inflamed area or the intestinal contents proximal to an obstruction.

        I’m sure someone else can clarify this…

        • DmcW is correct, ‘chassis’ being a Dublin slang (Liberties?) derivation of ‘a state of chances’ ‘unpredictable at the moment’….’there’s a chance it could this way, or that way, or another way’ Its not used in the sense of a car’s chassis :)

      • Malcolm McClure

        Brilliant catch, adamabyss!! Abject penance, sackcloth and ashes for me. DMcW’s knowledge of O’Casey triumphs.

        Moral: I mustn’t dive in without checking water depth.

  3. VincentH

    Of course the reason why Quinn sold in the first place still hold. Take Clonmel, SQ is in the middle of a town. Where Tesco, M&S, Dunnes X 2, Lidl and Aldi all have space to expand. Ample space and will still have lots of carparking.
    Oh, and of course, shopping is no fun anymore.

  4. wills

    David,

    Very informative article. And *financial gobshittery*, great term. Conceptualizes the ponzi economic spam the insiders are spewing out through the media to cover up their gigantic inside derivatives CDO inside bank job.

    Meanwhile famine underway in Africa and gluttonous financial headbangers are plundering and pillaging the economic system and getting away with trousering monies in the billions for sitting at a computer screen watching blips light up in a rigged stock market.

    Time for an apocalypse. I call upon God to eliminate this human contagion.

  5. Maybe the supermarkets in Ireland will reduce eventually to two main players just like what happened the Irish Whiskey Distillers did here .In Scotland there are thirty two independent owners with lots of various brands between them.

    • Deco

      Yes, Scotland has thirty two independent Distilleries. And they all vie to make the best product, and to carve out niches. They dominate the world market.

      Ireland has firm that owns all the main brands, plus a few Mickey mouse operations.

      The Competition Authority does not notice. The Competition Authority is a classic example of how regulation works in modern Ireland. Bowing to the influential big fish, and penalizing the small fry. A facade, a pointless veneer that does nothing meaningful, and an awful lot that is meaningless.

      • real terms

        Hmm, alot of ownership concentration in Scotch too. Diageo (Johnnie Walker, also Bushmills) and Pernod (Ballentines, also Jameson) owning biggest brands. Scotch reaches more markets than most, true enough,
        but most drunk whiskey now reportedly are brands in India. US also strong. Ireland has three competing distilleries. Was in Bushmills last year while they were bottling Jameson. Also, was told most Irish barley comes from Scotland.

  6. Deco

    {
    IRELAND is like Superquinn: a good economy, hijacked by eejits and financed by fools.
    }

    Correct. And you are correct in saying that the fools do not know they are fools. All they know is how to go to great lengths at maintaining the aura of sophistication, because they have decided that sophistication is the suitable antidote for a head that prefers not to do serious thinking.

    We are a country of individual lions led by a bunch of donkeys, to use a quote from one of David’s articles about 18 months.

    • wills

      Deco I don’t think they re fools. In fact they are intelligent smart asses. And know how to game the system and evade the law and fuse zombie banks and derivative pOnzi scam s to the world economy. This takes initiative and smarts to do.

      • Deco

        Maybe in Wall Street is ful of smartasses, but the clowns running banking in Ireland are not that smart.

      • Deco

        And Wills – you are correct – Ponzi scam.

        Growth is the delusion that the Ponzi scheme can get new suckers.

        Stability is the delusion that everything thing in the Ponzi scheme is safe.

        Rescue package – a relocation of money from one part of the Ponzi Pyramid where there is money to a part where there is a danger that the lack of money might threaten the whole structure.

        It is a mish-mash of Marxism and Crony Capitalism – and it is corrupt.

      • coldblow

        Good article, amusing quotes from Darwin etc. The wife of a friend (who hated me) once announced to the room that all the ills of the world were caused by clever people – something only a stupid person would say.

  7. EU Common Market

    The purpose of why the various members decided to form an alliance was to enhance the wealth between the member states.

    Why should the same members form another alliance to share in the burden of the union when that burden is caused by rebels ?

    There is no common goal between them that will motivate each and every member to aspire to something better and there is no single authority that holds the purse to give confidence from the top down.

    Tomorrow will be the feast day of St Bi-lateral and his blessings will see the pairings sent their ways under the aegis of what time once did in the past .Tomorrow will be the beginning to look past to see the future .Charlemaigne Twins of France & Germany might probably bed together for security reasons and agree to sponsor Nederlands as their common member.

    We will be snookered as an Atlantic Gale force winds where more will join the Royal Irish Regiments to pay the bills of sins past.

  8. adamabyss

    The Battle of Orgreave.

  9. Philip

    Fergal saw the Tescos, Lidls and Aldis and found his niche game was up. Ireland’s sophisticated taste was going mainstream. Select Retail Holdings came in around 2005, Fergal cashed in and Superquinn was rubbish afterwards. You could see the poor stock cotrol and penny watching from day 1. The place was destroyed by bean counters who thought a business was just a matter of balancing books.

    I am not too sure what this has to do with Boom & Bust Ireland. Seems like this collapse of SQ would have happened anyway.

    Face it, incompetence and get rich quick schemes with no underyling understanding of service or end product was, is and continues to be the main problem.

  10. piombo

    David,
    Immagine the day after the whole EU, ECB, US Treasury, SAFE of China have all seen the light and accept a unilateral reduction of say 50% of their Irish bonds on day one of Punt Nua. Who, pray tell, would finance the net public borrowing requirement of circa €15 billion/30 billion punt Nua?
    In dreams begin responsibilities, the great Yeats once wrote. A lot of people use you as their principal reference in macroeconomic commentary, so be prudent in your analogies.

    I appreciate your focus on communicating complex situations through parables, but you risk inducing people into false hopes, and that is not desirable when a lot of people are suffering on an individual level and maybe read your articles to hope to understand where the whole situation is evolving.

  11. Deco

    No bankster left behind. The worrying thing about this former Clinton policy advisor is that he is still influential in the Elders of the US Democratic Party.

    http://globaleconomicanalysis.blogspot.com/2011/07/larry-summers-on-how-to-save-rich-no.html

    Forget Somalia, the rich need another bailout.

    • Deco

      The mediamplies that the world will end unless the rich are bailed out. Even people who talk loads of Marxism want the rich bailed out.

      And it make you wonder…what if the rich were not abiled out ? Things might not be so bad afterall, I reckon.

  12. St Lorenzo da Brindisi

    http://www.newadvent.org/cathen/09359a.htm

    Tomorrow we celebrate a great saint from the south of Italy who was victorious in battle .

    Lets hope his hand will be shown to all of us again as the EU decide their fate.

    • Deco

      Print-Baby-Print.

      • Malcolm McClure

        Deco: Remember the inflation of the German mark in the early 1920s? By late 1923 it took 200 billion marks to buy a loaf of bread. Printing is not the solution.

        Demmise of supermarkets and return to the local pawnshop, where items can be bartered, and local grocery stores that accept the pawnshop’s token units of value is the only practical solution if this crisis craters, and there is a total meltdown.

        Meantime, stock up on sealing wax.

    • Colin

      In Gutenberg we trust.

  13. Mary Jenkins

    I feel sorry for the suppliers who will not be paid for the goods that they supplied to Superquinn in good faith, they will be pushed to the back of the queue while the banks who lent stupidly to the owners of Superquinn for the purchase of property, will get paid first. In other words the suppliers are subsidising the banks losses, then the same banks will be on their backs looking for repayment of loans and overdrafts, its NOT FAIR these losses belong to the banks not the suppliers just as private banks losses belong to themselves and not the public.

    • Deco

      The suppliers of Superquinn always got shafted. We have a retail system that punishes the productive part of the economy. Consumption has become king. Consumption and debt. Growth from increased consumption and debt – which is something completely different from the “knowledge economy”.

    • Colin

      Mary,

      Life is not fair. And the law certainly is not fair. So, when you have accepted that, you can then protect yourself. The politicians want unemployed people to use their redundancy money to start up a business and be part of the ‘smart’ economy. I strongly advise people to think twice before they part with their money. You must always be on your guard, and ask yourself what happens if a customer can’t/won’t pay you. The world of business is full of sharks, and its very easy to get suckered. Subcontractors in the construction industry are finding this out the hard way these days. This is not confined to the construction industry.

  14. Tomorrow in the corridors of power there will be more Super Values and the President will thus finally say: ‘Let the meek inherit the earth’.

    And thus sprang forth stamps to lick , stamps on our money , stamps to win , stamps on food , stamps on imports , stamps on our feet , stamping dance , stamp tax , saving stamps , stamps to leave the country , stamps to enter the country ,travel stamps etc

    Only by then tomorrow will be today .

  15. Great article, I was wondering on the astuteness of Fergal Quinn selling out at the time he did to the turkeys who bought it all top of the market in 2006.

    Expect our peacocks to fan out their tails with tall tales today of a Greek bailout with crumbs for us.

    The fact is at our levels of debt Ireland is scuppered and our Dail cabal are committed to scuppering it more with more damage in the next budget.

    As DmcW wrote in earlier article, we are a debt collection agency for the banks in the eu, a vassal state, the measurement of economic output in Ireland will be measured against how well we are able to screw taxpayers with odious banking debt, rather than an economy serving the needs of taxpayers.

    Hypocrisy of Enda’s Cloyne response compared to his position re taxpayers and odious banking debt is unfortunately deja vu as we had it previously with FF.

    Don’t get me going re ILP new incarnation as The Greens.

  16. stiofanc02

    I bought a Spar in Kilmeaden in Oct of 2004 for €780,000. By the time 2006 was over I was convinced it was a good purchase albeit a bit overpriced. The next 4 interest rate rises, builders getting laid off, etc.took hold less disposable income was spent in Spar. By June of 2008 I had a 25% drop in business! 25%! I was a student of Fergal Quinn by virtue of being from San Francisco and marrying an Irish girl who imigrated in the 80s to S.F. iknew how to retail at a level of excellence no other Spar had, but the financials ruled. Too much debt, not enough custom anymore, and no one willing to touch me with a 10 foot pole. Do you blame them? The shop has reopened and I warned those who bought it it was going to be a rough ride. I took a bath,without soap, on the sale,and they are in a state of total shock. Their business is down 75% of what I was doing! I was the fool for buying in a bubble and it will never return to the lofty levels of 2005 and rightly so. I shut the doors in July 2008, thanks to having become a huge fan of Davids articles and books, and got out while my losses were somewhat managable. I was asked by bankers, customers, suppliers etc. Why are you laying off 12 girls and closing down? This was July 2008 and by Sept the bank guarentee was in place. I looked like a genuis by the end of the year but if I hadnt listened to David I may have tried to hang on a while longer. Thanks David and to all readers for indulging me. Cant wait to see what happens in Europe today. Steve

    • adamabyss

      Very interesting story Steve. Briefly, could you be a little more specific as to what you actually did with regard to your Spar being ‘at a level of excellence no other Spar had’?

      Today will be interesting but possibly an anti-climax as I can’t see any all encompassing solution emerging from these suits in Europe – expect more fudge and indecision.

      • stiofanc02

        Here are a couple of examples. My deli offering would have potato salad that was prepeared on site daily,boiled, pealed, highest quality mayo etc. Same for the coleslaw as well as my own secret recipe, egg mayonaise same again. We could have bought the pre peeled eggs but the taste was not the same. Home made Lasagne for lunch, shepards pie,chicken curry again all sliced and diced fresh.
        I would not allow mobile phones during work hours, end of story. I wold not allow nose rings and various other piercings while on your shift.
        Purple hair?, didnt get hired.
        Rudeness was not tolerated. I insist on a pleasing personality while at work. Hello, thank you, and the proper response to a thank you was “you’re welcome” not “no bother” or in te venacualr “no bodder”
        Floors spotless, a fortune spent on gloves to be constantly changed during food prep. And plenty of local banter, stories and smiles.
        All of this and much more. Does that give you an idea of what I mean? hope this helped. steve

        • Colin

          Sounds like a well run operation. Are you working in the industry now?

          • stiofanc02

            Colin, I was doing Thermal Imaging and energy consulting in California before I bought my store. My retail experience in California was before the energy management and I was succesful. I have since gone back nto energy management and Thermal Imaging in Ireland as the housing stock amd commercial property here leaves much to be desired from an insulation stand point as well as other deficiencies. I dont think I will be going into retail again but my wife and her sister are working on a new line of ethnic food so who knows? I am currently taking an attic anti frost device to market so fingers crossed that will be a runner. But I may do something with food again as it is our true passion. I have a barbecue sauce recipe that is to die for! Given the forecast next week I will be trying it out on the friends and family again soon. Steve

        • Juanjo R

          13 equally pleasing happy personalities in a bog standard franchise operation – reminds me a little of the episode of Black Books were manny goes to work for Golaith Books in the third series ( Manny Come Home ). Scarey indeed. Super-blandness as a human/corporate ideal.

          I imagine the cawfee was s**t too.

          Tell me Steve were those 12 other jobs well enumerated positions capable of sustaining families and paying pensions and large PRSI contributions or were they ‘McJobs’ with a high turnover and little or no prospects apart from maybe the same staff get the idea to sign a similar highly leveraged deal and become a similar corporate clones themselves down the road for ‘X coffee shop ‘or ‘Y fast food outlet’?

          Can I make a few observations;

          Its all too American this mechanical franchise nonsense. Every thing is about making a quick buck. What you were part of the same overall ponzi nonsense, just a lesser clog – you did seem to pick up on that – although perhaps not to the exent you ought to have.

          This is Europe we are better than this I think and should be capable of aknowledging that – the economy exists just serve and provide for society not the other way around. Thats a human european model and a true reflection of an equal society. That should be the aim for us. We clearly can’t handle free enterprise a la United States – we don’t have the exploitative balls for starters and we are actually against slavery!

          The likes of SPAR shops destroy culture, streets and towncenters by concentrating retail activity inside a single shop with its goal of hovering up all the casual money thats swimming aboout making super efficent profits and simply blasting the competion out of the market, one way or another. Thats not even taking into account monopolistic corporate strategies like ‘clustering’.

          It is possible that is tide is turning that they have made such a wasteland of town centers that the small scale unleveraged retail will make a comeback.

          No more s**t cheap coffee I hope at least.

          Maybe theres a business idea there!

          • stiofanc02

            Jaun, Actually I am a coffee snob. San Francisco is just a few miles south of Seattle where Starbucks is from. No instant coffee,it was brewed several times a day and everyone loved the smell, even folks who didnt like coffee, the coffee was ground daily at 6 am and let me tell you, it was damn good. I dont think you got the point about demanding good service from those who I employed so I wont elaborate but needless to say the customers DID get it, and it was a topic often remarked to me and many of my polite staff, forced or not. I was proud of the positive feedback about how “nice” my staff always were. As for the rest of your thinly veiled insults, well,…. I will leave it at that. Steve

          • EMMETTOR

            I was talking in a Dublin pub to a Texan couple, as you do. They were bemoaning the fact that the US healthcare bill had been passed, “America’s now communist”, they insisted. “It’ll have to become civilised, first”, I thought but I didn’t say it, obviously, just smiled politely and drank some more Guinness. I never got too worked up about the fact that the US voter gets to choose between “the pro-business party and the rabidly pro-business party” until the USSR folded. Somehow, the absence of it’s gravitational force has allowed politics in Europe to be pulled towards the US and therefore to the right. The results are there for all to see. With more, much more, to come.

        • adamabyss

          Excellent stuff Steve, no wonder you made such a good job of it. I particularly agree with the mobile phone rule. I implemented that myself while running a successful storage business in Antigua. It was downright dangerous in the yard to be offloading a container with phones going off all the time so people could talk utter nonsense all the time. Notwithstanding the fact that my own phone was always going for business. Up to this day I despise getting personal calls but deal with business calls with relish! I guess that makes me a bit weird, haha. I do think most of the time people spend on phones these days though is time wasted. As for the appearance and manners, the place I was managing was only half-constructed when we started storing people’s possessions and as anyone in the construction industry (which is mostly all male) will tell you, it’s hard to put manners on these lads (no matter what country you are in) so I had to give a bit more leeway in that sense, but for retail I’m sure your approach was perfect. I certainly wouldn’t tolerate rudeness either though. You have to be aware of cultural differences too. In the Caribbean the tendency is to be loud and in your face which can be off-putting but when you are there for a while you get used to it. Tourists have been known to fear violence in a bar between locals, when it’s really only local best friends discussing the latest over in a cricket match! Anyway thanks for those insights Steve and I hope you get back into business soon. Adam.

          • adamabyss

            I got that book ‘Crowning the Consumer’ today from Lucan Library. I am not even into retail or anticipating a future in it but I want to see what Mr. Quinn has to say. Thanks for the recommendation David.

          • stiofanc02

            Am going to get Fergals book too. A really good read is a book by Seth Godin called Purple Cow I think you will love it. I am currenty marketing a product to stop attics from freezing, I invented it last year, so I wont go back to retail, even if my new poduct doesnt make any money. I have been doing Thermal Imaging for over 20 years so I went back to trying to keep pople warm and save money for homeowners after my shop closed. In California it was all about keeping the heat out, here its about keeping it in! Steve

          • adamabyss

            Nice one Steve. I’m sure you’ll do very well with your new project.

        • Deco

          We should put you running CIE, and kick Bertie Ahern’s mate out.

          Or have you running FAS instead of Brian Cowen’s mate.

          Only that’s the problem here – we do not appoint people on the basis of the service they provide to the public – instead they are appointed on the basis of favours done to up and coming gombeen hoors.

          “I did not appoint them to state boards, coz they gave me munney – I appointed them so state boards because they were me frendz” B. Ahern, as Taoiseach.

          We are fed up with that nonsense.

          • EMMETTOR

            So much of the social and physical infrastructure of this country, especially Dublin, shows the effect of this. The fact that it came with it’s own shorthand, “jobs for the boys”, only goes to show how acceptable it became to us. The new government will show what their pre-election noises about “reform” meant by replacing the FF appointees with their own, while making no attempt to reform the actual process by which these jobs are farmed out to incompetent party hacks.

      • adamabyss

        Constantin says on TV3 news that ‘once again they have failed to deal with the issues’ – good enough for me and emminently predictable.

        And the whole charade carries on…

        The newsreader ignores the essence of what Contantin has said and turns to some other geezer to ask if it’s really true that we now have a blueprint for the way forward? (!)

        Muppets!

        • Deco

          As usual, the newsreader is probably clueless when there is a serious economist present, and would much prefer interviewing a celebrity and asking questions about personal foibles, mindless minutae, and some campaig that the celbrity is involved in for PR.

    • Colin

      This is a really good news story. It just goes to show, if people open their ears and eyes to what David has been pointing out, you will reap the rewards.

      Most of us here are grateful for David’s prescience. Many of us here refused to buy property, even when the banks were writing to us telling us we had been approved for a mortgage even though we never had even applied for one. We ploughed a lonely furrow, peer pressure and parental pressure and partner pressure all tried to force us to become part of the herd. Its to everyone’s credit that they kept the DMcW faith.

      Steve, you are clearly wise, and I hope you soon get the opportunity to use your skills for the betterment of Ireland and her people/sheeple.

    • @davidmcwilliams

      david take note to send stiofan02 an invoice for the forsight you included in your book .

  17. EU Judgement Forum

    There is no palatable solution to this crisis today

    How about joining a Fudge Cake Party ? We could fill ourselves with calories.Its better than the Cooks we have meeting there.

    Read the Banner by Sarko ‘ Lets be Philosophical ; he says ‘ …Pragmatism is too painful says his aid .

    I think today is another Victory for The Duke of Wellington a great Irishman and a Great Leader unlike the prancers we have there today.

    • Deco

      We have had too much fudge, have got fat /not fit, and we need to go on a diet. The markets are asking us to get into shape.

      Officially, as a member of the Fudge Cake Society, as you call it, are on a diet – officially. This is to make the entire Fudge Cake group look thinnner.

      But a lot of fudge is still being dished about and consumed, and we are not losing weight – merely moving the flab from one area to another.

      Too fond of fudge, and too much into denial.

  18. adamabyss

    This is a very basic question. Noonan is talking about ‘getting back to the markets’ so the country can borrow what it needs etc.

    Wouldn’t it be possible for this country (or any other) to completely forget about borrowing from these loan-sharks and, instead, to work hard to ensure that we produce enough to pay for all our needs, now and into the future.

    Obviously I’m not taking about some sort of theoretical (and impossible) self-sufficiency which involves shutting ourselves off from the rest of the world a la North Korea (or Ireland of yesteryear). Imports and exports are fine as long as we can afford them and they are necessary.

    If prudent people can balance their budgets on an individual level, why can’t countries do it on a national basis?

    If it could be done the markets would eventually lose all relevancy and power. Shouldn’t this be the primary aim of any responsible government?

    • adamabyss

      I just get fed up with all this talk of ‘the markets’. They are the problem, not the solution.

      • Colin

        Aren’t the markets investing pension funds, so, if you look at it another way, the problem is that over 65s then expect too high an income throughout their retirement, and with pensioners living longer and longer, this forces the markets to provide more and more for their clients.

        Vincent Browne has a worthwhile solution; scrap private pensions (by ending tax friendly facilities and slapping high administration taxes on pensions), and doubling the current state pension for everyone, so €400 a week should be enough for an individual or €800 a week for a couple to live on considering they no longer have mortgage payments or raising a family cost to bear.

        • adamabyss

          At first glance it sounds like a reasonable suggestion. They’d put a lot of that money back into the economy in spending or help out their children and grandchildren. It will never happen though.

          Pissing in the wind is all we are doing here and I think we all know that.

      • paddythepig

        Adam, you ask a very good question, one which I have been bleating about for a long time. It really is that simple. Balance the books, and you don’t need to borrow.

        To balance the books, you need to cut a lot of waste though, and in my opinion there’s never a bad time to cut wase.

        I would disagree with your second post. I think the problem is more within the debtor countries themselves ; they are not forced to borrow ; rather, they make the choice to borrow, usually under weak leadership of the Bertie Ahern ilk caving into internal pressures. The NTMA actively canvasses creditors to get money for example. The willingness of creditors to lend to these charlatans is a problem as well, you are right, but the balance of guilt is on the debtor side.

        Horses to water, and all that.

        • adamabyss

          Fair enough paddythepig, but to bring it on a little more (I’ll be brief as putting wriggling little one to bed) –

          - which countries do actually balance their books and how? (I guess the oil-rich nations for a start)

          - I wouldn’t be against markets in a dogmatic sense; I just wouldn’t see a need for their existence if all nations could manage themselves properly.

          - in the event of a responsible nation (assuming we could get all nations to be fairly responsible) experiencing an unforeseen shortfall, there would be a mechanism for the other countries to lend to them in a fair and transparent manner with the same rates for everyone.

          - this being what the World Bank and IMF are supposed to do, but patently do not.

          - notwithstanding the simplifications I have made above like omitting the crucifixion of developing nations that goes on through murderous policies such as odious ‘debt’ repayments (see France vs. Haiti) or unfair restrictions on trade (see the US vs. everyone else) in certain directions but not others.

          - therefore (getting back to my original point), in a properly managed world, there would be no need for these parasitic markets…

        • paddythepig

          Who balances their books? Firstly, it’s important to make a distinction between a government and a country.
          You can have a government run a surplus (Government balance sheet), but have an economy living way beyond it’s means by running a trade deficit (like during Celtic Tiger Ireland). And vice versa (Japan for example).

          To find out how Governments are performing, here is a very useful chart of government deficits on a per country basis.

          http://www.gfmag.com/tools/global-database/economic-data/10395-public-deficit-by-country.html#axzz1SmGADGBk

          Taking a single year 2010, here is the list of current account balances for the world. You can see from this list who is running a current account surplus, and who is running a deficit – for that year.

          http://en.wikipedia.org/wiki/Current_account

          How do economies run a trade surplus? They export more than they import. Some, such as the Arab states, benefit from owning a commodity everyone wants – oil. Other countries have to innovate in a whole variety of ways, and sell their goods abroad – the Germanys and Japans of the world. We either need to discover commodities we can sell at a premium, or go down the innovation road (which is much much harder).

          How do Governments run consistent surpluses? They contain their liabilities, and don’t rely on highly cyclical or speculative sources for their tax revenue. Celtic Tiger Ireland failed miserably on both these counts.

          It is highly unlikely you will ever have every country in the world always balancing it’s books. It’s natural for economies to experience ebbs and flows, and it’s good that surplus economies have a facility to lend to deficit economies, via the market. Otherwise deficit countries who may have good use for funds wouldn’t be able to access them. Would that be good?

          You can get distortions in the market where funds are too easily lent to rogue debtors, like we are currently witnessing. You could argue that the market is the parasite, that the creditor is the parasite, but if like me you believe in the principle of taking responsibility for yourself, the real parasites are the countries who fail to manage themselves.

          Horses to water.

    • uchrisn

      Adam for some reason economists say that the ideal debt for a country is between 30% and 60% of GDP. note 30% debt is better than 0 debt.
      Choicescu in Romania tried to pay off all their debt and it didn’t go very well.
      Ireland will have to balance its budget, its debt is already over 100%, its just a matter of time.

      • adamabyss

        Thanks uchrisn. Do you know the reason why 30% is better than 0%?

        • uchrisn

          I suppose it goes back to the theory that access to credit is generally a positive thing.
          Think of the umeployed guy in western China who can’t get 600 dollars credit to buy a new machine to set up a welding business.
          It would of course be better for him to get a loan and do that.
          Of course you wouldnt give him a loan of 10,000 to buy a top of the range welding machine.
          I think that idea is kind of the same for countries, loans (debt) can be a positive thing, to a certain level.

    • coldblow

      Adam

      This has some, if not direct, relevance to your post.

      Here’s an interesting thread from irisheconomy.ie with interesting attachments (well, I read the first one fully):

      http://www.irisheconomy.ie/index.php/2011/07/20/fun-with-instant-zero-deficits/

      As you can see, Karl Whelan lost patience and closed the thread.

      • Colin

        Yeah, KW got upset with what the boys were telling him, so he grabbed his football from them and went back home to Mammy to lick his wounds.

        What we have now is every Insider Paddy for himself, and Insider Paddy is gonna start peeing down Outsider Paddy’s back and tell him its raining.

  19. Word is our annual repayments will reduce to €9 bn/annum from € 10/annum approx. We enter negotiations on common CT, backdown there. Of interest to banks in Europe is the pot of gold in CT they want from us.

    Repayments to extend out from 7 to 15 yrs approx.

    Details will emerge online in due course.

    With this level of ongoing debt repayment fed with austerity budgets, we’re scuppered.

    It will be interesting to hear how Enda the Titanic will grow economy out of this one:)

    OFF topic, tragic the number of doctors we educate for export and the numbers we need to import from abroad..another fine mess…

    • Colin

      It reminds me of the story about the Captain of the Titanic ordering the engines to be put in reverse to avoid hitting the iceberg. We all know how that ended.

  20. Deco

    Speech concerning the eventual path of increasing debt levels, and bailouts, in the US.

    http://www.youtube.com/watch?v=xqfm0zrRs9Q

    The debt increase is needed to sustain the ponzi scheme.

    At the end, we see the conclusion. The money that you are putting in via taxes, will be returned to you when you need it, but it will buy less – much less.

    Same applies here. There will be no money in the “pension reserve fund” in six months – let alone when most people in mortgage-suburbia are going to retire.

  21. Deco

    Looking at various websites talking about an interest rate cut from 5.5% to 4%.

    The real issue here is Ireland’s junk rating. And this is the rationale behind the interest rate cut.

    The entire EU is a debt ponzi heap. And the junk rating hit a raw nerve in Europe.

    Basically, the best that could have happened to Ireland in regard to the negotiations over the IMF “Facility” which is actually a bailout, was the awarding of a junk rating.

    Basically, were are in the Vietnama scenario – the EU and ECB has to win the situation in Greece, and turn Ireland around, before Spain starts to explain how a 56% youth unemployment rate is not causing a proper housing crash.

    This is a confidence trick by the EU. And it tells me that Spain is in a much worse situation than anybody with a vested interest in the Euro project is prepared to admit.

    In other words – If I was George Soros, I would be shorting the Spanish Finance sector.

    • Deco

      Interestingly, Paul Sommerville’s approach to dealing with the issue of the IMF bailout, was based on the need to play hardball, in the context of the mess being bigger in other countries….

  22. Operation Overlord 11, all taxpayers and their families
    assemble immediately in DunLaoghaire, we’re heading for Monaco and other ports to join the 6000+ Dennis O Brien and other ‘Bono’ Fide tax exiles:)

    http://www.askaboutmoney.com/showthread.php?t=105428

  23. piombo

    From the details so far emerged, this is a specific and solely focused package for Greece ipso dixit Sarkosy. No Private Sector Involvement for either Ireland or Portugal. Points 12 & 13 commit to de facto and de iure Fiscal Consolidation in the next twelve months.
    Overall, Sarko and Angela have essentially told Ireland to dun do beal, pay your debts and sort out your over bloated public sector and live within your means until your public debt is back to the Eu average.
    This is bad and sad news for Ireland. Feels like Finland’s treatment under the Marshall Plan.

    • Malcolm McClure

      Wall Street Journal:
      The plan includes cutting the interest rates on bailout loans to Greece and doubling the repayment period to 15 years. Officials said Ireland and Portugal could also see the interest rates on their bailout loans cut to the same low interest rate.

      http://on.wsj.com/qwqSCn

  24. irishminx

    Hi David,

    I really enjoyed this article/blog. I loved Superquinn & I am sad that Fergal is no longer involved & that Superquinn is now gone. In the mid to late ’80′s, I lived in Sutton & then moved to Naas & I always shopped in Superquinn. My children loved going there too.

    It is the ilk of Fergal Quinn that Ireland needs to run this country & Europe for that matter. However, all we have are buffoons in both! They don’t understand, or maybe they don’t want to understand, because as long as they don’t, it lines their pockets!

    I am very sad to see what has happened to Superquinn, but I believe it is a micro view of what’s coming down the line!

    Bah Hum Bug!

    :(

  25. The Morning After

    Agh they have come home and have given us what they promised in the elections tis sure a good thing those boys were great ….the show is over now ,….its the end of the movie ..now lads put on your coats and leave …there is nothing else going to happen anymore .

    Now wait a minute do I hear a ‘Moody ‘ and a ‘Fitch ‘ rumble ?

  26. Actually, now the deal detail is coming out eg from Lucinda Creighton on Morning Ireland. As I stated above savings on Ireland’s debt burden I initially was led to believe could be approx €1 bn, this was also echoed in the Cork Examiner.

    But later from the taoiseach’s office this was clarified to be €650,000. But apparently only €350,000 is secured at present, the rest has to be negotiated but is ‘expected’ to make up the €650,000.

    Touted as a great deal, in fact its an abysmal failure.

    The savings above won’t even make up in real terms for the effects of deflation and they bring default closer.

    There has been total capitulation on CT, formerly it was non negotiable, now its up for negotiation.

    Government are delighted and are touting the view Ireland’s debt burden is manageable.

    • Lets any of the turkey gombeens take sanctuary in the news re extension of the loan period out to 15 yrs, again details on this are sparce and misleading from the government, government is still signed up to the programme to axe €3.6 bn out of the economy in the next budget and are still signed up to the stupid guarantee mentality that odious banking debt is Ireland’s debt and must be repaid.

      The reality is what they are really signed up to is the maintenance of their salaries and peacock jobs in the Dáil and Europe.

      Propaganda that this is a good deal for Ireland should be treated with the outrageous contempt it deserves.

      The deal they signed up to is nothing but a hedging insurance by borrowers they will get their money back and that Irish taxpayers will be fully burned for the full amount of that debt.

    • piombo

      Just finished reading the comunique….it is even worse than I thought last night.
      Mr Kenny has sacrificed Ireland’s Corporation Tax by stealth through his willingness to engage on the CCCTB (paragragh 9).
      In return for what?
      A return to market rates and an extension to 15 years of NEW government debt.

      Paragragh 13 contains however the real revolution.
      This commits Ireland to National Fiscal Frameworks from 2012 (aka balanced budgets from 2014 as constitutionally mandated in Germany).

      This alone with ensure Ireland’s public service costs (central and local government, judiciary, professions supplying services to the State, pensions) will all have to drop to the EU average.
      In addition, the current tax receipts of 26% of GNP will have to rise to the EU average of near 35%.

      All in all, Mr Kenny has aligned Ireland to the EU in all critical aspects of the Nation’s public and private finances. Why did he act as such at this juncture? The reasons clearly emanate from his inexperience in international finance coupled with the fear that Sarko, Merkel et al would have thrown Ireland to the wolves had he not signed up and he would have had to finance the €15 billion net public borrowing requirement in the real world.

      He simply lost his bottle, just like Mr Cowen before him.

      • url for that communique?

      • Deco

        I reckon it will come to this.

        The Troika will “suggest” that a levy is placed on profits that are taxed at 12.5% to pay for the bailout of the banks…..

        Sarko is getting jam on both sides of his bread, without having to get his fingers covered in jam.

  27. Malcolm McClure

    Calm down cbweb. yesterday was D-day, not Dunkirk thanks be to God.
    As Chrchill said “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

  28. Praetorian

    So the moral of the story, Feargal Quinn was good, great even at retail, even did research of trends and habits in the US and low and behold he could see another trend coming, collapse, so he sold up and can now chill with his millions. The guy is/was good alright.

    The high street is in the dead zone, economy is tanking, unemployment is still high, and no creativity from government. I don’t know what start Quinn had in life, he was excellent at what he did, but it is that lack of excellence in Ireland which has brought us to the precipice.

    • Colin

      I’d love to know what he did with his millions from the sale of Superquinn, did he buy Anglo/AIB/BOI/ILP/EBS bank shares? Did he buy a few acres of bogland near Athlone? Or was it apartments in Bulgaria? Or has he a particularly high mattress? Or does he like visiting Switzerland and finds the Swiss to be very secure and discreet at looking after things? Tis a pity Uncle Gaybo never asked him for advice.

  29. Malcolm McClure

    Brendan Howlin on Newstalk this morning said that ‘everyone in Europe knows that Ireland stands by its 12.5% Corporation Tax rate as its position as it enters any negotiation about bailout terms and conditions.’… Remember, negotiation implies some flexibility.
    What we should be doing is discussing the deeper implication of yesterday’s meeting, which is, as I understand it, the harmonization of basic financial criteria across Europe. Everyone seems agreed that the Euro will only survive if some basic and unviolable criteria are put in place.
    What are these criteria and how do they affect our sovereignty?
    ie What is left for the Dail to do? Do our TD’s become front men and managers for a European agenda? Is this bad if it ensures our economic survival and perhaps leads to prosperity?

    There seems to be a widespread feeling here that FG and labour are incapable of whipping back to order all the things that FF allowed to get out of hand.

    Maybe we should give the Eurocrats a chance to see what good they can do.
    After all, what have we got to lose? Things couldn’t be much worse?

    • Re “Things couldn’t be much worse?”

      Wait until the next budget!

      We’re contrary to propaganda much worse than Greece. Greeks are the bad boys hiding their money from government, we’re the ‘good boys’ who have no money. With a bit of work, the Greeks can be put on their feet ‘possibly’. Or, to avoid sexism, we’re ‘the fur coats and no knickers brigade.’

      So, fair dues, no thanks to FG/ILP, they embarrassingly extended a few crumbs to Ireland given what was on offer to Greece.

      Stupidly FG/ILP said there would be no private sector involvement for Ireland and we would even negotiate giving up right to set our own CT!

      To understand ILP/FG Tweety negotiators

      http://www.youtube.com/watch?v=uQpBigS6KdA&feature=related

      We are in a far worse state than Greece. But ILP/FG have swallowed the propaganda they pass onto us, that we’re not.

      In fact, we’ll plunge the economy into recession to grow our economy out of recession….Hah. hah

      Sovereignty at this point is history!

      • Malcolm McClure

        Re: “Sovereignty at this point is history!”
        That is the reality that most people are just waking up to. The Dail is now just a meeting place for passive place-men who enjoy the role of rather superior Euro-county councillors. National assets will shortly become Euro-assets held as collateral for our debts. The ESB for example will shortly be renamed the Eurotricity Supply Board and so on ad nauseam.

        Welcome to tomorrow’s world.

    • coldblow

      Malcolm

      Re your last two sentences, this is the problem. Europe has shown itself to be incompetent (relatively) in dealing with the emergency to date. Moreover they seem to have put the interests of the banks above the peoples and of the core above the periphery. And of long term stability to short term poplitical advantage (eg Sarkozy). There is good reason to believe that they are not as incompetent as our own rulers but that’s about as far as it goes.

      Re your second last paragraph, I don’t think FG or Labour would have done much different if they’d been in instead of FF. Difference in style perhaps: less cowboyism, more piety.

      I remember reading Hutton’s The World We’re In four years ago. Here he contrasted the short-termism of the US-Anglo model, with its shareholder value, mergers and hollowing out of industry with the European model. It now looks as if the rot had already long set in in Europe in terms of the treatment of the financial class. By the way, I must have a look again at that book as it gives an interesting description of how the telecoms industry developed in Britain and Europe in recent years – see where Lowry and O’Brien fit into the bigger picture.

      In short I see little prospect from the current leadership, either in Europe or at home. Might be a good time to start bying those mopeds you mentioned before.

      • Malcolm McClure

        coldblow: It’s the leaders of Europe who cannot agree until their backs are against the wall. Some of the Euro-bureaucracy has proved to be quite competent. For example, takel “EUROCONTROL : working Together to build the Single European Sky” That seems to work quite well so long as the Spanish traffic controllers don’t strike. Harmonization of Laws still has a long way to go but there are good ideas in there. Quality standards, telecoms, patents, etc all benefit from harmonization.

        Why should financial affairs be so much different?

      • Colin

        The French used to have a saying, going something like “to govern is to choose”. Now, the French government and Sarko in particular seem to prefer to do nothing (a la Cowen 2008), and when the shit hits the fan like in the last week or so, choose to do as little as possible to face up to the problem.

        Basically, the will to sort out this PIGIS debt is not there, as it would force French banks to take a haircut, so we get a band aid here and a band aid there approach that the French think will convince the markets that the € is all fine and dandy……until the next event….but eventually, there’ll be no more road left to kick the can down, and the shit will really hit the fan at that stage.

  30. Rallies are short lived

    ‘ kicking the can down the road ‘ is the euphemism to selling ourselves to the EU …….so where will the can go ? To a ‘Big Panic’ …its the latest gift inside the Fudge Cake Co .

    How do you recognise a Big Panic ? Dont worry you wont have time to .

    You will definately feel it ….pale face is a starter followed by …..a missed heart beat ….then a shake of ice cream …after that …Pure Water is your only cure

  31. @Praetorian

    ‘Excellence’ …exactly I agree .How do you educate the culture we use to embrace that ?

  32. SLICKMICK

    The punter who defrauded the welfare system of 250k gets a 12 yr prison stretch.How long will the staff who diddled €3 mill from a punter in Anglo get ? You get less for murder ! Fergal Quinn is a waffler, couldn’t compete with the foreign chains.Typical rip off merchant.

    • prison sentenes operate like a pOnzi scheme too except in the inverse to wealth creation …the poor receive a dispropotionate sentence . What reason would a bank manager want to rip the social welfare scheme he can do better elsewhere where the sentence is unenforceable in law and he knows it.

    • Colin

      See earlier post. Life is unfair. The law is unfair. Once you accept that, protect yourself. Don’t give the bastards a chance to screw you.

      Has anyone seen Euromillions Michael Lynn anywhere recently? Where are the investigative reporters? Not on the Algarve by the looks of things? It makes one hell of a difference having a higher education in Ireland, and even more of a difference if its awarded in Law or Accounting, since it seems to repel reporters from white collar fugatives in the same way garlic repels the divil himself.

  33. thirdeye

    When a poor person robs a bank or state welfare systems gets a hefty prison sentance and made an example by the media and so called wider society for his or her actions.When one of the ruling elites golden circle of friends is caught witht he hands in the kitty well the response is quite different to avoid at all costs any investigation of any wrongdoing as further examiniation open up the can of worms and the links between business,political elites and financial links.Like the priest ffrom the pulpit do as we say dont do as we do mantra comes to mind.

  34. piombo

    @cdweb,
    Forgive me for not getting back earlier with the url, but I was out and about.You managed to find it anyway.

    While we all accept that Ireland is not high enough on the EU Totem Pole, and while I have never supported a debt default, I am really baffled as to why Mr Kenny and Mr Noonan did not push for the Eurobonds option or at very least the backstop guarantee of the EU super fund.
    I cannot believe they didn’t try and it would be the least to be expected of them if they explained why this option, if requested, was not persued during the summit.
    Methinks there must be something else in the oven, but it is not just time.

    • @piombo

      Noonan is aquiescing by stealt payments in national kind that include resources and produce that are carefully thought out by the twin sisters of charlemaigne.You only have to look at the common fishery policies , whisky production , and the arrival of foreign managements from those countries in recent yeaars.

      Make No Mistake we are paying a BIG PRICE

  35. Deco

    The US Federal Expenditure/Borrowing Dilemma, as described by a committee charged with finding common ground between the two main political parties in the US Congress.

    http://www.bipartisanpolicy.org/sites/default/files/Debt%20Ceiling%20Analysis%20FINAL_0.pdf

    One one of the pages there is a description of the Daily Cash Flow – In and Out.

    The US can no longer afford social security, or ongoing military engagements. Simply put, the money is not there. This is something which no media organization is telling us. They are instead concentrating on the “theatre” between the two parties. Actually, the real problem is the numbers – and there is a lot of denial going on in the media concerning the numbers.

    Therefore we are facing two prospects of a Lehmans meltdown.

    1. In the EU – when Spain discovers debt holes, insolvent banks, and starts to make up it’s mind about what happens to bank balance sheets when unemployment in the wider economy hits 20%.

    2. In the US, where the bailout deals of Wall Street have done just that and nothing for the real US economy. And where inflation is under-reported.

    The stuff that will matter in coming months is the stuff that the mainstream media is not being honest about. And yet, it is all very plain to see.

  36. Europe’s leaders are the real masters of comic timing.

    So should you buy into the euro-euphoria? No, I say . Europe’s politicians are “masters of the art” of disguising bail-outs: the latest buzz phrase is ‘selective default’.

    “That means that yesterday’s rallies in Europe’s stock and bond markets are unlikely to last. What’s more, the bounce in the euro versus the pound and the dollar could well prove to be short-lived. So buying into the current euro-euphoria could turn out to be very risky”.

    What TD’s will win ? My bet is watch those who visit their shoe repair man and you will see that those who will install a ‘rubber bounce ‘ underneath their soles ( maybe souls too ) to assist them from the sudden unannounced Big PANIC will be re-elected again.

  37. Class Default

    Ex teacher (~ a shadow pensioner & old fogey ) MOF Noonan should tell the class electorate that there will be a ‘Sovereign Default’ or listen to us :

    http://www.youtube.com/watch?v=qga5eONXU_4

    • Deco

      Noonan – it will not take an enormous crisis to prove that Noonan is barely up to the job.

      • The French have a lot of dirty jokes on him …only that they are told in silence , the earlier ones were when he met Lagarde …’ if he wants to be a little lamb let him pee ‘.

        • you cannot beat the French when they conjure how our Noonan bullies our country to incontinent .

          Which basically means leads our country down the toilet which brings to us a new meanting in his classroom to the Irish expression : ‘ an bhfuil agam dul amach?’ Essentially , can I get out of here ?

          Like a typical west limerick school master is capable of undecipherable expletes and head butting.

  38. Philip

    I am waiting for Aug 2nd. If that is not sorted, we are in a new scene completely. The reality of our junk status is merely a reflection of the junk status in markets generally.

    We need to understand what we really mean by wealth today. Hint: It has nothing to do with banks or markets.

  39. Philip

    We need to understand what we mean by progress http://www.eugenelinden.com/news5569.html

  40. Deco

    Ireland – with a substantial proportion holding on by the edge of their fingers.

    http://www.independent.ie/opinion/analysis/the-working-poor-and-their-lives-of-quiet-desperation-2829830.html

    Tax increases, and a residue of inflation from the boom years, that has still not been corrected by a deflation that is practically inconsequential.
    Not just the income levy, but fuel tax increases, and various levies, including local authority rates and bank repayments hiking up the cost of retailed goods, has substantial numbers of people in a bind.

    The way out for this section of the population is not exactly great – it consists of competing with each other for overtime, which is taxed at 52% marginal rate. And considering that this section of the population has bare pension entitlements, we are talking about people who have to save for old age – starting off from 20 euro a week.

  41. Malcolm McClure

    Freddy Forsythe draws a historical perspective:
    http://bit.ly/qUxuvt
    Is it time to scramble back under the UK comfort blanket?
    Divil ye know, etc?

  42. dwalsh

    I suppose Superquinn and other such companies sold at the height of the boom for crazy prices were priced not on their retail profit potential but on the basis of their asset capacity to raise leveraged cash…loans for further aquisition and investment.
    Would this be generally right?

  43. MK1

    Hi David,

    I hope things are good with you. And well done on the Bulmers!

    Before we go onto national problems, one ‘solution’ I have been
    pushing to try and get people to understand and absorb is the
    possibility to tax those that made a lot of wealth during the
    credit bubble. Its not a backtax but a tax of the present wealth.

    The equation of ‘the crash’ should be well known as something
    like thus:

    ExcessiveCredit/Loans -> ExcessivePrices
    (bubble burst)
    Bad Loans -> InsolventBanks -> NationalDebt

    But one aspect is that the Credit given out was used to pay someone
    and there was indeed a benefactor.
    Loan -> Benefactor

    Lets take the case of SuperQuinn as a working example. SuperQuinn
    sold out for 450m (or less, depends on the figures you read, 350m
    or whatever). This was ‘paid for’ by credit from the banks given
    to the ‘boyos’ consortium, McNamara ‘et al’. As a business,
    it may have been making a book profit, but like many its interest
    payments would have been a drag, plus assets would have lost value
    after the burst rather, negative ‘equity’.

    > Some creditors win and some lose and away we go.

    Given the above situation, if the creditors go bust, the banks will
    take a book value writedown, and it is WE THE TAXPAYERS who are
    the major creditor that will lose. And who has gained in all the
    above equations, not the developers, but none other than
    Fergal Quinn and family.

    THEREFORE, doesnt it make sense to tax his wealth now, and in
    some way clawback the errors that the states bank guarantee
    has made. Of course, we wont be able to make the equation zero,
    but a tax of say 80% on his wealth which is > 20m, wouldnt
    that be a start. Fergal surely cant complain that he is left
    poor. Granted, such a tax may be an over penalisation, and the
    level may indeed be more of a 50% (the credit bubble premium)
    rather than an 80%, or indeed mathematically 48.4532675% might
    be more accurate!

    David, please give this wealth tax a bit of thought and the
    equation of the money-go-round that was.

    By the way, I wouldnt put Fergal Quinn as the first person to be
    taxed because he wasnt involved in ‘the game’ and didnt leave
    with a bounty. Nevertheless, he ‘accidentally’ gained when
    the ‘consortium lads’ played a bet, as part of the credit
    frenzy that was.

    Enjoy the summer, and the bulmers!

    MK1

  44. pablos

    I always figured that he could see what was happening. He claimed at the time that his sons weren’t interested in running the business. It would be interesting to know what they are all doing now.

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