September 1, 2011

Government is fighting the wrong war and still losing

Posted in Irish Independent · 209 comments ·
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When are the powers in this country and internationally going to understand that this economic crisis is a debt crisis and will only be solved when the debtors and the creditors sit down and hammer out a deal with each other? This goes for debt between countries as well as internal debts.

The way to solve a local or global banking crisis is through the medium of “co-responsibility”, where the debtor and the creditor equally share the blame and the cost. One party borrowed too much in the good times and the other lent too much. That’s about the height of it.

The mature and responsible way to solve this problem is to do a deal which involves each party paying.

Contrary to popular belief, this crisis didn’t start in 2008 with the collapse of Lehmans or the collapse of the Irish property market. The debt crisis started in Ireland in the late 1990s and early 2000s when the banks started lending wildly.

The failure of the vast majority of Irish economists and policy makers was not that they didn’t predict the bust, but that they failed to understand what all this credit was doing to the underlying economy.

And unfortunately this thinking remains the establishment view — so rather than looking at the causes of the crisis they are looking at the consequences.

So, for example, the Irish establishment still seems to think that the collapse is the problem rather than seeing that the collapse in house prices is the result of previous lending, and is now also the cause of present indebtedness.

Unlike previous slumps, this is not a recession prompted by a massive oil shock, a war or some enormous technological change, which leaves certain economies stranded in the past. On the contrary, this is a payments crisis, where the lenders can’t accept that they won’t get paid and the borrowers can’t see a way out. So the borrowers stop spending until they get clarity about how much they will have to pay back and the lenders stop lending until they know for certain how much they are going to have to write off. As a result, the economy stalls.

If you doubt this, just look at the news flow in the past 48 hours. At home, retail sales slumped again in July, the banks have reported that they won’t meet their own modest lending targets because people don’t want to borrow and all the while, mortgage arrears all over the country are rising relentlessly.

Internationally, things aren’t much better. The US is losing altitude, as is the UK, markets are falling and even in Asia growth is slowing down.

This is all because there is too much debt.

But rather than focus on this, our politicians are still dealing with this slump as if it can be solved without co-responsibility on debts. Debt forgiveness is part of this co-responsibility agenda, yet even in the past few days we have had Irish politicians who won the election on the platform “not another cent” to the banks, coming out defending the interests of the same banks. They are fighting the last war — and if the last three years has told us anything, it is that it is time to start thinking afresh.

How do you solve a problem of too much debt? You solve it with less debt, not more debt. You never make a balance sheet stronger with more debt, you make it stronger with less debt. This is why we have bankruptcy procedures. In fact, strange as it may sound, bankruptcy is good for business.

In the US when a company is in trouble and its balance sheet is broken, it can go into Chapter 11, where the creditors of the company are told that they will have to take a huge haircut if they want to get any money back. Crucially, the company is saved.

In Ireland we have a similar legal mechanism called “administration”.

The reason we have these mechanisms is that they mean good business. Consider a company that has too much debt and is contracted to pay the debt, but if enforcing that contract will cause the company to fold, then enforcing the contract is reckless for everyone concerned. Therefore, it is financially irresponsible to enforce the contract. This rule is the basis of all business.

However, if you think like a lawyer and not an economist, you are mesmerised by the sanctity of the contract and don’t see that the very contract is now reckless because underlying conditions have changed. So the lawyer will always undermine a business that is in trouble.

The same goes for a household. A household with too much debt that can’t pay its bills will sink if it is forced to pay all its debts, so it must get debt forgiveness. There must be co-responsibility.

We in Ireland have to stop thinking like lawyers and think more like business people when it comes to resolving our debt mountain. Enforcing old debt contracts when the underlying economy has changed dramatically makes things worse not better.

The great economist Galbraith once said: “Faced with the choice between changing our mind and proving that there is no need to do so, almost everyone gets busy with the proof.”

On the issue of solving our debt crisis, we need to change our minds; but understandably, the Irish establishment is busying itself proving to itself that it doesn’t need to change its minds. In the process we are losing time and the crisis gets worse. Very soon we will run out of time.


  1. dorn

    I enjoy most of the articles on your blog, and sometimes even leave feeling positive about the future. Then I realise thats its all just words on a page and you are generally preaching to the converted. Knowing what has to be done to fix things is all well and good, but how do we make these things happen? We live in a broken democracy, where one failed government follows another, with more broken promises and empty gestures. How do we get them to see the light? Or how do we move on and get a new government thats on track with the uncertain economic times we find ourselves in. I realise that you’re an economist by trade – not a politician, but does anyone here know how we can put the people back in power, and get their needs catered for, rather than the current for-the-bankers, for-the-builders, for-the-rich puppet government?

    • Ronan Duffy

      @dorn – I agree with you completely, but even you are missing out on including the final pillar of the establishment, the permanent government public and semi state sectors, who, while believing they’re suffering, have seen nothing yet. It’s beginning to look, as David is clearly suggesting, that our establishment won’t face the reality of debt until the public trough is utterly empty. I believe that day is coming – it’s all about the numbers – and it will happen overnight when it happens. And of course the protected sectors will blame outside factors, but this time they will have no money. Sadly, the sooner the better.

      • Elpenor Dignam

        Actually Ronan, it’s a lot more straightforward than that; there are the haves and there are the have-nots and the haves have been ripping off the have-nots, with impunity, since the 1980s – one day, soon, the have-nots, realising they continue to be hoodwinked by the haves, will simply take back what has been stolen from them, and all these economic discussions won’t matter a jot.

        • Ronan Duffy

          Agreed, but you have to define the haves and have-nots. If you don’t, when the dam bursts the scramble will be chaotic and the result will be a new (not entirely different) set of haves and have-nots. Leadership still has to emerge. anyone have any idea who the leaders might be? Anyone?

          • dwalsh

            @ Ronan Duffy
            What Elpenor Dignam is talking about will not be a theoretical discussion or a matter of nice clear definitions. If it occurs it will be a chaotic mess.

            It may well be that is as good as humanity can do at this point in its development.

          • Ronan Duffy

            @dwalsh – Absolutely I agree, which is why, despite being a known optimist, I see the coming chaos and plan to be out of here. At 50 I am leaving the country next week to work elsewhere for the first time, out of necessity, as for me the time for opinion and comment is over and survival, economic and physical, is now the task. I hope I’m not tlready too late. But I agree with you and Elpenor. Disaster is looming.

          • dwalsh

            @ Ronan Duffy

            I wish you well wherever you go. I hope it is not to America!! If/when disaster hits America will be hell on Earth.
            I’m an optimist too. In my opinion Ireland might be a relatively ok place to weather the storm. I hope so :)

          • Elpenor Dignam

            Look irrespective of the political direction you lean we all want to see a fairer more just economic system, not just in Ireland but globally. We we lack right now is real leadership and that means governments facing up to harsh realities, the system is bust, this flow of wealth upward cannot continue without there being serious serious repercussions. To quote JFK those who make peaceful revolution impossible, make violent revolution inevitable and if Ireland be a case in point, our government are on a collisions course with a lot of angry people with little left to loose.

          • dwalsh

            @ Elpenor Dignam

            See my comment below.

    • miec

      Dorn I agree and I feel hopeless about the future of Ireland because none of the powers that be will take heed of the above, they will keep chasing their tales. It was obvious that massive credit was going to deeply affect this country, well it was to me. I was not one of the people to benefit during the Celtic Tiger and another friend was in a similar position, we both reasoned at the time that if a recession will come neither of us will be dramatically affected. At the time I was too poor to buy a house or get credit and besides I never liked it. I am deeply grateful that I never got into huge debt like so many people are facing. I really don’t see a way out of this mess it just keeps on getting worse.

      • ckone

        This is the bottom line really, as sad as it is, a very very small majority appreciate these articles and the preching of a couple of other worthy economists. I try directing people to this site but they’re not interested. Whatever rte tell them will suffice….according to the papers today, our economy’s growth is being halted by the US and UK slowing us down….are these people insane? En-masse, we deserve our fate through ignorance and gullibility.

      • Same here.
        I just went back to college during the boom and turned my back on consumerism. When I began visiting this blog I got confirmation that I was not alone in how I think and was very pleased to see that not all Irish people are interested in money and feeding their egos with useless crap such as the Irish Times property porn supplement
        I am a much happier man because of it too!

    • transitionman

      Dorn
      This article returns to David’s theme of getting everyone in the room. All the readers here understand the logic. I have formed the viewpoint that you will not get politicians or governments to see a similar light. You say you want to put the people back in power. I say cannot be done through existing structures that should be self evident from the last election. If you read Davids closing line in the last few articles you will see those that kick the can down the road are running out of road adove article ends with “Very soon we will run out of time.” I believe there will be no transition to the next level. Life will become” localised ” as opposed to globalised in a not too distant timeframe. Read Brian Daveys article from Feasta http://fleeingvesuvius.org/index.php/2011/08/25/danger-ahead-prioritising-risk-avoidance-in-political-and-economic-decision-making/
      Another economic bolgger Charles Hugh Smith has similar theme today http://www.oftwominds.com/blogaug11/crisis-of-capitalism-8-11.html
      An agricultural green island with a population of 4 million is the right place to be right now. It is however a shame that so few know it.

  2. rebean

    This is a good article and debt forgiveness will definitely help our economy.There is another option that we could explore . We could push out the mortgages for a longer period. The mortgage on 200,000 euro is about 1000 a month so if mortgages were pushed out another 10 years a portion of the debt could be restructured in this way. The rest of the debt could be written off. I think its important for the optics of the situation that people be seen to be treated with fairness and in the same vein there is a price to be paid for everything. If however someone was lent money recklessly then they should have the option of returning the property to the bank.

    • molly66

      when the money runs out and the people are out on the streets,its too late all the semi state workers on good wages and very good lump sums and pensions will share the pain that joe soap has and is feeling for what seams like a very long time.i was talking to a retired cola worker who’s pension was reduced from four grand a month to 3400 and he said he would find it hard to live on that.i am self employed for the last 20 years and have never seen things as bad as they are now in 2007 i had five people working for me ,i now work 2 days a week on my own.when i here people wont spend i feel like screaming people are broke the country is broke and yet our government has its head up its you know where. the red tape is getting longer and longer ,the government is a waste of our money.and can’t /wont do what we know they should be doing. would the same people be in power now if we where voting now.

  3. Deco

    This government is fighting a war ? That must count as news to me. Seems to me that they are shying away. More sober than the last crowd, and that is about the height of it.

    • Malcolm McClure

      Deco; “This government is fighting a war ?” –Naw. We’re just gettin’ saf’ened-up for the troubles ahead.
      David McW and the rest of the Irish media have willingly embraced their role as part of the ‘saf’ening-up’ process. Debt forgiveness is about as radical as they are prepared to go but they present it as the utter limits of civilised economic theory.

      Reminds me of Louis XV, and “Après moi, le déluge”
      Of course we all know what follows. A chaotic republic.

      Ireland since 1922 has considered itself a republic, but in reality it was comprised of the dukedoms of vested interests. The parallels with the reign of Louis XV are striking. The ministry of the Duke of Bourbon (= DeValera, Haughey, Bertie) was marked by many incidents which resulted in serious economic and social problems. These included the persecution of Protestants (1726 = preWW2); monetary manipulations (=Punt + Euro); the creation of new taxes, such as the fiftieth (cinquantième = VAT); and the high price of grain (= oil, etc.).

      Debt forgiveness = ‘Let them eat cake’ …indeed.

  4. Great article. Pravda RTE had a guy on this am whose name shall be nameless beating the same old tin can: “We need greater austerity to prove to the markets we are serious about fixing our economy, we can do it, we are not like Greece”

    Also funnily enough and no coincidence intended not, the ESRI have published in their latest report, we should bite the bullet and cut more, not less.

    Actually no, unsurprisingly there were no spokespeople for balance expressing arguments contra to the above position. Why? Because of PRavda RTE ubiquitous dirge bugles propaganding once again:)

    The effing markets are not demanding we cut the bones out of our economy with slash and burn budgets salivated over by gombeen spokespeople such as your man above, so the gombeen can employ a few extra interns at no extra cost to his business, or pay people less than the minimum wage!!

    The markets are punishing us because of our S&B policy that has us at junk status. The markets are punishing us exactly because we are not following the sensible advice DmcW has above.

    The RTE government propaganda machine is no Washington Post, the only Watergate we can expect from Pravda RTE is the demand for a higher license fee in return for more Lord HA HA propaganda:)

    Let’s extend Slash and Burn Economics to include banks and bondholders!!

    • Deco

      “We need greater austerity to prove to the markets we are serious about fixing our economy, we can do it, we are not like Greece”

      Here we go again. “Veneer-economics”. Impress the international finance capital providers, and the fun can continue. Never actually diagnosing the problem.

      • At this point there is still alot of inefficient public spending in Ireland that can be reduced however any further cuts without any investment or spending stimulus will push the economy closer to recesssion, without a change in the fundamental inequity and unsustainability of the current strategy further cuts may lead to an unchanged debt/gdp position and thus no real gain for further economic pain, ineffeciency must be removed but any money saved must now be targeted into investment and not just handed over to continually repay assumed private bank debt. It seems the only objective is to cut , despite rhetoric there is little talk let alone action to generate growth, considering some of the problems other Nations have faced this is not unsurmoutable we are a small state of 4 million with alot of human capital and resources burdened with an unsustainable amount of inevitably negotiable assumed private debt, to many other nations Ireland’s Economy could be easily turned around if we had the right people with international political and economic skills to represent us, we do not and as I have stated many times before Ireland is unlikely to ever reach its potential without a radical overhaul of the current political system whereby Irish people can directly elect the executive , elect a separate non captured legislature and divide the vote for local representation from national representation. Ultimately all of the economic issues are subordinate to the fact that we as people cannot elect people capable of governing the country to maximise its potential and once and for all provide a sustainable economy so that ALL of its people can live here in relative prosperity.

        • Deco

          There are times when I look on in complete amazement at the tinpot little emperors and the layers of titled wasters in this country, and wonder how the Danes manage, or how a city like Hamburg or Munich with an equeivalent population manages.

          The whole state complex needs to be de-verticalized, and made very horizontal. The height of the authority pyramid needs to drop by 30%, at a mimumum. Apparently something like 18% of the employee payroll in the HSE is management. Too many cheifs. Not enought actual work being done.

        • dwalsh

          @ businesslunch

          “…will push the economy closer to recesssion”

          Hello! surely you mean collapse – or at least depression? We have long since passed the “recesssion” milestone.

          • No recession is when GDP is no longer growing but declining, obviously Ireland’s Economy has collapsed since the Celtic Tiger Charade but once GDP is growing it is not a recession, which is relevant for the purpose of a debt/GDP ratio objective as stated. An economy could shrink by 80% but then begin to grow again and as stated once GDP is greater than it was on the previous measurement an economy is deemed not to be in recession.

    • Woody

      A good thing to get rid of is the RTE privilege Tax to watch TV. Or if not force RTE to drop ALL forms of sponsorship and advertising and ban revenue to them from this like the BBC. They should not be allowed to have it both ways. RTE’s domanence in the the Irish Media sector is uncompetitive and even if you had millions to start up a new TV station RTE and the Gov will not allow it, unfair competition, and so on, you all know what I am talking about.

      • Praetorian

        @ Woody – Could not agree more. They currently have a virutal monopoly over the worst kind of programming althought TV3 is attempting to give them a run for their money. Overall, extremely poor television on Irish channels, very low grade stuff, and you can’t blame the RTE-Pravda budget which is considerable.

      • Deco

        Pravda uses the licence to essentially squash much of the rest of the media. The local radio station in whichever area you live does not benefit from being able to exhort a levy from you to compete with 2FM. The whole thing is about fattening the elephant in the room, so that the others cannot breathe.

        The fact that the Competition Authority of Ireland are sitting on their hands over the fact that Denis O’Brien (tax resident somewhere else) is controlling an increasing share of the private sector media is another disaster.

        Regulation, Irish style. A farce.

  5. Deco

    David is 100% correct. This crisis started when the banks started lending recklessly. This is completely obvious.

    The problem with this truth, is that it undermines the entire establishment right across the board.

    • “undermines the entire establishment right across the board”

      +1 At a certain historical juncture, DmcW has it above,

      “The debt crisis started in Ireland in the late 1990s and early 2000s when the banks started lending wildly.”

      ..politics became a tangent to the circle of the banks and politicians at the most senior level became one with the banks.

      The banking burgher borg took over the minds of FF and assimilated them. Was it DmcW invented the word, bankocracy, the word sums up what our democracy of the people has turned into.

      Given a referendum, we would have supported the culling of banks and bondholders advocated here.

      This government has no mandate because it has refused to do what the people want, expressed in the article above. In the Halls of Wall Street and Brussels, we are a laughing stock because of this governments policy decisions.

      Fellow yeomen and vassals, we should treat this puppet government with the disdain it deserves:!

    • dwalsh

      @ Deco

      “The problem with this truth, is that it undermines the entire establishment right across the board.”

      And not just the establishment here in this country. Let us not forget the reckless lending was a global policy instigated by those who own and control the Federal Reserve central banking system. Anyone who pointed out it’s obvious fallacies was at best ignored and at worst fired or had their careers destroyed.
      As colm brazel says, Financial capitalism has usurped the political order and has it in its grip – or is it in its pocket?

  6. Consistent with the sentiments of many posters here over the years!

    The truth is that none of our decision makers are true business people! Over the last 90 years we’ve been governed by mainly school teachers and so it is today.
    They by nature lack the confidence to make decisive moves – That’s why they’re always commissioning a report!

    Because they are not business people the following sentence is only a string of words to them;

    “Fear and success are always found together!”

    The reason why they will not and never have taken courageous decisions is that they lack confidence……and where does confidence come from? -
    It comes from overcoming fear! (Ask any Entrepreneur!)
    So we’ll have to wait for a British or French or German initiative!

    I’m not terribly religious however The Lord himself in his thirty three years on earth only once dictated one prayer for his followers which had a key line;

    “and forgive us our debts, as we also have forgiven our debtors” Matthew 6:12 (King James Bible)

    But hey surely God’s wrong and the Irish establishment are correct – again!

    So we should just pray for the French, British, German or anybody else but our lot to come up with a scheme of debt forgiveness or something we can copy before it’s too late?

  7. stiofanc02

    One thing is for certain, if someone doesnt purchase some Sudafed for Noonan, we wont be able to hear him at all. This guy is as bad or even worse than the last congested fella, with the the sleepy, nasal, tired barely able to speak delivery, everyday! Imagine listening to him this coming budget. Jesus H. Kee-rist, were doomed.

  8. gizzy

    I laughed out loud when I heard Mattie McGrath of Fianna Fail warn of the moral hazard of debt forgiveness.

    Also we have forgiven the banks twice, when they could not pay their deblts to their lenders we gave them loans to clear their debts and when they could not clear those we swapped them for equity.

    But they have a voice close to the permanent government who make theese decisions. Ordinary borrowers are a disparate group with no collective voice so are easy to ignore.

    We do not or never had democracy we have bureaucracy. It will try stick with previous bad decisions forever and endless politicians will waffle on air about whatever the permanent government wants to justify.

    • dwalsh

      “politicians will waffle on air about whatever the permanent government wants to justify.”

      Spot-on!
      No matter what rhetoric they spew on the hustings, once they pass into the clutches of the ‘permanent government’ it’s as if they get an implant and suddenly they talk like a ‘permanent government’ spokesperson; which is to say – just like the former shower did.

  9. adamabyss

    Off-topic here is a good article about people and their storage habits – more evidence of the obscene consumerist culture that surrounds us.

    http://www.bbc.co.uk/news/magazine-14718478

    • coldblow

      We had a lot of stuff in storage for two and a half years and it would probably have been cheaper to throw it all away and buy new. But for me it’s like throwing away good food, doesn’t feel right. Also we thought we’d buy a house earlier, but prices remained stubbornly sticky for all of that time. When they did finally move so did we. You don’t realize how much you’ve been paying for storage until you add it up at the end. The bloke who moved us offered to sell us an unused leather suite. He owns a storage container and a woman had rented it over several years to store the suite and some other stuff. In the end she gave him the suite as part-payment of the storage bill. He told me he won’t let people store long term with him any more as it’s just plain wrong. He also takes away rubbish in his van to the dump. I must give him a ring soon to come and dump a load of stuff we have – he brought it down from Dublin for us at the end of 2009 and then we had it in storage…

      I also knew a fellow in Dublin who rented a container for his books – he had several thousand, few of them ever opened I suspect.

      The article mentions Oliver James. I didn’t read Affluenza but They F**k You Up and Britain on the Couch are very well worth a read.

  10. Dorothy Jones

    From David´s article above: ,When are the powers in this country and internationally going to understand that this economic crisis is a debt crisis and will only be solved when the debtors and the creditors sit down and hammer out a deal with each other?´,

    Well the people of this country elected same powers that be, so to en extent got what they asked for. DSE had an enlightened candidate in Paul Sommerville who understands the mechanisms behind the creation of debt and how to deal with the issues. Instead Lucinda(¨I will look up the details during the break¨[sic.VB]) sits in the saddle. Äs the man says…..enough said

    • miec

      Sorry but I have to say that ‘some’ people elected the powers that be, the rest of us who voted otherwise have to live with the consequences of the majority.

      • dorn

        You both seem to be implying that there is another option for government out there? FF, FG, Labour are all the same bunch of mis-educated twits in different coloured suits.

        SF, Greens and the rest didn’t have enough candidates available to form a majority government last time I checked. So how exactly do you propose make your vote count for actual change?

      • Dorothy Jones

        @miec
        Yes you are right of course, apologies.

    • Deco

      The party machines were all terrified that Sommerville might get elected. They saturated the area with canvassers. Sommerville was effectively kept off Pravda, for being so vociferous on TV3 (The VB Show).

      We have Lucinda as Minister for Europe – Is Europe not in enough trouble already before we throw in another barrister to work on an economic crisis ???

  11. Woody

    As usual David you are spot on. I had hoped the new Government would be miles better than the last but I fear not. I truly fear for the future for us in Ireland. All these new taxes and cutbacks are pushing me more in to the red and I’m already up to my nipples!

    I am just a number now, a statistic on a welfare document, when I hear the unemployed numbers on the six one news I think, Hey I am one of them, this is one of the few things I can be proud of these days!

    I have been on welfare since I was forced to close my property maintenance business in 2009 after 12 years. I employed 5 staff and in my best year I earned a salary of €50K Gross €30K-€40K gross was an average. As my wife said, I would be better of working in a factory.

    The builders I did maintenance work for all got taken up by NAMA, they never paid us what we were owed in 2009 and we didn’t go bankrupt, we didn’t go under due to reckless spending, we didn’t fail in running our business, we didn’t cheat or over charge our customers as this would kill word of mouth referrals which built our business, We were simply forced out of business buy not being paid by the builders while they said to me “It’s terrible but what can we do?” and like George Bush and his famous, “now watch this swing on the golf course,” the builders went off golfing in their Rang Rovers.

    I kid you not, one developer I did landscaping work for shafted me for €2,500, I went to his home in Killaloe and while he was painting the walls in his new pool house, he told me that the banks had stopped lending to him on his housing estate development where we did the work because of the economy etc…
    He told me that if I took him to court he will tell the court that I did an unsatisfactory job and therefore he won’t pay me! He then said wait a few months and come back to me and he will pay me in bits and bobs, I did and I got the same story and no payment. I gave up in the end, disheartened.

    I was able to get the Back to Education allowance which I am grateful for and I am just completing a Masters degree in UL in Interactive Media, I returned to education in 2009 to train for a new career and now that I am qualified there are no jobs.

    I enquired about a Intern position with FAS and was told that I would have to sign on welfare for three months before I could apply, that’s crazy and very Irish as I am already on welfare, I was told time on Back to education does not count, so I must go back on the live register and look for jobs that are not there.

    I contacted Joan Burton(office) by email and asked was the Intern program not to get people experience and in to jobs, why do I have to sit around for three months.
    I suggested that FAS should look at cases individually, especially if an Intern position was advertised. I received a long letter which just said sign on for three months.

    This type of thinking is not out of the box and is the old way of thinking, where is the inovation? Where is the out the box thinking, apart from cutting welfare, public jobs and new Tax burdons on householders, where is the action? the change we need?

    I will give it to Spring 2012 and if I can’t get a job I will emigrate my family to California where I can get a job and one that will pay very well.

    Having said that I do want to stay in my country, but like the builders forcing me out of business, the economy and the powers that be will force me out of my country.

    It is a very sad time and my country has been ruined by the greed of others.

    • adamabyss

      Very poignant and pertinent story. My only question would be – why wait till Spring 2012? If I was you I would get out now. There’s nothing here for you.

      • adamabyss

        I myself am out of here in summer 2013 before the ink has even dried on my graduation papers. I doubt that I’ll even hang around for the ceremony.

        • Woody

          My wife would prefer me to get a job as we need the money, I have been studying IT and programming, a big step from property maintenance but I am good with computers and want to work in development as an Interaction Designer.

          I have applied to Google and similar roles but I guess they see 12 years running a maintenance business and two years training and I don’t get any further. This is why I figured I could do with the Intern program to get experience, even though I don’t agree with it or the Work Placement Program as a lot of employers see this as free labour, especially at a time when people need real jobs, the employers should pay the salaries not the government on these programs.

          As I know a job for me will be hard to get I have decided to create my own job, it is hard when you have been self employed to take a job, I have just applied to the enterprise board about starting an IT business and they have offered me a place on a six month business development & mentoring program. This will take me up to next January, I will still look for jobs as well, so if I am not able to get a new business up and running and or I can’t find a job then we will move.

          I owe it to my wife and children to try and do something here and emigrate as a last option. With three children, cars, equipment from business to sell, moving is not as straight forward as it would seem, it obviously is easier for single folk. I would need to get a job in the other country first and borrow money to move, get house ready to try and rent it etc…

          I am 41 and if I do move it would be a permanent one as I need to look at planing for retirement and funding education for my kids, something I can see myself being able to do here?

          • adamabyss

            Fair enough, hope it works out for you. I’m sure it will with your attitude.

          • Woody

            Should say “something I can’t see myself doing here”

          • @ Woody,
            have you tried applying to VMware in Cork, they’re always looking for people and do give people a fair chance.

            It’s worth a try :-)

            Josey

          • Woody, California will be no cake walk, say you get a decent job which is not easy in the US at 10% unemployment, you will need healthcare for your family which will be covered by a good job with a co pay but alone you are looking at $1700 per month and you still have to pay %40 to see the doctor. If you buy a house property tax will be at least $4000 per annum on top of your mortgage and education , approx $8000 per child per year through high school then $40,000 per child per year for University. The public school system is a shambles unless you live in a high property tax neighbourhood, if you want a decent standard of living for your family without being a millionaire avoid America at the moment it rivals Russia and Iraq in terms of income inequality and is getting worse. There is demand for your new line of work in the global market which can be provided from Ireland, securing this demand would obviously be a considerable challenge but if you could get enough to start you would achieve a sustainable income for your family and establish the only type of business which can lift Ireland out of its current economic malaise, an Irish owned business which can compete in global markets while primarily based in Ireland. It would be harder in the short run but pay huge dividends in the long run, it would be far from easy yet possible, whatever you decide to do best of luck

          • Hi Woody I enjoyed your posts very much and like you I went back to college to do programming and have a keen interest in Human Computer Interaction (HCI). I am a Linux man by heart and prefer free software to all that commercial fluff

            I can easily empathise with your desire to stay in Ireland and try to create your own job and a home for your family. Like you I am in my 40s and am not what employers are looking for as they can’t easily pidgeon hole me and I am too old to take crap like go to work for free every day

            I am not heartened by the thought of giving away all my years of study and practical experience for nothing just so that someone else reaps all the benefits of my hard work. My sense of pride and self respect simply could not stomach it

            I believe that it is possible for someone like you to create their own niche and then successfully market and sell your skills and experience

            I wanted to ask if you have a web site or blog? I was thinking that maybe you would be creating personal projects to demonstrate your knowledge as this is the way I would go about raising awareness of my personal brand. Sometimes designers are awarded work based on what clients see in the designers portfolio and many people have started out this way

    • malone

      Woody

      Sorry to hear of your problems but I thought a rule in the construction industry , building, landscaping is that when you price a job say for 3000 euors you ask for half at the start which and then the rest when it is half finished so that you dont get caught out
      The person if they dont want to pay dosnt get anything done and is left with a half finished job if he refuses to pay the rest but you are not out of pocket ???

      • Woody

        Yes you are right, and this is a good rule but not a legal one. I worked for these developers for many years, was friends with them, went for pints with them and up until the recession kicked in I never had any issues getting paid.
        So I did that job that owes me 2,5K without a deposit as I trusted him, my mistake. I should point out that he did pay me 1,000 of it round the time I started, the whole job was 3,500 and it was a big job which I could have priced higher but didn’t because he always gave me work and my thinking was if I over price and be greedy I won’t get any more work from the guy.
        Nice guys do finish last!

    • coldblow

      Thanks for the,Woody.

    • I’m with Adam on this one, why wait? Plan for what you know you can accomplish and have control over, waiting for things beyond your control to happen in Ireland is a fruitless strategy. I know you want to give it a try but life is short. You might as well be happy. I left three months ago and haven’t looked back since. A combination of luck and preparedness. Its unfortunate what is happening in Ireland but I don’t see how things are going to improve in the short term.

      • Woody

        I agree Liam. I am thinking of California as there is plenty of IT work there and even better plenty of sunshine but as I posted up the page just now I’m married with 3 kids and have a house to rent out, not even goin to try and sell it, so I have a lot of steps to take to move. My sister is a Naturalized US citizen and she can sponsor me with a green card but this could take over a year.

        • Praetorian

          I had the opportunity to go and regret not taking it, it has passed me now and I have to make the best of my current circumstances until something else comes my way. It is easy for other people to say stay or go, there are pros and cons as I found out to whichever way you eventually decide to go. Primarily though it comes down to circumstances, if I was unemployed and not able to find work, then I would go as there would be nothing to lose.

          Northern California is nicer (I lived in LA which has a lot of charms but is a massive city and a bit unmanageable, I won’t even mention the traffic), climate is certainly a major bonus and people are generally helpful, friendly, the most important thing I found is the potential for ‘a break’, which is rare in Ireland (I have yet to come across it after years of working and living her) – there is a more open spirit but also you can hear all sorts of promises only to be disappointed, but generally I found Americans good to deal with, and as I said, there is potential there once you agree to play by their rules which seems to have an excessive focus on work, with jobs often defining people, a lot of the time it was the first question I was asked, those who didn’t go for the obvious were the more interesting type.

          If I had known then what I know now about how things would work out in Ireland, I would have opted for the US and would not have looked back, but I accept situations are different and hindsight is 20-20.

        • Scipio

          Woody,

          Until very recently I lived in NorCal. Don’t waste your time here. Ireland on (organic !!!!!) steroids. Sure there are IT jobs & sunshine but……..there is also most expensive housing in the US (SF Bay Area), crumbling infrastructure, rotten public schools (unless you live in a town where the median house price is $750k+), high state, sales, & property taxes, out of control public sector unions, an anti-business regulatory environment plus a massive illegal immigrant problem. Combine this with a statist democrat state legislature who have systematically destroyed California on the alter of “social justice”, “fairness”, whacko environmentalism & multiculturalism. Take a drive through the central valley and you will think you are traveling through Latin American favelas. California is in a real bad place right now. An awful shame as it is the greatest place in the world to live in terms of geographic beauty and climate. I was very sorry to leave but the economics (and the (re)election of “moonbeam” Brown as governor finally did me in. It was then that I finally realised that we had reached the point of no return here.

          If you can get over here go to somewhere like South Dakota where there are jobs and affordable housing. Granted the weather is tough !!

          Victor Davis Hansen has written some excellent articles on the current state of California. I would suggest you check out his website. I don’t post on this website very often but enjoy reading it. I usually attract a lot of flack when I post so as someone once said “f*** the begrudgers”. Still sitting on the same stools, talking everyone to death, and doing nothing constructive just like they were 30 years ago….the more things change and all that.

          Best of luck to you.

        • dwalsh

          @ Woody

          I may be completely wrong about this Woody – but I will write it anyway and apologies etc.

          If things go badly globally and the USA defaults – as many say it may do – California will not be a pleasant place to be. The Los Angeles riots will look like a picnic compared to the mayhem that could erupt. Remember – a large section of the American public are armed to the teeth.

          We may give out about our lot here – and rightly so – but I believe Ireland is one of the best places in the world to be during this crisis.

          I wonder what others here think about that?

          • adamabyss

            I’m off to Dominica, the Nature Isle of the Caribbean to live on my land. I lived there for years previously. I have the land up for sale to see what the interest is like but have no real intention of selling. You can drink the water from the river and there are fruit trees everywhere. Just working on getting another job out there so I can pay for a small house to be built with the intention of adding more to it later if I do well. I have already told 3 dear friends that they can build their own houses on my land free of charge – I have plenty of space and what good is life if you can’t share it with the ones you love?

            Here’s a link to the land for anyone who’s interested.

            http://www.caribbeanlandandproperty.com/moredetails.php?1319

            As for Ireland, it’s okay in terms of food resources and low density of population etc. but the mentality of people (consumerist) and the corruption of the political ‘classes’ sickens me and I can’t stay here any longer than is necessary. Dominica is a banana republic in the true sense of the word and is not half as corrupt as this ‘great little country’.

            Night Ireland.

          • dwalsh

            @ adamabyss

            That looks like a nice piece of paradise you have there…enjoy :)

          • Scipio

            dwalsh

            I would agree with you that if the economy gets much worse in CA then you will, most likely, have London style riots and mayhem. Certainly in the cities. Believe it or not one of the reasons that this hasn’t happened on a large scale is because of the volume of weapons ownership among the (law abiding) public.

            In Ireland you have the opposite situation. Law abiding citizens are at the mercy of vicious scumbags. I still have older relatives living in rural Ireland who are scared witless of the number of young thugs roaming the countryside and preying on seniors. Then, in the unlikely event that they are apprehended, charged, and convicted they receive suspended, or extremely lenient sentences, and are back in business shortly after.

            At least in the USA you can legally arm, and defend, yourself and your family. Guns ‘n’ Ammo have been flying of the shelves since 11/08. A lot of the scumbags here know that if they decide to get feral outside the ‘hood then they could be heading into a serious firefight. Much easier to burn down the ghetto and have FEMA cut you a check.

          • coldblow

            Adamabyss

            Dominican Rep: if you can, read Llosa’s “The Feast of the Goat” which centres on the attempted assassination of the dictator, Trujillo.

          • adamabyss

            coldblow,

            No, the Commonwealth of Dominica – the two countries bear no relation to each other whatsoever and are about 600 miles apart, see here -

            http://www.distancefromto.net/distance-from/Dominica/to/Dominican+Republic

          • dwalsh

            @ Scipio

            Good points.
            I am not in favor of the American gun laws or an armed public; but I agree that scumbags that prey on the elderly should be severely dealt with…and they are not.

          • coldblow

            Adamabyss

            My mistake. I’d never heard of the C. of D. but just looked it up. It’s quite a small place.

          • I don’t think it matters DWalsh. We have little enough control over the bigger picture as individuals (though it would be extremely silly to ignore it, as many do) all we can do is make the best possible choices at any given moment. That Ireland is undoubtedly fecked is still not good enough reason to leave, if you can find your niche here.

          • dwalsh

            @ Liam

            What doesnt matter?

            Still stand by my feeling that America will not be a good place to be if things get much worse.

        • The worst way to approach an opportunity or a challenge is to think about the reasons not to do it. What you have here is a series of steps you need to take in order to reach your goal. That you are married with three kids merely makes that more complicated, not impossible.

          You sound like you have yet to work out what it is that you want. I recommend you read Ken Watanabe’s “Problem solving 101″, it might give you some ideas. Whatever you do, keep moving forward. The past is another country :)

    • Deco

      Woody – not sure how I can help. But I will try.

      Firstly, as you have discovered by know the state is not really much assistance. But that should not mean you should ever be disheartened by their incompetence. You literally have to shove through them with your enthusiasm. Eventually the penny will drop – what exactly are the social services, the DSW, the Dept of Ed, FAS etc.. supposed to be doing in any case. Basically, keep annoying them. It might work.

      Secondly, there is a thing called the Irish concept of business or “the way of the gombeen”. Classic examples are the SIMI, the CIF, etc..

      Thirdly, there are probably better IT opportunities in Ireland than in the US. Yep. That might be shocker, but I reckon it is true.

      Fourthly, you need to be located in Sururban S or W Dublin, or if you prefer the sticks – maybe somewhere like Galway or N.Kildare – that is where the investment is more like to occur.

      Next, you are right start small. I am working in IT. I started in an electronics factory doing everything from stuffing boards, buying components, to working in the warehouse – so I could work with a network. Then I got to another factory doing other IT work. Then I became IT Admin, and so on. One step at a time, that is all that it takes.

      In the 1990s I was looking for my start in a recession, and I dropped my CV to ever location I could. I was received coldly on many locations – they said “oh, thank you very much – we will put it on file – and I never heard from them again”.

      Then I always recounted back to a story my grandfather told me when I was small about the virtue of never ever giving up, and always persisting no matter what misfortune was in my path. And I kept at it.

      Do your research – find out where the jobs are – and where they will be in years to come – and navigate towards these areas.

      Best of luck !!

      • Hi Deco, I worked in electronics too and did a bit of everything from debug to constructing computer controlled test equipment. It was very interesting work but around 2001 a lot of electronics firms moved out of Ireland and I saw the writing on the wall

        In 2002 I dreamed that one day it would be possible to run a successful business from a laptop computer and that you could choose to live anywhere in the world as everything relating to such a business exists in the cloud and there are no physical assets or products involved. It is all knowledge based and highly portable so to speak. Just like C.

        Rather than chase the jobs I decided to change track and computers and IT was a natural place for me to refocus my energies. I imagined that one day it would be possible for people like us to create our own work and I am now being proved right as some people have been asking me for advice in implementing their IT projects. It has been a long haul and taken many years of study but I am starting to see the dream come to fruition

        I figured it would take me 10 years to learn and gain experience and I focused on this using the boom rather than listen to all the madness going on around me. It also taught me that realising a dream takes much more work than you would imagine

        Having said all that I sometimes think it would be a lot less hassle to just find a programming job here in Ireland rather than become a businessman

        I have discovered Python programming and have fell in love with computer programming all over again.

      • miec

        Hi Woody

        I would concur with Deco, here really is the best place to build a career in IT/ media. Despite the doom and gloom that is one industry that is growing (you can get updates from various IT newsletters, also check out prosperity.ie – a recruitment agency in this field). I am not sure if you are on LinkedIn but it is a great site to meet with other professionals and network, I would urge you to join groups suited to your skills (one brilliant one is called social media Ireland) and job groups. Also some jobs are advertised on twitter #jobsfairy and worth checking out everyday, also you can do a web based CV via http://www.domain.me/ which is becoming popular and a good way of showcasing your skills. I understand where you are coming from re: emigration, I was out of work for almost 18 months after coming out of college as a mature student. I am a single parent and I didn’t want to emigrate because for all our problems here I like living in Ireland. Having lots of space and it being relatively safe for kids are big pluses for me. I stuck at my job search and eventually landed a fairly well paid permanent job. I wish you all the best and hope you make it here.

  12. ladygee2

    Woody

    I couldn’t agree more with what you had to say.

  13. bentley

    I rarely comment on sites like yours as I am involved in this whole business acting for clients who have come unstuck with lenders – I started my debt negotiation and mediation business in the mid 90′s and did not realise for a decade that I had started an industry here ! There is so much waffle and bullshit talked by so many commentators about “debt” and what “needs to be done” and I have to say IMO you generally get it right David. What you have written today is spot on. The parties need to mediate and take joint responsibility to reach a solution in each individual case. Lawyers must be banned from this process – they are the vulture class that have precipitated much of the current chaos. Any proposed “one size fits all” solution will utterly fail on all fronts if implemented. We also have to get away from the bullshit meaningless cliches that the media have attached to a sector they know little or nothing about …. phrases such as “moral hazard” and “debt forgiveness” and “kicking cans down the road” are just nonsensical – their use is only unnecessarly pitting one sector of our defunct economy against another. The biggest areas of coming mayhem that the industry and our government dares not speak about have yet to be unleashed – credit union and credit card liabilities meltdown and lifting the exposure of liar loans (prime AND sub prime)that I reckon account for about 20% of the ENTIRE loan book in this State.

    • Harper66

      ” Lawyers must be banned from this process — they are the vulture class that have precipitated much of the current chaos. Any proposed “one size fits all” solution will utterly fail on all fronts if implemented. We also have to get away from the bullshit meaningless cliches that the media have attached to a sector they know little or nothing about ….”

      Excellent post

  14. BnB

    “How do you solve a problem of too much debt? You solve it with less debt, not more debt.”

    The opinion of the government’s advisors appears to be the direct opposite of David’s. From today’s Irish Examiner:
    “Other options being looked at by a body of banking figures and civil servants set up by the Government include enabling people already in negative equity to trade up to a new home. This would be if they can sustain the overall debt after selling their old residence at a loss and carrying the previous mortgage “hangover” with them.”

    In other words, the best solution for a “hangover” is to drink yourself sober!

    This proposal of letting people carry over their negative equity onto a new mortgage amounts to offering them a mortgage of more than 100%. Even worse, it’s supposed to be given to people with a track record of reckless borrowing and hoping that their negative equity will be reduced in the next few years by rising house prices. Even Nama doesn’t finance speculators to take on new property loans.

  15. coldblow

    The world is run in favour of creditors, particularly in Ireland. I think once you see this the rest makes more sense.

  16. coldblow

    For those who haven’t seen it, there’s a good discussion about debt forgiveness from all angles here:

    http://www.irisheconomy.ie/index.php/2011/08/22/lack-of-debt-forgiveness-not-realistic/

  17. I got a letter this morning from the Irish Property Owners Association asking me to renew my membership.(I was a landlord some 9 years ago)
    Reading it is extremely enlightening.
    The property investors who “bought to rent” during the Fianna Fail inspired,tax relief/incentives era,represented about 50% of all buyers in the market at its peak due to the ridiculously generous tax breaks.
    This resulted in buy to live in owners having to pay the same money for a totally overpriced property-but which still made sense for a landlord to party on..
    Now the bust landlords dare not even attempt to sell their investment properties because their is a claw back by Revenue built in to the tax relief scheme.
    The landlord may get half of the money he paid for the flat if he sells and then face having to pay all of it back to Revenue.
    I presume Revenue will be the loser here because the bank (if they force a sale or repossess) have first call on the sale money.
    It is therefore in the banks interest not to foreclose on the bankrupt investor is it not- until such time as the claw back period has expired?
    Pity the poor landlords?

  18. David says : ‘ The debt crisis started in Ireland in the late 1990s and early 2000s when the banks started lending wildly.’

    Can we not be more specific and explain that it really started immediately after the Report on The National Crime Forum in 1998 ( that included Fraud ) published by The Dept of Justice ,IGNORED any mention of recommendations on Irish BANKS and FRAUD .Despite oral and written and filmed submissions made to this forum it acquised in deliberately witholding significant professional information submitted to this forum .It also ignored the Bank Regulatory Reforms submitted and the Regulation of Senior Banking Managers .

    Just think about it . Every Irish Banksta knew from this report that No Banking Recommendations were included and therefore THEY had an opportunity to Make Hay while the sun shined because under the existing Irish Laws Irish Bankstas had nothing on them within their four walls.And the World of Crime was made to be seen that only Crime operated outside the walls of Irish Banks.

    The then Minister for Justice was O’ Doherty from The Mafia Party .

  19. Drumming More Thoughts

    Why does it take the Irish Laws to use a foreign law as in USA to seek non bankruptcy of a former member of Anglo so as to seek revelation of the facts of evidence on Anglo Rogues in a Maple Tryst that is believed to be fraudulent .We have No Banking Laws in Ireland where it matters to the Irish Electorate / Citizens.

    • The Cuckoo Law Principle for Irish Bankstas

      Irish Law can only in some cases enforce revelations of bank fraud criminal actions on a suspect by using the laws of a third party country in which those laws are enscrined into law ,eventhough they do not exist on the Irish Statutes Books.

      Drummer Boy Song

      ( strangely no formal agenda has been prepared to change this void of crime )

  20. piombo

    Dear all,
    Agree with the article’s main thesis and the need to “true up” the debt at all levels.
    As I’ve advocated here before, whilst not a panacea for all of Ireland’s debt woes, the introduction of 21th century bankruptcy law would help greatly. “No-fault” bankruptcy to be discharged witinh 6-9 months by a supervising judge would provide the catalyst for both debtor and creditor to reach swift resolutions. “Fault”(Malfeasance, fraud etc) bankruptcies could follow the proposed three years.
    In addition to the above, the insolvency and bankruptcy procedures need to be rendered less litigious through the use of standardised processes.
    In parallel to these reforms, the same reform could mandate that all domestic financing attachs to the property and not the debtor.
    At present the above conditions do not exist, hence, the parties are forced to remain in perpetual conflict as the law of the land does not allow resolution.

    • Harper66

      Hi Pombo,
      Could not agree with you more. Nonrecourse mortgages are the obvious solution to Irelands property market. Buyer AND Lender Beware.

      Of course this would not suit the banks as they would have to do their job and would not be able to feed a property bubble as they would end up taking the pain on the down side of a property boom.

      Shouting to “Debt forgiveness” is more empty rhetoric from Ireland’s media anyone with a grain of sense and modicum of concern for future generations should be demanding the introduction of nonrecourse mortgages.

      • Harper66

        apologies should read Piombo :)

        • piombo

          @Harper66,
          No problem, it is only my nom de piume!
          Yes, Non recourse Financing is the only way out and forward. It works here in Italy on all domestic mortgages since 1937!!
          I worked for a large Private Equity firm for six years in Milan and was involved in a few Chapter 11 cases and I can confirm that David’s central thesis is spot on when it comes to restructurings.
          The current moment would seem to be perfect to introduce such a mechanism into Irish Law.
          The reason it is not even being proposed in the mainstream leads me to believe that the macro-governmental agenda is to facilitate a bedding down of the two pillar banks coupled with sufficient ECB funding to allow these banks not to fail whilst financing the State until it has it’s current spending reined in to near the 3% GDP target to allow resumption in the credit markets.
          Both are commendable objectives, almost noble, however, it will entail allowing hundreds of thousands of people to remain in limbo for at least another three/four years.
          Hence, the exercise is a cynical one disregarding a significant portion of the people.
          I spent two weeks in Ireland last month and I noticed a new normal. People are resigned and just plod on; some waiting for the P45, others waiting for the Budget 2012, others just waiting for the bailiff etc., There are those who are also waiting to buy. No one is to be eschewed for either their fortune nor their misfortune, but there is a definite fatigue and weariness in Ireland which struck me.
          I hope David’s advocacy of real solutions will be noted and acted upon.

  21. David says : ‘We in Ireland have to stop thinking like lawyers and think more like business people when it comes to resolving our debt mountain. Enforcing old debt contracts when the underlying economy has changed dramatically makes things worse not better.’

    I agree with the message he conveys in principle nevertheless law reform is needed to implement any sensible resolution to constitute a valid agreement that is enforceable.

    Message is : THE LAW REFORM COMMITTEE needs to be seen to do its duty to protect the citizens and with membership to include professional business people and not confined to the legal academics .

  22. Praetorian

    Irish Examiner gives this figure for unemployment in its editorial:

    “For the fourth month in a row the number of people out of work has risen. A figure of 469,713 – 14.4% of the workforce – was reported as this terrible statistic climbs inexorably towards 500,000. These figures, for such a small country, are on a frightening scale and represent so many lives, so many families in turmoil. ”
    http://www.irishexaminer.com/opinion/editorial/a-society-divided–its-time-to-scrap-these-insane-deals-166009.html#ixzz1Whp3LyLA

    On a front page article however, it gives this figure:

    As employment figures show 1,600 joined the Live Register in August, bringing the total close to 450,000, the think-tank (ESRI) predicted a further rise in joblessness next year.
    Read more: http://www.irishexaminer.com/ireland/worst-is-over-but-4bn-cuts-still-needed-166109.html#ixzz1WhpK7oYX

    20,000 out whichever way you look, not that I look at that paper much.

    ESRI are busy saying cut €4 billion, no double-dip, economy has levelled out, think very few people buy that especially with consumption continuing to decline and unemployment rising.

  23. Regarding debt forgiveness, we could look at the way a typical 250,000 mortgage, drawn down in June 2006 for 30 years, is structured.
    It takes 18 years (ish) before the interest repayments match the loan repayments. In other words, the banks take the bulk of their cut first. The interest repayable on this loan is a staggering 261,000 over the term, or obviously double the original loan.
    We could start out debt forgiveness there, with our bailed out banks repaying us taxpayers with reduced interest demands.
    When some poor sod restructures, this usury carries on, with the bank trousering the bulk of the repayments in interest.
    So it’s in the banks interest(no pun intended)to restructure as they’ll continue to fleece interest payments, with no appreciable reduction in loan capital.

    • Btw, if the bank has bundled up all the loans into an investment vehicle and sold it on, then they don’t care if the principal is paid back or not. Sin sceil eile for someone else to fathom.

    • Juanjo R

      I find it comicial that people talk only about basic loan figure ( you threw up 250K ) or the monthly repayments figure ( 1.4K ) not the credit advanced figure ( 511K ) which shows up the real gamble that was been taken.

      This figure could be upto 10 times a regular couples gross income!

      Then you gamble that that person can pay it for 30 years without a hitch!

      Then multiply this by an entire country’s generation!

      • Where did you get 511k from? As to risk, there is ultimately no risk to the bank, as has clearly been demonstrated over the last four years.

        However, a bank that is lending at ten times income (or even five times) on a thirty year term deserve to go to the wall, in my view.

        • Juanjo R

          250K was the basic amount given out by the bank for the mortgage example thrown out here..

          261K is the interest on that loan over a thirty year period at 5.5% according to data taken from an amortization table. Repayments were just over 1.4K per month from that table.

          Total credit advanced = 511K

          Total yearly payments = 17K

          People weren’t normally thinking something like this – jesus we just agreed to pay the bank half a million from our wages over he next thirty years at 17K a year and we’re f***ed if things go south for us for a long period during those 30 years cause social welfare won’t be covering that.

          More like they were thinking well my mortgage is only for 250 K and some my house Is GUARANTED to be WORTH 10% more every year ad the economic boom will go on and on and on – wow i’m made!!!

        • Juanjo R

          You are right there is no risk to the bank as long as the tax-payer underwrites their losses.

        • Juanjo R

          The 250K mentioned initially was not money that was just lying around it was money that the bank took from someone else or someother bank and promised to pay interest for. On top of that they need a profit and sufficent money to cover losses from delinquent loans.

          The banks have therefore contractually agreed to pay up an amount back greater than the basic loan advanced.

          Inter bank rates rose for Irish banks, because of their unreliable lending and losses meaning they are losing money on mortages.

          Mortgage defaults are rising so that isn’t going to improve their record in that area anytime soon.

          Can you see where this is headed?

  24. paddyjones

    This is really rubbish journalism/economics our debts are mainly to the ECB , 160 billion of it and its all collateralised. Specfically who are the creditors David wants to burn. Is it about mortgage debt or national debt? If its mortgage debt then this will be dealt with on a case by case basis . If it is national debt then this would be a disaster.
    Imagine never being able to borrow again ….ever, we would need massive budget surpluses to stay afloat. This would mean immediately balancing the budget, yes cuts of 18.5 billion.
    we are better limping along in this crisis , which is common in the western world , we are just one of many nations in debt …..no need to panic, just treat it as a mortgage and chip away at it slowly .
    I think David is losing the plot here and fails to understand that the EU/IMF/ECB are running the country.

    • goonermayo

      you are not grasping the concept of Sovereign Debt and what the troika are insisting on us doing. The troika are not asking us to repay the €160 billion debt figure you have quoted. They are getting us to reduce our ongoing budget deficit to 3% of GDP so that we look attractive to the Money Markets again. Once that happens the €160 billion will be passed on to another creditor and the troika are off the hook. If in the process of getting our deficit back to 3% we destroy our economy that’s no skin off their noses.
      A 3% budget deficit every year means that we are still borrowing on an annual basis thus increasing our debt.
      What the powers that be are not acknowledging is that the global economy is mired in debt. Making Ireland jump through the hoops will not sort that problem out. As David says, the problem needs to be addressed not the symptoms. If you have a leaky water pipe you don’t keep cleaning up the water, you fix the pipe.
      The 11 most indebted countries in the world as of 2010 owed €31.5 TRILLION. Total Global GDP in 2010 was €47 TRILLION (source The EU and IMF) There’s the problem – too much debt.

    • Harper66

      If Ireland had not beeen forced to take on private bank debt we would still be in the bond markets.

      • paddyjones

        Thats crying over spilt milk.
        If you think more borrowing will make everything ok then you are wrong.
        What we need is austerity , we need some fiscal disipline, politicians are no good at this , I look to the EU/IMF/ECB to force the Irish to behave themselves and live within their means.
        We are in the same boat as Greece and Portugal we cannot manage ourselves so the IMF/EU/ECB will manage it for us.

        • Harper66

          “Thats crying over spilt milk.”
          no its not, it is the truth and it also blows a hole in the bullshit argument you are repeatedly pushing here week in and week out.

          You say we we need austerity and yet it was private debt bankrupted the country not sovereign policy.

          I repeat – if we had not taken on private banking debt we would still be in the bond markets and so not require austerity.

          We are not like Greece and Portugal.

          Idiot.

    • Paddy although short of a sudden radical event the opportunity to negotiate some of the States assumed private banking debt has passed, however had the State been represented by persons capable of taking a stand and in the very least properly exposing the inequity and unsustainability of putting all Irish franco german private bank debt on the people of Ireland, we could have negotiated directly with the IMF, now I fully appreciate that taking a stand would have came with unwanted consequences but in the long run the State would have emerged from the current malaise in a shorter time and retained its dignity. To suggest that “limping along in the crisis” was the best option is either an opinion based on misinformation or the advocacy of those whose interests were best represented by that strategy

  25. Amortization calculator here;

    http://www.amortization-calc.com/

    Can’t find an irish one because they probably don’t want people to realise the big mortgage lie….

  26. wills

    David,

    I reckon the power structure is not changing its mind cos it rewards better not too. Like the banks secret negative equity sweet heart deals for insider customers as reported in the Indo today.

    That right there that story reveals everything anyone who is interested in how the economy works behind the spin and fairy story it hides behind.

    http://www.independent.ie/business/personal-finance/property-mortgages/mortgage-debt-banks-are-doing-secret-deals-2863723.html

    Click on link and have a look at the insider network in action!!

  27. tony_murphy

    I highly recommend you check the following out this interview interview Charlotte Iserbyt, http://www.youtube.com/watch?v=ezTIYd5UFRY&feature=share

    • tony_murphy

      the history of money, again, I encourage everyone to watch. Also check out Bill Still the Money Masters.. They don’t teach this stuff in school

      http://www.youtube.com/watch?v=h8qLkpA_PSs&feature=share

      • tony_murphy

        I will summarise, for those who don’t have the time to look at yet another youtube video.

        The central banks around the world are controlled by a few incredibily wealthy families. Governments borrow from them instead of printing and managing the supply of money themselves. This is corruption of the highest scale. Mass deception. There is no need for governments to be in debt. It’s that simple. They could control the supply of money themselves, yet the hand over the control of the money supply to wolves, why?

        American history has been rewritten to hide these facts. Everyones history is rewritten to hide these facts.

        As for Charlotte Iserbyt. She really lets the cat out of the bag. We will all be slaves in a communist world soon. We are in the new Soviet Union, aka EU. Anyone for more green taxes?

    • coldblow

      The first part is much in line with what Hudson has being saying (he mentions him at one point – although Hudson has been on about this for quite a long time now). Have a look at Hudson’s website: a couple of his article trace back the history of debt forgiveness etc back to ancient Mesopotamia.

      Interesting ‘stages of grief’ scenario towards theend for both debtors and bankers.

  28. Everyone knows what needs to be done David. You have been telling them for years and it is obvious

    You are dealing with human nature and nothing you say will change it. Just a lone voice in the wilderness of space

    The world does not function like it does in Economics and Management textbooks. If it did then everything would be functioning perfectly

    Too much thinking, greed and ego is the reason why humanity has failed to run its affairs and build a healthy society. The world is insane and if you doubt it then you must be an eternal optimist

    You have to switch off from it and set aside some quality time for you and yours. Else it will just drive you nuts thinking about it all. Here’s to love, joy and happiness

  29. dwalsh

    @ Elpenor Dignam wrote:

    “we all want to see a fairer more just economic system”

    I wish it were as simple as those words imply.

    There are many who believe that inequality and elitism is ‘fair & just’. Some even believe it is the will of god. Loyd blankfein of Goldman Sachs believes he is doing god’s work and deserves his 50 or so million a year ‘compensation’ for wrecking the global economy (these parasites don’t get paid they get compensated). Many Old Testament Christians believe this too; they obviously don’t read the New Testament too carefully.

    Even on this forum I have been scoffed at by some for saying society ought to be run for the good of all its citizens; and that there ought to be a more equal distribution of opportunity and wealth.

    Such are the views of the USA tea-party fanatics who regard all social infrastructure as theft. For this crowd of loonatics the only legitimate human right is what they call ‘liberty’. For them ‘liberty’ means the right to compete in the market for life and livelihood; and if you fail…the right of society to toss you on the scrap heap.

    This means a child has no right whatsoever to air or water or food or clothing or shelter — unless a parent or guardian has competed successfully enough to purchase these commodities for the child.

    ‘Fair & just’ do not mean the same thing to everybody.

    • Realist

      “Such are the views of the USA tea-party fanatics who regard all social infrastructure as theft. For this crowd of loonatics the only legitimate human right is what they call ‘liberty’. For them ‘liberty’ means the right to compete in the market for life and livelihood; and if you fail…the right of society to toss you on the scrap heap.”

      Tell me one thing that government public is doing better than the private sector ?
      I assume you want car insurance, home insurance and everything else under government control ?
      Maybe to go to pure socialism/communism. I bet you never lived in such. I did.

      “This means a child has no right whatsoever to air or water or food or clothing or shelter — unless a parent or guardian has competed successfully enough to purchase these commodities for the child.”

      The child will have the food and shelter based on voluntarism and not the government coercion.
      What you are saying that any other strategy to collect money for poor around the world is not working.
      You see such strategies every day here in Ireland and they work.
      If we do not need to pay too much in taxes we will have the money to spare for these that do not have.
      At least people who want to.

      “‘Fair & just’ do not mean the same thing to everybody.”

      Not at the moment where the wealth is shift from somebody who earns it to somebody who do not by coercion. If at least such transfer is on voluntary bases.

  30. CurlyM

    Power of numbers: If developing countries can stand up and displace their dictators and regimes through coordinated revolution surely it should give us hope that we can achieve the same. This time the enemy is debt. There are 9000+ David Mc Williams likes on Facebook. Surely more on the newsletter. Thats enough to take to the streets, and drop the keys of the debt burdened property into a bucket at central bank in protest. The tail wags the dog in current society. We serve the banks rather than the banks serving the people. If the global problem is to be reversed this power shift needs to happen. The debt burden needs to be shared. The government will not commit political suicide in Europe by shafting German bond holders. However with a population behind them they will have little option. It was power of numbers which got us into this mess. Power of numbers can get us out.

  31. Alf

    “The comments came hours after Mr Noonan said people would think he was “deranged” if he followed Mr Matthews’ strategy of pushing for €75bn owed by Ireland and the banks to be written off.”

    http://www.independent.ie/national-news/minister-respects-me-says-exbanker-despite-jibes-2864822.html

    So we are paying banks losses because Noonan doesn’t want to be seen as deranged. News flash – They think we are deranged.

    It is typical of government policy in Ireland. It’s not because the Irish people should pay or because it’s the correct business practice as David pointed out. It’s done to defend someone’s fragile ego.

    • +1

      “defend someone’s fragile ego” not only defend fragile ego, this is mere propaganda brainwashing to cover up a concerted policy driven feeder bowl at the trough power set who wouldn’t want it any other way:)

    • dwalsh

      @ Alf & colm brazel

      A very revealing article; thanks for posting; but it is Matthews’ fragile ego which is at stake here; not Noonans. Noonan is saying something else IMO. I say more about this below.

  32. David says:

    ‘GOVERNMENT IS FIGHTING THE WRONG WAR AND STILL LOSING ‘.

    I believe if the Laws are not there in Irish Statute Books then the Government cannot fight . We are only seeing ‘shadow boxing’ …..a lip service to the masses .

  33. http://www.oireachtas.ie/parliament/mediazone/pressreleases/name-2384-en.html

    You can watch live from 10am. If, like me, you don’t have time to watch this live, seems looking at their archives it takes about a month to put up previous archive webcasts.

    Yesterday, we had Laurel & Hardy, Noonan and Matthews, entertain with some suggestion made by Matthews that brought the riposte from Noonan…”if I made that suggestion to them, they would look at me as if I was deranged” (Posters, I missed the early part of the news item, if you can fill in the context some more:))…

    It was a bit like Raleigh on one of his frequent visits to the Royal Court describing his discovery of tobacco.

    But Noonan doesn’t have the expertise, confidence, craft and skill of a Raleigh, so the bit of backbone that glimmered faintly with Bernanke, snuffed out.

    The riposte was all the evidence we need of his craven vassal Baldrick to Blackadder subservience to his masters:)

    Don’t ask why Noonan would put down his colleague so publicly?

    Don’t ask why you cant watch the episode at your leisure next Sunday afternoon instead of going to watch a football match:)

    Don’t ask why Matthews(Baldrick) had not discussed the point before with Noonan(Blackadder)?

    This is Ireland.

    Appearing today before the Finance committee are Honahan and Elderfield fresh from ‘the charge of the Light Brigade’ ‘lies and whispers’ and more vassal act sellouts of what used to the ‘we, the people of Ireland’.

    I only got part of a snippet re above from Morning Ireland, any further info appreciated….:)

  34. dd

    Have been reading the comments for months but never subscribed until now.

    I was watching the RTE news last night and the story about the special needs kids getting one hour of schooling due to no special needs assistants really annoyed me.

    The education system is reducing the amount of teachers yet Mary I, St Pats, Hibernia etc are still churning out graduates, many of which will end up on social welfare. How can there be flexibility in the Labour market if there is none at 3rd level!

    Just an idea, but if there is such a lack of resources why dont FAS/Solas employ these qualified teachers as special needs assistants or make it part of the dole requirements. They would be gaining experience and kids of all abilities would benefit.

    On emigration, many of my mates are leaving due to disillusionment with Ireland at the moment. Most of them are in (relatively) safe jobs here with professional qualifications but were lucky enough just to miss out the rush to buy properties (mid to late 20′s). There is a serious brain drain going on here at the moment

    • Absolutely but Irish people seem to be the only state in Northern Europe where its acceptable to see a generation immigrate every now and again. Its a very good point about supplying services but with so many competing interests and an unavoidably compromised government simple solutions like this are never implemented. So many aspects of public life in Ireland fail miserably to do what they are meant to, as Health is one of the most acute services the failures are often clearer but look at the enforcement of the law, the legal system, the schools, the ESB there is systematic public failure all round. Without brand new independent and uncompromised government it is a part of life in Ireland that will continue

  35. dwalsh

    re: Noonans dismissal of Matthews

    What Noonan is really saying in his dismissive comments to Matthews is that he and his crew are part of the Euroland consortium, and from within that weltanschauung talk of writing-off Irish banking debt would be ‘deranged’.

    Why?

    Because it gives them enormous leverage on us; leverage to fast-track all kinds of adjustments including European integration and ultimately Federalisation.

    As I have said before: the global debt crisis is not a crisis for the global financial and political elites. They are all personally insulated from it and will prosper through it.

    For the global elites this crisis is an opportunity to re-organise their estates.

    Until this is understood the actions of our leaders will continue to appear puzzling to us ordinary folk who naively imagine that our ‘Great and Good’ are trying to solve the crisis for us.

    They are not trying to solve the crisis for us.

    They are using the crisis as an opportunity to fast-track all kinds of global agendas for themselves.

    • Re “Because it gives them enormous leverage on us; leverage to fast-track all kinds of adjustments including European integration and ultimately Federalisation.”

      Not sure I go along with that.

      Bernanke and the Fed have been busy for the past ten years flogging paper to other currencies around the world as the value of the paper continually erodes under its own debt mountain.

      They don’t care about European integration and ultimately Federalisation. In fact, if anything, the EMU is a threat to them. Merkel and Sarkozy only want to ensure they as lender of last resort in the EMU get their money back.

      Its just a flawed systemic fault process that is showing signs its going to blow.

      Of course, the powers that be benefiting from the system want to continue to benefit. But even they see they’ve got burst tyres and the system itself is in danger of crashing:)

      • dwalsh

        “…if anything, the EMU is a threat to them”

        in my view it is a mistake to think of this crisis in either national or currency terms or even trading block terms. From a globalist perspective all such talk of the $ versus the € or the USA versus China etc is irrelevant. They operate above and beyond these parochial anachronisms. All such talk is merely fodder for the news consuming masses.

        The actions of the Federal Reserve over the past decades have created this crisis – or rather this opportunity – in order to radically reorganise our world.

        If you listen to Kissinger he has stated it clearly. First of all this is not a crisis, it is an opportunity to introduce a new world order. Secondly the new world order has different characteristics in different parts of the world.

        This is exactly what he has said.

        If you carefully digest and analyse such statements you will see what I mean. They have thought this whole thing through. They have different levels of plans for the different regions of the world.

        One of the major adjustment they want to bring about in Europe is Federalisation – which is another way of saying the eradication of national sovereignty. We are living through the end of the nation state as we have known it.

        But I realise this perspective is likely to induce vertigo and cries of ‘conspiracy theory’.

        • @dwalsh

          Nope, doesn’t give me vertigo:)

          There is already a new world order created by the interdependence and globalisation of the currency markets through their buyIn to the dollar.

          You need to delve deeper beyond conspiratorial individuals to see the evolution of the fiat money system itself particularly in recent times through debt globalisation brought into play in the 70′s by ending of Glass Steagal.

          Kissingers and others act in the system, they didn’t build it; they can try to manipulate it in ways you have in mind, but ultimately the original conspirators who set up the system in the 16th century and later eg Fed Reserve Act 1913, are long gone and dead.

          http://www.examiner.com/independent-in-hartford/the-glass-steagall-act-comes-up-for-discussion-again

          Because of globalisation of money markets bringing back Glass Steagall of itself would do nothing.

          G20 should consider a new world currency pinned to gold and regulated with rules of participation that would regulate this new currency…Simples

          We could opt out of the euro and be the first European country to join up its AAA brand:)

          This would free the world from dependance on an outdated Federal Reserve Act of 1913.

          Is this going to happen without a complete collapse of the world’s current monetary mess?

          • dwalsh

            I think you are misunderstanding me; or you not reading my words to mean what I intend them to mean.

            What you say for instance about “the interdependence and globalisation of the currency markets” is all implied in what I have written; it’s one of my most basic points. The globalised world is already up and running in those spheres. It is the political sphere in the sense of regional governance that is lagging behind and in need of radical adjustment — ie Federalisation in our case — and what better leverage to force this than debt and bankruptcy.

            It is also very likely the new global reserve monetary unit will be gold based when it is introduced. No quibble there.

            If we consider that the globalist class I refer to all attend the same schools etc in their respective regions of the world; and have done for generations; it is implausible to suggest a break in the chain of events or command as you do? Although the individual bankers who drafted the Federal Reserve Act are dead, their families and businesses and their class are not. Don’t be fooled by the musical chairs of politics; that’s not where the power lies. There is continuity of power behind the political charade.

            With respect; what you say about Ireland leaving the euro and joining some AAA currency etc… well it’s just not real at all. When the new global currency arrives it will not be an optional club along side the euro; it wont be like choosing a credit card brand.

            There is a lot of that kind of talk on this blog. We could do this; we could do that; etc.
            No; we cant. We are a tiny pocket of insignificance in all this. We have lost any national initiative we might have imagined we had. We are caught in events that completely transcend us; overwhelmed by debts that utterly bankrupt us. Best we can hope for now is local leadership that will navigate us through the radical adjustments ahead as benignly as possible and minimise the damage to our citizens.

          • Hi dWalsh, I’m not proposing anything at all, that’s why I use ‘coulds’ or ‘should consider’ above.

            What we do should be based on pragmatic interest of we, the people. It won’t be delivered by blinkered politicians or croney bankers.

            I’m merely delving into the current meltdown to see what options there are.

            There are certain historical truths regarding how currencies work and how banks work and their ties to politics. These require exploration and understanding.

            Re ‘We are caught in events that completely transcend us; overwhelmed by debts that utterly bankrupt us. ‘

            Sorry, I don’t wear them blinkers and don’t feel overwhelmed.

            The guarantee was an example of stupid and reckless decision making that has brought us to where we are. Part of the thought process that fed the bad decision was this ‘overwhelming too big to fail, we are overwhelmed’ rubbish.

            There are certain pragmatic responses, opportunities that need fresh thinking to deal with our debacle. Wearing blinkers like the above is a ‘vassal mindset’ I reject.

            There’s plenty this government should be doing, are not doing, with this craven excuse of

            “No; we cant. We are a tiny pocket of insignificance in all this.”

            If you think you are insignificant, then you are insignificant.

            I’m not:)

          • ..but then i regard all living things as significant:)

          • dwalsh

            Hi colm brazel
            “..but then i regard all living things as significant:)”

            Me too :)

            You may call what I wrote a ‘vassal mindset’ or a ‘craven excuse’ but that wont alter the facts. Facing the facts is what is needed at this time; personally and nationally. Like it or not the guarantee was given and we are bankrupted. Like it or not Leinster House is determined to tow the ECB and Euroland line. Like it or not this global event is being determined by the decisions of unelected people in rooms we will never know about. The political and media circus is just playing catch-up.
            As redriversix said in the last blog “it is easier to deal with crisis once we know what we are up against”.

          • Time to wake up, stop whinginG and whininG and do something about it:)

          • dwalsh

            disapointing response colm

      • RE EU threat above eg:

        http://moneymorning.com/2011/09/02/european-sovereign-debt-crisis/

        Interesting proposal above:

        “Former head of the Federation of German Industries, Hans-Olaf Henkel, writing in the Financial Times recently proposed this alternative solution”

        Proposing that Germany, the Netherlands, Finland and Sweden should simply walk out of the EMU and create their own currency, let’s say, the EuroNua.

        Then the euro currency including Ireland and remaining countries could weaken not held aloft by the above countries. Greece with the drachma would probably have to leave the euro as even its exchange rate would be unsustainable for Greece, plus need for Greece to burn its bondholders.

        The above rubbish presupposes Ireland would remain in this weakened euro as a debtor state funnelling its cargo of debt repayments to the EuroNua countries….

        Nope, best course for us is to leave the EMU asap and renegotiate with our bondholders adopting the line of previous currency defaulters such as Argentina, and more recently, Iceland.

        We could then consider a more sensible currency block arrangement with the Commonwealth sterling.

        • The fact that the suffering of so many has been caused by so few who have not only escaped sanction but now continue to prosper as others suffer the consequences of their self serving recklessness shatters the illusion of any real democracy on a global level. There is clearly a power base and they held power under the veneer of merit and democracy but once the principles of same came in conflict with their material interest such principles were not at all adhered to or implemented. Apart from the unprecedented financial inequality of what is transpired arguably the biggest cost to civilised society is how what has transpired has completely usurped and undermined the principle of justice and equity necessary for a liberal democracy and has acted to really discourages those who had faith in the existence of same. You can run a bank that brings down a county and continue to evade sanction, as I am sure many would agree there will never be any sanction, intially some may have speculated that that was because of FF govt but new govt and still no one held to account for the nefarious state of Ireland and its peoples finances.

          • dwalsh

            ++1

            The illusion of western democracy is being exposed. The darkness at the heart of our civilisation is coming into the light.

            That is a difficult but a good thing.

            Against the darkness must come out the light.

  36. coldblow

    OT I found Karl Whelan’s piece here of interest.

    http://www.irisheconomy.ie/index.php/2011/08/25/economists-and-the-media/

    “However the media aren’t too interested [in my specialized area]. Instead, they often ask me to discuss issues that a very good command of undergraduate or master’s level economics would allow a person to explain. In most cases it does not take a frontier-economics level of expertise to answer the questions about bank balance sheets or fiscal policy that the media are often interested in.”

    • dwalsh

      It seems to me that Economics, both academically and professionally, has utterly failed society and civilisation.

      • Economics is proposed as a science but unlike typical scientific analysis in Economics there are often too many oft significant determinants to deliver any reliable level of precision. Economics is not much different than soccer or football analysis, the generally obvious can be foreseen like Kerry beating Longford but it is folly to believe any econimist that pretends to foresee anything in a more precise detail like for example when the first goal will be scored if at all. The main man himself D McW was obviously spot on in predicting a bubble economy in Ireland but he was not very precise in stating when it would pop. Economists earning significant salaries need to eschew the idea that it is a very exact and skilled science, as you and everyone else as seen when it came to what really mattered most economists were no better at predicting matters than anyone else. it is very useful but I would argue with karl that despite his extensive academic economic initiative, the fiscal and macroeconomic policies of most developed countries are not based on anything further than a graduate understanding of the discipline.

        • I’m a scientist. Economics is not science, its pseudo-science, at best. Brian Lucey put it better when he described it as “…a special form of Applied Philosophy”.

          • @Liam

            If he did he is wrong .

            Economics is the study of social behaviour at the disposal of scarce goods.

            Philosophy ask why?

            There is a very clear distinction .

            By the way studying a science on economics and being a scientist are not the same either .

        • coldblow

          Hi Businesslunch

          I think this is what Karl Whelan is actually arguing, ie that specialist knowledge isn’t of much use in intrepreting the broad picture.

  37. Irish Electorate

    We shape clay into a pot but it is the emptiness within that holds whatever we want.

  38. dwalsh

    Max interviews Dr Paul Craig Roberts who says revolution is the only way…

    http://www.youtube.com/user/RIPSOCompass#p/c/1E0FFDC72761AE77/0/kEPob3kQ-6g

  39. Glenstal Boarding School

    Recently on the grounds of this magnificant settlement many boarders from all over Ireland and their families gathered for their annual week end picnic day around the farm and enjoying the comraderie between the students while they expouse their civility and leadership that some day will be exercised at some future time as has done so over the years from their aluninae in Ireland that made their mark on Irish society .

    In one small such gathering under the forest trees and within the strong smell of dark coffee , tea and sandwiches friends of two students were talking :

    Nigel ( a Belfast man ) : I am amazed at all the monies that has been spent in the republic over the last 10 years we never had this madness in ‘The North’ or Belfast .I cannot understand it .

    Finbar ( a Cork Man ) : Your confusion is easily understood .It is like this ; you guys up north only have a mindset that sees sunshine and rain . We down here in Cork see rainbows too .

    Nigel : I don’t understand .

    Finbar :Its simple , if you find one their are pots og gold at each end and no one knows where it came from.

  40. correct :

    Finbar :Its simple , if you find one ( a rainbow ) there are pots of gold at each end and no one knows where it came from and no one cares .

  41. Tull McAdoo

    On a more positive note it is fair to say that the economics’ that underpins our present situation have come to the fore. This is a worthwhile development, as the debate for much of the time since 2008 has been concerned with what I would call “the politics” of the situation.

    Now for old stock observers of Ireland like myself this was not surprising, especially when you consider that most, if not all of Fianna Fail are economic illiterates and as such will spend all of their time clouding issues with rhetoric and gombeen driven agendas.

    The new government of Fine Gael and Labour have broadly fallen into their usual roles when they come to power. Fine Gael act as the accountants of the relationship with their emphasis on “balanced budgets” “cutting of waste” “austerity” and so forth. Now I know that the elimination of waste etc. is very worthwhile and very laudable and should form part of a recovery strategy, but they should not in themselves become the only strategy.

    Labour for their part has anchored themselves well and truly with various unsustainable pay agreements. They seem to broadly represent the views of the bureaucratic administrations in situ all over Ireland, from the general Public Service, through the semi-states and even extending out to include some of the quangos (even the ones that have been orphaned by FF’s departure). From my vantage point it seems to me that Labour has decided to try and sustain its members interest’s at the expense of the more vulnerable in society, which some might argue would be a departure from their core principles, but which I would argue was No surprise. I would argue that the likes of their former leader Dick Springs tenure as public interest director of a bankrupt bank speaks volumes.

    Now that we know how the teams line out, we have to decide who amongst them will deliver growth, because without growth there will be no meaningful recovery. Now David suggests debt forgiveness as a means of stimulating growth. Well two things about that are
    1. It will always be true that debts that cannot be repaid will not be repaid.
    2. Debt write downs will stimulate consumption.

    So now we get back to the key issue and that is where we get the type of sustainable growth from, that will reduce unemployment to a frictional rate of say 5% or whatever the natural rate for Ireland is calculated to be. Growth that will eliminate economic migration! Growth that will give meaning and direction to people as they make informed decisions!

    Again from where I sit here in Australia it is clear that there are no policies in place, in discussion, on the drawing boards or anywhere else in Ireland to deliver sustainable growth. Ireland has resorted to administrating handouts from the EU/ IMF and disbursing any crumbs that fall from the tables of the multi-nationals as they gorge themselves on record exports and a very benevolent tax regime. Transaction taxes etc. have dried up because wealth is concentrated in the hands of to few of the citizens. The so called leading entrepreneurs have exiled themselves for tax purposes. The landed class have battened down their hatches to “winter out the back end of a bad year” with aid and subsidies from the EU…………….

    Sustainable growth comes from investment in sustainable enterprise. Sustainable enterprises encourage further investment, which in turn adds to growth. It could not be any simpler than that. The problem with Ireland is that it needs to move beyond this dependency culture that has developed under various empires, with the EU being the latest.

    Control in Ireland at the moment seems to rest with the remnants of what I described previously as the “Comprador Class”. These people are happy to continue with the status quo and collect their rents. They are happy to deliver vast returns to their patrons, in England, USA and Europe. They are very anxious to show their patrons (mysterious markets to you and me) that they still control the Irish economy. But you see the problem now is that their patrons don’t believe that they can deliver sustainable growth and without sustainable growth there is nothing to invest in.

    So in conclusion, the people in Ireland who are very well paid to deliver a prosperous future, have not got a clue how to generate sustainable growth and their only policy at the moment is to cut expenditure, borrow what they can and sell off state assets to balance the books. Incompetence on a grand scale is how the history books will record the endeavours of these present administrators. Not an original idea between the lot of them. Land that’s all they know. They would kill you over a bit of land………………………

    I think I’ll take the dog for a walk down Trigg beach for a change of scenery……..there is a great breadth of fresh air that comes in across that Indian ocean all the same, does wonders for your auld patience…..

    • coldblow

      Nice one, Tull. I don’t think Crotty would have disagreed with anything here. Historically speaking, this is just a continuation of a trend which began centuries ago and which Independence did nothing to alleviate.

      Someone somewhere (not here) recently claimed that FG’s actions are easier to understand if you just look at them as a bog-standard right wing party, ie as if there was no bigger international picture. Labour seem to have more time for the quangoes who enforce current pc morality than for the unfortunates who are supposed to benefti from it.

  42. Peter Atkinson

    You fools, all of you.You all think you have the inside track.Stop wasting your time writing here and take the advice “TALK TO JOE”.

    We have been treated to a full week of car crash radio compliments of RTE Radio and Liveline.This has become the new reality TV.Sod the X Factor and You’re a Star.This is cutting edge in cringeability.Desperate people hanging on a thread ringing in and pouring their hearts out about debt in the hope that “St Joseph”, as he was called on Friday’s programme, will somehow miraculously bail them out.

    Brendan O’Carrol pitched in 7k to help some poor soul get out of the clutches of a moneylender.This my friends is where the poor sods of Ireland are turning to for hope and inspiration not the David Mc Williams blog.The advertisers are queuing up to throw money in for sponsorship into the bargain.When I think of it I’m sure the bould Joe could probably help out most of the hard presssed listeners out of his own tidy stash.

    Folks, people love voyeurism in this country either in the shape of that fantasy Fair City or the reality of Liveline.Nothing feels better than hearing others have it worse than yourself to make you feel better.

    In summary forget about Morgan Kelly, David Mc Williams etc.. Joe has the debt forgiveness issue nailed as we speak.Ironically after Liveline I heard Derek Mooney discussing blue tits in the Aras.Interesting one………….

  43. Realist

    The best that government can do is to leave us alone, reduce their size and expenditure, reduce taxes as much as possible, leave us to put money where everybody of us want, leave to the market to downsize itself and start growth from the proper saving/investments.
    After they distributed wealth wrongly (to themselves, banks stuff, builders, …) and did the damage nobody expect them to revert it back.
    It is the broken window fallacy, the damage is done, the wealth is gone.
    The reversion is not possible, to preserve the state of 2008 or any other year.
    The broken window is not possible to repair without additional cost to taxpayers, causing another wrong distribution of wealth between us.
    Let’s leave banks and companies to deal with already done wrongdoing of government and their directly/indirectly controlled banks, leave individual cases to them to deal with, push them to do it faster so we go down faster, when the Irish Phoenix will arise again.
    NAMA is keeping so many properties out of reach of market keeping both selling and renting property prices high, keeping our dreams high for longer.
    The time will come when the government (and ECB, Europe and USA) will not be able keep up this dream forever and when we will all come back to real values of saving, investments and proper consuming.
    Let’s not push our governments to do anything else than to reduce their size and their expenditure. And even this “easy” task is going to be hard to be done :)

    • dwalsh

      The market is not the solution to this crisis my friend.

      The market is the crisis.

      We cannot get out of this by some Darwinian market adjustment. De-regulation (letting the market adjust itself) led to an explosion of fraud and criminality and global disaster.

      And dont blame the government. Our political classes and our governments have been corrupted and usurped by the market.

      • Realist

        “The market is not the solution to this crisis my friend.”

        Not this kind of market, I agree. Free market freed from all governments interventions, Yes.

        “And don’t blame the government. Our political classes and our governments have been corrupted and usurped by the market.”

        You just said that we should blame the government. Of course I am.
        I believe it is vise versa, governments usurped the free market and made it “market” that you now blame.
        Who get rid of real money (gold standard) ?
        Who created fractional banking system ?
        Who is printing money from the thin air inside ECB ?
        Who is leaving above its standard, spending more than it earns ?
        The government of course.

        “We cannot get out of this by some Darwinian market adjustment. De-regulation (letting the market adjust itself) led to an explosion of fraud and criminality and global disaster.”

        Cheers. You found one term I did not come across earlier, but I love it – Darwinian market adjustment.
        As I am science believer this is brilliant.
        Regulations just mean bigger administration and waste of money.
        Would you tell us one example from the history where this happen ? I will tell you 1000′s where regulations did the damage.

    • Juanjo R

      Rubbish.Simpistic rubbish.

      • dwalsh

        All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.
        Arthur Schopenhauer

        • coldblow

          I don’t know if this adds to the general understanding in this, but the extravert half of hte population identify with external reality. Therefore, what is is good, what most people do is by definition what you should do, what is generally accepted as true is just that: true. The other half (usually their spouses etc) are intraverts and operate from the opposite starting point: does this make sense to me? They will theorize and many (if not most) of these explanations may be seriously wrong or just barmy, but not necessarily.

          I once got a “Rubbish” reply here (“begrudging rubbish” if I remember rightly) from an extravert poster when I poked fun at Her Holiness, Mary Robinson. The poster continued: “Everyone knows that Mary Robinson is on the side of the poor and disadvantaged”. (That’s the giveaway: “everyone knows”.)

          Working on an insight from the psychologist/trist Dorothy Rowe, and based on personal observation, this seems to be the way things work.

          But I could be wrong.

      • Realist

        “Rubbish.Simpistic rubbish.”

        You need to tell the sentence that is not true. Tell me about the example where it is not true or point to the reference like books or valid articles.
        Otherwise your comment adds nothing to this discussion.

  44. dwalsh

    In the past decades of lobbied (purchased) deregulation the financial markets moved steadily towards a state of anarchy, in the technical sense of that word; the freedom to do as you please with no constraint; other than maximise profit.

    What this crisis is showing us clearly is that as a species we are not ready or able yet to handle the degree of freedom the financial markets were given in the past decades. At this stage in human development we need democratic agreements to frame and constrain our activities. I mean agreements such as constitutions and laws and regulations. Without them our world will descend into a dark age of oligarchy and serfdom.

    • Realist

      I actually might agree with this if we are talking about the same regulations :)
      We need to get back to gold or some other real money standard so central banks/governments/banks cannot print money.
      We need to get rid of fractional based banking so banks cannot print money or control where the money flows (e.g. building, car industry, …).
      Other stupid regulations. aka forbid short selling should be removed forever.
      Politicians should be banned from deciding anything about economics if they did not read at least 10 good economics books :)
      Or you mean something else ?

    • Realist

      Good one.
      Like this one comment: Vote Obama and other keynesians out of office.
      I hope this crisis will wipe keynesians out of the economic books and put them into the historical books where they belong, or even not have them there neither as somebody in the future can get wrong idea.
      The problem with investing in anything at the moment, even gold, is that you do not know what the government is going to tax you on. Not to say due to ECB/Fed printing money your euro/dollar value is going down.
      Somebody mentioned that the government should impose ban on private owning of gold.
      Or tax the pensions, or whatever else.
      Politicians can bring any stupid regulations and law they want and even easily make people believe this is correct.
      And this will be true if we have people who think government needs to bring more regulations and more rules to the market. More means more taxes, means less money to do investing, less money for industry, less product to produce, higher cost to consumers, inflation and so on.

      • @Realist, you fail to see the distinction between good taxes and bad taxes. Good taxes money goes to spend on hospital to serve with excellence the needs of a pop of eg one million.

        Bad taxes, the money is taxation stolen to pay for the casino debt of bankers!

  45. Has Iceland ignored Davids Message or Was David Wrong or is there a Question We Need To Ask ?

    Changing of The Guards.

    http://www.independent.ie/business/european/recovering-iceland-set-to-pay-114bn-to-landsbanki-depositors-2865719.html

  46. dwalsh

    Hi Realist

    Thank you for your replies.

    We perceive the situation differently. I will try to present my perception.

    First we need to distinguish between the real physical markets where commodities and services are exchanged and upon which we all rely for life and livelihood; and the financial markets where virtual leveraged capital is used to speculate or gamble on the exchanges in the physical markets and other esoteric manipulations.

    The financial markets produce nothing other than profits for the gambling syndicates (Goldman Sachs et al) who control and operate them. They have developed a range of virtual financial instruments designed to extract wealth from the physical markets. The most powerful and toxic of these are the derivatives; which are the underlying cause of this crisis.

    The financial markets are parasitical. They feed on the physical markets; and anything else they can get their fangs (their financial instruments) into. At this time they hold the physical markets and the world in a vampiric embrace of death. If they are not shut down our civilisation will collapse.

    Next to government. In the USA (which is the nub of this crisis) most of the key positions in government agencies are controlled and staffed by the markets. The treasury is currently run by a Federal Reserve employee; previously by a Goldman Sachs employee. Same applies to Food & Drugs etc; all staffed by industry or market employees. In addition the largest contributors to politicians are the markets; and politicians who please the markets may look forward to lucrative positions in the markets after their time in Congress as well as generous funding and benefits along the way.

    In this way (and others) the market has corrupted and usurped government. You can see this in the actions of a government which penalises the lower and middle classes with taxes and regulations and austerities which hinder prosperity and rob them of their assets and savings; while at the same time legislating to give deregulation and tax reductions and free money to the financial oligarchs. Ordinary American citizens have their jobs destroyed; their savings and pensions stolen and their homes foreclosed; while Goldman Sachs and the other elite ‘market-makers’ (as they refer to themselves) get tax-payer bailouts and record bonuses…etc. these are not the actions of a democratic government acting in the interests of the people. America is not a democracy at this time.

    Furthermore central banking is not controlled by the USA government; on the contrary. The Federal Reserve is a privately controlled banking cartel which has the franchise to produce and control the world’s reserve currency. I can link a Greenspan interview where he states this explicitly — the Fed is not a government agency. It is entirely independent of government.

    Of course at any time Congress could override the Fed; but it doesn’t and it wont…for now.

    I agree with what you say about fiat currencies and gold standards etc. The entire set-up at the moment is immoral and criminal. But the legislation which enacted all of this was lobbied (purchased) by the financial elites – by the markets. None of it was the actions of a democratic government representing the people of America. The whole charade has been a masterful demonstration of manipulation, corrupttion and propaganda — or public relations. Remember: they own the media.

    I believe in democracy; but we not have functioning democracies at this time; we have oligarchies masquerading as democracies. If we had democracies our governments would be acting in the interests of our citizens — but they don’t. On the contrary they are bankrupting our citizens and nations to feed the predatory wolf packs of the financial markets.

    Our political classes and even our harried business classes (SMEs) are still in thrall to the financial oligarchs. Until this and other realities behind the media propaganda (market owned and controlled)is seen as it is we cannot even begin to address this crisis in a rational and humane way…which is to say democratically.

    • Realist

      Hi dwalsh,

      Thanks for being honest.
      I am a follower of logic and mostly Austrian school of economics, just to be clear on my positions.
      So any explanation that I can grasp logically will be accepted by me (even then I usually do the research to check it out).

      I believe we can agree that the governments and bankers are the main wrong doing elements of the society at the moment.

      I do not believe that derivatives are what brought the world down. I would rather say it is the diversion of real money + printed (thin air) money to the wrong segments of life, e.g. bankers salaries and building (car, …) industry.

      I cannot see your point on derivatives. How derivatives brought Ireland down ? or US ?
      Is it not housing, too much money spent on properties (cars, …). The similar happen in the US with their subprime mortgages fiasco (car industry fiasco, …)
      The whole world is wasting energy, people and wealth on government spenditures and direction of money where they want. So the money is flowing from the producers (what people want) to non-producers (government) and producers (who government wants), where the money is usually wasted.
      As Bastiat pointed out that it is easy to see what is seen but what about what is not seen, in other words what will be done with that money and resources if not wasted on government backed industries.

      One of the sectors benefiting the most, apart from the government officials, is banking sector that they supported both directly and indirectly.
      Almost all biggest financial institutions were bailed out by governments. Not to mention government bailed by other governments.
      Goldman and others were interrelated to treasury and FED as you pointed out. “Too big to fail” book explained how all of them were on the phone while coordinating what to do actions.
      Printing money and causing inflation tax on people is evil and fraud as it can be.

      This is why I agree to the argument to shutdown FED, ECB and central banks.
      Assuming that to happen we need to get back to sound, hard, money (gold or gold/silver standard) and get rid of fractional banking system.

      Fed independence explained: http://mises.org/daily/4171

      I cannot see how politicans who are voted on 4 years term can be useful to the society.
      They usually say whatever they want and later on they go over it. While you are paid you are paid, who cares about principles.
      Sponsored by finance and other industries they can easily get bribed.
      Some of them are decent people, but most of them are probably incompetent, especially if they brought us into this mess.
      I do not care was it guilt of previous governments or even governemtnts from 40 years ago when they abolished gold standard, but the new gov should say to the people let’s go and fix what is wrong.
      If we can vote them down with something like Sky red button every day or month that will be great.

      So clearly I am for downsizing the government and political establishment, privitizing things that can go private.
      Reduction of taxes will bring money back to us, so we decide what to buy, what to pay and what to not.
      Let’s welfare and healthcare be privitized so we get competition and better service (similarly to other type of insurances and services).

      My main question is:
      What is that public sector can do better than private sector ?
      Nothing in my opinion except wasting money and resources.

      This free book is also interesting: http://mises.org/books/bagus_tragedy_of_euro.pdf

      • dwalsh

        Hi Realist

        Thanks for the great reply

        I want to read and reply properly to your post.
        Since David has moved on to a new article I will post it addressed to you in the next blog…when it’s done.

  47. Malcolm McClure

    Wolfgang Muncau in his final FT paragraph today: http://on.ft.com/q07hp5
    seems to agree with me that this is an existential crisis.
    “There is, as yet, little recognition in the eurozone’s cacophonous capitals that an economic downturn poses an existential threat. I would expect therefore that the downturn will hit the eurozone with full force, and without defence. When that happens, the eurozone crisis will turn ugly.”

    • Tull McAdoo

      Muncau made reference to liquidity traps. I was just wondering the same here last week about the USA and whether most of the stimulus funds were absorbed one way or another by Wall St. which means very little traction in the wider economy? What say you, O soothsayer of Glenties?

      • Malcolm McClure

        The Fed announced last week that it would extend low rates until 2013. They are practically pushing people into higher-risk assets in a search for yield, at precisely the time we may be slipping into recession, which will put those assets at their highest risk. I think this could end in serious deflation and land those who are close to retirement in even worse shape.
        Recognizing this risk, Dallas Fed chief Richard Fisher warned in a recent speech:
        “… put yourself in the shoes of a business operator. On the revenue side, you have yet to see a robust recovery in demand; growing your top-line revenue is vexing. You have been driving profits or just maintaining your margins through cost reduction and achieving maximum operating efficiency. You have money in your pocket or a banker increasingly willing to give you credit if and when you decide to expand.

        “But you have no idea where the government will be cutting back on spending, what measures will be taken on the taxation front and how all this will affect your cost structure or customer base. Your most likely reaction is to cross your arms, plant your feet and say: ‘Show me. I am not going to hire new workers or build a new plant until I have been shown what will come out of this agreement.’

        “Moreover, you might now say to yourself, ‘I understand from the Federal Reserve that I don’t have to worry about the cost of borrowing for another two years. Given that I don’t know how I am going to be hit by whatever new initiatives the Congress will come up with, but I do know that credit will remain cheap through the next election, what incentive do I have to invest and expand now? Why shouldn’t I wait until the sky is clear?’”

        You can read the whole speech at http://www.dallasfed.org/news/speeches/fisher/2011/fs110817.cfm.

        Much of this translates to Irish experience – for election read December budget.

        • Malcolm,

          Fascinating document. Fascination comes from me from the obvious competitive nature of the Dallas Fed, the way it scrutinises its own performance in comparison with other Fed banks across the country.

          Most importantly they way it indexes its own performance in terms of employment growth under a large group of headings. Also the information it publishes on its own website.

          Also I believe occasionally supervisory teams are sent in from Big Brother Bernanke to make sure no cock ups!

          Compare this to the EMU CB’s across the eurozone left to tick along independently of each other, incapable of self scrutiny, and open to collusion with zombie free loading banks such as Anglo…

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