November 15, 2011

Recent inaccuracies re the Bank Guarantee

Posted in Articles · 72 comments ·


There have been a number of recent comments about the Bank Guarantee. I would like to take the opportunity to get something straight about the Bank Guarantee, not in my words but in the words of Brian Lenihan.

It is true that when he called out to my house – at his instigation not mine – I told him that in my opinion (opinion, not advice — advice is given by paid advisors, civil servants, paid consultants, paid central bankers etc) he should copy the Swedish banking policy of 1992. This would stop the bank run that was happening in Ireland at the time.

That was it. I assumed that they would do their homework — that is after all what these guys are paid to do. Remember the politicians had teams of civil servants, central bankers and personal economic advisors.

In contrast, I have never been inside the Department of Finance in my life to advise on anything. I was never asked to clarify the parametres of anything — re timing, scope etc.

Very soon it became shockingly apparent to me that the Swedish approach was not being followed. In fact, the opposite was occuring with devastating consequences. By early 2009, I thought it best — even at that stage — to rescind the guarantee and call the creditors into a room and tell them the game was up. I wrote articles to this effect.

In response to this stance, Brian Lenihan in April 2009, personally wrote a op-ed page for the Irish Independent. I am sure this is one of the first times such a thing has happened where a Minsiter of Finance writes a personal attack on an individual commentator.

I would like you to read it as it clarifies what my position was by early 2009 and the fact that the Guarantee as implemented since Oct 2008 was nothing like what I had suggested. Within three months, I had realised it was a diasater because it had been hijacked by the very bankers who had brought the country to ruin in the first place.

It might also reveal the level of establishment smearing and undermining that goes on in this country when the entire appartus of the State is used to blacken someone’s reputation.



  1. 33square

    Fair play David. couldn’t be any clearer than that. And. Thank you for your efforts.

  2. David ,
    I am glad that you have written the above because you have clarified many issues for the believers in you and the non believers and your transparency has simplified what sometimes is complex for the general public to understand.

    My experience in 1993 when acting with foresight to prevent a bank robbery in Dublin showed up all the same malicious tirade from Irish Bankers so that they could climb a career ladder and kill the messenger even though the Gardai were in agreement with my evidence . All the experience I endured from Trial and acquittal to obtaining damages from Irish newspapers enlightened me into how dis-functional our small country really was then and still is .Subsequent to that and following many meetings with members of Professional Ethic Committees of Accountants / Solicitors , Criminal High Court Judges , Constitutional Lawyers , Secretaries to Dept of Justice , Finance etc , Central Bank Regulatory Division , Criminal Injuries Tribunal , Special Fraud Office , and more , I realised that the system is Banjaxed . In 1998 my oral / written and filmed submission to The National Crime Forum revealed the serious shortcomings in Irish Banks .No other submission was invited in writing to talk about Irish Banks .This was chaired by Bryan Mc Mahon in Civic Offices in Limerick and who in his final report omitted to mention anything about Irish Banks .Irish newspapers refused to print anything I said then that eventually in good time proved to be correct .

    For me I learned that ‘ Logic is Dead’ because it does not prosper on corruption. Therefore to allow Logic to regain its glory ‘ a culture of crime prevention’ is a necessity to be inscribed into the ethics of all professional bodies.

    What is amazing during the dark personal moments is that you learn who your friends really are.

    • Julia

      John, your mistake is to assume that they operate under any ethical rules at all. I’m sorry for all that trouble you went through.

      • Julia

        Hindsight and Foresight are both insights and I had both then and would not change what I did then at the time of impact and was in accordance with my professional mandate . Speed and location are always a factor to manage .

        What is interesting is that in due course the Garda Commissioner / former Head of CAB prepared a file on three senior management officials of the Bank of Ireland to be sent to the DPP . The decision of the DPP was that no prosecution should take place . There was no reason given and wont be .

        The facts learned are that only Irish Bankers can commit Crime with Impunity and there is nothing you or I can do .This is now witnessed in the very long saga the Director of Corporate Enforcement has to endure and other agencies ie CAB without success and unlikely to be .

        To build up Trust Irish Laws must Change or we continue living and working in shifting sand.

  3. Georg R. Baumann says:
    November 15, 2011 at 12:19 pm
    Thanks David!

    See, this is precisely why I find your open statement so interesting an example on how the media in this country works. It is a disgrace really, the editor of the Independent was under a clear obligation to offer you a direct response, no excuses, full stop.

    • whirmark

      I think “shutting them down” won’t help too much – the fear is that they’ll “shut themselves down” (i.e. won’t participate in bond auctions so country can’t refinance, and the bid-side of the secondary market dries up giving further incentive not to participate in the primary). What we need (among other things) is a more committed purchasing from the ECB (on its own this solves nothing though)

  4. barryflanagan


    Glad to see you put the record straight!

  5. Can not wait to hear the next waffle brigade talking about….GROWTH! The situation in the bond and CDS markets today leaves no doubts what is happening here.

  6. eamonnmoran

    So when John Gormley said that you were the person (at Brian Lenihans request) who convinced him to agreeing to the guarantee that was not true?

    David you were the brain child of this idea. As you said yourself at the time. You talked about the need to come up with a solution that was unique. i.e. not a copy of the Sweedish solution. People need to read your articles (which are on this website) in the days leading up to the guarantee. I think they will conclude you have changed your tune.

    I think you tried to help Lenihan with the most noble of intentions but I think you were being used. You were used because you came up with some sort of solution that no body else in the Dept of finance could have but also you were used because your intention was to prevent a total collapse of our financial system. Lenihan’s was to ensure that the financial insiders were also saved in the process.
    You would have known that this would not be possible. You were also used to convince the greens to go along with it.
    You tried to prevent an inevitable collapse the rules of capitalism would have demanded.
    The best move was no move.

    • Deco

      What exactly was John Gormley elected to do ? To introduce cycle lanes, and talk loads of greenie stuff ?

      I mean he was a minister at the cabinet, and he had far more power than anybody outside the state apparatus. And all he did was stick to cycle lanes, and the planetary stuff – while the crisis was erupting under his nose.

      I would not mind but a lot of these banks have their headquarters based in his constituency, and he was caught by surprise by some of the goings on. Did he ever ask Shane Ross for advice ?

      • Colin

        He didn’t even get out of bed that night he got the important phone call from Cowen, and when he hung up the phone he went soundly back to sleep perchance to dream of cycling in paradise. That’s Gormless’ sense of public duty for ya. Now, where’s me pension?

    • 33square

      David McW the patsy?!

    • I think it’s quite reasonable that when the guarantee as implemented is described by some commentators as “The McWilliams Plan” then it makes sense for David to describe the limits of his contribution to same. I read the same articles as you and came to a different interpretation regarding what was being proposed. Can you tell me where DMcW suggests that the guarantee should be used as a way of propping up insolvent banks aeternus? This wasn’t the Swedish model. Don’t remember him suggesting turning Anglo into a cash bonfire either. Why are you so intent on blaming DMcW for the mess we’re in when there are MANY others who have far greater culpability and who had direct responsibility to deal with the banking crisis given their governmental and public sector positions? And by the way, do you not think that the external consultants hired by the government to provide advice on the parameters of the scheme and its extension had ANY say in the matter? For example a large US bank with an exposed position on Irish banking debt and related securities? Nope it’s all McWilliams fault…

    • Eamonn, that is a complete missrepresentation of the facts. Reading those articles it is very clear that the recommendation was to have a time lmited guarantee that would be used to protect the economy from a banking collapse. I recommend that you re read the articles for content.

      One of the most depressing aspects of the Irish financial crisis was the focus on personalities instead of hard realities.

  7. Adam Byrne

    Good stuff David.

  8. eamonnmoran

    From your article on the Sunday before the guarantee.
    “Events of the past few days imply that there is no model we can import from anywhere else to help us. The rest of the world is suffering the same plight. Large banks are going under by the day. Thus, if we wait, we will simply suffer more.

    We need to come up with an Irish solution to our specific problem — because no one has the antidote to the contagion that is spreading through the global financial markets.”
    Does this sound like you were suggesting that we follow a Swedish Model?

    • Eamonn,

      The fact that I didn’t mention Sweden in the article doesn’t mean it wasn’t the basis for the entire idea. In fact – as was shown on Question and Answers clip on RTE last week which took place the following week in early October – I cited both Sweden and Switzerland. Sweden was the only country that had ever stopped a bank run in its tracks and it did this with a guarantee and Switzerland introduced one in the early 1990s too, following a propery crash.

      My point is that what was implemented was nothing like either. Brian Lenihan chose to write that article in April 2009 in response to my saying publically that we were making such a bags of things that it would be better to rescind the whole thing.

      What is going on now is a smear campaign where all the paid advisors, civil servant and politicians and central bankers who were actually paid to take the decisions are trying to blame the one guy never took a penny from the State and who predicted and warned constantly as far back as 2001 that a crash was coming and that these guys were destroying our country



      • eamonnmoran

        Thanks for your reply.

        It definitely seems to me that you were saying that we needed to come up with a solution that had not been tried before.

        As I said before I think you were only doing what you did for the most noble of intentions (unlike Lenihan who was trying to achieve 2 aims. Avoid collapse and save the skin of banking insiders).
        Imagine if Brian Lenihan hadn’t found your article and latched on to your idea. I don’t think there was any other way he could have avoided what we now know, was an unavoidable banking collapse that night. The banks were insolvent and not just lacking liquidity.
        Your idea was his only port in the storm.
        I just wish you hadn’t expressed it though I understand why you did. I think it would have saved the citizens 10′s of billions. Traders in London expected to lose their shirts that morning in Anglo bonds.

        • Colin


          You can be sure those FF wasters would have found a way to screw the ordinary people without ever hearing of David’s guarantee. You are deeply naive to believe David is even partly at fault.

        • stiofanc02

          @eamonnmoron Uhm, actually it was not just one article but a series of articles and interviews that laid out a roadmap of sorts, and developed over a period of years. If the late garlic muncher didnt do his do dilligence how can you blame one man? And as one who followed it daily, weekly and monthly I must say I could have sorted it out better than the retards in the Dail. Why are you so convinced McWilliams is to blame? Answer, because you want to blame him. You have been duped and you have not done your own homework. Scratch the surface a little harder and you will find the truth.

        • Stiofan


          One man, outside the state, without a role in government, without status, without political position, without influence, without power. Some fool places the burdens of history on this one man? Completely absurd allegations! David McWilliams however gifted, does not write government policy or take state decisions. Better to blame Lenny and Biffo, the greatest traitors in the history of the state, who sold you down the river for the wealth of their sponsors. Best, Stiofan

        • daltonmd

          Eamon, does it not strike you as bizarre that with all of the paid people in the department of finance and not too mention Brian Cowen who himself was a former finance minister, that Brian Lenihan went to DMCW in the first instance?
          No disrespect to David, but it chills me to the bone that this encounter ever happened and it worries me even more that you seem to have no issue in laying the blame for what happened to this country at David’s door.
          That David;s idea was “the only port in a storm” is a shocking indictment of the government we had, indeed it’s a shocking indictment at how out of depth BL was.

          What happened to this country did not start on the 30th of September 2008. This was the inevitable consequence of many years of bad financial decisions by Fianna Fail.

          “Imagine if Brian Lenihan hadn’t found your article”

          Yes indeed let’s please imagine our minister for finance, faced with the worlds biggest financial crisis, surrounded by highly paid advisors, was not scanning national newspapers for a solution to a problem that started way back when we joined the Euro.

          Let’s imagine that our banks powered by the ECB and our own governments didn’t implement decisions to fuel a bubble of epic proportions over the course of 10 years.

          Are you also saying that DmcW should have been party to the huge levels of fraud going on in the banks?

          The absolute corruption in Anglo? The shocking behaviour of Sean Quinn? Please…. Because that’s what we are paying for too.

          Finally, let’s imagine that Brian Lenihan followed to the letter, exactly what DMcW advised him to do?


      • Deco

        The DoF had not plan.
        They had no plan when Cowen became Minister for Finance, and Ahern decided that he was a socialist all along.

        They had no plan any stage.

        Lenihan, for all his blunders and faults did make them form a plan. And the ECB forced them to have a plan. Not the right plan. But basically, they had no plan.

        As Roy Keane said “if you fail to plan, you plan to fail”.

        The DoF plan consists of a subsection of the ECB’s grand plan. Too lazy to plan.

        It is up to each individual to make sure you all have a plan to provide for your old folks, and your children in the event of the DoF, the ESRI, and co make more spectacular disasters for you.

      • gerry

        Hi David.

        The phrase ‘scapegoated’ comes to mind which is a form of blaming those outside the system so as to maintain the status quo. In this case, it’s so much easier to blame you rather than risk looking at how they might have been responsible for these decisions.

        I think it’s quite disgusting how you’ve been treated and think it shows up the Irish press for what it is.

        Thanks for the clarification on what happened on that night.



  9. Dorothy Jones

    Well said David…..
    ….and respect for couching the piece in such moderate terms.
    They WERE PAID[handsomely] to give professional advice AND WERE AWARE THAT this ADVICE WOULD BE ACTED UPON.
    [Does not the application of the 'Hedley Byrne Heller' test give? rise to a breach of the duty of care owed from same advisors from which resultant economic loss 'flowed'.In contrast: opinion freely given is not constitute negligent mis-statement.]

    However; the lack of diligence in many areas of media reporting fails to offer a forensic account of the affairs and to accuratley identify the roles and responsibilities of these persons and the actions of the Minister during this affair.
    Certain published inaccuracies on the matter and in respect to your own opinion are injust and ill-informed.

  10. Deco

    The problem here is that there is a list of vested interests who have a need to deflect attention from themselves and to blame David.

    In 2007, Lenihan was a lawyer who was just appointed as Minister for Finance – and who thought that a good place to start with regard to economic management was Alan Greenspans book. Now Alan Greenspan’s loose credit policy caused the problem in the US. Lenihan never heard of the Swedish model for bank restructuring – in fact he had 0 clue on what needed to be done.

    So he went to David. Lenihan picked the strategy, because the alternative was mayhem.

    Lenihan did not follow the rest of the strategy, because by that stage the banks were giving the Department of Finance bad advice, incorrect figures, and a lot of Bull. Lenihan copied bits of various solutions, and tried to put it together as he was going along. Lenihan had cancer. Lenihan was surrounded by idiots – and in some cases, drunken idiots. He also had to deal with a state apparatus that had no clue on how to respond.

    It was a case of
    - systems failure
    - too much deference being shown to dodgy bank careerists
    - media interests supporting commercial instersts like IBEC, bank interests, and Brussels
    - a skills shortage in the civil service
    - the infamous “drinks cabinet” who were not sober enough to handle a crisis
    - massive unknown debt levels
    - poor competitiveness in much of the economy
    - a culture of pretending that dubious habits built up during the previous two decades, were not up for negotiation.

    We have still refused to deal with the intellectual root causes of this problem.

    In fact there are a range of interests which depend on the people being sheeple…..

  11. Deco

    Lenihan should have kicked anglo and Permo out of the guarantee when he found out about the massive loan that “matured after 72 hours” which was explicitly designed to make Anglo look solvent, before Anglo became nationalized.

    The Auditors, and the Financial regulator, and persons working in both banks are liable.

    The problem is a bit like the Annabels case – they are all from the same layer of privelege, and they will not rat on each other – when they can get away with lying to the common people.

  12. Nouveau Pauvre

    Hi David,
    Having done a little research on how we all ended up in this mess, it seem obvious to me that the Big Banks have bankrupted nearly every nation in the western world by loaning them money that they can never repay which will result in an America and a European Union that is controlled even more by Big Banks than it is today. I think that the US promoted the idea of Iraq’s hundreds of billions of debt to foreign nations and banks as a “Toxic Debt” which under UN law was deemed to be Non Repayable as Saddam spending the Iraqi money on weapons was NOT IN THE BEST INTERESTS OF THE IRAQI PEOPLE!!!!!!
    If I am not mistaken, did Ecuador not recently kick out the IMF and declare their foreign debts as TOXIC in that the previous government has not acted in its’ peoples best interests….
    Do you feel that Greece, Ireland, Portugal, Italy, France, USA and any other country that has used taxpayers money to BAIL OUT THE BIG BANKS should cry foul and declare those debts toxic?
    I am not an Economist but if ALL THE WORLDS BIGGEST BANKS (who hold all the debt) were not repayed and allowed to fail…..then no countries would owe anything…I know that everyone with shares and investments and cash not in solid gold and silver would see it go down the toilet but I cannot see that not happening now anyway as the only way Europe and the US can pay back their debts is to print more dollars and euros which will inflate away all the assets of people in those areas.

  13. goldbug









  14. David, no person in their right mind believes that the big decisions on the banking bailout were taken on the basis of David McWilliams advice alone. Such a notion is ludicrous. These guys have teams of well paid advisers who are all state insiders and it shows how desperate they are when they single out one guy for blame. The emperor is stark naked and anyone who is watching knows it and we will not forget

    You have made yourself an easy target, for whatever reasons only you know, and now you are witnessing the state apparatus in action closing ranks to crush voices of dissent and popular opinion. That is the price you pay but I am sure you will cope with it

    The presstitutes in the Irish Media are a disgrace to their profession because they are controlled voices taking orders from people like Denis O’Brien and they are a bunch of limp wristed and despicable wan£$%s

    They tell us to shut our mouths (quite literally some asshole of a jouno in the indo was mouthing this the other day) in respect of the salaries paid to RTE presenters

    They are amoral, lying bastards and they are our worst nightmare. Ireland, like many western countries, is on the way to becoming a fascist state and this is only the beginning

    Maybe now that you know what it feels like to get your arse well and truly kicked it will persuade you to change course and take up the stance of someone who really believes in a common cause

    That means having the freedom to say what you think and not be afraid. All good men are willing to pay the price in order for truth to prevail. Otherwise we heading into a tunnel of darkness which will last for a very long time

    Don’t let the bastards intimidate you!

  15. stiofanc02

    @Pauldiv and David In short, Fuck the begrudgers!!

  16. MarbleGirl

    Brian Lenihan’s condescending, dismissive and (with the aid of hindsight) embarrassingly incorrect statements re: David McWilliams and NAMA: “…He is clearly confused about what NAMA and the state guarantee are designed to achieve…”. “NAMA”… “is fundamental to getting credit flowing again to support economic recovery and jobs” – is symptomatic of a tendency of Irish leadership and authority to operate a zero tolerance policy towards anybody who dares not to sing from their hymn sheet.

    Is this a characteristic of underlying insecurity? A knee jerk reaction, symptomatic of being out of one’s depth? An old fashioned belief that you should not be questioned by those ‘below’ you in the hierarchy of power? The bluster of confident incompetency?

    Or perhaps all of the above?…..

  17. Malcolm McClure

    “Never apologise, never explain, get it over with and let them howl.”

    Benjamin Jowett.

  18. Julia

    Hi David, the very idea that the Minister for Finance could base an economic plan, a bank guarantee and the following two years of activity or non activity on a half hour conversation with you is off the wall. As the others have said above, the man was surrounded by PROFESSIONALS who were employed presumably because they were qualified to advise him.

    You have made this economy, the vocabulary that goes with it and lots of new ideas clear and easy to understand to complete novices ( me especially) and I am very grateful for that.

    Brian Lenihan’s advisors DID NOT DO THEIR JOB.
    Mind you Kevin Cardiff has just been promoted PAST the level of his incompetence.

    Nobody in their right mind really thinks you are to blame for our present woes. The whole idea is totally ridiculous.

    Now get back to expressing opinions and educating the nation.

    Best Regards always,

    Eithne Ní Fhearghaíl

  19. Harper66

    “Now both Greece and Italy will be ruled, not by politicians but by economists. Nobody can doubt the sad necessity of these moves. But at the same time, nobody can deny that they mean a temporary suspension of democracy…..”

    “To avoid another Great Depression, the eurozone needs radical, costly and deeply unpopular measures, culminating in what cannot but be a diminution of national sovereignty for all its members.”

    “Challenges will be posed for the citizens of every country, most of whom will face national elections soon and (presumably) all of whom will have to endorse, through elections or through their parliaments, unpalatable new arrangements. ”

    Could not believe my eyes when reading this bilge.

    I find it frightening to think that a mainstream paper could print an editorial cheering on the dismantling of democracy.

  20. bonbon

    It seems to me the only real difference between Eire and Italy,Greece,Slovakia, is that somehow Eire got a chance to elect another Dail. Things have accelerated, and that cosy option is now flouted. Just let Dublin try a new treaty referendum as Merkel demands.

    Question is what pressure was brought to bear to roll out the Euro in the first place, and to what porpoise (as the mock turtle would say).
    Any calculation without taking this into consideration is doomed to flounder, including soft/hard, core/periphery, north/south euro2′s.

    This consideration overrides otherwise sober reason. I know there is plenty of the usual blather, baloney, laziness, waffle, cronies, in Berlusconi’s case bunga-bunga, but the question remains.

    The answer must involve why Germany would dump the most successful DM currency ever, from null in 1948. That in no way was voluntary. Because re-unification was critical, and threatened, it was done. The entire tragedy is pivoted on this. This is the reason Europe is tearing itself apart, the attempt to break Germany, a modern nation, is destroying the other nations, as if they all caught syphilis, like at the 1815 Congress of Vienna.

    With all these nations including Germany now in the throes of a Roman Mithra self-emasculation ritual, which will not stop the breakdown, one has only to find the presiding Blair-grin to see cui-bono.

    To give a reasoned opinion at such a gathering risks exposing the madness, and presto they all turn on you.

  21. Deco

    Full credit to Nessa Childers for making a stand of principal, concerning the Kevin Cardiff scandal.

    Kevin Cardiff has already shown contempt for the Irish people, concerning his appearance before the Dail committee.

    Promote Kevin Cardiff to being telephone accounts secretary for the Healy Raes.

    • I did not have a chance to learn about that in detail, but what i was told was most disturbing and if true, it should cause some major investigations and heads to roll. From what I understand she was threatened to vote against Cardiff in very clear terms.

      Stuff like that should not be swept under the carpet of a public short term memory.

      Simple question is, who threatened her? Make that public!

  22. Demystifying Economics

    Do you know what this is?

    If you studied economics, you will, otherwise more than likely you will not know this formula.

    What is that good for?

    If you read todays Bank for International Settlement publication on OTC derivatives market activity in the first half of 2011 and scroll down to tables, and starting with table 9a and following you will be welcomed by the term HERFINDAHL INDICIES, and that is what this above formula is about.

    In the US, it is used to measure market concentration for purposes of antitrust enforcement. The Herfindahl-Hirschmann Index, or short HHI of any given market is calculated by summing the squares of the percentage market shares held by the respective firms.

    So, this is an indicator of the amount of competition existing in a market. Lower indices indicate lesser concentration and higher indices indicate more market concentration, think market power, hence lesser competition.

    The bottom line for me is this, it is statistics, and as it is with all statistics, and in deed economy as a discipline and as a whole, it is dependent on assumptions, in this case, defining exactly what the market is.

    So by tweaking the definition, the assumption, just a tiny little bit, you exercise a helluva lot of power in manipulating the end results! – Am I making sense? -

    So in markets, the HHI is used to observe market concentration, hence is a tool to monitor developing monopolism achieved through mergers, and just as you would expect, it trigger the legal departments to become active and start to define and fine tune the assumptions, which in case of the US are expressed in the HORIZONTAL MERGER GUIDLINES.

  23. Perfect Prefect Kenny in Berlin:

    Be prepared for a cluster bombardment of EPP propaganda waffle.

  24. Lord Jimbo

    This whole thing does have a ‘fall guy’ feel to it. Dancing with the government and powers that be at Farmleigh, Global Economic Forum etc deepens the game.

    It is virtually a universal law that one has to be extremely careful when dealing with politicians. With them (with a couple of honourable exceptions) there is always an agenda, sometimes multiple agendas with their first instinct to save themselves.

    Bit like the final scene from this:

  25. [...] is McWilliams response on some "recent inaccuracies re the bank guarantee". Morning, There have been a [...]

  26. straboe1

    I tried tom get that web page, Message appeared with search stating Dave MWcWilliams blocked! I have been unable to get that page.

  27. BrianC

    Hi David

    Sad to see that you have to defend yourself regards the incompetence of the Irish Government to manage the affairs of the Irish state. And incompetence is putting it very midly and very kindly.

    All in Ireland shuold note these two simple facts.

    Firstly ‘The Mirror’ in Germany reflects Ireland in the light of an Elementary School teacher visiting Angela Merkle who has a doctorate received for her thesis on Quantum Chemistry.

    Secondly ‘the Irish Department of Finance is not only inept at getting the figures right the German Department of Finance knows the details of the Irish Budget before they do’.

    David in light of the above two simple sad facts do you really feel the need to defend yourself regards banking guarantees or anything in economics in connection with the Irish Government. There are many good people in Ireland and a great many of them in the Irish Civil Service it is a pity that Irish politicians has to let all down time and time again. The Germans have a saying ‘When you fail in everything try politics’

    • The people blaming McWilliams for this problem are the same who believed the economy was fine in the good times and that the only thing standing in the way were doomsayers talking down the economy. So what? I guess the problem for DMcW is media saturation and the Irish love for violently knocking anybody who sticks their head above the parapet and challenges the imagination-devoid status quo. It’s ingrained. Almost impossible to get around. David has made this point and should just let it go. Otherwise it’s self destructive.

      However, you raise an interesting point here as I’ve read the same German papers you have and discussed it with German friends. If they didn’t know any better they’d assume we were all financially incontinent gamblers who lived in mansions and had a stable of BMW SUVs. No sympathy is possible for the Irishman they portray. Nor is there any culpability for the German banks that shoved money down the gullets of ours. Irresponsible lending was regarded as a European growth formula at the time by fantastically inept economic ideologues in the ECB. If this wasn’t the case then why the PIIGS contagion?

      It’s nice that the management of the Irish economy has been handed over to a stunningly unimaginative and paranoid German government pandering to sensationalist and condescending journalism of the quality of the Sun and the Mirror. Driven by a fear of hyper inflation and banishment to a political wilderness for Mutter. Any pain we experience is justified in that light. The Eurozone project can’t collapse too soon.

  28. straboe1

    Funny, I tried the exact same exercise now and I got the web page. Also how come I only got the article from David this evening when it was posted on the 15th?

  29. molly66

    The government at the time suffered from a warped brain how this happens is you stop listening to the very people you should be listening to us the Irish people. Than you end up in the tunnel syndrome Walter Mitty had the same and hittler they start to believe there lies are the truth and when the ship is about to sink,they call to David twist there take on it and David after past performance of the said government are you not surprised.
    What about the present government did they tell lies to get in and what’s next the budget I hope they did not consult one of hans Christian anderson books on how to dup the Irish people.I think we have been so badly treated buy the last shower that the new showers life span might be even shorter.

  30. Delighted that this clarification has been issued. The next fool printing or uttering black propaganda promoted by those in grey suits should be hauled up for defamation, if that process hasn’t already started.
    Keep up the good work David.
    BTW, when are you and Duncan Ferguson going to collaborate on a book to record this mess for posterity and set out possible scenarios that are likely to occur?
    Should be quite a small paperback really!

  31. molly66

    How to get rid of a government with a large majority we the people of modest means not the rich or the over payed or the retired over payed or the farmers who seem happy with the present government I mean the real people unite as one and make a stand. I am not happy with the way this country is beening run are you.

  32. Shay Conway

    No David, it wasn’t about your comments/discussion/advice on the bank guarantee. It was your distasteful personal comment about a very trusting guy. Something about garlic and the state of his suit.

  33. dermo

    Fairplay to you David and about time .The smearing and sneering about this has gone on long enough .It shows also the power of governments what they can do if you disagree with them .They will scapegoat anyone that will divert the blame from themseloves

  34. billyomahony

    As regards what David’s opinion/advice regarding the banking situation in Sept 2008 and what ought to be done about, some readers may find the following quotes from the three articles before the guarantee and the first article after it enlighting.

    September 21, 2008
    State must act as a safeguard

    The single most persuasive route to take would be for the Irish government to guarantee all deposits in Irish banks. Yesterday’s announcement of a €100,000 deposit guarantee only goes half the way.

    In contrast, a full guarantee would have meant full protection for all creditors, all our own deposits and those of the foreign institutions who have lent to the Irish banks. The government could do this for a limited period — let’s say two years.

    This would guarantee the deposit side of the banks’ balance sheets, where there is no problem but uncertainty.

    Of all the options, the deposit guarantee is the most attractive.


    September 24, 2008
    What we must do to get the monkey off our backs

    Let’s leave the US for a moment and return home where we see that shares in our banks fell in response to Finance Minister Brian Lenihan’s €100,000 deposit guarantee scheme.

    A full guarantee covering all deposits would have been, and still could be, a much more comprehensive option.

    Now, with the deposit guarantee scheme, they are implicitly telling us there’s a big problem. If it’s a big problem, let’s do something big to rectify it.

    By giving a full deposit guarantee now, the State could re-energise creditors’ – both big and small – confidence in our banks.


    September 28, 2008
    State guarantees can avert depression

    The only option is to guarantee 100 per cent of all depositors/creditors in the Irish banking system. This guarantee does not extend to shareholders who will have to live with the losses they have suffered. However, it applies to everyone else.

    Furthermore, the state could charge the banks a 0.25 per cent fee for the guarantee, thus making about €1.5 billion per year in revenue (0.25 per cent of €500 billion).

    The beauty of guaranteeing deposits is that you use no money — not a penny. Instead, the government is using its sovereign credit as the country with Europe’s lowest debt/GDP level to restore confidence in the system. The civil service view appears to be that such a guarantee would subject Ireland to the risk that people withdraw money, disbelieving the state.

    The Irish bond market has never been in such demand, and so would this guarantee scheme.

    In fact, it is highly likely that money would flow into the Irish banking system from abroad to avail of the guarantee.

    The minister should simply state explicitly that the deposits are guaranteed and clear up any confusion.

    The right one for Ireland is a 100 per cent guarantee of all deposits.


    October 1, 2008
    Lenihan’s masterstroke has bought us time to sort out our own problems.

    Finance Minister Brian Lenihan has made a wise choice. By coming up with a unique, Irish plan – guaranteeing all deposits.

    The minister obviously thought that by guaranteeing some banks and not others – as many of his advisers argued – he would open up the prospects of the weaker banks undermining the stronger ones. He has put the system first and this can only be a good thing.

    Longer term, we can expect foreign banks to move here, setting up offices in Ireland and creating a banking industry which will thrive. We have set the template. The upside greatly outweighs any possible downside. The system is the most important thing at this stage. A threat can now, with the right accompanying policies, be turned into an opportunity.

    In time, Brian Lenihan’s move yesterday will be seen as a masterstroke and a practical blueprint for the new financial architecture which will emerge from this global crisis.

  35. markfl

    @billyomahony :
    There were many who thought it was a masterstroke. It worked for Sweden so it could have been a good plan if adapted correctly and executed skilfully. Many have said that it brought us time , but when the forensic examinations of the banks were complete , there was no excuse for persisting blindly with it – the parameters had changed so much. Don’t think you are being quite fair to David, and maybe even abit mischievious. Mark Fleming, Oslo

  36. Alan42

    If anybody needs proof that Ireland is corrupt just read ‘Anglo Republic ‘ by Simon Carswell . Anglo had to be saved because of the cross deposits that was going between the banks and Anglo . Even the central bank was in on it . Some call it the ‘ Green Jersey ‘ but others call it ‘ Fraud ‘ if the markets had of found out what was going on at the time nobody would have touched Ireland with a barge pole and Ireland reputation would have been damaged beyound repair . Thats why kept on banging on about important Anglo was .

    Along comes David with his guarantee idea and it was the perfect cover for FF / The Greens to cover up the scam .

    I like David , I like his articles and his books . But FF have been running scams since the foundation of the State ( Sweepstakes ) and it was a fair bet that there was a scam involved when Lenihan called to his house late one night to chew garlic . No way were they going to play it straight .

    Interestingly this seems to be coming from The Greens who judging from recent TV appearances are talking like they were in opposition at the time .

    David , you are just way to innocent . You are dealing with criminals who will do and say anything to save their skins and chances of winning future elections .

  37. From my own experience David you can have hundreds of teams of people but 1 person makes the decision and usually it has nothing to do with the teams of people who don’t have the power to make the decision in the first place.
    I know and believe the only way forward for Ireland is to keep with Europe for as long as they will have us. There wasn’t a road in this Country in the 1970s. People have a very short memory you included when you write about leaving the euro. The failure of the state to govern itself economically since its foundation could not be clearer.
    Now there is a downturn but this wont last, march 2012 is when the ECB will have no choice but to print money and lots of it…

  38. [...] banking policy of 1992. This would stop the bank run that was happening in Ireland at the time. Recent inaccuracies re the Bank Guarantee | David McWilliams Sign in or Register Now to [...]

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