August 19, 2013

An uncomfortable truth about eurozone growth

Posted in Banks · 201 comments ·

The local lad, more meat on a seagull, walks precariously on the narrow ledge of the enormous bridge. One false move and he is gone. Far below, the green Neretva river moves slowly. The blazing summer sun forces the locals into the shade and it is from here underneath a large home-made canopy on the Muslim side of Mostar in Bosnia that we watch the spectacle.

He reaches the crest of this extraordinary bridge, built by the Turks in the 16th century, destroyed – in a crass act of cultural vandalism – by the Croat army 20 years ago and rebuilt piece by piece by the new Bosnian government with Turkish and French money. This is the bridge – the ‘Most’ – from which this beautiful town Mostar gets its name.

The crowd gathers, waiting. The boy jumps, screaming, arms and legs flailing – as if riding an invisible, mid-air bicycle – and then whoosh, he’s in the river. For a second, he is gone. Then a tiny head emerges, laughing, punching the air. Triumph. The crowd roars its approval. The next waif scurries up the bridge.

“We used to do this all together before the war. Now the kids from both sides don’t mix too much.”
They’re masters of understatement, these Bosnians.

My three Bosnian friends have had their lives dominated, destroyed and then ultimately rebuilt by the war in Bosnia. Only 20 years ago this month, Serb forces rampaged through this beautiful country, murdering, burning, terrorising in the name of Greater Serbia, opening up ethnic divisions which, for many, were of no consequence before the shooting started.

Now reconciliation is a difficult road. This dreadful and tortured experience in Bosnia makes the achievement of the EU and in particular the alliance between Germany and France after the Second World War all the more remarkable.

True, the potential warring parties were kept apart by the realpolitik of the Cold War. It was Nato and not the European Community that prevented another war in Europe. It was American military power and the prospect of mutually assured destruction that kept Europeans from each other’s throats. The EC claims to have been responsible, but neither an enfeebled Germany nor a colonially compromised France were in any shape to exercise military power.

However, the peaceful and respectful nature of the EU is truly a remarkable achievement, especially when seen from somewhere like here, deep in the Balkans.

This is why the latest twist in the EU’s road, the devotion to the euro and that fact that Europe’s leaders have been prepared to risk the EU in order to preserve the euro must be one of the most bizarre political initiatives of the past 50 years.

Far from bringing the EU together, the present policies threaten to push the countries of Europe needlessly apart with the eurozone splitting between creditor and debtor countries and each pointing the finger at the other.

The EU top brass need growth in order to convince the people that the policy – which is essentially a creditor’s charter – has a chance of success.

This is why the news this week must be music to the ears of the bureaucrats. On Wednesday, both German and French GDP growth beat expectations. This follows news that the rate of economic shrinkage in Greece is declining. Not getting worse is not the same as getting better, but after years of economic catastrophe, the fact that there could be a floor for the Greek economy has to come as a relief to the Greeks above all.

Latest data also indicates that European manufacturing might also be stabilising. The latest Purchasing Managers Index – which measures the health of the manufacturing sector – just hit a two-year high.

Could the worst in Europe be over?

There is a huge difference between the rates of decline slowing and the possibility of a real turnaround, but latest data are encouraging for the continent. European consumer confidence is also picking up and is heading back to levels of optimism not seen since 2005. So let’s see what happens next, as survey data is quite a good leading indicator of where the economy could be headed.
Where might a European economic recovery leave Ireland?

There is a tendency in Ireland to see a European recovery as being good for Ireland, via exports and the improvement of European banks’ balance sheets, facilitating more lending to us.

However, this tendency is misplaced. The relationship between Ireland and Europe is not straightforward. Yes, for policy purposes Europe is significant; but in terms of real trade and investment, the US and Britain are by far, the most significant players.

Indeed, given the hugely indebted state of Ireland – the most indebted nation on earth (when all debts are taken together), the rate of interest dictated in Germany matters much more than whether German people are spending or not.

If the European recovery is strong enough to change interest rates expectations and if the ECB were to change course and begin the process of raising rates or even change the policy of the last five years from lower and lower interest rates to somewhat higher rates, what would happen here?

It has always been the case that the financial impact of interest rates movements in Ireland has been much more dramatic than the real impact of a growing Germany on Irish exports and thus trickling down to Irish jobs. This is because the balance sheet of the average Irish person is so dependent on the rate of interest as the balance sheet is carrying so much debt.

Therefore, Ireland is in the strange position for a member of the eurozone in that our ideal economic combination is a weak European economy (giving us low interest rates) and a strong American and British economy (giving us buoyancy in exports).

This bizarre outcome is the direct result of our political elite allying our country financially to countries we do modest trade with via the euro and yet at the same time, allying us umbilically to America via the direct foreign investment policy. It is a case of the left hand not knowing what the right hand is doing.

What happens to the 375,000 tracker mortgages if the European recovery takes off and pushes up the monthly mortgage payments?

Where do Ireland and Europe’s interests start to diverge?

The big European picture is that there can be no doubt that a return to growth in Europe is good for the entire project. When we are talking big things like international reconciliation, particularly given the continent’s history, it would seem a little bit Hiberno-centric to be pointing out uncomfortable truths like the fact that Ireland’s immediate economic future is a bet that Europe remains in the doldrums. But that’s the way it is. For Irish balance sheets to recover, Europe needs to remain weak.

So yes, to avoid another Mostar, a strong European economy is necessary, but who will tell that to a couple trying to make ends meet somewhere in Ireland?

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  1. EddieN

    Early bird and all that

  2. Eireannach

    So David is saying that since Irish households (and many businesses) are so heavily in debt, we need to keep interest rates low, to prevent personal and corporate bankruptcies.

    Why not avail of both the new personal insolvency laws, and the improved economic conditions, to get the inevitable wave of bankruptcies over with?

    After all, debts that can’t be repaid, won’t be repaid, and it’s what they’d do in the UK and US.

    Surely the best way for a fresh start is through this magic door. As if by magic, one’s debts are gone and there is no more ominous claim against one’s future wealth.

    • Grey Fox

      That would be to say that the Banks are right and the debtor’s are wrong, not that straight forward methinks… and since when were the UK & US any kind of role model to based sound decisions on?
      Fresh Starts and all that…..

  3. Pedro Nunez

    As Emily O’Reilly quoting President Michael D Higgins, at the Magill summer school in Glenties said: “There is a deep-seated anti-intellectualism prevalent in Irish life,” and that our political and cultural life is marked by the false notion that one person’s ignorance was as good as another’s knowledge”.

    There are lighthouse principles which cannot be violated with impunity. If we step off a sea-cliff we are governed by gravity, a natural law. We may want to swallow-dive into the sea below to impress people. That may be our personal value proposition. Values drive behaviour. Principles drive the consequences of behaviour.

    I may want to impress you in a particular way to garner some benefit. But, if I don’t talk straight and don’t tell you the truth, and you know that, the natural consequence is you will not trust me.

    Quoting Peter Sutherland O’Reilly said the ROI courts were “inappropriately forced to decide not alone what our values in this republic are or should be, but also to divine what the elected representatives of the people think about those values”.

    Lives and our political ‘leaders’ have no moral centre or compass. They’re flaky not based on principles. They’re just based on short term expediency, vox pop polls and what gets what I want now.

    Have we recognised the core principles necessary to get us out of this mess as a nation?

  4. michaelcoughlan


    I understand the point you make in you’d mistitled article but your point is a reciprocal of the reality. Let me explain.

    I agree completely that it is ludicrous for the people in fail eireann to tie us to Germany when the US and the UK are our more important trading partners. The uncomfortable reality is the fact that we the people accept and vote for such nonsense not the fact that progress in Europe is bad for Ireland.

    I’m just curious regarding the data from the PMI and GDP; is the data measured in Euro terms or in an actual increase in a demand fir real things like goods and services?

    If the data is measured in an increase in euro terms and the output and demand is actually falling then your article could be demonstrating that inflation has taken hold. Gold David is up almost $100 an oz in the last couple of weeks. You know what that means…………

    • michaelcoughlan

      Warren buffet gets around the issue of dodgy official figures by keeping an eye on the number of rail road cars in use per week. If the number is up (a leading economic indicator) he knows the economy is performing better irrespective of “official figures”

      Maybe some similar measure of transport exists for Europe?

      • Points presented above are valid Michael.
        Is the economy measures in units of output or in currency.

        In the US John Williams demonstrates that the real rate of inflation is around 9% and that the economy is contracting at a rate of negative 1.5% pa at the least.

        The dry Baltic index (I think that is what it is called) measures the amount of trade between countries by noting the number of cargo ships loaded in transit.

        Another measure is the US use of electricity as a measure of unit of activity. It also is down rather than up.

        It is no longer reliable to use money or currency as a unit of measurement as the values of the currencies have been completely distorted by central bank infusions, injections, additions of units of currency into the economy. No currency is immune from this.

        Our monetary system is the root cause of the economic malaise. Nobody can make a correct decision because of the false messages imparted by using currency as the unit of measurement.

      • 5Fingers

        Internet Traffic. It’s a knowledge economy. We don’t move atoms around anymore, we move data. And it is growing at about 25-30% consistently.

        Cannot measure activity by material movement because there is less need of it to yield the same result. Energy consumption per unit of work DONE is dropping enormously – so power consumed is no longer a reliable indicator. Just look at a 100W bulb – a 3W Lamp of same luminousity now replaces it – less than 10 years later. Latest D series engines from Volvo yield 20% drops in fuel consumption with less weight, higher reliability. and so on and so on…

        Have a look at a company like SAP AG. Bet you are sorry you never bought into it. The entirety of their intellectual property can be put on one USB memory stick and yet they dominate how businesses run their processes (banks as well).

        I am not saying all is good at all. But I am saying that the traditional ways of viewing economic activity are being turned on their head. Metallists do not get it , neither does our host get it and indeed anyone else getting hung up on banks. Worst of all, most of the world’s governments do not get it with perhaps the possible exception of maybe China, Scandanavia, Benelux, Germany and bits of the US and UK.

        • Pat Flannery

          Well said 5Fingers.

          • Not really Joe
            There have been plenty of times I have talked of a basket of currencies. Primarily US dollar, Chinese Renminbi, Russian ruble and Brazilian Real as possibilities plus a good slice of gold. It remains to be seen if gold will just be used as a backing for the stronger currencies or as a stand alone unit of currency within the basket.

            There is no doubt in my mind that gold is returning/has returned as a monetary metal. silver is a little further behind. Culturally silver is money for many peoples.

            No doubt there will be foisted on us the specter of special drawing rights issued by the BIS as the banking system seeks to retain control with the debt based fiat Ponzi scheme money. That will be the attempt to be rid of national currencies and have a world currency.

            If the Euro is inequitable now , wait till you get SDR currency. My hope is the Russians and Chinese et al will go in the direction of national currencies hitched to gold to add stability and quell the central bank manipulation of inflation and false interest rates.

            Better yet would be to disband the central banking system and revert to national treasury currencies which although subject to inflation are at least debt free. National debt could be a thing of the past together with the constricting debt and interest throttling the worlds economies as at present. We are approaching the final days /end game of our current system.

            The debts accrued simply cannot be paid: That is personally, corporately and nationally.

          • Sorry Pat , I got the above on the wrong thread!!

          • Joe R


            I still don’t agree with the gist of this but I do thank you for taking the time to explain your point of view to me.


          • Thank you for your civility Joe.

        • michaelcoughlan

          Knowledge economy you say? The US and the UK are very knowledgeable about services and finances etc. China is very knowledgeable about manufacturing etc. Now I wonder how much knowledge I’d need to figure out which of them is the debtor nations hopelessly bankrupt and which of them the creditor nations?

          • China is also very knowledgeable about un-backed fiat paper money. They tried it themselves several times , each resulting in a social and financial disaster.

            They are in the process today of using that knowledge and getting ready to control the world with the use of their own money and currency which will have the “metallists” grinning and others grinding their teeth. It will have the backing of precious metals.

          • Joe R

            You do have connections to the Chinese leadership that give you the inside track on this? You know their thinking?

            Here is reality;


          • Hi JOE R

            No inside track. Your attached article is in line with most comments. A basket of currencies with gold as a component is on the horizon. China accumulates gold as fast as they can in order to be in the strongest position possible. Nobody is suggesting a new gold standard as such.
            Jim Rickards could be accurate or he could be short in his estimates, but we know that maybe he has an inside track.
            We will see in the fullness of time.

          • Joe R

            The article totally contradicts your invented narrative and crystal ball gazing in general.

            It talks about the probability of the Yuan emerging as a global reserve currency and that the gold the Chinese are buying is to back their strategic sovereign investment fund.

        • And what exactly is done with this knowledge? By itself it accomplishes nothing. Putting the knowledge to work may have an economic effect that is measurable either in units of production or currency or both.
          Knowledge is , I Think, what is referred to as human capital. Knowledge can be applied by people. By skilled people.

          Application requires what is known as venture capital AKA cash and someone willing to invest.

          One of the problems the UK has had is that it has often given away knowledge to others who then capitalize on the knowledge and produce a valuable item.

          The hovercraft is a prime example. Conceived and developed in Britain. Nobody in industry could see the benefits. Then it was presented to the military but put under lock and key for several years. Finally it was presented to others. The US grabbed it and built the hovercraft , Japan also and finally it was manufactured in Britain.

          Christopher Cockerill was the inventor. He also helped developed Radar

          • 5Fingers

            Knowledge economy not JUST about KNOWING HOW. It is also about KNOWING WHY, WHAT, WHO and WHEN and being able to anticipate and recheck assumptions in real time. Ignore any of this, and competition will wipe you out. Most of the economic failures can be traced to no knowledge of WHAT is being done and WHY or even on WHEN. It is all WHO and HOW and unchecked assumptions on the rest – which basically frames the science of 20th Century politics and finance and a lot of economics.

            Knowledge Economy demands deep strategy because without it, with things moving so fast, any short term tactics are likely to be unreliable.

            I think the strategists are starting to “get it” in the knowledge economies I mentioned earlier. Being able to look ahead is key and to do that you need data and you need processing power and lots of it to ensure all 5 facets are being monitored and catered for correctly.

          • Thank you 5 Fingers
            A widened scope of thought and description is valuable.

        • Paul Divers

          Our host does get it. Pretty well in fact. He is selling economics courses online and does it with free software and I hope he succeeds because it would indeed prove that No Man Is An Island :-)

          Free Software is communist in essence yet it helps capitalists make money. Hilarious. I bet it never even crosses their minds for a second.

          If he control all that software then he is far smarter to those who entrusted their computing and data to cloud providers. The hype is over.

          Company’s like SAP and Microsoft are dinosaurs and no place in the future of computing

  5. jbradyyvoir

    According to the CSO Main Trading Partners – 2012 €m


    Great Britain and Northern Ireland
    Other EU Countries
    Rest of World

    Other EU Countries actually greater than UK and USA combined – ignoring the fact that UK is in EU as well.
    Also you seem to mix up the Second World War and the Cold War. Germany and France were on the same side during the Cold War – at least Western Germany.

    • 5Fingers

      Balance of trade with the UK is actually negative. Whereas it is decidedly positive in EU and US and elsewhere barring China and a few others in rest of world.

    • Swanie

      That is interesting. Perhaps David you could explain why you wrote “our ideal economic combination is a weak European economy (giving us low interest rates) and a strong American and British economy (giving us buoyancy in exports)” when it seems apparent that our relationship with the EU is worth much more than our relationship with the US & UK.

    • Joe R

      You could throw in that involvement with the EEC/EC/EU has attracted the large US connection and the combination has reduced dependency on the UK. These do not stand alone.

      Switzerland is a country that has negociated a position between three larger blocs – the french, germans and italians for centuries perhaps there are some hints to be had in their story.

    • Joe R


      I am not surprised that your very simple and valid point was not answered.

      A few weeks ago he was insisting that strategic default did not exist and that the constantly rising unemployment rate of 14% was to blame for 12% mortgage delinquency rate. Because this is what happens in the US of A. Yes in an uncomparable market.

      However if you take Spain, which is a comparable market using the Euro too and which has a similar overall rate of property loans going bad as Ireland, it just has a mortgage delinquency rate of just 4% despite rates of 26% general unemployment and nearly 50% youth unemployment.

      By D McW logic it should be far worse. But it isn´t! That because the logic is flawed…

  6. Pat Flannery

    David: if it started snowing gold nuggets in Europe you would be saying “ah, but they don’t have the Sterling stamp on them, so they’re no good”.

    You stretch all logic to breaking point in your Europhobic-Anglophilic propaganda. What you are really afraid of is that Ireland, hitched to the European economic engine rather than the British one, will take off and leave Britain far behind.

    Britain has always been terrified of a prosperous Ireland linked to Continental Europe. It has dominated British thinking about Ireland since the reign of Elizabeth I. Your “For Irish balance sheets to recover, Europe needs to remain weak” is just the latest Elizabethan propaganda.

    • Semper ad Meliora

      I must beg to differ. In very recent years, as diverse a grouping as Cameron, Clegg, The FT, Sky News, the Guardian, The Daily Telegraph and the BBC have all voiced support for a satisfactory outcome to Ireland’s economic woes. I’ve lived in the UK for most of the past twenty-five years and have seen a staggering increase in positive attitudes towards Ireland amongst British people in general and, interestingly, English people in particular.

  7. Jimmy Gavin

    A return to growth in Europe should be welcomed in Ireland. The key points are of course that this growth should be sustainable and represent progress in improving living standards for all European citizens.

    It’s is truly shocking that Ireland finds itself in a position that growth in Europe, which could see interest rates increase as demand for finance increases, could be unwelcome. This idea that stagnation and lack of development predominates has parallels in policies that were pursued back in 1913, with this year being the 100th anniversary.

    Shane Coleman on this mornings newstalk radio outlined how back in 1913 tenement buildings in Dublin collapsed, killing a number of people and subsequent inquiries outlined how certain members of Dublin County Council who were responsible for overseeing these buildings, were in fact the very same slum landlords who owned these property’s.

    The point I am making here is that the people in Ireland at present, who are responsible for deciding future economic policy, may be allowing slum landlords like Bank of Ireland, AIB and so forth maintain the old tenement framework……..I am nervous about this whole edifice falling down on my head! How about yee?

  8. 5Fingers

    Interest rate rises no matter where you are means cost of money will climb and risk in speculation will rise as well – putting a curb on that nonsense as well. Interest rates are the litmus test of economic health.

    There are 2 issues being mixed up here.

    The social problems relating to indebtedness and unemployment (many of whom were tied to the property industry) and damaged business relying on a much weakened domestic market. Is it being suggested that the health of economy is to be solely directed by progress here? Even if Ireland had its own currency and started to do well on exports, you still have the same problem with those carrying debt and rising interest rates.

    Ireland’s own development as a true industrial economy which owns all the means of production along the value chain independent of old ties and working at a global level developing “real” global partnerships. If EU grows, Ireland’s current surplus with these partners grow and our deficit with UK diminishes.

    If the 2nd can be encouraged more, the 1st will be in a much better position to benefit from the fallout in the domestic market. And with better deposit interest, we are likely to have healthier banks.

  9. conman78

    From a historical perspective the picture you paint of Mostar in the Balkans is a little skewed. To describe what was happening before the Croat forces shelled the bridge would be more apt rather than insinuating a guilty and innocent party.

    However, the fact that the bridge in Mostar stood for over 400 years is testament to the Ottoman legacy of instilling a singular identity which only ruptured after the Allies post WW1 & 2 country building came crashing down after the Cold War. The Ottomans were also the catalyst for the demographic change too. So, much like economics it really depends on the actual variables and facts you use to form a decision or opinion.

    Safer to use analogies that don’t refer to armageddon and murder when that’s not the context! (and breath)

  10. Adelaide

    “higher rates, what would happen ?…”

    The UK and US economies are like two corpses awaiting the arrival of the state coroner to officially announce them dead.
    In economic terms this announcement is the equivalent of an interest rate increase. As long as the coroner is being stuck in traffic
    (interest rate being kept at near zero) the two corpses are technically alive. But that traffic jam can’t last forever, the coroner will
    arrive eventually to state the obvious, they are dead.

    Obviously some commentators will claim that the coroner killed them by announcing them dead, as if there was a ’cause and affect’ at play. Dead is Dead. The one affect the coroner’s announcement produces is the green light for the corpses to be buried. Similarly an interest rate increase would bestow the dignity of a burial for two dead economies. As they say on tv, “the relatives will at least have closure.”

  11. Beaver

    ´´What happens to the 375,000 tracker mortgages if the European recovery takes off and pushes up the monthly mortgage payments?´´
    The key point in your article David, Why did you not expand on it?

    We are in a schizophrenic sitiation in Ireland. The unemployed, those with jobs and variable rate mortgages should celebrate any return of growth to the European economy but the tracker martgage holders wages won´t rise as fast as interest rate element of their mortgages thus depressing demand from over a quarter of the households in Ireland.

    On the positive side savers will once more be rewarded for their self discipline.

  12. Pat Flannery

    One the best articles I have seen recently on the Irish economy

  13. Adelaide

    in light Constantin Gurdgiev’s article yesterday (Sunday Times)
    “Ireland’s Knowledge Economy Is A Sham”

    and how Max Keiser routinely refers to McJobs as Junk Jobs
    I’d like to propose a new word noun/verb. “SHAM JUNK”

    Wikipedia: “SLAM DUNK” = something that has an outcome of guaranteed SUCCESS.
    “SHAM JUNK” = something that has an outcome of guaranteed FAILURE.

    “Adopting the Euro was in hindsight a sham junk.”
    “Lenihan sham junked the Irish economy.”
    “Borrowing 40k for a degree in media studies is a total sham junk.”

    • 5Fingers

      If you meant a Media Studies degree is a sham because of the poor value it attracts in Ireland reflects a sham knowledge economy, then I agree. If the general view in Ireland is to poorly regard media studies, then the extent of the sham is reflected in our culture, our sense of vision for the future and our ability as individuals to move to the next level of economic development.

      Perhaps the Euro has highlighted the level of SHAM in Ireland. Is that not a bad thing rather than wear the green jersey back slapping our usual way of business as we head for oblivion.

      As for Lenihan, the more I look at this episode, the more I see how ill equipped our government was. If we are going to swap bows and arrows for semtex and not read the instructions, we are likely to have our heads blown off – which is exactly what happened.

      • So you are suggesting the link to the Euro is exposing the problems in the Irish economy thus giving a chance to “cut the rot” identified, and improve overall value and performance.

    • Adam Byrne

      Got a link Adelaide?

  14. Adelaide

    The manifestation of our general disregard and ill-equipped outlook is being exposed in the vaudeville limelight and yet the Irish audience seem bizarrely content to repeatedly pay the admission price. A word you seldom hear these days is ‘sophistication’ or ‘intelligentsia’.

  15. Paul Divers

    “The point is not whether the Irish Times called it right – I don’t know, the data isn’t sufficient. And, for the same reason, the Irish Times doesn’t know either. The point is the establishment’s ability, at all times, to convince itself of anything it wants to believe.”

  16. Adam Byrne

    Anyone got a link for Gurdgievs recent article about the knowledge economy. The search function on the Irish Times website is horrendous.

  17. molly

    The circle comes full circle and things will never change.

  18. Colin


    Its important to recognise the effect of 400 years of Turkish aggression had on Croats which made British impearialism in Ireland look like an afternoon picnic. Janissaries! Yes, the Turks came without invitation and captured male Croat teenagers, sent them back to Constantinople, forced the boys to convert to islam, trained them for a few years in the art of butchery, and then send them out back to Croatia to murder their own people in the name of the sultan.
    Of course there was a way out of doing this if you were a Croat family, fearing this likely scenario, and that was to convert to islam, where immediately there was also a financial incentive regarding paying tax. And that’s how there exists a muslim people in this part of the world, nothing more than descendants of those who switched sides against their own people for financial gain and familial stability.

    Its also worthwhile questioning why Bosnia should even exist as a country, which is divided in two anyway, so why not scrap Bosnia, give the Serb element to neighbouring Serbia, give the Croat element to neighbouring Croatia, make a few tweaks with the borders if needs be and if the muslims aren’t happy, they can move to Turkey where I’m sure they will receive a warm welcome.

    You also forgot to mention the mujahideen fighters, from many muslim countries waging jihad in Bosnia, who were battle hardened from their experiences in Afghanistan, who fought for the muslims in Bosnia. This crew can now be found in Syria fighting for Sharia Law and murdering native Christians there and forcing them to flee for their lives.

    Don’t believe the line that the Serbs are the baddies in this war.

    • Hi Colin

      Nice to hear form you. I spend a lot of time in this part of the world and am aware of the history and how it can be also grabbed by one side or the other to suit the argument

      I think it is fair to say that while no one is innocent, the Serbs disgraced their nation down here in the 1992-1995 period and have been rightly vilified.



      • Paul Divers

        Mr Personality Transplant^

        McWilliams you let yourself down answering this racist.

        This article is about Europe. Not religion.

        • Colin

          The Bosniaks are ethnically the very same as Croats and Serbs. Racism is not an issue here, and I’m not a racist as my non-white girlfriend will confirm.

          But you can’t help yourself from talking nonsense Pauldiv, maybe its the drink talking, or withdrawal symptoms? You are not interested in the truth.

          • Joe R

            No, the Bosniaks are a different ethnic group that is why the GENOCIDE there was refered to as ETHNIC CLEANSING.

            I have a tip for you; don’t use words that you don’t understand. You just end up looking like an idiot as well as a bigot.

          • Joe R

            And Colin, I told you before I think but I will say it again, a blow up doll is not a real girlfriend.

          • conman78

            The truth will set you free :)

            The old I’m not racist but…..

            Recent years Bosniaks are also known as Bosnian or Bosnian Muslims – an ethnic group. Hence Bosnian Serb – Orthodox & Bosnian Croat – Catholic. For racial and genetic make up, most the Balkan peoples are Slavic or Slavic origin which is what I think you were alluding to!

            Ah sure it’s all semantics in anyways..or is it?!

          • Joe R


            I don’t think it is just semantics are when genocide is involved.

            The genetic make up of Bosnians in fact consists of genetic stock mainly from pre-slavic peoples. At least according to scientists.

          • Paul Divers

            You are an idiot. Get a haircut.

    • Joe R

      “What happened in Bosnia is not just genocide, the willful destruction of the essential foundations of one particular community or group of people within a society [....] What happened in Bosnia is also described as sociocide, the murdering of a progressive, complex, and enlightened society in order that a regressive, simple, and bigoted society could replace it.´´

      Exerpt From p.130 of Understanding Evil; Lessons from Bosnia. by Andras Riedlmayers.

      The research in the book was used in the Hague Tribunal in attempting to understand the nature of what had occurred there. Linked here;

      Does that say enough? Is the attempted creation of that “simple, and bigoted society´´ to be condoned here?

      You know, Colin´s kind of society.

      And BTW jihad does not mean “war´´.

      And WTF any of this has to do with economics in Ireland i don´t know.

      • Paul Divers

        Mr Personality Transplant?

        • Joe R

          Paul, it is an astounding comment.

          There is not a fact to be had in it. Bosnia under the Ottomans cannot be even nearly equated to what happened to Ireland under British colonialism from 1534-1890.

          The comment nothing but total bile.

          Here is a well written and referenced wikipedia article here on Bosniaks ( Bosnians and Bosnian Muslims ).

          • Colin

            Well written and referenced wikipedia article here? Haha, you’re having a laugh aren’t you? The very same website claims our host has 3 children. The fact that David has highlighted how wrong wikipedia is in the past has washed over you, it seems.

            Also, I never claimed that you live near London, I’ve no idea or interest in where you live, but London Heathrow has so many global destinations it should not take anyone too long to get there. But it was you who assumed I lived in Slough, and then you go crying to David looking for censorship saying people here aren’t nice to you and make assumptions. Well JoeR, go find another blog where your ego isn’t challenged, we got on fine here without you before you know.

            And do yourself a favour and find out what jihad means. I can’t be spoonfeeding you.

            Good luck with delivering projects from scratch to completion wherever you are. Take your sidekick Pauldiv out for a few drinks and lols. He doesn’t like being part of the system, but signs on the dole and takes his €188 a week plus free this and that handouts.

          • Joe R

            Yes , Colin the article is very well referenced and well organised too. It has 160 varied and authoritive references listed at the end of the article and linked where possible.The sources come from many languages and cultural backgrounds, too.

            That is about 140 more than the average ENTIRE MCWILLIAMS book. The 20 or so he includes (if that) are usually half made up. There is one/two per chapter on average.

            If you don’t believe me go look.

          • Joe R

            Jihad does not mean war it means struggle and it is a central tennet of Islam.

            Every Muslim is asked to engage in Jihad but it is a private choice – to help the poor, to sin less; in short, to be a better Muslim.

            However, some sick fucks like Bin Laden or Saddam, Western agressors and you choose to contort it for their or your own purposes into a venomous and spiteful thing.

            Good thing most Muslims know what it really means.

        • Paul Divers

          Thats two false assumtions alrealdy in this article that I sign on the dole.

          Can you prove it?


      • Paul Divers

        You’ve heard the personal slurs and innuendo on this blog and things have a tendency to turn nasty when Col is around. His card was marked long ago by a former contributor of note and the concensus is that he has issues

        I don’t know the guy from Adam and don’t know anything about him except that he likes getting personal and nasty with it

        I must be doing my job right

        And as for WTF this has to do with Ireland and Europe I don’t know.

        Maybe I need a personality transplant and a haircut

        Think I have tue and wed free :-)

  19. Adam Byrne

    Where is Mr. bonbon this weather? – I’d almost miss him (her?) – almost.

    Probably busy cruising the French Riviera for the summer months.

    • Pat Flannery

      Adam Byrne; is that why comments are down over 50%? If he reappears, even if DMcW sings “God Save the Queen”, I will not even look in here.

      • Adam Byrne

        It must be why they are down.

        I don’t care about nationality, national anthems, passports, ‘sovereignty’ and all that crap – I don’t care if he sings the Martian national song.

        • Pat Flannery

          Nor do I. It is when somebody, anybody, runs down their own side I get mad.

          My criticism of DMcW is that his constant negativity undermines the self-confidence of the Irish people, especially the young, who need to be encouraged, not put down, if Ireland as a country is to fight its way out of this mess.

          No outsider is going to help us.

          • Adam Byrne

            They can’t even get Hawk Eye right over here Pat. A supposedly ‘fool proof’ system. What hope is there for anything more complex?

            I saw the diminutive Marty Morrissey yesterday on RTE assure us that ‘it wasn’t human error’ that caused the problem (in whatever match it was – I don’t follow it).

            I thought to myself “that’s not right”.

            Sure enough, some plonker mixed up the hurling and football settings and RTE back tracked today during Marty’s daily 5 minute segment (which he’s guaranteed for eternity it seems).

            Can’t-Be-Arsed-Checking Syndrome strikes once again.

            I’ve just come out of an undergraduate degree and at least half the class couldn’t even string a proper sentence together on paper.

            And that’s just the ones who actually made it to third level.

            The future is bleak here. Knowledge economy indeed.

            They wouldn’t know what hard work was if it jumped up and bit them.

          • Paul Divers

            Depends what side you are talking about.

            What side do you play for?

    • Ryu Hayabusa

      Hi Adam,

      Was totally wondering the same over last few days!

    • Paul Divers

      Mr Bonbon is in The Carribean partaking in some alternative medication Adam. Getting laid any time he wants and waitresses walking around with mugs of foaming beer and trays of whatever takes tickles fancy. It’s cool. He is just having a break.

      Someday We’ll Be Together Diana Ross & The Supremes (1970)

  20. Ryu Hayabusa

    Aye Bonbon.. If you’re on sabbatical… don’t make it a prolonged one.
    Everyone has the right to vent their spleen, whatever their outlook.
    It’s free speech for all…. at least until emperor Enda tries to take this isle down the totalitarian route like Barracked ‘hear no evil, see no evil’ Obama.
    Not that I expect his sejourn to be a long one. (Dame Enda that is!)

    • Adam Byrne

      Barack Obama – what a two-faced w**nker.

      Enda is worse except he’s thick as two short planks (unlike the hypocrite Obama).

      • Paul Divers

        Would you string two coherent sentences together and expand your argument Adam? The semantics are screwed up and it sounds like uncontrolled anger and bile from a drunken five year old. Do you have many friends?

        Rage and bitterness. First chance you get you show intolerance. Like your mate who does not live in the country but who hopes someone in D4 will get papped out of their home to let people like him in the door

        Is this why you spent time as a student in Ireland? If you value Ireland so much then why do your course here if we are such a bunch of muppets?

        I didn’t know Obama wanked. Maybe he is like the rest of us and likes to let rip from time to time :-)

        For example. Prove to me that Obama wanks.

        • Adam Byrne

          Haha, down the hatch Paul.

          Steady as she goes.

          • Paul Divers

            Haha down the hatch Adam.

            Pulling your leg of course.

          • Paul Divers

            On second thoughts that’s not quite good enough Mr Byrne. You appear to underestimate the seriousness of this very grave matter.

            You will be detained at Dublin Airport for nine hours during Enda’s pleasure and examined vigorously until it is agreed among peers you have regained your sanity

            Unless you have photographic proof such as shirt stained evidence and sworn testimony from eye witnesses (whose life will not be worth a fuck one we know their names and where they live) then I have no choice but to dismiss this a thought crime and a slur. The actions of a misguided boy who had no idea what he was up against. I’d figure 6 months on Rockall will give them the blood they want and rightfully expect for such treacherous distraction

            I shall pass my report to the president and recommend you and your family not be drone struck but I have have to inform you that is is a very serious thought crime that will remain on your record. Period!

            Now remember who your friends are Adam. Even if such friends exist only on between keyboards in the ether it would do no good to upset up.

            Have a nice weekend sir.

          • Adam Byrne

            I’ll be in Chicago at the weekend Paul, first weekend of a month in the States.

            They can do what the f**k they want with me, or try.

          • Paul Divers

            Take a stopper with you Adam. I’d want some cork if those NSA nutters were frisking me.

          • Adam Byrne

            I’d happily live on St. Kilda or Pitcairn if I could get a decent internet connection.

            Dominica will be more convenient though.

          • Paul Divers


            That would be extremely depressing.

            Rural Sligo has it’s attractions and there is life around.

            Just enough and no more.

          • Paul Divers

            “They can do the fuck what they want with me”

            Now that sort of attitude is part of the problem Adam

            Would you be prepared to be invaded either physically or mentally or both for nine hours just to prove you are worthy of admission to paradise?

            Think I will just chill out here for a while and listen for the tweets. Or screams

            Don’t come moaning to me if some muscle bound neanderthal turns you inside out in the transit area toilets

            You are a brave man

        • michaelcoughlan

          Mr bonbon is probably caugh in the same trap everyone like him eventually winds up in. When your view is as limited to and as pathological as his “reinstate glass steagal” you wind up repelling everyone around you until you wind up in a tiny room on your own
          with only one Person (yourself) to talk to saying the same thing over and over again. In his case “we must reinstate glass stegal”

          A wondeful intellect destined to atrophy in a cocoon of your own madness and insanity.

          • Paul Divers

            Many gifted people destroy themselves.
            It’s their life and their bodies.
            No-one else’s business.

  21. Ryu Hayabusa

    Indeed.. Well for starters they’re both spoofers& pathological liars! Obama is the more polished orator obviously (not a big stretch) but in substance they’re as hollow as each other. The main difference is the consequences of their deceptions… Enda’s are more or less confined to a national level whereas Obama’s have much more far reaching and chilling ramifications!

    • Paul Divers

      Obama is a very creepy man.
      He scares the crap out of me.

      • Adam Byrne

        A total charlatan.

        • Paul Divers

          They all are

        • Ryu Hayabusa

          And how they rejoiced when they threw off the shackles of the Bush administration… Woohoo it’s a whole new world!!
          Out of the frying pan& into the fire…

          • Critical mass is near for exposing the new Nixon:


            Some interesting comments regarding the real trade/GDP exposure to GB/EZ/US. Really needs clear data to gain overview.

            Unless (until) there’s another catastrophic implosion (Greece 3rd bailout?) the decision has been made to integrate Irish Sovereignty into Europa via the Troika. So, the fate of the First Irish Republic is effectively in the hands of foreign powers. If the Euro survives/thrives beyond this crisis, then the advocates of Austerity will be vindicated and rewarded as ‘Insiders’.

            David has written about “Ireland as an entrepot city-state’ juggling allegiances and alliances before. However, I can’t help but feel that Dear Leader Enda is a stooge of Obama and The City and has made no real attempt to renegotiate the terms of surrender accepted when FF raised the white flag.

            Even if the EZ thrives, it’s hard to see how the debt overhang can be re-jigged to rising interest rates without triggering meltdown. As Croatia joins the EU, it’s also hard to see where any sustained economic revival for ordinary citizens will materialize unless the internal cost base is reduced to a level that makes existing mortgage commitments consume the bulk of average incomes.

            As for the dip in comments on this blog: it’s summer, and the Irish Corralito is on pause, as is the Greek, Spanish, Italian, Portugeuse ‘bail-in’. Cyprus is the canary in the coalmine. Mind you, a few miles east of Cyprus we have open chemical warfare on Europe’s boundaries, a situation which may well exceed the horrors of Bosnia if Obama doesn’t get his act together. The security apparatus can monitor the entire Interweb, but are unable to confirm whether it was Assad or Al-Queda? My ass. It doesn’t matter who did it, after the Tokyo subway warning, who will be surprised when London or New York are gassed?

            Hoping to do Kilkenny if other commitments allow. A nice plastic paddy blow-in Brit should liven things up nicely once I load a new personality software into my neural network. Impersonating Morrissey was fun but I fancy something more extreme.

            regards to my friends (and frenemies) here, and kudos to DMcW for continued clarity in writing, even if there’s some data-crunching issues to resolve.

            Is the UK Ireland’s biggest economic target or not?

  22. Paul Divers

    Good Article.

    Seems to have brought the nasty people out of the rocks.

    I preferred your article from two weeks ago when you were empathetic.

    But today I realise you are little right wing runt who knows who his friends are.

    You won’t ever cross this door.

  23. Ryu Hayabusa


    Maybe Angela should make a rousing ‘we’ve turned the corner european syle’ speech what with the one quarter of anaemic growth (french & german growth which skews the overall figure anyway putting a false sheen on it.)

    And another thing, must we remind RTE individuals and other culpable mouthpieces again to stop using the term ‘negative growth’ where applicable, an erroneous term. Call it what it is…. ECONOMIC CONTRACTION!!!

  24. Ryu Hayabusa

    Check this out, dude goes postal when he tries to acquire some Superquinn sausages only to be told to DO ONE…

    it’s all Fergal’s fault for flogging the family biz to those arse fell outta their pants feckless speculators!

    It takes one back to that show some years back where Des Bishop worked in various jobs, including Superquinn where employees had to bawl HELLO incessantly to everyone within a 10 foot radius!

  25. Ryu Hayabusa

    Haha nifty product placement… ‘Zis kind of nonsense could never occur in an orderly german hypermarket Jaaa-wwoull… Indo are cake.. Gene Kerrigan will maybe dovetail it into the Sindo soapbox with a nugget on food price inflation!

  26. Ryu Hayabusa

    That bit where he goes back for seconds.. pans out in the doorway and then ur man-o leans out and takes a swipe toward his crotch direction?! :O probably retrieved a piece of the lovely fried chicken that the Indo were fretting over.

  27. Ryu Hayabusa

    It really is a sign of the times when the ‘marquis of queensbury’ can not be observed.. You do not make sinister swipes at an opponents crotch when he doth be spreadeagled on the ground.
    Very unsporting chaps!

  28. Wills

    …thing is…the militant power elites who have hijacked the Irish economy – under the guise of a corrupt banking system – don’t give a damn about Joe average and his i rate nightmare scenario.

    Thus the issue of the i rates increasing for those who got suckered by the property ponzu scam will be thrown over board into abyss and go the way of the 150,000 emigrants of the last 4 years, the free market enterprise system built up in the 80′s – early 90′s, and the Celtic Tiger.

  29. Paul Divers

    Militant was a far left party in the uk during the 80s.

  30. Paul Divers

    Content tip.

    Justify your text.

    Makes a blog look more polished & professional.

    Devil is in the detail :-)


  31. Adam Byrne

    David must be on holiday this week – wot no announcement?!

  32. Peter Schiff on how the stats are fiddled to show positive growth when there is in fact contraction(avoiding the oxymoron-negative growth!)


    A follow up article examining the growing strength of the Chinese Renminbi and its use in world trade. Plus the accelerating accumulation of all things gold (and silver)by Chinese mining interests and the general population too.

  34. A follow up article by Ellen Brown re the predatory lending practices of the banks in the US. Parallels are similar to the Irish problems as stated by Greyfox and RR6 and others who are working on exposing these predatory practices.

    Considerable comments too on Eliot Spitzer, a US politician, bent on doing something about these problems.

  35. I have recently been accused on this blog of being both obsessed with money and being cheap with money.

    I am not obsessed with money in regards that I have to have lots of it and that my life revolves around getting it. It is a false premise.

    I confess to being obsessed as to finding out what money is, why it is necessary and what constitutes good money or poor money. I confess to being concerned that I have enough assets that I may be as self sufficient as I can. I confess to being concerned since my teens that the government can not afford to be all things to all people and that I would not be able to rely on the state to support me in my aging times.

    I confess to not understanding what inflation was as I had not much experience of inflation in the fifties and sixties. Prices were stable and wages rose with increased productivity. People were becoming better off.

    I confess now to having discovered the cause of inflation, and the evils that it heaps on the communities. I now understand the oppressiveness of debt and interest and why the wisdom of the ages preached neither a lender nor a borrower be.

    I have discovered there is no perfect money but I know the best money available. I know why the powers behind the thrones wish to control money and why we have a paper, debt based, interest bearing Ponzi sheme for money.

    I attended a lecture by Bill Still in Bray a few months back. II confess to standing and challenging his assumptions on gold as money and his dissing of “gold bugs” as lunatics. As Bix Wear in the attached essay does, I agreed with the majority of the Bill Still presentation and like Bix Wear not with his solution. It makes me suspicious that

  36. I have recently been accused on this blog of being both obsessed with money and being cheap with money.

    I am not obsessed with money in regards that I have to have lots of it and that my life revolves around getting it. It is a false premise.

    I confess to being obsessed as to finding out what money is, why it is necessary and what constitutes good money or poor money. I confess to being concerned that I have enough assets that I may be as self sufficient as I can. I confess to being concerned since my teens that the government can not afford to be all things to all people and that I would not be able to rely on the state to support me in my aging times.

    I confess to not understanding what inflation was as I had not much experience of inflation in the fifties and sixties. Prices were stable and wages rose with increased productivity. People were becoming better off.

    I confess now to having discovered the cause of inflation, and the evils that it heaps on the communities. I now understand the oppressiveness of debt and interest and why the wisdom of the ages preached neither a lender nor a borrower be.

    I have discovered there is no perfect money but I know the best money available. I know why the powers behind the thrones wish to control money and why we have a paper, debt based, interest bearing Ponzi sheme for money.

    I attended a lecture by Bill Still in Bray a few months back. I confess to standing and challenging his assumptions on gold as money and his dissing of “gold bugs” as lunatics. As Bix Wear in the attached essay does, I agreed with the majority of the Bill Still presentation and like Bix Wear not with his solution. It makes me suspicious that Bill Still is an agent of the PTB but I will reserve judgment.

    Here is Bix Wear

  37. Midas du Metropole re 2003 and today comparison.
    Here it is…

    Our STALKER source, who is in the bullion business, went to a private meeting in Arizona with four others in his industry. It was back in 2003. The person conducting the meeting did so behind a SCREEN. They could not see what he looked like, but he spoke English very well. The presenter told them his client was going to be buying a lot of gold and that they would be some of the agents doing the buying. Our STALKER source surmised that the person behind the screen was Chinese and did not want to be identified as such.

    This is James Bond sort of stuff. For the next five years I reported on various reports of mysterious gold buying and reported to Café members that is was most likely the Chinese Government doing the buying in disguise. The mainstream gold world mentioned NOTHING about it. Then, out of nowhere, the Chinese Government announced they had increased their gold reserves by 450 tonnes. This stunned those supposedly in the know. Café members just smiled.

    This is why it is no small deal for me to bring to your attention that the famed London trader is all-in gold and silver. This information, and sources, have been invaluable over the years. Please spread the word to friends, or those in the industry, who want an extra edge on what is to come this fall when it comes what gold and silver are going to do.

    Time do some fun retro on just a fraction what was brought Café members way so long ago now…

    September 10, 2003 – Gold $379.70 down $1.80 – Silver $5.22 unchanged

  38. 13:02 5-yr TIPS auction(reopen) yields (0.127%) with bid/cover 2.18 vs average 2.77
    Allotted at high 93.21%
    Indirect participation 38.17% vs. average 41.12%
    Direct Participation 8.13%
    In reaction:
    2-year (1/32) to yield 0.39%
    3-year (5/32) to yield 0.82%
    5-year (7/32) to yield 1.69%
    7-year (6/32) to yield 2.34%
    10-year (6/32) to yield 2.92%
    30-year +7/32 to yield 3.91%
    Dow +32.84 to 14,930.39

    Ten year rate approaching 3% or double the rate of 3 months ago. Greatest effect is on long term mortgage rates and its affect on the “Housing Revival” in the US and the bond rates around the world in other currencies.

    • Paul Divers

      And this means what exactly to the average joe?

      Are you insane. No-one owns bonds far less understands them.

      No-one cares.

      • Observe. Rising rates will sink the state ship, and many corporate and personal ships too.

        Your state pension is invested in bonds as well as private pensions invest in bonds and it is the largest invested pool of funds in the world. The bond market is larger than the equity markets etc. etc. The bond market effects everyone.

      • michaelcoughlan

        Anyone with a pension owns bonds.

  39. John Credele: Fed is screwed, and we with it. Backed into a corner. No matter what it does or does not do interest rates are going to rise.



    Despite bailout success, household debt crisis rolls on: The WSJ discussed the household debt crisis in Ireland. The article noted that many homeowners are finding it difficult to make their mortgage payments due to the pressures from the government’s austerity program and rising unemployment. It added that home loans in arrears have doubled to more than 12% of all principal home loans in the past two years. According to the article, the struggles are expected to continue until the country finds a way to help its weakened banks pare down the large number of problem loans. However, the government has said that it will not support any widespread debt writedown because it cannot afford to do so, while the banks have argued that large writedowns would deepen their losses and create moral hazard issues.

    • Joe R

      A large percentage are speculative property loans, Tony, not home loans by actual owner occupiers.

      This is an important distinction to make if Ireland chooses to deal with the problem on a societal basis, which I hope it does. Valid points have been made about can’t pay vs won’t pay.

      • It all affects the property market.

        People who invest in housing to rent and then allow a perfect stranger to inhabit thousands of euros of assets should be appreciated. Generally the rental value is lower than the mortgage and ownership costs. People should be grateful to the buy to let investor instead of treating them like a pariah.

        • Joe R

          Seriously Tony that is rubbish about buy to let. Buy to let particularly interest only loans where the craziest part of the ponzi property crash. The final cocaine hit.

          • Never mind why property was bought, it was a function of the housing market. The type of loan was the corruption in the lending market, and not the exclusive preserve of the landlord purchaser

            The fact that a property was bought to rent out is also a function of the market. If there were not people wanting or needing a place to rent to have a place to live there would not be any properties bought to let out.

            I have had plenty of rental properties in the past and I can tell you it is not all cream and honey.

            Many is the time I have had to clean up, repair damage, and replace floor coverings at an expense that wiped out 6 months of rental income. Some tenant need throwing out on the street. It is what they deserve.

            You are damn lucky to have rental property available. quick in and quick out for the tenant. Fast mobility and no taxes to pay to occupy. Possession of a multi hundred thousand property with no security asked. No long term commitment made, no investment of own funds, no being bound to a mortgage, no responsibility to maintenance of the building.Show some respect for the landlord. Not all landlord are saints, that I know, but I disagree with the blanket condemnation.

            Everyone was responsible in their own way for the property debacle but just you see how well society would function without somewhere to rent.

            Don’t give me your rubbish, rubbish. Just argue the point.

          • StephenKenny

            People buy properties to rent out to others to make a profit for themselves, so there is no luck involved.

            The landlord does this to maximise their profit, so will minimise costs against income. The costs are the upkeep and maintenance of the property, and the income is the rent.

            The landlords are therefore financially incentivised to use any method available to change that cost/income ratio in their favour – forcing the tenant to repeatedly weigh up the perceived financial and (dis)utility costs of moving property, against efforts by the landlord to increase their profit at every available opportunity.

            Historically, excesses by the rentier class have been significant contributory causes of revolution and violent social unrest.

            In many ways, landlords have much in common with bankers: They need to be kept under tight rules, because the effect of their incentives getting out of “balance” can have serious social results.

            There is no “luck” involved.

          • Hi Stephen

            Why is the emphasis on “luck”. There is no previous mention of luck as a reason or an issue.

            Your suggestion that maximizing profit is bad is in my opinion a misunderstanding of the market function.

            The higher the profit in any business enterprise, and this is a business enterprise, the more people will be attracted to that business. In this case more rental housing would become available.

            It is then in the landlords best interest to try to attract the best tenants and so the property is improved and the facilities increased.

            The minute the government becomes involved in regulation of the marketplace this function is distorted.
            (I am not arguing against the regulations for safety and security as contained , for example, in the building code that provides for proper electrical, plumbing, sewage and water standards.

            Rent controls and other such regulation work against the best interest of tenants and cause a shortage of reasonably priced accommodation.

            In BC I bought rental housing in 1972 in Victoria that was a large property with a total of 9 suites. My family moved into one unit and we were resident landlords.

            We soon discovered that every last thing that went awry in the house was deemed to be the landlords problem. Every dripping tap and malfunctioning electric socket was fixed by me and not the tenant. A plugged toilet was my problem and not the tenant, regardless of the cause.

            One day I was informed how lucky I was to be the owner. It was an interesting exercise to find out from all the application for tenancy forms I had inherited that I was in fact the lowest wage earner in the house. Every single tenant earned more money on an annual basis than me. So much for luck , you might say.

            The vacancy rate for accommodation was dropping and there was a clamour to have rent controls as the costs of rents were rising.

            The Federal government at that time implemented capital gains taxes on property and the Provincial government responded and brought in Rent controls. Landlords were now limited in the amount of rent increase that could be asked of as tenant as a percentile of their existing rent.

            This meant that “kind” landlords who had kept the rents low could not now negotiate with a tenant over a rent raise in excess of that percent. Also the annual allowance was not accumulative and so if the rent were not raised that amount was permanently foregone.

            Landlords were forced by this policy to raise the rent to the maximum allowed limit every anniversary of the tenancy, and so that became the new standard. No landlord dare fall behind.

            The other thing was that tenants lost mobility. Those in a lower rental structure were fixed in this lower structure by law and protected from higher raises but the rest of the property rentals were consistently rising. There was no place for the tenant in a cheap suit to move to without a large rent increase.

            At the same time the “kind” landlord was trapped with low rents and rising costs that made the cash flow negative and so the landlord could not afford to do maintenance and repairs and so the property deteriorated.

            Then the Federal government reduced the tax incentives for landlords by reducing the Capital cost allowance allowed which had the result of dramatically increasing the taxes on the income earned. As a result rents rose right across the country as landlord sort to regain reasonable returns on their investment.

            The net result of all this was that nobody built any more rental housing and so vacancy rates across the country plummeted.

            In response the Fed Gov proposed MURBS. Multiple Unit Residential Buildings.
            Capital cost allowances were increased from 4% to 10% for new construction and there were generous allowances for “soft cost” write offs against taxes and there were no rent controls on new suites or new rentals unoccupied.

            The private sector responded to these incentives and built a large number of new rentals.


            Although they were multiple unit buildings the age of the strata unit or condominium had arrived and these units were strata titled and sold individually to investors. The prices as a condo were approximately double per unit to that available for the units sold as a block. All these allowances were able to be deducted against other income and provided tax relief to higher wage earners who invested.

            Doctors, Lawyers , Dentists, and anyone else got in on the scheme. Buy this unit now. Get a 30% tax allowance on the cost of the unit and deduct against your 50% tax rate. Save 15% of the purchase price in taxes and only put down 10% and stuff 5% free cash into your hip pocket for each one you bought. (Sound familiar) Why stop at one? You can afford three.

            Needless to say this market came crashing down when the tax department (Internal Revenue) re-assessed many investors and on technical grounds claimed back the tax allowances DRIVING MANY PROFESSIONALS TO BANKRUPTCY AS THE property VALUES RESET DOWN 30% AND THE TAXES WERE RECLAIMED.

            In the meantime the average landlord had to appeal and open the books to government bureaucrats to try to get enough of a rent raise to offset the high inflationary costs of operation. Remember the 80′s inflation rates of 8-10-12-14-18% per annum. Then rents were set to the rate of inflation. Today there is a similar squeeze as the actual inflation of 6-8% is not the government proclaimed 2%

            Point of the story. Government meddling, with the best of intentions, results in the destruction of the market place with disastrous results. Then more regulation is enacted to “fix” the problem ensuring further problems.

            In Canada and BC we have been more fortunate that both governments have backed off and allowed more freedom of activity.

            We have the residential tenancy legislation but with consultation from both landlord and tenant organizations it is somewhat more balanced at present.

            Like bankers, landlords need to provide the best service and be allowed to go broke without incentive or support from government to stay in business.

            Remember any government support is your Taxes at work. Your taxes are coerced from you and used to support nefarious schemes. That is big government regulation at work against the average citizen’s interest.

            All the best, enjoy the day.
            As a PS. I along with many others am out of the rental business as the controls and lack of autonomy drive investors away. Rents here are up 50% in 5 years or so as the rental pool shrinks.

          • 5Fingers

            Eh…Tony, you are describing a non Irish market. Ovet

          • 5Fingers

            Ovet…I mean Over here, the laws are 100% biased in favour of the Landlord. Yes we have “laws”, but the agencies to polices same have zero teeth. Ireland is a Landlord’s paradise. Joe R is absolutely spot on. For a while and increasingly again, Landlords make money easily and Tenants have very little say.

          • Joe R


            Different country, different market.

            There are 350,000 vacant residential units in Ireland, leaving aside holiday homes obsolete stock and allowing for a normal vacancy rate that is 200,000 units over what is needed. 2 million housing units and 1.7 million households. Ireland with minimum employment and no one emigrating needs 40,000 units per year at most. Work it out!

          • Joe R/5Fingers

            True I described a BC market and the situation.

            However it was as an example as to what happens with overt government intervention. Poorer buildings and less choice for tenants with the attendant lack of mobility.

            How does the Irish landlord make “easy money”? Would it be the case that I arrive in Ireland , buy several properties and tenants are forced to inhabit and pay me high rents. Why are a lot more people not doing this if that is the case?

            If what Joe says is true, and I have no reason to doubt his words, then there is a vast oversupply of housing units in the country. That being the case then the rents ought to be at all time lows and the landlord giving incentives to tenants.

            That has happened here in BC in the past with a tenant offered one or two months free occupancy if they agreed to a one year contract rather than a month to month tenancy.

            Someone explain to me the actual law so I understand this. Thanks

          • 5Fingers

            Get properties in Dublin and you’re sorted.

        • Joe R


          Regarding why rents haven’t dived to ridulous lows; it is because the lowest rung is being subsidised by the government via the HSE. People on social welfare who are not in social housing can get the government to pay the rent. The rental market is being directly propped up by the state.

      • Joe R

        So does NAMA, rent supplement and the lack of distressed sales due to the low reposssession rate. It is a faux market, it is not properly capitalist nor socialist.

        • So, that is what you get when government interferes and tries to save people from themselves or worse yet save a sector at the expense of the general taxpayer.

          Fascism I think it is called. A nasty combo of entrepreneurship and socialism. I think Clare Leonard had it right when she said years ago the profits are privatized while the losses are socialized. Corruption rules throughout society.

          What is the point of a rent subsidy. It just increases the amount of rent being paid.

          • Rent subsidies are to protect the mal-investment of banks, not to ‘help’ tenants.

            In a proper housing market, rents would fluctuate in relation to incomes. Under “Austerity” that can’t happen as contracing incomes driving rents down would threaten the underlying Ponzi loans of the banking system.

            Rent subsidies (Housing Benefit here in the UK) is a subsidy to Bankers, no one else!

        • Paul Divers

          It’s an intentional cock up.

          It’s a cock up because you can tell where corruption has a hand by looking at the quality of products and services.

          There is no excuse whatsover for deliver poor products and services. None at all

          Take computer software. Microsoft and Apple are complete cock ups because their drive for revenue comes before the interests of the computer user. You are abused at every turn

          Only after years of using non-proprietary software is it even possible to realise how long you have been asleep

          Be free. Ditch Apple and Microsoft and come to people who will treat you with respect and aim to exceed your expectations.

  41. Stagflation is foregone conclusion

    “With U.S. consumers too indebted to take on more debt, with job prospects dismal and consumer incomes falling, decline, not recover is in the cards. The Federal Reserve’s money printing policy is inconsistent with negative real interest rates and with a stable dollar. When the house of cards falls, Americans will face another wealth loss together with rising prices and rising unemployment. ”

    - Paul Craig Roberts

  42. 5Fingers

    What is money? This has been said many times before in this blog. At its purest it is a communications system for contract settlement and banks or your box of gold or whatever you have is merely a memory of all contracts settled. The fact that for the vast majority of us, we throw away the artefacts of contract details and retain just the outcome or value number does not really change matters. It is still a memory.

    As we move to the information age in more depth, it is very likely that all underlying contracts will be recallable to the extent that we can see the detail of all value rendered. That will be something against which a true basis of justice can emerge and the real meaning of Rushkin’s value ideal of “a dollar earned for a dollar’s work”. Personally, I can see a lot of people who would be very upset if this happened.

    • michaelcoughlan

      “contracts settled”


      I’m interested in understanding the above better thanks.


    • Trying to understand what you are saying.
      Are you suggesting that most transactions with people are a memory and nothing retained of that contract settlement.

      This may be true of the casual purchase but not of wages or taxes etc. Most people have a record of their cheque book transactions.

      You seem to suggest that the balance in a bank account or assets held in hand are merely a memory but I see that not as a memory of anything but an aggregate of all transactions by the account holder.

      What is the idea of justice inserted here. Are you suggesting that the value agreed on these transactions is unjust? Who arbitrates the value of the transactions?

      How is this related to the question, What is money?

      I can not find any reference to Ruskin and “a dollar earned for a dollar’s work”. Please reference.

    • Rates

      The law (Section 19 of the Private Residential Tenancies Act 2004) defines the open market rate as “the rent which a willing tenant not already in occupation would give and a willing landlord would take for the dwelling”. One of the PRTB’s functions is to monitor and research trends to find out what this market rate is in relation to cases taken to the PRTB.

      The reading so far has produced little differences in the rights and obligations of land and tenant in Ireland/BC

      With the legislation in place as in the above a landlord can not charge more than the going rate and can as in BC only ask for a rent change once a year on statuary notice. Ireland the notice is 30 days and in BC 90 days.

      Where is the easy money?

  43. Seems as if Tenants have good protection after 6 months of occupancy. The first six months is tenuous unless a lease is agreed.

    There are detail differences but I do not see substantive differences.

  44. From 1 February 2013 onwards, landlords must ensure that their rental properties fully meet all the minimum standards for rented housing.

    If the landlord does not do these works, the housing authority may issue a Prohibition Notice, directing the landlord not to re-let the property until the breach of the regulations has been rectified.

    Perhaps the enforcement of these standards over the last 4 years results in thousands of unoccupied properties. could this be true?

    Overall I see little difference in BC or Irish legislation re landlords and tenants.

    • 5Fingers

      Who polices? You really are naive.

      • 5Fingers

        I am a landlord so I know the scene all too well.

        • Then perhaps you can shed some light on the question as to whether being a landlord is “easy money”.

          • 5Fingers

            If u bought in 10 yrs ago or more it’s a doddle. If you bought in during boom, you were fleeced.

            A landlord is one step up from loan sharking. Tenants respond in kind. I personally do not like it because the laws are about plain human respect which I find very few really care about and will be divesting. But am in no hurry.

          • But yet there is a social need for rental housing. Some can not afford to buy, others do not wish to buy, and yet others prefer to rent.
            Where will they live if there is no accommodation for them.

            This antipathy to the landlord has deeper roots and is embedded in the subconscious. Dastardly deeds were exercised in the past, by land owners, and millions were displaced in horrific conditions.

            There needs to be a public discussion of the modern world in that regard and some of these demons exorcised!!!

            I hope I do not sound presumptuous but I would be interested in others feeling on this aspect.

      • The tenants can complain to the agency and also the landlord. It looks as if a tenant has little rights until 6 months have elapsed. Is this correct?

        Tenants groups have formed in BC as well as owner landlord associations. Each gets input to government re policy enactment.

        Then it is up to the participants to enforce their position provided in the legislation. This happens all the time although the complaints were that decisions were too heavily weighted in the tenants favour. Seems to have evened out now and runs smoothly.

  45. Security deposit requirements are also similar. In BC the maximum is one half of one months rent plus another one half if a pet is allowed. In Ireland, it is a one month rental amount for deposit.

  46. Dorothy Jones

    You’re right pauldiv about Tony Brogan. I don’t know whoever is behind the posts under that name, but the writing syntax and grammar bear no relation to TB personal musings on mail

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