July 31, 2014

Beware of hedge funds bearing gifts, the easiest way to rob a bank is to run one

Posted in Irish Independent · 79 comments ·
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A “shadow banking system” is being constructed in Ireland. It has enormous potential to torpedo the future growth path and risks another banking crisis in time.

The term shadow banking system was coined by my former boss, the economist Paul McCulley, to describe the activities of all sorts of funds that are in his words “a whole alphabet soup of levered-up investment conduits, vehicles and structures”. The term perfectly captures the nature of a business, which significantly contributed to the global economic crisis.

A shadow banking system is a parallel banking system. It behaves like a banking system but it’s not. It is all sorts of investment funds which lend money. But the institutions aren’t places you go into with your deposit and open an account. A shadow banking system manages to get finance in other ways and then lend this money into the economy

The Irish Central Bank has just announced that it will allow hedge funds – the most greedy, unscrupulous, short-termist financial subspecies out there – to lend money to Irish corporations. This truly beggars belief.

Hedge funds are the most highly speculative, profit-driven financial companies in a vast avaricious eco-system that is the financial markets. The aim of the hedge fund is to maximize profits in the very short-term. This involves taking big bets on certain assets – usually stocks or bonds – and if you make money, great – but if the asset is not performing you sell as quickly as possible. Involving these people in the business of lending to ordinary companies will completely destabilize the economy and lead to much more amplified boom/bust credit cycles than we have even seen in the past fifteen years.

The incentive structure built into hedge funds means the hedge fund manager has to take big bets.

As financial markets continue to rise, most hedge fund managers are worried about investing in expensive markets now. Therefore, they are looking for new pastures to make money and lots of it.

When the only objective of the lenders is to make lots of money, you can be sure that this is not good news for the borrower!

To make this money, the hedge fund raises money from rich investors or institutions and takes a fixed management fee of maybe 2pc of the total capital committed. After that, the hedge fund manager gets 20pc of any profits the fund makes over a certain minimum amount.

Because the hedge fund managers share the profits but not the losses, they are always incentivized to take big bets and are less concerned about losing money than making it. In addition, what distinguishes hedge funds from mutual funds is that they can borrow as much as they like in their pursuit of profit.

Are these the types of people that should be lending into the Irish economy? Is this the type of financing which is designed to create a sustainable growth path in the future?

They are moneylenders of the old-fashioned type. Yet according to the reports yesterday, hedge funds based in Ireland will be able to lend to companies under new rules drawn up by the Central Bank.

Apparently, the Central Bank has issued a consultation paper on its proposed rules and expects them to be in place by the end of the year.

Because banks are still reducing their lending to households and corporations six years after the financial crisis, the Central Bank claims that there has been increased demand for new sources of lending from firms in Ireland and abroad.

Under the new rules, a loan fund will not be able to lend more than a quarter of its assets to one borrower and the amount of debt the fund can take on will be capped at a ratio of one to one, meaning that if a fund has assets of €100m it can borrow another €100m.

But the issue is not how much money they lend; it is how they lend it and why.

The banking crisis in Ireland was caused by a combination of too many big loans and far too many little loans. The reason the banks lent too much money is that they were driven by short-term profiteering and the short-term movement of their share prices. They paid themselves in the shares of their banks, so self-interest drove them to push up the share price.

Such activity gives credence to the observation that the easiest way to rob a bank was to run one.

Traditionally banks were robbed by criminals breaking in, but in recent years banks were robbed by executives on the inside breaking out.

The managers of hedge funds will have an even bigger incentive to take risks because the link between their own pay and the profits of the fund are even more direct. If the central bank is prepared to allow hedge funds lend in Ireland how big might this move be?

In 2009, it was reported that there are over 350 financial companies operating in the Republic, despite the fact that many have little or no employees and are experts in tax avoidance. The ‘shadow banking’ system’s assets comes in at a whopping €1.7 trillion.

The proposed new regulations over the shadow banking sector specifies that there will be a cap on the amount of debt a fund can hold, with a ratio of 1-1. Thus, considering that the total value of the Irish shadow banking system’s assets to be €1.7trillion, it can borrow a further €1.7trillion.

This is a huge amount of money in the hands of people who are incentivized to take risks with it in the real economy. Is this a sensible route? Imagine if a fraction of that gets into the south Dublin housing market?

I suggest we hold onto our seats!


  1. Grey Fox

    Mr Tepper heading back to our shores?????
    http://youtu.be/myvyGl6yo64

  2. J-Will

    This will not end well !

    http://goo.gl/z1k9MH

  3. POF999

    Insanity: doing the same thing over and over again and expecting different results.

    Albert Einstein

    • Deco

      Ponzi-nomics and politicians.

      A lethal combination. Which always ends in debt.

    • patboland

      We have to put far more responsibility on the borrowers. Nobody is going to force people to borrow money. Nobody ever did. This idea of ‘bankers forcing people to take loans’ has crept into popular culture unchallenged.
      The truth is it never happened and it never will. People sign up to loans freely and have to bear the responsibility.
      People must act rationally. If you want to buy a house save a big deposit and then enter a loan contract you can afford even if your income drops 30%. If you cant do that then rent a home you can afford. If you take on more risk than is wise then you bear the responsibility. It is not the lenders fault.
      If we follow this routine there will be no rapid rise in house prices and no credit bubble.

      • michaelcoughlan

        Pat,

        This comment is hopelessly naive. If a citizen is on welfare or is in a very badly paid job they will be forced to borrow just to make ends meet. The reason the establishment wants to constantly reduce the return in workers’ wages is to force then INTO the arms of the loan sharks.

        Michael.

      • ‘act rationally’ The grand fiction of “economics”. Did the bankers & developers act rationally in the last boom? Are they acting rationally now? Well, yes, to a degree, or their receivers are by artificially creating shortages in housing stock, refusing to address infratstructure bottlenecks in water and sewerage provision for the capital, thereby presenting your wage/tax slaves with a well-rehearsed dilemma:

        Do you carry on in the rented dog-box with insecurity of tenure, bad repairs and shifting parade of neighbours with a baby on the way? Or do you throw your fate to the wind and gamble on the ‘market’ like the big boys and girls? But there’s one difference.

        If the little fish fail to pay their debts they get eaten alive by the sharks. If the big fish fail to pay their debts, they eat the little fish by foisting their gambling debts onto them & their children for the next few generations in water rates, property taxes, failing social services, unaffordable health-care. Etc.

        It’s how the Norman Elites of Ballsbridge & Knightsbridge have always worked since their Viking original families first carved up these Isles of Wonder and claimed them under kith’n'kin, king & queen, earl, lord and various clans. Ireland is STILL run by Normans in D4 who seek to create a new landed aristocracy for the C21st by enslaving successive generations in impossible debt peonage during a boom, then laughing as their new masters at the ECB raise rates and the whole thing implodes. Most of the new elite will be clever enough to trade out of the market before that happens, probably on ‘insider trading knowledge’ from Frankfurt, Brussels & Berlin, not to mention London and New York.

        Disgraced Haughey was setting himself up for Kingship, there appears to be a terrible human yearning to escape death through ‘proxy immortality via progeny’. But not everyone can become the Duke Of Westminster, the Queen of England….or Charles Haughey…..

        Meanwhile, the tourist bread’n'circuses pretends there’s a ‘rebel’ culture still to celebrate. Rebellion against what? Clever game played by the Normans of D4, appropriate 1916, expel dissidents over the water then sell it their traumatised families a homecoming? LOL!

        I know longer identify as “English” “British” or “Irish”. I’ve had enough of this nonsense on both Isles of Wonder, Plunder, torn asunder by a fake historical narrative that sets tribe againts tribe to hid the Norman bankster landed gentrified South Dublin foe behind heraldry and myth. “talking ’bout a revolution….sounds like a whisper”

        Ireland is a hedge fund, and it’s played the cute hoor well, but a reckoning is coming that may reduce this island to devastation unless the value system of the Gael is restored and the voice of the Culchie is heard. No wonder 10% of the population turn to Garth Brooks to vocalise their despair….

        When the ‘rational economic cycle’ turns by the machinations of foreign powers, then interest rates will obliterate the Irish Middle Class. When the Great Game of Tax & Wage Arbitrage in the BRICs terminates with Robotics and Onshoring, when Tax Justice activists in USuk bare their teeth, expect mayhem.

        “Geography Is NOT Destiny”. The original foundational dreams of 1916 of a geographic island integrity are in ruins, but not for the obvious reason of the smouldering bonfires of the 12th. The very notion of Nation is under siege from the new Aristocracy: The Corporation which has the Elected Governments on their knees before them, fluffing for Jayzus. Not many folk can turn down endless free blowjobs/tongue-jobs, so don’t blame the Cyborg Corporations, they’re doing what the Law Of Incorporation has programmed them to do under turbo-charged Capitalism for the last few centuries. Blame corrupt politicians and servile voters who put up with this nonsense all over the globe.

        The “Ireland” of the C21st will, like “Israel” be a global diaspora. It already is. As I type this nonsense on Talbot Street, all around me are the new victims of international imperialism, those ‘invited’ into the North to fill the gaps left by the Industrial Working Class being throw on the scrap heap (or the Agricultural/Construction Working Class here on this island). “Ireland Inc” is entirely complicit in this and on one level has totally banjaxed the indigenous population, like the Brits. But the last few years have seen almost NO racism during the crisis and of that everyone here should be enormously proud. But what happens next?

        I spent this morning in a new coffee shop half a mile from the IFSC reading papers & philosophical tracts. The Polish owner patiently explained why Wi-Fi was a no-no, repairs to cables had to get permission from the reciever of the business next door. He was full of praise for Ireland and said he’d never, ever go back to Poland due to corruption. I smiled as I read of the various sentences from lenient to severe of the jackasses who nearly destroyed this place in 2008. But I was also struck by how different it is here to Britain, how the culture is both rebellious and compliant, fawning and ferociously independent in equal measure. A paradox explored expertly by Ian O’Doherty in an Indo article I read today called “Makes you proud to be Irish?” Here’s the money quotes:

        “There’s nothing particularly unique or special about the fact that a large percentage of Americans can claim some Irish ancestry. But, what we tend to forget is that most of those folks could also claim German, British or some other ethnically European link.

        How would we respond, for example, if Alex Sammond decided to celebrate Scottish independence by fluting around the world, handing out spurious ‘Certificates of Scottish Heritage’?

        Well, the chances are that we would laugh at such a desperate attempt to gain recognition for his country. Similarly, you don’t see the Welsh assembly trotting around like lap dogs trying to confer taffiness on unsuspecting slebs.

        The uncomfortable fact is that the vast majority of people of Irish extraction don’t really care that much.

        Also, and this is something the cheerleaders for these ridiculous and overtly cynical pieces of tat never seem to ask themselves, does anyone ever stop to think that maybe the ancestors who left here actually left for a very good reason, and never wanted to darken our shores again?”

        http://www.independent.ie/opinion/columnists/ian-odoherty/makes-you-proud-to-be-irish-30475231

        As i retrace my parent’s faltering steps from Culchie Central, the Oveg & Nore, the mediaeval Irish capital of Kilkenny to the grand houses of D4 as cleaner or ‘paddy on the railways’, I’m struck by how little has changed. And how much needs to change….but then, I’m just a plastic paddy so it’s none of my business? No, it’s not, because the 1st Irish Republic has morally collapsed along with the Banker’s Republic. Whether that’s ever formally recognised or enshrined in history is irrelevant as it’s irreversible. It’s time to tear down the wall between D4 and ‘the Pale’, not to rebuild it with South Dublin House Price Hegemenony. It’s time to tear down the wall between the supposed ‘real Irish on the island’ and the various branches of the Diaspora, it’s time, but it will not happen until the next convulsive crisis. I see Argentine is heading for another meltdown, so much for the Hedge & Vulture Funds who were meant to be restoring them to economic sanity….

        “Tear it down, Mr Gorbachev! tear it down!”

        “Tear it down, Mr Kenny! tear it down!”

        Or we will…..because…..we’re the Forgotten Irish, the voices of the previous waves of Fugees and we do NOT fawn before your regime even if we flood the place for The Gathering and to drive The Atlantic Way. Don’t be fooled into thinking accent is everything. It isn’t. We can reduce this island to smithereens if you betray the Republic’s foundational dreamscape. Not that Enda reads this or knows who I am, of course. I don’t know anyone in Mayo……LOLOLOLOLOLOLOLOLOL!!!

        Wonder if any of this will make sense tomorrow. Probably not. Who cares? Time for a pint and some trad Sean Nos music in O’Shea’s. Anyone who fancies having a go at me about this comment: you know where I am. But beware….I carry the “Saoirse Sword” gifted to “Seoirse The Saxon” by St Wulstan on the Isle Of Avalon to save the Shire Irish of Eng-Eireland. Dosen’t mean a thing to ye, does it? *sigh*

        “yonder lies the Norman-Roman foe”

        • DB4545

          Andrew there’s a lot of other Dublin postal codes between D4 and the pale and they’ve been on the receiving end of most of the shit doled out since 2007. Have a drive through parts of D1,D3,D5 D8,D12,D24. It ain’t party central for most people there and by comparison some of our country cousins are doing well. I’ve never judged any person by their accent. Some of the biggest thieves on both Islands use RP and D4 to deceive.

  4. cooldude

    “Because the hedge fund managers share the profits but not the losses they are more incentivised to take big bets and are more concerned about making money and less about losing it.”

    Sounds like standard fractional reserve banking to me. At least these guys won’t come looking to be bailed out by the tax payers to the tune of 60 billion if they make a balls of it.
    Also there is no chance of depositors losing most of their deposits in a “bail in” scenario which is now just a matter of time with the main banks. The hedge fund investors lose money if they mess up and the hedge funds eventually go out of business. Whats not to like.

    I would like to see an article on the legal status of depositors in the banking system. Is it not true that they are deemed “non secured creditors” legally and are last in line to be paid out. That might be an interesting article.

    • Adelaide

      Hi Cooldude

      “I would like to see an article on the legal status of depositors in the banking system. Is it not true that they are deemed “non secured creditors”?”

      I researched this topic awhile back and you are correct.
      Under the law a depositor does not ‘deposit’ money with a bank, in fact he does not even lend it to the bank, he GIVES it to the bank. At that point the money becomes the bank’s property, it is now 100% legally-and-lawfully the bank’s money AND THERE IS NO LEGAL OR LAWFUL obligation for the bank to return the money, after all it is now THEIR money. Obviously they do return the money for commercial purposes but under the law the depositor receives back the bank’s money, it’s essentially a gentleman’s agreement.
      A few years back (my memory’s hazy) an activist group in the UK brought a test case to test this very topic, and the judge asserted that lawfully a so-called depositor has no legal recourse to his money because it is the bank’s money. A bank does not need legal permission to undertake a bail-in because legally it all their own money.

  5. E. Kavanagh

    I really don’t see how this is such a bad idea. The free market kicking in with €1.7T to lend out; at least no one would expect the government to bail them out. And if no one is going to bail them out, I’d expect they’d be somewhat more careful with their lending criteria.

    If the main street banks won’t lend, then it seems this is at least an option.

  6. michaelcoughlan

    Hi,

    “Are these the types of people that should be lending into the Irish economy? Is this the type of financing which is designed to create a sustainable growth path in the future?”

    No.

    They are not paid to take risks David they are paid to DESTROY the place let me explain;

    Take property developers.

    McFeely was the ex con ex IRA man who was working as a labourer after he got out of jail and was developing hundreds of apartments in the priory hall development. Behind the scenes someone in a bank somewhere lent him the money to do it. So this is the modus operandi; Two developers walk into a bank one is a very well educated floppy haired economist who knows his stuff and one is an ex con with a deposit from his mates who lifted the moola from the bank in the first instance.

    The bank manager has to decide who to give 100m euro to. He knows the floppy haired economist will do a good job and see out the development and he knows the ex con will make a balls of it. So he makes the following deductions. 100m to the floppy haired economist will take say 6 or 7 years to recover with a modest amount of interest.

    100m to the ex con who will bankrupt himself in say 2 years but will have paid off a sizable portion of interest in the 2 year period and then the bank manager calls in the lien on the rest of the assets and sells them rapidly with the state backstopping the losses through state owned banks means the return on capital is QUICKER (and as a ratio of money lent HIGHER) by lending to the ex con he knows will fuck the thing up.

    Therefore the bank manager lends the money to the ex con and tells floppy to go fuck himself.

    And guess what David? As I write look at what hedge funds have done to Argentina;

    http://www.irishtimes.com/business/economy/argentina-defaults-on-debt-for-second-time-after-talks-fail-1.1883643

    I HOPE our Army reads this article and I HOPE they read confessions of an economic hitman by John Perkins.

    Your previous articles said markets are forward looking. Not in the case of Argentina. The money was lent KNOWING Argentina would default and it’s now about to be asset stripped again David. The Bonus is paid to draw financial Nazis into the employment of the hedge funds who have no conscience to prevent them for profiting from predatory lending practices where the focus is to unleash as much havoc as possible on the borrower.

    Michael.

    • E. Kavanagh

      This doesn’t makes any sense; and much is irrelevant.

      Loaning to a nation like Argentina has nothing to do with loaning to companies in Ireland.
      We are not talking about bank managers.
      How much interest would one pay on a $100MM loan in 2-years compared to the loss of the actual capital. What bank is interested in loaning money to entities with the intention of taking over their failed business 2-years later.
      Surely by now it should be possible to talk about Argentina without mentioning Nazis?

      • StephenKenny

        It depends very much on what the business does, what assets there are, and how the deal is structured. Barclays Bank in UK have been caught doing precisely that – pressuring businesses with the intention of forcing them to default on loans, enabling assets to be taken over by other parts of Barclays.
        After the past 10 years I’m amazed anyone could even ask such a question.

        • E. Kavanagh

          The fact that Barclays Bank did that proves nothing. Post hoc ergo propter hoc. Of course if a bank ends up with a bad loan it is going to do what it can to do end up with as good a result as possible. That in no way proves that the bank made the loan with the hope that the business would fail, and the intention of taking over a failed business.

          And it just doesn’t make sense. If the business could sell off everything and pay the bank why wouldn’t it do so rather than give everything to the bank. If banks wanted to get businesses why wouldn’t they just buy good ones.

          The idea that banks are in the business of making loans so business fail and then take over that failed business is preposterous at best; and that someone would suggest such is what is really amazing.

          • dwalsh

            Never heard of private equity operations?
            That’s exactly what they do.
            You seem to have a very naive notion of capitalism and banks.

  7. Pat Flannery

    “In 2009, it was reported that there are over 350 financial companies operating in the Republic, despite the fact that many have little or no employees and are experts in tax avoidance.”

    Thanks for writing that David.

    Richard Bruton has the gall to deny Obama’s accusation that the Irish are “gaming the system”. Obama is right, Ireland is the Las Vegas of the financial world, the “gaming” capital of the world.

  8. Reality Check

    The banking crisis in Ireland was caused by a combination of too many big loans and far too many little loans.

    Who/what decides how much overall lending/money creation is done by the Banks?

  9. dwalsh

    The interests of the financial markets or shadow banking system and the real economy are diametrically opposed.
    Companies and people functioning in the real economy benefit from and want stability; financial markets benefit from and want instability.
    The IFSC is a Trojan horse designed to loot our economy.
    Until the financial markets are reined-in and properly regulated the crisis we have been in since 2007/8 will continue to deepen; and if unchecked will inevitably lead to a general collapse and a global disaster on a scale the human race has never before experienced.

    • E. Kavanagh

      That’s not true.

    • EMMETTOR

      The Financial Markets will not be reined-in, it’s a ratchet. The “Wealth” they “create” cannot be destroyed, even though it doesn’t actually exist. Therefore the global disaster IS inevitable, in fact history may show that we are actually going through it, right now.

      • E. Kavanagh

        Firstly nonsense.

        Secondly and more interestingly, if you actually believe this what are you doing e.g. shorting everything, buying an island and learning to farm?

  10. Deco

    [ The managers of hedge funds will have an even bigger incentive to take risks because the link between their own pay and the profits of the fund are even more direct. If the central bank is prepared to allow hedge funds lend in Ireland how big might this move be? ]

    Throw this in with low interest rates – a subsidy for speculation, and you can some rather dangerous behaviour.

    High risk, interest rates so low the subsidize risk, a tax system that sucks out of productive activity and rewards unproductive activity, a legal system that jails nobody unless they disobey authority, and a set of “new” banks that are ready to behave like sub-prime lenders.

    If has the ingredients of an even bigger disaster than the one that started when Trichet took over the ECB.

    The whole system is about to go completely bonkers.

    • Tull McAdoo

      “Good man Willie” “Good man Willie” “Good man Willie” aka William McAteer was today handed down a sentence of 240 hours community service for his part in a 450 million euro bit of shenanigans to prop up the share price of a bank that had gone completely off the rails.

      Now what I can tell “Good man Willie” is that his damn well lucky, because if he was up before the same judicial system for not paying his TV license today, then he would be as we speak, staring out over the stone walls of Mountjoy Prison, having been handed down a custodial sentence.

      As a matter of fact “Good man Willie” and his partner in crime Patrick Whelan were given a warm send off on their new adventure by Judge Martin Nolan who said “Thank you gentlemen. Enjoy your community service”. The height of civility from our Marteen, a prince amongst men……

      I have said it before here “root and branch people”” root and branch”

      Take it away Boz for “Good man Willie”……put your money on the table and drive it off the lot…..and Goodnight Ireland. Sleep Well

      http://www.youtube.com/watch?v=yj4JCPXQjk8

      • DB4545

        What did you expect? He was hardly going to send his old school tie pals to the big house to slop out was he? You must think we live in a Republic of equals. The constitutional monarchy across the water that the lunatic fringe want to fight didn’t hesitate to send Lord Archer to the big house for four years for telling porkies. A Toxic Republic.

      • Deco

        If Willie did not pay his TV Tax, he would be in more trouble, than he got into for bankrupting the country.

        The law is an ass. It facilitates deceit. It is time to change the law !!!

  11. Legally_blonde

    Should the hedge funds, which are a large part of the IFSC’s business (which generates €2 bn in taxes) take their business to Luxembourg?

    As for hedge funds being incentivised to take excess risks because they are part owners of their shadow banking businesses, that is a contradiction of reality. One of the strengths of the hedge fund business structure is that the owners are usually co-investors and have a vested interest in the longevity of the business. How many hedge funds went bust since 2007? Some, not many and they imploded, not exploded. How many required bail outs by taxpayers? None. And with banks, previously the supposed experts in lending monitored by central banks, in self-preservation mode, who fills the funding gap for businesses?

    Oh, look! Another financial institution going down. It’s a bank, The Bank of the Holy Spirit! Now if that name wasn’t a clue…

    • E. Kavanagh

      David, I love your stuff generally, but I think Legally_blonde has a better analysis on this issue than you do.

      • StephenKenny

        I’m actually completely stunned by this view, which essentially seems to be that all investment is equal.

        When raising money for a business, the source of funding is an absolutely critical variable: Assuming that you have a reasonable business, there’s funding you don’t take ever, ever, ever; others who you’d only take a minority; there’s ‘dumb’ and ‘smart’ money, ‘inside baseball’ and ‘outside baseball’ money, on and on.

        I’m going through it now and it’s all we talk about – the right mix for funding. Are they going to treat us as we need them to, over the coming years? Other than money, what else do they bring?

        They have their place, but very few hedgies know anything about real businesses – it’s just not, generally, their thing.

        Create some venture funds, with rules that suit the sorts of industries we’re interested in encouraging, and it looks better.

        I guess fundamentally I believe that governments should regulate well, incentivise the businesses (not funders) and get out of the way.

    • michaelcoughlan

      http://ftalphaville.ft.com/2014/07/31/1913792/most-hedge-funds-fail/

      Neither you legally_Blonde nor E. Kavanagh have a fucking clue what ye are talking about.

      “Should the hedge funds, which are a large part of the IFSC’s business (which generates €2 bn in taxes) take their business to Luxembourg?”

      In light of the link above YES.

  12. Shane F

    It was Margaret Thatcher who did away with the two and half times salary for mortgage rule in the uk. And Ireland followed. (There was a name for that regulation which I cannot recall.)

    See below for a view on the long term effect of Thatchers policies.
    http://www.bbc.com/news/business-22064354
    All those old Bank managers who people had to tiptoe around to get a loan would have started working during the great depression and seen the effects.

    Would love to see an article by David on increasing Banking Debt enslavement, and where in response BRICS de-dollarisation will lead the world.

    • E. Kavanagh

      That 2.5x rule seems a bit of a rule of thumb rather than something that should have been legislated; especially when interest rates vary over time, and if one could get a fixed mortgage. (I’ve never bought property in Ireland though.)

    • Deco

      Thatcher’s main economic policy was more debt, and more funny money. Milton Friedman in action. Long term it was completely unsustainable. Nonsense.

  13. kinsele2

    Sounds a potential trap for SME’s to get into payday loan style lending, where unless your short term future income increases after the interest rates you’ll just end up in a worse situation very quickly

    • J-Will

      “That’s just the way it is” eh Adam,”somethings will never change…”

      My mother was the youngest of nine siblings. Her father,at aged 50,died.My mother was then only five years old – leaving my grandmother a widow and a creamery cheque from two milking cows,to support eight kids.

      At that precise time,one of my grandmother’s two cows got Mastitis and lost three of her quarters – so a one way trip to the slaughter for that cow,but no money to buy a replacement.

      A local farmer,in an ‘opportune’ moment,arrived at my grandmother”s house and thinking he had the advantage over this widow in mourning,offered to buy her healthy cow – but offering a paltry sum …..

      That’s the thought your contribution just stirred in my mind with your brainwashed talk of wretched opportunity for profit! ( while people suffer!)

      You don’t have the first clue what’s going on in Argentina and your contribution reflects exactly that,and more….

      P.S. Luckily,my grandmother did have five good,kind and honest neighbours,who saw my grandmother in her time of need,her plight and cared enough to come together and helped her invest in a second cow and life went on….

      My Mother,all these years later,can remember that moment with amazing clarity,and no,not so much loosing her father, rather, the look of Fear,worry and desperation in her mothers face – with loosing that precious cow.

      The truth Adam is that I don’t even have my Leaving Certnot to mind a University Education,not to mind a Phd,but i’m not envious of your education (or your island)

      I suggest reading,actualy,studying some Thomas Paine

      This is a good start

      http://www.cooperativeindividualism.org/paine-thomas_letter-to-thomas-jefferson-1789.html

      • I neither agreed nor disagreed with the article. I merely put it up there for discussion.

        Play the ball, not the man Mr. bonbon.

      • DB4545

        I respect what you have to say on that point my mother was widowed and left with four kids under thirteen in lovely D8 in 1976. Hard times and we missed the drug scourge which arrived in 1981 by a heartbeat. She had the same type of ruthless scumbag trying to pocket the meagre life insurance payout. The Rights of Man have been surrendered by those same type of scumbags who we elect to represent us. We long ago sold out our Marine, Agricultural, Oil and Gas reserves for very little. We could be Norway and the corrupt elite are turning this Island into Zimbabwe.

      • Colin

        Maybe now Mr bonbon, you can follow through on your latter day wisdom, wake up and revise your opinion of the Irish famine. It was not genocide perpetrated by the immoral imperial British. The catastrophe was enabled by the rich catholic farmers of Ireland who continued to export food while their poorer Catholic neighbours starved. Bet you this farmer who made the paltry offer to your grandmother was descended from a farmer who exported food in the famine.

        Also remember, if you ever end up in London, don’t work for Paddy, because Paddy will ride you.

  14. This one will be up Mr. bonbon’s street:

    “We’re heading into a jobless future, no matter what the government does”

    https://www.linkedin.com/today/post/article/20140731045824-8451-we-re-heading-into-a-jobless-future-no-matter-what-the-government-does

  15. J-Will

    I’m still in shock after reading this article!

    These predatory financial alchemists being ‘allowed’ to feed on vulnerable Ireland will result immediately in:

    1) Soaring asset prices – housing/land being further pumped
    2) Rents for Joe and Jane Bloggs to RISE (by absentee landlords)
    3) 1st time buyers,in Dublin region anyway,[and aside from poor supply levels of housing and wages being,at best,stagnant] won’t now have a snowballs chance after this proposed irrational move/’stroke’.

    This Threat of a purposeful rapid re-inflation of our property bubble is a thundering disgrace!and we were concerned about “cash buyers” ??!!.. a small fraction of E1.7 Trillllion ,is like a small dose of cyanide!

    A “Last ditch effort” that’ll land many people in a ditch David! What a shaam! These wolves in sheep’s clothing must be salivating at the mere prospect of being invited with open arms!

    Enda is an incompetent Leader,or WORSE, a traitor!!!!!

    DMW summed up these predators anyway:

    “”The Irish Central Bank has just announced that it will allow hedge funds – the most greedy, unscrupulous, short-termist financial subspecies out there – to lend money to Irish corporations. This truly beggars belief.”

    or maybe i ought to do as i’m told and mind ‘my’ own business?!

    http://goo.gl/nYyFhy

    • J-Will

      [P.S.. I was told once that a lethal dose of cyanide [poisoning] attaches itself to one’s blood cells with an affinity that is 130x greater than haemoglobin bonds with your blood and the poison scavenges all of the cells’ available oxygen – resulting in a rapid shut down of one’s first affecteed brain and heart,resulting in the collapse of one’s internal respiration system and then in a short time later,external respiration (lungs etc)

      A most awful death, from the inside out.

      Maybe the perfect metaphor for Enda’s Kamikaze proposals?

      He is dangerous !

      • J-Will

        Back in the times of The Incas,they had three rules to live by;

        Do not lie
        Do not steal
        Do not be lazy

        And it worked!

        I guess it comes down to a choice really…

        A society dense with profit seekers who know nothing of Real Value,targeting the vulnerable v. a modern society dense with creativity and technology,driven by productive labour,thats dedicated to the Common Good

        Welcome to the Revolution !

        3mins
        https://www.youtube.com/watch?v=7tkzc983aE0

        • Deco

          [
          Do not lie
          Do not steal
          Do not be lazy
          ]

          An economy based on property speculation, and cheap credit advocates breaking each of those three maxims.

          Ponzi-economics, relies upon lying, stealing be stealth, and promising people “something for nothing”.

          And it is now the mainstay of economic though, on both the centre left and the centre right in most English speaking countries. With Ahern, Blair and Clinton, the pro-business left decided to stimulate economic activity with Ponzi-economics, and give the proceed to the institutional state.

          More voodoo economics, except twice as toxic. More debt.

          It does NOT add up.

          Disaster in sight.

          Unless there is a major war. In which case the disaster gets a whole lot worse (but it get’s postponed).

          • J-Will

            Economic hitmen,as you know well.

            But worse than even that Deco – They have the potential to be Killers of Dreams!A re we now at ” the Eve of Annihilation”,in the “post-boost phase?” …time will tell

            We are inviting a Death Squad of Compulsive Gamblers with ~E2 trillion to ‘splash ‘in our already debt-ridden ad vulnerable island country!?!Madness!

            So the scene is set…VUTURES that are devoid of morality + NAMA(looking to make a profit and good PR for Inda) + a slave’s mentality by Enda and as such is more than willing to prostitute the PEOPLE’s Present and Future + poor housing supply in a wild-west setting + incompetent and COMPLICIT govt = a winning formula for a game of Russian Roulettte!

            Bankrupt of creative ideas,Inda the imperial lackey,welcoming hedge funds is a dangerous uppin’ the ante tho Deco! [it's not we're like Argentina with vast resources like Vaca Meuerta in Argentina ,in fairness...the only 'chips',excusing my vulgarity,that we have,is compounding Schachtian austerity 'programmes'and future generations committed to debt slavery!]This is what we face!

            These are mainly hedges to their main books right,so it’s high risk/high return wild-west scalping and they’ll bring their arsenal of weapons of mass financial destruction to our shores. Interest rate swaps/spreads,crdeit default swaps,”whatever you want we got it” swaps and these Pump and Dump financial illusionists have zeee-ro conscience for negative societal consequences/impacts of their bets.

            And how complicit Enda will “dress up this lady” [with V.D.!] with spin galore – and all the while in the shadows ‘alleviating the burden’ from bank balance sheets ahead of stress tests?thus enhancing banks’ share price yadayada …just more misdirection & sleight of hand…hardly surprising afterall – its the stock and trade of financial illusionists.

            We are being fed to the wolves!

            Europe is in free fall,a death spiral, and these savage bloodthirstry usurious serpents in Armani suits are no friend of Ireland!Why are they coming now btw…is the timing coincidental with the BRICS making their Power Plays??!!hmmm The hedge funds are strategists,not just opportunists and have a frightening determination and work rate -to snare nations!

            “Run a bank?” our host asks – Does Bear Grylls shit in the woods?

            http://www.youtube.com/watch?v=-DT7bX-B1Mg

            These hyenas will jettison the serfs amidst the flotsam and jetsam of more [largely unproductive ]debt,componding an already unsustainable debt load!!!! This is a huge mistake masquerading as a short-term,feel good factor exercise. What a shaam!

            Our Govt are relinquishing CONTROL !

            “The science of constructing a commonwealth, or renovating it, or reforming it, is, like every other experimental science, not to be taught a priori. Nor is it a short experience that can instruct us in that practical science, because the real effects of moral causes are not always immediate.”

            - Edmund Burke

          • J-Will

            Is inviting hedge funds into our lives going to compliment the direction of a Future Orientated,Just,Safe,Lawful,Fair, Progressive Society – where citizens’ well-being up-holding True value and Rights are central?

            No is the answer!Having anything to do with these vultures is lamentable ignorance or worse ,treachery!

            http://lowres.cartoonstock.com/money-banking-garden_of_eden-subprime-loan-dbet-devil-wmi100226_low.jpg

          • J-Will

            These financial pirates will hijack our political system and then can choose to easily steer us off course and profit from our loss!Dealing with these speculating scavengers,will in effect,be giving away our Control,our sovereignty to a bunch of Shylocks !Giving up our control of determining our Future path made of principle ,and engaging with these blood thirsty hyenas,with a track record remember of wreaking havoc and misery – is a “Hail Mary play” from Enda’s vapid mind!

            Control of Ireland’s political process is where it’s at.

            [The same,similar anyway, as India and China where 30% of the population are below the $1 a day and uneducated and so oblivious to whats really going on,so come election time,the unscrupulous Chinese/Indian opportunist politicians promise maybe extra daily allowance of Chapati&Dhall or a half bowl of rice,to secure a persons vote![same as US and it’s open borders now…more votes and maybe more bad credit into the system,to support the bail-out of the sinking ship!

            Money is nothing more than a heat energy index.If you skew the index,you don’t necessarily add more heat to the system.

            Associating with hedge funds is a caustic fraud that’ll end in more tears and the equivalent of activating an electro magnetic pulse,an EMP,30 miles high!Considering the non-linear nature of debt,this has all the potential of delivering Trident II devastating repercussions!!!!

            We can’t regulate the shower of financial deviants that are already there ffs!

  16. michaelcoughlan

    Hi David,

    It must be obvious now to you gsucks is preparing to play the same trick on Ireland as they did on Cyprus. I’d say they suspect the dollar will hyper inflate or some other event will happen but before that they will have Irish businesses in hoc and then WHAM the trap closes shut and Roisin gets it where the sun doesn’t shine: All the assets of Irish business will be confiscated in lieu of debs owed.

    At least a few of us saw it coming.

  17. Fat Tony

    Is TAFTA going to happen now or not?

  18. J-Will

    Speaking of hedge funds and opportunist hunters with insatiable appetites,the pack dynamics in the wild for feral dogs,has s a very well defined hierarchy,with just one well defined Leader – The Alpha,who decides for all pack members,the where and when to sleep ,the pace of a pack hunt,where to hunt,often selects which vulnerable animal to hunt and generally assigns roles & responsibilities to all other subservient pack members,so that together,collectively,all members contribute to the furthering of the overall pack survival and while co-operation among a dog pack,features heavily in a hunt scenario,we understand now,further to extensive scientific zoologists’ studies,that democracy isn’t a feature with wild dogs,it’s a Dictatorship and this model of dictatorship has well served wild wolves,jackals,dingoes and coyotes for hundreds of thousand of years.

    • J-Will

      A must watch to gain life saving insights into hedgers

      ( sorry Tyler D but we both know it’s the Truth)

      The Druid Clan, In The Valley Of The Wolves!

      http://www.youtube.com/watch?v=HnVkoc7ldrk

      • J-Will

        if you enjoyed that,maybe watch this

        http://www.youtube.com/watch?v=HnVkoc7ldrk

        When humans entered the equation,the dynamics between dogs and humans changed in a way nobody could predict and a sense of co-operation evolved over the last c.30,000 years of canine domestication. This Co-operation between people and dogs has enabled man traverse much longer distances more easily – in order to discover more abundant hunting grounds,create an improved sense of community and crucially facilitated hunting bigger game (e.g. buffalo) more successfully, so as to meet the challenges of survival and the necessity to thrive in order to feed ever increasing numbers of more families – progressive moves in meeting the challenges and conquering the harsh environment /conditions of the wild.

        This arrangement of mutually beneficial co-existence speaks to the furthering of mankind’s progress and is similar to today,but of course orders magnitude greater Power today to create Change,with man creatively wielding chemistry/FIRE & technology to progressively higher states of efd,which is and will continue to be a template for a progressive society,meeting the life and death challenges that we face!

  19. Pat Flannery

    What’s the matter with me today? I suddenly find myself in agreement with Colin about what caused the famine and about not working for an Irishman; and I know bonbon’s (or J-Will?) problem: they are both insomniacs – like the schizo who said to himself “together we can beat this thing”.

    Seriously Colin, you are right about both. But I still don’t like the Brits (or you) calling the Irish “Paddy”. You never hear that in America.

  20. Blood & Tears

    Taxation is a primal activity with the intention ‘To STICK ‘ in the presence of ‘The Enforcer ‘( The Hunter ) .

    Sometimes ‘ The Enforcer ‘ is not present when the Tax Payer ( Beast of Prey ) becomes Entrapped ( Notice of Estimation ) in a Snare ( Discovery ) that is located ‘Away ‘ .

    The Snare is usually the location that draws the remote Taxpayer into its TERRITORY ( Taxable Activity ) .

    A Humane hunter allows the beast of prey to call for help when entrapped and to choose anyone ( Appeal Commissioner / Bank Ombudsman ) .Our own River Dog ( Minister for Finance ) is not humane and chooses himself HIS Appeal commissioner to endure the taxpayer to suffer a further fate of needless pain .

    The GREED of the Irish Finance Minister clouds his ability to think clearly and his efforts to lay claim to the continued existence of an agreed Tax System between the various Hunters on the spoils of the Beasts of Prey will only result in the elimination of The Territory for our Minister to legislate on .

    Welcome to the land of the River Dog Minister Ml Noonan .

  21. Dug Out Ideas

    Limerick gets its name from its location where the Estuary begins .It is two Danish words for ‘Dug Out’ river which is what the Estuary is and not a Fjord .All the waters that drain from the Isles of Ireland pass through Lymricke.

    Shannon is the location for the first Finance Plan to legislate in the World International Tax for Companies without Borders .It was conceived by a team from Thomond and led by Brendan O’Regan .Its concept then was unique and its implementation became practiced and copied all over the world.Real Leaders in a Real Team crated a success and shared a common goal ‘to enhance the wealth of the community they lived in ‘ .Theirs was fair game with an offer to give to their visitors an opportunity to prosper and share .

    Over Time, changes in international culture developed and the new languages of business became indecipherable to the masses .Confusion arose and the weakness of the Irish Dept of Finance became visible.This Dublin mindset drifted from the original spirit initiated by the Real Team from Thomond. This stench still can be felt all around the building housing the Dept of Finance that is manned by an elitist separatist that is PALE by comparison and Dull in spirit .

    The mindset of the Dept of Finance is a Terminal with no where to go and no place to live .Let them Burn.

  22. michaelcoughlan

    An aside David,

    More evidence of close to a 10% real inflation rate;

    An post’s new charge for delivery of a local letter has just increased from 55c to 68c, SIXTY EIGHT CENTS DAITHI.

    I shit you not.

    • StephenKenny

      Neo-liberalist ‘market’ economics is nothing to do with free market economics. Nothing at all. Really, it’s just the other side of the coin to the sort of command economy that the (unelected) leaders of the EU are going for.
      Free markets can be spotted. For example, in a truly free market, when a sector matures, profits tend to zero. This means that companies just go along, everyone earning so-so money. In a free market economy power companies, transportation companies, water companies, agriculture (i.e. food), and so on, should simply have no jobs that are particularly well paid. Competition would see to that.

      Using only simple feature, of many, can anyone think of a free market economy?

      If anyone is worried about the source of this idea, it wasn’t me, it was Adam Smith – the ‘Wealth of Nations’ guy. People like to quote the ‘Invisible Hand’ , but seem less keen on profits tending to zero.

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