November 5, 2015

Like him or not, O'Leary is walking on air in the smiles-high club

Posted in Irish Independent · 107 comments ·
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Last Friday week, there was a small crash on the M50. Try getting to the airport from most places in Dublin if there is a crash on the M50: the chances of you making it on time are slim to non-existent.

 

We scrambled, arguing, angry and stressed into Terminal 1, a mere 35 minutes before the take-off of a Ryanair flight. Family half-term holidays must increase the chances of divorce dramatically.

Resigned to missing the flight, we trudged up to the desk. The woman at the desk told us the check-in was closed but after a bit of pleading, she spoke to her manager, a Scottish guy. He rang the gate, smiled and said: “Okay, just run.”

Would this have happened in the Ryanair of old? No way.

But the new Ryanair is not just nicer; it’s massively successful as a result too. As Michael O’Leary himself observed: “If I knew we’d make so much money by smiling at people, we’d have done it years ago.”

Ryanair’s latest results are phenomenal and they reveal how much the whole nature of air travel has changed and continues to change. They also underscore just how fantastic O’Leary is as CEO.

In a country that doesn’t exactly embrace success, what O’Leary has done with Ryanair is extraordinary. Ireland has no right to have the biggest airline in Europe.

Had you said 30 years ago that a country with no aeronautical manufacturing heritage, a tiny population, an incumbent national airline (in an industry dominated by the big national carriers), would create the biggest airline in Europe, change the entire way travel is perceived and do it in the face of massive governmental opposition, people would have thought you crazy. But O’Leary did it.

In the last six months, profits rose 37pc to €1,088m. The airline flew nearly 60 million people between March and September and, although O Leary cited three favourable factors – (1) bad summer weather in northern Europe encouraging people to fly south, (2) strong sterling and (3) lower oil prices – the growth of the airline is continuing apace.

When you look at the US market, you see that five large airlines dominate 90pc of the intra-US travel market. Might this happen in Europe? It must be possible.

Obviously the US is different as it doesn’t have national carriers protected by national parliaments and notions of equating airlines with national football teams, but if consolidation comes, there must be a very good chance that Ryanair will lead that pack.

Right now, although it aims to fly over 100 million people this year, it is still only 13pc of the total European market and only 3pc of the huge German market. But if you look at the figures, Ryanair published the other day, it looks to expand in Germany to push up the annual numbers of passengers to 180 million – or 20pc of the European market – in the next few years. It has the fleet to do this and the airport places, which used to be the problem in the past, are now no problem. It’s difficult to see what will stop O’Leary now.

In the past year, air travel to and from Ireland on both Ryanair and Aer Lingus has grown dramatically. For example, on the short-haul routes of Dublin to Milan, Rome, Barcelona and Madrid, traffic has increased by more than 150,000 passengers a year on each route.

This is a massive turnabout. And we see the same sort of numbers in UK airports too. For example, last year, 17 million passengers flew out of and into Stansted. This year, that figure is scheduled to be 25 million. This reflects huge pent-up demand in the London area and is also a reflection of just how the congestion at Heathrow is pushing people out to airports that in the past were considered secondary.

For companies like Ryanair and other low-cost carriers, Germany is the Holy Grail. It is a huge market but because German roads and railways are so good, the airlines have to be cheap and this is where Ryanair hopes to makes inroads.

The prize is huge because Germans are switching to flights within Germany – now that they are being offered the choice.

For example, last year a new route was opened between Cologne and Berlin. It flies six times a day – where the route did not exist before – and it is estimated that this year alone 600,000 will fly the route.

Operating a huge airline is a logistical feat, not unlike running a massive manufacturing operation. Companies the size of Ryanair fly 2,000 flights a day. With all the ground staff taken together, some 40,000 people work for or with Ryanair per day all over Europe.

The other day, at a regional airport in Croatia, I watched the whole operation with amazement. The people seem to know exactly what is demanded of them, they do it with extraordinary efficiency and most of us passengers by now understand the deal. You see the plane land, it turns around, the outbound passengers get off and then we get on and off we go. No fuss, no drama and although it’s not luxury, it’s grand and it works.

Most of the coverage of Michael O’Leary focuses on the PR stunts, the attitude and the “screw you, you paid only a fiver” stance. However, the real success of Ryanair is this operational efficiency and the fact that this is a massively complex operation that has to be consistently competent every day of the year. That takes a huge managerial and personal effort, which is often forgotten.

Next year, it is likely that Ryanair will make yet more profits because this year its cost of fuel was more than $80 a barrel, while in 2016 it will likely be closer to $60. This will give it a 20pc-odd fall in its fuel costs and given that Ryanair uses more that $2bn (€1.8bn) of fuel a year, the cost saving on this alone will be in the region of $400m.

All this cash on the balance sheet will put it in a better condition to emerge as the winner, once the airline industry consolidates and merges in the years ahead.

In a country that doesn’t like its winners, or at least begrudges them, it’s about time we learned, if not to love Mick, at least to acknowledge him. Imagine national adulation – that’s one thing that would truly scare the bejaysus out of that fearless fighter!

 


    • McCawber

      Warning – Hijack in progress.
      I would like to walk into a meeting with worlds CBs and their financial advisors, flanked by Michael O’Leary on one side and Willie Walsh on the other.
      I would then proceed to ask them.
      “Why do we need spread betting, cfds etc etc”
      Following their answers I would then say to them.
      “Now, ladies and gentlemen tell me how to get rid of them”
      Oh and by the way, Michael and Willie will escort anyone to the door, who doesn’t feel their up to the task.

  1. Pat Flannery

    Michael will be remembered as one of the great Irishmen of our times. He exposed the narrow clubbyness of Irish society. I will always remember his description of the petty tyrants in our government departments and in our public agencies such as the Dublin Airport Authority, as “gobshites”.

    His contribution is not only economic but social and cultural. He exposed the ugly fact that this country is run by faceless civil servant gobshites. Look at who is currently in charge of our health system. It is not the Health Minister. Our politicians are not the problem. If they are to blame it is for allowing themselves to read whatever their gobshite handlers put in front of them and for allowing themselves to be shunted from pillar to post on a schedule drawn up by long-term, insider, nameless, unaccountable civil “servants”. Can you imagine Michael allowing that?

    What we need is a few Government Ministers like Michael O’Leary.

  2. michaelcoughlan

    Hi,

    Another excellent article. I find myself warming to Oleary too. Maybe it just took him longer to mature from teenager to adult than everyone else.

    Imagine David if O’leary distributed some of that cash in bonuses to the bottom tier workers the effect it would have on their communities and families. Velocity of money and all that. He would be well advised to pay down debt too. He doesn’t need our input though.

    Michael.

  3. Mike Lucey

    Well said David, particularly the “If I knew we’d make so much money by smiling at people, we’d have done it years ago” comment. That made me laugh.

    Mick is a no BS operator and I have admired his style and success from the start. He admits it when he gets things wrong and pushes ahead with his plans regardless of the begrudgers and behind the parapet civll servants.

    I understand that he has a load of long hauls on order and hopefully he will operate a low cost Newark to Shannon run. I think Shannon this time around would talk positively to him now that it has got rid on the Dublin brigade.

    On the subject of the behind the parapet civil servants, I remember Michael Fitzmaurice TD, suggesting that newly nominated Government Ministers should be able to nominate at least the top two of three tiers of their department Civil Servants. The current situation must be hog tying any progressive Minister. If Michael’s suggestion was implemented we surely would see big changes and progress as Civil Servants would have to show initiative in order to progress through the ranks rather than whatever they do at the moment!

  4. I think a big component of Ryanair profit is got from ‘blood extracted from it’s workers’ in the form of neo-slavery.
    I think ‘Mick’ was a cheerleader for bringing neo-slavery to Ireland, (American style) back as far as the baggage handling dispute. I have known and lived with Ryanair employees all who were under chronic stress because of their work load, and cruel rosters and eventually their health broke down and they were replaced.
    The Irish media is not interested in talking about these issues because it is not in the greedy profit interests of those who own, and control the media. On principal I have never and will never fly with Ryanair.

    • michaelcoughlan

      An excellent post. I too believe “mick” will only deserve more than our utmost contempt when the people who work there are treated better. My thaw towards the man only goes so deep.

      Michael.

      • Pat Flannery

        Scania & Michael, I am disturbed to hear your reports about how O’Leary treats his employees. I would never buy an Apple product because of Steve Jobs attitude towards labor, particularly towards vulnerable Chinese girls. How much of that applies to Ryanair? Has any media organization ever investigated it fully?

        The role of labor in the creation of wealth needs to be re-examined in the modern global economy. When I studied economics in the ’60s in London we were taught that labor was one of the three agents of production: land, labor and capital. Now it seems to be tacitly reduced to only capital

        I would like to see O’Leary publicly grilled on his view of labor as an agent of Ryanair’s wealth production. Does the company have an employee share option scheme for example? How does it share the wealth created? Does it all go to capital?

        These are the basic concepts that underpin our society. Our attitudes towards them determine how we live.

        • Steve Jobs was a wanker, I wouldn’t buy any Apple products for myself either.

          Unfortunately my little girl needs an iPad so I will have to bend somewhat and get her that, but no way would I use any of Apple’s stuff for myself – it’s a pile of flashy crap anyway, useless for the kind of work I do myself, although I’m sure it’s good for the arty farty graphical types.

          Besides, they don’t pay their taxes.

          • Deco

            Correct, Adam.

            Steve Jobs is a slave driver.

            The evidence shows up when there is a search performed on thw words “Foxconn” and “suicide”.

            Unfortunately, I think that this is now standard practice in the smartphone sector. They are all getting components and assembly performed by dodgy subcontractors.

            Nobody knows what is going on. Likewise, with respect to environmental regulations, and waste material.

        • michaelcoughlan

          Hi.

          “When I studied economics in the ’60s in London we were taught that labor was one of the three agents of production: land, labor and capital. Now it seems to be tacitly reduced to only capital”

          I mean the following respectfully;

          There is no “production” only transfer. Your transfer methods include subjecting labour in zero hour min wage contracts, shooting your way into THEIR country to steal THEIR mineral wealth or fucking them in the ass by reducing the value of the currency and quantity THEY use whilst having an endless access to MORE newly printed currency YOURSELF through your govt contacts to maintain the value of what you have already.

          Twisted beyond belief isn’t it?

          The Conquistadors knew what they were doing. So do the goodfellas “Fuck you pay me”;

          https://www.youtube.com/watch?v=ZPtjyqgZAUk

          • Interesting reading, thanks for your post.

          • michaelcoughlan

            You can also add control of access to markets. For example; In Eastern Europe you will find many castles built adjacent to mountain passes. “Pay me to allow you use the pass or go around the LONG way assho%e” to the valley on the other side.

            OR

            The current war between Russian and the US being fought in Syria. The yanks want a Gas pipe line favourable to them in the region and the Roosky’s want to stop it because it will undermine their gas pipe line servicing Europe.

            Of course the desert/jungle and villagers of course must be painted black with napalm etc. in the meantime;

            Geeeeeeeeeeeeeeeeeeeeeet Soooome!

            https://www.youtube.com/watch?v=InRDF_0lfHk

        • Hi Pat, Thanks for your reply, although I am out of touch now with the current working conditions in Ryanair, I used to know quiet a few in the early days, some left Ryanair with nervous breakdowns and have never worked since, their careers and confidence shattered beyond repair from their intensive negative experience and they are now unrecognizable people as well as burden on the tax payer, they are known as ‘Micks Collateral Damage’. Some probably hade great potential but they were damaged beyond repair. I don’t know what the current working conditions are like in Ryanair, especially for lower paid workers, but Mick set a trend and now Ireland is full of ‘Mini Micks’ styled on him as a role model. Agency labour has now caught up on and passed out Mick in the role of neo slave trading in Ireland. Fiddling over wages and the use of over complicated wage slips has become

          • michaelcoughlan

            “I used to know quiet a few in the early days, some left Ryanair with nervous breakdowns and have never worked since, their careers and confidence shattered beyond repair from their intensive negative experience and they are now unrecognizable people as well as burden on the tax payer, they are known as ‘Micks Collateral Damage’. Some probably had great potential but they were damaged beyond repair”

            Exactly. And the cost to the taxpayer of all of that is never recouped from Michael. If you are reading this oleary I sincerely hope this country collapses into a shoot out because I know who will be dropped first and it wont be me Michael.

          • Well as Richard Branson says:

            “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.”

            I always travel Virgin Atlantic, the staff are a joy, and I booked a flight the other day or their website – the useless seamless experience – it didn’t take three days (!) worth of trying to complete like it did with RyanAir or Aer Lingus!

    • On the subject of exploiting employees, a friend of mine works in Irish Life and they were on strike yesterday – this email was circulated among the employees (obviously I can’t reproduce the graphs here that were included in the email but if anyone wants the original email with graphs just let me know and I’ll send it to you):

      ******************************

      We Are Irish Life

      Today, hundreds of Irish Life workers are taking industrial action against their employer – the beginning of a month long series of actions. At stake are three inter-related issues: the company’s attempt to impose a new pay-bargaining structure, the persistence of poverty pay at the company, and management’s unilateral attempts to decide which employees it will bargain with and which it won’t.

      But this is more than just a dispute over pay and conditions. What is at stake is the employer’s attempt to make a fundamental break between pay and profits by pitting workers’ against each other – between companies and across sectors. It is about management’s refusal to acknowledge the role that workers play in generating wealth.

      A few weeks ago I wrote about how employees are considered a cost to an enterprise (We are Not a Cost) which drives an agenda of wage suppression. In that post I explained that basic national accounting categories view labour and capital as ‘equivalent’ – jointly creating value-added in a firm. In this categorisation labour is not a cost but a necessary input (imagine a firm trying to create value-added without labour). Wages are the compensation to workers paid out of value-added; similarly, profits are the compensation to owners likewise paid out of value-added.

      Therefore, as value-added grows, workers bargain for their proportion of the growth they generated. Irish Life management wants to put an end to that.

      The new pay structure (one which is gaining traction throughout the US and Europe) seeks to link wages in Company A to the average median wage that pertains in comparable Companies B, C, D and so on. Therefore, if workers in the other companies don’t get an increase, neither will workers in Company A – regardless of how profitable Company A is.

      It gets worse. The comparator is not an objective set of figures such as the CSO produces. It is a secret and unverifiable dataset which is produced by salary data companies who are quite upfront about what they are up to – helping companies to make ‘savings’ on their payroll. The comparator is skewed from the outset.

      The ‘genius’ of this approach (from a management perspective) is that with companies comparing their respective payrolls with each other, a vicious cycle of wage suppression or stagnation is created – as long as no company breaks the cycle by providing an increase. No wonder 70 percent of Irish Life employees do not expect a pay rise in the near future – because the new pay structure doesn’t allow for it.

      This is not just about stacking the deck against wages, it also about stacking the deck for profits. Irish Life is now owned by Great West Life – a multinational assurance company based in Canada. And a highly profitable one at that.

      Irish Life 3

      With wages stagnating a growing share of value-added can be shifted towards profits – along with higher dividends for the shareholders and rising remuneration for senior executives (especially if remuneration is based on share value). In short, labour gets less and less of the wealth they have created.

      It’s not as if Irish employees are somehow overpaid. Compared to their European counterparts, Irish employee compensation in the insurance sector is below average.

      Irish Life 1

      Of the countries reporting, Irish compensation ranks only above the poorest countries in the EU-15 – Portugal and Greece. Of course, this is an average. This doesn’t reflect the pay scale of most employees in the sector – high executive pay can skewer these results. But they are indicative.

      Not only are Irish employees in the insurance sector relatively low-paid compared to most other EU-15 countries, they work longer hours.

      Irish Life 2

      Irish insurance employees’ work longer hours than in most other EU-15 countries.

      So lower-paid and working longer hours: It is this wage suppression that leads to poverty pay. While low-pay is usually associated with the retail and hospitality sectors, in the Irish Life call centre in Dundalk between 30 and 40 percent of employees are paid below the Living Wage.

      However, Irish Life management, not satisfied with a pay structure that breaks the link between profits and wages – is now trying to break links within the workforce, between those workers with whom it will bargain with and those who they won’t. And the category of those employees with whom they are refusing to bargain with is growing (funny that).

      You can see where this might all end. The pay of workers – which should be intrinsically linked to value-added (or, in another variant, productivity) – is being broken. Instead, in secret, wages will be compared with workers in other companies and sectors so that through a mutually reinforcing cycle, wages will be suppressed. Inflation won’t matter, profits won’t matter, affordability won’t matter. In short, workers won’t matter.

      That this is occurring in Irish Life is particularly ironic. It was formed as a public enterprise company during the 1930s because the market for life assurance was small, in danger of insolvency and out of reach for most households. For the next few decades Irish Life grew to become a profitable leader in the market. It was one of the first companies to be privatised in the anti-public enterprise craze in the 1980s. It ended up back in public ownership when Permanent TSB came under public control during the banking crisis. Irish Life then had the dubious distinction of being privatised twice – when it was sold off again, this time to Great West Life.

      And throughout all that, it was the employees who built up the stability and reputation of the company, under public and then private ownership. That’s why the employees’ slogan in this industrial action has the potential to strike a resonance:

      ‘We are Irish Life’

      This slogan challenges the idea that workers are a cost, a commodity to be bought at the lowest possible price. It defies a process that seeks to airbrush their input into the company out of existence. It lays equal claim to the collective activity that is a company – the collective process of wealth generation.

      That’s why should support the workers in Irish Life. Their slogan – We are Irish Life – speaks for all of us in our own workplaces.

      And imagine if that caught on.

      * * *

      You can follow the campaign at Supporting Irish Life Workers (and give it a like) at: https://www.facebook.com/SupportingIrishLifeWorkers/?fref=ts

      And you can tweet your support at #?WeKnowIrishLife

      • With specific reference to share (or stock) buyback schemes, here’s a good article from last year which was published in the Harvard Business Review.

        What an utter scam these buyback schemes are – they are purely for the benefit of greedy corporate executives – those people are the utter scum of the earth.

        “Profits Without Prosperity”

        https://hbr.org/2014/09/profits-without-prosperity

      • Deco

        [
        It was one of the first companies to be privatised in the anti-public enterprise craze in the 1980s. It ended up back in public ownership when Permanent TSB came under public control during the banking crisis. Irish Life then had the dubious distinction of being privatised twice – when it was sold off again, this time to Great West Life.
        ]

        Sounds like the management are not merely incapable.

        They are incapable of learning from their inadequacy also.

        Kind of standard fare in the Dublin banking sector.

      • michaelcoughlan

        Yes Adam.

        And because many bonds have negative interest rates no revenues can be got to pay claims. So The human beings have to be got rid of WHICH IS WHAT I HAVE BEING SAYING ALL ALONG MCWILLIAMS. THE PSYCHOS IN CHARGE ARE DEFLATING THE HUMAN BEINGS TO STOP THE DEBT PONZI PILE FROM DEFLATING.

        They are waging war against humanity!

    • I’ve no objection to flying with Ryanair. O’Leary is far more likeable than the odious Steve Jobs. You have somewhat of a choice to work for Ryanair or not – those Chinese girls you mentioned in reference to Apple have no choice though Pat, or very little.

  5. Coincidentally my last post on the previous thread was about how I couldn’t book a flight on neither Ryanair nor Aer Lingus for the past two days because neither of their websites were working properly – and I received tweets from both airlines within 4 minutes of each other acknowledging this fact.

    That’s pretty pathetic if you ask me. I will try again today for the third day in a row but if they don’t work this time I’ll be looking at Irish Ferries.

  6. “and the airport places, which used to be the problem in the past, are now no problem”

    Why is this?

    • Pat Flannery

      Adam, like me you seem to spend a lot of time outside Ireland and have something to compare it with. I have been trying all week to book a B&B for tomorrow night to catch a flight to the US early Saturday morning. The prices were outrageous and I finally figured out why – the Web Summit.

      Ireland is a nation of gougers. No wonder Dublin lost the Web Summit to Lisbon. I will catch the midnight bus from the country and sleep through the dark hours on the bus and on the departure lounge floor rather than pay the Dublin gougers double, triple or quadruple their normal rates.

      Hello sunny SoCal (and sanity) until April.

      • Pity I wasn’t in Ireland Pat, you could have ‘crashed in my gaf’ in lovely Lucan (it really is lovely, most beautful village in Dublin – maybe even Ireland).

        I’m in Antigua for another month, then Ireland for 2 months (Christmas will be nice), then back out to Antigua in late January. I’m already looking forward to St. Patrick’s week in Montserrat.

        Finally managed to get on an AerLingus flight from Gatwick to Dublin today for late November, after three days trying – had to give up on Ryanair – neither firm’s website was working properly – for three days!

        Later in the day I did get a flight to Bristol on Ryanair in January – it was, wait for it, £10 one way – can’t say fairer than that.

        Safe travels people.

        • Pat Flannery

          Thanks for the kind offer Adam. Likewise if you ever find yourself in San Diego. I shall be there until early April. It is almost as nice as Lucan :)

  7. Deco

    I remember being told of a university lecturer who asked the undergraduates to provide the name of a Irish business innovation.

    The replies all work on the point of complex, sophisticated business models like Kerry Foods or the IT sector.

    And then the example is presented – Ryanair.

    The Irish media (especially the propaganda quango, and the posh comic that sold us a pup in the real estate boom) has spent much time ridiculing Ryanair – without actually taking consideration of the fact that many Irish people could not afford the cosy cartel racket that operated in previous decades.

    O’Leary deserves credit for breaking rank with the dullard thinking that seems to predominate in the Irish establishment.

  8. Deco

    In the past two decades, the worst performers (which have destroyed the most value) on the ISEQ are located outside the centre of Dublin, or expensive locations like D4. As an example I present the banks. The only exception is Paddy Power (and even that is an odd one).

    The best performers (over the longer term) are headquartered in suburban Dublin, or provincial towns. For example Kerry Foods (Tralee), Ryanair (Swords), Glanbia (Kilkenny).

    This rarely gets mentioned in the Irish media.

    This is not just an Irish experience. In the US the best performers are in locations like central California, Minnesota, Atlanta. The “stars” in Manhattan seem to have needed many bailouts to keep them going.

    It is the outliers that create results not the corporate well connected amateurs playing golf in Portmarnock or Druids Glen.

  9. I once flew from Spain to Italy with Ryanair and it seemed like I was the only one not from Spain or Italy. It was a good feeling walking onto the plane to see the Irish flag. I know we have a love/hate relationship with Ryanair but we should be proud of it (it’s a bit ironic that the government at the time wanted Ryanair out of business). As most people know, O’Leary was shown around Southwest Airlines in the 80s to copy their business plan. However the boss at the time would have his staff at his house for bbqs. I doubt MOL does the same.

  10. bremlin

    Personally I rarely fly with Ryanair because of the poor connection of their airports with conventional public transport.
    What is truly astounding is how Ryanair achieved what it has against the resistance of the Irish government. That the Irish government blocked the takeover of Aer Lingus by Ryanair so forcibly ostensibly on the grounds of competition was ridiculous. Cui bono: British Airways, Air France and Lufthansa didn’t want Ryanair to provide competition on transatlantic routes.

  11. CorkPlasticPaddy

    @Pat Flannery.

    Couldn’t agree more with what you had to say about the gougers up in Dublin. It just goes to show the type of people who are running those hotels etc in that all they’re interested in is making a quick buck out of the people who are attending the web summit! I don’t blame the organizer(s) for moving down to Lisbon next year and for what may turn out to be a whole lot of years after that! What more can you expect from that particular group of money grabbing bastards!!

  12. Mike Lucey

    I know loads of people that would never have had a chance to fly to destinations that they could only dream about but for Ryanair’s low prices. I also know people that have and still work for Ryanair and are very happy to have a job in these times. They don’t consider themselves to be slaves as slaves have no choice.

    I am also a Mac user and have been since they started using Intel processors as this CPU was required for some apps I use. Since using Macs I have spent zero on maintenance / repairs. Prior to using Macs I was spending on average €200 plus per year on PC repairs. That has been a saving over ten years of €2,000!

    Steve Jobs like Michael O’Leary produced what folks needed at competitive prices hence their huge success.

    Maybe in the future we will hear Mick telling us, “If I had known that treating my employees nicer would generate more revenue I would have invited them around for BBQs a lot sooner”.

    • Deco

      Yes. But as far as we know there have not yet been any suicides due to Ryanair’s drive to provide cheap prices. Ryanair deserve credit for efficiency.

    • Pat Flannery

      Thanks for that Mike as it tends to balance the comments here especially Scania’s most recent one saying that “…some left Ryanair with nervous breakdowns and have never worked since…?

      That is why I think Ryanair’s working conditions need to be investigated by competent people in view of the fact that Ryanair and “Mick” in particular are being held up as role models. We need to be careful about who we allow to be role models. I can think of several who led us astray in the past.

      Unfortunately serious investigative journalism is not a very accomplished art in Ireland, they tend to go in more for sensationalism, just look at the Irish Independent, even RTE.

  13. Mike Lucey

    The other side on the coin is public servants and how they operate.

    I have a friend that manages building maintenance for a large County Council and some of the stuff he tells me is unbelievable.

    For example, €400 ‘disturbance money’ in pay cheque for moving to an office (better than old one) 600M away also two extra days leave for the 10 minute move! It would be laughable except that its our taxes that pay for this type of carry on.

  14. DB4545

    I remember paying £200 sterling on the London/Dublin route with Aer lingus 20 years ago. Mick O’ Leary kicked that bullshit into touch. Aer Lingus at that time was run for the benefit of employees and a well heeled business class and it didn’t give a flying f**k about most customers. We have huge growth in tourism partly as a consequence of the Ryanair low cost model. Do you really think tourists would bother with the place if they had to pay the crazy prices that we were subjected to in the past?

    However there is a danger for consumers if Ryanair were to become a dominant player and it used that power to abuse a dominant position. However EU law in relation to abuse of a dominant position serves us better than domestic competition law and I’m sure Mick O’Leary is in no rush to get tangled up in that particular mess. In essence consumers are better served with a lot of Ryanair type operations. I think it would be healthy for Irish consumers if Easyjet and many others started getting a bit more of the low fares pie.

    Imagine an event that resulted in the demise of Ryanair and the impact that would have for Irish consumers. I like Mick and he’s done more for this economy that most people will ever admit and he’s saved me a few quid over the years. But we can’t allow ourselves to be exposed to that risk. Look what happened with the banks. Too big to fail? Nothing personal Mick it just makes good business sense to be anti-fragile.

  15. We now interrupt the current program to bring you the breaking news. An important message from President Putin in pursuit of world peace and mutually beneficial cooperation in world affairs and economics.

    We should listen carefully.

    http://fortruss.blogspot.ca/2015/10/putins-urgent-message-to-west.html

  16. DB4545

    I did listen carefully Tony to every word and he made very compelling and sound arguments. A political monopoly is just as dangerous as any economic one. My only suggestion is that in order to get his message across he needs to edit hard and be introduced to the world of soundbites. Bizarre that someone so articulate may well be negotiating with a man who believes that the pyramids were grain stores. The loony tune element in the US scares the s**t out of me.

    • It is the Christmas Season approaching according to the latest adds!!

      The basic message to heed. “Peace on Earth and Goodwill to all Mankind”
      Pass the link to all your friends!!

    • For Putin to get his message across needs the use of alternative media.
      The Western Press is bought and paid for and are little more than propaganda rags. Sound bites mean nothing to them. Those with a short attention spans will hear nothing however it is presented.

  17. DB4545

    Has anyone considered an alternative explanation for the strong performance of the European low cost carriers in the last couple of years? I think they’re well placed to take advantage of a phenomenon that could be loosely describe as “White Flight”. Westerners (and not just specifically caucasians) are not travelling outside their comfort zones in any great numbers unless they have a very compelling reason to do so. Who is willing to put their family at risk to shave a few quid off a sun holiday in destinations that are seen as unstable?This means that European destinations are in a position to take advantage of a growing Western aversion to anywhere that could be considered risky in terms of a terrorist incident.

    The “sun holiday” concept has been mined to exhaustion across most economic demographics for at least two generations and I believe people will respond positively to new alternative offerings. We’re well placed to turn a global lemon in lemonade if we tidy up transport links to Dublin airport. We also need to ensure price transparency and competitive offers for tourism related products such as hotels,car hire etc. I’m at a loss to understand the anti-Dublin sentiment of so many contributors when the tax base of Dublin and the Leinster region contributes so much to the national economy. It makes no practical or economic sense. Shannon had a shot at the title to be a major airline hub. It’s time has come and gone and was solely focused on re-fuelling. The “Shannon stopover” bullshit cost this economy dearly. The farming sector sold out our fishing industry for a pittance in quotas that are now extinct so sadly I don’t see a Reykjavik developing on our western seaboard any day soon. Would you prefer to visit your grandkids several times a year in Dublin or once in a lifetime in Sydney? People need to build a bridge and get over the anti-Dublin nonsense.

    On a side note it’s puzzling to hear the support for price control in the housing rental market when deregulation of the airline industry on the supply side has delivered a much better product,service and value for consumers. We had a virtual British Airways/Aer Lingus cartel on air transport services to this Island for many years. It would be helpful to break up the land bank, property and banking cartels in the same way.

  18. mike flannelly

    Any chance that we could replace BO BO Irish Pillar Banker and their “the customer should come last” attitude with michael and Ryanbank.
    Ryanbank would give Irish couples with 25 yr fixed mortgages @ 2.75% interest
    250,000euro would cost couples 1153euro mth.
    Couples and familys could afford a decent living standard.

    Lets face it,
    If BO BO Pillar Banker made Carlsberg it would Probably(definitely) taste like sheeba the cats piss and cost 15euro a pint.
    We would be told by Bu Bu Irish Politician Finance Minister that because Ireland is a forced shareholder we must All only drink Sheebas piss. The shareholder is more important than the customer.

    “The Customer Comes Last”

  19. mike flannelly

    Any chance michael could replace BOZO the Irish Plastic Leftie that controls the HSE health staff and again makes sure that HSE staff come first and the 93 year old customers comes last.

    The OECD report 2014 stats tell us that
    They tell us about
    number of nurses per 1,000 population
    and
    number of hospital beds per 1,000 pop

    Country nurses beds
    Poland 5.5 6.5

    Israel 4.8 3.1

    Spain 5.2 3

    Uk 8.2 2.8

    IRELAND 12.4 2.8

    BOZO was on an RTE radio programme last week and told us that the solution to leaving very sick Irish old people and very sick children on trolleys -
    Lots more nurses.

    My mother was a nurse and I have nothing against nurses but when it comes to very sick old people and the sickest children in Ireland

    BOZO

    “THE CUSTOMER MUST COME FIRST”

    Can Rte s Prime Time check the hospital trolley stats in Uk, Israel Poland and Spain.

  20. mike flannelly

    Per 1,000 population
    Poland 5.6 nurses, 6.5 beds.
    Israel 4.8 nurses, 3.1 beds.
    Spain 5.2 nurses, 3 beds.
    Uk 8.2 nurses, 2.8 beds.
    Ireland 12.4nurses, 2.8 beds.

  21. Ryanair is a classic example of what competition can do. Balanced between profits and performance is a lower price structure than anyone could have anticipated.

    The same competition is need in the money supply system. Get rid of legal tender laws and throw open the market to competitive money systems. May the best currency win.

    http://www.wsj.com/articles/competition-for-the-feds-money-monopoly-1446416015

    • Can’t read that article without subscribing to the Wall Street Journal Tony, which I am not going to do.

      It’s looks interesting though.

      • Submitted by cpowell on 03:32PM ET Saturday, November 7, 2015. Section: Daily Dispatches
        By Sean Fieler
        The Wall Street Journal
        Sunday, November 1, 2015

        http://www.wsj.com/articles/competition-for-the-feds-money-monopoly-1446

        History suggests that the only way to rein in the sprawling Federal Reserve is to end its money monopoly and restore the American people’s ability to use gold as a competing currency.

        The legislative compromise that created the Fed in 1913 recognized that the power to print money, left unchecked, could corrupt both the government and the economy. Accordingly, the Federal Reserve Act created the Federal Reserve System without a centralized balance sheet, a central monetary-policy committee or even a central office.

        The Fed’s regional banks were prohibited from buying government debt and required to maintain a 40-percent gold reserve against dollars in circulation. Moreover, each of the reserve banks was obligated to redeem dollars for gold at a fixed price in unlimited amounts.
        Over the past century, every one of these constraints has been removed. Today the Fed has a centrally managed balance sheet of $4 trillion and is the largest participant in the market for U.S. government bonds. The dollar is no longer fixed to gold, and the IRS assesses a 28-percent marginal tax on realized gains when gold is used as currency.

        The largest increases in the Fed’s power have occurred at moments of financial stress. Federal Reserve banks first financed the purchase of government bonds during World War I. The gold-reserve requirement was dramatically reduced and a central monetary policy committee was created during the Great Depression. President Richard Nixon broke the last link to gold to stave off a run on the dollar in 1971.

        This same combination of crisis and expediency played out in 2008 as the Fed bailed out a series of nonbank financial institutions and initiated a massive balance-sheet expansion labeled “quantitative easing.” To end this cycle, Americans need an alternative to the Fed’s money monopoly.

        A competing currency would not only offer people a monetary choice in a crisis. More important, it would give the Fed a clear incentive to anticipate and avoid such crises. In a competitive system, before it embraced another bout of monetary adventurism, the Fed would have to contemplate a decline in market share. For if the Fed were even perceived to be debasing the dollar, many would seek out a sounder alternative.

        The continuing revolution in payment technology makes the introduction of competition not only possible, but practical. Bitgold, a Canadian company, is already offering gold-denominated transaction accounts with a debit card. The tag line on the company website reads: “Spend gold with the Bitgold prepaid card. Accepted anywhere globally that accepts credit cards, including ATM machines to withdraw local currency.”

        With a gold-based currency up and running north of the border, why not offer Americans a monetary choice as well? The proposition is simple. Americans who prefer the incumbent monopoly provider of money are free to keep their accounts as is. Those who prefer gold are free to switch. And the Fed is free to defend its market share with sound monetary policy.

        —–

        Mr. Fieler is president of Equinox Partners LP, a New York-based hedge fund, chairman of the American Principles Project, a Washington advocacy group, and an investor in Bitgold.

        * * *

  22. michaelcoughlan

    Hi David,

    Just watch this video. It’s max keiser;

    https://www.youtube.com/watch?v=hVmD4lbYnDM

    • michaelcoughlan

      Max keiser;

      “The guburnment has declared war on anyone who isn’t a gsucks partner”

    • sravrannies

      Hi Michael, can I pick your brains.

      I can’t get my head around the bit where he says..” the Central Banks are borrowing money to acquire back all of the capital, leaving no capital” [2.20]. I just don’t get that…. is it not swapping one form of capital for another?

      cheers

      Peter

      • First of all it is a misuse of the word capital. Capital is NOT money as use by Keiser but “assets remaining after deduction of liabilities; the net worth of a business”.

        Thus capital is loosely defined as profits form a business enterprise.

        Secondly Central banks do not borrow money. Central banks create money out of nothing. There is no business and no asset backing this money.

        When central banks repay a debt such as a government bond then that money ceases to exist in the reverse fashion in which it is created. That is , it is created from nothing and reverts to nothing.

        However in order to have money to pay off the existing debt the central banks have to create money with which to pay.

        The net result is that there is no increase in the money supply. If fact there may be less as the central bank is paid interest on that debt which is taken from the original issued and so as the interest is paid there is less and less money in circulation.

        To answer your question. You are correct. It is swapping one form of debt for another. But there is no capital to swap as money per se is not capital.

        Capital id accumulated as mentioned as a profit of business and is seen as wealth in the form of land, plant and equipment and education and training of people. The latter referred to as human capital.

        Sometimes capital can be seen as cash as it is invested into a business from savings of people and enterprises. Thus a failed business can destroy capital but that is all that is lost, just the investment.

        The troubles arise when debt is employed to invest in business. If the business is unsuccessful the debt remains or even increases. Then bankruptcies occur and the people who loaned the money as debt loose their capital too and the economy deteriorates.

        Except for banks. Banks do not employ capital to lend out , they simply create money from nothing to lend out. Thus we live not in a capital economy but a debt based economy and as the debt based economy implodes we are all worse off.

        Saying the capitalist economy does not work is untrue. The capitalist economy we used to have that made us all wealthy has been usurped by the banking fraternity. It is transferring a large part of the wealth previously created to the fraternity of bankers and associated businesses. The rest of the wealth is bein destroyed by the interest bearing , debt based economy.

      • michaelcoughlan

        Hi Peter/sravrannies.

        I will try and answer your question to the best of my non economists ability. It will contradict a lot of Tony’s response but I would ask Tony to consider my post before he responds.

        Tony says CB’s don’t borrow money but they do borrow money and to understand how you must understand how the money supply increases. The CB in the US is the Fed and they are responsible for increasing the money supply. 3% of the money supply is cash and 97% is digital. The treasury (a different building and institute) prints the cash and mints the coins. They also print the certificates called Govt. bonds.

        When the fed wants to increase the money supply they ring the treasury and tell them to print say 100bn worth of bonds. These bonds are given by the treasury to the bond dealers (18 banks including Goldman Sachs) who sells them to the fed and the fed pays for these bonds with digital blips created on a computer! All money is created as debt!

        However what the FED has facilitated is the borrowing of the future tax revenues of US citizens and business for an up front payment and a promise to repay this borrowed capital from the American public with principle and interest over a period of time set as the maturity date and this debt instrument is called a Govt. bond. The money is used by these banks to increase their reserves and use the magic of fraction reserve banking to increase the money supply!

        Now to answer your question; ALL of the surplus capital created by the economy at the PRESENT TIME is being used to honour the need to pay the principle and interest payments on the existing total Govt. debt (Govt. Bonds).

        Total Govt. debt of course is capital owed to the American public and BORROWED FROM THE FUTURE representing surplus capital created in the FUTURE by the American Public!

        The shit pile of debt acting like a parasite is CONSIMING its host the wealth creating economy through the transfer of the capital created by the economy today for the repaying of debt which represents surplus capital created tomorrow!

        Madder than a bonbon.

        Michael.

        https://www.youtube.com/watch?v=F4KiQQJuaIQ

        • sravrannies

          Thanks to both of you. I keep making the mistake of overthinking it when it is just some sleight of hand to avoid overt monetary financing? And yes, I can see how the CB could be considered to be ‘borrowing’ from future income, while issuing more and more debt to keep kicking that can down the road. Will we live to see the outcome?

          tks – very much enjoy reading both your posts.

          Peter

        • http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html

          I do not see where the Fed borrows anything form anyone. They buy, loan, redistribute, and issue currency. It is printed by treasury as Federal reserve notes.

          Coin is issued by the mints in the US and bought by the the Fed if needed to balance the needs of the commercial banks.

          Coins are not issued as debt but the currency notes are.

          The fed can arbitrarily increase currency in circulation thereby diluting the currency. This is intended to create inflation but no longer works.
          It also increases the currency supply to meet demand from foreign countries for currency they need for world trade.

          Most of the increased currency is circulating in countries other than the US. As these countries must print their own currency to buy the US’s this creates inflation in those countries and so inflation is exported abroad from the US. Countries and institutions are currently demanding US dollars as a safe haven driving up the US dollar value and all other save 3 or 4 downward. Disinflation occurring in the US and gaining inflation elsewhere.

          Nowhere do I see the Fed borrowing anything. But they are now a large holder of US treasuries and bonds by purchasing, so are a large creditor of the US. These purchases create demand and thus drive up bond values and interest rates downward.

          There is absolutely no reason to have a FEd Reserve as Treasury can do the same job and issue notes directly to banks without lending the money as a debt at interest.

          Get rid of the central banks.

          • michaelcoughlan

            The total value of the bonds on the balance sheet of the fed equals a sum borrowed by the fed from the us public and given by them to the commerical banks in the same way as a loan sourced through crowd funding equals a sum of money borrowed by me and given to whoever.

          • What does the FED borrow.
            I see the FEd creating currency to use to buy the bonds. Thus the FED monetizes the debt and creates artificial demand which raises bond value and lowers interest rates.
            This currency then goes directly to the government. It is the government who borrows from the FED.
            This is done when there is not enough demand from other sources. There is some evidence that other countries are unloading bonds rather than accumulating.

            In any event, a high currency will not assist the us economy as it will be harder to export but cheaper to import. This will add to the deficit.

            The crouwd funding you mentioned was loaned or given to you so you would borrow and owe a debt. The crowd funding does not produce currency from thin air. It is somebodies capital savings earned from a profit from business or labour. A central banks aladin money is nobodies capital. It is backed by nothing although the central banks like to say they have assets of bonds and gold.
            The gold is not theirs in the first place but was scooped from the people and given to the Central bank to be a custodian of the nations wealth. Just like your bank deposit it is treated as a loan for the bank to do with as they wish. The nation is an unsecured creditor of the central bank.

          • michaelcoughlan

            Thanks Tony.

            I don’t want to hung up on words and your responses are accurate. You have to read my post in context with the video.

            When the Fed takes possession of a US Govt. bond from the securities dealers who just got it from the Treasury this bond represents a claim on the future taxes of the US Public. The Fed creates a sum equal to the value of these new issue total bonds out of thin air to give to the securities dealers in return for these new bonds which has the effect of bringing forward all these future taxes into the present time. It’s as if the FED says to the American public “look lads we need to borrow yere future taxes for a short period to get out of a short term bind we are in right now”.

            For the whole thing to work these new bonds with their corresponding coupon requirement should be extinguished once the short term problem has been sorted. This doesn’t happen and the reason is best explained by your contribution to the board regarding the exponential need to increase the money supply. As a result the corresponding tax requirements to pay coupons rises also.

            I feel we are at the point where the taxes required to pay all the coupons on all the bonds is a figure more than growth in the economy. Therefore the shit pile of debt will asset strip the real all world economy to preserve itself.

            Michael.

  23. Home Counties Girl

    Hello,

    Apologies in advance to Mr McWilliams, I’m going to use your blog as a platform to try and reach the masses for worthy causes.

    Christmas is upon us and I’m sure most of you are contemplating where to donate a few extra quid. Please consider Mission for Orphans – a campaign ran by an American couple who are doing a fab job. Every penny goes directly to the cause, check it out:

    https://www.indiegogo.com/projects/mission-for-orphans#/story

    Kindly pass the link onto family and friends :-)

    Also, can somebody educate me on the term ‘disinflation’ – I keep coming across this term in numerous forums/blogs banging on about the UK economy. Is Europe touching disinflation not deflation? I’m very confused :-/

    • Disinflation Definition | Investopedia
      http://www.investopedia.com/terms/d/disinflation.asp
      DEFINITION of ‘Disinflation’ A slowing in the rate of price inflation. Disinflation is used to describe instances when the inflation rate has reduced marginally over the short term. Although it is used to describe periods of slowing inflation, disinflation should not be confused with deflation.

      • Home Counties Girl

        Cheers TB

        I figured if I ask here about disinflation then I might skip my homework on this one! I appreciate the definition from Investopedia – I was really looking for some examples on the topic.

        It’s quite confusing with all this QE and next to nothing interest rates (I thought the mechanics of such policy was to prevent deflation). Anyway, as previously noted I’m not an economist. But to me it seems that the UK is in a period of disinflation which will probably linger for a number of months before it dives into consistent deflation…I’m now rambling, so I’ll leave it here as I need to read more on the subject, but lack the time.

        As a thank you token – here’s an article for you on GOLD!!!

        http://www.theweek.co.uk/gold-price/61682/gold-price-hits-three-month-low-and-could-fall-even-further

        • Home Counties Girl

          Thanks for thinking of me!!

          The truth is that such articles are a compendium of truths, half truths, lies, deceit and lazy assumptions.

          The price of gold bears (no pun intended) no correlation with the things mentioned. Simply looking at the daily graph of gold over the last several years will reveal a trade pattern that has nothing whatsoever to do with social, economics, military, or announced events.

          It is only about the consistent blatant attempts of the bankers cartel to maintain the current fiat money system that is so profitable for them in terms of the total control exerted over the political process and the world’s economy. They operate a criminal fraudulent operation of gold manipulation with the use of the paper futures market selling gold they do not own and cannot obtain for delivery. In any other marketplace it is governed and prohibited behaviour.
          In the gold and silver market the regulators ignore and are complicit accomplishes of the crime.

          Just about every day the price of gold takes a sudden plummet in price at the exact same time or times.
          Often these are when there is virtually no world trade in the off hours of the US early morning. Then again at the opening of Comex, and another just after the close.

          These price drops are not news related. The reports are ingenuous and deceitful. There is no investigative journalism into this phenomenon, just endless repetitive drivel. Online and other commentators have produced the evidence of this manipulative process and every time they approach mainstream media they are rebuffed and ignored and occasionally ridiculed.

          When one realizes that the major news networks are owned by the same people as the major bankers then it all makes sense. Our news media are largely nothing but a propaganda arm for bankers and associated big business.

          Any academic who steps out of line is dispossessed of career and future advancement and often fired from the job at hand.

          Have a look at this selection of essays. It happens to be the daily offering and not especially selected.

          http://campaign.r20.constantcontact.com/render?ca=6c30ac8b-6ddb-43bf-8f9e-a161f775d78f&c=877a32b0-427b-11e3-ad08-d4ae52a45a09&ch=8905dbc0-427b-11e3-ad3c-d4ae52a45a09

          Explore http://www.gata.org as GATA have documented the proof of manipulation over the last 15 years. Aside from an appearance on CNN which was cut short when the moderator realized what was being disclosed they are not allowed to air the information.

          Explore http://www.jsmineset.com Jim sinclair has a huge background in the investment community and gold. He runs the blog as a personal service for free. He employs Bill Holter as a writer on this subject who is not to be missed.

          This will take you a week or two but you will have started the process toward an unusual education and understanding.

          Do not expect DMW to go anywhere near this subject in commentary.

        • The current price of gold depends on your currency. In some it is at all time highs or close to. In others such as the Euro and Canadian and Aussie dollar it is down short term but up on the 5 year chart.
          In US, Chinese, UK and Hong Kong currency is is down on the 1 year and five year chart. Last week is was up on the 6 month charts as well. The news reports are all US centric.

          The US dollar is at a long term high in relative strength to other currencies.

        • http://investmentresearchdynamics.com/gld-is-being-looted-to-help-banks-manipulate-the-price-of-gold/

          *Dave from Denver sees it this way…

          GLD Is Being Looted To Help Banks Manipulate The Price Of Gold
          November 10, 2015Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. EconomyComex, economic collapse, GLD, gold manipulationhttp://investmentresearchdynamics.com/author/admin/

          The choke hold put on the precious metals the past several days has been relentless, Eric. It was so forceful, it might even have been unprecedented…the selling is being driven by the paper-gold market and the central planners no doubt have had a hand in it. The paper-gold they sell needs to be matched from day to day with a show of force, and the only way to do that is being able to deliver physical metal when the buyer of your paper promise asks for physical metal rather than cash settlement. – James Turk on King World News

          The price of gold pushed through its 200 dma and hit a high of $1191 on October 15. It appeared ready to assault $1200:

          GLDtonnes

          But over the next 17 trading days 36 tonnes of gold was removed from the GLD Trust. Most of the gold – 29 tonnes – was removed in the last 9 trading days to facilitate manipulating the price back below 200 day moving average (red line in the graph above).

          There’s unquestionably something wrong behind the “curtain.” With the increasing meltdown in various areas of the global financial system (energy, commodities, high yield debt, leveraged loan portfolios, biotech stock, Glencore/Lonmin, emerging market currencies, etc) the OTC derivatives market must be littered with train wrecks.

          At a time when the price of gold should be soaring to reflect the increasing financial, economic and political turmoil brewing, the western Central Banks/banks are relentlessly manipulating the price. Without a doubt they have had to resort to raiding GLD in order to make the deliveries referenced at the top by James Turk.

          Now we have to endure another round of the “we’re going to raise rates this time, we promise” game. How many times can the Fed get away with hammering Wall Street’s calcified brain trust and the financial media over the head with this farce?

          With the level of systemic debt in the U.S. (Federal, State, corporate, individual and pension debt in the form of underfunding) going parabolic, economic activity quickly fading, financial landmines going off behind the scenes and geopolitical risk escalating, the only way the Fed can maintain any level of credibility is to prevent the price of gold from engaging in bona fide, market-determined price discovery.

          At some point the Central Banks will lose their ability to contain the price of gold. We’re already starting to sense their level desperation in this endeavor as reflected in the paper gold to deliverable ratio on the Comex, the gold being drained from the Fed’s vaults and the removal of gold from GLD

  24. The legal tender laws state that nobody can refuse payment of a debt if tendered using legal tender. That is otherwise known as cash. In Europe the legal tender is the EURO , in Canada the Loonie or Canadian dollar.

    IOU $10 and I pay offer to pay you with canadian legal tender, that is 10 loonies, 5 twonies , 2 five dollar bills or a 10 dollar bill or even if I were so foolish 2 one ounce silver coins (demarked as 5 dollars each and stamped so.

    In the “war ” on cash currently under weigh, many places are now being encouraged to refuse cash in favour of electronic payment.

    This is an illuminating article that shows how quickly we are headed to totalitarian governance as all our information will be on one card. A bank card that has all personal and financial information. A card that without which you will not be able to function. Health care, voting rights, and money turned off with the press of a button on the whim of a government official or a banker.

    Is this the world you wish to live in? That is why we need repeal of the legal tender laws and the legal right to use whatever we wish as money or its derivative currency. Silver coins should be an option for cash, without restraint.

    Cribbed from Awaken Longford by me.

    http://www.zerohedge.com/news/2015-11-08/war-cash-advancing-all-fronts-first-they-came-pennies

    0

  25. DB4545

    Nassim Nicholas Taleb made a very strong case in relation to potential dangers of over efficiency,over-optimization, lack of diversity and lack of redundancy in systems. Great venue by the way David, It was like a scene from Hannibal but the acoustics could do with a little tweaking or maybe I just don’t listen properly in church. I think what he said has a lot of relevance to Ryanair. I’m not dismissing for a moment the achievements of Michael O’Leary or his performance. He’s contributed a huge amount to the development of this Country and doesn’t get the kudos he deserves but I’m sure he couldn’t give a fiddler’s f**k.

    Ryanair is an extremely efficiently run operation which is highly optimized, has very little redundancy and has a good safety record. Ryanair use one aircraft type the highly efficient 737-800 (over 300) with another 183 on order and options for a further 100 to quote from their own website. The planes make money in the air not on the ground and turnaround and therefore efficiency at airports is probably the fastest in the business. But it concerns me that myself and the other passengers may not be the only people who have paid for the flight. The Independent UK newspaper has reported that co-pilots may have to pay the airline for the privilege of accessing the training programme to gain a rating for a particular type of aircraft. This concerns me because when I’m moving at 500 miles per hour at 33000ft I’d prefer that the person responsible for my safety doesn’t have undue stressors which could induce mental imbalance and Germanwings spring to mind.

    We’ve seen the problem with lack of system diversity with VW and how the ghost in the machine jumped across their product range. Ryanair use a single product from just one manufacturer. Tragically we’ve seen the human cost of a high stress environment impacting on a individual with mental health issues with Germanwings. Ryanair makes the profits it does by being one of the most efficient operators in the business. These are all factors that Mr. Taleb has suggested can make a business or system highly fragile to any major shock in the environment in which it operates. Could this be worthy of further analysis?

  26. mike flannelly

    IRISH FAMILIES “WANT” REPOSSESSIONS.

    Dear Ryanbank,

    Contrary to Irish bank spin and bad Irish journalism, Irish families want repossessions.
    They want Normal Repossession Procedures for Normal Mortgages.

    Normal Repossessions only occur as a “Last Resort” when the bank customer is not able to afford interest only restructures or in the case of high debt ratios, an industry best practice split mortgage.

    Most mortgages from 2005 to 2009 were Not Normal.

    Irish people dont want repossessions and firesales because an Irish pillar bank are “broke” or refused to request help from an ESM fund.

    Irish Citizens want a Fair Banking System.

    Irish families have paid a HIGH price “already” for the Pillar Bankers Failures.

    Irish Families now want Normal Repossessions and the SAME banking products as countries like France and Germany.

    25 yr fixed mortgages@ 2.75% interest like France and Germany.

    1,153 euro mth repayments for
    250,000 euro .

    There are over 300,000 Irish bank customers ready to switch tomorrow to a Fair European Bank where normal repossession procedures would be welcomed.

    How many times and for HOW LONG does the Irish economy and depressed Irish families have to pay for the 2007 Pillar Bankers(same 2015 Bankers) Failures?

    WE NEED A NEW BANK.

    ” RYANBANK “

    • “WE NEED A NEW BANK”

      Or rather to get rid of central bank and central bankers. Leave the EURO. Issue national currency from the Irish treasury. No debt, no interest. Income tax eliminated. Economy recovers!!

  27. Negative interest rates are good for commercial banks to “borrow” from the ECB. That is the banks make money by increasing reserves.

    It should be a good example enough to allow negative interest or zero interest rates on mortgages. Then any payment would be a reduction principal outstanding and there would be no foreclosures!!

    As the the loans are paid down it would shrink the amount of money in circulation which is no bad thing as there is too much produced anyway with QE to infinity.

    The admission that the banks do not understand the fallout from negative interest rates indicates they do not understand much.

    Get rid of central bankers and their money system and implement honest money policies and then we have a chance of avoiding the great reset.

  28. mike flannelly

    Tony
    How come negative interest rates have not been used by Irish Central Bank for Irish pillar banks to offset the 1% trackers and restructure All overvalued 2005 to 2009 mortgages. Would that not be practical QE that would add real direct value to the domestic economy.
    Recognize and restructure grossly overvalued debt that was the core Irish Bankers Failure from 2005 to 2009.

    That is not QE to infinity. There is a measureable limit for each country. Move back from aggressive profit growth short sighted bankers to boring big picture long term bankers that are respected by the people again.
    Failed political new money bankers must be told to “jog on”.

    • I do not think the Irish central bank sets monetary policy any longer as sovereignty was ceded to the ECB. National central banks only print currency under edict from the ECB. The Irish Central Bank does not have the authority to set any policy.

      QE to infinity is a version of QE1 plus QE11 plus QE111 etc. Just acknowledging that QE will never stop as the Central banks have no other plans to stimulate the economy other than expand the money supply. IOt has always worked before but subject the the law of diminishing returns. The stimulus has now turned negative as every unit of currency added hinders the economy rather than helps.

      How so? Simply put.. DEBT plus interest.
      The central bank money is except coin, all issued as a loan. That is how it comes into existence. That is the way the bankers set it up. Therte is interest charges on this loan and so the bankers cream off the percentage of the economy that is used to pay the interest. As the only money produced is the cash need for the loan, and no money is used to pay the interest, when the interest is paid it must come out of the money originally loaned. That leaves less money in circulation. To make up the shortfall in the money more must be issued to anther borrower. As time goes buy the amount of the loans being paid off together with everyone paying interest leaves a larger and larger shortfall in the money in circulation. To cover this ever greater numbers of people must take loans out which increases the debt load which increases the interest which reduces the money supply which requires greater and greater amounts of money to be issued. It is a classic Ponzi operation that needs more and more suckers to be pilfered in order to pay off the earlier suckers until it reaches exponential proportions.

      Today the debts are so high the world Gross domestic product is not enough to even service the interest. Central banks resort to monetizing the debts directly, particularly the debts of the nations. That means the newly created money goes to simply repay the old loans and in addition refinance the government bonds coming due. The central banks are the biggest creditors.

      Out in the real economy no more debt can be absorbed and so trying to get money to circulate by increasing the supply is pushing on a string with no results. It has seeped into the financial markets in different ways resulting in an elevated stock market , an elevated bond market with lower and lower interest rates. Now there is no interest earned for fixed income funds that pensioners rely on and pension funds are going broke paying out more than is being earned.

      So here we are with QE to infinity until the financial system breaks, and the Central banks will say they had no understanding of what they are doing.

      That is Codswallop as it is self evident what is occurring. It is designed to throw us into chaos. Chaos will result in protests. Protests will be curtailed. Marshal law will be declared, all savings will be frozen and bail in the broken banks. Emergency laws will be declared and we will all be in lock down, wage and price controls, no cash, just electronic money which will be cut from your account if you misbehave.

      The current system must be abandoned and discarded. Nations, towns and cities must reclaim sovereignty, individuals too. Likely as not money operations on the internet will be disrupted or shut down and it will be a cash economy. What will you use as cash? Anything acceptable to the counter party to the trade.

      In the meantime, take control of your government. Issue a national currency and be rid of the Euro. Issue the currency from Treasury, back by the full faith and credit of the state, it would not be a loan, it would carry no interest. Used to Replace the fiat banker money immediately the country would have no debt. There would by no interest payments to service from the national account. The budget would be in surplus. Taxes would be reduced. Particularly on the first 100,000 of earnings. Implement a national guaranteed income and dispense with all social programs and reduce the bureaucracy.

      Then declare the legal tender laws void.

      Then issue a silver currency using the national mint. Coins would be denominated by weight and purity but not stamped with a value. The declare trade value of a silver coin would be approximately 20% higher than the bullion price. The government issues the trade value of tyhe coin and no matter what the world price of silver the trade value of the coin would never fall.

      If the world price of bullion increased then the declared trade value of the coin would increase in increments of 5 until it again was no less than 20% higher than the world price of bullion. This would encourage the coin to to circulate as money but at the same time be inflation protected. The coins would circulate alongside the treasury notes and people be allowed to choose which they prefer.

      A sovereign people with a sovereign currency. Survive to Thrive.
      Tell the Central bankers to ” Jog on “.

  29. Perhaps Ryanair has control of the freight transfer business causing the seabound freighter trade to collapse.
    Lowest number ever for the month of November.

    http://www.zerohedge.com/news/2015-11-06/its-official-baltic-dry-index-has-crashed-its-lowest-november-level-history

    • michaelcoughlan

      good man Tony. Further proof that the monetarist economy which is focused on profits is consuming the wealth creating economy focused on creating surplus value.

      And all the while the price of gold being forced down.

      Makes me want to puke.

  30. mike flannelly

    Thanks Tony
    There was me thinking you could marry 0% money with the measureable False Value of debt in every EU country.
    Protecting failed new money bankers and not identifying “False Value” debt has been the central banks failure.
    Protecting the boys at any human cost.

    Would EU pension funds want some 25 yr @ 2.75% interest from young irish home buying couples?

  31. mike flannelly

    UNCONSTITUTIONAL CONFIDENTIALITY

    They are at “IT” again this morning.
    Pretending there is a confidentiality problem.

    Confidentiality with public money would “ONLY” occur at the bidding and tendering stage of any process.

    We have property registers with private bought property.
    So to PRETEND that we need confidentiality for public funded resources after the bidding process is FALSE.

    It would actually be Unconstitutional to have confidentiality after a bidding process is over because this would amount to “BACK ROOM AGREEMENTS”.

  32. Perhaps O’Leary deserves some public recognition. Worthy individuals are noted and awarded here by the Canadian Taxpayers Federation.

    https://www.youtube.com/watch?v=iheBDfSwssM

  33. In the coming and already active deflation, Ryanair, already operating on tight margins and efficiency will likely out last all competitors and many in other lines of business.

    http://davidstockmanscontracorner.com/central-banker-jabberwocky/

    David Stockman explains how the debt based credit machine promulgated by central bankers ” simply stole demand from the future and wasted massive amounts of real labor, capital and energy resources in the process”.

    Here is the total essay.For graphs etc click on the link.

    Central Banker Jabberwocky
    by David Stockman • November 6, 2015

    The financial system of the world has been turned into a doomsday machine by central bankers stranded in an intellectual puzzle palace. That is, they are marching financial markets straight into another giant bubble implosion owing to their embrace of a fundamental error about why there is an apparent lack of consumer inflation in the official indices.

    For example, the chief economist of the IMF, Maurice Obstfeld, recently trotted out the chart below to prove that “lowflation” is a deadly threat everywhere on the planet to growth, jobs, living standards, public finances, and even capitalist viability.

    The ill of lowflation can only be remedied, he averred, by resort to “out of the box” central bank expedients designed to compensate for the purported drastic shortfall of that Keynesian ether called “aggregate demand”.

    What he had in mind, of course, was negative interest rates and further massive monetization of the public debt and other existing assets in the name of QE.

    Mr. Obstfeld is talking central banker jabberwocky. The above graph is actually welcome evidence that wage workers and other middle class households are finally getting some respite from the relentless upward creep of consumer prices.

    Moreover, the above graph represents no problem whatsoever because better retention of the purchasing power of wages and salaries is surely not something that needs fixing. And most especially not by the very same central bankers whose misguided policies gave rise to the deflationary tides now gathering in the world economy.

    In a nearby post today, Pater Tenebrarum called out exactly what these “moar inflation” seeking central bankers are really up to:

    What are the basic requirements for becoming the chief economist of the IMF? Judging from what we have seen so far, the person concerned has to be a died-in-the-wool statist and fully agree with the (neo-) Keynesian faith, i.e., he or she has to support more of the same hoary inflationism that has never worked in recorded history anywhere. In other words, to qualify for that fat 100% tax-free salary (ironically paid for by assorted tax serfs), one has to be in favor of central economic planning and support policies fully in line with today’s economically illiterate orthodoxy. Meet Maurice Obstfeld, who has just taken the mantle.

    BN-JL827_Obstfe_M_20150720120520New IMF chief economist Maurice Obstfeld (left) and fellow monetary crank Haruhiko “Peter Pan” Kuroda, governor of the BoJ

    So trapped in their illiterate orthodoxy, Obstfeld, Kuroda, Yellen, Draghi and the rest the central bankers cartel resort to desperate monetary expedients that would have been considered crackpot economics even 15 years ago. The idea of ZIRP for 82 months running would have been considered borderline lunacy; the notion that the collective central bank balance sheets of the world could explode by 10X in two decades would have been viewed as incendiary radicalism.

    But it is exactly these crackpot doctrines which have now become embedded in a relentlessly tedious central banker groupthink. Indeed, the core notion of “lowflation” and deficient “aggregate demand” is so superficial, contradictory and refutable that it amounts to little more than jabberwocky.

    The fact is, the massive growth of central bank balance sheets since 1994 is the driving force that fueled, shaped and deformed today’s global economy and financial system. The chart below is utterly new under the sun and thereby nullifies the relevance of pre-1995 history and contradicts all of its rules and patterns:

    Global Central Bank Balance Sheet Explosion

    When the central banks created $19 trillion of new balance sheet out of thin air they fueled a worldwide credit bubble of epic proportions. After two decades of maniacal central bank money printing, the world’s credit outstanding has grown from $40 trillion to $225 trillion or nearly 4X more than the interim expansion of global GDP.

    And even that latter figure is exaggerated because it includes massive amounts of malinvestment and economic waste that will eventually be written off and abandoned; it does not comprise a permanent component of the world’s productive economy.

    Global Debt and GDP- 1994 and 2014

    This massive expansion of cheap debt, in turn, fueled a runaway capital investment boom that has left the global economy drowning in excess capacity and malinvestment. This occurred in the form of a central bank enabled doubly whammy over the last two decades.

    First, excess DM world household demand lead to an investment boom in China and its EM supply base prior to the 2008 “peak debt” crisis; and then the post-crisis infrastructure and investment binge staged by the red suzerains of Beijing fueled a second wave of capital spending for energy, metals, processing plants, shipping, warehousing, manufacturing and consumer product distribution that dwarfed all prior history.

    As shown below, the publicly listed companies of the world actually increased CapEx by 5X or upwards of $2 trillion annually during the run-up to peak capital spending in 2012-2013:

    Global Capex- Click to enlarge
    Global Capex- Click to enlarge
    The official inflation indices, therefore, are tepid because prices of commodities and goods are being crushed by excess supply. That’s why oil prices have plunged into the $40s and why iron ore is heading into the $30s (per ton) and copper back toward one dollar (per pound).

    Moreover, the excess capacity is by no means limited to the mining sector and oil patch. Its rippling downstream at a ferocious pace. This week, for instance, we posted a piece on Alcoa’s intention to shutdown most of its US aluminum smelter capacity and the likelihood that in a few years the entire US industry will disappear.

    Needless to say, that’s not owing to a labor arbitrage because today’s high tech, capital intensive power-guzzling aluminum smelters are not about underpaid peasant girls living a dozen to a dorm room; they are about return on capital, which has been driven to nearly zero by the China’s insane rates of cheap credit fueled investment over the past two decades.

    The same is true for steel and all its downstream customers. In 1995 China had 70 million tons of steel capacity and no modern auto plants. In the interim, its steel production capacity grew by 16X to 1.1 billion tons and auto industry capacity to 26 million units or well more than either North America or Europe. The excess supply from these malinvestments will be deflating world prices for years to come.

    And the same is true of containerships, bulk carriers, refineries, chemical plants, solar power, heavy machinery and much more.

    The collateral effect will be collapsing profits, asset write-offs and a long spell of weak capital spending. Indeed, the developing depression in commodities and capital spending is what is driving the global deflationary cycle, and the collapse of profits and incomes in the impacted sectors.

    Stated differently, the credit fueled commodity and CapEx boom of 1995-2014 did not generate a miracle of global growth and prosperity as the Wall Street Keynesians would have you believe; it simply stole demand from the future and wasted massive amounts of real labor, capital and energy resources in the process.

    Accordingly, the world does not suffer from a lack of “aggregate demand”. Sustainable demand everywhere and always is derived from production and income, and the latter are now falling due to the wasteful capacity excesses overhanging the global economy.

    And there is no short-cut way out via credit based spending. That’s because the world is now saturated with “peak debt” in the household and business sector, as well as the official institutions of the state. More central bank enabled credit will only fuel speculation in financial assets.

    By the same token, the “lowflation” story is just self-evident drivel. On a worldwide basis, the price of commodities are falling due to excess supply. Likewise, prices of goods are being flattened by cheaper raw materials and the excess supply of labor that was drafted into the world’s tradeable goods economy from the rice paddies of Asia during the credit and CapEx boom of the last two decades.

    By contrast, domestic services prices have continued to inflate at a 2.4% annual rate since commodity and goods prices began to peak in 2011. In fact, the roll-over of the green line (all commodities) and the red line (finished goods) is the cause of “lowflation” in the aggregate consumer price index. Only the central banker PhDs lost in a self-serving groupthink of jabberwocky can’t see the implications of the graph below.

    In a word, the graph says to the central bankers: You are out of business!

    The developing deflationary cycle stunting the world economy has arisen from the monumental harm that central bankers have already done, not from lack of sufficient vigor and boldness in attempting to contravene its consequences.

  34. mike flannelly

    Great article Tony

    “Simply Stole Demand From The Future”.

    Like land bank debt valuations from 2005 to 2009.
    Land Bank debt was based on “future” rising family debt to income, for unfair bonus payments for intelligent professional Bankers today.

    They ” Not Believably” completely ignored the basic principles of banking.

  35. mike flannelly

    As Columbo used to say,

    There is still ONE thing bothering me.
    Tony
    “Negative interest rates are good for commercial banks borrowing from the ECB and is a good enough example for allowing zero percent interest rates on mortgages.”
    Why cant this be married with the False Value portion of 2005 to 2009 Mortgage Debt?

    The ECB charges banks for leaving money on deposit yet Mentally Tortures Irish families that have a Measurable, Identifiable False Value portion of Debt. Servicing the False Value portion of Debt is killing the Irish economy and worse still killing Irish people through financial anxiety.

  36. “False Value portion of 2005 to 2009 Mortgage Debt?”

    I am lost on this. What is it?

    BTW We watch Columbo reruns Mon-Thurs 5pm regularly!

  37. mike flannelly

    False Value portion of debt would be the overvalued portion of debt. A Higher portion or ratio of your earned or rental income that would require cuts to other family living needs. The overvalued portion means that critical medical funds, medical insurance funds, education funds,family occosion funds,kids activity funds,car funds or retirement funds have to be diverted to pay this.
    Before @ 7° interest we had a recommended mortgage ratio of 3.5 times one wage. Average age of first time buyer was 28.
    Now @4.5% interest we have a recommended mortgage ratio of 7 times one wage. Average age of first time buyer is 36.
    250,000 is the recommended sustainable debt for an average earning couple.
    Debt above 3.5 times a couples gross earnings would be considered overvalued False Value debt.
    Let couples service sustainable debt only.

    We were told in Feb 2014 by our main pillar banker that bankers sold unsustainable (false value) debt because they were competing for profit growth. The scientific explanation is that “at a wild bankers party even good girls get into trouble”.

    Standard investment mortgage metrics would recommend that rents should be 130% of mortgage payments and stress tested at 2% higher than the variable rate.
    A 250,000 investment mortgage would require rent of 130% of the 1767euro repayments (250000@7% for 25 yrs) to be considered an investment. Unsustainable Rent.
    An investment has no right to go up even though that is the selling point.
    Having a guaranteed loss from day one is another thing.
    Investment mortgages that had Zero investment value from day one have a false value portion of debt accountable for the loss.

    We have according to mick wallace our finance minister michael noonan accompanied by alan kelly (housing)rushing firesales of property at half their build costs to balance books and then announcing costly prefab housing to come soon. With the SAME tax payers money.

    Does any economist in Ireland during an economic crisis ever get off the fecking fence and shout STOP?
    There is no economic sence in FG/Lab firesaleing property for half the fecking build costs.

    Irish people want REPOSSESSIONS.
    As LAST RESORT.
    Restructure the debt with interest only or industry best practice split mortgages for mortgages with higher than recommended debt ratios .
    Thats where you park the FALSE VALUE portion of the debt.

    A lot of it is from 2004 to 2009.

    If a bank CANT AFFORD to do the right thing and restructure FALSE VALUE debt then the ECB should step in with the ESM fund from 0% interest to do so.

    • OK Mike, the debt assumed was too high to be serviced by the borrower.
      So the false value is the portion of the debt that eceeds the ability to pay. Do I have this correct.

      In Canada the Federal government sets the rules on mortgage debt. Anything over 75% loan to value ratio must be insured with a premium paid by the borrower. The insurance companies are mostly a government agency called CMHC, Canada Mortgage and Housing corporation, but can be a private corporation or bank owned agency.

      Re: owner occupier mortgages.
      It is possible to go to as high as a 95% L/V ratio. To qualify there must be disclosure and proof of income. There must be confirmation of value by an independent appraiser. (4 year course to take and full liability for errors in valuation)

      Generally the last time I looked the Ratios allowed to qualify for a mortgage were as follows

      Total debt payments not to exceed 40-42% of Gross income.
      Mortgage debt payments PIT(A). Principal, interest, taxes(rates) on the property, and annual assessments for a condominium. Not to exceed 32% of gross income.

      Income is earned income. Usually if there was a rental suite in the house, only half the rental income was allowed. Unearned income from investment depended on the investment.

      Debt payments on credit cards, or other loans for example could not exceed 10% of gross income if the largest mortgage was to be obtained.
      anything in excess of payments of other debts higher than 10% would affect the amount of mortgage that could be borrowed.

      The rate of interest used to qualify a buyer(borrower) was usually the 3 year fixed term rate or even the 5 year rate. This no matter if you opted for a shorter term at a lower interest rate.

      These safeguards have generally kept the mortgage market stable in Canada.

      There are two options for a bank if there is a default. Foreclosure or Court ordered sale. If foreclosed the the bank takes title to the property and usually sells it. If there is a shortfall the bank eats it. If there is a surplus the money is returned to the previous owner after deduction of all foreclosure expenses.

      If a court ordered sale is opted for then the Bank can order a sale even if the owner also has the property for sale. If the bank gets an offer it must be approved by the local court after a brief hearing.
      Again if there is a surplus of cash after redemption of the mortgage then it is returned to the previous owner. If there is a shortfall the bank can pUrsue other remedies against the borrower and attach other assets to claim against.

      In the event the individual is bankrupted then protection may be sort from further claims.

      After bankruptcies an individual can start again in 9 months or so to build a new credit rating and be able to borrow again.

      http://www.bankruptcy-canada.ca/length-of-bankruptcy

  38. mike flannelly

    Thanks Tony.
    32% for shelter.
    For an average earning irish couple on 70,000 gross , 1,867 euro mth for mortgage, property tax, property insurance and property maintenance.
    From net pay of approx 4,000 euro.

    Hard to pay everything else on 2,200e
    Time off to have a family,
    Food, clothes, heat, health bills, education, car, job change,social etc.

    7% unemployment in Canada.

    • One thing I did not mention.
      Usually the wages of the lower wage earner were only allowed at a rtate of 50% That is in a two wage earner family the lower making 20,000 a year , would count only 10,000 of gross income in the calculation for mortgage purposes.

      Rental suites income counted 50% also. There may have been a change to allow 100% od gross income but it is very recent.

      Many starters in the market were unable to save the down payment and resort to a grant from family. Any such grant must be able to be proven where it came from as are all downpayments. The cash down must not turn out to be a loan to be repaid!!

  39. mike flannelly

    1,413 euro mth shelter needs.
    2,600 mth for rest. 600 wk.

    Less
    Childcare and earnings lost from illness or changing jobs there would not be much left for a holiday or family occasions. Kids activities or sport, music etc.

    Not easy.

    I know im like a broken record but with the cost of buying a first time buyers house we really like France and Germany need the
    25 yr FIXED 250,000e mortgage @2.75%
    1153euro mth would give low income families 260e mth more breathing space.

    Thanks again Tony.
    Any recommended rent metrics?

    New York a landlord insists that your gross earnings must be 40 times a months rent. A landlord does not have to take a risk on a low income tenant causing damage at the landlords expence or not paying their rent. New york dont accept low standard behaviour from tenants and expect the landlord to pay for it. So a 70,000e gross earning couple can afford 1,7500 euro max rent for house/apt

    Here in Ireland, the government insists that you have to accept a rent of their choosing regardless of the need to service a possible unsustainable debt ratio sold to you by a government promoted bank as an investment.
    You must take a guaranteed loss to supplement the states lack of social housing.

    I would think that a couple with 4,000e net/mth should not pay more than 25% or 1,000e mth.
    Three workers renting should prob not pay more than 1,500 mth.

    The so called Rent crisis is only a crisis if people have to pay more than 25% of their net pay I am guessing .

    What is a rent crisis?

    Surely not rent rising from a low base.

    Any ideas Tony?

    • Not really mike.

      Every landlord and tenant in BC is subject to the Residential Tenancy Act. It does not stipulated rent ratios or how high a rent can be even though there are rent controls.

      The relief valve on the market is that all freshly advertised rental units whether apartment or a mansion can advertise for market rent. All landlord make there own decisions on how much they pay for a property and the financing will be after having qualified under bank or finance company rules and if high ratio mortgages the additional rules of the mortgage insurance company.

      Basic discrimination is not allowed except in the case of 55 plus buildings, and in not having to accept minors. Minors cannot by law bind themselves to a contract to any agreement with a minor is unenforceable.

      Apartment owners associations have developed as the landlords needed a voice to advocate for a counterbalance to the tenant organizations who had obtained the ear of government.

      The initial decisions made by the Rentalsman (a government agency) were heavily biased in favour of tenants. Gradually over the years it is more balanced. It was implemented in 1793 because of a perceived rental shortage and to prevent “gouging” by landlords. It succeeded in restricting the supply of rental units.

      We still have a low vacancy rate of below 2% and rents have steadily escalated. Landlords now have a comprehensive application for tenancy form and a tenancy agreement form, developed within the confines of the act, provided by the owners association. Coupled with that is the right to get a credit check on any tenant.

      I routinely took credit checks on all applications for tenancy. The application itself had a statement within that gave permission from the applicants to allow a credit check. If one just did not like the “cut of the jib” of an applicant it is sufficient to say the application was refused. Not easy to do if it was the only applicant but then one is not forced to rent a premise if the decision is made to leave it unoccupied.

      Those units already rented are allowed no more than one rental increase every 12 month period. The increase in BC is restricted to 2% more than the current Cost of Living index for BC. If a landlord defers an increase just to be nice it cannot be recovered as it is non cumulative. If the building had to have a major renovation for some reason then and application can be made for a general rent increase for all the tenants but it is a lengthy process and not necessarily granted. Regular increases in operating costs are not allowed for a general increase in rents.

      All in all if a prospective tenant can provide references that are approved and passes a credit check and otherwise persuades the landlord the premises will be cared for and the rent paid , there is no restriction on how much of their income a tenant decides to allocate to rent payments.

      One half on one months rent can be taken as a security deposit and held as a custodian by the landlord. It pays a statutory rate of interest from the landlord to the tenant. If there is a pet allowed then an additional one half of a months rent may be held. In this case a tenant needs two months of rental value, in cash or cheque, to be able to move in.

  40. mike flannelly

    1,750 e rent mth

  41. mike flannelly

    Thanks Tony.

    “NO SOCIAL HOUSING”

    RENT AFFORDABILITY versus RENTAL CRISIS

    I have read that in general from USA to Australia rent is affordable if it is not more than 30% of net income.
    That is approx 1,200e for a Irish average earning couple on 75,000e .

    Three average earning Irish workers could afford max 1800e by that measure.

    In Ireland tenants are paying less than 20% of net income in a lot of places outside Dublin and the media are screaming ” Rental Crisis”.
    1,200e three bed houses are 20% of average net income for three tenants. If one tenant has a better than average job then the rent is less than 20%.
    “Rental Crisis” is probably being used outside Dublin as a Label for “NO SOCIAL HOUSING”.

    New money commentators are just reporting the rents are up another 5%.
    These new money experts god bless them never mention from what net income base.

    Rental Crisis outside Dublin my arse.
    Its a SOCIAL HOUSING PROBLEM.

    If the supply of social housing met the Irish needs then the cost of rents outside Dublin would remain below 20% of net income.

    The lazy Irish politicians and Irish media of 2015 are trying to make out that average private rental accomodation( 30% of average net income) should be social accomodation based on zero economic logic.

    Enjoy your weekend Tony.
    I need my glass of wine now.

    • I would think that a tenant could afford a little more of gross income than a buyer. A buyer has maintenance costs of the structure that a tenant does not accrue. I have seen tenants getting by spending up to 50% of income on rent.

      People can do what they wish and there should be no limit set on what is applicable. AAn apartment empty for just one month will mean an annual reduction in rent of 8.33%

      It does not pay a landlord to have a suite empty so a prudent landlord will set a rent structure 5% below the top rental value in order to maintain a full building.

      Many tenants are paying 10% below market rents as the landlord will be established and wants a place easy to run and to make a profit. Like tenants, 99% are fine.

  42. mike flannelly

    I agree 100%.
    Rental crisis my backside.

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