The easy-credit drug was pushed from the top, right down to the poor debt junkies at the bottom
Could Patrick Honohan be our Noel Browne? Could Honohan’s inquiry into the fiasco of the banking mess be the 21st century equivalent of Browne’s Mother and Child scheme?
Noel Browne was opposed not just by the bishops. The bishops driven by theology would obviously be against him. But it went deeper. Browne was also opposed by the doctors who were driven by self-interest. The doctors didn’t want their incomes being determined by some quasi-socialist state scheme overseen by the government any more than the bishops wanted their hold over the family to be weakened by the State. In the 1950s, the power base of the local doctor and the local priest or bishop dominated rural Irish life. Had Browne succeeded in breaking this, he would have destroyed the central pillars of Irish society.
Browne was driven by a desire to eradicate TB. Our incidence of TB was three times higher than Britain’s. This didn’t matter to the people who ran the place. To them, Browne’s crime was that he threatened the real power nexus in Ireland — the Church and the local supportive bourgeoisie who sat up the front at Mass. Thus this uppity medic had to be stopped.
In the case of the new Central Bank governor Patrick Honohan, he is equally threatening the power base of the country. He will be opposed by some senior politicians who are opposed to upsetting the status quo — particularly when they are implicated in the affair. They were the primary cheerleaders of the boom because the more credit the banks gave out, the more tax revenue the politicians got to dole out to pet projects. Why would the senior political class have anything to gain from an inquiry, which will conclude that they are guilty?
But it goes much deeper than that. Honohan will also be violently opposed by certain senior people in the Central Bank and the Financial Regulator who now work in the same building as him. He is their boss but he is clean, whereas many of them are part of the problem. Could it be that some of the top brass in the Central Bank and the Financial Regulator, all from the same stable in Dame Street, might want to thwart the new boss in his drive for openness?
But if Honohan gets his way (which he should) lots more issues will be raised. And these are deep issues and go to the root of who runs the country. This is why Honohan is dangerous. Take for example the cosy relationship between the big auditors of the banks and the banks themselves. The auditors signed off on the balance sheets of the banks — without question — when it was clear that the banks were behaving delinquently.
Remember that the Irish banks went from having a loan to deposit ratio of 100pc in the early noughties — which was normal — to a loan to deposit ration of 160pc in 2007 — which was terrifying. Yet the auditors said nothing. Might Honohan’s probing lead to a civil case against one of the large auditors? What would happen then?
And what about the boards of these banks? What did they do to check the madness of the executives and protect the depositors? Well, they did nothing.
Today most of the bank boards remain in place despite the carnage. I remember a conversation with two board members of one of our largest banks a few years ago where I was told that I was a “dangerous voice”. These same people are still drawing salaries, having failed monumentally.
In the case of Anglo Irish alone, the scandals raise enormous questions — not just about this bank, but about the ethics of senior sections of Irish business. How could a “whip round” of the golden circle in summer 2008 — which was a totally illegal share-support scheme — be seen as normal? How could the “bed and breakfasting” arrangements of bank executives using other banks to hide their personal loans be regarded by other executives as kosher? And what about end of year massaging of deposits?
Could the inquiry examine in depth the financial journalists who were refusing to ask hard questions, and were coming out with nonsense about new paradigms and the uniqueness of Irish banking culture based on claptrap called “relationship banking”?
If Honohan’s inquiry goes deep, many bizarre practices will be exposed. So the new governor will not just have to contend with the immediate executives of the banks but he will unravel a deeply corrupted system. We will see how, at the bottom, mortgage brokers were on the boards of estate agents where one outfit was hyping prices and the other outfit financing the loans to pay these silly valuations. The brokers, working on commission, had the incentive to lend as much money as possible out. But where did they get the cash? From the big banks of course who were using the mortgage brokers as salesmen on steroids.
In my book ‘Follow the Money’, I compare the entire financial scam in Ireland to a drugs cartel where the easy-credit drug was pushed from the top and right down to the poor debt junkies at the bottom. The entire system was corrupted throughout. Although distasteful, the comparison is valid.
And this is what Honohan threatens with his inquiry. He threatens the entire system. He says he doesn’t want glib comments but rather a forensic and quick inquiry to get to the root of the problem. But like Browne, he is taking on the power in Ireland and that is why he will be opposed, stymied, and attacked at every juncture.
The spinning is starting already. For example; yesterday I was listening to RTE radio and the presenter asked a guest whether he believed that now, with the world looking at Ireland, was a good time for us to be hanging out our dirty linen regarding the banks! Here we go again; let’s not protect our own citizens because, using the perverted logic of our vested interests, protecting our citizens from a rapacious elite looks bad! What planet are these people living on?
In a sense, you can regard Honohan’s very public urging for an open enquiry as a “cry for help” from a new governor who realises that the truth will never be found by going back to the usual suspects.
He sits atop a corrupted and discredited institution, surrounded by people who have no interest in him succeeding. He realises he has to go outside, and in so doing he is rocking the boat — not just the banking boat and political boat, but the entire edifice that has governed the country for years.
The more you look at both men, Honohan and Browne, the more the similarities are striking. Browne’s objective was eradicating the disease of TB but to do this he has to overturn the system, the real power nexus. Honohan’s objective is getting to the bottom of the banking mess, but in so doing, he will need to shine a light on all areas of Irish business and politics.
In this effort, he needs all of our support.
Well said (again), David! They have no shame.
Wouldn’t you and Michael Hudson be a powerful twosome for Gov. Patrick Honohan to bring together to help sort out the banks’ excesses?
Salvation : I want to agree with everything you have said above and I hope it is true and if it is we are very lucky .Trust is a hard experience to share now in these times and time will tell us if this new appointment is a fair and professional appointment that will be objective and pragmatic and serve the country well.It is Ideal to be wishful now and easy because it is Christmas but in a few weeks the new year will have moved on in a new direction .What that direction is will be interesting to follow… Read more »
Honohan is more Samson than Noel Browne, because if he keeps pushing he will bring the temple down, the ‘pillars’ of our society – ‘the professionals’ ‘journalists’, ‘politicians’ and all the other carpetbaggers with their hands in the till. Prime Times Investigates also raises yet more serious questions. ‘Nobody broke the law’ is the standard refrain, but surely there must now be legislation on conflict of interests for those in the public domain i.e. politicians getting preferential loans from financial institutions – surely this practice should be made illegal especially in light of the property and economic collapse – people… Read more »
G – Sometimes it is worth knowing to see with an extra sense and astrology makes that possible .Maybe he is a Scorpio and if that could be confirmed or his true sign for that matter if it is another we all can share a deeper insight into what might happen and who might he really be .
G – the date is important too as is the month .If we all knew the signs of all our new leaders now it would increase our transparency and our sense of presence .It’s now too serious to ignore. October can tell you that he is either a Libra or a Scorpio both are so different as chawk and cheese .Personally I would think he is a Scorpio and if he is – let no man thread his path and he takes no prisoners ….and thats just the beginning . If he is a Libra ….well lets say he would… Read more »
David. All eyes are most definitely on this guy in a beard. BL posted ’em there which is also very very telling and worth keeping in mind. No better way to control people than through disease and weakening of body weakens the mind. David this article in my p.o.v frames the ‘reality and its incumbent drama s afoot’ at play in our country to day demanding citizenry action. This ‘contagion’ lives on the back of ‘implied consent’. They perpetrate their scamming on the back of a twisted truth. They view the outside world through the lens of a delinquent child… Read more »
Excellent article !. I was livid when I read an article on the RTE website, which blamed Honohan for causing bank shares to plunge.
Honahan has as much relevance as a customs officer standing on the Louth border.Why does the central bank employ 800 people?.What do they do all day?.Why has nobody taken a swing @ Seanie?.The timidness of Irish people is beyond belief!.A bunch of wusses who desrve to be the new Paraguay.Why bother anymore?.Honahan was more dangerouis while in academia.Why he thinks NAMA will work is beyond me.He is in a minority of about 3.
Hi David, Again an excellent article But from my flu ridden bed, this article has not made me feel any better! While I would be in agreement with most of what you say I am wondering why you even bother anymore? I am not as optimistic as you even seem to want to be! Too many vested interests are threatened, and the powerful and the great will strike down this honest man, I am willing to take a bet on it! This is Just the latest r example of the golden Circle’s influence and again (if we needed it) proof… Read more »
Patrick Honohan certainly is in a position to shake the system, but if he chooses to do so he will be biting ‘the hand that feeds’. I will be surprised if we see anything more than tinkering with regulations, lengthy reports (mostly unreadable) and fudging the real factors that motivated the financial oligarchs to make the killing they made. What puzzles is why so many people accept the law of the jungle when it comes to economic and social policy — in every other aspect of our social being the laws of science are applied to solving and understanding problems… Read more »
David said: “…Take for example the cosy relationship between the big auditors of the banks and the banks themselves. The auditors signed off on the balance sheets of the banks – without question – when it was clear that the banks were behaving delinquently… Yet the auditors said nothing. Might Honohan’s probing lead to a civil case against one of the large auditors? What would happen then?…” ——————————————- Now we’re getting somewhere. I’ve been on about this for a long while. These big consultancy and accountancy firms provided the justification and the authority for what went on. Forget the developers.… Read more »
Anybody out there interested in exploring the direct action rout?
Then please contact me at bewilderedcitizens@gmail.com
David shape-shifts, morphs back into seditionist mode. And good fun it is to follow the agent-provateur economic hit-man with a silencer on his weapon as he ‘will-o-the-wisps’ his way hither and yon…! Nollaig de Brún had a belly full of the Mullah Taliban De Valera’s ‘let’s go back to a mediaeval theocracy’ nonsense. Having been rescued and saved by exile to alien Saxon reaches of Eastbourne and Windsor, he returned to Dublin to fight the real fight for Ireland’s soul. Whilst Ireland was going backwards, he was watching The Future unfold as the ‘decadent Keynsianism’ of Post WW2 Britain launched… Read more »
Ho ho ho , and merry Christmas David, can’t knock you here and your comparisons. My hope for the next decade is with time we will turn this Country around , now we have the Elite fighting amongst them selves , they have to be nervous now. Just look at RTE this bunch of over paid commentators and they bring out this Prime Time show and show the disloyalty of us going over the Boarder to shop !. You and the other ‘celebrity Angry Men ( O Toole, Cooper, Ross and Browne ) have to take the stance and challenge… Read more »
Dear Professor Honihan. You recently said: ‘I don’t want to close without mentioning consumer protection. The worst aspects of this, such as out-of-control loan originators pushing unaffordable sub-prime mortgages, seem not to have been as widespread an issue in Ireland as it was in the UK or of course in the US’. http://www.tcd.ie/Economics/staff/phonohan/Glenties.pdf I think you’re missing The Big Issue, Professor Honihan. Allow me to explain it succinctly: The whole Irish residential property market was sub-prime. Not only did the Irish banking scammers originate and distribute 10 x income to value loans en masse, they did so against the backdrop… Read more »
Bloomsberg has a grim Christmas message for us: The survival of Irish banks is threatened by a wave of mortgage losses, as house prices slump and unemployment surges, according to Morgan Kelly, an economics professor dubbed the country’s “Doctor Doom.” Some 3.3 percent of Irish mortgage borrowers were at least 90 days behind in their repayments at the end of September, more than double the share in June 2008, the country’s Financial Regulator said yesterday. “The Irish banks remain as zombies whose only priority is to reduce their debt, and who face complete destruction from mortgage losses,” said Kelly, a… Read more »
Billy Holiday Sings The Blues – The Blue Moon Epitaph is yet to finish and her final Great PULL is beginning tomorrow to finish on the 1st January 2010. Bad Weather, Church Resignations, Floods, Revelations ,and much more will follow as soon as it had begun on the 1st of dec until then.And if our CB Regulator of all regulators is a scorpio he will not be as quiet as you might expect during this season.Intensity of purpose might be the key to understanding what happens next.Also no one can swim against the tide neither can they swim directly across… Read more »
Folks, I have been wondering about this article since it appeared and it struck me that I have been wondering about the potential inquiry since I heard that Honohan called for one. I have an abiding, lingering, sense of unease about it. That sense of unease was compounded by Monday night’s “PrimeTime Investigates” show, when a whole load of information was delivered to us a “new”. Information that has appeared in David’s articles in the last 18 months, in his book and on this site from contributors gleaning information from media sources worldwide, (as well as in other books, such… Read more »
Oh, and I found this, for those of you who would like something “uplifting” for Christmas – it is about overcoming adversity:
http://ow.ly/OYlH
… enjoy and Be Inspired.
Tim – long may The Pull inspire you in the Blue Moments you have now.Absorb ….absorb….absorb….and all we reveal to you .
Ooh! Now, look here:
http://thestory.ie/2009/12/23/michael-fingleton-inbs-and-mespil/
…. and the plot thickens…..
(John ALLEN, thanks.)
“Mespil” is a reasonable metaphor for who is ruling Ireland; the banker, the politician, the business-leader and the broadcaster, all with appartments together in D4.
There you have it!
“Bank regulation is more difficult than most people think. I never believed that regulators or bank managements understood things that you would need a degree in higher mathematics to understand.” Charlie McCreevy. Is that so, Charlie? That being the case, did it never occur to you to counsel caution on that fateful night in September 2008? You knew Brian had a law degree, not one in higher maths. Did you meet Lenihan over oven-roasted garlic cloves and aoili as well to sound the plan out? Did you ask about ‘due diligence’? Of course I already know the answers to all… Read more »
David. Another excellent article. A step back in the era when Ireland was not controlled by Maynooth (The oligopolists and big swingers in the K-Club) but Maynooth (the bishops in conference). I read Noel Browne’s book “Against the Tide” when I was in the CBS secondary school. The amazing thing was that the general practitioners managed to scupper the thing purely because they could not control it. The Hierarchy agreed in principle to an FF version of the same thing. But Browne’s proposal had the ‘wrong’ structure. He was not giving enough consideration to the doctors or the bishops. The… Read more »
David, the team that supports David, and fellow posters, all of whom I have enjoyed this past year, I wish you all
A very HAPPY Christmas to you, your families, and to all those that are important to you.
AIB had their EGM today. AIB are potentially a massive headache for the taxpayer. Again. AIB need to be completely reformed.
The Irish concept of management has failed. It needs to be reformed/replaced. The motives and the behaviours of people holding authority in Ireland is the source of all of our problems.
Let’s keep mentioning this, so that it will be reformed.
Well said David. We are now getting to the nub of the issue. The country needs to rid itself of the cancer of the last 10 years, it needs people like you to band together and force the hand of the so-called mandarins, and make them accountable for their deception. This country could teach Zimbabwe a thing or two about raping its own – these people, those at the top, in the banks, government, dept of finance, regulator, and the developers need to be made to pay for their corruption and greed. On top of this, and correcting the fiscal… Read more »
Folks, this is the new working paper by Morgan Kelly (the one that Malcolm McLure’s Bloomberg link above refers to):
http://www.ucd.ie/t4cms/wp09.32.pdf
I suggest that you allow your breakfast to settle before reading it.
Regulating What ? I remember in the 90’s I wrote to the Central Bank complaining of a Crime at Bank of Ireland .Their response was it was none of their business because the CB is only concerned with ‘bank prudence’ only and my complaint did not come within their remit.We now know since how good they were at remiting between themselves. I persevered to have a meeting with the appropriate supervisor to give him my raw nerve and this was granted. When I arrived I was met in a board room by a ‘posy of girls’ who frankly had nothing… Read more »
Yet another excellent Article David. I hope you are right about Patrick Honohan. I have to admit I have some doubts as I guess he was appointed by Lenihan. His calls for an investigation probably suits Lenihan. It might help get rid of Cowen. Which has to be a good thing – unless he is replaced by Lenihan. I will never forget that he forced NAMA on Ireland. I have just started reading “Nineteen Eighty-Four” by George Orwell. I have just finished the introduction and read first paragraph – wow, recommended reading Happy Christmas and New Year to everyone. 2010… Read more »
A humdinger of an article followed by some of the best posts to date.
Can’t dally due to Christmas obligations.
Well done on all the analysis in a cathartic year.
I’m looking forward to blowing the lid off all this crookery next year with David and Prof Kelly chairing a board of Enquiry.
We need these “dangerous voices” so Happy Christmas one and all.
Nollaig Shona.
F
Desert Storm – The World has lost it’s paradigm and worse still it has no replacement and worse again it has no dream. All it can muster is a ‘whisper of surviving’ .There is no cohesiveness between nations and no care to want it .Too much wind is liken to excess internet and mobile telecommunication and ‘no contact’ as we remembered it to be in a world gone by.We are in ‘ Air Bland Talk World’ where whispers are only whispers and then disapear to a nothingness .Where divorce is a ‘ three click on a mobile phone’ and to… Read more »
David,
Merry Christmas, great article, and hope you continue on this journey for truth and justice with us all here throughout 2010.
Season’s greetings to all posters here, and let’s hope for a prosperous 2010, which may seem unlikely at the moment, but we must continue to hope for a better future and a better government.
Great comments and great article. However, there is a common theme of exasperation that what seems obvious to the author and multiple contributors, namely that the country has been destroyed for generations to come by a bunch of conmen in government, banks, media and property development, is not obvious to the population at large. If it was, we’d all be up in arms about it, wouldn’t we? The reason is the people literally do not understand what has happened. They have been baffled, blinded and battered by a never-ending stream of self-serving, partisan, half-assed, piecemeal assessments and endless pointless, nitpicking… Read more »
David, I would have strong suspicions in relation to Honohan’s “enquiry”. Let us not forget that Honohan has called for lifting of the cap on bankers’ pay. http://businessandleadership.com/news/article/17680/leadership/lift-bank-ceo-salary-cap Reading that the 500,000 euros cap (30% greater cap than limit applied to bankers in the United States who are managing institutions 100 times the size of our largest banks) does not include pension contributions is all the more astonishing when you reflect on the fact that there are massive deficits on bank employee pension contribution schemes; in the case of Bank of Ireland, this amounts to 100,000 for every one of… Read more »
There are no investigations in Ireland! We do tribunals and oireacteas investigations, ensuring that punishments for the guilty are minimal. CJH got a state funeral. The electorate re-elected Lowry, the Flynns and Bertie! The regulator of our banking system retired on a full pension after overseeing the near financial collapse of the state. The Indo reported today on a civil ‘servant’ who sold state data to third parties whose ‘punishment’ was two year’s suspension on full pay followed by a full pension! No investigation took place. We have had the state’s police force threaten to break the law they are… Read more »
Merry Christmas to you and your families. Just testing a new computer and surfed to dmcw’s page. Sure where else would ya go on Christmas day :)
This country for the last 1300 years has been built on one upmanship and keeping the littleman down THE BRITS THROUGH OPPRESSION, THE CATHOLIC CHURCH THROUGH REPRESSION, AND NOW THE BANKERS THROUGH ECONOMIC DEPRESSION. Those of us who were lucky enough to get an education escaped the financial and social repression thrrough the advantages that education gave, some of us worked our way out through honest toil and the odd nixer, and then there were those who had the idea for the next bigthing and leveraged to accumalate and expand; nearly all have been damaged by this barbaric plundering of… Read more »
Folks, just had our Christmas dinner with the out-laws. Mark, above is right. People are bamboozled. My father-in-law isa good man, 70 yrs old, still working and fit. He spent 40 or so years working for the Jury’s-Doyle hotel group. He is pretty clued-in. But even he feels confused; he knows the basics, that something is wrong; that the bankers/politicians/media/IBEC are scrambling to protect themselves; that corruption is rife in these circles; that the government and media are fooling people – he can see that the news and the reality “just don’t add-up”. But he is confused about the details,… Read more »
Electorate Paradigm
We need to change the existing one from ‘ turkeys voting for Christmas’.
God.
EXtraordinary.
A people live among us, and they are all too ready willing and able, if giving the opportunity, too kill the society they come from, in order to make a quick buck too go on an ego trip.
Extraordinary.
Lenihan seems to be slowly building confidence in Ireland’s determination to survive this downturn. http://www.ft.com/cms/s/0/ad2b3422-f000-11de-833d-00144feab49a.html
In its latest quarterly economic bulletin, ESRI forecast that economic output, after plunging by a “huge” 7.25 per cent of GDP this year, will contract by a modest 0.25 per cent next year, as growth returns in the second half of 2010. But ESRI said that the unemployment rate, currently at 12.5 per cent, will continue to rise and peak at 14 per cent late next year.
http://www.ft.com/cms/s/0/fc747aec-ef20-11de-86c4-00144feab49a.html
ERSI = every report selvishly incorrect
Folks, our neighbours in the UK are not at all happy about the cost of EU regulations:
http://www.openeurope.org.uk/research/outofcontrol.pdf
Folks, pancreatic cancer does not have a good prognosis; it seems it is fatal within three years, in over 65% of cases.
http://www.emedicinehealth.com/pancreatic_cancer/article_em.htm
Micheal Martin must be preparing a heave against Cowen now.
Posters –
NAMA carries a ‘deathly’ curse.
NAMA is a black toxic waste bin and will infect all that bring it into existence.
we must not allow the primacy of opinion rise above our ideas
Posters – The NAMA / Criminal banking syndicate arrangement on passing the gambling debt onto the taxpayer is now going up in price. 10 BILLION euros more according to the Sunday Independant to day. The banks will be ‘required’ to take a further 10 billion more than originally calculated, take it from the taxpayer to off set the further erosion of asset POnzi values underwAY. More monies stolen from the people of Ireland going into the hands of private banking elites a few hundred of them per head count and the countries tax monies handed over too private banking criminal… Read more »