The men bidding at the Ennis mart would have negotiated a better deal with the IMF and ECB than our inept bureaucrats did
Last Thursday morning in the freezing cold, the temperature in Ennis mart was rising. The age-old ritual of buying and selling cattle was in full swing. Fellas with woolly hats pulled down over the eyebrows, and old tweed caps of every hue, lined up around the pen as the beasts were weighed and paraded for bidding.
The ceremony is intricate, and behavioural rituals of the mart are opaque and confusing to the uninitiated. The buying farmers rest their arms over the side of the railed pen to indicate an interest in the cattle, and then move their arms around and around in circles before the auctioneer – an extraordinary market maker – finds the price where he senses bidding can start.
And we’re off. The seller sits in a box beside the auctioneer but he can’t see the buyers. The auctioneer is in control and he gropes his way to the price, by a combination of cajoling, nudging, nodding and winking. The auctioneer doesn’t so much call as sing out the prices, using a range of the scales, beginning with a deep baritone before climbing exuberantly towards a falsetto climax.
The farmers, caps over the foreheads, try to conceal their bids from each other, having eyes only for the auctioneer as he scours the throng for the faintest sign of a bid, a raised finger here, a facial tic there. Before you know it, the cow is sold, the price fixed, the deal done – and the next cow ushered into the ring.
I watched this for an hour in -4C and, believe me, I had no idea who had bought what. For an outsider, it is impossible to see who is bidding, why the bids move up so quickly and how the auctioneer concludes the price is right. Then, just when you think you have a handle on what is going on and you feel the price must be moving up – such is the speed of the auctioneer’s commentary – with the slam of an old stick, not some fancy ornate hammer, the auctioneer indicates that the deal has been done for â‚¬780 and the ritual starts all over again.
Dirty fifties and tenners are produced and away we go, until all the cattle are sold. In the canteen, lads eating plates of dinner against the background noise of ads for tractors on ‘Farm TV’ discuss whether they did well or not. You can identify the internal fuming of the fella who, in hindsight, knows he bid too much in the excitement, as much as the quiet satisfaction of the lad who knows he’ll come out ahead on the day.
At its core, the mart in Ennis is commerce, as it has been from time immemorial. The stakes are high and the combination of experience, cunning and understanding the bottom line, knowing when to deal and when to fold, are wrapped up in a split second as buyer and auctioneer negotiate in ritual. One moment of hesitation or weakness, a little bit of insider knowledge that the rest of the bidders haven’t got, is the key to leaving the mart knowing that you have done well, that you have negotiated your hand as best you can.
The key to the Ennis mart is that the farmers are negotiating, and they know what they are doing.
Although there are plenty of younger farmers there, the old fellas are doing the bidding. There is a strict hierarchy, where age, wisdom and knowledge are respected, not for themselves, but because they get the best price. They have done this before.
I couldn’t help concluding that, had one of these farmers gone to the ECB and IMF last Sunday, he would have got a better deal for Ireland than the establishment, because he knows what he is doing. These farmers would buy and sell the IMF bureaucrats and, more to the point, they would know a price where buying cattle made commercial sense and recognise the price where buying cattle would sink the farm.
The farmers know when to pull out and they know that there are plenty more cattle waiting to come into the pen and, therefore, plenty more deals on the table before the day is out.
Our negotiators had no idea what they were doing. Our hand was, and still is, extraordinarily strong. This deal should be ripped up by the next government and renegotiated in such away as to separate the Irish banks from the Irish state. The Republic is not the banks. The last time I checked, there was a harp on the front of my passport, not the logo of AIB.
Here is the information the next government needs to know to negotiate.
The ECB is in a hole of its own making, and should be squeezed. More than 90 per cent of the net money that the ECB is injecting into the eurozone on a daily basis to keep the banking system functioning goes to banks in Ireland, Greece, Portugal and Spain.
If we look at the figures, we can see how strong our hand is. Of the total â‚¬279.9 billion of net liquidity the ECB provides, â‚¬115.4 billion goes to Ireland. Now, of course there is liquidity given to Irish banks that is not covered in these numbers. This is under a category called ‘‘other assets’’ on our Central Bank’s balance sheet (with the full knowledge of the ECB).These come to a whopping â‚¬34.6 billion.
If we add this number to both sides of the equation, we get â‚¬313.6 billion total net liquidity, with â‚¬150 billion net coming to Irish banks. That means that 48 per cent of the total net exposure of central banks to the European banking sector is to Irish banks.
Remember, we only account for 1.7 per cent of the eurozone’s GDP.
So our problem has become their problem. And it is a â‚¬150 billion problem that ECB president Jean-Claude Trichet can’t walk away from. The deal to do is a debt-for-equity swap, where the ECB will have to figure out away of taking equity on to its balance sheet.
Can you imagine how different the deals at the Ennis mart would be had the farmers been aware of information like this? Can you imagine how low the price of cattle would be, had the farmers known that them art had millions of surplus cattle to mop up that day, rather than what had been advertised?
I write on the day that Brian Cowen’s poll rating slipped below the cost of borrowing for the Irish sovereign bonds. What a political epitaph!
Hopefully, the new guy will have the ‘horse sense’ to see that we can get out of this deal, and cut a deal that would earn respect from the lads at the canteen in Ennis mart on a frosty Thursday morning.
David McWilliams performs Outsiders in the Pavilion Theatre, Dun Laoghaire, on Tuesday and Wednesday