Friday, 31 December 2010

Momentous Year From Bad To Worse...

A momentous year which went from bad to worse...

Siobhan Creaton uses the alphabet to summarise the main events of what proved to be a tumultuous year for Ireland

A The nightmare that is Anglo Irish Bank continued in 2010 when its staggering €35bn of bad loans finally bankrupted the country. Some of the bank's top brass were arrested and questioned by gardai, and the Director for Public Prosecutions will decide next year whether they will face charges for their recklessness.

Sean FitzPatrick did suffer the humiliation of being made bankrupt while his protege David Drumm filed for bankruptcy in the US where he may fare better in the long run.

For many months politicians dithered and differed over how to solve the Anglo problem before finally agreeing to wind it down. So in 2011 Anglo Irish Bank will disappear forever but Irish taxpayers will be paying for its failure for many years to come.

B 2010 will go down in history as the year when Ireland agreed to take an €85bn bailout from the International Monetary Fund, the European Union and the British and Swedish governments.

Due to the scale of Ireland's crippling bank debts, the Government's finances will be closely monitored by the IMF/EU. Every week it will be expected to tell Ireland's lenders how much cash there is in the kitty followed by detailed monthly and quarterly reports.

The years ahead will be lean and we can only hope our new masters' recovery plan will restore us to financial health.

C Contagion was the big fear across Europe as Ireland's debt problems threatened to topple the euro. By virtue of our toxic banks Ireland is now part of the PIGS of Europe -- a motley crew of the regions' sickest economies that also includes Portugal, Greece and Spain.

For months bond holders targeted the euro's weak links, first attacking Greece and forcing it to be bailed out before turning their sights to Ireland. The attention next year will focus on how Portugal and Spain.

D Billions of bank deposits were pulled out of Irish banks as international investors took their money to safer havens. AIB, Anglo Irish Bank and Bank of Ireland saw more than €36bn being withdrawn as corporate deposits were shifted to AAA-rated institutions.

This left a massive hole in their balance sheets and left the Irish banks reliant on the ECB to provide them with cheap money.

Many nervous Irish bank customers also switched their money into foreign-owned institutions despite the Government guaranteeing up to €100,000 at any bank, building society or credit union regulated by the Financial Regulator.

E Ireland has remained a leading exporter of manufacturing goods and services and the sector continues to attract high levels of inward foreign direct investment.

Lower costs and the availability of a large pool of skilled workers are amongst the upsides of the economic gloom for exporters. The retention of our 12.5pc rate of corporation tax is also welcome as the bulk of Ireland exports come from the multinationals.

But the only way to ensure an export-led recovery that will create jobs is for Irish-owned small and medium sized businesses to seize international opportunities.

F Kerry-based financial services group FEXCO moved into the major league by purchasing Goodbody Stockbrokers from a distressed AIB for €24m in cash.

It's a bold move that will put the firm in direct competition with the likes of Davy and NCB for the first time in its history.

Brian McCarthy's business was in the envious position of having a €123m cash pile at a time when AIB desperately needed the money and walked away with what looks like a bargain.

Goodbody's senior management are staying on board, taking a stake in the business but there will be redundancies as the two businesses are merged. This transformational deal for FEXCO will be approved by regulators early in 2011.

G There was good news in Co Monaghan where the exploration company Conroy struck gold. The firm, headed by Richard Conroy, is set to develop a gold mine at Clontibret after "excellent" results confirmed the find.

And the company has hopes of an even bigger discovery at Clay Lake, Co Armagh. It has raised enough money to fund the work it needs to complete feasibility studies at the one million-ounce prospect at Clontibret and is excited about the company's prospects.

H It was left to Central Bank Governor, Patrick Honohan, to confirm that Ireland was definitely taking a bailout after days of denial from Taoiseach Brian Cowen and senior ministers.

"We're talking about a very substantial loan for sure -- tens of billions, yes," he told RTE's 'Morning Ireland' as the IMF team arrived.

His intervention sparked rumours of a deep rift between the Government and the central banker with the Taoiseach saying sniffily that Mr Honohan was entitled to his opinion.

The controversial Central Bank Governor also declared that the Irish banks were "up for sale" and that he was "relaxed" about who owned them.

I The Republic of Ireland was put up for sale on for €900bn or nearest offer. The 74,000sqkm island at the edge of western Europe was advertised with full planning permission for 300,000 homes, eight prisons, five public hospitals, one city metro system, 10,000 schools with extensions as well as hundreds of unfinished road developments ranging in size from national primary roads to larger motorway systems.

"In need of some refurbishing," it said. "Also comes with a variety of weather, nationalities and political opinions." Offers to Taoiseach Brian Cowen. (No time wasters please)

J News on the jobs front was mostly bad with the Department of Finance expecting the rate of unemployment by the end of 2010 to be around 13.5pc as thousands of people continued to lose their jobs.

There was some relief with companies such as Citi group, outsourcing company OSG, HP and Facebook all seeking to recruit new staff. The Government announced an ambitious plan to create 300,000 jobs over the next five years in the business and tourism sectors, with 30,000 to be created in 2011.

K UCD academic Morgan Kelly, who forecast Ireland's spectacular property crash, emerged once again with more grim predictions.

If you thought the bank bailout was bad, he warned, wait until mortgage defaults hit home. Dr Doom says that, while the first round of the banking crisis centred on a few dozen large property developers, the next will involve hundreds of thousands of families with mortgages.

At least 100,000 or one-in-eight mortgages are already underwater and struggling to make repayments.

L New legislation will give the Finance Minister powers over banks guaranteed by the Government that would be the envy of North Korea's masters.

The opposition claimed the Credit Institutions (Stabilisation) Bill would give Brian Lenihan the most powerful position ever given to any minister in any government in the history of the State.

But the Finance Minister insisted these sweeping powers were necessary to intensify the Government's efforts to resolve the banking crisis and the financial stability of the nation. Independent TD Finian McGrath was reminded of Cuba when debating the Bill.

"One big difference, however, is that the Cubans nationalised the banks when there was money in them, but we take major shareholdings when the banks are broke," he said.

M One of Ireland's biggest and best-known property developers Bernard McNamara's empire came tumbling when the National Asset Management Agency moved to shut it down. McNamara, who owes about €1.5bn to Irish banks, had been working with Ireland's bad bank to agree a business plan for his company but his debts were too big.

NAMA went to court to have his building firm, Michael McNamara, liquidated and soon its assets were put up for sale.

The company was owed millions by other companies he controlled and with no prospect of repaying them. NAMA believed his building group could not survive.

N Ireland's bad bank was forced to defend itself in a court action taken by property developer Paddy McKillen.

The publicity-shy tycoon, who stayed away from the High Court during the hearing, took the first serious challenge against NAMA.

He believed that the transfer of €2.1bn of his loans to the agency -- which is also his tenant at the Treasury Building in Dublin -- would irreparably damage his vast property empire.

NAMA emerged unscathed but Mr McKillen, who claims to be facing commercial disaster as a result of the transfer of his loans to the agency, has appealed the verdict.

O The south Dublin suburb of Dalkey may become the centre of Ireland's oil industry if Providence Resources strikes oil off its coast. The company is set to begin drilling just off Dalkey Island to assess how much oil and even gas might be there.

The exploration will be offshore and shouldn't upset residents like U2's Bono although there are concerns about the potential impact on the exclusive neighbourhood.

P One of Ireland's biggest building contractors Pierse collapsed under the weight of some €200m in debts.

The firm founded by Ged Pierse in 1987 had undertaken many major construction projects in Ireland for the last three decades.

But the collapse of the property market dealt a fatal blow to the contractor which was forced to ask the High Court for protection against its creditors.

It was owed €16m by Gannon Homes, a company controlled by developer Gerry Gannon, while Pierse owed subcontractors and suppliers more than €50m.

An intricate 'spider's web' of enormous intra-company loans was exposed as being at the heart of the group's problems.

Q Sean Quinn and his family ended the year owing Anglo Irish Bank a whopping €2.8bn as efforts continued to restructure and sell his Co Fermanagh-based empire.

Once Ireland's richest man, Mr Quinn has given a "firm commitment" to repay this debt but his prospects are bleak.

He has lost control of the business he built over three decades while the circumstances surrounding the purchase of his family's stake in Anglo Irish Bank are still being probed.

R Europe's Commissioner for Economic and Monetary Affairs Olli Rehn became a household name.

The Finnish politician is Ireland's new economic overlord as the man who oversaw our austerity plan and who knocked politicians' heads together to engineer the bailout.

"The Irish are smart, resilient and stubborn people: they will get over this challenge and the EU is supporting them in that," he has soothed.

S The Government is getting ready to sell off the family silver to pay for the bailout. In the months and years ahead companies like the ESB, Bord Gais, Coillte, Dublin Port and even the National Lottery licence will all be sold as part of the biggest ever shake-up of the semi-state sector, which is worth about €10bn.

The Government's stake in Aer Lingus could also be put on the market and spark another battle with Ryanair for control of the air routes in and out of our tiny island.

T Dublin Airport finally opened its second terminal. At a cost of €600m it is an impressive building that has so far seen very little activity.

Etihad is the only airline that is fully operational there with Aer Lingus operating a few flights -- leaving the 40 shops empty.

With passenger numbers declining rapidly it will be a challenge for the Dublin Airport Authority to make it pay.

Michael O'Leary, who has pledged that Ryanair will never use T2, described it as a statement of modern Ireland: "A big bankrupt property development."

U As the Government gets ready to sell the banks it now controls, other financial institutions will also go under the hammer.

Royal Bank of Scotland, which owns Ulster Bank, is keen to offload this bank and get out of Ireland to concentrate on more vibrant markets.

Ulster has racked up enormous bad loans and has transferred more than €29bn into RBS's own toxic skip.

The RBS boss, Stephen Hester has promised a wave of asset sales and job cuts in 2011 that could see another familiar bank exit Ireland's high streets.

V Vodafone Ireland chairman Brian Patterson attacked the media for its overly gloomy reporting of Ireland's bankruptcy while wagging his finger to say that everybody was to blame for the country's economic woes.

His remarks are of significance only because Patterson is a former chairman of the Financial Regulator at the height of the boom when Anglo and AIB were lending recklessly.

"We were all responsible," he said several times in a speech to Kilkenny Chamber of Commerce. We are certainly all responsible for picking up the tab anyway.

W Wikileaks brought us the news that there are two sites in Ireland of vital importance to US national security.

The 12,200km Hibernia Atlantic transatlantic communications cable that links North America with Ireland, the UK and Europe is a key piece of infrastructure.

While the bio-tech Genzyme plant in Co Waterford was also a vital enterprise as far as the Americans are concerned.

Genzyme's 37-acre biotechnology site is a subsidiary of a Massachusetts-based multinational that produces Thymoglobulin, a kidney transplant rejection treatment product, as well as other products. It employs 460 people outside Waterford.

X Supermarket chain Tesco enjoyed lots of good publicity as the public followed the success of check-out operator Mary Byrne on the 'X Factor'.

Byrne moved to London once she made it through to the live shows but customers were treated to cardboard cut-outs of the singer for weeks and asked to vote for her.

The Dubliner, from Ballyfermot, didn't make the final but has secured a record deal and is hoping not to return to working on the tills in the near future but won't rule it out.

"I'm still an employee of Tesco and if things don't work out, I wouldn't have any qualms about coming back here,' she said.

Y Poet Theo Dorgan offered some solace to University College Cork's young graduates who like so many in Ireland now are facing an uncertain future.

Those who must emigrate, he said should go with a full heart and high expectations of the world. "Do not go in defeat, with regret, in loneliness."

And those who stay have the same opportunities to learn and explore, to discover and innovate, to be surprised and joyful, to learn and to help teach us all what it is to be fully human.

"The nation is beaten down, but not defeated. A certain kind of Ireland is over, and we are well rid of it; there is a new Ireland to be imagined and worked for, a new kind of Ireland to build, and it is you who must build it."

Z Farewell to Bank Zachodni WBK. The Polish bank that was the "jewel" in AIB's crown was put up for sale by the beleaguered Irish bank.

Spanish bank Santander snapped it up in a €3.1bn deal and also bought AIB's 22pc stake in the US bank M&T for another €1.5bn, as it struggled to raise cash.

Bank Zachodni WBK was Poland's third biggest bank and its prospects were bright. It was a dire outcome for AIB. Years of reckless lending have left it an insolvent wreck that will be sliced, diced and sold to whoever will take it.

Irish Independent

Monday, 27 December 2010

Surge In Emigration...

Surge in emigration as economic downturn takes toll...

THE NUMBER of people moving to live in Australia, Canada, the US, New Zealand and Britain over the past year has increased sharply, reflecting a major surge in emigration due to the recession.

New figures show Irish citizens have received 21 per cent more long-term resident visas for Australia, 49 per cent more New Zealand resident visas and 33 per cent more US immigrant visas.

There has also been a 100 per cent increase in the number of Canadian work permits issued to Irish people and a significant increase in the number of similar visas issued for Australia. The number of people moving to Britain has risen by 2 per cent in 2010, which amounts to just under 1,000 Irish people moving to Britain every month to live.

The figures from five of the most popular destinations for Irish emigrants are in line with recent data from Central Statistics Office, showing 65,300 people emigrated in the year to April 2010, the highest number leaving the country since 1989.

Britain and Australia are the most popular destinations for Irish emigrants but there is also a major increase in the number of people moving to work in Canada.

In the first six months of 2010, Canada issued 3,077 work permits to Irish citizens, which is more than the 3,047 it issued during the whole of 2009. This corresponds with a steady rise in Irish workers in Canada recently: 2,959 in 2009; 2,617 in 2008; and 2,392 in 2007.

Australia has seen a similar increase in the issuing of permanent residence visas. In the year to the end of June 2010, 3,041 Irish people got migration programme visas (for highly skilled workers), up from 2,501 a year earlier. A separate visa programme, which enables Australian firms to sponsor workers on a temporary basis, is also experiencing a big increase in Irish applicants. In the five months to November 30th, some 2,290 people received these visas, compared to 3,370 for the whole of the previous 12-month period.

However, the number of holiday working visas issued to Irish citizens under 31 years for Australia fell to 14,833 in the year to June 30th, 2010, down significantly from a record high of 22,786 in the previous 12 months.

Liz O’Hagan, founder of the firm Australian Visa Specialists, said this probably reflected the fact that many young people had already been on the programme and were now looking for ways to get long-term Australian visas.

Britain has not experienced a dramatic upturn in immigration. Some 5,630 national insurance numbers were issued in the first six months of 2010, suggesting full-year figures will surpass the 11,050 people in 2009 and the 10,550 people in 2008.

The US issued 287 immigrant visas to Irish people in the year to end September 2010. This represents a 33 per cent increase on the figure in 2009, although it is so small a number it is almost irrelevant to the figures.

Some 1,637 people gained legal permanent resident status in the US in the year to end September 2009 but no figures are available yet for 2010. Some 14,444 non-immigrant visas, covering students work programmes, intra-company transfers and other temporary workers, were also issued in the year to end September 2010.

Irish immigrant groups also suggest there has been an increase in illegal emigration to the US.

The number of permanent resident visas issued by New Zealand to Irish people is up 49 per cent at 434 in the year to end June 2010. It has also issued 4,010 work visas to Irish people, up from 3,936 in the previous 12-month period.

Dr Alan Barrett, who co-ordinates the migration programme at the Economic and Social Research Institute, said the emigration figures reflected one of the most depressing aspects of the economic downturn. He said, given there are few job opportunities in Ireland, it was probably preferable that people went away to work elsewhere to maintain their skills.

“But regardless of these possible benefits, emigration that is involuntary is saddening and brings back sad memories for people of my generation who left college in the 1980s,” he said.

Report by JAMIE SMYTH - Irish Times

Useful links:

Guide to Moving to Canada

Guide to Moving to New Zealand

Guide to Moving to Spain

Nursing Jobs in Australia

Jobs in Dubai

Wednesday, 22 December 2010

Horses Abandonded As Financial Crisis Bites...

Thousands of horses and ponies abandoned in Irish countryside as financial crisis bites...

Tens of thousands of horses and ponies are believed to have been abandoned in the Irish countryside as families struggle to cope with the financial meltdown.

Animal welfare inspectors have had to shoot some of the worst affected animals left badly weakened by exposure, starvation, sickness and injury.

With costs of feeding or keeping the horses in stables running to £26 per day, generations who have kept horses as a passion have no longer been able to afford to keep them.

Irish Prime Minister Brian Cowen has pledged £12.8billion in spending cuts and tax increases over the next four years.

The austerity measures are expected to lead to a 10 per cent cut in the disposable income of Ireland's middle class, and worse for those on lower incomes, leaving them without the funds to care for domestic pets.

Irish law requires owners to have animals registered and microchipped, but it is not rigidly enforced.

Thousands of people are thought to have invested in horses or ponies during the boom years in Ireland, fuelled by a property bubble in the country.

Reckless breeding has also seen the horse population soar rapidly.

Many were kept in gardens, fenced-off building sites or on common land.

But the global financial meltdown has led to them being left to wander in the countryside as owners are unable to pay for their upkeep.

Joe Collins, president of the Veterinary Council of Ireland, estimates there are between 10,000 and 20,000 'surplus horses' across the country.

Ted Walsh, father of top steeplechase jockey Ruby Walsh, said that number could be as high as 100,000.

Thousands of the animals have been left to roam around the site of Dunsink tip, just miles from the centre of Dublin.

Many of them have been shot with a .32-calibre pistol by animal welfare inspectors as they were too weak to survive.

The Dublin Society for the Prevention of Cruelty to Animals has been forced to limit its stabling capacity in the hills around Dublin and slash its $500,000 budget for horses and ponies.

In 2008, it took in 26 sick or injured horses and ponies; last year that figure was 106, and so far it has cared for 115, according to the New York Times.

Some of the released animals are even recaptured and sold to unregulated horse markets for as little as £10 each.

Report - Daily Mail.

Friday, 10 December 2010

Corporate Welfare Will Sink Ireland...

FF's parting gift of corporate welfare will sink the country...

A farmer told me he had just taken €53,000 out of the local bank and put it under his bed

YESTERDAY was the feast of the Immaculate Conception. In many other Catholic countries, particularly in Belgium and southern Holland, this is also the week that Santa comes and leaves presents in children's shoes. For many, both the Immaculate Conception and Santa Claus are simply not believable. For me as a child, December 8 was a day off school and that's all that counted.

What would Christmas be without Santa, or Catholicism without the Immaculate Conception? You can't have one without the other. Even if you don't believe, sometimes it is easier to pretend.

The Budget was akin to the Government playing a big game of 'let's pretend'. Let's pretend that the banks are solvent. Let's pretend that the problem in Ireland is 'social' welfare rather than 'corporate' welfare (because this is what bailing out the banks amounts to) -- welfare fraud by corporations. Let's pretend that the Budget can make the economy grow. Let's pretend that some other country has tried austerity without mass debt restructuring and succeeded. None of the above are true.

The problem with 'let's pretend' games is that, when we are young, they allow a child's imagination to flourish, with reality and fantasy crossing over, but when we become adults, we know it's only a game. We also know, for example, that the reason no country has ever tried what we are doing -- austerity budgets without debt restructuring -- is that it doesn't work. So why go through the charade?

The people know the Budget will not get us out of the hole, and they are voting with their pockets by taking money out of the banking system. The official response to this was, first, to deny it is happening and then to say it is all right because as quickly as our deposits leave, the ECB injects new cash into the banks and the net position stays the same. But this is a recipe for a banking collapse, as it implies that a banking system without deposits is a banking system; it is not.

For example, the other night, following a performance of 'Outsiders' at the lovely Backstage Theatre in Longford, a local farmer approached me tentatively. He mumbled for a bit, complained about the weather and abruptly told me that he had just taken €53,000 out of the local bank and put it under his bed (and being a farmer he had a shotgun by the bed). He didn't solicit any advice as to whether this was a good or a bad thing to do; he just stated baldly his own personal conclusion about the banks, the economy and the financial affairs of the nation in general.

Either we fix the banks or this farmer's approach will become commonplace and the establishment's course of action that increasingly looks like national economic suicide or 'patricide' will continue.

The only part of the banking system that is currently working is clearing. Most deposits are still in the banks, cheques still clear, the ATMs still work. But that is it. The original guarantee prevented a run back then, but the problem has changed utterly since September 2008. It is now failing. The reason it is failing is that it was the right solution to the wrong problem.

The banks are insolvent. It is interesting that the conversation is now about comparing levels of insolvency. Bank of Ireland is quite insolvent, AIB is more insolvent and Anglo is completely bankrupt. The thing about solvency is that either you are or you are not. You can pay the bills or you can't. None of our banks can pay their bills.

So, what is the solution? Let's look at the numbers. In September 2010, when the guarantee expired, the banks had €55bn of bonds that they needed to roll over. The market, knowing that the banks were insolvent, said 'no thanks', so the ECB and Irish Central Bank stepped up to the plate and provided the liquidity the banks needed in order to open for business the following day.

To that €55bn we can add the €35bn the ECB had already provided in liquidity, giving us €90bn.

Then we can add the €34bn of special liquidity provided by the Irish Central Bank and we get €124bn. To resolve this mess, we have to look to the biggest holders of Irish bank debt: the ECB and the Irish Central Bank as well as the bondholders.

It should be very easy to convince Mr Trichet that allowing Ireland to go bust -- as we surely will with the albatross of bank debt hanging around our neck -- would be against the very raison d'etre of the ECB.

What is the biggest cause of runaway inflation in every country from Weimar Germany to Zimbabwe? A currency that people think is weak, and therefore don't trust. The one thing that will weaken the euro is a sovereign default within its borders. It would turn into an existential crisis for the currency. There is no one willing to trust a currency whose continued existence is in doubt. Result? The euro plunges on the international market.

To stop this happening, the ECB has to sort out the Irish banking system in a way that does not lead to the people of Ireland being saddled with debts we cannot afford.

It should be fairly easy if there is a will to do it.

All deposits in Irish banks are held electronically. Ring fence these and move them to another institution. (This is not as odd as it sounds, it is exactly the plan Patrick Honohan outlined for the depositors in Anglo when he said that institution would be wound up by the end of January.) If a suitable institution does not exist, then we should create one.

The debts of the banking system can also be moved to the new institution, but the ECB would have to allow the money it is providing as liquidity to become capital in the bank. It would own, along with the other bondholders, 100pc of the shares in the new bank. As the property market here finally starts to clear, the bank could be sold to the private sector, fully capitalised and in good health.

Ireland is a systemic risk to the euro. We can deal with our own sovereign debt. We cannot deal with the debts of private institutions that went on a lending splurge to the private Irish banks for quick profits, nor should we.

If the ECB does not allow us to forego the bank debt, then it will reap what it is sowing. We will cause a crisis for the eurozone, and the demise of the very institution that has the power to save both itself and us.

The austerity Budget, without a deal on the banks, will lead to patricide. Corporate welfare, not social welfare, will sink this country. Will that be Fianna Fail's legacy?

Article by David McWilliams - Irish Independent

Saturday, 4 December 2010

It's A Scandal, We're Being Screwed...

It's a scandal, we're still being screwed to pay bankers their bonuses...

This must be the final insult. In three days' time, Brian Lenihan's Budget will take a big chunk of money from every taxpayer in the country to bail out our failed banks.

Now we discover that those same banks have already been using public cash to pay their staff handsome bonuses and salary increases that will ensure they escape the worst of the pain.

Needless to say, this information has not been exactly been freely volunteered by the banks themselves. In fact, it has only emerged because the backbench Fianna Fail TD Chris Andrews put down a written Dail question on the issue last Wednesday.

A new opinion poll suggests that as few as 16 FF TDs could be returned in the coming general election -- but Andrews' willingness to confront his own Government's policies suggests that if there's any justice, he will be one of them. The evidence is clear.

Over the last two years, most workers have been forced to take pay cuts but AIB and Anglo Irish actually bumped up some staff salaries by 3.2pc and 5pc respectively.

This might seem like a generous gesture, until you remember that the Government was simultaneously pouring money into the banks' coffers in order to pay for their leaders' mistakes.

In the real world, bonuses are something that you only get if you've done a good job. It comes as something of a surprise, them, to discover that a grand total of 15 Anglo Irish staff members received these awards in 2009 and 2010.

Since Anglo is now one of the most pathetic basket cases the banking world has ever seen, we can only imagine how much worse things could be if these people hadn't been doing such sterling work behind the scenes. It would be bad enough if the only people to benefit from these pay increases were frontline staff, who are at least innocent of the crimes and stupidity that have brought this country to its knees. Instead, it seems that banking executives are as keen as ever to stick their own snouts into the public trough.

Earlier this week a Central Bank report found that only one bank was making a real effort to reform its pay policies, while the others were still presiding over the Celtic Tiger culture of perks, bonuses and golden parachutes.

As the report points out, this greed mentality is also responsible for the toxic loans that eventually led to the national humiliation of last week's IMF/EU bailout.

To put it very politely, most of us would be quite keen to see that not a red cent of this goes towards lining the pockets of banking executives.

Of the €35bn that has been earmarked for the banks, almost half will come from the National Pensions Reserve Fund -- while the likes of Michael 'Fingers' Fingleton can retire on a gold-plated €27m pension that the law is apparently unable to touch.


Since these people clearly don't do shame, it is up to the Central Bank to put manners on them. While Patrick Honohan's new regime seems to be a vast improvement on his predecessor's, however, it is still far from clear that the straight-talking governor has the powers he needs to clean up this mess.

This week's report even begs whistleblowers within the banks to expose any executives who may be overpaid, a shocking admission that the regulators are apparently unable to get this basic information for themselves.

Tuesday's Budget will be yet another grim reminder of how the banking system has bled this country dry. It seems that no amount of taxpayers' money, however, will make these financial institutions anything other than morally bankrupt.

Report - Evening Herald.

Wednesday, 1 December 2010

Bailout Will Sink Ireland...

Bailout will sink Ireland before we can even swim...

Foreign banks and creditors should lose everything they gambled on the likes of Anglo, but instead, they have been saved by the taxpayer

Make no mistake about it, this 'bailout' will sink Ireland. We are witnessing a monumental struggle between the innocent average Irish person and the guilty creditors of the bust Irish banks.

Interestingly, the financial markets have seen through what the Government and the elite are trying to do and have reacted with ferocious negativity to the Irish deal.

The markets realise that the Irish State is not bust; rather the Irish banking system is bust. Therefore, rational people can see that any deal which is framed to give Ireland a chance has to sever the link between the bust banks and the solvent State.

However, far from severing the link, the deal solders the link between State and banks, making the Irish Republic itself little more than a bust bank. The rest of the world has twigged that what the elites are trying to do is preserve their system by giving the bill to the people, and this will not work. This is why, far from calming the financial markets, the IMF deal with Ireland has enraged them.

Extraordinarily, the people who were supposed to negotiate for the Irish people not only negotiated against us, but couldn't see the backlash coming. Perhaps this is because few of them have any real financial market qualifications.

So, rather than force the ECB to account for its own monumental culpability in allowing out-of-control German and French banks to lend recklessly to Irish banks, the Irish negotiators turned sides and acted as debt collecting agents of foreign banks.

Think about what is happening in our country. Foreign banks and creditors should lose everything they gambled on the likes of Anglo, but instead, they have been saved by the Irish taxpayer, who had nothing to do with executive decisions at Anglo and the other banks. These same major international banks will now lend money to the EU who will lend it to us and the same banks will make more money on interest from us.

So the very banks that should be punished for their failures are being bailed out by the Irish citizens and, worse still, they will get paid more interest from us in the loans they are now extending to us, to save themselves!

Let that sink in for a minute. This is not capitalism, it is not European diplomacy; it is a stitch-up.

This is only the first part of the terrible fantasyland we have been led into.

In order to get to the bottom of what is happening, we have to clear up a few things. First, we have to stop calling it a bailout. This isn't anything like a bailout. Rather it is the EU giving us enough rope to hang ourselves in the hope that we don't hang all of them.

Of course, as soon as they gave us the rope, they started discussions on a mechanism that would ensure no other country would have to be beggared by a profligate out-of-control administration again.

Amazingly, our so-called negotiators signed a deal that will be the last of its kind ever signed by a European government and, in so doing, they have condemned their own people.

The EU leaders realised last weekend that the problem was bigger than Ireland, so they have committed to come up with a construction in the weeks ahead which will mean that in the future when banks get into trouble for lending too much, they and their creditors will pay. They will share the burden.

But Ireland will not be allowed to avail of such a deal because that would be retrospective. So rather than dig their heels in, our negotiation team signed and allowed the EU to treat Ireland differently to any other country. We can go hang.

So not only have they given us a rope, but the interest rate on the rope is nearly a death sentence in itself. It is reported that the "blended rate at current market prices will be 5.82pc". As opaque phraseology goes, that one is pretty meaningless.

But let's accept that at face value, and look to the costs of the financial noose our 'friends' in Europe have given us.

There are two sides to the story.

First, there is the cost side. If we borrow the entire €67.5bn and scrape the bottom of our own barrel to come up with €17.5bn, we can add €85bn to the current outstanding €90bn of debt. That will leave us with a national debt of €175bn by the end of 2014. The interest on this will come to about €8.5bn per annum. This, of course, is the optimistic scenario.

Anyone who has watched in horror as the cost of Anglo has risen from zero to €4bn to €12bn to €18bn to €24bn to €35bn over the past 26 months will know exactly what stock to put in government forecasts.

But the other side of the story is growth.

If this debt is not to drown us, we need the economy to grow at a pace that is greater than the interest we are paying on our debt.

With a debt/GNP ratio far above 100pc our growth will have to be in the order of 8-10pc by 2014 for the economy just to stand still. Anything less than that and the interest payments head off on an unsustainable tangent.

Without growth at these levels, the interest payments leaving the economy (a major problem when a country has all its debt owned offshore) will prove such a drain on the State that we will end in a debt-deflationary spiral. This is where our growth fails to meet the interest payments, making the following year's growth lower as there is less investment, making that year's interest payment more burdensome, leading to less growth etc, until a huge default becomes inevitable.

So where will this growth come from? Where can it come from?

The assumption underlying the four-year plan is that things will not get any worse. That is some assumption. But let's allow it for a moment. Has there been any government policy recently that is aimed at improving opportunity for the future? Or have they all been about preserving the past, and the "insider" power nexus that got us here in the first place?

The bailout hits the sweet spot where the interests of our insiders and the European insiders meet. Luckily for us, the financial markets do not have the same interests. The markets want growth, not punishment, which is why they are sceptical.

Without a radical change in the way this country is governed, there is no hope of growth returning. Our only hope is that maybe there is a tide coming that will wash away the 'insiders' and take their policy decisions that will bankrupt the country with them.

Article by David McWilliams - Irish Independent

Monday, 29 November 2010

Ireland To Be Crippled By €10bn A Year Interest...

THE country is facing crippling interest payments of €10 billion a year after the European Union and IMF agreed to an €85bn rescue package to fund the economy for the next three years.

The bulk of the money, €50bn, will be used to pay for the day-to-day running of the country.

The banks will receive €8bn immediately to restore their cash reserves; €2bn will be on standby and a further €25bn will be available if and when they need it.

The money will come from the IMF, our Euro area partners and loans from Britain, Denmark and Sweden.

In addition, the country has been told to take €12.5bn from the National Pension Reserve Fund and use €5bn the NTMA had already borrowed to pay for early 2011.

The expected average interest rate for the bailout will be 5.83%.

By 2013 the national debt is expected to rise above €200bn and by then almost a quarter of all taxes raised will be used to pay interest service costs.

At the end of the term this is expected to have climbed to €9.66bn a year if the banks have drawn down the full amount of capital. In return, Ireland has not been ordered to raise its corporation tax and it has been given an extra year to get its borrowing levels back within targets for the eurozone.

Senior bondholders in the banks will not have to absorb any losses, after this proposal was blocked in Europe because it was feared the move would undermine the stability of the entire financial system.

Taoiseach Brian Cowen said the agreement was "the best available deal for Ireland".

He said the interest rate was cheaper than Ireland could have got on its own and the deal was "necessary to allow us to fund our budgets over the coming years".

Fine Gael finance spokesman Michael Noonan said the interest rates meant the country was "sold out" in the negotiations.

Labour leader Eamon Gilmore said the IMF and EU walked over a Government without backbone or authority.

The details first emerged in Brussels at 6.15pm yesterday when Luxembourg’s Prime Minister Jean Claude Juncker announced the deal between Europe’s finance ministers had been struck.

Twenty minutes later Mr Cowen addressed a press conference at Government Buildings and spelled out how Ireland would be funded up to 2013.

The agreement demands that Ireland broadly sticks to the terms of the four-year plan announced last week, introduces a property tax and raises the pension age.

A fiscal responsibility law will have to be imposed on Government and an advisory council on budgetary affairs established.

The minimum wage will have to fall by €1 an hour and employers will be given greater scope to plead an inability to pay.

Future governments will also be restricted during the lifetime of the deal. If they raise any revenue not budgeted for, it will have to go towards paying debt rather than additional services.

In terms of the banks, €10bn will be made available straight away. Of this €8bn will be channelled into the institutions directly and €2bn as a short- term contingency fund.

From the immediate €8bn pot the Central Bank said Allied Irish Bank will get €5.2bn, Bank of Ireland €2.2bn, EBS €438m and Irish Life and Permanent €98m.

A further €25bn will be available for the banks to be drawn down when they require and after the Central Bank enforces new capital requirements.

The amount of money the banks take from the remainder of the fund will be added to the national debt and this will increase interest costs.

The breakdown of the rescue package means that €12.5bn will be taken from the National Pensions Reserve Fund and €5bn from our own cash reserves. The European Commission’s stabilisation fund will supply €22.5bn.

The Euro area’s emergency stabilisation fund will also lend us €17.7bn; Britain will offer €3.8bn; €390m will be given by Denmark and Sweden will lend us €598m.

The IMF will provide €22.5bn in a term of up to 10 years, with a minimum interest rate of 3.1% based on the current market. Head of the IMF team in Ireland Ajai Chopra said he was confident the Government will pass the budget on December 7.

He also said the open and flexible nature of our economy meant it was in a "much better situation than many others to rebound quickly".

Report by Conor Ryan, Paul O’Brien, Ann Cahill and Brian O’Mahony - Irish Examiner

Friday, 26 November 2010

Householder To Carry Can For Banks...

Householder to carry heavy can for errant banks...

HOUSEHOLDERS will be hammered. That is the clear message from the four-year austerity plan issued yesterday by the Government.

In plain language, if you own a home, have a pension and a son or daughter in college, you will end up more than €4,600 a year worse off by the time all of the changes in this plan have been implemented.

Many of the changes will impact early on in the four-year plan, putting additional pain on family budgets.

Middle Ireland is set to pay an extortionate price for the failures of our banks, our regulators and the Government. And significantly, there are no measures in the four-year plan to levy the errant banks.

Instead, homeowners will bear the brunt.

Personal finance experts last night warned the taxes, levies and charges would push many families over the edge financially.

The downturn has left many consumers just one bill away from financial collapse. The severe measures in the four-year plan could be enough to sink many homeowners struggling to pay bills.

People will enter the tax net at a much lower level of income, they will pay tax at the higher 41pc rate on more of their income, and will get lower tax credits than at present.

A tax credit is basically the amount of income you can earn before paying tax. The swinging changes will mean that income tax levels will come back to 2006 levels, Taoiseach Brian Cowen said yesterday.

The changes will mean that a married couple, with one income of €55,000, will see their annual income reduced by €2,310 from the tax changes planned over the next four years.

But one of the biggest surprises was the way pensions investment was pounded.

There is real pain for anyone sensible enough to take out a private pension plan.

Those providing for their retirement will now find it costs them an extra €32 for every €100 they put into a pension.

This is because of the loss of tax relief from PRSI and health levy payments when money is put into a pensions, and from the gradual reduction in the tax relief rate for pensions investment for higher taxpayers from 41pc to 20pc.

All this means it will make little sense to invest in a pension. Additional voluntary contributions (AVSs), used by those with inadequate pensions to top up their retirement fund, will no longer be worth investing in.

On top of all of this, college fees are set to surge by an additional €500 a year.

Then there will be higher VAT (value added tax) on goods and services – a measure which will hit everyone.

Middle Ireland will be disproportionately hit by the new site valuation tax to come in by 2013, even if it is set to average €200, lower than expected.

This is because measures will have to be put in place to exempt low-paid workers and those who have paid stamp duty. The net effect will be that middle Ireland will be carrying the burden here too.

Other taxes and levies, such as the doubling of carbon tax and the loss of tax reliefs, will mean it is set to become very expensive to live in this country.

The banks broke us, but the taxpayer ends up carrying the can.

Report by Charlie Weston - Irish Independent

Monday, 22 November 2010

Cowen Accepts Bailout - Not Blame...

Cowen accepts the bailout but not the responsibility...

As a result of an ill-judged edit, viewers of the national broadcaster missed the liveliest and most telling part of the press conference held tonight at Government Buildings by the current Taoiseach Brian Cowen and the current Minister for Finance Brian Lenihan. TV3 host and Irish Times columnist Vincent Browne asked Cowen if he accepted that he was to blame for “screwing up the country”; that he more than anyone else was responsible for Ireland’s economic catastrophe and that his continued presence in office was “a liability” to the nation.

“I don’t accept that at all,” replied Cowen, grumpily. “I don’t accept your contention [or] the premise to your question that I’m the bogeyman you’re looking for.”

Minutes earlier, a Bloomberg television journalist who asked if Cowen had ever thought of packing it in was told that the process of electing a Taoiseach was a parliamentary matter… mumble, jargon, mumble. As for whether or not he would lead Fianna Fáil into the next election, “obviously that is my intention”. All of this enraged Browne who temporarily became the voice of a nation’s anger about the bizarre lack of contrition on the part of a Taoiseach who insisted there was a rationale for every decision (that he would explain to Browne on another occasion if he wanted) and that every decision the Government had made was “in the national interest”. “I have always taken full responsibility for my actions,” said Cowen, lost in doublethink and seeming almost resentful of the television cameras.

He was also unable to answer Browne’s inquiry about the estimated level of Irish citizens’ future debt burden. This, he explained, would depend on the size of the drawdown on the assistance offered, which in turn would hang on further stress-testing of the black-hole-banks. Something to look forward to, then.

There is at this point no confirmation on the total size of the bailout from the European Commission, the International Monetary Fund (IMF) and the European Central Bank (plus some bilateral loans from the UK and Sweden thrown in for good measure). Lenihan earlier in the day said it would not be “a three-figure sum”, by which he really meant it would not be a 12-figure sum of €100,000,000,000 or more. In other words, it will be less than €100 billion, according to the Government. EU sources and UK banking analysts say something similar, in case the Government’s best guesses are no longer enough.

The only thing the press conference confirmed tonight, amid a blaze of obfuscation, was that Ireland will be taking the money. As a result, Irish public finances, for the next three years at least, will be subject to “regular reviews” by the external monitors that control the purse-strings. Whether the Government will be taking responsibility – as the concept of responsibility is understood by the (mostly livid) Irish viewers of the BBC and Sky (which kindly broadcast the press conference in full) – is as yet uncertain.

It’s an infinitesimally small comfort, but Browne’s series of questions, transmitted live to millions across Europe, will at least have shown internationally that Irish people are not okay with incompetence, not sanguine about fecklessness, not calmly accepting of economic negligence. This, in the long run, can only improve our reputation. Shortly after Browne’s indignant contribution, the two Brians exited stage left. TV3, for its part, is broadcasting a special edition of Tonight with Vincent Browne at 10.30 pm, where the rational apoplexy will continue.

Report Laura Slattery - Irish Times

Sunday, 21 November 2010

Cowen Out...

A nation's outrage to drive Cowen out...

Poll: public welcomes the IMF but roundly furious at government ‘lies’

THE Taoiseach, Brian Cowen, and his Government are at risk of being ignominiously driven from office, such is the level of anger sweeping the country this weekend.

The people have broadly welcomed the arrival of the IMF, are largely indifferent to emotive sentiment associated with a perceived loss of national sovereignty, but are roundly furious at the manner in which the Government has “lied” about the unprecedented events of last week.

As the Government now strives to further “spin” itself out of what is, by any measure, a glaringly obvious credibility deficit, its efforts to do so will be hampered by a disintegration of cohesion within its own ranks. This weekend, the Taoiseach is at odds with the governor of the Central Bank; the Minister for Finance is in agreement with the governor and, therefore, at odds with the Taoiseach; and at least two senior Cabinet ministers are smarting at having been so blatantly exposed by the political leadership of Mr Cowen and Mr Lenihan.

In an attempt to hold on to power, the Government is expected to attempt to explain away its misleading of a bynow hugely irate public upon the publication of a four-year economic plan on either Tuesday or Wednesday of this week. But this weekend, from within its own ranks, the Government has been told that it had fundamentally, some would say fatally, undermined the trust of the people. Today the former Minister for Defence, Willie O’Dea, a Fianna Fail TD, writing in the Sunday Independent, says “the Government’s actions and comments over the past 10 days have fundamentally undermined public trust”.

It now seems certain that Fine Gael and Labour, in particular, will seize upon public anger in an attempt to remove the Government, possibly before Christmas. Mr Cowen has already rejected calls for his resignation from an opposition that has scented his blood and that of the Government, but it is unlikely that either Fine Gael or Labour will leave it at that. Yesterday there was word from within both parties that they may move to mobilise the power of the people to drive the Government from office. “The people are ready to march on Government Buildings, like I have never sensed before,” a senior Fine Gael figure said yesterday.

But also in this newspaper, the economist Colm McCarthy echoes the view of the people on the question of national sovereignty when he says that while blame is necessary and unavoidable, “some of the outpourings during the week have been hysterical”. A nationwide Sunday Independent/ Quantum Research poll, the first to be taken since the arrival of the International Monetary Fund (IMF), the European Central Bank (ECB) and EU chiefs to, effectively, bail out a bankrupt country, has established precisely what is causing such widespread anger this weekend.

The poll has found, in summary, that the people are deeply resentful at the manner in which they believe the Government “lied” to them last week, and, consequentially, at the apparent lack of respect inherent in the Coalition’s public relations strategy. As Mr O’Dea writes today: “Putting out ministers to insist that the emperor is beautifully robed when onlookers can plainly see he is stark naked cannot be justified as a media strategy, even by the most inept of communications managers.” Asked whether they welcomed the IMF intervention, 63 per cent said yes and 37 per cent said no. Asked if there was tactical advantage in the Government “lying” to the public last week, 79 per cent said no and 21 per cent said yes.

The country is divided, but largely indifferent, on the question of whether the events of last week were a betrayal of the men and women of 1916: 47 per cent said yes, but 53 per cent said no. Yesterday, talks between Irish officials and representatives of the IMF, ECB and EU resumed. The discussions centre on the public finances and external support for the banking sector. They are expected to continue for a number of days. The Government’s fouryear economic plan is likely to be published, possibly as early as this week. Lest there be any doubt, the European Commission (EC) has warned that the plan is subject to its “thorough assessment”.

Upon publication of the plan, it is expected that the Government will formally submit a request for emergency funding to the European authorities and the IMF, an application which will be considered by eurozone finance ministers in the first instance. But already there are reports emanating from within the EC that the plan, which envisages cuts and tax increases amounting to €15bn over four years, may be insufficient. There seems little doubt that these matters will be decided by the European authorities and the IMF, with the involvement of the Government here. A government source yesterday claimed that the plan, as prepared, had been broadly accepted.

He said: “The process we are involved in at the moment is to access funds for Ireland going forward, as we have withdrawn from the financial markets on the advice of the NTMA.” A most serious issue facing the Government now, however, is whether any of its declarations can be accepted as even approaching the truth after the events of the last week. Last weekend, Reuters and the BBC reported that the Government was in preliminary talks with the EU with a view to seeking financial support. While there was an element of Europe-inspired pressure being applied on the Government through leaks to the international media, the Government’s repeated denial of the substance of the leaks turned out to be untrue. Ministers Noel Dempsey and Dermot Ahern, in particular, were pushed forward to deny the reports, which Mr Ahern, at one stage, described as “fiction”. Both ministers are now said to be deeply unhappy at the manner in which they were so publicly exposed by Mr Cowen and Mr Lenihan.

The credibility issue engulfing the Government was last week sharply illustrated on the RTE Prime Time programme, when the former Labour leader, Pat Rabbitte, engaged in a sharp exchange with Equality Minister Pat Carey. Mr Rabbitte said to Mr Carey: “You ought to be ashamed to show your face in this studio after you have brought our country to penury tonight, and the damage that you have done to people’s livelihoods, and start the young people emigrating again. You have destroyed this economy and you engaged in lies over the weekend.

“It’s about time you went because you can do no more damage to this country, and coming on here with your oul palaver about this and that and about structuring, etc. “You ought to be ashamed of where you have brought us tonight.” Mr Carey said: “No, I’m not ashamed.” Mr Rabbitte replied: “Well you ought to be, that’s the problem with you — when you ought to be ashamed you don’t have any shame.”

The Sunday Independent/ Quantum Research poll has found that 81 per cent believed Mr Rabbitte was right to attack Mr Carey in such a manner, while only 19 per cent felt he was wrong to do so. Respondents were also asked if they agreed with the claims of ministers that poor regulation of the banks was the sole cause of the current crisis: 69 per cent said no, 31 per cent said yes. It was not until Thursday morning that a confused and increasingly anxious public was reassured somewhat by the Central Bank governor, Patrick Honohan.

Mr Honohan intervened to explain that he expected a loan would be put in place, running into tens of billions of euro, to assist with Ireland’s banking emergency. But the Taoiseach repudiated Mr Honohan’s view, which he said did not necessarily reflect that of the Government. “The governor is part of the governing council of the ECB and it is a matter of public knowledge what the ECB general view has been,” Mr Cowen said.

In effect, however, Mr Cowen’s statement was also at odds with his Minister for Finance, who had told the Dail earlier in the day that he agreed with Mr Honohan’s comments. Mr Lenihan said that “a substantial contingency capital fund” could be made available to the State that could “create confidence in the firepower available but not be drawn down by the banking system”. He said this “would be a very welcome development”.

Yesterday, the former Taoiseach Garret FitzGerald said: “Such an open divergence between the views of the Taoiseach and his Minister for Finance is extremely disturbing and a government so deeply divided cannot long remain in office.”

Sunday Independent

Saturday, 20 November 2010

Re-Trace The Mess...

We need to re-trace our steps and go over what a complete mess has been made of this country...

IS sovereignty of so little account that two senior cabinet members can consider throwing it away while the rest of the Government don't even know their leaders are doing this? What is being done to our country? Who will buy us, or sell us, next?

What has really been going on since Brian Cowen concluded his disastrous occupation of the Finance Ministry and graduated to his even more disastrous holding of the job of Taoiseach?

We need to re-trace our steps and go over again what a complete mess has been made of this country's governance, bringing us the acute embarrassments of this week.

It began with Anglo, followed by all the other banks. It then proceeded to the Lisbon Treaty vote, enhancing Europe's powers over our sovereignty. Then it floundered into the disaster called NAMA and ended with debts that needed international rescue. It concludes with loss of sovereignty.

Anglo first. The sensational defence, by the court trustee in David Drumm's bankruptcy hearing in Boston last Tuesday, had as its central point the fact that Anglo made €7.65m available to Drumm for fraudulent purposes.

Drumm acted honourably in the face of incorrect loan documentation. The first documents would have released him from paying back the loans. Instead, he signed new documents, in return for the bank agreeing they would not sue him, nor take his family home, and would give him long-term repayment schedules, since the shares and his income had disappeared.

Anglo reneged on this, dragging him into court in November 2009. He fought the case and tried to settle, which Anglo did not want.

The letter to Drumm of January 10, 2008, spelled out that the loan was to buy Anglo shares. It details strict security charges. The recent events in Boston now make it unlikely that Anglo will achieve anything like Drumm's offer to them because of bankruptcy trustee Kathleen Dwyer's claims that these claims undermine the bank.

The original circumstances under which Drumm got money to buy shares soon became apparent as money flowed out of the banks. As I have said in an earlier article, Brian Cowen, the then Finance Minister, was told, and did nothing.

The Boston hearing was widely covered -- two pages in this newspaper. RTE gave the story 18 seconds. Big story, small coverage. Next day, RTE reported that the trustee was counter-suing Anglo, which is seeking to have her dismissed. RTE conceded: "This is rapidly becoming a complex and surprising court case."

On Wednesday, the Government reassured us that taxpayers were the main concern. It came late. On the road to Damascus, our leaders, bent on further persecution of the people, had suddenly been converted to this new aim. It was not there when Anglo collapsed under Cowen's and Lenihan's attempts to conceal their own mismanagement; nor was it part of the brutal follow-up.

NAMA is also a brutal process. It has brought virtually all private-enterprise development to a stop; it has robbed the developers of their assets; and has sold, in circumstances repeatedly shown to be ill-judged and simplistic, hugely important portfolios for short-term public gain.

NAMA is at the root of our troubles and has not operated in taxpayers' interests. NAMA has helped create the enormous black hole Ireland faces. It is responsible for drawing Europe into that hole.

NAMA is run by a well-regarded man, John Mulcahy. It is chaired by former civil servant and Revenue Commissioner Frank Daly. There is an academic, Brendan McDonogh. None of these men is qualified to assess a development appraisal, least of all Frank Daly, the chairman.

NAMA has distorted the property market. It prescribed the write-down without knowing how big the hole they were creating would be. Talk about 'known unknowns'! This is an 'unknown' unknown, due mainly to ignorance. There are instances of prime re-development sites given discounts of 80pc because NAMA says so, and not because the market would have said so.

Here is one example: NAMA acquired from Anglo a toxic loan this year for €40m. This haircut was down from €120m. Recently, NAMA announced its sale for €180m. The valuation was very far off the mark and it was foolishly naive to boast about it. Trumpeting the eventual sale was farce bordering on tragedy.

Did all that smoke and mirrors 'serve the taxpayer'? It beggared a developer and a bank. It created no jobs, did nothing to help the building or development industries, and provided the country with no harvest. It drove values down -- and we, the people, ended up seeing an even bigger cheque being drawn on our resources.

This was not corruption. It was ignorance combined with arrogance. There was a property bubble, no doubt. But the whole sorry mess, if managed properly, would have cost the State far less.

The State should then have sought help from the ECB. Instead, NAMA dug on. The hole got darker.

If Europe cared about us, it would insist on NAMA being reversed and its grossly offensive legal constraints repealed. But Europe does not care about us. Europe is here for Europe's sake. Europe is desperately trying to save a crumbling empire, a shaky currency and a smug bureaucracy; we are mere chaff in the wind, taking the medicine with loss of sovereignty because we foolishly voted for it in the second Lisbon Treaty referendum.

Dear, beloved country, why did you not listen to me then?

Article - Irish Independent

Friday, 19 November 2010

Calls For Taoiseach To Resign...

Labour leader Eamon Gilmore today demanded the Taoiseach resign in the national interest claiming Ireland had suffered its blackest week since the Civil War.

As formal talks begin in Dublin with the International Monetary Fund (IMF) and European officials, Mr Gilmore said the Government has no authority to strike a deal on a bailout loan.

"(Taoiseach) Brian Cowen continues to cling to power and his attitude seems to be that if Fianna Fail is going down, the country is going down with it," the Labour chief said.

Mr Gilmore accused Mr Cowen and his coalition Government of laying waste to the economy.

"If he will do the honourable thing, an election could be held by the second week in December. A new government, with a fresh mandate, would be in place before Christmas," he said.

"In the meantime, discussions or negotiations with the EU and the IMF could continue with their preliminary work, but any final agreement would be a matter for a new government.

"Apart from any other consideration, this government has neither the moral or political authority to make decisions that will have such an impact on the direction of this country for many years to come.

"Only a general election and a new government can now save the country."

The Government has faced increasing demands to dissolve the Dail (parliament) this week after the IMF and EU confirmed their plans to inspect the country's indebted finances.

Government ministers had repeatedly denied talks with the institutions had been going on, with one minister describing the suggestion as fiction.

Labour accused Fianna Fail of systematically lying over the extent of the crisis and the nature of contacts with Europe and the IMF over the past 10 days.

Mr Gilmore said the Fianna Fail-Green coalition was "demoralised, discredited and politically dishevelled".

"Any government in any other democratic country that had laid waste to an economy in the way Fianna Fail has and delivered the country into the hands of the IMF would now be long gone," he said.

"Mr Cowen and his government must now resign."


Sinn Fein backed the call.

The party's Dail leader, Caoimhghin O Caolain, said IMF intervention could lead to savage cuts in health and education, public service jobs, social welfare, tax increases for the lower paid and the selling off of State assets.

"This country is facing one of the greatest crises in our history and we have a Taoiseach and a Cabinet who spent the last week trying to deceive the Irish people," Mr O Caolain said.

"The Taoiseach and his Fianna Fail/Green Government should resign in shame.

"The intervention of the IMF is a disaster for Ireland, brought about directly by the scandalous policies of this Government.

"An EU/IMF bail-out will not be a bail-out for the Irish people. It will be a further bail-out for the banks but the Irish people will have to pay the price."

Sinn Fein earlier this week topped an opinion poll for next week's Donegal South West by-election.

Press Association / Irish Independent.

Wednesday, 17 November 2010

Europe - It's Not Us, It's You...

DAIL SKETCH: THE PATIENT is a basket case and refusing treatment.

“This country has not applied to enter a facility,” insisted the Taoiseach, defiant to the last.

He is not going to commit poor Mother Ireland into some sort of economic Shady Pines, to be prodded at by bespectacled eurocrats before being released into the real world with a healthy spending plan and an ankle tag.

We’re fine. There is nothing wrong with us. It’s our enemies in the international media and other sinister factions who have it in for us. At least that was Brian Cowen’s belief yesterday afternoon. But as he spoke in the Dáil, the men in the white coats circled ever closer in Brussels, syringes at the ready.

“Come, come, Ireland, take your fiscal medicine!” Still, the Taoiseach protested. “We are pre-funded up to mid-2011,” he argued, pleading for more time.

Wait until the Ecofin meeting is over, he asked. The Opposition listened to him in the Dáil, looking scared, unanimous in their opinion that the Taoiseach has now entered Cloud Cuckoo Land.

The country he leads has been in trouble for two years now. Europe has been monitoring its progress with growing alarm.

Matters came to a head at the weekend. Reputable international news outlets said the EU was holding intense discussions over the best course of treatment for Ireland. The Government was said to be participating in the talks.

“Fiction!” declared Minister for Justice Dermot Ahern when asked to confirm the story, which refused to go away.

On Monday, his colleague Noel Dempsey stood at his shoulder, nodding and mouthing “oh yes” as Dermot reiterated the denial.

The matter landed on the floor of the Dáil yesterday as the Minister for Finance was on his way to Brussels to see the money doctors. He too was going to insist that, for the time being, Mother Ireland is economically sound.

But while the Brians and their Cabinet cohorts continued to insist rumours of their committal are premature, the authoritative dispatches from the continent contradicted them.

Time so for the Taoiseach to nail the rumours in the national parliament. If for nothing else but to quell the rising feeling of fear and panic in the country.

“What has been going on in the past week?” demanded Enda Kenny, on behalf of the dogs in the street. He didn’t get an answer. Instead, the Taoiseach chose to address a question which hadn’t been asked: “This country has not applied to enter a facility”.

It was never said that we did. It was reported that discussions, relating specially to Ireland, had taken place. Instead, Brian Cowen chose to ignore this.

Then the Fine Gael leader struck at the Taoiseach’s Achilles heel – his tribal allegiance to Fianna Fáil. Enda evoked the spirit of Seán Lemass, the man quoted by Cowen on the day he became party leader, and said he had gone against the very principles of his hero.

“You Taoiseach, and your Government, politically, have betrayed our country. You have let down the founding fathers of your own party. You have let down those who fought to achieve Irish independence, and, by your actions, you have now endangered the economies of other European countries.”

Brian looked cut to the quick. When he rose to reply, he did so more in sorrow than in anger. The “tone and context” of what Deputy Kenny had to say was regrettable.

“Be not deceived, Taoiseach, the people will not be mocked,” said Enda. Then he demanded a general election, again.

“You say that every week,” shrugged Biffo, who went on to defend his record in dealing with the disaster, citing the report on the banking crisis to bolster his case.

“The Honohan report shows . . . ”

They were so depressed across the floor that they could hardly raise a snigger.

Eamon Gilmore delivered more of the same. “What is going on?” asked the Labour leader in the exasperated tones of a man who knows he isn’t going to be told but has to try anyway.

We know that “no application has been made” for a bailout – or to enter a facility, as the Taoiseach would put it, but what sort of contacts were made over the weekend?

“I’m not responsible for the rumour mill all over Europe, or anywhere else, for that matter,” shrugged the Taoiseach.

The best Gilmore could get was that discussions go on all the time in relation to the banking situation generally. “All I’m seeking from you, Taoiseach, is information” he wheedled.

Were we talking about assistance for the State, or assistance for the banks? No luck. “I’ve always defended the Irish people and I’ve always defended her interests as well,” replied Cowen, sulkily.

And just to calm the situation and restore some confidence he said his Government had done everything they were required to do “in best practice.” That didn’t exactly do the trick.

Still. Perhaps he would shed more light on the matter in the special statements to follow. He didn’t.

Sinn Féin’s Arthur Morgan didn’t mince his words. “You said nothing in your 10 minutes,” he told the Taoiseach, and what he did say was probably “concocted by a civil servant”. Arthur was at the end of his tether. “When will you ever learn?” he sighed, saying he was fed up listening to the Taoiseach “lying” to the country for the past two years.

He was reprimanded by the Ceann Comhairle for using inappropriate language. “I intended to use the word fib,” said Arthur. He shook his head. “I hope I don’t have to be here much longer,” he remarked. Arthur is not standing in the next election.

All we learned from the Taoiseach is that he will not be signing his basket case of an economy into any facility – secure, open or otherwise.

Unless, of course, some sort of square deal package can be put in place to help us cope in our difficult years . . .

Article by MIRIAM LORD - Irish Times

Monday, 15 November 2010

Time To Plan For The Worst...

'FOR God's sake, Sarge, say something, even if it's only goodbye!" The old joke about the platoon of soldiers about to march over a cliff carries relevance for a Taoiseach and a Government out of step with everybody else and refusing to acknowledge the proximity of the cliff.

For much of the last week, the story of Ireland's trouble has jostled for prominence in the headlines with massive world events. It has preoccupied leaders at international conferences. It has filled the pages of the 'Financial Times' and attracted the attention of the media in Europe and the United States. It has provoked comment, almost unanimously gloomy, from leading economists.

But "Sarge" has had nothing to say beyond a reassurance that we have enough money in the kitty to last us until the middle of next year. After that, who knows? At any rate, Sarge thinks the cliff is a long way off.

Brian Cowen is reportedly "furious" about the reports that we may seek to access the European bailout fund. Justice Minister Dermot Ahern dismisses the speculation as "fiction". Fiction from the 'Financial Times' and the BBC? Fiction from European leaders who fear that "Irish contagion" could bring down the currency?

More oddly still, there could be an innocent and mundane explanation of how the reports originated.

The Government rightly hopes that we can continue to manage our own affairs and avoid subjecting our financial destiny to the European Commission and/or the IMF. Again rightly, it hopes that the Budget on December 7 and the four-year fiscal plan can enable us, at long last, to begin to get a grip.

But nobody can deny that a bailout may be necessary -- in six months' time, or tomorrow afternoon. It would therefore make sense to enter into preliminary discussions on the methods to be employed. It would also make sense to inquire how we could contain the costs, and how much of our independence we could salvage.

And it would make sense to explain to the public how the Budget can help. But taking the people into their confidence seems to be beyond the ability, or the thinking, of Sarge and his corporals. There is a by-election to be fought. There are hoops to jump through, to please independent deputies who support the Government. And there is still money to waste. For this Government, the cliff is still a forbidden subject.

Report - Irish Independent

Thursday, 11 November 2010

Homeowners Face Paying €80-a-month Property Tax...

HOMEOWNERS face paying an €80-a-month property tax under a plan drawn up by the country's top economic think-tank.

The charge would be based on the value of homes, and middle-income earners would end up providing most of the tax generated, the study by the Economic and Social Research Institute says.

Homeowners who bought their house and paid stamp duty in recent years would be given a waiver, as they would be regarded as having already paid a property tax. Those on low incomes and people getting social welfare benefits would be exempted from the payment.

Even with these exemptions, a property tax could still bring in close to €1bn a year, as the Government draws up plans for a €15bn package of cuts and taxes over the next four years.

There are 1.7 million households in the country, but the exemption scheme would mean up to 235,000 householders would not have to pay the tax, the ESRI says. But the study, which sets out how a property tax would work, warns that exempting those with little or no income from the payment could stop those on welfare ever taking up a job.

A property tax is currently being considered by the Government, as it strives to meet its €6bn target of cuts and taxes for next year's Budget.

Sources have indicated that it is almost certain to figure prominently in the four-year budgetary plan to cut the deficit, which is set to be unveiled in the next few weeks.

The tax would cost €80 a month for the average household based on a property value of €240,000.

The majority of the tax would be paid in Dublin, as incomes and property values are higher on the east coast. Some 55pc of the tax would be raised in the greater Dublin area. The study found 44pc of disposable income is generated in Dublin.

The ESRI said such a tax could be introduced quickly based on updating existing data on house values, a task that could be carried out by a private firm of valuers.

In two academic papers examining how a property tax might work, the state-funded think tank said the tax would work best if it was based on the valuation of homes.

Dr Tim Callan of the ESRI admitted the study showed that middle-income earners would end up providing most of the tax generated.

The average amount of the tax would be €950 a year, and it would only be imposed on owner occupiers. Middle-income earners would up having to shell out between €832 and €1,040 a year.


Asked about middle Ireland being hit by an unfair tax burden, Dr Callan commented: "There is no painless way of getting extra income in."

A property tax is the sort of revenue-raising measure that would have the least impact on the labour market, he said.

The ESRI suggested that a simple property tax, with no reliefs or income exemption limits, at a rate of 0.4pc of a property's value could raise revenue of about €1.1bn per year.

It said there is potentially an important role for property tax in Ireland, but there was a need to shield those who could not pay it. But it added that even if reliefs were built into the system for the low paid and those on social welfare, the tax could still generate close to €1bn.

The paper looks at completely exempting those who earn less than €12,000 a year, or alternatively those who earn less than €15,000 a year, from the property payments.

The study advocates having tapered reliefs from the tax for those earning a little over these amounts. It admits this would discourage people from giving up welfare payments.

According to the paper, the introduction of a property tax could be made more equitable if stamp duty payments were treated as a pre-payment of property tax and homeowners were given a waiver from property tax until this pre-payment had been fully used up.

Treating stamp duty as a pre-payment of tax would mean a family that paid €15,500 when they bought in 2007 would not make a property tax payment for up to 15 years.

Report by Charlie Weston - Irish Independent

Monday, 8 November 2010

Ireland Ain't Seen Nothing Yet...

"If you thought the bank bailout was bad, wait until the mortgage defaults hit home."

THE BIG PICTURE: Ireland is effectively insolvent – the next crisis will be mass home mortgage default, writes MORGAN KELLY ...

SAD NEWS just in from Our Lady of the Eurozone Hospital: After a sudden worsening in her condition, the Irish Patient, formerly known as the Irish Republic, has been moved into intensive care and put on artificial ventilation. While a hospital spokesman, Jean-Claude Trichet, tried to sound upbeat, there is no prospect that the Patient will recover.

It will be remembered that, after a lengthy period of poverty following her acrimonious divorce from her English partner, in the 1990s Ireland succeeded in turning her life around, educating herself, and holding down a steady job. Although her increasingly riotous lifestyle over the last decade had raised some concerns, the Irish Patient’s fate was sealed by a botched emergency intervention on September 29th, 2008 followed by repeated misdiagnoses of the ensuing complications.

With the Irish Patient now clinically dead, her grieving European relatives face the melancholy task of deciding when to remove her from life support, and how to deal with the extraordinary debts she ran up in the last months of her life . . .

WHEN I wrote in The Irish Times last May showing how the bank guarantee would lead to national insolvency, I did not expect the financial collapse to be anywhere near as swift or as deep as has now occurred. During September, the Irish Republic quietly ceased to exist as an autonomous fiscal entity, and became a ward of the European Central Bank.

It is a testament to the cool and resolute handling of the crisis over the last six months by the Government and Central Bank that markets now put Irish sovereign debt in the same risk group as Ukraine and Pakistan, two notches above the junk level of Argentina, Greece and Venezuela.

September marked Ireland’s point of no return in the banking crisis. During that month, €55 billion of bank bonds (held mainly by UK, German, and French banks) matured and were repaid, mostly by borrowing from the European Central Bank.

Until September, Ireland had the legal option of terminating the bank guarantee on the grounds that three of the guaranteed banks had withheld material information about their solvency, in direct breach of the 1971 Central Bank Act. The way would then have been open to pass legislation along the lines of the UK’s Bank Resolution Regime, to turn the roughly €75 billion of outstanding bank debt into shares in those banks, and so end the banking crisis at a stroke.

With the €55 billion repaid, the possibility of resolving the bank crisis by sharing costs with the bondholders is now water under the bridge. Instead of the unpleasant showdown with the European Central Bank that a bank resolution would have entailed, everyone is a winner. Or everyone who matters, at least.

The German and French banks whose solvency is the overriding concern of the ECB get their money back. Senior Irish policymakers get to roll over and have their tummies tickled by their European overlords and be told what good sports they have been. And best of all, apart from some token departures of executives too old and rich to care less, the senior management of the banks that caused this crisis continue to enjoy their richly earned rewards. The only difficulty is that the Government’s open-ended commitment to cover the bank losses far exceeds the fiscal capacity of the Irish State.

The Government has admitted that Anglo is going to cost the taxpayer €29 to €34 billion. It has also invested €16 billion in the other banks, but expects to get some or all of that investment back eventually.

So, the taxpayer cost of the bailout is about €30 billion for Anglo and some fraction of €16 billion for the rest. Unfortunately, these numbers are not consistent with each other, and it only takes a second to see why.

Between them, AIB and Bank of Ireland had the same exposure to developers as Anglo and, to the extent that they were scrambling to catch up with Anglo, probably lent to even worse turkeys than it did. AIB and Bank of Ireland did start with more capital to absorb losses than Anglo, but also face substantial mortgage losses, which it does not. It follows that AIB and Bank of Ireland together will cost the taxpayer at least as much as Anglo.

Once we accept, as the Government does, that Anglo will cost the taxpayer about €30 billion, we must accept that AIB and Bank of Ireland will cost at least €30 billion extra.

In my article of last May, when I published my optimistic estimate of a €50 billion bailout bill, I posted a spreadsheet on the website, giving my realistic estimates of taxpayer losses. My realistic estimate for Anglo was €34 billion, the same as the Government’s current estimate.

When you apply the same assumptions about lending losses to the other banks, you end up with a likely taxpayer bill of €16 billion for Bank of Ireland (deducting the €3 billion they have since received from investors) and €26 billion for AIB: nearly as bad as Anglo.

Indeed, the true scandal in Irish banking is not what happened at Anglo and Nationwide (which, as specialised development lenders, would have suffered horrific losses even had they not been run by crooks or morons) but the breakdown of governance at AIB that allowed it to pursue the same suicidal path.

Once again we are having to sit through the same dreary and mendacious charade with AIB that we endured with Anglo: “AIB only needs €3.5 billion, sorry we meant to say €6.5 billion, sorry . . .” and so on until it is fully nationalised next year, and the true extent of its folly revealed.

This €70 billion bill for the banks dwarfs the €15 billion in spending cuts now agonised over, and reduces the necessary cuts in Government spending to an exercise in futility. What is the point of rearranging the spending deckchairs, when the iceberg of bank losses is going to sink us anyway?

What is driving our bond yields to record levels is not the Government deficit, but the bank bailout. Without the banks, our national debt could be stabilised in four years at a level not much worse than where France, with its triple A rating in the bond markets, is now.

As a taxpayer, what does a bailout bill of €70 billion mean? It means that every cent of income tax that you pay for the next two to three years will go to repay Anglo’s losses, every cent for the following two years will go on AIB, and every cent for the next year and a half on the others. In other words, the Irish State is insolvent: its liabilities far exceed any realistic means of repaying them.

For a country or company, insolvency is the equivalent of death for a person, and is usually swiftly followed by the legal process of bankruptcy, the equivalent of a funeral.

Two things have delayed Ireland’s funeral. First, in anticipation of being booted out of bond markets, the Government built up a large pile of cash a few months ago, so that it can keep going until the New Year before it runs out of money. Although insolvent, Ireland is still liquid, for now.

Secondly, not wanting another Greek-style mess, the ECB has intervened to fund the Irish banks. Not only have Irish banks had to repay their maturing bonds, but they have been haemorrhaging funds in the inter-bank market, and the ECB has quietly stepped in with emergency funding to keep them going until it can make up its mind what to do.

Since September, a permanent team of ECB “observers” has taken up residence in the Department of Finance. Although of many nationalities, they are known there, dismayingly but inevitably, as “The Germans”.

So, thanks to the discreet intervention of the ECB, the first stage of the crisis has closed with a whimper rather than a bang. Developer loans sank the banks which, thanks to the bank guarantee, sank the Irish State, leaving it as a ward of the ECB.

The next act of the crisis will rehearse the same themes of bad loans and foreign debt, only this time as tragedy rather than farce. This time the bad loans will be mortgages, and the foreign creditor who cannot be repaid is the ECB. In consequence, the second act promises to be a good deal more traumatic than the first.

Where the first round of the banking crisis centred on a few dozen large developers, the next round will involve hundreds of thousands of families with mortgages. Between negotiated repayment reductions and defaults, at least 100,000 mortgages (one in eight) are already under water, and things have barely started.

Banks have been relying on two dams to block the torrent of defaults – house prices and social stigma – but both have started to crumble alarmingly.

People are going to extraordinary lengths – not paying other bills and borrowing heavily from their parents – to meet mortgage repayments, both out of fear of losing their homes and to avoid the stigma of admitting that they are broke. In a society like ours, where a person’s moral worth is judged – by themselves as much as by others – by the car they drive and the house they own, the idea of admitting that you cannot afford your mortgage is unspeakably shameful.

That will change. The perception growing among borrowers is that while they played by the rules, the banks certainly did not, cynically persuading them into mortgages that they had no hope of affording. Facing a choice between obligations to the banks and to their families – mortgage or food – growing numbers are choosing the latter.

In the last year, America has seen a rising number of “strategic defaults”. People choose to stop repaying their mortgages, realising they can live rent-free in their house for several years before eviction, and then rent a better house for less than the interest on their current mortgage. The prospect of being sued by banks is not credible – the State of Florida allows banks full recourse to the assets of delinquent borrowers just like here, but it has the highest default rate in the US – because there is no point pursuing someone who has no assets.

If one family defaults on its mortgage, they are pariahs: if 200,000 default they are a powerful political constituency. There is no shame in admitting that you too were mauled by the Celtic Tiger after being conned into taking out an unaffordable mortgage, when everyone around you is admitting the same.

The gathering mortgage crisis puts Ireland on the cusp of a social conflict on the scale of the Land War, but with one crucial difference. Whereas the Land War faced tenant farmers against a relative handful of mostly foreign landlords, the looming Mortgage War will pit recent house buyers against the majority of families who feel they worked hard and made sacrifices to pay off their mortgages, or else decided not to buy during the bubble, and who think those with mortgages should be made to pay them off. Any relief to struggling mortgage-holders will come not out of bank profits – there is no longer any such thing – but from the pockets of other taxpayers.

The other crumbling dam against mass mortgage default is house prices. House prices are driven by the size of mortgages that banks give out. That is why, even though Irish banks face long-run funding costs of at least 8 per cent (if they could find anyone to lend to them), they are still giving out mortgages at 5 per cent, to maintain an artificial floor on house prices. Without this trickle of new mortgages, prices would collapse and mass defaults ensue.

However, once Irish banks pass under direct ECB control next year, they will be forced to stop lending in order to shrink their balance sheets back to a level that can be funded from customer deposits. With no new mortgage lending, the housing market will be driven by cash transactions, and prices will collapse accordingly.

While the current priority of Irish banks is to conceal their mortgage losses, which requires them to go easy on borrowers, their new priority will be to get the ECB’s money back by whatever means necessary. The resulting wave of foreclosures will cause prices to collapse further.

Along with mass mortgage defaults, sorting out our bill with the ECB will define the second stage of the banking crisis. For now it is easier for the ECB to drip feed funding to the Irish State and banks rather than admit publicly that we are bankrupt, and trigger a crisis that could engulf other euro-zone states. Our economy is tiny, and it is easiest, for now, to kick the can up the road and see how things work out.

By next year Ireland will have run out of cash, and the terms of a formal bailout will have to be agreed. Our bill will be totted up and presented to us, along with terms for repayment. On these terms hangs our future as a nation. We can only hope that, in return for being such good sports about the whole bondholder business and repaying European banks whose idea of a sound investment was lending billions to Gleeson, Fitzpatrick and Fingleton, the Government can negotiate a low rate of interest.

With a sufficiently low interest rate on what we owe to Europe, a combination of economic growth and inflation will eventually erode away the debt, just as it did in the 1980s: we get to survive.

How low is sufficiently low? Economists have a simple rule to calculate this. If the interest rate on a country’s debt is lower than the sum of its growth rate and inflation rate, the ratio of debt to national income will shrink through time. After a massive credit bubble and with a shaky international economy, our growth prospects for the next decade are poor, and prices are likely to be static or falling. An interest rate beyond 2 per cent is likely to sink us.

This means that if we are forced to repay the ECB at the 5 per cent interest rate imposed on Greece, our debt will rise faster than our means of servicing it, and we will inevitably face a State bankruptcy that will destroy what few shreds of our international reputation still remain.

Why would the ECB impose such a punitive interest rate on us? The answer is that we are too small to matter: the ECB’s real concerns lie with Spain and Italy. Making an example of Ireland is an easy way to show that bailouts are not a soft option, and so frighten them into keeping their deficits under control.

Given the risk of national bankruptcy it entailed, what led the Government into this abject and unconditional surrender to the bank bondholders? I have been told that the Government’s reasoning runs as follows: “Europe will bail us out, just like they bailed out the Greeks. And does anyone expect the Greeks to repay?”

The fallacy of this reasoning is obvious. Despite a decade of Anglo-Fáil rule, with its mantra that there are no such things as duties, only entitlements, few Irish institutions have collapsed to the third-world levels of their Greek counterparts, least of all our tax system.

And unlike the Greeks, we lacked the tact and common sense to keep our grubby dealing to ourselves. Europeans had to endure a decade of Irish politicians strutting around and telling them how they needed to emulate our crony capitalism if they wanted to be as rich as we are. As far as other Europeans are concerned, the Irish Government is aiming to add injury to insult by getting their taxpayers to help the “Richest Nation in Europe” continue to enjoy its lavish lifestyle.

My stating the simple fact that the Government has driven Ireland over the brink of insolvency should not be taken as a tacit endorsement of the Opposition. The stark lesson of the last 30 years is that, while Fianna Fáil’s record of economic management has been decidedly mixed, that of the various Fine Gael coalitions has been uniformly dismal.

As ordinary people start to realise that this thing is not only happening, it is happening to them, we can see anxiety giving way to the first upwellings of an inchoate rage and despair that will transform Irish politics along the lines of the Tea Party in America. Within five years, both Civil War parties are likely to have been brushed aside by a hard right, anti-Europe, anti-Traveller party that, inconceivable as it now seems, will leave us nostalgic for the, usually, harmless buffoonery of Biffo, Inda, and their chums.

You have read enough articles by economists by now to know that it is customary at this stage for me to propose, in 30 words or fewer, a simple policy that will solve all our problems. Unfortunately, this is where I have to hold up my hands and confess that I have no solutions, simple or otherwise.

Ireland faced a painful choice between imposing a resolution on banks that were too big to save or becoming insolvent, and, for whatever reason, chose the latter. Sovereign nations get to make policy choices, and we are no longer a sovereign nation in any meaningful sense of that term.

From here on, for better or worse, we can only rely on the kindness of strangers.

Article by MORGAN KELLY - Irish Times