Thursday, 25 February 2010

Thousands At Risk...

Thousands at risk of rate hikes as AIB bars mortgage switchers...

THOUSANDS of homeowners are effectively trapped with their existing lenders after the biggest bank in the country, AIB, admitted yesterday that it no longer accepts mortgage switchers.

Just two lenders will now accept switchers, leaving thousands of homeowners trapped and vulnerable to being hit with higher mortgage rates.

The AIB move is a huge blow to mortgage holders who are with Permanent TSB as it has increased its mortgage rates twice in the past six months, and those with Halifax, which is closing its retail operations here.

AIB has the lowest home-loan rates in the market, with a standard variable rate of as low as 2.25pc and a three-year fixed rate of 3.19pc.

In comparison, Bank of Scotland (Ireland)/Halifax has a three-year fixed rate of 7.25pc.

Permanent TSB shocked homeowners this month when it pushed up its standard variable rate for existing customers by 0.5pc.

Other lenders are now expected to follow the move by Permanent TSB.

Up to 350,000 mortgage holders have standard variable rates, which lenders are free to increase when they want. Some mortgage experts expect standard variable rates to rise by up to 1pc this year.

Frank Conway, director with the Irish Mortgage Corporation, said the switcher market was now effectively closed off to borrowers at the very time they needed it.

AIB admitted in a statement to the Irish Independent yesterday that it was no longer interested in switchers.

"We're very keen to talk to anyone -- especially first-time buyers -- who want to purchase a property.

"However, when we can use our resources to provide mortgages to customers who want to purchase property, rather than exchange loans, we're less inclined to use those resources to facilitate the replacement of a mortgage contract at one institution with a cheaper one at AIB."


The bank, which has so far received €3.5bn in funding from the State, said its priority was funding new buyers who borrow less than 92pc of the value of the house, and who show "a capacity to repay".

It is understood that AIB has promised the Government to fund first-time buyers, but the bank has not given any commitments to fund other types of mortgages. Because banks are chronically short of funds, the bank has decided not to finance switcher mortgages.

Just KBC Homeloans and EBS Building Society will now transact switcher mortgages, Mr Conway said. But these lenders have strict lending criteria making their switcher mortgages difficult to quality for. KBC will only accept switchers who are borrowing less than 80pc of the value of the home.

Bank of Ireland said it would accept a mortgage switch from people who were not customers only if they were borrowing less than half the value of the home.

However, managing director of Bank of Ireland Mortgages Brendan Nevin said the lender would loan up to 90pc of the value of the home to existing customers.

Three years ago at the height of the property boom, mortgage switchers were responsible for 40pc of the value of mortgage drawdowns. But switcher mortgages now represent 12pc of the market.

Banking sources said yesterday that switcher business was regarded as risky as people switching had not always being upfront about their financial position in the past and they often wanted to extend the term of the loan or consolidate other loans into the mortgage.

Report by Charlie Weston - Irish Independent

Wednesday, 24 February 2010

Time To Shout 'Stop'...

It's time to shout 'stop' -- NAMA is grand larceny...

The land has reverted to the price you'd get from a farmer for putting a donkey out to graze on it

For the past year, this column has been warning of a "triple lock" in the Irish banking system, which would financially incarcerate the Irish people for a generation.

The triple lock would solder the people to the banking system in a suffocating embrace forcing us to borrow from tomorrow to pay for yesterday and, in the process, destroy the opportunities of today.

Now with the Government upping its stake in Bank of Ireland, this prediction -- regretfully -- is coming to pass. The worst thing is that it doesn't have to be like this. The latest news that some development land in Athlone valued in the boom at €31m is now worth only €600,000 has truly terrifying implications for all of us, because it means NAMA will bankrupt us, and the triple lock implies that we can't sever the fortunes of the people from the fortunes of the bank.

Let's just recap what I mean by the triple lock. The first lock was the bank guarantee, the second lock was NAMA and the third lock was the "forced" nationalisation of the banks. It is important to remember one overriding fact: we do not need Bank of Ireland or AIB. This truism needs to sink in. There is nothing sacrosanct about either, nor is there anything sacrosanct about the debts these banks have run up. These debts have nothing to do with us.

Yes, we need a banking system or a couple of functioning banks, but they don't have to be AIB or Bank of Ireland as constituted at present.

At this stage, the Government should be trying to give the banks away for free to a large European bank. This is what you would do if a sweetshop were in trouble and banks are no different. Any new owner, taking the opportunity of having cash, not debt, in a downturn, will do a deal with the creditors. This is how normal bankruptcies work.

What big bank wouldn't want to take on the Irish deposit base of €175bn, the branch network and the banking possibilities of a European country? The new owners would do a deal with the old creditors. The way this is done in the real world is that the creditors are told the game is up, there is no cash left in the kitty, but if they are prepared to take stock of the new parent bank, they can get something out of their Irish misadventure. Obviously the new owners of Bank of Ireland would roast the old creditors, but, hey, that's capitalism!

The only way new credit will emerge in Ireland is if there is a new banking balance sheet. And the only way a new banking balance sheet will emerge is if the big banks are given away to a healthy bank for free and the old creditors told where to go -- to the back of the queue.

The problem for us in Ireland is that the people who are drafting our laws locking us to the banks do not understand this, because they are not capitalists; they are legalistic functionaries, civil servants and bankers trying to hold on to their jobs. In short, they are consummate insiders with their interests vested in the old status quo who can't see that the old status quo is the problem.

As a result, these insiders are all too happy to give the outsiders (the people) the bill without any thought of how we are going to raise this money. This is why the Finance Minister can come on radio and talk blithely of billions here and there without appearing to consider just how much money this is and how much we have to produce to earn these sums he is tossing about.

Listening to politicians and bankers/brokers using these figures is like witnessing demented generals in the last stages of a war moving imaginary armies on a map -- battalions that have long been vanquished.

About 18 months ago, the 'guarantee' was constructed to avoid this endgame. The logic of the guarantee was to buy time to get the banks to sort out their own mess. Implicit was the notion that the banks were to look to the market -- not the State -- for capital and, if there were to be a 'bad bank', the banks (not the taxpayer) would have to fund it from their own resources.

On the night the guarantee was first mooted, the 'bad bank' was touched on too. The bad bank would be a skip into which we threw our withered land portfolio. The State would raise the money, but the banks would pay for this out of their profits and the taxpayer was not to be touched.

Unfortunately, and not surprisingly given the way our country runs, the banking 'insiders' hijacked these ideas last year and have left us with the pathetic situation we are in where they get away with it and give us the bill.

To see how pathetic the reality is, let's go back to the site in Athlone and extrapolate. The value of this land has fallen by 98pc from €31m to €600,000. So, after all the hype about Ireland and its new wealth, the price of the land has reverted to the price you'd get from a farmer for putting a donkey out to graze on it.

In the Commercial Court, Mr Justice Peter Kelly -- who is emerging as a hero in all this -- said that his original presumption (from his experience in the Commercial Court in the past year) that land prices had fallen by 70-80pc was now put "in a cocked hat". So he thinks 70-80pc falls in land prices are too optimistic.

So if we look at the breakdown of NAMA's 'assets' and see what this new reality means for the banks and us, we see that there will be €51.5bn of land and development assets and "associated loans" transferred. If we apply Mr Justice Kelly's discount based on what he has seen so far, we are looking at a hole of possibly €40bn, where we will borrow €51.5bn from the ECB, for assets worth a little over €10bn.

Obviously there will be some assets that will be worth more. In addition, some of the assets that are in the UK or the US will recover reasonably quickly, but given that the lion's share are in Ireland, a massive discount should be expected.

Whatever the gap, someone has to plug it and, although the NAMA plan is over 10 years, no one in their right mind believes that development land in Athlone will ever again be worth €31m -- nor should it be.

In fact, permanently cheap land should be the aim in order to give us a comparative advantage. But permanently cheap land would impoverish the landlords and their financial backers -- the very people who have got us into this mess and the very people NAMA is devised to rescue. So someone has to pay for the bailout.

According to the triple lock system devised by the Government, we the people -- the outsiders -- will plug this gap. This is grand larceny overseen by the insiders. Someone has to shout "stop"!

Report by David McWilliams - Irish Independent.

Tuesday, 23 February 2010

Fears Grow Over Housing Market Slowdown...

Not a single new home registered by Premier in January...

THE private housing market could be in danger of grinding to a complete halt with one of the two home-registration firms in the country not registering a single house in January.

The Irish Independent has learned that Premier Guarantee did not register a single housing unit in January, with its larger rival Homebond only registering 149 houses, including just 24 in Dublin.

At the peak of the property market in 2006, Homebond was registering 6,122 houses a month or about 72,000 in a full year. Premier, the smaller of the two registration services, was registering about 2,117 houses per month, or almost 25,000 per annum.

Of the 149 houses registered with Homebond in January, 62 were in Cork, 16 in Kildare and 24 in Dublin. In most of the other counties there were less than three houses registered, with many counties only registering a single house.

One of the few things propping up the housing market now is one-off housing which often doesn't depend on insurance from either Homebond or Premier. Local authority housing, which is also continuing, normally has some form of state insurance behind it.

The warranties provided by the companies also protect a homeowner's deposit in the event that their builder goes bust. Homebond has been operating since the late 1970s and has only faced competition from Premier since 2002. Willis Risk Services offers the Premier product in Ireland.

Economists regard the house registration figures as the best indication of housing starts. Once a house is registered with either of the two companies the builder and then the owner has cover for any serious structural problems that arise in the first 10 years after construction.

The collapse in prices, rising unemployment and a lack of mortgage finance has seriously hurt the housing market, with first-time buyers also finding it hard to come up with deposits to make purchases. In some parts of the country the overhang of existing stock will not be cleared for many years.

Banks have changed their loan-to-value rules forcing purchasers to come up with more of their own finance. Credit standards have also been tightened in other areas, for example long-term mortgage loans over 40 years have been restricted along with 100pc mortgages.

Average national house prices in Ireland fell by 18.5pc in 2009, according to the Permanent tsb/ESRI House Price Index, with prices declining by 3.6pc in December alone. The full-year decline of 18.5pc compared to a reduction of 9.1pc in 2008.

Report by Emmet Oliver - Irish Independent.

Monday, 22 February 2010

Devastating Pyrite Epidemic...

Devastating 'pyrite epidemic' hits 20,000 newly built houses...

UP to 20,000 homeowners are facing the devastating "pyrite problem" which is destroying recently built houses.

The Irish Independent has learned that this many claims for pyrite-related damage, such as cracked floors and walls, have been made to the builders' insurance company HomeBond -- which may not have enough funds to cover the cost of all the claims.

Its cash reserves have dropped from €50m in 2007 to €26m, according to its latest accounts, due to declining stock market returns.

This means it would only be able to pay around €1,250 per household. The average cost of removing the pyrite from a house and repairing the damage is between €50,000 and €70,000.

HomeBond only covers a portion of the cost if the builder is liquidated or unable to pay for all the repairs -- so families are facing potentially huge bills to repair their homes.

The claims against HomeBond are separate to a landmark case presently before the High Court.


According to an Irish Independent investigation, there are 20 building firms which have used material containing pyrite from at least four suspect quarries -- which are located in Dublin and Meath. These quarries are still functioning.

The affected houses are located in parts of Dublin, Meath, Kildare and Offaly where pyrite -- a mineral that expands in the presence of moisture and oxygen -- has been discovered in the infill material put in below their floors.

In Kildare, one family bought a €560,000 home which has been damaged by the presence of pyrite. Yet they are being offered only a €38,000 settlement by HomeBond when the total repair bill could be up to €220,000.

Fine Gael Meath East TD Shane McEntee said there was a "pyrite epidemic" waiting to be uncovered.

"Over the past 12 months I have been contacted by numerous householders who are experiencing defects within their homes. This is a problem which is affecting estates extending all the way from south Meath to north Dublin and into parts of Kildare," he said.

HomeBond was established by the construction industry in 1978 to provide a warranty to homeowners to ensure builders would fix defects that arose in their home over a certain period. And it would then step in to cover some of the costs if the builder was unable to pay.

HomeBond has provided cover for 680,000 homes since 1978 and now has 300,000 homes under warrantee.

Mr McEntee called on householders who were experiencing pyrite-related defects within their homes to contact HomeBond immediately.

HomeBond confirmed it was currently processing a number of claims for problems associated with excess pyrite under floors. It said it did not offer to cover the full costs of every household against structural damage because there were limits specified in every agreement.

Meanwhile, in the High Court, the Menolly Homes building firm and three associated companies are claiming damages of more than €18m against Irish Asphalt and the Lagan Group. The claims follow the discovery of pyrite in the infill material used under concrete floors in three new housing estates in north Dublin. The repair bill for the 400 houses affected is estimated at €20m.

The High Court is also due to give judgment tomorrow on an application by 175 of the affected homeowners to take separate legal action against Menolly Homes.

Report by Michael Brennan - Irish Independent

Sunday, 21 February 2010

Mortgage Lending Plummets...

Mortgage lending at lowest level since records began...

MORTGAGE lending plunged last year to the lowest level since records began in 2005, as borrowing by investors and those seeking to trade up plummeted.

Just €8.08bn of mortgage loans were issued in 2009, a 65pc drop on the previous year, the Irish Banking Federation said yesterday. The number of loans made fell 58.5pc to 45,818.

“The data illustrate how difficult 2009 was for the mortgage market,” Irish Banking Federation boss Pat Farrell said.

“The general economic situation, consumer confidence, the unsold housing stock and house-price movements will be among the factors to influence market activity in 2010.”

Despite the plunge, first-time buyers and people moving house still only accounted for two-thirds of mortgage lending in the final quarter of 2009. Investors and those seeking socalled top-ups or remortgages accounted for the remainder.

The market remains so moribund that there are more people borrowing money to “top up” their mortgages than there are people borrowing to move house.

Just 2,116 people took out a mortgage to move house in the final quarter of last year, the figures show. The amount borrowed by home buyers has fallen as property prices continue their downward spiral.

First-time buyers borrowed an average of €206,865 in the final quarter of 2009, compared with €243,232 in the last quarter of 2007, when the property market was beginning to crumble.


Those trading houses borrowed an average of €242,793, compared to an average of €271,751 two years earlier. House prices have fallen in every month since March 2007 and are now around 40pc below their peak in the early part of that year, according to the Irish Homebuilders Association.

Rating agency Moody's said last month that the percentage of Irish home mortgages at least 90 days in arrears had hit 3.3pc – the highest since it began monitoring the area in 2004.

The EBS building society claimed yesterday to have increased its share of the retail mortgage market by seven percentage points to 21.3pc last year.

The lender also said it was lending 43.8pc of all loans made to first-time buyers in the retail market last year.

The EBS cited market data given to lenders by the Irish Banking Federation but not released to the public. Other lenders have not disclosed their share of the market.

“The level of applications, specifically for first-time buyers, remains strong. This suggests that some potential buyers have decided that now may be the time to get into the market,” the EBS said.

“Affordability levels continue to improve for first-time buyers. The quarterly index shows that the average proportion of net income required to fund a mortgage has fallen by more than 50pc in the past three years,” said membership business director, Dara Deering.

“These kinds of figures, in addition to the well-publicised fall in house prices, are prompting people to consider their options and we would expect to see increased levels of activity in 2010.”

Report by Thomas Molloy - Irish Independent

Thursday, 18 February 2010

Nama Top 10...

Names of top 10 borrowers in first wave of Nama transfers revealed...

ANGLO IRISH Bank will transfer close to €10 billion in loans into the National Asset Management Agency (Nama), accounting for the largest amount owed by the top 10 developers moving to the agency in the coming weeks.

The Irish Times has established the identities of the top borrowers being moved in the first wave of transfers to the State agency.

They are developers Liam Carroll; Bernard McNamara; Sean Mulryan of Ballymore; financier Derek Quinlan; Paddy McKillen, owner of the Jervis Street Shopping Centre; Treasury Holdings, which is owned by Johnny Ronan and Richard Barrett; Cork developer Michael O’Flynn; Joe O’Reilly, the developer behind the Dundrum Shopping Centre in Dublin; Dublin builder Gerry Gannon, co-owner of the K Club golf resort in Co Kildare; and Galway businessman Gerry Barrett, owner of Ashford Castle in Co Mayo and G Hotel in Galway.

More than €16 billion in loans linked to the top 10 are being moved to Nama out of a total of €80 billion being transferred.

The transfer of the top 10 borrowers’ loans has been delayed due to the vast amount of paperwork demanded by the agency.

Nama has told the five participating institutions over recent days that it would not be able to provide a schedule of the first loans to be acquired – and the discount or “haircut” to be applied by the State to the loans – as planned due to delays in the valuation and legal process. The transfers of the top 10 borrowers are expected to be ready by the end of this month, though the Nama plan awaits EU approval.

The scale of the work has delayed the transfer of the top 10 from the initial target of the end of last year.

Anglo is understood to have held up the process as it completes legal paperwork and valuations on a small number of properties owned by the top 10 borrowers.

State-owned Anglo is transferring the largest initial amount among the 10, followed by AIB with about €3 billion and Bank of Ireland with about €2 billion. Irish Nationwide is moving about €1 billion in the first transfers, followed by the EBS building society, which is moving about €900 million into Nama.

The State will buy the loans at a discount which may be higher than the average 30 per cent estimated by the Government last September on the biggest loans.

The discount applied to some institutions is expected to be higher than to others. Properties and assets backing the €1 billion Irish Nationwide loans are estimated to have been assessed over recent weeks at about half that value.

Nama is taking over development loans as well as associated loans secured on assets such as investment properties provided as collateral for development loans.

A significant number of the associated loans are being serviced with repayments by borrowers.

Almost a third of Anglo's loans in the first tranche of 10 are yielding repayments, while more than half of the bank’s loans are associated loans secured on investment properties which are generating cash repayments.

Report by SIMON CARSWELL - Irish Times.

Wednesday, 17 February 2010

Mortgage Timebomb Crisis...

Mortgage timebomb will cause new banks crisis when it goes off...

The recommendation that the moratorium on repossessions should be extended by a further year is another sign that the clock is ticking on our €150bn mortgage time bomb.

Last year all of the main banks and building societies agreed not to repossess the homes of people whose mortgages were in arrears for at least 12 months. Now, with the 12-month moratorium about to expire for many of those in arrears, there are fears that the number of homeowners facing repossession could rocket.

For some it has already happened. Entertainer Adele King (better known as Twink) revealed that her family home was about to be repossessed by her lender. Twink's statement came on the same day that the Oireachtas Committee on Social and Family Affairs recommended the 12-month moratorium on home repossessions be extended to 24 months.

The recommendation comes just 11 days after the Financial Regulator extended the 12-month repossession moratorium to all lenders, including the sub-prime lenders, who have been by far the most aggressive in pursuing homeowners.

On the face of it, the Financial Regulator's action to curb the ability of the sub-prime lenders to secure repossession orders should contain the problem.

While no official figures have yet been released, it is estimated that financial institutions secured about 1,000 repossession orders last year, up by a third on the 748 repossession orders granted in 2008.

Unfortunately, these figures are merely the tip of the iceberg.

The most recent statistics from the Financial Regulator show that over 26,000 homeowners, 3.3pc of those with mortgages, were at least three months behind on their repayments by the end of September 2008. This was almost double the 14,000 homeowners who were three or more months in arrears at the end of June 2008.

At the same time as the number of homeowners in arrears has been soaring, house prices have been in freefall and unemployment has started climbing again. Further compounding their misery is the growing proportion of homeowners who are now stuck in negative equity, where the value of their homes is less than the amount which they have borrowed.

Recent research by the ESRI estimated that there were almost 100,000 homeowners experiencing negative equity at the end of 2009. Depending on how house prices perform, that number will rise to somewhere between 200,000 and 350,00 by the end of this year. In other words, by the end of 2010 between one-quarter and four-fifths of all homeowners will be stuck in negative equity.

This combination of falling house prices, rising unemployment and increased arrears is setting the stage for a social, economic and financial catastrophe. Not alone will tens of thousands of homeowners be confronted with the prospect of losing their homes, a tsunami of mortgage defaults will also wipe out the banks.

At the end of December the Irish banking system had lent over €147bn in residential mortgages. When one takes into account that Irish house prices have fallen by at least a third since their February 2007 peak, growing arrears and the increased incidence of negative equity it is clear that the Irish banks are going to have take a massive haircut on these loans.

The 30pc average write-down the banks are taking on their development and commercial property loan books has already forced the government to pump in €11bn of fresh capital and set up NAMA to take €77bn of bad loans off their books.

Will the housing meltdown trigger a second phase of the Irish banking crisis?

Even a 10pc average mortgage write-down, surely an optimistic prediction, would cost the banks another €15bn in loan losses. The mortgage timebomb is already ticking. When it explodes, probably in the second half of this year, it could take the banks and tens of thousands of homeowners with it.

Report by Dan White - Evening Herald.

Monday, 15 February 2010

Ireland Is Threat To Euro...

Ireland poses real threat to future of the euro, says top think-tank...

Ireland has been identified as one of a small number of countries that poses "a real risk" to the future of the euro, according to reports in a Sunday newspaper.

The report cites research from influential German think-tank CESifo, which warned of "very serious" slowdown in the Irish economy three years ago.

The new research reportedly lists Ireland and Greece as two countries where international money markets see a significant risk of a sovereign default or an exit from the single currency. This perceived risk is reflecting in the markets for Irish and Greek debt, CESifo says, even though leaving the eurozone is not on the political agenda.

Ireland, along with Finland, also comes in for a mention in CESifo's list of countries for which eurozone membership is "not optimal", due to our heavy reliance on trading with non-eurozone countries.


Against the backdrop of last week's Greek manoeuvres, the latest CSEifo research also warns that a "wave of bailouts" of weaker member states must be avoided to keep the euro currency stable.

Munich-based CESifo has a long history of reporting on Ireland, most notably in 2007 when it warned that our economy faced an imminent and "very serious" slowdown at the hands of a "significant reversal" in construction activity.

Last November CESifo research co-ordinator Paul de Grauwe described the way the international community had been "misled" by Ireland.

"Somehow so many people failed to see the foundation of that growth was based on bubbles and excesses financed by credit," he said.

"It was quite a shock for many and for me."

Report by Laura Noonan - Irish Independent

Sunday, 14 February 2010

Ireland in Greek-style Crisis...

Green minister fears Greek-style crisis if banks don't get houses in order 'fast'...

Ireland could be plunged into a Greek-style crisis unless the banks get their house in order "quickly''. That's the stark warning issued by the Communications, Energy and Natural Resources Minister Eamon Ryan yesterday.

"The final bill for everything, that is all the madness in mortgages, the developers and general finance could be as high as €34bn," he warned.

"We have done a job in projecting the Government's ability to manage its own finances. Now we have to convince the outside world that the banks have the capacity to manage their own finances," he said.

Mr Ryan also noted that within Government, the view was "the sooner we do it the better''.

Referring to the improved image of Ireland in the international community, he said of the banking crisis: "We have a limited window of opportunity to resolve this now. If we miss this opportunity it could be decisive."

In a chilling warning, he also noted that "the more honest the banks are, the better. If they try to cover it up and cod people, the markets will read through that -- look at Greece".

But in a tough warning for taxpayers, he said: "Banks are going to require a lot of capital. It is a woeful legacy from woeful mismanagement''.

But Mr Ryan has warned the banks that when it comes to raising capital "they are going to have to sell assets''.

However, he refused to rule out a raid on the State's much-depleted National Pensions Reserve Fund.

And he also reiterated his warning that there will have to be a fundamental reform of how the banks deal with mortgage arrears.

"The vast majority of mortgage defaults occur because of lost income and trends in unemployment." He noted that within the current situation "continuing the old Dickensian courts route and playing by the existing rules is not very clever".

However, when it comes to the putative €34bn final costs, some believe that even Mr Ryan is being optimistic.

Report by JOHN DRENNAN - Sunday Independent

Tuesday, 9 February 2010

Failure - What Ireland Does Best...

Kevin Myers: Failure is actually what independent Ireland has always done best. We even failed at prosperity...

THE Taoiseach's recent 1916 speech, and the warm reception the references to the "heroes" of the GPO got from the Dublin Chamber of Commerce, were depressingly illuminating. They confirm that our political and economic classes are steeped in denial and hallucination. Yes, Mother Ireland has reverted to ancient delusional habits, and is sustained by illicit bottles of poteen around the national household, labelled 1916. And whenever the old woman feels another attack of the vapours of 21st century realism attacking her, she reaches for a bottle, yet again.

A polity which feels the need to recycle ancient events as a modern inspiration is in dire trouble. That's the real lesson from the Taoiseach's rodomontade of last week. You can look at these things mythically or you can look at them literally: either way, no interpretation of the event of 1916 is of any use to us today. No grown-up anywhere else in Europe would cite one of the bloodiest and most terrible years in world history as an inspiration to us all. An Orangeman who cited the example of the 36th Ulster Division, or a modern English political leader who pointed to the sacrifice of the Accrington Pals on the first day of the Somme, as modern inspiration would be regarded as a suitable candidate for a locked ward. Irish nationalism should not be treated by any other standards.

Yet throughout independence we have deliberately deluded ourselves with the falsehood that there was no political life, no culture, no true Irishness, before 1916. Hence the Taoiseach's words about the 100th anniversary of the Rising: "We can say in 2016 when we get to O'Connell Street and look up to those men and women of idealism who gave us the chance to be the country we are, yes, we didn't fail our children, and most importantly of all, we didn't fail our country either."

What rubbish. This State has almost had a fetish for failing its children. This is the land of the industrial schools, paid for by the State, "inspected" by the State, then ignored by the State. There was no end to the post-1916 futile state-experiments in a separate and unique Irishness: the price was failure, poverty, ruined lives, emigration, and always always always, destroyed childhoods. Indeed, failure is what independent Ireland has always done best. Why, we even failed at prosperity. We didn't manage to build a single modern motorway, or a hospital with trolley-free corridors.

We certainly failed to live up to the inspiration of the men of 1916: or at least, I certainly hope so. There was Connolly, with his totalitarian Marxist gibberish, arming his 14-year old son to kill fellow Irishmen. Or Pearse, with his dreams of building a pre-medieval pseudo-Gaelic society, similarly arming his underage pupils. If you choose these men to be your heroes, don't be surprised if madness results. You cannot build a mature and modern state on such a bizarre and dysfunctional bipolarity -- for what do you get when you blend socialism with nationalism? In its own hallucinogenic way, the GPO was the test-tube for the horrors of 1930s Europe.

So naturally, every single attempt to "rededicate ourselves to the principles and the dreams of the men of 1916" -- as political leaders reiterated in the Single Transferable Speech in the decades that followed -- has ended in the same sorry plight of economic failure and emigration.

WE have just suffered a unique economic calamity. Including those no longer on the live register, because they're claiming old age pensions or because their savings disqualify them from the dole, about half-a-million people in Ireland have lost their jobs in the past two years. Maybe a further quarter-of-a- million people -- mostly immigrants -- have emigrated.

Thus our habitual immaturity and profligacy have now brought us to a familiar and toxic place, of recidivist indebtedness. To pay our debts, we must pay higher taxes. With PRSI and levies, our higher marginal taxes stand at around 55pc. The resulting revenue is needed, amongst other things, to pay the tax-free golden handshakes to retiring public servants which, needless to say, we in the private sector do not enjoy. Moreover, thousands of higher-paid civil servants are avoiding higher levies.

It's hard to imagine a more inequitable and socially disruptive taxation system than this. It gets worse. For high private taxes on the private sector drive the self-employed into the cash-based, black economy. This means higher taxes for the diminishing number of tax-compliant in the self-employed sector. That increased burden causes further migration to the black economy, and so on.

Welcome back 1982, but now with the jingoistic idiocy of 1966 thrown in for good measure.

Yes, I know I'm in a tiny minority here, but I really don't want to hear any more a-factual, romanticised gibberish about 1916. And politicians who go on about it are simply telling me that their addictions are not cured, the family alcoholic is in the linen-press getting hammered again, and we're nowhere close to dealing with our problems.

Report by Kevin Myers - Irish Independent

Thursday, 4 February 2010

All Fools...

David McWilliams: We're all fools if we think recovery plan is patriotic...

It's been nearly 18 months since the Government announced its bank guarantee. Anglo Irish Bank was nationalised over a year ago and it is coming up to a year since the Government first mooted the NAMA plan. Yet nothing has actually been done since then. Not a single loan has been transferred to NAMA. There has been lots of talk, lots of bluster and point scoring, but still credit in the economy contracts, house prices continue their slow strangling decline and, most significantly, the rest of the world has moved on.

Why the delay? One interpretation is that our government doesn't understand that speed is crucial. If we compare our stagnation with other countries that have been faced with national bankruptcy, we compare dreadfully.

Look at what the Swedes achieved in their crisis of 1993 when their property market collapsed along with their banks. In the four months between November 1993 and February 1994 Sweden issued a bank guarantee, set up and transferred all the bad loans to a bad bank, committed state money only after all the private money had been wiped out, let some weak banks go bust, nationalised some big ones and devalued their currency by 40pc!

Sweden took all these decisions quickly in order to save the economy. The financial markets saw that the country was serious about sorting itself out and money cascaded back into Sweden. In a short time the Swedish crisis was over and the casualties were those who caused the problem -- the banks and the big landowners. The devaluation allowed industry to recover quickly by becoming hyper-competitive.

So, is the reason for our inactivity the Government's failure to understand that speed and significant policy change are crucial to getting out of the mire quickly? Or is it that they understand this perfectly, but also cynically understand that if they can brazen it out for another two years they might just be able to run an election campaign on the fallacious myth of taking "hard" decisions?

By adopting the latter tactic, the Government can divide the country between the "insiders" and the "outsiders".

The insiders are those who have a stake in the society and, therefore, will support a government that is taking decisions that protect their dwindling stake. The insiders prefer the certainty of a tarnished status quo to risking the unknown of a rejuvenated country.

The outsiders are those with no stake in the society, who therefore have most interest in fundamental change. During the boom, some outsiders got inside the tent for a few years, but now they are back outside, in negative equity. They are likely to emigrate or go on the dole as they dutifully did in the crises of the 1950s and the 1980s.

The cynicism of the current approach is that it gives a political party, which is playing the percentages, a chance. On the other hand, it means the recession is longer than it should be. Credit dries up and the country is fixed in a holding position, which is sustainable as long as the Government can borrow abroad and the insiders are kept in a state of nervous anxiety rather than acute fear about their future. This allows the insiders to see the outsiders as, at best, a worrisome nuisance and, at worst, a threat to the insiders' standard of living. The outsiders quickly become the enemy.

Playing the insider/outsider game allows the ruling party to experiment with what could be described as "ground hurling". Ground hurling means you keep close to your marker, don't do anything dramatic and see how the ball breaks. Ground hurling allows a team that shouldn't have a hope in hell to eke out a win and rob the prize.

Think of this in political terms. We are now faced in Ireland with the pathetic spectacle of the Government protecting the rotten status quo based on the entirely mendacious strategy of political survival rather than national renewal. This starts with the banks. Forget patriotism, self-preservation is the name of the game.

The ongoing public sector versus private sector debate is also part of the bigger insider/ outsider tactic, as it creates false skirmishes. This new conflict is a by-product of the failed "a lot done, more to do" economics of this government. But expediently, this row actually helps the Government because it detracts from the real issue of who mismanaged the economy to such an extent that we ended up here. As smokescreens go, the public/private fight on radio and TV current affairs shows suits the Government.

The reality is that most Irish families are made up of workers who work in both private and public sector. Most families are made up of a small business person, a civil servant, a student, a pensioner, an employee of a private company and someone on the dole. There is no public/private divide.

It is entirely made up to detract from the real issue, which is that the present administration, their senior civil servants, who are supposed to run and regulate the country, and the insiders at the top of the banks and property companies destroyed this economy. This is the one and only issue. But that is not the issue the Government wants discussed so it sets up roadblocks, like the private versus public wage debate.

This is also what the NAMA strategy is based on. The Government argues that it is patriotic to save the banks and the bondholders of the banks because not to do so would undermine the "credibility" of Ireland. What do you think actually undermined the credibility of Ireland? Could it possibly be appalling management of the economy in the past five years?

It is not patriotic to lumber the next generation with the debts of the last. This is not patriotism, it is theft. But for a political power base desperately clinging to power, saving the banks and borrowing to do so is a strategy based on buying time and hoping something will turn up. If it works, Fianna Fail saves itself from obliteration at the cost of hundreds of thousands of extra outsiders being forced -- unnecessarily -- to go on the dole or emigrate. But they are outsiders, so who cares?

In Sweden of the 1990s, the government took a different approach. It fired those responsible. It nationalised the banks. It made sure all the stockholders' funds were wiped out before it put a penny of government money into the bankrupt banks. In so doing, Sweden learnt from the disaster. The main lesson is a simple one, which is that the "more of the same" approach is not good enough.

This country needs to be fixed, not patched up. We don't need tinkering about with the old model. We need to see through the present government strategy. It is not about renewal but is all about keeping its incompetent fingers on the levers of power until something turns up. In so doing, it is aided and abetted by the ECB, which will keep the Irish banks afloat because it is afraid of an embarrassment such as a default within the euro.

The only way it can achieve this is by allowing the banks to mortgage the next generation with more useless borrowing to keep land prices falsely underpinned using the new device called NAMA bonds.

That's the game -- and they dress it up as patriotism.

More fool us if we go along with it.

Report by David McWilliams - Irish Independent

The Bleak Picture...

New report will show number of empty homes well above 300,000...

With so much vacant property about, councils are now actively seeking homes to rent from a minimum of 10 years for those on waiting lists...

A REPORT being finalised by planners at UCD for publication this month is expected to conclude that the number of empty houses or apartments in the State may be even higher than the 302,625 figure suggested recently by their colleagues in NUI Maynooth. Dr Brendan Williams, lead author of the UCD report, told The Irish Times that “our figures might be higher”.

He had also visited some uncompleted housing estates last weekend and they painted a “bleak picture” of the current levels of vacant housing.

The 300,000-plus figure, calculated by the Maynooth-based National Institute of Regional and Spatial Analysis (Nirsa), took a lot of people by surprise – especially as the Construction Industry Federation had been sticking to a vacancy rate of around 40,000.

It was also way above the Department of the Environment’s estimate of between 122,000 and 147,000 – figures that exclude abandoned homes, which Nirsa’s didn’t. Relying on a DKM report, it said this was a more reliable measure of the excess stock over “normal” levels.

One large firm of estate agents complained that the Nirsa figure was based on a “sweeping assumption” that over 50 per cent of all housing units completed since April 2006 were now vacant – on top of the number recorded as being vacant in the 2006 Census.

Nonetheless, it is clear that there is a very significant overhang especially in rural counties such as Leitrim, where construction was fuelled by the Upper Shannon Rural Renewal Scheme of tax incentives, introduced in 1998 by then finance minister Charlie McCreevy.

Housing minister Michael Finneran has said he wants to see some of the vacant houses or apartments being used to provide homes for the 56,000 applicants currently on local authority waiting lists – under the Rental Accommodation Scheme (Ras) run by his department.

The Dublin local authorities are actively seeking to lease “suitable residential property” for occupation by their social housing applicants. All types and sizes of dwellings are required in all areas, with leases running from a minimum of 10 years to a maximum of 20. South Dublin County Council is also implementing a policy of social integration by carefully managing tenure mix so that the quantity of social housing in any apartment block or street will not exceed 10 to 15 per cent of the total number of homes in that location.

“To this end, we will not accept whole apartment blocks under the leasing scheme. We would also prefer, where we are taking a multiple of homes in one development, that they be scattered randomly throughout the development rather than clustered together.” Mick Fagan, Ras leasing programme manager for the Dublin region, said the terms of leases are a matter for negotiation. “The council will maintain and insure the properties for the full lease term and manage the tenancies” – thus taking over the landlord’s responsibilities.

A new online service,, has been set up to assist property owners who wish to make houses or apartments available under the Ras programme; it is already running a pilot scheme in the South Dublin area and will be rolling it out to other areas.

Conor Mohan, who established the new service, said it was intended to become the premier website for landlords wishing to let their properties for social housing applicants as well as local authorities seeking to procure vacant properties for social housing.

Landlords have the option to list their property on Click2Rent, which is targeted at tenants on social welfare and/or in receipt of rent supplement. The listing fee is €24 per property, and there is also a service charge of €42 per month – deducted from rents collected.

Report by FRANK McDONALD - Irish Times

Wednesday, 3 February 2010

Irish Most Pessimistic In EU...

Irish among most pessimistic in EU about economy - survey...

IRISH PEOPLE are among the most pessimistic in Europe about the economic and employment situation in their country and most people expect the situation to be worse in 12 months’ time, new EU research suggests.

Although the research also suggests that the Irish are among the most satisfied Europeans with the area they live in, contentment with the public administration is very low and the cost of living is a major source of unhappiness.

In a report drawn up amid signs that the world’s worst recession since the 1930s may be bottoming out, the European Commission warns that the social consequences of the downturn may take months or even years to manifest themselves fully. Irish attitudes to the situation were gauged in a survey of 1,007 people in May and June last year, following months of bad economic news.

Some 90 per cent of Irish respondents described the situation as bad, one of seven countries in which nine out of 10 people or more judge the economic situation to be negative. The other states were Spain, Lithuania, Greece, Portugal, Hungary and Latvia, where 98 per cent of people deem the situation to be bad.

While the research suggests most citizens in all 27 EU member states say the situation is worse than five years ago, Ireland ranks among eight countries in which this is most pronounced. Similarly, most respondents in a majority of EU states declared the employment situation in their country to be bad. Again, Ireland ranked among the nine countries in which this was most prevalent.

The commission says confidence in the EU reached an extreme low point in autumn 2008, as the financial crisis reached its climax.

“Since then, confidence has picked up again, but remains at a very low level. People’s expectations about their job situation follow the trend in employment growth, as do their expectations about the employment situation in the country over the next year.” While declaring that Europeans are on average broadly satisfied with their personal situation, the commission warns unemployment in the EU is likely to rise further.

Report by ARTHUR BEESLEY - Irish Times