Tuesday, 30 March 2010

The Great Bank Robbery...

Year of the great smash and grab raid -- by the banks...

IF THERE is one thing you can bank on, it is that 2010 will go down as the year of the great bank robbery.

Usually the raiders take money from the bank. But in the case of this bank job, the ones who have had their cash torn away from them in an audacious smash and grab raid are consumers.

Banking was once a byword for trust, but today's Irish bankers are a sorry lot. They now have their hands out, begging for a bail-out.

Unfortunately, we have no choice other than to stump up and fund their losses from lunatic loans that were advanced with abandon to developers and others during the boom.

We are set to learn today exactly how many billions of euro will be required to be pumped into the banks in order to bring them back to health.

But it is almost certain that the State will end up as the majority owner of AIB and Irish Nationwide, along with significant stakes in Bank of Ireland and EBS Building Society.

And these banks and building societies will return the compliment by hitting consumers with higher mortgage, credit-card and loan rates, along with a string of other hikes in banking charges.

AIB chose to get its bad news on mortgages out of the way yesterday in the hope that by today the news agenda will have moved on to the size of this latest bail-out.

It is hard not to be cynical about AIB's decision to hit existing mortgage holders with interest rises just hours ahead of the expected announcement of the nationalisation of the bank and its latest recapitalisation.

Existing customers will have to pay 0.5pc more for their mortgages, a move that will add €65 a month to repayments on a €250,000 mortgage.

AIB is also hiking its fixed rates from the start of business today. The bank had the lowest fixed- and variable-rate mortgages before the rises.

The bank has also told the European Commission that it will hike its mortgage rates again until they have gone up by a total of 1.5pc by the end of this year.

Yesterday's rises will hit AIB customers who have standard variable-rate mortgages.

A homeowner who borrowed more than 80pc of value of their home will see their interest rate rise from 2.65pc to 2.99pc, an increase of €80 a month or almost €1,000 a year in repayments on a €300,000 mortgage

The bank's best-value standard variable rate has gone up from 2.25pc to 2.75pc, which will increase monthly repayments by €25 on every €100,000 borrowed.

AIB's fixed rates, which were the most competitive in the market, are all rising. Its three-year rate goes from 3.19pc to 3.65pc, with effect from today.

THE changes will have no impact on those who have tracker mortgages or existing fixed-rate deals. But few, if any, customers of banks and building societies will escape some form of financial punishment.

Bank of Ireland has already announced rises in interest rates on credit cards, personal loans, overdrafts and student loans. AIB has said it is increasing its credit-card rates.

Expect all the others to follow suit with higher charges, interest rates and other charges as banks and building societies desperately scramble to get back to profitability.

And do not expect the Department of Finance to stand in the way of this bank charges hike frenzy.

Either the State continues to drip-feed the banks with more taxpayers' money to repair their blown-out balance sheets or the banks help themselves by pushing up interest and charges.

The situation is so bad that both of these unpalatable options have to be taken, as the Department of Finance sees it.

So get set for Bank of Ireland, EBS and Irish Nationwide to follow Permanent TSB and AIB by hiking their standard-variable mortgages and their fixed rates.

Both these types of home loans are likely to rise by at least 1pc before the end of the year.

Credit-card rates and the fees for the likes of a late payment will also continue to go up.

There will be fewer banks and building societies operating in this market.

From a situation where a typical Irish town had up to 11 banks, it now seems that more than half of these will be gone by the end of the year.

AIB, Bank of Ireland, Ulster Bank and the 'Third Force' of EBS, Irish Nationwide and Permanent TSB will now be the most likely banks left competing in the average town.

And savers, who are enjoying higher interest rates at the moment, are likely to see what they are earning on their nest eggs falling back.

All consumers can do is make sure they are getting the very best deposit rate they can at the moment, lock in to a decent fixed rate on their mortgage -- if their lender still offers one -- and keep on side with their credit union.

Because the bad news for consumers is that it will get worse before it gets better.

Report by Charlie Weston - Irish Independent.

Sunday, 28 March 2010

Economy 'Fallen Off A Cliff'...

Our economy has 'fallen off a cliff'...

Ireland's economy has "fallen off a cliff" and is in the grip of the worst recession in its history as new figures reveal it has shrunk by almost 25 per cent from its peak.

A loss of nearly one-quarter of the country's domestic trade in such a short period of time is seen as a catastrophe.

The domestic economy, the day-to-day business of trading, has been decimated and business leaders have called on Finance Minister Brian Lenihan to follow the lead of the British, who put small businesses at the heart of their economic recovery plan.

According to the new figures, since the peak of Ireland's economic wealth creation in the first quarter of 2007, Ireland's economy has reduced by a frightening 24.27 per cent, far higher than previously thought.

While the main political agenda was last week dominated by Taoiseach Brian Cowen's reshuffle, focus will next week return to the state of the country's finances, with Mr Lenihan to announce in the Dail the future of Nama.

Also, as a result of a collapse of all tax revenues since the peak of late 2006 and early 2007, the Irish exchequer has also reached another worrying milestone. The State has posted 25 consecutive monthly exchequer deficits since January 2008.

Since then, Ireland's national debt has doubled to €75bn, and is set to double again to €150bn by 2014. The first quarterly figures for 2010 are to be released next Friday and so far the exchequer is showing a deficit of €2.4bn for this year.

Mr Lenihan's Budget Day comments that the worst is over were based on a reported minor return to growth, driven by multinational profits, but this was an error and in fact the pace of decline actually increased toward the end of last year.

Yesterday Mr Lenihan, through his spokesman, said that he stands over his comments because he said GDP is a far better indicator in terms of economic activity and jobs. GDP has been running higher than expected since Budget Day, he said. In total, the domestic economy fell by 11.3 per cent during 2009, the largest-single decrease in wealth ever recorded.

Labour's finance spokeswoman Joan Burton said that Ireland "has fallen off a cliff" and that behind these stark figures is a world of pain for regular Irish families.

"Records are being set for all the wrong reasons as the Government's scorched-earth Budget and banking policies continue to take their toll on our fragile economy," she said.

Mark Fielding of the Irish Small and Medium Enterprises Association said the majority of the pain is being felt by small businesses, which have been abandoned by the State.

"There is no economic leadership coming from the Government at all. Look at Alistair Darling doing a huge amount for small businesses, telling Lloyds to give half their money to small companies.

"We need that here but our members are frightened by the uncertainty coming from Government. We need a radical new approach," he said.

To illustrate the true devastation of the recession on the private sector, 127 companies a week, or 12,049 in total, have been forced to close since Mr Cowen became Taoiseach.

Shocking new figures from the Revenue Commissioners also reveal that since 2008, 40,758 individuals have officially ceased trading.

If 127 companies have closed for each of the 97 weeks Mr Cowen has been Taoiseach, it works out as 18 a day.

Fine Gael's finance spokesman Richard Bruton said Ireland is in the grip of its worst-ever recession. "What we are going through is worse than what happened in the 1950s or the 1930s.

"This country needs a new focus and the 'batten down the hatches' tactics of this Government clearly are not working. These figures are simply disastrous."

Labour's Ms Burton added: "The economy may technically return to modest growth this year, but real recovery won't come until we get the country back to work. Any growth this year is likely to be modest and jobless."

DANIEL McCONNELL - Sunday Independent

Thursday, 25 March 2010

Ireland 'Needs New State-Owned Bank'...

Ireland needs a new publicly owned bank modelled on a lender that helped rebuild Germany after the Second World War, it was claimed today.

Labour leader Eamon Gilmore said a state bank was necessary to inject much-needed cash into struggling smaller firms and business start-ups.

A Strategic Investment Bank - based on Germany's KfW bank, which was set up under the post-war Marshall Plan to rebuild a devastated Europe - would also raise money for public projects, he claimed.

"Businesses need money to start up and keep going," he said.

"At the moment and certainly for the foreseeable future there does not appear to be any prospect that the existing banking system is going to provide that finance."

Mr Gilmore said the proposed bank would be set up with €2bn taken from the national pension fund, with another €18bn raised from international money markets.

Under the Labour plan, it would have a small number of branches and, while state-owned, would be run independently of Government.

As well as supporting smaller businesses, it would provide funding for major public projects such as broadband, transport and renewable energy.

"It is absolutely necessary - we have gridlock in the Irish economy," insisted Mr Gilmore.

"On the one hand the Government is paring back on expenditure and on the public capital programme and on the other hand the private banking system is simply not lending to businesses."

Labour deputy leader Joan Burton said Ireland was suffering from "complete market failure".

Unless jobs are created through new investment, tens of thousands of young people will be devastated by the "utterly corrosive effects" of long-term unemployment, she added.

Press Association - Irish Independent

Wednesday, 24 March 2010

House Prices To Fall 10pc...

House prices 'set for further 10pc fall' says leading economist...

House prices will fall by another 10pc before the market hits rock bottom next year, a leading economist predicted today.

Jim Power, chief economist of Friends First, believes while the recession is likely to end around the middle of this year, consumer confidence and spending will continue to be undermined by wage cuts, an uncertain labour market and further reductions in state spending.

The finance house revealed six out of 10 consumers are not confident in the Government's ability to revive the economy, with a third backing a Fine Gael/Labour coalition to do the job.

Mr Power said it was difficult to be convinced the economic situation will improve considerably in the near future.

"The Irish economy is going through an extremely difficult adjustment and the situation remains precarious. It is way too early to sound the all clear," he warned.

"A fundamental reform of taxation and spending is required.

"The most economically efficient tax system is one based on relatively low marginal rates but spread broadly - the notion that the problem can be solved by increasing taxes on the so-called 'better off' is naïve and would go nowhere towards solving the problem."

In its quarterly economic outlook, Friends First examined the views of 1,000 Irish people on the current and future economic situation.

It found 86pc of those surveyed believe creating jobs is the biggest challenge facing the Government, followed closely by reducing Government borrowing (51pc) and enabling the banks to lend again (45pc).

The research also showed confidence in the Government remains low with with a third believing the economy will not return to growth until after 2012.

Some six out of 10 are not confident in the ability of Irish banks and NAMA to stimulate the economy.

Mr Power said he found it difficult to see where meaningful job creation might come from and predicted further job losses in construction, retail, hotel and restaurant, financial services and the public sector.

House prices, which he said had plunged by at least 50pc since a 2007 high, will drop another 10pc before bottoming out in 2011.

Mr Power also said it was critical that the cost of doing business and the cost of living in Ireland be further reduced to reap the benefits of a global economic recovery.

"This is the major challenge for Irish policy makers - to ensure that as the external environment improves the Irish economy is in a position to exploit it," he added.

Press Association - Irish Independent.

Sunday, 21 March 2010

Property Suicides Leave State Unmoved...

29 property suicides leave State unmoved...

Families torn apart by cash crisis

Twenty-nine deaths by suicide can be directly linked to the turmoil in the construction and property sector but dozens more deaths among small investors, homeowners and construction industry workers linked to financial despair have gone unreported.

David Mellon, of the Irish Property Council believes the human misery inflicted by the collapse in the property and construction industry is incalculable and the Government is doing nothing to protect the sanctity of the family home.

He predicted that by the time the economy recovers, hundreds will have taken their own lives because they have been plunged into a financial abyss from which they can see no way out.

"We are talking about people who invested in property, people who earned their livelihood from it in many forms; builders, plasterers, plumbers, developers and large and small investors.

"They are now facing financial disaster, bankruptcy and destitution.there are teachers, gardai, lawyers all caught in the crossfire. They are in a suffocating despair."

He says that the seven-person board of the Irish Property Council had personal knowledge and the names of 29 suicide victims that can be directly attributed to turmoil in the property and construction sector.

"I was talking to one family who lost a husband and a brother and they have been simply torn apart. It's hard for people to talk about, to go public about what has happened. They want to protect their children and some are simply too shocked. They haven't come to terms with it."

He has personal experience of the human cost of the disintegration of the construction industry. He lost a friend to suicide a year ago while another had to be talked out of taking his own life.

"There are other cases too. I was having a pint with a friend of mine and he got a text from an employee. My friend was in shock and he showed me the message. It read: 'I cannot come into work tonight. My brother killed himself today. He had no work for his trucks.' This man wasn't an investor. He wasn't a speculator. He wasn't anything other than a man trying to make a living," said Mr Mellon.

Property developer and suicide campaigner Noel Smyth has revealed that a 24-hour helpline set up by suicide charities three months ago is now receiving between 2,500 and 3,000 calls a month -- many of them from people being ruthlessly pursued for money.

"They would be classified as high-risk calls, in other words someone who already has a suicide ideation or they may have actually planned a suicide," Mr Smyth told the Sunday Independent.

"Definitely the age profile of people with suicidal thoughts is changing and that is a reflection of financial worries. Many are in difficulties with property, with bank loans, with the Revenue."

Meanwhile, a financial tsunami is heading toward thousands of first-time buyers and investors who took out "interest-only" loans at the height of the property boom.

Thousands of these loans will now revert to capital repayment loans and are on properties already deep in negative equity.

Around 14 per cent of the 158,098 mortgages approved in 2007 were for interest-only products. Many lenders offered "interest-only" holidays of two or three years.

Similarly 15 per cent of the 110,300 loans approved in 2008 were also interest only.

It means tens of thousands of people, particularly first-time buyers, will have severe difficulties meeting repayments when the interest-only period comes to an end before the end of the year.

Respond, the housing agency, told the Sunday Independent they have received calls from many distressed homeowners whose mental health is being affected.

Aoife Walsh of Respond said: "There is a crisis out there which is taking a human toll. The Irish Banking Federation have renegotiated the mortgages of 30,000 householders. We are very fearful for a lot of people out there.

"I have been receiving from [calls] people in difficulty who are at the end of their tether fearing their home will be repossessed. They are displaying worrying depressive tendencies. Their mental health is being put under pressure and there are immense pressures on families.

"It is having an impact on marriages which is not being taken into account. The social implications are enormous. The screw is being turned on marriages and the family unit and that is going to have far reaching consequences for Irish society for years to come," Ms Walsh said.

Developer Noel Smyth said he has been shocked at the huge number of calls received by a free 24-hour helpline (1800 247100) set up by his organisation Turning the Tide of Suicide in conjunction with the suicide charity Console.

"Unfortunately the people who are putting them under pressure, whether it is the banks or whatever, have no understanding, no training. When they come across an uptight client they treat them as a normal tough guy or woman -- and as a result of all that, they are unaware that they are potentially driving someone over the top," he advised.

"People caught up in this are nearly afraid to be seen complaining or to actually voice that they are in a lot of trouble.

"They fear that they are going to be told that 'It's your own fault. you were greedy, you were grabby' and that means there is no support for people out there.

"This Government is treating suicide like they treat the poor. Their view is that 'the problem will always be there so therefore we can ignore it,'" Mr Smyth added.

Report by JEROME REILLY - Sunday Independent

Saturday, 20 March 2010

Bucket Of Cold Water...

EU Commission throws cold water on hopes worst of budget crisis over...

THE EU Commission yesterday took on the role of the man who blew out the light at the end of the tunnel.

Tuesday was a good day in terms of the public finances. The Government, through the National Treasury Management Agency (NTMA), managed to borrow €1bn at the lowest interest rates since December 2008, when compared with equivalent German rates.

The head of the NTMA suggested the gap between Irish and German interest rates on government debt could be less than 1pc by the end of the year.

Any sane person not still living in bubble land would regard that as an eminently reasonable "spread", given the differences between the two economies.

But the commission threw a large bucket of cold water on any flickering hopes that the worst of the budget crisis was over.

In its formal report on the public finances of 14 EU states, it warned that the tough Irish budgetary plans, over which so much anger and anguish has been spread, may not actually be tough enough.

Less happy

Like the financial markets themselves, Brussels gives credit to the Government for acting quickly and decisively when the public finances collapsed in 2008.

But it is much less happy about the plans to restore them to the EU rulebook by 2014, with a government deficit of less than 3pc of economic output (GDP).

The commission has two main concerns. It fears that the fact the actual measures to be taken in future budgets have not been spelt out raises the risk that they may not be implemented when the time comes.

Brussels will be well aware that the trade unions are already in negotiations about what will be done in future, and whether the past will be revisited in terms of the public sector pay cuts. That might be called political risk.

The second worry is more fundamental.

Despite further planned spending and tax adjustments of €5bn over the next four years, the Government targets depend on a return to growth next year and rapid growth of more than 4pc in the following years.

That always looked optimistic, and the travails of the world economy up to now have made it seem even more optimistic.

Growth will resume -- probably quite soon -- but cumulative real growth of 12pc over the next three years is a lot to ask.

Yet there is little room for slippage. The programme agreed with Brussels sees the national debt ratio peaking at 84pc of GDP in 2012, followed by a small decline to below 81pc of GDP by 2014. Interest payments on that debt will be eating up €1 in every €5 of tax revenue.

Any weakening of the budget discipline -- or even growth averaging less than 3pc a year -- could bring the debt ratio towards 100pc. The commission seems to think that is quite likely.

Debt ratio

"In view of the likely need for significant further capital injections into banks, and of the negative risks to the budgetary targets, the evolution of the debt ratio is likely to be less favourable than projected in the programme," it says.

To no-one's surprise, Brussels says the Government should be ready to impose even more stringent spending cuts should the need arise.

There comes a point, though, where such responses are self-defeating, if not downright politically impossible.

Whisper it not in Brussels, but the 3pc target is not sacrosanct. The British are not even trying, much to the commission's dismay. Ireland is doing a lot to restore its competitiveness and potential growth. More could be done, but the actual growth rate is outside our control.

Holding the level of current spending steady in cash terms, as the programme envisages, should be the central target, not the deficit.

Additional taxes will have to be raised, which will sorely test the political system.

Raise those, and Ireland will have done all that can reasonably be asked of any country.

However, those who argue that we can get away with doing less need to explain why their version of reality is so different from the stark one set out in Brussels.

Report by Brendan Keenan - Irish Independent

Friday, 19 March 2010

This Wretched Isle...

"For the love of God, and his blessed disciple St Patrick, displace me from this wretched isle"...

Mbwana minister! All hail from the Emerald Isle, on this, its patron saint's feast day! It is my 10th year here! Any chance of granting me the posting that I sought after my very first week? To somewhere civilised, like North Korea, or Burma, or dear old Liberia? I liked Liberia. Yes, they sometimes kill children there, but that is in war: the highest men in the land raped children at a time of peace in this country, and got away with it. Big men, Mbwana. Important men, with purple hats, and their crimes were covered up by other men with purple hats.

The health ministry here is pioneering new long thin hospital wards called "corridors". There is no money for the patients, because it is all being spent on the staff. Thousands of people are X-rayed here, and then no one bothers to read the X-rays, ho ho ho. In a county called Kerry, they are building a new hospital in K'nmare, to keep a politician called Jackie Healy-Rae happy. There are no words in English to describe him. In our mother tongue, he is what we would call a g'bdaw. Who will run the hospital? The patients probably. For I should tell, you, Mbwana, that Irish politicians think that forward planning only happens in a rugby scrum.

Young people here apparently admire the Health Minister, because they clearly model their physical appearance on hers. She now resembles the sister of Comrade Nkomo, after several months on the hippopotamus diet. Having her as Health Minister is like having a pacifist as minister for defence. She has taken her very large feet to New Zealand for a few weeks. This also is somewhat strange: rather like a minister for defence going on holiday during an invasion.

New Zealand, I should also tell you, is where Ireland gets most of its national plant, an indigenous clover called shamrock. No, Mbwana, I do not know why the Irish cannot grow their own shamrock -- but as I have told you repeatedly, I understand nothing about this country. So why not post me elsewhere, oh beloved Mbwana, Minister? The pulchritudinous Pitcairns beckon! Or perhaps the enchanting Faroes, with dead whales in every inlet, and a population racked with scurvy, rickets and six-month winters! Delightful, compared with here.

Meanwhile, Europe is emerging from the recession, as Ireland settles deeper into it. Civil servants are effectively on strike. Senior public officials -- like politicians -- have recently seen their relative incomes actually go up. And colleagues who are complicit in, or have ignored, corruption, are not given the dear old Winnie, namely a necklace of a burning car tyre filled with petrol.

No. They are given tax-free lump sums and allowed to take early retirement on full pensions. Mbwana: the country is borrowing €500m a week to pay public salaries. My economics is not good -- BComm (Pass), University of Mjubu, 1981 (burnt down, 1982) -- but even I understand that this is voodoo.

However, I beg to report good news, Mbwana! The primitive savages of the old IRA are out of business. This is not to be mistaken for the old IRA, or the old old IRA, or possibly even the old old old IRA. (Forgive me: sometimes one loses track). On the other hand, there are now two new IRAs, both bombing and shooting, just like of old.

You know how the white man laughed at Comrade Nkrumah for building a motorway to nowhere? Well, it was a short motorway. In Ireland, the Government has built many hundreds of miles of motorway without service stations, toilets or rest areas. The new 300km road from Galway to the Border with Newry has not a single petrol pump, until you get to south Armagh, which certainly has petrol stations, Mbwana, and lots of them. But you'll never guess who owns them!

The Irish people are curiously conceited. They think we need them to build our houses. I do not like to tell them we have millions of unemployed, who should be doing the building themselves.

For building houses is, it seems, what the Irish like to do, instead of thinking. They have actually built 350,000 more houses in Ireland than they need. I presume it is what we called in the University of K'mginga (BPsych, 1985, burnt down, 1987), displacement activity.

Mbwana, O Mbwana: I am rather fond of displacement activity! Any chance of displacing me? I am a fervent believer in Christianity and in nudism: I could practice both in Afghanistan. Or I could open the first Naked Baptist Mission in the Sunni Triangle, in lovely, lovely Iraq.

Please, Mbwana, Minister: displace me -- oh for the love of mGod, and his blessed disciple, Saint mPatrick, please, displace me from this wretched isle!

Article by Kevin Myers - Irish Independent

Wednesday, 17 March 2010

Artists & Entrepreneurs Are The Key...

Artists and entrepreneurs are the key to our recovery...

On St Patrick's Day two years ago, while nudging my way up a crammed Fifth Avenue, the idea of the Farmleigh Global Irish Forum came to me. I'd thought about it before and I had seen how other countries cultivated relationships with their global tribes -- particularly the Jewish tribe and Israel -- but it was only after seeing the unique outpouring of Irish America on March 17 that I knew we should do this. We should tap into the power of the tribe and see where it takes us.

Like many initiatives, the real power of something like Farmleigh can never be dictated in advance. There is an element of chaos in putting people together who don't know each other and are bonded by something as fluid as having an "interest" in Ireland and allowing the conversations and ideas to flow.

But Ireland has never been short of ideas, if anything we have loads of ideas and not enough people who can execute them. The hardest part about ideas is getting them to fulfil their potential. This is what any entrepreneur will tell you. It is also what any artist or writer will tell you. It's easy to have an idea for a book, the hard part is having the discipline to write it.

Similarly, had the officials and Foreign Affairs Minister Micheal Martin not been open to the idea, Farmleigh would have remained an idea thrown out in a bar on St Patrick's Day -- how many of these do we have? So it's all about execution and no matter how amenable the diaspora or tribe is, we still have to translate an emotion into a reality.

Out of Farmleigh have come a number of concrete initiatives and only time will tell how many others are bubbling away under the surface. Dermot Desmond's University of the Arts, the Farmleigh Graduate Programme, the latest tourism campaign 'Home', the 'Gateway Ireland' portal as well as the many regional Farmleighs which are taking place today -- all these are tangible. Sure, Farmleigh had its critics, and some of the points made are valid and apposite -- but you have to try, you have start somewhere and the connections made are likely to throw up more initiatives.

This is the beauty of setting up networks and bringing people together, you simply have to stand back and let human curiosity, ingenuity and love of risk run its course.

These are the sort of characteristics which join two of the most interesting types of people in our world -- the artists and the entrepreneurs. One of the most gratifying and unexpected developments to come out of Farmleigh has been the realisation that artists and entrepreneurs are on the same side.

For many years this natural alliance has been obscured, often by arts administrators who, as bureaucrats, are more risk averse than either artists or entrepreneurs. Some academics play this role too, a sort of false bohemia cosseted by the protection of a State salary.

These folk like to hang with artists but would never risk their own creature comforts and live like artists. It is natural -- no in fact it is essential -- therefore, to create an enemy that is inimical to the artistic temperament so that the artists never see who their real kindred spirits are and the entrepreneur never sees that the artist gets up every day.

The fat-cat businessman image is a type of Dickensian caricature, counting his swag and scoffing at artistic effort. But this is far from the truth.

Take James Joyce for example. Joyce was an entrepreneur before he was an artist.

In September 1909, on a visit to Trieste, Eva Joyce, James's younger sister, suggested to Jim that there was money in cinemas. For a city of 400,000, Trieste had loads of cinemas. In contrast, there wasn't even one in Ireland.

Joyce was sold and he put together four venture capitalists to back him. Joyce negotiated 10pc for himself. Today, this capital would have been known in the jargon as "sweat equity".

Joyce set off in October 1909. By December the Volta cinema was open on Mary Street in Dublin, with Joyce as proprietor. The 'Evening Telegraph' covered the Volta's opening night on December 20: "James Joyce, who is in charge, has worked apparently indefatigably and deserves to be congratulated on the success of the inaugural exhibition."

Two other ventures captivated Joyce. The first was a plan to import skyrockets into Trieste, and the second was to import Irish tweeds into Italy. Both projects were dropped and the Volta folded, but all three episodes reveal a portrait of the artist as a young entrepreneur.

Joyce, arguably our finest and definitely our most celebrated writer, saw no contradiction between artist and the entrepreneur. Rather they are complementary and at their root the artist and the entrepreneur are similar. A fine business brain is as interested, irreverent, creative and alert as a fine artistic mind. The artist sees himself as outside the mainstream. So too does the entrepreneur. Both celebrate the individual over the collective. Both regard security with a certain distance.

There is a striking similarity about their worldview. Both regard most of society's obsession with certainty and security as bizarre. Neither can bear the idea of working for someone else for a wage.

The very thought of taking orders from a bureaucrat strikes fear in both. Working is about creating, beating the competition and expressing themselves, not about pointless committees, political games and promotion.

In the end, artists and entrepreneurs are the only people in society who do not retire. They rarely become jaded or washed up. Of course, many artists and entrepreneurs become part of the establishment, feted by politicians, the media and corporates alike, but most remain beyond the pale.

What binds these two apparently contradictory groups? Risk. Risk and a love of risk, originality and freedom, distinguish the entrepreneur and the artist from others.

Both groups live on their wits, not from the type of corporate arse-kissing that dominates many "successful" career structures in corporate and public sector Ireland. They make things happen by displaying enormous self-belief, hard work and attitude.

An interesting way of looking at the similarities is to remember your schooldays and examine the subsequent careers of friends. In many cases those who ploughed their own furrow either artistically or in business were remarkably similar.

It wasn't really that surprising, therefore, that when I got up to chair the final session at Farmleigh, there was a little knot of some of Ireland's and the diaspora's finest entrepreneurs and artists huddled together excitedly.

These people understood each other. They are spiritual bedfellows and unlike others they -- artists, writers and entrepreneurs -- realise that the idea isn't the end, it's the beginning. The hard part is the hours spent on your own -- writing, tearing up, getting up when you've been knocked down and taking the flack from the critics, who tell you that idea will never fly. This St Patrick Day, let's celebrate these doers.

Report by David McWilliams - Irish Independent

Monday, 15 March 2010

Crisis To Redefine...

This time of crisis affords us great opportunity to redefine ourselves...

The vision of our leaders is bankrupt. Now is the time to change our political culture

IN TIMES of crisis, more than any other time, we need our politicians to provide leadership and clarity so we can make some sense of what we should be doing as citizens. In our current malaise we are still waiting for them and our public and corporate leaders to empower us with ideas so that we may reimagine our new Republic. It is a time of trauma and also of great opportunity and the need to correct this for the next generation should be a priority.

What has been evident is that our artists, writers, thinkers, philosophers and (some) economists have been suggesting alternatives and a way of thinking afresh. I’m not suggesting that these new ideas will make us financially solvent again but in the absence of a dynamic political leadership, it is as good a place to start as any. It will, at the very least, replenish our idealism.

Our politicians, public policymakers and corporate leaders are still in a shock of inertia and their political wisdom and vision is bankrupt. The best they can come up with is a competition with a cash prize (Your Country, Your Call). Another All-Ireland talent show. This is not a criticism of the competition itself, but it is a clear public symptom of the lack of confidence we have in the leaders of our society and the lack of trust they have in each other in providing a way forward.

I know that, as a taxpayer, I’ll be funding Nama and the capitalisation of our banks, for the rest of my life. Even when I retire, I expect my old-age pension to be taxed. As a citizen I will have a stake in the running of this country until I am cremated and in return I intend to contribute to that.

That is the connection we need to make, the promotion of active citizenship so that we can empower (through elections) our leaders to govern with a constitution that proclaims Ireland a Republic.

I want our politicians and policymakers to give themselves permission to be visionary and imaginative when it comes to redrawing a new constitution. Instead of a competition we should have a National Citizenship Forum.

The “insiders” of our political establishment who guided us into this mess of economic disaster and political stasis will find it difficult to be the same team to forge a fresh political way forward. Your Country, Your Call is a symptom of this, but not the solution.

The playwright Thomas Kilroy, in Christ Deliver Us! (currently running at the Abbey Theatre), provides us with some clarity and hope, when Fr Séamus offers advice to young Michael, who has to decide whether to die or make a commitment to living and pursuing his ideals.

“Know nothing! A clean slate! Ignorance is the start of everything, Michael. That’s what drives us forward. Questions. Always questions. We are born under the sign of a question-mark, Michael. And that’s how we end, too. Questions, questions!”

The need to question and interrogate is exercising all sectors of society including our community of artists and theatre makers. However, there is a disconnect between all of us. We are in our own trenches, clamouring for our own demands and competing for whatever bread is left on the table.

What the Celtic Tiger era achieved was the institutionalisation of that disconnection between citizens and the democratic process. This wasn’t the case in the first 30 years of the 20th century when common causes united citizens and communities.

How can we achieve this again? The diaspora event at Farmleigh last September was extraordinary and cathartic as it showed how diverse community leaders can converge and debate the issues. However, wouldn’t have been better if this debate had occurred in the Oireachtas? Imagine, the debating chamber of the Seanad with Senators Séamus Heaney, Mícheál Ó Súilleabháin, Dorothy Cross and Moya Doherty, debating with their political, economic and business peers.

We need to question and change political culture in Ireland and allow a mechanism where new ideas can be discussed. What the Celtic Tiger achieved was the privatisation of our democratic system and it validated the corruption in the democratic, political, religious and financial worlds. A rereading of this verse by a former senator, Nobel Laureate and co-founder of the Abbey Theatre suggests that history has repeated itself:

What need you, being come to sense,

But fumble in a greasy till

And add the halfpence to the pence

And the prayer to shivering prayer, until

You have dried the marrow from the bone?

For men were born to pray and save:

Romantic Ireland’s dead and gone,

It’s with O’Leary in the grave.

WB Yeats, September 1913

I’m critical of the “insiders” who are still in positions of authority but what I’m angry about it that we let it happen. We became consumers rather than citizens. It is time now to bury the description “Ireland Inc” for good, and build towards a newly defined (newly named) and collectively shared Republic. The move away from calling ourselves “consumers” to being proud and active “citizens” is what I want.

We sleepwalked our way through every election recently based on our individual needs rather than shared community values. We were greedy and adopted the McCreevy doctrine of “spending it while we have it”.

Tom Murphy in his last play – The Last Days of a Reluctant Tyrant – summed up brilliantly the moment when Ireland dispensed with the ideal of a democratic Republic and shifted towards the culture of corporate, consumerist Ireland Inc: “When they lose the sense of awe people turn to property . . . and religion.”

The challenge for our political culture is to make policy that we might not see the benefits of for 20 years. What if we took a decision to invest in education now? To have a new curriculum on citizenship, design, science, maths, languages and cultural studies from the age of five upwards. If we invest in design and cultural studies now, we will be developing a new generation of leaders, innovators and entrepreneurs.

We insist that our politicians (which was readily accepted by them) keep to the short-term agenda of what Declan Kiberd calls the “present tensism” ( Irish Times August 29th, 2009). The need to get a quick result, announce a decision, lay a foundation stone, cut a ribbon before there is any look at the long-term consequences is our political culture. Good long-term policymaking is forsaken for immediacy. The savaging of Government policy on the spatial strategy in exchange for decentralisation is an example of this.

I know from my own stewardship of the Abbey Theatre that I need to balance my programming and administrative decisions between achieving success here and now and the longer-term strategy of investing in the work of emerging generations of artists. Michael Cronin says that instead of the culture of “Me, right now!” we ought to be moving to a culture of “All of us, all of the time” ( Journal of Music in Ireland – Nov/Dec 2008). It is about inculcating a sense of common purpose in us as a community and we can’t just blame the politicians alone for this.

Can we, as citizens, sacrifice our immediate concerns for a longer-term shared goal of a healing society? We require politicians who have the ability and political courage to plan long-term and to pursue the “All of us, all of the time” philosophy. Reform of our electoral system alone is not the answer; we need profound change at local government level. This combination will change the political culture of the next generation.

Although it might be easy to criticise our electoral system as the reason why our national politicians have a more clientelist approach to constituency work, I’m not sure if it is entirely to blame. It is a cliche, but we often get the politicians we want and deserve. We expect our elected representatives to do our bidding and service for us, to bypass the official system so that we can get something done. Trevor Sargent’s correspondence with An Garda Síochána is the latest example. We often treat our politicians as State servants (and they are happy to comply too) It is a subconscious conspiracy. We can’t see the value in having more efficient public services and better local government when our local TD can deliver it quicker.

We are not encouraging ourselves to be active citizens, we believe that our responsibility begins and ends with our action in the polling booth. We are colluding in the bind of “present tensism” with our politicians. It suits us both.

Public sector reform will free up valuable time for our TDs and Senators to contribute more to policymaking and less to lobbying. We need to redefine for our elected representative what success means. Not letters to judges, guards, department of social welfare and the passport office; but by making better laws, providing transparency in decision-making, and a more diverse and vibrant Oireachtas that reflects our healing Republic, which in turn can deliver expert Government.

To stick to Thomas Kilroy’s advice of “Questions! Questions!” I would like to question the value of our Constitution as a framework for a 21st-century Irish Republic. It is a dry and legalistic document from another era. It should offer us hope by defining the goal of our Republic so that it can assist us in responding to change. How can we accept as a multicultural, secular society that all authority and actions of our people and the State should derive from the most Holy Trinity? This time of crisis affords us great opportunity to redefine ourselves and pursue the goals of our founders.

The Joint Oireachtas Committee on the Constitution is currently deliberating electoral reform. There is public interest in this and I have found myself attending such meetings, which are well attended. There is an interest and a hunger in citizens to engage with new ideas and recalibrate the vision of our country.

Mary Wilson asked me recently on Drivetime who I would suggest from Fianna Fáil to be promoted in a reshuffle. I found it difficult to answer. Other than political mavericks and chairmen of Oireachtas committees, I don’t know the calibre of backbenchers in Fianna Fáil (or in Fine Gael either). I haven’t heard them discuss or contribute significantly to any major public policy issue.

The party system in the Oireachtas has morphed into lethargy and stagnant party discipline. A rigid party competitive structure leaves no space for nuanced debate and is a symptom of our fractured political culture. Policy debates are regularly conducted outside of the chambers. Recently Mattie McGrath TD spoke against the reversal of the pay cuts to senior civil servants and yet, sided with the Government on the issue. Saying one thing and doing another doesn’t add to the integrity of Irish political culture.

Commentators, politicians and academics have put forward suggestions on political reform, ranging from a revised electoral system, increasing voter participation, reform of the Seanad, supporting affirmative action when it comes to increasing participation by women in the Oireachtas and the appointment of non-elected people to the cabinet. I’m in favour of all these changes but I would like to concentrate on a solution that will work but that requires long-term political courage.

In April 2004, I visited Mike Ashe in Durham County, north Carolina. He is the director of the board of elections. The board’s mission is “to provide free, open, honest, and professionally managed election services to [Durham County] community”.

I was there to observe democracy at work at a local government level. We often criticise the democratic process at a national level in the US. But a resident of Durham County can vote for the board of the local school, can debate and participate in the local budget spending. Ashe also explained to me the campaign of increasing voter participation, through a flexible voter registration policy.

I came away with the strong sense that the political culture in Durham County encourages political participation, not only by making voting easier, but also by making the connection between voting for the school board and your child’s education. This is also achieved by paying tax at a local level. I’m not suggesting increasing taxation but I am advocating that a portion of our taxes should be raised and spent locally. This will gives us all a sense of ownership of our local library, swimming pool, school, health centre, arts centre, sports field, childcare facility and public spaces. Ireland is too small to be divided up in the current local authority structure. A regional-based approach has to be considered and this was alluded to in the spatial strategy. We need to make the connection and provide the power to citizens at a local level so that bottom-up activity will enable national politicians to concentrate on their executive and legislative responsibility in the Oireachtas.

What I learned from Ashe is what Noel Dempsey said in response to Brendan Howlin at a meeting of the Joint Oireachtas Committee on the Constitution debate on political reform: “The system of local government is one in which people spend money but have very little power. It delivers local services at the direction of national government. It is not, except in small areas, local democracy and it will remain like that until it has a revenue-raising role.” (November 18th, 2009)

A new local government system needs to be established which is funded and administered at a local level. This will revitalise our political culture, increase participation at a local level across all sectors and contribute to better policymakers and political leaders on a national level.

Report by - FIACH Mac CONGHAIL - Irish Times.

Saturday, 13 March 2010

Nobody Knows...

'Returning to the spirit of Tiger Ireland is pointless. Only a completely new political movement can tackle the challenges'...

DECLAN KIBERD : The UDC professor of English outlines what he believes needs to be done to fix Ireland

NOBODY KNOWS what will happen next – not even our leaders. We walk as a community in darkness down a strangely unfamiliar road, into a new landscape for which there are no maps. Except, possibly, newspapers.

Their sales may be in decline, but you can bet your life that more people are reading a newspaper, and in greater detail, every day. If you call into an office still lucky enough to be in business, you are likely to find people reading the morning paper. Four or five years ago, these readers would have been rushed off their feet with work to do and would have managed to glance at headlines only at the end of a fantastic day.

The unwelcome increase in “free time” is but one reason for this heightened interest in current affairs. Another is the fact that citizens, who for more than 15 years allowed politicians to get on with things, are now scrutinising their lords and masters more critically. And many don’t like what they see.

Just a few weeks ago, politicians awarded themselves an allowance of up to €15,000 a year in unvouched expenses. Before that, hundreds of the most senior civil servants had their incomes proofed against any pay cuts. While the newspapers were being drip-fed stories of Fás junkets, the nomenklatura was securing its financial future, if not that of the country.

Fifty years ago, there were senior civil servants who tore up a postage stamp in order to reimburse the State whenever they made a call on the office phone to a member of their family. The public services are still run by honourable and honest people but those days of efficient patriotism are gone. The period when the health system could be run by five senior administrators is now hardly a memory.

Ireland is at present immobilised by what Francis Wheen has called “process morons with Blackberries and iPhones”. They assumed critical mass in the years of the Tiger, frustrating many people both inside and outside the public services. It is arguable that even in those times of relative affluence we could not afford them. It is certain that we cannot afford them now.

Much of the divisive and unpleasant commentary on public servants over the past winter derived not just from envy of their position rights but also from a resentment at bureaucratic intrusions.

Everywhere, one hears stories of how the new mandarins invoke bizarre laws which make the cost of doing business simply prohibitive. Administrators are accused of blocking necessary medical operations in the public health system which doctors want to perform. Managers are telling educators with decades of experience exactly how to teach their classes. Yet these managerial elites, while talking constantly of “innovation”, have a truly impoverished notion of how knowledge is shared: they tend to prefer e-mails rather than complex first-hand encounters.

The country, as President Mary McAleese recently remarked, is full of talented, creative persons; but many with a wisdom based on years of experience feel frustrated. Those with good ideas cannot get their hands on the money to give shape to them, while those who continue to reward themselves with big money operate systems designed to block off unconventional, fast-track ideas. Sean Dunne put it pithily: “the people with money have no balls and the people with balls have no money.” An over-statement, perhaps, but only just.

Other nations with decades and centuries of experience do bureaucracy far better than Ireland – the French medical system, for example. But our large home-grown administrative elites are only a recent formation. They haven’t been streamlined to take full account of the accumulated lore of the various professionals and business people with whom they deal.

Every time a restaurant with a complex menu or a greengrocer with a beautiful range of produce falls victim to closure, this isn’t just a bad, single moment in the lives of the proprietors and customers. With each closure is lost a marvellous, possibly irreplaceable store of knowledge.

Every time a surgeon is told that an operation cannot be performed, the wisdom of a team of experts, arduously assembled over years of considered effort, is set at naught. Architectural practices have gone from 27 to seven practitioners in less than three years – the loss of such lore is heart-rending.

Ireland is filled with naysayers – often on fat mileage allowances – telling people why they can’t do this or that. The banks – which, a few years ago, were throwing money indiscriminately at all comers – now refuse to support well-costed and sensible projects. They may well be bust, but if so, why are they still allowed to trade?

Despite all the special advisers and spinners, the political system is remarkably unresponsive to actual human needs. Last November, the Irish Congress of Trade Unions (Ictu) presented a 10-point plan to combat unemployment, including a job-sharing model. The model was rejected, although it has worked well in Germany. “I think most of the hostility came from the Department of Finance,” said David Begg, general secretary of Ictu.

The salary-proofed group of senior public servants must include many who facilitated or propounded some of the weirder policies of the Tiger years: a reliance on taxes generated by a short-term property bubble to fund basic structural and social spending, and a serious undercapitalisation of education from primary schools to universities. The looting of the public purse by Fás executives has been well exposed, but has anyone explained why, in a time of full employment, Fás was deemed necessary at all?

These were the years in which gobbledegook about a “stakeholder economy” and a “stakeholder society” was cut and pasted into every second press release. The new mantras were all about “centres of excellence”, “innovation” and “smart economy”. PR smoothies, who wouldn’t be found near a church on Sundays, ransacked the language of religion for “mission statements” and “ethical testing”.

A vulgar, heedless populism led to an assertion that unrestrained market forces were somehow compatible with excellence and ethics, and to a widespread distrust of those with real professional expertise. As gesture took the place of structure, the very people who now call for regulation were just a few years ago the ones baying loudest for deregulation of everything from transport to health services.

The feel-good gobbledegook was the sort at which Irish people of all backgrounds would have hooted in derisive laughter just one generation earlier, but now it was taken up by managers who called for “sound business models”.

Trainee primary teachers, on their practice in schools, were expected to draw up detailed printed plans for eight lessons in a single day, while also providing self-assessment reports on each of the eight lessons given already on the same day. Applicants for academic fellowships were instructed to declare what the precise “outcomes” of their projected research would be, even before their work had actually begun. Waiters in tea shops were trained to punch into a retrieval system the number of customers sitting at a certain table before they could dare to say “good morning”.

People were seized by the crazy idea that information is knowledge and that everything worth knowing could be measured. They became so busy using the new technology to document life that many of them lost the art of living it or of thinking straight. Too many of us rolled over and let these things happen.

Before the Tiger years, Irish people understood that the real quality of life lies in those things which cannot be quantified. The notion that market forces are vital is plain common sense, but the idea that money should determine everything is a rather recent and barbarous development.

So is the proposition that people can express individuality through designer labels. For most of their history, Irish people have felt connected to traditions of compassion for the young and old, for the poor and infirm, and money has been subordinate. Our grandparents understood Einstein’s maxim that “what counts can’t always be counted and what can be counted doesn’t always count”.

THE MONEY GENERATED in the boom years was not often invested wisely, either in long-term businesses or infrastructure, either in social amenities or educational development.

A report by Davy said as much a few weeks ago. There is no point therefore in seeking to return to the spirit of Tiger Ireland. The country needs to make not just a single step forward but a series of quantum leaps. These will be based on new ideas, propounded mainly by those who work outside our sclerotic political system.

And that system is sclerotic. It is forever fixated on small details rather than big pictures. The most interesting feature of the bust-up between Willie O’Dea and Maurice Quinlivan goes back to a press release issued in March of last year, in which Quinlivan complained of a bill of between €165,000 and €225,000 for six civil servants employed to deal with the then defence minister’s constituency affairs.

O’Dea was a local vote-catcher in the Ahernite style of almost all other successful politicians.

A country whose population is not much larger than that of Greater Birmingham can hardly afford more than 160 high-maintenance ward-heelers who open their main shop for business on just 96 days a year. Better by far to reduce the number of TDs to about 75; to bring in new kinds of leaders with experience in various walks of professional life; and to pay such people a competitive salary (but with no frills or extras) for running a country rather than a local clinic.

It seems unlikely that a political class which allowed so many problems to germinate in the days of plenty could offer many real answers in a time of austerity. Only a completely new political movement, perhaps in tandem with youth sections of the current parties, could tackle the challenges.

It may be that medics, scientists, architects, engineers and educators will, through sheer frustration, provide the nucleus of such a movement. In a coalition also composed of stymied business people and the shamefully treated young, they could constitute a formidable force. Their calibre would in all probability be superior to that of our current politicians, many of whom cannot think for themselves without the assistance of special advisers.

One thing is for sure: those who set themselves to face these challenges must have a lot more staying power than George Lee.

If that movement is to succeed, it will have to curb those who have been allowed to create an aura of busyness around infantile questionnaires, box-ticking and form-filling (much of it itself a substitute for personal initiative and critical thought).

The young will have to be brought into politics, but many people now over 50, who have memories of past setbacks and how they survived them, would like to share their knowledge with the community before passing on. There must be thousands of people in businesses, schoolrooms and social services who want something better, not just for their children but for themselves – and right away. One can live with austerity for a few years but only in the certainty that the leadership has a plan – like the democracies of western Europe after the second World War.

There are good people all across the public services who are frustrated by current blockages and who would have creative ideas about how to save Ireland from the fate of Greece. But we need political leaders who can locate and unleash such people.

An Smaoineamh Mór (the Your Country, Your Call initiative) is a start and will create good ideas. But the necessary reform of the political system, which may be a condition for the implementation of some of those ideas, is not likely to happen from within. Most of its beneficiaries are too well embedded to challenge the codes that have produced them. Those with the courage to do so should certainly be a crucial element in any reformed national government.

The initiative will have to come from outside. There is not a lot of time, but Ireland has often recovered from worse crises when it seemed on the point of disappearance.

Article by DECLAN KIBERD - Irish Times.

Friday, 12 March 2010

It's Rip Off Nama...

NAMA board get pay increase of up to 70pc...

National Assets Management Agency (NAMA) board members have received a hike in salary -- despite being less than three months in the job.

Finance Minister Brian Lenihan yesterday confirmed he had approved a new fee structure for the nine-strong board in light of their increased workload.

The board's chair, former Revenue Commissioner boss Frank Daly, will receive €170,000, a 70pc increase on his original pay packet of €100,000. And the team of ordinary members will receive an annual fee of €50,000, rather than the €38,000 first proposed.

The board, which comprises of six ordinary members, two ex-officio members and one chairperson, were appointed by Mr Lenihan in December

They have responsibility for shaping NAMA and will decide the future of developers, ranging from household names to small-time developers.

Besides Mr Daly, the ordinary members of NAMA's board are former AIG official Eilish Finan, former Bank of Ireland board member Michael Connolly, bank director and auditor Peter Stewart, insolvency expert Brian McEnery and former Fingal county manager Willie Soffe.

They will be joined by member International Monetary Fund official Steven Seelig in May.

Report by Patricia McDonagh - Irish Independent

Thursday, 11 March 2010

Recession Damage Is Permanent...

Recession damage to Ireland is permanent, says OECD...

THE global economic crisis has left deep scars that will take years to heal, but the Government must start now to plan for economic growth, said a new report from the Organisation for Economic Co-Operation and Development (OECD).

Highlighting the scale and depth of the recession, the report estimates a permanent loss of 3pc in output (GDP) on average across the 30 countries of the OECD. Unemployment will persist at higher levels than before the crisis.

The report said Ireland has experienced a severe set-back in living standards that is "likely to have permanent effects". But it noted that, despite this, Ireland's per-capita income is now close to the average of the upper half of the 30 OECD countries.


However, the structure of the Irish economy means real income is 15pc less than output -- the second largest such gap in the OECD.

In its review of Ireland's economic policies, the Paris-based thinktank said progress has been made in most key priority areas, "although it has been incremental and incomplete".

It repeated its recommendations for the introduction of university tuition fees, accompanied by a system of means-tested student loans, as a way of funding more spending on education. Pre-primary education should be extended, it adds.

The OECD wants more user charges, such as payment for water, as a way to ensure efficient use of infrastructure and a speeding-up of the planning process.

"Slow progress in increasing competition in the services and utilities sectors has contributed to sub-par productivity performance," the report said.

"The global recession has left deep scars," said OECD secretary-general Angel Gurría.

"The only way to begin healing them is by taking effective action now to help our economies recover their lost potential."


Because the crisis has wreaked havoc with public finances, some taxes which were cut will need to be raised. The report recommended shifting the composition of taxes away from income and toward consumption and land.

It urged governments not to water down current plans for financial sector reform. "Prudential banking regulation can be toughened without undermining competition," it said.

Strong supervision appears to reduce the cost of credit for firms and households, as it helps to level the playing field," the OECD said.

One of the biggest risks is that people with weaker ties to the labour market such as older workers, youths, those on low incomes and single mothers, will stop looking for jobs.

"Governments need to boost spending on training and job-search at this critical time. But they also need to provide the right incentives to the unemployed," it said.

This means resisting pressure to relax eligibility criteria for social welfare.

Report by Brendan Keenan - Irish Independent

Monday, 8 March 2010

How Greek Tragedy Could Cripple Us...

Ireland’s share of an EU sponsored bailout of Greece would be between €200 million and €400 million, according to an exercise carried out for a European think tank.

Open Europe, a broadly Eurosceptic think tank based in London, has estimated what each EU country would be required to pay if Greece was unable to refinance its debts, of which €20 billion to €25 billion will mature in the coming two months.

Under a series of possible systems, it estimated that Ireland’s share of the bill would be between €227 million and €406 million. The broad range was accounted for by uncertainty of the size of the bailout and the system used for calculating the contribution.

Open Europe said that meeting the cost of the bailout could be either spread among all members of the European Union or confined to those who used the euro as a currency.

Ireland’s largest exposure - of about €400 million - would arise if only eurozone countries were required to pay. Under the system, Germany could be required to pay between nearly €4 billion and €7 billion.

However, there is growing opposition in Germany to the idea of a bailout for the Greeks.

The country’s huge debt and massive budget deficit - expected to be some 13 per cent of GDP this year - is seen as a result of years of profligate mismanagement of the economy.

Last year, the newly-elected socialist government revealed that Greece had been issuing misleading statistics about its economy and its public debt.

The debt crisis has prompted the Greek government to slash spending and raise taxes. It is attempting to bring its soaring deficit under control and convince markets to lend it the money to keep going on a day-to-day basis - in a programme not dissimilar to what the Irish government has implemented in the last 18 months.

However, Greek government bonds must continue to pay a premium in order to persuade markets to buy them, and the danger of a wholesale shutdown of the markets to the Greeks - prompting an immediate crisis in the public finances - remains real.

The EU and the ECB continue to insist on the Greek austerity measures, while holding out firm - but unspecified - promises of help. The understanding between the Greeks and the EU is that the Greeks will be helped - but only if they help themselves.

European leaders, including German chancellor Angela Merkel, Commission president José Manuel Barroso and ECB chief Jean-Claude Trichet have repeatedly warned the Greeks that they could rely on European support or guarantees, only if they implemented the most swingeing cuts in public spending and reforms of the public sector.

Ollie Rehn, EC economic affairs commissioner, last week visited Athens to review the country’s efforts to cut spending, and was uncompromising in his warnings. ‘‘No member of the eurozone area can live permanently beyond its means . . . either you keep your debt under control or your debt starts controlling you," he said.

Rehn’s team of Commission officials concluded that the measures promised by the Greek government would reduce the country’s deficit by only 2 per cent of GDP, partly because the country is suffering a severe recession, and not the 4 per cent promised to Brussels. In response, the Greeks announced a freeze on pensions, more cuts to public sector pay, increases in Vat and duties on fuel, alcohol and cigarettes.

But there has already been widespread opposition among the public to the measures announced before now. Last week, the head of the largest public sector trade union warned the government that his members would not accept all the burden for the retrenchment.

‘‘We are not going to become sacrificial victims, regardless of the struggle to save the country," Spyros Papaspyros said.

If this all sounds familiar to Irish readers, they’re not the only ones. Ireland has been touted as an example by Brussels of a country facing a crisis which brought its finances under control by means of sharp cuts to public spending and steep tax increases.

However, Ireland is more than a slightly smug spectator to the Greek crisis.

Consequences of a Greek failure could include increases in the cost of borrowing for Ireland. Analysts also fear that, if one eurzone member were to default on its debt, the contagion could spread to other potentially vulnerable countries.

That’s why policymakers have been warning the markets that they will not allow betting on a Greek failure - for example, through credit default swaps. Activities such as these will be counteracted by swift changes in regulations.

Last week, Luxembourg prime minister Jean-Claude Juncker, who chairs the council of eurozone finance ministers, said that, ‘‘if the Greeks hold onto the strict parameters and the markets continue to speculate against Greece, we will not let them just march through.

We have the torture equipment in the cellar, and we will show it if needed’’.

Report - Sunday Business Post.

Sunday, 7 March 2010

Times Are Tough...

"Citizens at the frontline are way down the list: the priority remains sorting out the banks to the best satisfaction of the banks"...

When times are tough, choices must be made, priorities laid out. Last week, a film screened at the Jameson Dublin International Film Festival showed what happens when such priorities pay scant attention to lives lived at the frontline of recession.

Meeting Room is a documentary charting the rise and fall of the Concerned Parents Against Drugs (CPAD) movement. CPAD was formed in 1982 to tackle the problem of drugs in inner city Dublin, where dealing and injecting were as common as little boys kicking football on the street.

CPAD began with a meeting in Hardwicke Street, attended by, among others, Jesuit priest Jim Smyth. Pretty soon a plan of action was devised. Dealers would be asked to attend meetings of residents where they would be told to desist or leave the area immediately. If the dealers didn't show, the assembled marched on the offending abodes from which the drugs were being dealt.

Some violence was inevitable, as was the spectre of the odd innocent party getting caught up in the determined march towards a safe environment for child rearing. There was also the targeting of some junkies, pathetic creatures beyond redemption who were living through rather than living off addiction.

It was a summary approach to justice, but desperate times called for desperate measures. Those who lived beyond the confines of state-created ghettos in the inner city could afford to equivocate on the morality of what was afoot. Those whose children were being exposed to shooting up heroin as today's are to Dora the Explorer had no such luxury. They had to intervene because the straitened times led to the state abdicating its responsibilities to a large tract of its citizens.

We are once again in straitened times and the issue of priorities is coming into sharper focus by the day. Again, large tracts of citizens at the frontline are way down the list of things that matter. There is little focus on the growing, and predominantly young, constituency of the unemployed. Those running small businesses continue to struggle for air in a stifling atmosphere of dry credit.

Meanwhile, the government's priority remains sorting out the banks to the best satisfaction of the banks, on the presumed basis that recovery will trickle down into the economy.

Those at the top of the list of priorities include the shareholders and bondholders in banks and the presumed perceptions of foreign investors. While these people matter in terms of sorting out the banks, all indications are that the government believes little else matters right now.

Last week, we were treated to the latest chapter in this terrifying narrative. When the government injected €3.5bn into Bank of Ireland last March, we were told by Brian Lenihan we would receive a tidy 8% annual dividend from the investment. The first payment fell due last week. Instead of getting our money, we received a stake in a bank that is worth diddly squat.

This would be bad enough if it were an isolated case. In the next few weeks, a similar scenario is scheduled to be played out with AIB. And worst of all, the economic boffins are estimating another €6bn will be required for Anglo Irish Bank, an entity which is en route to the knacker's yard.

Elsewhere, the great white hope, Nama, trundles on towards the nightmares of citizens not yet born.

Last week, the EU gave it the thumbs up. The pace of Nama's workings was highlighted with the news that lenders must provide over 1,000 pieces of data on each loan being transferred. The banks, whose reckless behaviour required the establishment of Nama, are to get €230m per annum in fees for managing the loans they recklessly created.

We already know from the IMF that Nama is unlikely to free up credit, which effectively discredits the premise for setting it up. Ideology, and the terror of state control of the banks, led the government into Nama, and now we are left with a beast that could run amok.

But the priorities as laid out by the government demanded no less. In this scheme of things, the immediate plight of the unemployed and those who struggle with small businesses are way down the list of priorities.

Meeting Room was a blast from the past, a reminder of where fate can lead people when the state relegates their problems to the bottom of the queue. Ignoring the disenfranchised is something any government does at its peril.

So far, today's disenfranchised have endured silently in quiet desperation. The hope in government most likely mirrors that of their predecessors in the 1980s. With a bit of luck, the youngest and most able of the unemployed will up sticks and leave. Already immigration has picked up and is likely to increase further once other economies begin recovering.

But the scale of youth unemployment among the low-skilled is particularly acute, with one in three men under 25 now out of work. Little priority has been given to creating an environment where people can invest hope in a jobs market.

Equally, the future for small businesses continues to darken as banks revert to the most cautious approach to offering credit. The government has paid scant attention to rescuing a sector which would be vital to recovery.

Priorities have been laid out. In the banks the government continue to trust exclusively. Everybody else must stand and wait, whatever the accumulating cost of that strategy.

Report Michael Clifford - Sunday Tribune

Saturday, 6 March 2010

Don't Blame Us Say Builders!...

Don't blame us for 170,000 house surplus, say builders...

BUILDERS yesterday denied that too many houses went up at the height of the boom -- insisting they built to the demand that existed.

Hubert Fitzpatrick, director of housing and planning services at the Construction Industry Federation (CIF), made the comments after a new report claimed 170,000 more houses were built than were needed during the property bubble.

The organisation is now calling on the Government to conduct a national audit to provide "accurate" data on the number of empty homes.

It argues that a definitive account of the situation has not been presented -- because reports probing the issue are measuring housing stock in different ways.

The latest report into housing published yesterday by University College Dublin (UCD) and Dublin Institute of Technology (DIT) found a total of 345,000 homes -- or 17pc of all housing -- were currently lying empty.

It said that even without considering holiday homes and homes no longer in use, there was still 170,000 houses and apartments surplus to demand.

And it warned that NAMA could prolong the slump by preventing downward price corrections.

Mr Fitzpatrick denied that developers had built far too many houses during the boom.

"Developers built to the demand that existed at the time," he said.

And he told RTE News that builders had not "messed up".

"We acknowledged at the time that building 80,000 to 90,000 houses on an annual basis was not sustainable."


The latest housing report differs from the CIF's own figures, which maintain that there are 35,000 to 40,000 new homes remaining unsold.

It also contrasts with figures from the Department of the Environment, which suggest a figure of between 120,000 and 147,000. And National Institute of Regional and Spatial Analysis at NUI Maynooth concluded that 302,625 houses were now uninhabited.

The CIF believes a national audit should be conducted to give a definitive account of the situation.

"There have been four or five reports on this issue and a range of difference between each," a spokesman for the federation said last night.

"There is a need for a report where everyone knows what the framework is and where there is a clear idea of how vacant stock is defined.

"There is a need for a national audit of housing stock. It would be beneficial to do it once and for all."

Yesterday, Housing Minister Michael Finneran also admitted the actual figure of vacant homes may be lower than the UCD/DIT report.

He said a county-by-county calculation of the number of unfinished housing estates was taking place.

Once it was completed, the Department of the Environment, along with local authorities, would decide what could be done to remedy the problem, including the introduction of incentives, said Mr Finneran.

"The figures available to me say there is somewhere between 122,000 and 147,000 vacant properties," he said.

"That's the figure. There are other figures out there. But remember that in any country in the western world there is always an overhang of about 6pc to 7pc."

Report by PATRICIA McDONAGH - Irish Independent

Friday, 5 March 2010

Mortgage Mayham...

The mortgage debt crisis in this country is much worse than the banks' official figures would have us believe...

A report published two weeks ago by prestigious think tank Organisation for Cooperation and Development (OECD) on the mortgage crisis here was unambiguous. For a dozen years, Irish house prices raced ahead at the fastest rate and for a longer time than anywhere else in the world.

When the bubble burst in 2007, it left Irish households facing – along with the Dutch and the Danes – the highest family debts in the world.

A bird's eye view of OECD housing markets by Christophe Andre reveals that Irish house prices since the 1970s were many times above the prices in Britain, Netherlands, Spain and France. Some years, several countries experienced house price booms simultaneously, said Andre, who defines a boom as prices having increased by 25% or more over five years.

Doubling of household debt

But since 1995, 13 countries of his sample of 17 countries simultaneously shot higher and, of course, Irish house prices shot higher than anywhere else. The mortgage debt taken on in Ireland to pay for the highest house prices on the planet shot up too: Andre's figures suggest that as a percentage of income, household debt doubled since 1995.

The picture is fairly clear. Ireland went into one of the biggest housing busts ever seen in the world, after house prices and mortgage debts soared faster than anywhere else. House prices will fall here the most because they reached higher peaks than anywhere else.

The Irish economy has seen the biggest collapse of any advanced economy and the upward trajectory in the jobless rate has been among the largest in Europe. The legacy of household debts – as detailed by the OECD in the 54-page report – ought to show a huge rise in the number of borrowers facing difficulty meeting their monthly mortgage payments.

Yet, the banks' official figures tell a remarkably benign story.

Every few months, the financial regulator publishes the figures it collects from the lenders for the number of people who are in arrears with their mortgages, having failed to meet payments over at least three months.

Before Christmas, the regulator said all the banks here, including RBS's Ulster Bank and Danske's National Irish Bank, reported that at the end of the third quarter fewer than 26,500 mortgage accounts had failed to meet three or more monthly mortgage payments. The arrears accounted for 3.3% of all 791,634 mortgage accounts and were worth €4.8bn, or 4%, of the €118bn outstanding in all private residential loans.

Surprisingly, the default rate in Ireland – where the jobless rate is likely to peak this year at short of 14% – is not significantly higher than in Britain, with an unemployment rate of 8%.

Michael Greaney at Fitch Ratings in London estimates that the default rate on €9.3bn pools of Irish mortgages which he assesses was running at 2.8% last September, compared with a default rate in Britain of about 2.2% for its buy-to-let scrutinised mortgage loans.

Many mortgage brokers, who used to account for up to half of all the mortgages sold here, say the figures issued by Irish banks underestimate the numbers of people facing big distress in paying their mortgages.

"I just don't believe the figures. They underestimate the problem," said Michael Dowling of the Independent Mortgage Advisers Federation (IMAF). He estimates that more than double – over 50,000 people – are likely to be experiencing distress in meeting their mortgage payments, suggesting that 150,000 children and adults in indebted households could be affected by huge mortgage debt problems.

Switch to interest-only payments

Most of Dowling's working day is spent renegotiating on behalf of existing clients with their lenders to switch onto interest-only payments because they can no longer pay the monthly capital and interest payments.

He believes the figures do not capture the huge numbers of people who have had to switch to interest-only or part-interest-only repayments and therefore fail to reflect accurately the number of households facing mortgage-debt distress.

"I have never heard any bank describe to me a customer as being in arrears when that customer has switched to interest-only. That customer is left alone for six or 12 months. If they were in arrears then they would appear in the Credit Bureau. The figures the regulator gets from the banks, I believe, are underestimating the problem," he said, adding that the banks so-called policy of forbearance serves their interest of not having to write off bad mortgage loans and preserve capital on their balance sheets.

Possibility of debt forgiveness

Other experts, including the Rathfarnham and Dundrum office of the Money Advice and Budgeting Service (Mabs) in south Dublin, report a large increase in the numbers seeking advice on their mortgage problems since Christmas.

Capturing the scale of the debt issue will be a key issue for the expert group that government minister Eamon Ryan said in recent weeks will examine the possibility of debt forgiveness – writing off some of the mortgage debt of people facing serious arrears.

The mortgage brokers say that debt forgiveness will be required here if the economy is to recover. But first, they say, any expert group will need to assess the size of the debt problem if it is to devise an affordable scheme. Dowling says that the regulator should get the banks to publish monthly and provide more detailed arrears figures.

2.9% default rate on mortgages

Fitch Rating closely monitors the underlying arrears' rate on seven big Irish mortgage pools or so-called residential mortgage backed securities, which were worth €13.5bn when the Irish banks offered the securities in recent years to investors.

In the summer of 2008, Fitch made two predictions: that house prices here would fall by 45% and that the arrears rate on the underlying mortgages would hit 9%. The first of its "severe test stresses" came true – house prices have fallen, but Fitch reports that the rate of default on the RMBS mortgages last September was running at only 2.8%, below Spain's 3% and a default rate of 2.2% on Britain's scrutinised buy-to-let mortgage loans. With repayments, the pool of mortgages Fitch follows is now worth €9.3bn.

The issues are: Ulster Bank's Celtic Residential Irish Mortgage worth €3.85bn when issued several years ago but which has since shrunk to €2.8bn as the underlying mortgages have been paid off; Bank of Ireland's ICS Kildare Securities issue of €3.97bn which now has €2bn in the pot; Bank of Ireland's ICS Pirus Securities issue of €1.79bn which now has €1.68bn; EBS' Emerald No 4's €1.5bn which now has €1bn; Start Mortgage's Lansdowne No 2 issue of €525m, now worth €237m; Start's Lansdowne No 1's €373m, now worth €118m; and Irish Nationwide's Armoin Residential pool which had €1.5bn in mortgage debt when issued several months ago.

Report by Eamon Quinn - Sunday Tribune.

Thursday, 4 March 2010

Nanny State...

Nanny state's pension plan is bitter pill for most of us...

NANNY Hanafin, assisted by the two Bossy Brians, was in full swing yesterday. Work for longer, get less tax relief and, by the way, if you are not in a pension we are going to sign you up for one whether you like it or not.

Yes, the 'Nanny State' knows what is good for us and was not shy about telling us yesterday.

Taoiseach Brian Cowen, Finance Minister Brian Lenihan and Minister for Social and Family Affairs Mary Hanafin, have decided many of us have been naughty, not nice.

So they have prescribed a full dose of pension punishment for all. Naughty workers who failed to take out a pension when the boom was in full flow will now be automatically signed up for one.

This measure will not impact on those who are already in an occupational pension scheme and those in the public sector.

All workers under the age of 62 will have to work for longer. Those under the age of 49 will end up having to wait until they are 68 before they qualify for a state pension.

Anyone currently in receipt of a pension will not be affected by the Government's new National Pensions Framework.

But for millions of others the changes announced yesterday amounted to nothing short of a pensions revolution.

However, it is a revolution few workers will welcome.

Private sector employers who are already in a pension are likely to see their employer raise the retirement age in line with the changes being announced by the Government.

The moving of the state retirement age from 65 to 68 is in line with international developments, but it is still set to come as a massive shock to thousands of workers who have mentally prepared to get out of the workforce at age 65.

How will a brickie keep laying blocks at the age of 68? Do we really want our highly charged adolescents being taught by a worn-out 67 year old?

And how will a nurse cope with still having to lift patients out of bed when they are well into their 60s?

For people in private sector pensions there is little cheer either.

The pensions framework document sets out how they will get less tax relief on their pension contributions.

From 2014, instead of being able to get tax relief at 41pc the tax relief will be cut to 33pc.

This is good for those on the lower tax rate of 20pc, but for higher-rate taxpayers it will effectively mean a pay cut, if they want to maintain the same level of pension contributions.

This is how it works. At the moment a PAYE worker in a private pension scheme who pays tax at the 41pc tax rate can claim tax relief at 41pc, and also claim relief on PRSI (4pc) and the health levy (between 4pc and 5pc).

This means that it costs €51 for every €100 of pension money.

At the moment, those paying tax at 20pc get tax relief at that rate, plus relief on PRSI and the health levy.

But by 2014 the tax reliefs for everyone will be 33pc, plus relief on PRSI and the health levy. This means it will now cost a higher-rate taxpayer €59 for every €100 of pension pot.

The only positive is that the gradual change in the retirement age from 65 to 68 should ease the deficits in the majority of defined-benefit pension funds as there will be more time for workers and employers to pay into the schemes and eat into the deficits.

The other hugely radical move is the introduction of private pensions for all.

Anyone who is not already in a pension will have to join one.

FROM 2014, workers aged over 22 earning above a certain income threshold (probably €18,000) will automatically be enrolled in a new supplementary pension scheme to provide additional retirement income.

Employees would contribute 4pc, with the Government and the employer providing matching contributions of 2pc each -- making a total contribution of 8pc.

Workers may opt out of the supplementary scheme, but they will be enrolled into it again every two years.

This will force them to keep signing themselves out of it if they do not want to remain in.

If someone stays in the scheme then it is mandatory for employers.

It will not be an option for people in this new auto-enrollment scheme to get their money out before they retire.

The scheme is expected to apply to those earning less than €50,000 who are not in a pension, but that figure is not finally agreed on yet.

There were accusations from Fine Gael yesterday that the new system would be a boom for investment companies, as private pensions providers would have to tender to provide a range of pension fund options for those enrolled into the new scheme.

This is despite the fact that pension funds have a dreadful reputation right now. They impose high charges despite some of the worst returns in the Western world in the past few years.

The ministers committed yesterday to making sure that the state pension would remain the basis of the pension system in Ireland, with the Government undertaking to preserve its value at 35pc of average earnings. It remains to be seen if that promise will be kept by our Nanny State.

Report by Charlie Weston - Irish Independent

Wednesday, 3 March 2010

Emergency Welfare Not Paid...

Over 33% of claims to relief scheme not paid...

MORE THAN one-third of people who applied to the Government for emergency welfare support to help pay their mortgage last year did not receive a payment in 2009.

Figures released by the Health Service Executive (HSE) show 13,469 of the 18,443 people who applied for mortgage interest supplement payments in 2009 were granted relief.

The remaining 4,974 people were either refused support, withdrew their application or are still awaiting a response from community welfare officers. The scheme operates to provide support to people unable to meet their mortgage repayments due to a change in circumstances, such as loss of a job. Under the scheme, households receive an average of about €365 every month to help them cover part of their repayments.

There has been a sharp rise in the number of people receiving mortgage interest supplements since the recession took hold. At the end of December 2009, the number of people availing of the scheme was 15,100, compared with 4,000 at the end of 2008.

The scheme cost the exchequer €60 million in 2009 and this figure is expected to rise as the number of homeowners losing their jobs increases.

Despite the number of people applying for the scheme, the HSE does not keep separate statistics on the number of people refused payments by community welfare officers. This has led several TDs to criticise the fairness of the scheme, which is administered by community welfare officers in the eight former health boards.

Fine Gael TD Olwyn Enright said the HSE figures demonstrated the arbitrary and unfair way the scheme was operating.

Minister for Social and Family Affairs Mary Hanafin is currently reviewing the mortgage interest supplement scheme.

She is expected to publish a report next month detailing changes to it.

Report by JAMIE SMYTH - Irish Times

Monday, 1 March 2010

Over 30,000 Struggling Homeowners...

Over 30,000 homeowners renegotiate mortgages...

More than 30,000 struggling homeowners have negotiated alternative mortgage repayment options with banks and building societies in a bid to hold onto their homes, according to estimates from the Irish Banking Federation.

A spokesman for the IBF said that mortgage customers in financial difficulty had negotiated a range of agreements with lenders, including payment breaks, longer mortgage terms and interest-only periods.

‘‘Things are difficult and people are under pressure, but it’s a case of picking up the phone and discussing the options with your lender in good faith," he said.

The IBF will launch a new consumer guide to dealing with mortgage repayment difficulties this week. It recommends that mortgage customers in financial difficulty should contact their lender as soon as possible, and be sure to respond to letters or phone calls in relation to arrears.

Under the statutory code of conduct on mortgage arrears, lenders must wait at least 12 months after arrears arise before beginning legal proceedings to repossess a property.

However, this grace period does not apply if a borrower refuses to engage with the lender.

The IBF expects the number of borrowers negotiating alternative mortgage repayment structures to rise further. ‘‘We expect that number may well increase - but by how much, we just can’t say," said the spokesman.

However, he said that an increase in the number of people with newly-negotiated repayments represented a willingness by lenders to engage. ‘‘If we are going to see a number going up, we want it to be that one, not repossessions," he said.

Report by Emma Kennedy - Sunday Business Post.