Honahan’s Golden Fleece

October 15, 2014

national-water-protest-against-water-630x419Hats off to this blog for so long highlighting the so-called “Double Irish” tax avoidance scheme mounted by some MNCs operating out of Ireland. Because of this minor fact and mounting international pressure, this loophole has been crimped in yesterdays budget.

The budget itself was strictly a non event ensuring that €8bn+ equivalent in full, an amount exceeding the budget for Education, is repaid to international bondholders; assurance that Ireland’s crippling interest payments on its quadrupled levels of debt growing to 130% of GDP, is paid back in full.

Soldiers of austerity, Dr Alan Ahearne of the Fiscal Council and Professor Honahan of the Central Bank, make us await opportunity to throw our hats in the air again, following their resignation.

Dr Alan Ahearne has hinted that he may resign if the draconian austerity measures advised by the Fiscal Council were ignored. They were.

The resignation of Prof Honahan is quite another matter. His power in Ireland must exceed that of Rasputin’s power over the Romanov’s.

While it would appear the Fine Gael/Labour coalition run the country on behalf of the people, there is an Everest of evidence that shows they are but toll keepers of the Irish Central Bank and the ECB and their consular presence in Ireland.

Honahan is no Friar Tuck of Robin Hood legend. He has more in common with the German greyfriar demon, Mephistopheles. He has played a critical role in forcing Ireland into bailout by the troika under more odious conditions, than meted out to Greece or Portugal.

Throwing cold water on burning of bondholders with obedient compliance to odious bond repayment terms, he acted as virtual PR of Jean Claude Trichet; he failed to vindicate the rights of Irish taxpayers, to fair and just burden sharing among bondholders.

He claimed achievement promissory note debt repayment obligations of circa €30bn amortized into long term bonds that achieved nothing more than minor clipping of interest repayments, was a successful outcome for Ireland.

In contrast:


As IMF put it:

“Key to Iceland’s recovery was [a] program [which] sought to ensure that the restructuring of the banks would not require Icelandic taxpayers to shoulder excessive private sector losses.”

While contrary views exist on capital controls and whether Iceland has emerged from its financial crisis, clearly Prof Honahan with the Irish government marching to his Pied Piper tune, is no Ólafur Ragnar Grímsson defending Icelandic taxpayers against bondholders.

So-called success  clipping interest rates on debt coupons has been largely due to Ireland brought into step with negotiations on the sovereign obligations of other jurisdictions, Portugal and Greece.

Yet even here Ireland has not achieved what Greece has achieved in its negotiations.

Honahan’s Golden Fleece

Honahan’s latest gambit caper for the Irish economy is a new twist on the concept of economic controls that show the damage a financialized false economy can do to the real economy. Value has no longer real value, its new value is dictated by financial paper trail evangelists.

Consider the background:

PRE-RECESSION GROWTH A THING OF THE PAST “The International Monetary Fund (IMF) has cut its global growth forecasts for 2014 and 2015 and warned that the world economy may never return to the pace of expansion seen before the financial crisis. In its flagship half-yearly world economic outlook, the IMF said the failure of countries to recover strongly from the worst recession of the postwar era meant there was a risk of stagnation or persistently weak activity.” U.S. stocks tumbled at the news. [The Guardian]

Not so… in Ireland  some spokespeople from the financial services industry stating growth projections of 6-8% for next year.

Do not be fooled by such propaganda from the financial sector.

Evidence of returned growth is argued to be the booming  property sector in Dublin fueled by cash buyers and vulture funds.

However the boom has a sting in its tail and is not all that it appears to be:

Prof Honahan of the Central Bank has a ludicrous plan to stop the growing property bubble in Dublin.

The boom is largely the result of shortages due to lack of construction activity and supply.

Irish leprechauns with pots of gold are to be fleeced.

These leprechauns got their pots of gold by buying pre the celtic tiger and would have seen their properties rise in value during the Celtic tiger years. They are part of Ireland’s silver haired golden circle and they have savings in the bank.

Honahan has his eye on their saving pots of gold.

There is extreme risk that a property bubble fueled by once off cash rich injections by rich family members will not last; property prices will collapse with adequate supply and the end of such fuel, never mind collapse due to rising interest rates.

A shortage of construction in the property sector especially in Dublin has seen property prices sky rocket through the roof with some price increases of 25% in less than 10 months. The property boom is fed by those people on double incomes wanting a home in a scenario of little construction activity and residential property shortages.

Of course these young people cannot afford the high property prices without white knights riding to their rescue. Such white knights exist in the form of their parents.

Drawing down on savings from an older generation cohort, Honahan is pleased to see this cash fuelling the new housing bubble; it firms up the capital base of the banks who can claim safer equity against the growing value of property.

He must know such people will be fleeced with such high risk built on unsustainable investment.

Pretending to put a ludicrous curb on property investment due for early next year, he must knowingly be fuelling the stampede bubble.

If you havn’t got rich parents, you cannot play this game. You must rent and suffer exorbitant rent rises fuelled by rising property values and property shortages. Its a short term economic fleecing with Honahan fuelling the bubble by announcing that in December next in order to quell the bubble, the Central bank will restrict lending from Irish banks to those with 20% of the equity in cash.

Most young people without help from their parents cannot afford the 10% cash down payment required for mortgages. Some may regard the requirement of 20% down payment as reductio ad absurdam.

But there is mephistophelian method in this madness that is engineered to create a stampede amongst remaining potential property buyers pumped with cash from their rich parents. We know this category is diminishing fast in number. There are some out there still with cash in their pockets and Prof Honahan wants to wring the marrow from the bone.

Put aside the fact that prices are so out of whack with what young people can afford, fairy tale illusions must be generated out of a fog of propaganda to pretend all is well with the banks and the Irish economy.

The reality is the property mess is but one component in a dysfunctional economy that is teetering on the brink. Such lies and deceits are the hot air of the ballooning  financial economy. Its a false economy, a paper based services economy that serves the banks and not the needs of the people.

Houses need to be built at affordable prices. In order not to compete with the inflated asset prices of current property prices, Honahan is suggesting that €200m be set aside to build social housing for those who cannot afford houses.

The consequence of this and similar policies is the ruination and extinction of Ireland’s middle class. Beset with property charges, water charges, USC’s  increased charges/taxes; their property now being looted by rich property funds and transferred to the 1%, Ireland’s middle class, is fast disappearing. Their young find property unaffordable.

A future tenant/rentier society with dependant  lower class starved of services in education and health capped by a rich 1% beckons.

This is the amortized cost of Ireland’s troika bailout. In essence, this is a banana republic model  growing differential conflict between rich and poor.

In order to save the Irish banks property prices have to remain high as the banks capital reserves are leveraged against loans already taken out. The banks are not lending into the construction sector.

The reality is Ireland’s economy is still in a dead cat bounce phase with economic recovery compromised by high levels of public and private debt.

“The CSO figures also show that during the same period there was also a decrease in quarterly household expenditure, which dropped €138 million to €19.6 billion.”

In order to save the financial economy, property prices must be retained at high levels; in order to save the real economy, property prices must be vastly lowered.

In the short to medium term, some will be fleeced. The good news is property prices will lower eventually because of gravity.

Ireland needs affordable housing not financial paper leveraging high property prices  based on hot air.

Caveat emptor.









Nods and Winks

October 5, 2014

Mandarin The Magician

Its Autumn and results of the bank stress tests and the coming budget approach stealthily. There is More smoke and mirror and fog in the air than usual.CollegeRanking2014_large

“Eoghan Murphy, Fine Gael TD for Dublin South-East, said the Dáil should explore whether a €2 billion adjustment was necessary as the council had suggested.”

Although the Government is planning the budget on the basis there will be no new spending cutbacks and no net tax increase, the council said there should be another tough package to continue repairing public finances.

Galway academic Dr Alan Ahearne of the Fiscal Advisory Council appears to be out of step with pretty much everyone else in the world who believe austerity has reached its limits. (1) He leads the FAC who believe sticking to 3% deficit target based on the value of the economy could be achieved at the expense of further economic slowdown with further damage wrought through austerity.

This is not the time to take  €5bn out of the economy over the next two years to satisfy a largely discredited austerity programme that is floundering across Europe.

From a macroeconomic point of view there is the danger that ballooning debt levels in Europe and worldwide will need to be adjusted on a European and global level.

Countries seeking to benefit from self-imposed austerity will not be rewarded by economic turnaround. Instead, their actions instead of stimulating growth, will wipe out the seeds of growth while savings made disappear into the growing  unquenchable global debt pyres.

Ireland needs to pause its austerity, test it with measured growth stimulus.

Reality Bites

Hospital waiting lists are manipulated downwards to hide the real debilitating state of our health service. The numbers of homeless in Dublin increases by the day with large numbers sleeping rough on a nightly basis. Government has failed to act against this growing tide.

Crime is on the increase with concern that crime figures are being manipulated downward to conceal true statistics.

Not to be outdone the Central Bank has revised upwards its growth figures for the economy for next year. last month growth figures projected were of the order of approx 2.5%; this month rather erratically the Central Bank has revised upwards its growth estimates for the economy to be 4%+.

Mathematicians may wonder at the erroneous and error prone statistical projections based on a months data, how projections for a whole year in advance can be based on such limited data. But let’s go further and question the data itself.

Apparently, employment statistics produce by the ESRI recently came about as a result of new procedures and methods to analyse data. This led to a huge increase of circa 40,000 mostly in the agricultural sector. Our economists and universities and media have not dissected the figures breaking them down for us to reveal their veracity or lack of.

What are those procedural changes that output such radically different results. Ahem, can we compare the results output by those procedures with the more classical approach we are used to. Can someone explain the thousands of new Lazarus jobs in the agricultural sector?

Likewise, the oracle of the Central Bank has not been dissected by our financial journalists to examine the quantifiable statistics it bases its projections upon. How come in one month our exports have risen to such heights. Who is leading the charge?

If you believe the propaganda, prospects for the economy are going up.

Prospects for the universities, our health service, education service, are, it appears, going down.(2) TCD has fallen 10 places and UCD 35 places in world rankings over the past year. Its unfortunate there are no world rankings for our health service.

We need an informed media to penetrate the fog of propaganda emanating on the true cost of austerity. Financial journalists should show greater expertise in delving into figures that frankly don’t bear scrutiny.

Schenanigan Politics

Part of the sidebar distraction raising fog on the above has been the recent McNulty affair. Clearly the appointment of McNulty to the board of IME came from Enda Kenny himself. Any attempt to place responsibility for the debacle on inexperienced minor officials in the Fine Gael Office, is a cover up sacrifice of their good name. Heather Humphries in protecting Kenny has not come out well in the controversy.

Kenny himself has signalled that those paying higher tax should be given any reprieve available in the coming budget.

Out of touch, leading an undemocratic economic management council of An Taoiseach, Enda Kenny, Minister for Finance, Mr Noonan, Minister for Public Expenditure and Law Reform, Brendan Howlin, no more than consuls of the troika and led by mandarins of the Irish Financial Services industry and the Irish Central Bank, they are committed to further austerity.

Young members of Fine Gael fearing backlash at the next election, perhaps fearing the emigration boats of their peers, betrayed by the duplicity and failure of their party to bring about promised changes and reform, must wonder how much longer, such failure of government can continue.

Icebergs ahead. With Mandarin The Magician running out of conjuring tricks, will Gerry Adams be next Taoiseach, Michael Martin as Tanaiste.

till again.

1 http://www.independent.ie/irish-news/fiscal-council-warns-government-it-must-still-hit-key-targets-29217526.html

2 http://www.irishexaminer.com/ireland/nuig-leaps-ahead-of-ucc-in-world-university-rankings-289510.html

Professor Honahan needs to be questioned closely as to his role in negotiations with the troika in relation to Ireland’s bailout. According to Brendan Keenan writing in Sun Independent, p4, “He says government reluctance to apply for a programme explains his dramatic interview on RTE’s Morning Ireland on November 18, 2012, saying Ireland would go into a bailout, but he did not realise other cabinet ministers had not been kept informed of what was happening”.poodle

Apparently, he also did not realise it was not his decision to make, but Brian Lenihan’s, who was Minister for Finance at the time, his decision to make and announce.

Prof Honahan should also be questioned on the draconian and odious terms of this bailout and his failure to force the ECB to share responsibility including shared cost of bailout that instead was shouldered unilaterally by Irish taxpayers.

Was it a concern that Brian Lenihan may have awoken from compliant obedience to consider actually burning bondholders instead of Irish taxpayers?

Marion Finucane in an excellent interview on her Saturday Show spoke with Olli Rehn former European Commissioner putting it to him that pressure was put on Ireland not to burn bondholders when it was discovered bondholders were from German and French banks.

Meanwhile the ECB has refused to publish a letter sent by Trichet to Lenihan during the same period November 2010. Olli Rehn will seriously consider any request to appear before a forthcoming banking inquiry into Ireland’s financial collapse and subsequent bailout.

Subsequent fallout cost of Ireland’s bailout is being felt today in such after shocks as the further financialisation of the Irish economy with Ireland becoming an economic Frankenstein.

The property sector in a mess and international vulture funds have descended on Ireland’s rich pickings purchasing everything NAMA and the banks have to offer.

On the crest of a wave where the US programme of Quantitative Easing has pumped a tsunami of trillions  into the banks and the financial sector  that has failed to be lent into the real economy, hedge funds inflated by the hot air of fiat money printing ballooning their assets, are pumping this hot air into Ireland’s financial and property sector.

Demand in the Irish property sector is fuelled by rich cash buyers able to invest in the property market. Native first time buyers cannot afford the prices being asked.

Pricing is also being fuelled by shortages with banks refusing to lend into Ireland’s construction sector. Many of Ireland’s former developers are under water with bad loans still around their necks.

A property sector that is being put beyond the reach of ordinary investors willing to buy homes or invest in property for their business, is one that is choking the real economy.

In its place we have a virtual Frankenstein of smoke and mirrors that gravity will make fall sooner rather than later.

Government Response

Minister for Finance, Mr Noonan, is as rich in good news about the economy as Goebbels or chemical Ali propaganda minister, he injects wild announcements about billions in savings that will be saved by the Irish economy on its bailout obligations.

By twisting failure to renegotiate recapitalisation of the Irish banks from his ‘European partners’ into success at achieving minor clipping of interest rate coupons, he’s turned failure into success! But only if you understand failure to mean success.

The motif of black is white continues with the recent announcement AIB, Allied Irish Bank, will be sold at expected return of €3bn for 30% of its shareholdings. This expected sale return is on foot of alleged return to profit of this bank and turnaround of the Irish economy.

Shane Ross recently made the point if AIB had maintained their provision for bad debts at last years level at €738m instead of reducing the provision to this year’s $92m, they would have had to declare a loss of over €200m.

Instead they posted a profit of €437m fan-fared by RTE. Needless to say any write-offs of mortgage debt fed into the lower figures on negative equity recently afforded by the ESRI.

Good Goebbels like, gobbly deduke surrounds AIB when you consider the false floor being given to property assets by bubbly from international vulture funds, rich investors and the majority, who cannot afford such prices.

Meanwhile as a counterweight to the financial funny money that sloshes about the Irish economy, the majority pay for the spree through austerity, USC(Universal Social Charge), property charges, water charges.

Providing backdrop to this looting is Austerity as it plunders the health and education services with cuts.

More Goebbels trickery surrounds the alleged 70,000 new jobs created over the past year in our economy. Show me the jobs! Lets do an audit. It might surprise you what is today considered a job, a JOB BRIDGE working in a school for free… Some jobs will rebound in any dead cat bounce.

But with “Size of the Global Derivatives Market at $1,200 Trillion Dollars … 20 Times Larger than the Global Economy” sloshing around the hedge funds, investing in property in Ireland and other European peripherals under water, becomes a better prospect than allowing such fiat conjured out of nothing, to remain and do nothing.

Thus we have a fungibility index whereby real currency value, being a function of real economic indices such as employment stats, eg production, the creation of real and valuable marketable goods, education, health, the service industries, is being eroded to nothing.

In its place in Ireland an economic management committee taking orders from the banks and financial industry who perform chicanery.

Money Transfer

Democracy itself is suffering corrosive erosion with a massive transfer of wealth through austerity into the hands of the super rich. Even the super rich cannot fund in the medium to long-term a reworked and revamped false economic model designed to favour the 1% at the expense of the 99%

In such a ‘black is white world ‘ of financial trickery and subterfuge, its likely that dead Frankenstein property portfolios held by NAMA will be sold off to international vulture funds. 30% of zombie banks such as AIB will sell for €3bn to these funds.

Poodle politics will resume as usual with Phil Hogan and Enda Kenny privatising the rights to Irish water that will be levied as a new tax on Irish taxpayers. Business as usual with €50m wasted on bad advice from consultants feathering nests for themselves and crude incompetence.

Meanwhile we await more good news on the economic front from a Minister Noonan, pet poodle messenger boy of the troika and Ireland’s ‘economic management committee’. He speaks against the embarrassing backdrop of failure to renegotiate our bailout heist saving German and French banks.

A real economy is being groomed through austerity to be a financial protectorate monoplised by the ECB instead of an elected parliament of people by the people.

With a global derivatives market of $1,200 Trillion Dollars a lot of smoke and mirrors and conjuring out of nothing and many poodles, can be bought. Ireland’s debt at circa 130% of GDP, under austerity, is doing great, according to the poodles.

Don’t believe a word of it! Welcome to the world of smoke and mirrors, ballooning debt where no pins exist.

Where homelessness is increasing, where rent prices are forcing families and the vulnerable onto the streets, crime increases and a widening disparity between rich and poor is growing; a massive transfer of wealth from social services, health and education and utilities such as energy and water, is transferred to the super rich.

till next time

The Laughing Policeman

September 15, 2014

There is a shortfall of €500m required for the HSE next year to avoid the closure of upwards of 300 hospital beds and further erosion of services. The collapse of An Taoiseach  Enda Kenny’s unworkable plans to bring about universal and free healthcare is not worth deliberating upon here.

Suffice to say everything is on hold.

Currently An Taoiseach is basking in the glory of possible savings of €1.5bn over the next 5 years by paying off Ireland’s IMF loans early. Interest rates falling Govt hopes to borrow low on the cheaper market funding. Of course no reference to the unconscionable, odious and penal rates of 5.8% the Central Bank agreed to accept from the troika in the first place.

Govt has had a disastrous result in its failure to renegotiate our banking debt but clipping little bits from odious interest rate terms is touted as success.

“He laughs upon point duty, he laughs upon his beat
He laughs at everybody while he’s walking down the street
He never can stop laughing, he says he never tried
Well, once he did arrest a man, and laughed until he cried”










From a debacle in Health to similar in Irish water, its come to light the meters currently being installed are costing twice their value and are also inferior in design. http://www.peoplebeforeprofit.ie/?q=node/906

Phil Hogan, newly appointed EU Commissioner for Agriculture, http://www.herald.ie/news/hogan-facing-questions-over-irish-water-millions-30568730.html  has questions to face over the startup costs of Irish water up to €100m half of which was spent on consultancy fees. No, you didn’t misread that, €50m on consultancy without one pipe installed to fix a leaking national water infrastructure that has contaminated water supplies countrywide.

In response to a question on RTE Radio1 on his responsibility for such cost overruns Phil demurred stating that basically he was an ordinary man and such matters best left to professionals! Dublin people look forward to the exciting probability water charges levied upon them will not be spent on a new reservoir for Dublin needs or even to fix Dublin’s leaky pipes; but rather will be spent to decontaminate the rest of the country’s poor infrastructure and contaminated  group water supplies. Hogan should do well in agriculture raising prices for Irish beef the brunt of which will be born by Irish taxpayers as a cloak for another hidden tax.

The banking inquiry has been put on the back burner and no one believes it will lead to one jail sentence so laughingly its become a mild source of ennui for govt as another set of plans that will be neatly consigned to the distant future in the land of broken promises.

A surge in property prices led by cash buyers has led to high rents forcing some into homelessness. Rather than tackle the problem the govt has cheered on the property bubble touting it as evidence of economic recovery. High property values are required to prevent further negative equity damaging the capital base of the banks.

There is no evidence that the mortgage market has returned to normal. Mortgage lending is for the cash rich 1% not the 99% who cannot afford current pricing. Even those on high salaries cannot afford a modest home.

Inactivity, bad planning and inertia in the face of housing shortages in the Dublin area have left government the opportunity to milk every ounce of propaganda they can muster to point to rising property prices as evidence of their success. Black is called white.

New property charges, USC’s, water charges, increased funding needs for education and health inevitably lead to rising taxes not helped by failure to unwind our banking debt. A surge in vulture fund activity to buy up NAMA property portfolios in the short-term may help govt limp its way to the budget under the mask of a false housing bubble as they cover up long-term damage to the Irish economy.

But the emigrating best and brightest young professionals leaving the country in their droves will not be retained here by marginal tax cuts http://www.independent.ie/irish-news/high-tax-rate-forces-young-professionals-to-emigrate-30246177.html

“A few years ago, Irish immigration in Australia was driven more by the trades,” he explains.

“The growth in our membership, which reflects the change in demographic of immigrants towards white-collar, is among young professionals, like chartered accountants, engineers or lawyers.”


The irony of emigration is that the social welfare bill is reduced thus contributing to govt laughing stock. The greater worry is that the numbers emigrating are leaving jobs, do not come from the ranks of the unemployed. Part of the unemployment stats fiddle is to say jobs vacated are new jobs!

This is another example of a low quality good being passed off as a higher quality good. Another way of stating this is that what we have is a generic application of Gresham’s law in economics. The flooding of helicopter funding to the rich, the financial sector and the banks has left a broken financial model with austerity for the 99% and profligacy for the 1%.

The financial sector driven by the frenzy to persuade us all that this model works flood us with propaganda that their return to profit is actually the return to profit of the 99%. You do not need a microscope to see that the flood of professionals emigrating from Ireland’s health/education/legal and engineering sectors are not taken in by such bogus arguments.

Laugh all you like but meanwhile the euro area crumbles with austerity hastening its decline and demise. Europe’s financial sector mirroring that of the global dollar based financial sector is bloated and in need of a vast reset. The tentacles of the financial industry over the real economy have grown since Johnson turned the dollar into fiat to pay for war deficit spending in 1971.

“In finance, a derivative is a special type of contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate, and is often called the “underlying”.[1][2]


The problem in Ireland, EU and globally is that an inversion of that definition has occurred. The problem is the real economy has become a special type of contract that derives its value from an underlying entity, debt that fuels the economy, not the economy itself.

Therefore, for example, the price of property is not set by supply and demand. It is set by the need to fuel corresponding debt set by the financial industry.

Likewise across a range of commodities, metals and industrial goods the produce of large corporations, the financial industry has inverted the real value of economic trade in such goods across national boundaries, so that trade is subsumed by financial wizardry to be an entity whose underlying value is based not on real market conditions, but rather on financial paper manipulation.

This is a ponzi scheme that is built to fail as it failed in 2008. QE in the US has been the equivalent of giving whisky to the indians who’ve gone on a large spending spree spending in the casino of financial paper. The share values of stocks have risen while the real economy has gone into a downturn. Vulture predators created by the scam are looting Ireland.

Currently this failure is masked by cash buyers of the 1% while the 99% have curtailed spending. Across Europe economies are in decline. Things will get worse when the cash buyers have spent their last penny. When they do, they will look for more loot to spend in a deflationary economy.

It will be interesting to try to judge the moment when the inflationary financial markets fed by QE in a forever rise upwards, finally separate from the real deflationary economy in its inevitable cycle downward. Will rising interest rates fed by political unrest trigger a global meltdown?

Meanwhile its cash buyers on the loose and time to party along with our laughing policeman of the troika, an Taoiseach Enda Kenny.

"Top Derivatives Expert Estimates Size of the Global Derivatives Market at $1,200 Trillion Dollars … 20 Times Larger than the Global Economy"

“The global financial crisis three years ago was caused in part by the proliferation of derivative products tied to U.S. home loans that ceased performing, triggering hundreds of billions of dollars in writedowns and leading to the collapse of Lehman Brothers Holdings Inc. in September 2008.”


The value of Irish property is deeply tied in and manipulated by the Irish financial sector. The gravity of the real economy weighs against paper based optimism.

till next time.




Dead Cat Bounce

August 25, 2014

We have a rail strike on at present that is countrywide. Rail ticket prices are already ridiculously expensive. Both bus and rail tickets are ridiculously expensive though intercity coach tickets are competitive. In Dublin a single journey by bus of a couple of miles from suburb to center city is getting closer to €3 compared to say Nice to Cannes for €1 not long ago.blackCat

Transport subventions are the norm in other countries. In Ireland austerity is reducing same with a hidden agenda to break up and privatise both the rail and bus systems. A more efficient rail system makes sense to take passenger traffic off the road system and save energy costs. It makes sense to expand the rail system and make it cheaper and more attractive for users but government privatisation policies would appear to be heading for a situation where the only government employees still in ‘full time’ jobs will be politicians. They won’t be rail workers.

The slice and dice of employment statistics continues unabated. Most of the public service has a recruitment ban. If a job comes available and every effort to avoid replacing the individual has failed, there is now imposition of a rule that the full-time job is divided into 2 part-time jobs. There are many such opaque rules that define what is a job or define lack of a job.

Perhaps the ESRI can publish a report defining what these rules are. It would allow us to see through false employment statistics. Even a report based on a statistically meaningful random selection of people classified as both having a job and another cohort unemployed focusing on the definition of the term ‘employed’ would throw light on the current unreliability of analytical tools used currently.


“About the ESRI’s Independence

From its foundation in 1960 the Institute’s role has been to provide a strong, independent source of research evidence for policy and civil society in Ireland. That it would be funded by government and yet independent of government was precisely the mandate it was given.”

ESRI is long overdue an audit to decide if it has failed the mandate it set itself. A lot of its cash comes from government-funded research and one wonders if this has swayed independence into being a propaganda arm of the state. Recent growth forecasts of 4% have yet to be bettered by any other institution in the state’s financial sector.

As Ireland descends into a long painful depression fueled by austerity, rising taxes and higher charges for utilities, water, waste and property, its time to give considered thought to the prospect of Ireland leaving the euro. Even growth rates of 4% are not good enough to stave off the deflationary inevitability of economic decline based on our link to the euro. Wishful thinkers in the financial sector who have form in fuelling the boom in Celtic tiger years are cited regularly fuelling the propaganda of economic recovery.

Our link to the euro has produced a flight of euros from Ireland as Ireland’s import bill has risen alongside a progressive loss of industrial infrastructure and employment. Our recent property boom collapse was largely fed by efforts to stimulate construction to take up the slack of unemployment fed by lack of real growth in the economy.

“In 1992, members of the European Union signed the Maastricht Treaty, under which they pledged to limit their deficit spending and debt levels. In the early 2000s, some EU member states were failing to stay within the confines of the Maastricht criteria and turned to securitising future government revenues to reduce their debts and/or deficits, sidestepping best practice and ignoring international standards.[5] This allowed the sovereigns to mask their deficit and debt levels through a combination of techniques, including inconsistent accounting, off-balance-sheet transactions as well as the use of complex currency and credit derivatives structures.[5]


In Ireland private debts were transferred to sovereign debt led by politicians celebrating their actions in so doing, or otherwise claiming blindness or poor advice. The real problem for the euro zone is that banks in the euro zone own a significant portion of sovereign debt; these banks are themselves  closely allied to the solvency and liquidity of the states in which they reside. Thus it is in the absence of a true fiscal union, that the inner core members of the euro zone are now in a master slave relationship with countries such as Greece, Ireland, Portugal.

The european union is now a divided currency zone holed beneath the water. The repatriation or some would say extortion of odious debt from the outer core is now the main aim of fiscal policy across the EU. The problem is that the goods and services previously purchased in these debtor nations no longer fuel their economies and they are in a slow path downward. The negative reinforcement of deflation and slowing growth rates in the inner core especially Germany is evidence of this:

From http://en.wikipedia.org/wiki/Dead_cat_bounce

A “dead cat bounce” price pattern may be used as a part of the technical analysis method of stock trading. Technical analysis describes a dead cat bounce as a continuation pattern that looks in the beginning like a reversal pattern. It begins with a downward move followed by a significant price retracement. The price fails to continue upward and instead falls again downwards, and surpasses the prior low.[7]“

““Richard Bruton promised us that this would not happen when he was here three years ago,” said Foley. “Look around you. There are eight units in this business park and the other seven are empty. Leitrim and Roscommon have been forgotten about and we expected more from a west of Ireland Taoiseach.”” 160 recent job losses by MBNA from previous peak circa 2000 jobs in Carrick On Shannon from http://www.irishtimes.com/news/social-affairs/carrick-on-shannon-mourns-loss-of-mbna-call-centre-1.1898596

Same story replicated across the country, “Since the start of the current recession in 2008, almost 2,500 local jobs have been cut at IDA Ireland-backed companies, according to Independent TD for Waterford John Halligan, while about 500 have been created.” http://www.irishtimes.com/business/economy/waterford-believes-job-losses-have-hit-it-harder-than-most-1.1814327

Property taxes, water charges, and pay cuts with another €2 bn next budget earmarked for more austerity cuts pillage the countryside accompanied by deteriorating public services. In a ludicrous piece of statistical hermeneutics that stretches the imagination, the ESRI has published a forecast predicting in the face of the above growth of 4% in the economy next year.

Let’s get back to dead cat bounce:

Growth rates projected come from a very low base and are on foot of losses in negative equity, unemployment and property transfers to vulture capital in NAMA already sustained, along with other losses


Recently FF have mooted renegotiation of the IMF portion of our bailout levied at odious 5% repayment rates but cold water was thrown on this with assertion the rest of our EU bailout  partners would object as this would increase their exposure to sovereign risk.

A more productive engagement with the IMF would be to press for an extend/pretend arrangement  http://en.wikipedia.org/wiki/1998%E2%80%932002_Argentine_great_depression

Notice the devastation caused in Argentina by “In June 2000, with unemployment at 14% and projections of 3.5% GDP growth for the year, austerity was furthered by US$938 million in spending cuts and US$2 billion in tax increases.” Austerity did not work for them; it will not work for us.

Consider the following:

“When a short-lived boom in the early 1990s of portfolio investment from abroad ended in 1995, Argentina became reliant on the IMF to provide the country with low-interest access to credit and to guide its economic reforms. When the recession began, the national deficit widened to 2.5% of GDP in 1999 and its external debt surpassed 50% of GDP.[29] Seeing these levels as excessive, the IMF advised the government to balance its budget by implementing austerity measures to sustain investor confidence. The De la Rúa administration implemented US$1.4 billion in cuts in its first weeks in office in late 1999. In June 2000, with unemployment at 14% and projections of 3.5% GDP growth for the year, austerity was furthered by US$938 million in spending cuts and US$2 billion in tax increases.[30] Following vice president Carlos Álvarez‘ resignation in October 2000 over bribery suspicions in the Upper House,[31] the crisis accelerated.[citation needed]

GDP growth projections proved to be overly optimistic (instead of growing, real GDP shrank 0.8%), and lagging tax receipts prompted the government to freeze spending and cut retirement benefits again in November 2000.[32][not in citation given] In early November, Standard & Poor’s placed Argentina on a credit watch, and a treasury bill auction required paying 16% interest (up from 9% in July); this was the second highest rate of any country in South America at the time.[33]


Cavallo also attempted to curb the budget crisis by instituting an unpopular across-the-board pay cut in July of up to 13% to all civil servants and an equivalent cut to government pension benefits—De la Rúa’s seventh austerity round[40]—triggering nationwide strikes,[41] and, starting in August, it paid salaries of the highest-paid employees in I.O.U.s instead of money.[42] This further depressed the weakened economy. The unemployment rate rose to 16.4% in August 2001[43] up from a 14.7% a month earlier,[44] and it reached 20% by December.[45]

In October 2001, public discontent with the economic conditions was expressed in the nationwide election. President Fernando de la Rúa‘s alliance lost seats in both chambers of the Argentine National Congress, leaving it in the minority. Over 20% of voters chose to enter so-called “anger votes”, returning blank or defaced ballots rather than indicate support of any candidate.[46] “

The parallels are self-evident with austerity measures tracing out in Ireland and across the euro zone outer core. But an important difference is that Ireland is tied to the euro and there is a belief in the bond markets that ECB will print money and do whatever it takes to prevent Ireland and fellow outer core default threats collapse.

Such belief is inconsistent with the facts. The euro zone is a bucket with a large hole in it. Printing money will lead to inflation and perhaps hyper inflation. Inflated bond markets are not having the desired effect in Japan or the US. Eventually, the more fiat is printed, the more it is likely to fall under the weight of its own gravity.

1. John Bruton, former Taoiseach, has spoken of the funding difficulties of pensions across the EU suggesting such obligations may not be realised.

2. Budget cuts are already causing chaotic repercussions in Ireland.

3. Ireland has already entered its own anger pattern of voting with a backlash due to broken promises awaiting the present government in the next round.

4. Ireland has made miserable  progress  in dealing with the troika on question of reducing Ireland’s debt repayment of €67.5 bn of odious bailout, €30bn of this should have been torn up promissory note funding of Anglo bailout, instead this was secured into long-term bond repayment schedules with the compliance of government falsely persuading the public it had an achieved ‘savings’ under this ruse.

5. Ireland in education and now in transport is embarking on a policy of pay cuts.

Property Sector Mess

Ireland’s property sector remains a mess with a plethora of remedies including promised 54000 units to be constructed to kickstart supply of residential demand. Government with years to do this already have dismally failed to do anything but let the sector get into a worse mess.

It’s a curious business illustrating the tectonic plate difference between the real economy and the managed economy. On the one hand, we have the managed economy led by the banks. The banks face imminent stress tests and the requirement that their capital base is sound. Much of this capital base is lending based on the property sector.

If property prices fall further this can damage the security of such lending driving up the number of defaulters as their portfolio falls into negative equity. If prices rise by way of property bubble or other means, this takes pressure off the banks.

However, in the real economy the rising price of property has put the concept of a home beyond the ability of young people to obtain or invest in this pricing that is beyond the safety valve of 3 times the main salary of couples contemplating setting up a home.

Propaganda can therefore be cut both ways by Enda Kenny who can say there is no property bubble at present, a lie; but point to a raft of solutions to the housing crisis that will be a litany of broken promises over the coming years.

Ireland is an economy managed by the banking sector, by the banks, for the banks, of the banks.

However, in a curious twist to this uncompromising reality, it doesn’t much matter as banks are not lending and construction is at a very low-level. It behoves the banking sector to claim on the basis of a small dead cat bounce fed by cash investors seeking to capitalise on a bottoming out of the property sector, that property prices are not only sustainable, but due to rise again, an illusion fed by propaganda.

Ireland faces other headwinds, reduced corporation tax as our tax haven status is tackled; a weakened financial sector as Financial TransactionTax is mooted; a world requiring a global financial reset as rising debt levels overwhelm even leading economies.

The consequence of all of this is a more divided Europe, a more divided society in Ireland, a greater difference between the have’s and the have-nots; a looting of the Irish public sector led by banks in Ireland and Europe.

Its long past the time for Ireland for Ireland to consider leaving the euro. Ireland’s main population centers, its cities are being looted of their public services in health, education, transport, water, energy and property. Now the countryside, Ireland’s agricultural  based rural economy is beginning the realise their future in Europe is to be a Neill Blomkamp’s District 9 http://www.imdb.com/title/tt1136608/.


till Next Time.


Fugue and Fog

August 5, 2014

With much fanfare the ESRI produced the following report last week https://www.esri.ie/UserFiles/publications/WP487/RN20140201.pdf

“The improvement in negative equity is important in the context of financial
stability, (Hellebrandt, Kawar and Waldron, 2009). The reduction in the value of
mortgage based assets can lead to a reduction in the availability of credit to
both households and firms as banks make provisions for an anticipated increase
in expected losses. The more mortgages that exit negative equity, the stronger
the balance sheets of Irish credit institutions.”

“The recovery in prices experienced in 2013 reduced the number in negative equity
to 268,000 by the end of the year, a fall of approximately 45,000.”

The report was followed by blanket coverage from RTE heralding the news as very positive.

The news is quite the opposite.

As stated in previous blogs, the return of a housing bubble upon which the above stats are based may be good news for the banks, but it is bad news for the general population. Housing bubble in Dublin has led to an increase in rents by 14% over the past 6 months with accompanying homelessness many losing their homes as they cannot afford such rises. Young couples cannot afford the asking prices to get themselves on the property ladder.

Vulture funds and cash buyers have propped up the housing market but a market that cannot provide housing for 3 times the main salary plus another salary, prices housing outside the range of young people starting on the housing ladder, is a property market that is dysfunctional. Today the Institute of Architects in Ireland have recommended a new approach to building of apartments, larger and more family friendly. To date there is a shortage of housing in Dublin in spite of 7 years of planning opportunities to respond to Ireland’s property crash.

What is good for the banks is based on misleading propaganda that blurs the truth.

ESRI have played a key role in propaganda that has misled the Irish public. Their Irish unemployment statistics have become impossible to fathom even to the point of deciding who is unemployed, or who is not. For example, http://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/unemployed_people/self_employed_and_unemployment.html

“Self-employed people can become unemployed if their business has to close down. It may also be the case, though you continue to be self-employed the amount of work you are getting has reduced so much that it no longer provides you with a sufficient income.

If you find yourself unemployed or you are getting less work than before you may qualify for a job seeker’s payment. You do not need to de-register as self-employed to get a payment.”


According to Michael Hennigan: “The number of self-employed persons increased by 33,400 or +11.5% to 324,500 — likely including the assumed surge in farm numbers but maybe former construction workers who were part-time farmers are now treated as entrepreneurs.”

Over 2013, likewise there was a surge of numbers in the farming sector that were argued to be additional jobs due to statistical understating of numbers, criteria in previous years. This is the stuff of propaganda, folks.

Recent news that NAMA had sold large chunks of its property portfolio to vulture funds was hailed as great news for the economy. This weekend however we read of property developer, John Flynn, “comparing the state agency to North Korea and describing it as a cancer on the Irish economy” Sunday Independent, Aug 3, 2014.

The story of NAMA, employment statistics, housing bubble all point to a concerted effort to support Irish banks and their need to protect their capital base. Protecting the capital base of Irish banks instead of protecting the interests of Irish taxpayers who are prey to these banks is the story of broken promises, of government parties the Irish public trusted with this task, who have failed.

Irish banks are playing tough at the moment and seek investment and confidence from everywhere. One of these “pillar”  banks has been in the news posting return to profitability. According to Shane Ross  “In the near future there is likely to be a consolidation or another similar financial acrobatic for AIB.

What does this mean? As Noonan and AIB prepare for privatisation, small shareholders could be given one share in return for every six shares held.” Sunday Independent 3 August, 2014, Business 2. Ross is very much a lone voice in his efforts to throw light on the financial sector.

He makes the point if AIB had maintained their provision for bad debts at last years level at €738m instead of reducing the provision to this year’s $92m, they would have had to declare a loss of over €200m. Instead they posted a profit of €437m fanfared by RTE throughout the week. Needless to say any write-offs of mortgage debt fed into the lower figures on negative equity afforded by the ESRI above.

Its clear the fanfare fugue is taken up by all members of the titanic orchestra, RTE, ESRI, and others more of anon. If you are wondering what fugue means, “a contrapuntal composition in which a short melody or phrase (the subject) is introduced by one part and successively taken up by others and developed by interweaving the parts.”

Conor O Brien in Business 4, same paper, writes a defence of Ireland’s corporate tax code. He is head of tax at KPMG Ireland. he should go back to school.


Table 4 he might look at before initiating a misleading discussion on the ludicrous:

“Similarly for companies, they are taxed where they are resident or where they have a presence in the form of a branch”

I refer the reader to previous blogs here on corporate tax inversion. There’s obviously a lot of money a lot of money to be gained on how to set up a mailbox. In order to make this money, you need to leave your brain behind.

Being misled is becoming the new normal. According to the Israelis its normal to return fire leading to the death of 300 babies in recent Gaza conflict, to argue civilians are fair targets in a built up population where there is nowhere without civilians, to hunt people from their homes, decimate their economy and their property. Talk of sanctions against Israel and war crimes is off the table.  I digress on behalf of innocent lives lost.

Likewise, being misled is the new norm in international finance.

Mysterious Belgian buyer:

The establishment view is that the action by Mario Draghi in 2012 to introduce unlimited bond buying to bolster peripheral countries of the emu….


…was achieved without a shot being fired. However, speculation is increasing on a 2 hander between the FED and ECB with ECB taking up the slack of the FED’s slowdown in QE with ECB making large USTY purchases, story by Schiff and bloggers below.

It’s conceivable as part of quid pro quo, such purchases extend to the purchase of bonds of EU peripherals, but you’ll have to follow the trail yourself for now:

More bond purchases will be required with news BES has collapsed:

“Novo Banco, or New Bank, will be recapitalised to the tune of €4.9bn by a special bank resolution fund created in 2012. The Portuguese state will lend the fund €4.4bn. All of BES’s depositors will be protected as well as the bank’s senior bondholders.

Portugal’s central bank, which only days ago said that BES could be recapitalised by private investors, said the plan would involve no cost to the public purse because the loan would be temporary.

The Bank of Portugal expects the state to be reimbursed when Novo Banco is eventually sold to private investors.

- See more at: http://www.independent.ie/business/world/portugal-eyes-49bn-banco-espirito-santo-rescue-in-days-30482465.html#sthash.etReliRp.dpuf

Obviously those private investors changed their minds. Only private investors left are the governments of emu countries who freely fill from their taxpayers’ well.

It will be interesting to see if Irish taxpayers are asked to follow suit this Autumn following the stress tests of Irish banks.



until next time:


PS Property Scam

July 27, 2014

An Taoiseach, Enda Kenny, has told us there is no property bubble. Over the past year property prices in Dublin have risen by 20-25% . A professional couple with 3 times the main salary plus salary of the other salary won’t hack it. They are being outbid by cash buyers.

Of these how many are local and how many represent vulture fund capital of domestic or foreign based interests, no one knows.

Reasonable property valuations of around the €200,000 mark have disappeared with prices skyrocketing far beyond the ceiling that can be afforded by most young people aiming to start a family.

Let’s think about this problem and approach it from a new angle. Without getting into the nitty-gritty of why we are not building the 15000 housing units annually, why the government is slow to act, why planning permission for these units is in the hands of developers cocooned by their problems with the banks, NAMA and the courts, might there be other reasons for the debacle?

Property tax is resented in Ireland and regarded as a bondholders and banker tax to fund repayment of odious debt. http://www.irishtimes.com/news/politics/resentment-over-property-tax-is-palpable-1.1793551

However it has been mooted by tripling the amount of property tax, in excess of €2bn could be raised that would allow taxation to be reduced. Alarmists have pointed out, this would be akin to giving with one hand and taking it away with the other and have derided and scorned the proposal.

However, there is method in this madness. Consider the following scenario: with QE providing plenty of collateral for banks to purchase/invest in property in Ireland with money from abroad, let’s say this money rushes to Ireland to purchase vast portfolios of land/commercial property from NAMA and property in the domestic private market?

Add to this, the savings of those unaffected by the recent property bubble wishing to cash in on rising rents to avoid low-interest rates. Add in lack of supply, and voila, we have our housing bubble?

Who gains? The banks gain. In oncoming stress tests due this fall, Irish banks will be scrutinised on their capital balances, how secure their lending is. Banks will point to rising property values as security against their lending return on domestic loans. Falling property values would lead to more falling into negative equity to tarnish the loan book of Irish banks.

Rising property charges will mean government can reduce taxes if these taxes can be offset and levied against property owners instead.

Cash rich buyers and external vulture funds can swoop in and control the market. Unable to compete, domestic buyers, young people hoping to start a family, will be priced out of the market and forced to rent.

'I don't get it...after all the budget cuts to streamline the work force, why aren't we moving faster.' Rental prices increase with domestic property charges handed on by a new slave class forced to pay whatever rent is decided by a new rentier class. Divisions between rich and poor increase.

Is there an alliance between government, the banks, vulture fund capital, a new rentier class of local and foreign capital with a Greek chorus of ECB, bondholders, to scam young people betrayed in the recent housing bubble collapse?

There is no commitment to bring down housing prices to reasonable levels. Instead there is a denial this problem even exists.

So, first you sign up all Irish taxpayers to pay for odious debt. In order to keep property prices high and safeguard the capital base of banks and continue to make returns on bondholders odious debt, you flood the market with vulture fund money: for example, purchase anything on NAMA’s books. You need to force young people out of the property market and into the rentier controlled sector.

Once you have young people there, you can make them pay any rent you like. Government can force any amount of property charges it wants. Landlords simply raise the rents and the new class of young Irish rent slaves will pay whatever is asked of them. Troika is happy, their odious lending has been securitised.

Those with a fertile imagination can imagine Mr Magoo with his puppet strings controlling Mr Kenny and all his rent slaves in a world without private property,  everything in Mr Magoo’s ownership.

Mr Magoo may turn out to be much more unkindly than George Orwell’s Big Brother!







I’m not a fan of Garth Brooks and bought no tickets for his concerts in Dublin. But I do respect the 400,000 disappointed fans who purchased tickets for his concerts in Dublin. They’ve suddenly received notice the shows are cancelled.

Poor licensing regulation in this area led to a lot of mistakes being made by various bodies involved in the organisation of the concerts. I will not go into the detail of evaluating or enunciating the opposing rights and perceived infringements. They all point to greater clarity and clearer rules for all concerned for future venues.

An Taoiseach, Enda Kenny, has stated intervention by him to save the expected loss of castleintheairrevenue of €50m to the city with cancellation of the concerts would expose him to, “certainly be accused of coming the heavy on an issue like this”.

Failure to act means he is coming the heavy on 400,000 people who’ve purchased tickets.

A smarter option would have been to acknowledge that a mess has been made; facilitate legislation that enables the concerts to go ahead on a one time basis;  compensate the local residents in a big way for their inconvenience; guarantee this was only a once-off subject to clearer licensing rules in this area.

This would gain kudos for An Taoiseach who has squandered this opportunity once again to show leadership that is worthwhile and not less than worthless.

This is but more evidence of Kenny’s blindfold mess of eg property charges that discriminate against city dwellers, water charges that discriminate against everyone, privatisation of refuse collection that has ended in the Greyhound mess, expulsion of key party members on their conscientious objection to certain aspects of party policy, medical cards debacle, water debacle, energy grid mess.

But most of all dunce failure to deliver on a debt deal for Ireland that is not less than derisory. But you will often hear him in self-congratulatory mood as he deliberates on the crumbs the ECB has bought him with.

Happily the result of the European elections showed a rejection of the Irish public of FF/FG policies in spite of massive propaganda to persuade them otherwise of the Kenny agenda. Blind indifference to Kenny’s agenda informs  most of the electorate who experience another world of falling standards of education and public health, increasing taxes, emigration and few jobs.

In a vacuous way the Kenny agenda is to ignore  the debt ridden nature of Irish state’s private and public liabilities, to pretend these are sustainable, that a trickle of new jobs can be nurtured into a river of growth. To celebrate when there is no cause for celebration. To bestow confidence with a smile wherever caution signals action required more than a smile.

Kenny’s is a light weight, shallow, head in the sand agenda, that hopes against hope that a rising tide will lift all boats: Even when there is no tide.

Ireland requires a growth rate of 8% to be sustainable under its present conditions of odious debt. But growth rates above 2% would be cause for celebration. Inflation has turned into deflation and growth will be sponged up to pay for increasing incapacity to repay debt.

Austerity is the name of the game led by Germany. This is aimed to suck the marrow from the bone of peripheral countries such as Ireland. Austerity requires puppet governments to be bailiffs and Kenny’s certainly serves the mark.


“Enda’s strategy in Europe has been to align with Germany, which is bizarre as economically we are faced with different circumstances entirely to Germany. Enda has failed to make any case for Ireland and has instead bought into Germany’s own misconception of the Irish people and the Irish economy.”

A little over 2 years ago the writer of that letter wrote ” Last night I attended the launch of the FF Futures Group in Dublin and it stuck out a mile who the real Taoiseach is. We need to get a Cork man back in the driving seat, it seems.

Would that we could elect Micheál Martin to the job. He would do us all proud.”

On the contrary, both Martin and Kenny are joined at the hip when it comes to Europe. Both need to be replaced by leaders of more depth and insight who will not disappoint in leading this country through difficult times ahead.

But even Micheal Martin has the wit and insight to this week suggest enabling legislation to allow the Garth Brooks concerts proceed. Clearly FF/FG are worse than FF.

It’s a curious case of deja vu that the ‘come the heavy’ argument from Kenny has been heard before. It was used to defend the rights of bondholders over the rights of the people of Ireland, its taxpayers and public services, who were levied with the liabilities of bankers and bondholders and the €67.5 bn odious debt levied on the people of Ireland by the troika.

These arguments should be examined in another forum, the Banking Inquiry promised by Kenny. It too is currently embroiled in a mess.

Kenny  cannot learn from mistakes made in the past. Ireland joined up to a flawed EMU with its flawed euro currency that did not suit our needs and was poorly if not recklessly administered in favour of Germany.

While EMU peripheral countries sold the fool’s gold of debt by Germany are witnessing the painful legacy and extraction of their liabilities,  Germany continues to grow with enviable growth rates of 4% +. Germany’s bondholders safely secured against the liabilities of Irish taxpayers.

The original European Union was an aircraft carrier with all members having a say in its running. That ship was sunk 6 years ago. In its place is a poorly defended and organised convoy led by a German battleship towing with fraying tow ropes the economies of peripheral zone members.

So far, Kenny’s reign is mindful of a tale told by an idiot, full of sound and fury, signifying nothing.

Tomorrow Enda Kenny reshuffles his pack. Its difficult not to be indifferent and to regard this as nothing more than the swapping of seats of another orchestra on another titanic.



To-morrow, and to-morrow, and to-morrow,
Creeps in this petty pace from day to day,
To the last syllable of recorded time;
And all our yesterdays have lighted fools
The way to dusty death. Out, out, brief candle!
Life’s but a walking shadow, a poor player,
That struts and frets his hour upon the stage,
And then is heard no more. It is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.






jean-claude juncker“Mr Juncker is seen as an ‘arch federalist’ by the Government because of his record of wanting more power for Brussels over national Parliaments” Jean-Claude Juncker is no Santa Clause.

“Mr Cameron added: ‘There are times when it’s very important that you stick to your principles … even if the odds are heavily stacked against you rather than go along with something that you believe is profoundly wrong.’

He said the recent European elections had shown that there was ‘huge disquiet about the way the European Union works’. “

Cameron is campaigning for reform of Europe and the election of Juncker will be viewed as a step back for reform and a step forward for the status quo of austerity for taxpayers and no austerity for lenders.


Support for the EU is wafer thin in the UK and the Tories have pledged an IN/OUT referendum in 2017 if the Tories remain in power.(1)

At the heart of this dispute in Europe is fears over growing centralisation. However, it is ironic that growing centralisation does not include the centralisation of bailout debt of peripheral debtor nations such as Ireland.

Meanwhile former Luxembourg Prime Minister Jean-Claude Juncker will become next president of the European Commission following  European Council vote 26:2 on June 27 with UK and Hungary voting against.

The question is will David Cameron now lead a eurosceptic campaign for Britain to leave the EU. Will he regard his reform agenda as dead?

The vote comes in the wake of the routing of pro European parties in the recent European elections May 26/27.


European parliament elections saw the rise of  the neo-Nazi Golden Dawn party in Greece now set to enter the European Parliament. On the far-left, meanwhile, the anti-troika Syriza party leads the ballot. Its clear people voted on the basis not of extreme ideological far left or far right on a racist agenda, but simply on for or against the Europe project.

Many of those who do not hold the extreme views of extreme left or right voted for such parties on the basis no mainstream  parties articulated their anti EU views.

In France Marine Le Pen, trumped  both the centre-right UMP party and the Socialist Party of François Hollande. The National Front won about a third of the seats allocated to France. “One half of the Franco-German motor of EU integration thus appears to have gone into reverse, with unforeseeable consequences for the whole European project.” However mainstream parties still control up to 2/3 of seats in the EP.

“In Britain, always more sceptical of the European project, Mr Farage’s UKIP seems to have beaten the traditional parties, with the opposition Labour party coming second and the Conservative party of the prime minister, David Cameron, coming third. “I don’t want Britain to leave the EU. I want Europe to leave the EU,” declared Mr Farage.”

Cameron for the Tories at home has let some of the air out of the tyres of the eurosceptic wing of the Tory party and the rise of Farage UKIP.

It will be interesting to observe if Cameron transmogrifies from a position out to ‘reform Europe’ to outright eurosceptic supporting UK unilateral withdrawal.

In Ireland there was no support for the Cameron anti Federalist position in spite of Enda Kenny’s continuing failure to negotiate a debt write-down. Kenny,  a golden boy of the troika is ‘glowing testimony’ to the policies of the soldiers of austerity, he hopes to obtain a commissionership or two for Ireland out of his support for Juncker.

Kenny lost opportunity to play the debt card and make his support for Juncker contingent on a reworking of Ireland’s odious debt profile with Irish people saddled with approx €40bn out of the troika’s €67bn losses that ought to have been shared by external banks. Clearly FG and Labour policy is to be poodle for Europe and the banking financial industry.

Meanwhile John Bruton chairman of IFSC, a former Taoiseach and Fine Gael hack, has espoused the view election to presidency of the European Commission should be by vote of the people directly not merely by members of the European parliament.

Ironically, Juncker’s EPP in its electoral manifesto for 2009


also called for ” direct election for the President of the European Commission “. EPP also supports, ” Increasing transparency and surveillance on financial markets. “

Kenny’s other political initiative, the banking inquiry, would appear to be dissolving before our eyes before it even gets to take place.

Cabinet confidentiality may prevent certain records surfacing if they exist. Restrictions surrounding the inquiry limiting it to a showcase trial around the guarantee already limit investigation of the poor management of Ireland’s bailout deal led by representatives of the central bank/dept for Finance and political representatives.

The curious case of Brian Lenihan’s repeated visits to the Dail with the bill for the banks leaping from €3bn to €30bn + is major cause for investigation as to who misled who with the bill passed to Irish taxpayers, a story that demands to be told.

Reform in Europe has been put on the back-burner. Juncker’s backing by Merkel will further consolidate a federalist Europe with growing powers of centralisation and growing control of the European parliament by Germany.

As austerity and lack of growth continues to haunt the EMU, is it now time for Ireland and the UK to consider leaving the EU? Its long past time for Ireland to adopt a strong position in renegotiating its debt profile.

To do so, do we need to leave the euro and join those countries outside the euro such as Switzerland and the UK ?

Currently the following countries do not use the euro.

United Kingdom
Czech Republic

Ireland outside the euro could return to its own currency, the punt,  using the euro as a base.

Deflation in Europe is about to make our debt profile worse. Calls in Europe for more investment to stimulate jobs come against the backdrop of a growing austerity that puts more brake on growth.

There is less and less money to go round. Devaluation would help restore our national finances. An open, flexible country with a large dependence on exports, could offset any disadvantages and quickly restore order to Ireland’s finances. Day by day our prospects in Europe diminish.

Whatever there is looted from starving the public services of funding in education and health gets exported back to large banks in Germany, France and US by way of €8bn in interest payments on our ‘bailout’ debt. An alliance with UK under a commonwealth free trade agreement the Switzerland way could yield an excellent alternative to our current debacle.


“The cornerstone of EU-Swiss relations is the Free Trade Agreement of 1972.

As a consequence of the rejection of the EEAmembership in 1992, Switzerland and the EU agreed on a package of seven sectoral agreements signed in 1999 (known in Switzerland as “Bilaterals I”). These include: free movement of persons, technical trade barriers, public procurement, agriculture and air and land transport. In addition, a scientific research agreement fully associated Switzerland into the EU’s framework research programmes.

A further set of sectoral agreements was signed in 2004 (known as “Bilaterals II”), covering, inter alia, Switzerland’s participation in Schengen and Dublin, and agreements on taxation of savings, processed agricultural products, statistics, combating fraud, participation in the EU Media Programme, the Environment Agency, and Swiss financial contributions to economic and social cohesion in the new EU Member States.

In 2010 an agreement was signed on Swiss participation in EU education, professional training and youth programmes.

In overall, around 100 bilateral agreements currently exist between the EU and Switzerland.”

Ireland could well take a leaf from the Swiss book. With a similar bilateral trade agreement with the UK, there is another way to the austerity path.

With lack of inflation, anchored to the euro, our situation worsens. However, with results from recent local elections it appears most now reject the FG/LB view that we are living in a paradise with 70,000 new jobs with the tide turning.

Many experience such a fool’s paradise differently, especially those on hospital trolleys.



1. Read more: http://www.dailymail.co.uk/news/article-2671985/Angry-Cameron-warns-European-leaders-consequences-Cognac-breakfast-Brussels-fixer-Jean-Claude-Juncker-given-EUs-job.html#ixzz361HE77UF

2. http://en.wikipedia.org/wiki/Croatia_and_the_euro

3. http://www.economicshelp.org/blog/1299/economics/advantages-and-disadvantages-of-devaluation/



Shudder Island

June 15, 2014

Currently Ireland is reeling from revelations regarding the 796 babies buried in Tuam. Lists of names and cause of death of all who died between 1925 and 1960 are published in today’s Sunday Independent. Babies were buried in an unmarked grave. Poor healthcare, neglect or worse caused a mortality rate sometimes between 5 and ten times the normal mortality rate in the wider population. Further investigations and inquiries will reveal more. It’s thought such high mortality rates occurred in similar homes for unmarried mothers across the country during the same period.

Some of these homes appear to have been run along the lines of Japanese prisoner of war work camps and were populated by those regarded as members of Ireland’s lowest caste, unmarried mothers. Religion, politics and foot soldiers in the civil administration provided the lethal conditions under which such abuse flourished.

Archbishop Dermot Martin probed on his reaction to such revelations wondered why there were not people of insight, whistleblowers, within the church who rang alarm bells. I’m sure he equally questions reasons for genocide and ethnic cleansing in Ruanda and Nazi Germany.

Let me partially attempt an answer. Organisations and institutions can go bad for many reasons. Organisations are living organisms with foot soldiers  to follow and defend the status quo. Those who threaten the status quo are summarily executed in a worse case scenario. In a lesser context they are shown the door. Those ambitious for power like Frank Underwood in House of Cards know how to tow the line. They are rewarded for such loyalty card actions and guard the doors.

Unfortunately those with the greatest critical faculties can become victim of a zombie takeover. This can lead to a less than healthy competence emerging among leadership contenders. This may explain the government’s hand maiden of the troika, soldier- of – austerity performance in dealing with our economic collapse.

Perhaps this is also a clue to what is happening to our long-delayed Banking Inquiry. Government has already stopped the PAC committee headed by FF John McGuinness acquiring the job and instead it has given the inquiry to a new committee with a new chairman, Ciaran Lynch, Labour TD.puppets

Through mismanagement the FG/LB led government lost its overall majority on this committee and now has reimposed its own political majority stating it must have power to impose its “terms of reference”. We should shudder.

But the so-called banking inquiry was already holed below the water line. Its flaws go back to a referendum where Irish people decided politicians were not to be trusted. As a result Oireachtas committees are prohibited from holding non-public office holders to account. The difference with this inquiry and previous ones eg Honahan, Regling/Watson , Nyberg is that hearings will take place in public, not in private.

If it goes ahead, some of its hearings could prove to be farcical, with those probed in attendance with their solicitors, stonewalling and pleading the 5th Amendment. Worse still, those “terms of reference” will come from handmaidens of the troika infected with a deep compliance and subservience to bankers.

This government has defended the rights of bondholders over the rights of taxpayers. Sutherland, Bruton, Honahan, and Department of Finance officials have a lot of banking secrets to hide and are likely to use such terms of reference to steer attention away from bankers and towards political adversaries who have little to confess other than compliance, subservience and incompetence.

The fact that Oireachtas committees are already hobbled in the above way should point to the only way forward for a real Banking Inquiry to take place: it should be a proper judicial inquiry led by a high Court judge, a person of competence and good standing with proper powers of compulsion to get answers we need.

Stephen Donnelly TD was correct to spot the political stage-show trial and resign from the committee before this Banking Inquiry could manipulate him towards a darker agenda.

In a previous inquiry I suggested some terms of reference.

Some Suggestions for the Inquiry

1. Follow the money.

This should not be too difficult. Ideally, the ten largest loans handed out by each bank could be trawled through to examine the precise mechanics involved in these developer loans: who dealt with them, how were decisions made, documents in support of the loans obtained and examined. This would quickly reveal a seam of rich information that will quickly unravel the culture of lending in the banking system.

2. Examine the bonus system.

Word has it that the traditional method of classical banking with local managers intimately knowledgeable re financial matters in the local community with lifetimes of experience overseeing lending patterns responsibly, was set aside. Instead such managers were replaced by whiz kids of the bonus culture pressing loans on everyone they could find. Lending standards were lowered, the bottom line was the bonus, prudential lending was the big casualty. As long as property rose in value nobody cared.anglo

3. The role of the central bank and regulator.

Specific interest should target the Central Bank personnel who were witness to Anglo’s meteoric rise to unsustainable levels of growth during the Celtic Tiger.

4. The case against Europe.

Particular interest should focus on ECB(European Central Bank) and ICB(Irish Central Bank) relationships, correspondence and communication by email, phone, video, meetings where regulatory brakes should have been considered and monitored by ECB and ICB. Note this has already been ruled out of order by the probe.

5. The Guarantee.

The inquiry should not conclude its deliberations until full and final discovery is made of the personnel and role of ECB, ICB, Dept of Finance and the political representatives  who played a role in the Guarantee.

I find it difficult to swallow the commonplace assumption the Irish Dept of Finance, Irish Central Bank, Irish politicians and representatives of the Irish financial industry acted alone in opting for the state guarantee.

The Guarantee would have been new territory. In hindsight it was a rash and incompetent idea. It would be therefore easy to assume incompetent rashness on the part of that group from a relatively large background in banking and politics. But, were there other compelling forces at work? Who, where this did the ‘Guarantee’ come from?

The inquiry should examine closely the possibility of other outside influences on the Guarantee. It’s incredible to believe the ECB was not consulted on such a momentous decision.

6. The role of the credit rating agencies?

It’s incredible to believe the high credit rating afforded to Ireland and to its banks at the height of the Celtic tiger as it increasingly became more exposed to dangerous lending practices and icebergs.

7. The role of financial auditors

Anglo Irish Bank auditors, Ernest & Young, their role needs to be scrutinised.

8. The planning authorities and the role of planning legislation that fueled the boom?

There are plenty of issues not covered here, but the above is a sample of what a banking inquiry should deliver answers on so that we can learn for the future. It’s not sufficient that opaque, broad generalisations be used to obscure the truth.

The inquiry needs to yield positive results that discovers hard factual evidence that will form the concrete base of any conclusions it makes.

In the US financial meltdown has been the subject of detailed inquiries:


“The Report cites investment banks as a major player in the lead up to the crisis, and uses a case study of two leading participants in the U.S. mortgage market, Goldman Sachsand Deutsche Bank. The case study found that from 2004 to 2008, banks focused their efforts heavily on RMBS and CDO securities, complex and high risk financial products that they could bundle and sell to investors who did not necessarily know the composition of the product. Financial institutions issued $2.5 trillion in RMBS and $1.4 trillion in CDO securities. They created large trading desks that dealt strictly in RMBS and CDO securities. More alarmingly, their trading desks began to take out insurance policies against the RMBS and CDO securities, allowing them to wager on the fall in value of their own asset. They acted in many instances as an intermediary between two opposing parties who wished to bet on either side of the future value of a security. This practice led to a blatant conflict of interest in the securities market, as the banks used “net short” positions, in which they wagered on the fall of a security, to profit off the failure of a security they had sold to their own client.[10].”

The cause of financial meltdown in Ireland was different with focus on  banking and housing bubble meltdown. Will our inquiry into Ireland’s financial meltdown comprehensively answer the questions  explaining the legacy of financial meltdown still with us.

9. Many other areas not covered here require investigation as well.

Can such an inquiry competently deliver the answer as to why young people in Ireland cannot afford housing, cannot afford to begin families, why the financial services industry, the banks, austerity, continue to extract from them through falling social services in health and education, a future that comes through Ireland eating its young; a politics of vampire bailiffs masquerading as democratically legitimate politicians defending the people!”

Meanwhile Enda Kenny, Taoiseach, trendy handmaiden of the troika, a soldier of austerity, a poster boy of austerity and postboy for how jobs can flow from austerity, can count the days before his government breaks.

It’s not often the Irish Central Bank’s sometimes Pollyanna forecasting agrees with the views of this writer,

With another €2bn to be taken out of the budget, unease re Ukraine, disinflation in EMU, global slowdown in growth, further instability in government, there could be a perfect storm in the Autumn:

In its latest macroeconomic financial review, the Irish Central Bank points to concerns regarding our banks as a result of forthcoming ECB stress testing:


“…outcome of the ECB Comprehensive Assessment (CA), which includes a point-in-time Asset Quality Review (AQR) and forward-looking stress tests, will be important in determining the resilience of the major banks to future shocks, notwithstanding the substantial capital injections of recent years. The results of the AQR and the stress tests are due to be published simultaneously in November 2014 at the time that the Single Supervisory Mechanism (SSM) enters into force.

….The low-yielding tracker mortgage loan book and high share of impaired loans will
also limit domestic banks’ ability to increase margins on existing business

…The outcome of the ECB’s CA may also impact provisioning and,
in turn, the profitability of the domestic banks. The ECB and
relevant national authorities commenced the CA in November
2013. The assessment exercise comprises three distinct
elements: an Asset Quality Review (AQR); a Supervisory Risk
Assessment; and a stress test. This exercise will be completed
before the Single Supervisory Mechanism (SSM) enters into
force on 4 November 2014. In total, the CA will be carried out for
128 banking groups in the Eurozone. Five credit institutions in
Ireland will be subject to this assessment – AIB, Bank of Ireland,
Permanent TSB, Ulster Bank and Merrill Lynch as the ECB will
directly supervise them under the SSM. Subsidiaries of
Eurozone banking groups, such as KBC and ACC, also fall
indirectly within the scope of this CA, as they may have loan or
asset portfolios subject to the AQR.”

Banks have large bonds that are due in 2015 and a downward assessment may affect Irish banks to raise capital on external markets. But no doubt the inward rush of pirate QE vulture funds supporting our virtual zombie economy’s NAMA property sector, will attempt to buffer the financial system. Vulture fund money is the only buyer at the moment, the domestic market priced out for both commercial and residential development.

Government break up, further austerity in our budget, stress tests on our banking system, a perfect storm indeed.

Enda Kenny, trending austerity across Europe, may bail out for a job in Europe as clouds gather. Currently, Alan Dukes, Fine Gael doyen, former chairman of Anglo Irish bank, soldier of austerity and friend of bondholders, is on radio pontificating on our banking inquiry shenanigans. You may shudder! Directing the searchlight away from bankers and Department of Finance officials towards political enemies in Fianna Fail would be up his alley.

Crumbling support in polls for government incumbents shows the Irish electorate is far more sophisticated than our political masters who’ve betrayed trust.

Having been shafted by the ECB, a €67bn sinkhole loan billed to us from the troika, to bail out the euro not Ireland,  a badly designed and unworkable ECB  that sent freefall confetti  lending of euros into Ireland’s banks, setting off a false property lending boom bubble, its long past the time we ditched Europe and set up a new alliance with countries such as UK, Norway, Sweden in a new sterling zone. Other moves are worthy of consideration also.

As well as confronting our past, we need to be prepared to ditch it and not prolong its legacy of austerity and misery.

Until next time!


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