June 28, 2015
The Greek economy is screwed. Its structural deficit reduction has been 4-5 times that of Ireland’s since 2008. Think of the austerity in Ireland endured by its population, multiply it by 5.
Court jester to the troika and the creditors, Enda Kenny thinks Greece needs to come up with some pro growth policies.
Look at Greece circled in accompanying chart. The debt burden is increasing, growth has collapsed. It cannot serve its own public service in spite of horrendous cutbacks, never mind serve creditors their interest rate repayments. Policies forced upon it by creditors have led to economic collapse. The troika is demanding more austerity for citizens leading to further collapse.
It would appear the only method in this madness is to destroy the Greek government, destroy democracy, make the country ungovernable and unmanageable, before sending in tanks with law and order provided from a puppet government such as the Irish government, friendly to creditors, at some point in the not so distant future.
Both Kenny and his cabinet mainly Noonan and Charlie Flanagan have been sniping at Greek efforts to secure a debt deal over the past week. Charlie Flanagan, minister for Foreign Affairs, has stated actions and comments by the Greek negotiators have been “provocative” over the past week.
With its record on debt negotiation hitherto regarded as successful by this government we are dealing with a level of self-delusion unprecedented in Irish politics. They will not delude the Greeks as they defend against the latest IMF smash and grab. One pro growth policy not acceptable to Kenny is debt write-down.
Broadcast on: June 26th, 2015 by RTE interview by Cathal Mac Coilla
containing a relatively lengthy and revealing interview with Yanis Varoufakis economist and current Greek Finance minister.
Enda Kenny and his cabinet avoid such interviews preferring their handler’s glib soundbites that hide incompetence and groom the public to accept dictatorial dictates that may not be questioned.
We could benefit from a televised debate style open forum between him and Yanis Varoufakis, Alexis Tsipras and Michael Noonan that would instantly cast light on his lack of ability and idiotic contribution to debate on Greece.
Perhaps one on the lines of the BBC’s Question Time together with a live audience who also field questions.
We would soon see through to his clownish tilting at windmills that would lay bare his embarrassing contribution to the debate on Greece.
We are unlikely to get this. Apologies for this slight digression.
Approximately 6 mins into the interview with Varoufakis, Mac Coilla ran a Kenny interview in which Kenny was asked : “Is debt relief something that Ireland would support for Greece?” “No”(Enda Kenny).
Kenny has campaigned for debt relief for Ireland seriously bungling the matter with claims he had commitments for same, which have since evaporated.
Here he is May 2014 reiterating such claims “Mr Kenny said the implementation of a pledge by EU leaders in June 2012 to ease the cost of the Irish bank rescue should be part of Europe’s response to the election”
Now both he and Noonan are sniping and attacking Greece for its attempt to vindicate its own requirements for debt relief.
In terms of the politics of the absurd this is embarrassing to say the least.
How can we deny the Greeks their right to debt write-down and claim those same rights ourselves?
This is gross hypocrisy. Damage done to our own claims for debt relief on our shouldering of losses on saving German and French banks with tab sent to our taxpayers, is beyond belief.
It would appear Ireland supports Germany hegemony and its interference in the affairs of a sovereign country Greece.
Idiotic politicians from Ireland such as Kenny are jumping on the bandwagon and fanning the flames of opposition to Greece instead of supporting the Greek position.
These efforts are meant to destabilise the Greek government:
Jean Claude Juncker EU commission president is not beneath trashing Greece and interfering in its political autonomy. So long EU and welcome in GEU (The German EU)
Unlike FG/LB under Kenny Syriza are committed to democracy and have called a referendum on Greek bailout. The Greek people can measure the heinous effects of bailout disguised in looting and pillaging of the public sector and can see through the lies told by Juncker.
Yanis Varoufakis in his interview stated Greece “Bent over backwards” to accommodate some “rather strange demands” from creditors and European partners.
Its ironic European ministers are not privy to these negotiations but are fed on propaganda from the negotiations given to them by the creditors.
Varoufakis noted Greece negotiating with the institutions, heads of state not negotiating with the institutions. They are kept in the dark as to the details known only to Greece and the institutions, but are willing to feed on the line/propaganda given to them by the institutions.
Yanis Varoufakis states if Noonan, Kenny were privy to those details, they would change their perspective.
I’m not sure he knows the level of incompetence he is dealing with.
As debtor nation under constant recession for the past 3 years they have responsibility not to make matters worse for the economy. Yanis states when he is asked to put his signature at the end of an agreement he knows is unviable, he is not going to do it!
Unlike Irish negotiators who sign anything they are asked to.
Kenny raps the Greeks over the knuckles for not having any pro growth figures before the ministers. The way Greece should go given Ireland’s example according to Kenny, “We did not increase income tax, we did not increase VAT, we did not increase PRSI, but we put up alternatives to those measures proposed in order to put up a pro growth policy and make our country competitive”. The lie is we did increase vat along with a plethora of hidden taxes.
Kenny increased vat and introduced odious austerity through the back door protecting the rich with unfair, hidden taxes, property taxes and water charges and public service salary cuts levied on the lower and middle class. He did what he was told to do.
According to Yanis Varoufakis Greece has imposed 5 times the fiscal consolidation imposed by Ireland over the past 5 years. Greeks are the champions of austerity at this time.
Because of austerity measures the Greek economy shrank by 27% on back of pensions coming down by up to 48% and wages by 32%.
They have squeezed out of their public sector everything apart from low wages and low pensions. For 7 years quarter on quarter the economy is shrinking. Only 10% or 12% get unemployment benefit.
In Greece whole families with generations of the unemployed living on one pension there is nothing more to give.
For Joan Burton “Greece seems to prefer lecturing the rest of Europe”….So many critics of Greece in the Irish government.
Varoufakis has been excused of the heinous crime of explaining macroeconomics. Varoufakis, “It’s quite quaint that insisting on having a macroeconomic discussion at European level is considered to be condescending”.
On the contrary, Varoufakis is holding up by his learned competence a mirror to the incompetence and quaint ill-informed if embarrassing position of Burton ilk.
Kenny and Burton are both against increasing taxes on corporations, on the rich, on large companies; they are both mouthpiece of a right-wing ideology. Strangely they ask for pro growth policies but refuse to countenance debt forgiveness as the only pro growth outlook for Greece.
The Greeks have put forward a balanced proposal to their creditors. Perhaps we need to ask Kenny to outline his balanced proposals for Greece or justify his ill-informed nonsense?
Meanwhile in forcing Greece to the brink, IMF has breached its own mandate in partnering with the ECB and the EU.
It should immediately withdraw from the troika.
Classical way the IMF ingloriously worked financial meltdown eg in Latin America in countries since its inception was, to support devaluation, debt write-down/relief with 40-50% losses born by creditors, re-engineering of the economy to support growth.
IMF’s meddling in the affairs of ECB and the EU under the principle of full repayment of unpayable bailout loans without devaluation or debt write-down has turned into an exercise in the excoriation and pillaging of a sovereign nation.
IMF should reexamine its own policies and mandate and consider whether its own leadership is up to the task of managing Greek fallout, or whether its own leadership under Lagarde is wanting another adult in the room to deal with this unfolding crisis.
High Five to Greece, go n’éiri an bothar libh.
June 15, 2015
Congrats to Syriza not selling out their people as our government have. Incompetence and greed unfortunately have won the day in Ireland, see growing list of current failures of FG/LB end of this blog:
Ambrose Evans Pritchard in the Guardian:
“The radical wing of Greece’s Syriza party is to table plans over coming days for an Icelandic-style default and a nationalisation of the Greek banking system, deeming it pointless to continue talks with Europe’s creditor powers.
Syriza sources say measures being drafted include capital controls and the establishment of a sovereign central bank able to stand behind a new financial system. While some form of dual currency might be possible in theory, such a structure would be incompatible with euro membership and would imply a rapid return to the drachma.
The confidential plans were circulating over the weekend and have the backing of 30 MPs from the Aristeri Platforma or ‘Left Platform’, as well as other hard-line groupings in Syriza’s spectrum. It is understood that the nationalist ANEL party in the ruling coalition is also willing to force a rupture with creditors, if need be.
“This goes well beyond the Left Platform. We are talking serious numbers,” said one Syriza MP involved in the draft.
“We are all horrified by the idea of surrender, and we will not allow ourselves to be throttled to death by European monetary union,” he told the Telegraph.
The consequences for default are far reaching and contrary to the snake oil bond salesman frequently brought on to RTE to talk down the crisis, who argue every bank in Europe has already written off Greek Debt, such is not the case.
Lets look at Deutsche Bank http://notquant.com/is-deutsche-bank-the-next-lehman/:
“June 9: S&P lowers the rating of Deutsche Bank to BBB+ Just three notches above “junk”. (Incidentally, BBB+ is even lower than Lehman’s downgrade – which preceded its collapse by just 3 months)”
“The trouble for Deutsche Bank is that its conventional retail banking operations are not a significant profit center. To maintain margins, Deutsche Bank has been forced into riskier asset classes than its peers.
Deutsche Bank is sitting on more than $75 Trillion in derivatives bets — an amount that is twenty times greater than German GDP. Their derivatives exposure dwarfs even JP Morgan’s exposure – by a staggering $5 trillion.
With that kind of exposure, relatively small moves can precipitate catastrophic losses. Again, we must note that Greece just missed its payment to the IMF – and further defaults are most certainly not beyond the realm of possibility.”
The chain of dominos that will fall if DB defaults is anyone’s guess and DB is but one bank in Europe. Banks in France and Germany are highly exposed to Greek style default.
Highly inflated tyres come with increased risk of puncture and it looks like Greece is one tyre that cannot be mended without default.
QE in the US, EMU, Japan and UK patched the burst tyre of the fiat monetary system debased by taking it off the gold reserve Breton Woods system in 1971. Since then the money supply has inflated the divide between rich and poor. Austerity has made the poor poorer and the rich, richer. In order to unwind the out-of-control path of our current monetary system, Breton Woods should be revisited.
Financial engineering concealing losses due to adjusted profit accountancy tricks will not hide the effects of Greek default.
A super inflated stock market rich only on the gambled investments of central banks printing money spent on stocks and shares not in real investment awaits the pin of Greece and a burst DB.
Omens are not good and parallels exist with the past:
“In 1715, France was insolvent. It had just lost its king, Louis XIV, and the Duke d’Orléans was named regent until the late monarch’s great-grandson came of age to rule. Familiar with Law and his unorthodox ideas, the duke established him as head of the Banque Générale in hopes that he might reduce the massive debt Louis XIV left behind.
To this end, Law began printing banknotes—lots of them—and flooding the economy with easy money. Doing so, he believed, would expand employment, boost production and increase exports.
It indeed had those effects—for a time. Paris was booming. The number of millionaires multiplied.
Unlike Palmstruch, Law made no claims that the notes could be converted back into gold or any other metal. He believed that a currency, whether gold or paper, had no intrinsic value other than as a government-sanctioned medium of exchange. Instead, his notes were “secured,” vaguely, by French land, including its colonies in the Americas. There was also no limit to the amount of money that could be pumped into the French economy. Like many of today’s central bankers, Law was of the opinion that if 500 million notes were good, a billion were even better.
But to make it all work according to plan, he had to take extreme measures. Law outlawed the hoarding of money, the use of coins and the possession of more than the minimalist amount of gold and silver.
The system turned out to be untenable and the paper money became worthless. After only four short years, the currency bubble burst. Law was not only removed from office but exiled from the country. Until his death in 1729, he roamed Europe heavily in debt, making his way by his former occupation, gambling.
The incident had long-lasting effects. It sustained the country’s economic woes for years and contributed to the start of the French Revolution later in the century, as it stoked working class disenfranchisement.”
There are parallels between 1715 in France, The Central Bankers, QE, the international shadow banking system and the bubble of QE printing money for the rich while printing austerity and debt for the poor.
We should know by June 30 if Grexit is to be.
Grexit will not end the euro’s woes.
In a badly designed monetary union the treatment of the outer core debtor nations such as Ireland, Portugal and Greece, has been appalling.
Austerity is not leading to growth in Europe. It has crippled Greece and done serious damage to Ireland attacking democracy, health and education services and the development of public infrastructure.
The EU has morphed into a dangerous hegemony controlled by Germany leading serf nations into the unknown.
Global currency led by the dollar in the US has turned its economy into a rentier financial paper led system destroying the middle class, destroying the possibility of property ownership for young people, burdening the young with impossible debt.
Is this a true model for human development and growth in a civilization tasked with developing a positive future for humanity, or a recipe for disaster dragging the world into the past.
Arguments made against Greece refer to its large shadow economy. International creditors have pitted an international shadow banking system against Greece’s own shadow economy under the radar of taxation.
“As of 2013, academic research has suggested that the true size of the shadow banking system may have been over $100 trillion in 2012.”
“Based on estimates, Prentice notes that “given US GDP of $14.26 trillion, the world’s largest, that could still be as much as $1.2 trillion in taxable income that slips through Uncle Sam’s fingers each year”. Prentice quotes Austrian economist Friedrich Schneider, “Taxation and regulation increased in most countries over the past 10 years…reducing the tax burden is the best policy measure to reduce the shadow economy, followed by a lessening of fiscal and business regulation.”
Negotiations between Greece and its creditors have followed a rocky road. A large shadow economy in Greece unwilling to face taxes against a band of creditors wanting taxes to pay extortionate and unconscionable debt of no benefit to Greek people innocent in driving up such debt.
Let’s hope in return to the Drachma or some parallel currency, responsible and competent government can bring Greece into a better place; where taxes will be levied to support services in education and health and infrastructure for the Greek people.
Meanwhile its time to rethink the very basis upon which our deregulated and dive-to-the-bottom global currency system works.
Humanity can come up with better than the pretence the global monetary system has clothes on.
Hats off to Greece in defending democracy against rampant shadow bankers who’ve won out in Ireland and Portugal.
Grexit and Greece may yet to be a lesson for us all.
Kathleen Lynch must have been joking on the radio. When asked about possible tsunami of parents with children under 6 wishing to avail of the free GP scheme flooding doctor surgeries, she replied, that she had taken this into consideration, working mothers would not be taking time off work to take their babies to the doctor when they are sick!
Perhaps she should sign an edict requiring doctor’s surgeries to be relocated to creches to avoid having whole creches descend on doctor surgeries? In a world where the completely daft and ludicrous becomes commonplace, I must point out I jest for sake of parody.
Those who are seriously ill will find it increasingly difficult to attend the doctor.
Kathleen Lynch has a favorite turn of phrase she uses to describe this policy, “this is part of the future”. The irony is its not, our health service through austerity is being dragged back to the middle ages.
The notion free health care for the under 6’s should equally be distributed to those who can well afford to pay for this strikes at incompetence of ludicrous proportions in a society that cannot provide hospital beds only trollies.
Along with Irish Water, the abysmal failure to address mortgage arrears, extortion of those on variable rate mortgages, absurd efforts to abolish the Junior Cert, and current proposals to hide the IBRC investigation under the umbrella of a commission of investigation they hopefully will anaesthesise the downside of negative findings of political incompetence, the mess grows by the day.
FG/LB have ensured the investigation will not be brought into the Public arena with no danger of the PAC getting hold of it as they did with the charities. Dirty washing will only be done in private.
Property mess, notices of intent to startup have dropped by up to 25% this month in Dublin due to the Central Bank’s loading of 20% deposit requirements for first time mortgages in spite of rearguard action to soften this blow to first time house buyers.
Huge landmarks of zoned land in Dublin are sat on by developers tax free in spite of emergency requirements to address homelessness and increase stock of available housing to avoid rentier and bank mortgage scalping.
Environment minister Kelly and Junior minister Nash have just circulated a document to local authorities in Dublin requesting that regulations on builders be softened to avoid impacting developers in such a way they may be deterred from constructing houses. I kid you not. Regulations eg such as minimum insulation standards. All this coming from Celtic tiger years where sub standard housing was built all over Dublin city.
Over 400 Clery’s workers given 30 minutes to vacate the premises with summary notice of liquidation and loss of their jobs, with many more feeder jobs from suppliers to be lost, no sign of blinkered Richard Bruton or Enda Kenny, hidden from it all.
June 2, 2015
Oligarchs threaten Irish democracy
In contrast to the extortionate rates of interest handed out to Irish variable rate mortgage holders, Dennis O ‘Brien has managed a more favourable deal perhaps under threat of withdrawing his money from Irish banks. But first:
“Last night German Chancellor Angela Merkel held an unscheduled emergency meeting in Berlin with Greece’s creditors. In addition to Merkel, Francois Hollande and Jean-Claude Juncker, the IMF’s Christine Lagarde and ECB’s Mario Draghi were also in attendance.
According to the Guardian, The meeting took place from around 9.30pm until midnight, and though rumours spread that concessions would be agreed, the commission paper drawn up offered none.
Concurrently, a cabinet meeting was held in Athens and a “comprehensive proposal” sent to Greece’s creditors. Prime Minister Alexis Tsipras says it contains specific, realistic proposals, and that the decision on agreement now rests on European leaders, as Greece has conceded enough already.
Today various members of the SYRIZA government have been re-iterating that position – that they will not accept further austerity measures.”
This issue flagged repeatedly and most recently here on last blog, is about to reach final endgame.
“Over in Athens, the minister of state Nikos Pappas has also racheted up the pressure this afternoon describing the proposal the Greek government has made as “complete, unified and solid,” reports our correspondent Helena Smith.”
This will have profound ramifications for the future of the EU. Key differences exist between the reforms proposed by the ECB and those proposed by the Greek government.
While relegating this story to the side line meanwhile RTE have other irons in the fire.
It’s all about Dennis O Brien and his challenge to the Oireachtas. At its heart is O’Brien’s argument that his banking affairs are private and his right to privacy trumps any effort by the state to investigate the affairs of IBRC or indeed any of his business dealings.
Right to privacy, commercial sensitivity have led to a rash of laws protecting NAMA’s right to cloak itself in secrecy.
O Brien has threatened to remove his assets held in Irish banks and like Bono take all his banking offshore….
Transparency and accountability have been to the fore in what this blog has called for investigating the fallout of Ireland’s financial collapse and bailout 2008-10.
In their place we have had obfuscation and coverup culminating in the mea culpa dirges sung by those before our so-called banking inquiry acknowledging mistakes were made and apologising if the complainant/defendant had any inadvertent role in same.
This blog has argued for an approach to follow the money investigating the 10 highest developer deals. Sadly developers and bankers trumpeting their right to privacy have tooth and nail like O Brien fought to prevent such examination of their ‘private’ banking affairs.
Contrast this position with the €67bn bailout of the Irish banks by Irish taxpayers whose right to investigate the banking collapse and vindicate their rights with criminal proceedings to prosecute wrong doing if required.
If no crime committed, there should be nothing to hide. There again if you consider it a crime that taxpayers were left to bail out a collapsed economy, they are deserving of knowing what exactly they are paying for.
If bonuses, brown paper bags, political influence, incompetence, under the table deals, skull duggery of whatever guise were the cause of collapse, taxpapers right to know trumps the rights of criminal concealment of crimes if committed.
To make this judgement we need to root out any wrongdoing hiding under false claims to right to privacy. With banking collapse normal banking claims to right to privacy are absurd if they cover up wrongdoing.
FG/LB and FF government have signally been remiss in changing the constitution to enable legislation if required to trawl through the records of financial affairs that led to banking collapse. See Deputy Catherine Murphy’s proposal to end this debacle below.
Collusion with bankers and developers is an extraordinary feature of this present government culminating in the appointment of KPMG to investigate IBRC and hounding of those who seek to get at the truth.
The O’ Brien saga cuts to the root of the problems that led to the ill-fated Celtic Tiger marriage of developers and politicians with bankers.
The O’ Brien saga if anything shows where we really should be looking to see the roots of Ireland’s financial collapse.
Siteserv deal or selling off by NAMA to bottom feeding vulture funds of discounted state assets, should warrant open public inquiry. This is in contrast to ludicrous KPMG inquiry of the fox investigating the missing hens.
A real inquiry into our banking collapse should be enabled by constitutional changes re right to property. Such rights should be forfeit if proven to hide criminal wrongdoing or corruption favouritism given to political and/or developer oligarchs.
If such a right is shown not to serve the public interest, but to serve only the interest of eg developer barons looting this economy as tax exiles, emergency legislation to examine the private financial affairs of developers and bankers, should make way for proper banking inquiry.
Squeals from O Brien show we are on the right track on investigation of shenanigans where the right to privacy is invoked over the right to free speech, what is in the US called the First Amendment.
“COMPTROLLER AND AUDITOR GENERAL (AMENDMENT) BILL 2015: FIRST STAGE
- That leave be granted to introduce a Bill entitled an Act to amend the Comptroller and Auditor General (Amendment) Act 1993 in order to make an addition to the First Schedule, to expand the areas under which an examination under section 9 may be conducted, and to provide for related matters.
The Comptroller and Auditor General (Amendment) Bill 2015 proposes to extend the functions and powers of the Comptroller and Auditor General to cover IBRC. It was the Taoiseach who first suggested that the Comptroller and Auditor General review the Siteserv sale process at which time it was pointed out to him that the IBRC does not come within the Comptroller and Auditor General’s remit. With this Bill, I am attempting to address that problem by broadening the remit of the Comptroller and Auditor General. The reason I anticipate the need to involve the Comptroller and Auditor General, if not a full commission of inquiry which latter might well be a better option, is that the Government has got this matter badly wrong. That is not least because most of the key players in the Siteserv saga have links with KPMG and the eventual purchaser and vice versa. It is a web of connections and conflicts that requires outside eyes to unravel.
I have no doubt that the special liquidator is more than capable of carrying out such a review, but his direct involvement in the sale process, his relationship with the eventual purchaser of Siteserv and his current actions in the High Court in supporting Mr. Denis O’Brien against RTE place him in a position where there is, at the very least, a perceived if not an actual conflict of interest. The review is not confined to Siteserv, but that is the transaction that prompted a review in the first instance. I worry about the transactions that have been excluded from the review given what that we now know that in the final months before prom night, the relationship between the Department and IBRC had completely broken down. If deals were being done without the knowledge or input of the Minister, we must know what those were. We are now aware, for example, that the former CEO of IBRC made verbal agreements with Denis O’Brien to allow him to extend the terms of his already expired loans. We also know that the verbal agreement was never escalated to the credit committee for approval. I am led to believe and would welcome clarification by the Minister that the rates applicable to the extension were extremely favourable. I understand that Mr. O’Brien was enjoying a rate of approximately 1.25% when IBRC could, and arguably should, have been charging 7.5%. Given that we are talking about outstanding sums of upwards of €500 million, the interest rate applied is not an insignificant issue for the public interest. We also know that Denis O’Brien felt confident enough in his dealings with IBRC that he could write to Kieran Wallace, the special liquidator, to demand that the same favourable terms extended to him by way of a verbal agreement be continued. We now have Kieran Wallace, who has been appointed by the Government to conduct the IBRC review, joining with IBRC and Denis O’Brien in the High Court to seek to injunct the information I have outlined from coming into the public domain. Surely, that alone represents a conflict.
In documents released to me under freedom of information, the Minister, his officials, the Central Bank and even the troika acknowledge that IBRC – the former Anglo Irish Bank – is no ordinary bank and that there is a significant public interest as the bank was fully nationalised and was in wind-down mode. They all accept that this is the people’s money we are dealing with and that there can be no dispute regarding the public interest in this. The same materials obtained under freedom of information detail instances where the Minister can specifically intervene and issue a ministerial order that material matters have a significant public interest. Included in these material matters are instances that are outside the ordinary course of business. I argue that what I have outlined here regarding verbal deals and extensions etc. are outside the normal course of business and ask the Minister to exercise his right to intervene in the current proceedings to defend the public interest.
I have a motion on the Order Paper signed by the majority of Opposition Members calling for a debate on the proposed review. I note that 45 Members have signed and more are welcome to. When I tried to raise the matter on the Order of Business, I was silenced and told to take it up with my Whip. I am the Whip of the Technical Group and I had raised the matter at the weekly Whips’ meeting. The Government Chief Whip told me that the Government would not be altering the KPMG review and that it would not provide time to debate this issue. He suggested that we use Private Members’ time. This is not just an Opposition issue; it is an issue for the whole House. It is an issue of serious public concern involving public money. If the Minister opposite, Deputy Paschal Donohoe, got his hands on an extra €20 million, he would not have to think too hard about how to spend it. I urge the Government to reconsider this matter and to give the Bill and the motion the time they deserve. It is in the public interest to do so. ”
May 14, 2015
Spurred on by low-interest rates coupled with the expansion of the money supply through QE in Japan, Europe and US, inflation is looming. Savings and long-term capital investment are parked and replaced with speculative, short-term borrowing. So far inflation has confined itself to stock markets, both Janet Yellen head of the FED and Christine Lagarde at the head of IMF, are both worried. They should be.
Banks and governments on bond buying sprees see more money to be made at the casino of the stock markets, than productive investment in the real economy on austerity shakedown.
Bubbles are required to support the fungible inflation of stock prices and to keep real economy and the shadow economy in business.
In Ireland, the real economy has been pillaged and looted replaced by a virtual financial services driven economy dictated by banks, government economic management committee, IMF and ECB and European Commission. Health care and education are under real attack and declines in services becoming more pronounced.
Developing in Orwellian Big Brother fashion Europe gains day by day more of the features of the defunct USSR in its relationship to satellite states with shots called by Germany leading inner core nations against outer core interests.
The lofty pricing model of property during Celtic Tiger years is being kept in place by banks and financial institutions to protect their asset base.
Shortages induced by NAMA and lack of investment in construction through induced shortages, has falsely inflated property prices. If property prices drop, lending institutions on a knife edge regarding the servicing of their lending into the economy, face danger of default.
Banks now depend on a false bubble in the housing market!
The real economy with resources and assets siphoned out to pay eg extortionate variable rate interest rates and service unsustainable lending, is victim of the bubble.
Young people are priced out of the prospect of owning their own home. The future is ill- omened with imminent prospect of vulture fund acquisition of large housing stock and future extortionate rental rates driving serfs to emigrate.
In the US PE price of stock by valuations by share continue to rise to bubble levels.
According to Robert Schiller of Yale, stocks are very overvalued (markets extremely overvalued). Currently US stock market should be 50% of the size of the economy instead it is valued over 150-180%.
Margin debt, the economy divided by the amount people have borrowed to bet on stocks and shares, as percentage of the real economy, is at an all time high. Internals are weakening eg earnings are lower. Middle class is disappearing as wealth is more and more funnelled upwards where it lies dormant and unproductive. Unless spent on financial paper bubbles.
So far the shadow economy of derivatives has fuelled an internet bubble, and fuelled the 2008 crash. An ineffective Dodd Frank pr stunt has failed to curb excesses of the financial services industry through lack of regulation, QE has provided more fuel for the shadow economy dragon, to create more bubbles of fire.
Since 1970 the derivatives industry and the shadow banking economy have grown to estimated $1.2 quadrillion: 20 times the size of the world economy. Its estimated that the world’s annual gross domestic product is between $50 trillion and $60 trillion..
2008 Lehman’s was a bank scapegoat for problems in the financial services industry. The Wall Street Crash of 2008 was executed by Lehman’s. But the real cause exploited by Lehman’s was lack of regulation. Remove opportunity and end the crime.
Bloating TBTF banking, burgeoning, bubbling. smoking, fire spitting dragon of unregulated out of control bush fires of the derivatives market, controlling, manipulating the shares market, welcome to Casino investment banking.
Instead of tackling the dragon, through austerity taxpayers are sacrificed to it; its worst excesses are refuelled to generate more havoc.
Lack of regulation of investment banking stocks and gambling in shares led to the market crash of 1929. We are heading there again.
The problem is lack of regulation of the financial services industry now overwhelming the real economy to the point where we no longer have a real economy, but a virtual one driven by virtual paper.
This is leading to a currency crisis. Triggers are in place. In Europe we have not only a Lehman’s, Greece, but we have sub prime lending and a bankrupt country whose extend and pretend prospects fast running out.
Forget all this ‘improving competitiveness’ emanating from EU and Central Banks across the world. Its only a mask for austerity and a cover to conceal the real problems effecting the global economy. If you want to improve competitiveness, dismantle the shadow economy and its financial services industry. Strict regulation of a gold standard to bring about stability and real growth.
Brexit and Grexit loom prospecting imminent financial collapse of the euro under Europe’s QE race to hyperinflation. Germany should know better.
Werner Hoyer President of the EIB in an introduction to the European Investment Bank paper, begins well:
“Europe’s competitiveness and long-term, sustainable growth potential suffer from a history of underinvestment in important areas, inefficient and fragmented financial markets, and institutional barriers. Seven years of crisis have undermined confidence, lowered aggregate investment, and further aggravated structural investment gaps. At the same time, limited fiscal space and the necessary regulatory response to the banking crisis are significantly limiting the ability of Member States and the European banking sector to take risks and catalyse valuable investment. ”
Thereafter, the paper rolls out a call to action with significant investment in key areas. But this paper fails to address the matter of problematic financial markets. Perhaps its been redacted.
The geopolitical interests of certain dominant inner core members at expense of the interests of outer core members, lets not delve into who will get the lions share of such investment.
Over and over we get these pious declarations of intent to fix financial markets, but nothing concrete emerges.
Problems in the euro area are not due to under investment, nor will they be solved by over investment.
Problems are due to ‘ limited fiscal space and the necessary regulatory response to the banking crisis are significantly limiting the ability of Member States and the European banking sector to take risks and catalyse valuable investment ‘
Throwing money at the problem of under investment won’t cure the problem. The above paper names the problem but does not address it.
Let me try to put back and catalyse into that paper a missing chapter.
Both Janet Ellen and Nobel Laureat Schiller are aware of the problem. Stocks are overpriced. Property markets are overpriced.
Eventually this bubble in stock market pricing will turn into a bear market that will have to be controlled by a new financial formula to replace the low interest rate and QE formula that has led to the present bubble in stocks and property prices.
This may end in a global currency crash if matters continue to deteriorate as they have so far.
Low interest rates or negative interest rates cannot last forever.
Market forces will eventually exert gravitational pull on bubbles bursting them. QE has generated bubbles, little else.
Grexit is one such bubble waiting to be cauterised. Its origin lies in the design of the euro itself with self regulation the norm. Its domino effect can bring the house down. For Greeks the choice is between accepting dictatorial austerity or some form of proto Icelandic Grexit.
Both these Hobson choices have an extremely negative side for the euro.
Future of the euro is on the table. Excision of the whole systemic economic failure of the euro, should be on the cards.
Failure to unwind the problems that have given rise to Grexit and Ireland’s massive default, should be of grave concern.
Lower interest rates and tax cuts wreaked havoc in Europe in the years following its inception when stability and growth pacts were watered down if not totally ignored:
“While the latest reforms go in the right direction, it is far from clear whether they will be sufficient to ensure sound fiscal policies. The envisaged common approach to stronger domestic fiscal rules is insufficient, and it is unclear whether countries will make meaningful changes to domestic arrangements. Under the preventive arm of the revised framework, the monitoring of expenditure will probably play only a secondary role. The proposed stronger focus on developments in government debt under the corrective arm is welcome, but the precise nature of the debt rule raises doubts as to its effectiveness. It is also questionable whether the changes adopted in order to strengthen statistical governance will be sufficient to prevent misreporting in the future, as experienced especially by Greece. Most importantly, the new provisions still leave a considerable degree of administrative and political discretion at each stage of the process. All in all, the changes envisaged do not represent the “quantum leap” in the euro area’s fiscal surveillance which is necessary to ensure its stability and smooth functioning.” (note this from 2011…no real progress since then)
As the real economy declines due to massive private and public over borrowing, the prospect of massive unwinding and fallout whether through sub prime lending collapse, or massive default in Grexit, looms.
Debt is the modern dragon stalking the land and burning all before it.
Problems besetting the eurozone in the past have now been repeated with QE. Massive government bond buying programme inflating the money supply can only encourage irresponsibility making governments prone to throwing financial investment down the drain as eg in Ireland’s ill judged and disastrous Irish Water setup disaster for Irish taxpayers.
To stimulate the US economy trillions were thrown at banks and financial institutions hoping to kickstart the economy and save it from depression. Many argue the experiment has been a success but results are not in and omens not good. Now the eurozone has joined the party printing money hoping to kickstart economic growth. Japan and UK have already gone down this route.
“A remarkable consistency among the monetary expansion policies of all four central banks is that while all measures led to sharp increases in the monetary base, none led to sharp increases in broader monetary aggregates (see Figure 4). The broader aggregates did not increase because banks voluntarily held the increased monetary base as bank reserves—safe, liquid assets in high demand during periods of economic uncertainty”
“For example, this article details the circumstances under which the ECB and BOJ generously lent money to banks to inject reserves into their bank-centric economies, but the Fed and BOE injected reserves into the U.S. and U.K. economies by purchasing bonds.” The question of the retrospective capitalisation of Irish banks and failure to qualify for such lending to pay for the loss suffered by taxpayers re Anglo is a failure of government that will not be dealt with here.
The experiment has led to the curious anomalous rich growing richer while the poor urged to competitiveness under the flag of austerity have grown poorer.
Stocks and shares in a bull market have hit astronomic heights while at the same time market share, purchasing power in an indebted population have decreased. This shows the financialisation of the global market place has become out of kilter with the real market place. Anxious remarks of Christine Lagarde to Janet Ellen regarding the policy of the Fed to lower interest rates leading to stock market bubbles….
How are we doing locally here in Ireland. Well, banks have returned to profit by raiding those unfortunate enough to have been fleeced and forced to take out a variable rate mortgage with them over the past number of years. Banks borrow from ECB at 2% approx and lend out at 100% profit to fleeced property owners.
Are banks lending into the real economy, no!
Money that could be spent in the local economy is sucked from the banks out of the domestic economy to pour into the black hole of bank losses.
Absurd rents, high value property, fears by banks the bull run is over and they won’t lend for such prices! How could they, with high rents how can young couples save 20% of €400,000 which is €80,000 and pay back an extortionate mortgage set at 4.7% interest rates with nothing left over to be spent in the real economy. This so-called real economy becomes more absurd by the day.
You guessed it, the financial system we live under has turned into a crazy bubble in need of immediate lancing. Financial sector want it fuelled.
It needs to be lanced before further damage and political, civil strife ensue.
In Ireland, according to the Irish Times ‘Rich List’, April 26, the Dunne family, owners of the retail chain, have entered the billionaires club. This must be on foot of their zero hour contracts provoking mass strike action from its workers. Even pilots at Ryanair are on these infamous contracts that profit at expense of uncertainty and exploitation of their victims.
Its clear fallout from 2007-9 and Ireland’s financial crash has meant the buck to pay for it has successfully been transferred off the shoulders of the rich via austerity onto the shoulders of the poor. We are not alone in such trends.
Steps to even the balance however small need to be taken. One small step would be to legislate against tax exiles who exploit laws to have dual residency via off shore accounts and Ireland. Figures like Dennis O Brien and Bono avoid Irish taxes because of their tax exile status while sick people cannot obtain a hospital bed in an evermore compromised Irish hospital system.
Such tax exiles should have their passports removed and be forced to pay taxes in their country of real domicile. A government tax strategy group has recommended: “there should be a “place of abode” test and a “centre of vital interest” test, According to the report, this would mean taxing individuals based on where their main economic activity is rather than where they reside.
A judgement based on a percentile measurement of what weight to give to “place of abode” and “centre of vital interest” should be made by Irish tax authorities. Those who flout such laws should have their passports removed and exiled.
This would prevent exploitation and looting of economies to serve the interests of the rich. It would criminalise such activities.
The question is can an economy re-engineer itself from the ground up to pay back its debts and not impose severe and growing austerity on its citizens.
Curiously there are no plans available for public scrutiny of such plans see below. Indeed. eurozone leaders have been adamant Greece must produce such plans fortwith, but still we have none. We do not know the detail of what austerity measures are being considered.
On the one hand, there is a tiered society with insiders holding the reins of power who do not want to lose their position. On the other hand, there is the squeezed middle who cannot give anymore. There is also the growing numbers of the severely impoverished.
Some argue it may be the time for Greece to remove itself from the EU and negotiate a better deal with its debtors. The benefits of such a deal are autonomy vs growing Big Brother control of the economy led by the troika. Time for Greece to do an Iceland.
Repercussions of a Grexit could be huge. Bond yields, negative interest rates, massive default … Will a Greek exist burst the current global bubble?
Big Brother of financial interests is growing more autocratic and dictatorial by the day:
“Greece’s dire financial position is forcing euro zone authorities to look beyond
Mr Varoufakis to Alexis Tsipras, prime minister, much like in February when Jeroen Dijsselbloem, the Dutch finance minister who chairs the Eurogroup, brokered an extension of the current bailout programme.”
“According to two eurozone officials, Mr Dijsselbloem phoned Mr Tsipras from Riga in an effort to mend fences after Friday’s feisty eurogroup meeting, where Mr Varoufakis was rounded on by his eurozone colleagues.
In a sign that Mr Varoufakis’s combative approach is prompting concern in Greece as well, a senior Athens official said the Riga meeting was likely to lead to him being sidelined as Mr Tsipras and his deputy Yannis Dragasakis take a more hands-on role.
Amid the acrimony, differences over a new list of reforms that is to be agreed by Athens were barely discussed at the meeting, putting off indefinitely a deal to unlock access to the funds left from Greece’s €172bn bailout.”
“All the ministers told [Mr Varoufakis]: this cannot go on,” said Luis de Guindos, Spain’s finance minister.”
In such a situation calls to competitiveness are a hoax. Some debts cannot be repaid.
Lancing of global financial markets and decoupling of banks and financial services interests from politics with politicians willing to tackle the dragon required.
Financial markets are rumbled and they must be fixed. The growing threat posed by derivatives and the shadow banking sector need to be fixed. The world economy needs more sustainability than that provided by bubbles.
We do not even have proposals on the table from a global currency think tank to examine and report on problems in the global economy.
Perhaps Greece will be in Grexit the dose of reality that will cure the real problems in financial markets.
If not Grexit, then Euxit followed by a global currency run by Big Brother.
With zero interest rates and tax on any remaining money, its hide your money under the mattress time again. At least until hyperinflation hits.
Turns out you are not one of the inner circle unless you have appeared at the Banking Inquiry, did your Mea Culpa, and bounced through the limpid questioning with the requisite, prepared, obfuscations and denial of responsibility.
Perhaps more political show casing and hand washing can be avoided if the committee contain themselves to just one question:
“Do you know who put forward the proposal of ‘The Guarantee’.
Has that question ever been asked of anyone before the banking inquiry?
April 25, 2015
Mr Dukes on the Business programme RTE Saturday 25.04.15 was expressing anger that Dept of Finance officials had ample
opportunity on a monthly basis to express any concerns they had re the Sitserv sell off by IBRC.
It has emerged recently that Dept of Finance officials had grave concerns re the fire sale sell off of Siteserv to Dennis O Brien. Eight companies had expressed interest in the sale. This was whittled down by IBRC to three.
Better late than never!
According to Dukes, there was a history of conflict between Finance and IBRC based on distinction between day-to-day running of a programme of deleveraging sell off of IBRC assets to yield maximum return to the state and ‘overall policy’ informing such sales.
This blog has highlighted on many occasions re the banking inquiry: it has largely become compromised due to its remit of confinement to the latter concentration on policy alone, rather than minute investigation of key transactions, each witness before the inquiry sings their own song of rueful abstract meaninglessness.
Dept of Finance officials had many concerns related to the specific details recording the sale of Siteserv.
Dukes was unhappy that DoF officials wanted to engage at the level of control related to ongoing day-to-day management of this transaction.
Siteserv was sold to Denis O’Brien-owned Millington by the Irish Bank Resolution Corporation (IBRC, formerly Anglo Irish Bank) in 2012 for €45 million.
Siteserv provides a wide range of services to public and private companies, such as scaffolding for construction projects and the installation of satellite TV boxes.
Businessman Denis O’Brien took possession of the company that won the contract to install meters for Irish Water.
One of the points a full independent inquiry could investigate, is whether Siteserv knew in advance of the likelihood or not of the awarding of such contracts.
IBRC had given Siteserv a loan of €150 million, meaning the bank wrote off €105 million and the State got back less than €45 million. At the same time, shareholders were paid €5 million.
According to Walter Hobbs (
“Walter Hobbs says the initial bid from Denis O’Brien was the highest, while others had multiple terms and conditions”
Ignoring the claims by Mr Hobbs let’s not suspend our disbelief and follow his view that the €45ml on the table by Millington, an O’Brien subsidiary, was the best offer and that failing to accept it risked the taxpayer getting nothing back.
Any estate agent worth his salt would delight in eight companies interested in a house for sale. Incredibly, Hobbs who was managing the sale:
“He said he believed the higher bid that came in from the French company Altrad was designed to disrupt the bidding process, because of competitive concerns that the company had.
Mr Hobbs said initially the bid from Denis O’Brien was the highest and was accompanied by a three-page letter, while other offers had multiple terms and conditions attached to them.”
Let’s set the scene for this Jacobean farce.
By now you may have questioned my analogy to a sale of a house by an estate agent. You know those in negative equity in dispute with banks do not get similar write downs and kickbacks when the sale of their house goes through.
Instead they are likely to suffer eviction and have their assets seized. Not so these shareholders.
These companies were sold in a loosely regulatory business friendly and taxpayer hostile world.
Extraordinary powers were exercised by Hobbs and his team making judgement calls when no interference should have been allowed to steam roll potential bidders off the scene .
Rules of engagement mean different strokes for such folks:
Hobbs had a remit of returning to the taxpayer as much of the €150 ml loan losses incurred by IBRC in its lending to Siteserv.
In this farce eight interested parties appeared on stage and immediately 5 sent packing.
Dubiously Hobbs notes:
“Mr Hobbs said a number of other bidders were excluded because of the nature of the Siteserv business.”
Firewalls can be put in place if a company requests specific information and withdraws because it has not acquired that information.
It should have been a company decision to withdraw, not Mr Hobbs’ decision.
The absurd idea that Mr Hobbs should decide to exclude interested parties based on his biased preferences, is anathema to best practice and should be considered grounds for investigation.
The irony is the above is standard business practice. Its as anathema as gazumping meaning there is one rule book for Joe citizen, another for cosy insiders.
It gets more absurd: “He said he believed the higher bid that came in from the French company Altrad was designed to disrupt the bidding process, because of competitive concerns that the company had.”
There is enough prima facia evidence to contradict Hobbs and believe the opposite: that Hobbs feared Altrad was disruptive of Hobbs bid to accept a lower offer from Millington.
Let’s set the scene for what should have happened:
1. All bidders should have been invited to bid at auction with a reasonable time ceiling of eg weeks/months to conclude a deal.
2. All bidders should have been made aware of each other’s bids.
3. All bidders should have been allowed to raise their stake to compete for the sale.
4. A contract of sale should have been awarded to the highest bidder subject to the lodgement of payment.
5. All bidders should have similar information with agreed protocols on information/data sent to bidders.
6. All documents and video evidence related to the above should have been logged and minuted and made available to Dept Finance in exercise of due diligence on behalf of taxpayers.
Are there other matters that should concern a proper independent investigation of Siteserv sell off by IBRC?
Davy Stockbrokers and Arthur Cox solicitors acted for both sides.
Dare you imagine there could be a conflict of interest here? Forget about Chinese Walls for a moment.
Let’s just consider the fact that IBRC and Millington, O’Brien’s company, were aware that their firms acted for both sides.
There could be a tendency there to maximise profit for the legal side and the broker side, to keep the deal inhouse so to speak?
Where incompetence ends and malpractice begins is a matter for investigators. Other questions need to be raised and further investigated independently in a process not hobbled and compromised by conflicts of interest.
There are lessons to be learned. Alarming business practices are accepted as normal. They feather the beds of an elite insider group who want to play the game inhouse.
These business practices, none the least in the manner the way affairs relating to the disposal of taxpayer assets, need reappraisal and change.
Perhaps taxpayers through DoF need to hire special units with expertise in white-collar crime with powers to oversee and investigate day-to-day business of a dubious kind.
Were these sales rushed, was the bottom line getting a sale in a given period over maximising profit in itself a gift to incompetence over expertise. Or was malpractice involved?
Should different protocols regarding sale of such assets be followed in the future?
Should there be a cooling off period of 5-10yrs before ex politicians are allowed to pursue further careers in banking?
Was undue haste the prime motivator behind such sell-offs with Dukes extolling the virtues of successful completion of all sales by 2016-2018.
Such matters need to be investigated in an open and impartial manner by special investigators hired by Dept of Finance to exercise expertise and due prudence on behalf of taxpayers.
The wild west of loose business practices and cosy cartel banking needs to be brought to heel by DoF on behalf of all taxpayers.
This was a rigged game with flawed and broken rules perpetuated by a cosy cartel of insiders feathering their own nests.
No change there.
April 12, 2015
We should give praise for the existence of Irish Water. Given the amount of public opposition to its inception and continuing existence any political party supporting it should deservedly be called the Lemming Party in terms of its political chances for re-election. At least it ensures the present incumbents will not be re-elected
No doubt the troika when it was first mooted by Enda Kenny would have cannily supported the notion of a device that would take water out of the Irish deficit spending contingency fund thereby allowing such funds to flow more freely to bondholders.
Common sense should have warned the Irish electorate were not in mind to waste valuable resources on a quango that was built to make a mess bigger on their tab.
We recall in 2011:
“Charles Dallara, managing director of the Institute of International Finance, a Washington-based trade group that represents the world’s largest banks, said the group would work with Greece, euro-zone authorities and the International Monetary Fund to develop a concrete, voluntary agreement that should set the basis for a decline in Greece’s debt to GDP ratio to 120% by 2020.
“The specific terms and conditions of the voluntary [private-sector involvement] will be agreed by all relevant parties in the coming period and implemented with immediacy and force,” Dallara said, in a statement. “The structure of the new Greek claims will need to be based on terms and conditions that ensure [a net present value] loss for investors fully consistent with a voluntary agreement.””
In a disastrous move Irish authorities in 2008 decided on a bank guarantee that brought the Irish state to the brink of insolvency. Compounding the idiocy the Irish state went on to assume ownership of a €67bn bailout whose terms in odious and penal interest rates were radically worse than those offered to Greece and Portugal.
Some amelioration of rates subsequently were watered down in amortization of a promissory note €30bn for Anglo-Irish Bank and other extend and pretend legally enforceable Irish coupon clippings.
Instead of lobbying to vindicate rights to a voluntary agreement requiring debt burden sharing among senior bondholders, Irish authorities never even fought this battle instead insisting with its opponents that such losses to be levied on bondholders, were unacceptable!
It could be argued that the wealthiest section of the Irish financial world agreed to rigorous austerity for the electorate in return for special privileges protecting their wealth. Indeed evidence is there that the dichotomy between rich and poor in Irish society has grown since 2008 with greatest burden of austerity falling onto the shoulders of the poor.
You might wonder that a plethora of means to address the tsunami of a possible 50,000 Irish mortgages in arrears with upwards of 30,000 homes facing repossession, would focus and address this crisis in a meaningful way. You would be wrong. Instead we find an industrial army of professionals working through individual cases based on rules of divide and conquer extraction of resources from already burdened borrowers.
One measure imposed by the banks is extortionate interests rates of 4.5% imposed on Irish variable rate borrowers who are managing to pay back their borrowings, that compared to comparable rates of 2.5% provided by banks in other European countries giving them a healthy return on their Central Bank borrowings of less than 1%. On €250,000 average mortgage for some borrowers means they are paying in excess of €6000 margin over what their counterparts in Europe have to pay.
Did I mention rocketing rental rates in Dublin and countrywide because of a housing shortage when we have vast numbers of builders unemployed but willing to contribute their resources to growing our economy.
Banks oppose construction and release of the Nama stockpiles because it would lead to falling asset prices. The anomaly of austerity induced restricted lending practices created by banks and financial institutions further eroding economic development, but adding to their bottom line as they gain from the uptick as well as the down swing, ponder.
The Irish economy is in a state of chassis. Perhaps the credit union movement can mobilise and create its own public state bank to provide competition against the worst excess of banking bad practices.
The case for a single best case scenario solution ameliorating the problems for the individual and society would appear to be compelling.
“The Icelandic debt relief programme.
From Iceland, we have reports of a governmental mortgage debt relief programme which would involve the write-off of €24,000 from individual household mortgages at a reported cost of around €1.2 Billion. The government contends that the measure will enhance households’ disposable income and thereby “kick-start” the economy by boosting the capacity of consumers to spend. The measure, which has a political dimension to it (it is reported to be a pre-election commitment from parties now forming the Government), has been criticised by international institutions such as the IMF and the OECD on the basis that it will negatively impact on the economy, on government debt and on the ability of Iceland to attract foreign investment. ”
“The government said it would finance the measure through tax hikes on financial institutions and a haircut on around $4 billion in debts owed to overseas investors in Iceland’s failed banks, which collapsed in late 2008.”
Haircuts to troika bailout to pay for a similar exercise in Ireland are not being considered. Instead of which we have a myriad of competing solutions competing to waste time and expense while causing the most amount of stress to borrowers.
Government will of course deny any of this is true pointing to Ireland’s alleged recovery.
A falling unemployment rate based on the quick sand of dodgy statistics that do not take forced emigration into account or the abuse of zero hour contracts amounting to hard to fathom phantom jobs in, for example, the Jobbridge programme where internships amount to free labour in private companies and in state public services, all together make idiots of us all.
There is of course a rump of financial services consultants, bankers and politicians and an army of legal paper merchants doing very well out of this delusional mess.
“New waiting list figures from the National Treatment Purchase Fund show there were over 405,000 people waiting to be seen at an outpatient clinic for the first time at the end of March.
The number of adults and children waiting for a day-case or inpatient treatment is also up to 66,800.
A contributory factor is emergency department overcrowding, which has led to cancelled planned operations.”
Another contributory factor is the diversion of resources from hospital wards to deal with the crisis of patients on trolleys who await a hospital bed numbers reaching over 600 on one day in January last.
You would imagine all available resources to manage such a situation could be marshalled at once to bring down such terrible waiting lists.
Instead we have a proposal to provide free universal healthcare for the under 6’s. As an anxious parent myself having raised four children through the early years, it took some discipline coupled with experience to avoid taking each of my under 6’s to the doctor on every occasion they looked pale before a Winter cold.
That problem should inundate GP’s with unnecessary visits. With medical cards being refused for 7yr olds with a diagnosis of cancer, we are not only required to suspend our disbelief at the scheme, we need to be total idiots and abandon all common sense.
You would think education could be spared. Huge cutbacks in research funding in Irish universities mean continuing loss of jobs and negative impact on further research for PhD programmes and further drops in standards.
At second level under the mask of reform comes a proposal to scrap the Junior Certificate and remove regulation and erode objective standards in Irish Education. Proposals exist to have teachers set the examinations and correct them thus taking away real-time for actually teaching children.
To have teachers correct public examinations set for their pupils would appear to be ridiculous? But teachers set examinations and homework on a regular basis.
However, the thought of exposing teachers to parent/pupil pressure and face retribution from schools and principals hiding poor results, bias, makes no sense. But this is the educational currency of the moment, folks. Defies belief until you find hidden cost cutting measures and austerity at its root.
Teaching standards are further eroded with a plethora of part-time teachers providing lack of continuity for students and lack of security and stability for the future of this teaching cohort.
Yesterday, Eamon Lillis, a convicted wife killer, walked free having inherited well over 1 million € from properties jointly owned with his wife. He spent 5 yrs in prison for this crime. The legal profession have known for 5 yrs he would walk free and inherit the results of his crime.
“The Law Reform Commission is looking at whether judges should have the discretion to decide a killer’s entitlement to property jointly held with the victim, such as in domestic violence cases.”
I kid you not, they are still looking at it.
“Senator Quinn”, according to Maeve Sheehan, Irish Independent, p5, 12 April 2015:
“His succession (Amendment) Bill 2015 proposes that where one joint tenant kills another, not only would the offender have no entitlement to the victim’s share of the property, he/she won’t be entitled to avail of his or her own share in the property either”
There are another 1000 repossession cases listed for the courts next week. Presumably taxpayers will need to pay for their homeless needs at some point. But no one can pay for the amount of stress they are put under.
The mess is growing bigger and if you can point out an example of any idiotic measures of a political nature, feel free to add it to the comments section.
Don’t be afraid to say ‘The emperor has no cloths on’.
March 23, 2015
Fresh from his return from the USA from which he failed to obtain any substantive deal to benefit difficulties faced by the illegal Irish in the US, Kenny has taken the floor to stamp down on outspoken views of Greek agitators. He is hoping to secure a better deal for Greece.
Not as far as anyone can tell!
Instead of lending support to those working to secure debt write-down, he has taken on the role of the outspoken far right in Germany and in EU. Embarrassed by personal failures to secure debt write-down he claimed was on the cards following June 2012 EU summit, he has taken to the role of court jester in terms of valedictory remarks re Irish bailout rather than Irish sell-out.
How else can you explain antics to denigrate efforts of Greece whose success would help Ireland to vindicate promises of 2012.
Such paradoxes extend further and apply to our economy.
The term ‘Fragile Recovery’ has become a euphemism to claim the economy is not brain-dead and on life support! Lets look at some more of its paradoxes.
Though 80,000 emigrated last year, 30000 jobs allegedly were created.
Unfortunately lies, damn lies and statistics do not break employment statistics down on a job by job basis.
How many of those jobs were vacated by those who’ve had enough of austerity? Most jobs by far created in the Dublin area were ominously in the financial sector. Few jobs created outside Dublin.
A mini property boom in Dublin has generated some jobs alongside jobs in the tourism sector noted for zero contract and low paid if not seasonal work. How many so-called ‘new jobs’ were vacated jobs left behind because of a rising brain drain luring Irish professionals to better paid and better prospects abroad.
Emigration is a boon to the authorities reducing the cost of welfare services. It has become an invisible contributor to the stabilisation of deficit spending by this government. No doubt it plays its part in claims we are growing at a rate of 4% such is its paradox.
Another such paradox or contradiction behind the claims of our fragile recovery is return of a mini property boom in Dublin. catch-22 of claims the economy is returning and the paradoxical fact of property shortages leading to a boom in prices.
Let’s examine the paradox?
Sun Independent, 15 March, p12, Alison Bray: “There are other complex reasons for the plethora of derelict sites in the capital. Some are the subject of disputes over ownership, others have been put into receivership or liquidation or are under the control of the State’s ‘bad bank’, Nama.
You thought the bad bank Anglo had gone away? No, its detritus is hidden away in NAMA far from where the eye can see; but its ill effects are everywhere. Whereas Anglo fed the boom, NAMA is using its control vice mechanics to generate property shortages in Ireland.
This ensures ‘pillar banks’ banks feed upon large loans to fund exorbitant property prices; it allows redundant banks to claim and act on higher than normal asset prices. It even encourages banks to proceed with evictions to oust the 30000 whose mortgages are in deep arrears.
Banks hope to seize these properties and sell them on the NAMA controlled property market. By inducing a housing shortage in refusing to fund Irish property developers who are ready to begin construction as previously reported in this blog and elsewhere, NAMA is only interested in attracting vulture funds it solicits by creating the conditions for a high rental return for these funds.
Activities of NAMA shrouded in secrecy under FOI and by other means, should be investigated and exposed. Young people are being fleeced in post recessionary Ireland with a controlled fraud of high rental returns. Many will never afford entry into property ownership.
Here is a list of Nama properties available for sale on a county by county basis http://www.irishhouses.ie/nama/nama-property-sales-price-list-march12.php
“NAMA is obviously obliged to obtain the highest price possible for the properties it controls and may sell properties by public auction, public tender, private treaty or whatever the normal market practice is for the particular type of property they are selling.
To sum up, if a sales agent has not been appointed (and therefore not yet listed by NAMA), you should deal with the receiver (by email) and they will pass on your contact details to the sales agent. If a sales agent has been appointed, you can deal directly with them.”
Evidence that Nama is tampering with the market using its position to control residential property pricing is worth investigating but hampering such an investigation is the fact Nama is enveloped and cocooned in secrecy laws that would rival those of the CIA or KGB.
This is not new controversy, see
“On the 27th January last Fianna Fail Senator Mark Daly made a series of very serious allegations on Today with Pat Kenny against the National Assets Management Agency (NAMA).
The allegations are as follows:
That NAMA is breaking the law by failing to hold public auctions or competitive tendering for the sale of public assets within its remit.
That NAMA is allowing some properties to be sold back for virtually nothing to the original owners.
That NAMA is facilitating a scam of monumental proportions whereby friends of the original borrowers are putting in false bids for assets thus preventing Irish taxpayers from obtaining the maximum value from the assets.
That the scam is happening wholesale and without any transparency whatsoever.
That the scam, although widely known about within official circles, is being ignored by the authorities.
That within the next six months the best properties will be cherry picked by the ‘scavengers and vultures’ resulting in a very serious loss for Irish taxpayers.”
Lets look at NAMA. Is it the invisible hand of a false recovery for the Irish economy.
A post recession Irish economy should be spending on construction 12% of GDP, it is currently spending only 6%. Why is this incredible fact true? Check out reasons above and feel free to comment below.
Congratulations to the tens of thousands who marched last Saturday to protest against Irish Water missing the Scotland/Irish rugby match and making personal sacrifices to turn up.
They are not convinced by the paradoxical and ludicrous arguments of Minister Alan Kelly in favour of Irish Water and they are determined to rout FG/LB next election. Kelly makes the ludicrous argument of huge infrastructural development projects eg Shannon/Dublin scheme that Irish Water is required to invest in short to medium term.
According to Kelly only Irish Water can make such investments on behalf of the Irish people. Naturally the paper boys with armies of investment consultants and access to international vulture funds lie in wait to provide these lending services.
Marchers against Irish Water including those against Irish Water who’ve been bullied into signing up including the old and the infirm, are not willing to suspend their disbelief at the notion that the repayment of capital investment to pay for the super quango and any further investment, will arrive through increased charges in the future.
Marchers argue that such investment should come out of general taxation.
If Kelly was not such a mindless puppet of the troika or financial overloads who’ve fed him useless advice, he would get off his butt and head to Mario Draghi and the troika to demand a write-down of Ireland’s annual €8bn repayment to its bondholders to pay for the infrastructure of Irish Water. Why not argue for a European grant for a Hoover Dam project for Ireland to help get its economy moving?
Kelly knows about grants. This morning he announced a €250ml (I kid you not hospital trolley watchers) Rural Development programme. He wants the deserted villages to be a key part of the renewal programme. Grants to the rural community come in all shapes and guises. A recent radio programme on rural matters heard one contributor ask that a grant aid be provided to create a shared group of workers for farmers to utilise with training provided.
City dwellers instead get grants taken away through austerity for every disabled group and grants for groups helping to fight drug addiction are starved of funding. There is a rural/city divide. Yet grants for the capitalisation from Europe of Irish Water in spite of the outflow of €8bn a year to bondholders, are off the table for Kelly and Kenny. Another paradox.
Do not suspend your disbelief!
To break the link between the financial services people, the banks and politicians. In particular, the break the power of BAD bank NAMA to control and further ruin this economy,we need to build some good Chinese walls.
First up should be a law that prevents politicians taking up a post with a bank within 5 years of leaving office.
Before that we need to scrutinise the activities of NAMA.
Meanwhile its just been revealed that the amount of building land available for construction in Dublin has been vastly overstated. Perhaps ‘Fragile Recovery’ should be replaced with the term, ‘Controlled Scam’.
March 16, 2015
You think banks tampered with asset prices in Ireland’s property bubble economy that became a dead a dead cat of financial meltdown?
The whole nefarious edifice of 100% mortgages, subprime lending, madcap lending led by the banks, responsibility?
Professor Honahan last week appeared again before the Banking Inquiry. Increasingly looking like Mr Byrnes of the Simpsons he sought to disingenuously disengage from any responsibility in the whole debacle.
At the outset Honahan refers to a letter he wishes to point out would have led to alternative course of action the government might have taken in September 2008. He points out he himself had no involvement in the guarantee decisions, his views are based on the May 2010 report he prepared on his review of financial stability leading into the meltdown.
Honahan criticises the guaranteeing of subordinated debt, draws attention to how the government neutralised its capacity to deal with the subsequent meltdown by being unable to close bad banks because guaranteed loans could not be repaid. He criticises the failure to consult as making it difficult for the government to ask for burden sharing.
But we need him to explore and explain the role of the ECB and the Irish Central Bank in the debacle. Show us documents, evidence of meetings and discussions in what led up to the meltdown. He should though not Governor at the time, have access to archive records and be able to grill his peers?
But he is questioned on none of this!
Honahan reflects on a letter he wrote in Feb to the inquiry in which he speculates on the actual costs if the government in a hindsight scenario if they ‘had been convincingly advised’ of the likely actual magnitude of the costs of the guarantee.
The government had no information at hand indicating the actual likely magnitude of the cost of the guarantee.
Honahan refers to a letter he wrote in Dec 2008 to Brian Lenihan “hard to avoid the conclusion if this reasoning is correct that Anglo is insufficiently capitalised, should be intervened and wound up”.
Note he distances himself from the Irish Central Bank as he was not Governor of the Irish Central Bank at the time but a university professor and an academic.
Honahan also gives the view that without the guarantee ELA (Emergency Liquidity Assistance) could have been extended to the Irish banks by the ECB.
Clearly ELA would have led to a much lower cost to the Irish economy compared to sudden meltdown and collapse. ELA could have stabilised the banks and avoided the odious ‘promissory note’ and odious token interest rates imposed by troika bailout.
For his role in negotiating such odious and penal token interest coupons on Irish debt, his obedient compliance and lack of backbone in negotiating a better deal; for jumping ahead of Brian Lenihan in announcing bailout, he should have been fired. In particular, he should have been fired for his role in laundering the €30bn of Anglo promissory note into long-term bonds sealed by contract the current Irish government laughably claim as having a major part in the saving of €50bn against the total cost of Irish debt.
We are still awaiting the arrival of Enda Kenny’s spreadsheet describing the nature of these savings! It won’t be arriving soon or ever.
Its questionable whether the Banking Inquiry …
“Deputy Pearse Doherty, Senator Sean D. Barrett,
Deputy Joe Higgins, Senator Michael D’Arcy,
Deputy Michael McGrath, Senator Marc MacSharry,
Deputy Eoghan Murphy, Senator Susan O’Keeffe.
Deputy Kieran O’Donnell,
Deputy John Paul Phelan,
DEPUTY CIARÁN LYNCH IN THE CHAIR”
…have the competence to deal with a wily performer of the calibre of Honahan who can jump willy nilly between three roles, Governor of Central Bank, university professor and author of the Honahan report.
We simply need to know 3 things:
1. who proposed the banking guarantee
2. who supported it
3. why is this being covered up?
A more likely source of information helpful to unearthing the answer to such questions should come from the ninth governor of the Central Bank of Ireland
Perhaps Tony Grimes, David Begg, Gerry Danaher, David Doyle, John Dunne,
Jim Farrell, Alan Gray, Brian hillery, Patrick Neary, Deirdre Purcell,
Dermot O’Brien, Brian Halpin, Directors of the Central Bank of Ireland under its Governor, John Hurley, could be individually brought before the Banking Inquiry in closed sessions, to make statements on the role of the Irish Central Bank in its management of the Irish economy and in its relationship with ECB.
Begin with the following piece of rubbish stamping approval on ‘healthy’ Irish banks.
“After a long period of extremely buoyant conditions, global financial markets experienced a substantial adjustment in the second half of 2007 and into 2008. The proximate cause for this correction was the downward valuation of securities linked to sub-prime mortgages in the US. Central Banks responded decisively to counteract this with the ECB in particular taking effective action in the light of the pre-existing arrangements that ensured banks had an extensive range of collateral that could be used to access central bank liquidity through the normal tender process. The Irish financial sector was, of course, impacted like all others by these global developments. Medium- to long-term funding was not as readily available on wholesale markets as had been the case. However, Irish banks have negligible exposure to the sub-prime sector and they remain relatively healthy by the standard measures of capital, profitability and asset quality. ”
We need Hurley and each member of the Board of the Central Bank at that time before the committee to explain how Hurley got this so wrong. What was the effective action taken by the ECB to protect Ireland? What advice re the ‘guarantee’ was given by the Irish Central Bank? Why did it not stop the guarantee and handover to the ECB for ELA? What oversight did it exert in monitoring the Irish banking sector.
How did Hurley and colleagues contribute to the tanking of the Irish economy? How did they allow the ‘Irish guarantee’ become the pawn protecting the knights of European banking in Germany and France and the US; how did they allow Ireland to score the greatest own goal in global financial history?
The banking expertise of members of the Banking Inquiry committee must be questionable. Professional expertise beyond political competence is required to dig deeply into veins of truth and sieve out the answers we need.
March 1, 2015
During the week we had David McWilliams before the banking inquiry:
Good McWilliams gave account of his dire warning re collapse of the housing bubble in Ireland in years leading up to 2008-10. Very bad he advised government on a guarantee however subject to conditions and limitations he meant this to be. Very ugly in hindsight he does not accept what a mistake he made.
According to McWilliams what he advised was a ‘limited guarantee’ made subject to conditions perhaps lasting only a few months. However, such a ‘limited guarantee’ would merely message all stakeholders to get their money out asap before the door closed.
The guarantee must have sounded like manna from heaven to Brian Lenihan as he listened to this advice. Lenihan would be aware that depositors from large institutional stake holders to property developers with large tranches of their money secreted away in storage in Anglo, to small depositors stood to lose out big time. How many government ministers had their savings locked into Anglo with gilt-edged promise of security of former years?
The stage was now set to bet the financial well-being of the state against the financial well-being of the banks.
The state would lose in one of the greatest financial own goals of history. Clearly McWilliams is a lesser man than the man required to confess to such a mistake.
But what should McWilliams have advised?
Clearly one of the largest stakeholders involved in the calamity facing the Irish banks was the ECB. Because exposure to the crash of 2008 and exposure to losses faced by the Irish banks was upward to 40% of total losses, European banks in particular both German and French banks, should have been consulted by way of consultation with other heads of government through their role in the European parliament.
A joint decision should have been commissioned at European level. We have to believe the advice would have been strictly against a blanket guarantee that would cripple the Irish state and bring about its financial collapse.
This would have protected Ireland’s interests giving Ireland the security of a fair deal that would have to be passed and ratified by fellow members of the European parliament.
Ireland would be protected against a foolish own goal giving credence to the view that Ireland brought its own calamity upon itself.
The deal for Ireland would have to be a deal that would be offered without prejudice to any member of the European parliament.
Clearly the deal would not have meant that Ireland would sink itself with a guarantee that turned a banking crisis into a financial meltdown that would force a bailout of €67 bn with odious and penal interest rates seeing shares in French and German banks leap 24% overnight on the news of ‘the guarantee’.
Brian Lenihan was given a dodgy hose with holes in it fed with taxpayers money to feed the banking spending spree for the rich. The fire brigade was never called.
“The existence of orderly and transparent debt work-out mechanisms would undoubtedly provide a more appropriate platform to resolve sovereign debt crises in more optimal ways.”
Ireland squandered its opportunity to force an orderly and transparent debt work-out mechanism fair to its citizens.
Obedience, compliance, subservience and incompetence became the mantra of the time with taxpayers being foolishly extolled to ‘take one for Europe’. Parish pump politicians revealed their fragile weakness.
No doubt critics of this approach will point out there was no formal means for dealing with such crises in Europe.
There was no banking union with which better strategies could be effected.
In its absence the European Commission, International Monetary Fund and European Central Bank, who formed a group of international lenders laid down stringent austerity measures that became the groundwork to resolve later crises in Europe.
In this way the collective could be protected from responsibility and blame and punishment levied on those on brink of meltdown. The collective revealed it was run by German banks and the Bundestag with priority given to the outer core taking a hit to protect the inner core; not the other way around.
This would divide Europe further.
The irony of this is membership of the European union was guaranteed to give stability and avoid such dangers for its members.
The outcome of this for Ireland has been a regime of brutal austerity the European commission itself warns is not working.
Full report on Ireland located here:
“In Ireland’s case that translates as high levels of public and private debt, ongoing issues within the banking sector, in particular continuing losses, and high levels of unemployment.
The commission has a six-step imbalance procedure by which it grades the severity of the macroeconomic issues facing each country, with one being the lowest and six the highest level on the scale.
Ireland is currently at four, which is down from six over the past two years.”
The FG/LB coalition in Ireland speak of ‘fragile recovery’. Recovery which protects the rich, creates further divisions between rich and poor, is fragile.
The property market has returned to the mistakes of the past with shortages fuelling a housing bubble in Dublin and in large urban areas throughout the country.
Broken banks are feeding off the frenzy turning induced shortages and evidence of a property bubble into the false propaganda ‘the tide is on the turn’ and recovery is taking hold instead of the return of a malignant financial cancer fed previously by free lending now fed by shortages fed by incompetent government policy.
The banks and the property market exist in a catch 22 limbo. If property prices fall due to a new construction boom, the capital base of the banks will be negatively impacted due to greater numbers falling into negative equity.
If property prices rise as they are now, high levels of public and private debt will put further pressure on the banks.
The solution is simple but unpalatable to the wealthy. Greater investment providing for the needs and well-being of the majority with a much fairer proportion of taxation taken from the rich by way of Capital Gains Tax, Corporation Tax, and tax on high earnings. This should pay for a fairer society with increasing numbers required to staff hospitals and schools and frontline public services.
But above that we require debt write-down that goes further than ‘extend and pretend’. Taxpayers should demand write-down of unfair and odious debt. But this FG/LB coalition elected with this one mandate above all else, has failed miserably to deliver real write-down.
Instead we are treated to the current propaganda of Enda Kenny telling the public the coalition have saved the Irish taxpayer €50bn.
We’ll have to await forever for the accountancy exercise that itemize these savings. An uplifting sense of humour is required to swallow your disbelief at such illusionary and delusional politics.
The irony is Irish taxpayers pay almost equal amounts of tax to that paid by their peers in France and Germany. But this provides for virtually free healthcare in France with a visit to a GP costing €7 compared to €60 + in Ireland not including purchase of medication.
The solution to this dilemma espoused by the European commission is for member states to carry out structural reforms and continue to consolidate their public finances. This is european, eurospeak for ‘austerity’.
Structural reform is a euphemism for radical overhaul of the public services. Under the mask of making the system more professional and efficient a culling of numbers working for the public sector is planned. Bureaucracy and paperwork becomes an industry impeding the delivery of services under pretence of reform.
Statistical and percentile analysis of the impact of paperwork and bureaucracy on existing services providers is non existent.
The idea that any human being be left waiting for a bed on a hospital trolley should be anathema to any civilised person.
Clearly the European commission’s recipe of cutting state deficits means cutting and culling public services. It is drawing Europe into a future with Ireland as its poster boy. The economy is run and controlled by the banks, for the banks and of the banks.
The taxpayer is drawn into the role of bank serf with one rule for the bank serf and another rule for those who wield financial paper where the rules of morality including rules of capitalism, do not apply. No tax for the rich, deregulation for the financial industry, more regulation for the poor taxpayer.
Where write-down of debt exists for the rich; no debt write-down exists for the poor.
Now the banks have their fingers in the greasy till (Yeats September 1913):
What need you being come to sense, But fumble in a greasy till, And add the halfpence to the pence And 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.
The banks of Europe are set on a path to dry the marrow from the bone, to plunder public services for taxpayers, to repay odious debt.
The FG/LB coalition are trying to ram through with medical organisations what remains of their universal healthcare policy, namely free healthcare for children up to the age of 6 yrs. Cost of this daft proposal is approx €28ml about what extra is required to end the debacle and calamity of trolleys in the A and E’s. It’s a boon to first time parents who without much experience in such matters, will regard every cold as reason for a visit to the doctor.
Given local medical practitioners, already stretched with waiting lists, will deliver this service, you better look out for long queues, if you require a doctor, if there are any left around.
February 18, 2015
“Market manipulation is a deliberate attempt to interfere with the free and fair operation of the market and create artificial, false or misleading appearances with respect to the price of, or market for, a security, commodity or currency. Market manipulation is prohibited in most countries, in particular, it is prohibited in the United States under Section 9(a)(2) of the Securities Exchange Act of 1934, in Australia under Section 1041A of the Corporations Act 2001, and in Israel under Section 54(a) of the securities act of 1968. The Act defines market manipulation as transactions which create an artificial price or maintain an artificial price for a tradeable security. Market manipulation is also prohibited for wholesale electricity markets under Section 222 of the Federal Power Act and wholesale natural gas markets under Section 4A of the Natural Gas Act.“
Along with zero hour contracts JobBridge has now been exposed as a way not to be a bridge returning people to employment, but as a way to displace jobs, provide virtually free “slave labour” for employers. The scheme means if a person is out of work for a certain period of time, eg 6 months that you have to work 20 hrs a week for an extra €50 to stop you from losing the Dole? Primary reason for this is to get people off the live register and manipulate the employment statistics.
“The Department of Social Protection confirmed that 284 interns – roughly divided between the sexes – have worked in various departments since the back-to-work scheme began in 2011. – with 269 completing their internships.
Of those who finished placements, 69 progressed to employment with other companies, but just three were hired at their host departments.
Clearly where there is a recruitment moratorium in the public sector, such departments should be banned from participating in the scheme. Likewise private companies who abuse the scheme should be investigated if complaints and abuses are verified.
This blog has highlighted the “zero hour contract” as another means of manipulating employment statistics. For approx €30 euros employers can download a ready-made document whose highlights include, no normal or fixed working hours, agree to work at any place, termination with one weeks notice. trial period.
‘You may not do other work(even voluntary work) or engage in any other business’. Is this not a charter for slavery?
You may have problems if you see abuse and highlight this to say an ombudsman as you’e signed a contract preventing you from “bringing the company into disrepute/breach confidentiality”.
Of course manipulation goes deeper than manipulation of employment statistics. At the Banking Inquiry John Fitzgerald said ESRI failed ‘to see the economic collapse’. This blog has continuously highlighted the failure of the ESRI to act as an objective and scientific provider of reliable statistics on Ireland’s economic performance.
ESRI continues to make absurd and over optimistic claims of economic performance for this economy with growth rates of 4-5% for the coming year in the face of water charges, property taxes and looming Grexit for eurozone.
The mea culpa of John Fitzgerald should require root and branch changes in ESRI or the creation of a more reliable agency for analysis and economic prediction. Either that or we can propose for each of the eurozone members a bailout of minimum €67bn so we can all avail of 5% growth rates and forget about austerity and recession.
In Business 4, Sunday Times, 15.02.15 Cormac Lucey includes a bar chart with Ireland’s debt to GDP ratio of 390% only slightly behind highest Japan at 400%. Significantly, Japan finances most of its debt from within Japan, itself, so let’s put Ireland top of the chart. On the other hand, large amounts of Irish debt are owned by multinationals, so Lucey rightly proposes GNP as a better denominator. This brings our debt to GNP up to 345%.
This is a huge drag on our economy never mind the externals such as growing deflation in the eurozone. Why are we not complaining like the Greeks? According to Lucey,
“In an interview with the newspaper DerSpiegel abouts Greece’s debt crisis, the former German Central Bank head Karl Otto Pohl said this “was about protecting German banks, but especially the French banks, from debt write-offs. On the day the rescue package was agreed, shares of French banks rose by up to 24%”.
The Irish government has been a significant supporter of Ireland’s debtors and is a direct supporter of NAMA. This ‘bad bank’ is now playing a significant role in manipulating the Irish property sector to the detriment of both debtors and lenders into the Irish economy”
‘The National Asset Management Agency (NAMA; Irish: Gníomhaireacht Náisiúnta um Bhainistíocht Sócmhainní) is a body created by the government of Ireland in late 2009, in response to the Irish financial crisisand the deflation of the Irish property bubble.
NAMA functions as a bad bank, acquiring property development loans from Irish banks in return for government bonds, ostensibly with a view to improving the availability of credit in the Irish economy. The original book value of these loans was €77 billion (comprising €68bn for the original loans and €9bn rolled up interest) and the original asset values to which the loans related was €88bn with there being an average Loan To Value of 77% and the current market value is estimated at €47 billion.‘ (See earlier blogs for critical analysis).
Vulture fund activity concerning NAMA with large tranches of commercial portfolio property segments laundered into sales abroad have raised eyebrows in the recent past and should be further investigated but secrecy surrounds such transactions.
“”Developers are being banished out of here in the name of the taxpayer. They are being forced and threatened into a state of silence but it is time to speak out. Nama will be proven to be the biggest mistake we ever made.” David Agar
“This weekend, Mr. Flynn described Nama as akin to North Korea: “They are an evil empire, a cancer on the economy and on the country and I believe that, honestly. They are answerable to nobody.
“They have sold assets and told people to sell assets without hearing them and those assets must be worth more now. So the question is: if they did it and acted unlawfully in doing that – are they going to be liable for damages?”
In particular, NAMA has now been accused of property market manipulation:
‘”You are aware of the significant shortfall in housing supply in certain areas. This was anticipated by us and others and reflected in our business plan but rejected by Nama who considered themselves to have greater expertise in this area and refused to listen to those who have extensive experience of the market and planning for development,” Mr O’Flynn wrote.
Referring to the responsibility he believes the agency must bear for the current and chronic housing crisis in Dublin and elsewhere, he added: “Nama did not then nor does it now have the expertise or the skills necessary to operate as developers as is evident from the housing shortage which has arisen when Nama was the dominant player in the property market.”
Commenting on Nama’s future direction and indications that the agency will become more directly involved in property development, Mr O’Flynn said: “I note with considerable concern some comments made in relation to the future direction of Nama and wonder if anyone has stopped to consider the impact on the property industry generally and the Competition Law issues which would arise from such a development.’
In order to inflate current house price values and preserve the capital ratios of banks, NAMA is now exposed to charges of denying a generation of young people the right to own property.
Truly the financial paper merchants have succeeded in annexing the democratic freedoms and rights that should be part of our capitalist economy and created in its place an extreme socialist dictatorship of financial manipulation akin to the worst excesses of the USSR. We should not be surprised at signs met on the road to slavery such as “Zero Hour Contracts” in our new socialist state for the banks.