Lord Cardigan and Enda Kenny

February 9, 2014

NAMA monster could devour Irish economy!

NAMA monster could devour Irish economy!

A little like Lord Cardigan telling the Light Brigade to advance yet again against Russian guns, Enda Kenny with little to nothing to show for vindicating Ireland’s right to a debt write-down, continues to bleep Ireland should get a debt write-down corresponding to a recapitalisation of its banking system.

At European level no one listens. Echoing such calls is Minister Noonan. Having carved all the meat from the bone of the Irish Health and Education system; hospitals like Portlaoise with staff doing the work of 2 or more persons, a dangerous trolley service; teaching profession with teachers doing the work of 2 people or more, teachers now expected to draft syllabi, set examinations and correct state examinations, both sectors starved of investment and victim of rundown, both Kenny and Noonan maintain black is white. Both Noonan and Kenny consider their austerity policies a success!

The European Council

The European Council is subject to the wishes of European parliaments. A retroactive bailout of Irish banks funded by ECB would first require the authority and compliance of all member Finance Ministers of the EMU.

Minister Noonan or Taoiseach Kenny are not embarked on a round of visits to European Finance ministers to gain support for their cause. I havn’t heard of any promise of outright support for Kenny’s crusade which so far has proved to be a tilt at windmills.

But austerity is not an illusion. In a despicable intervention in the Tallaght Hospital dispute where frontline staff collectively flagged the danger of inadequate emergency cover, Eamon Gilmore of the Labour Party apparently quoted the CEO of Tallaght in stating the service was safe. (3)

The irony is that the looting of the Irish public service with its consequence of unmanageable burden placed on the smaller and smaller cohort left to service it, has made such jobs unattractive with absurd demands leading to flight of doctors/nurses/teachers joining the emigration trail.

Noonan’s Empty Basket

Finance Minister Noonan has a difficult job at the moment. Under pressure to do more to vindicate the right of Ireland to retrospective bailout of its banks costing at present up to 30% of its debt to GDP ratio, if he shouts louder at European level, he’s in danger of further humiliation from European finance ministers, who’ve said on numerous occasions, there will not be retrospective debt relief for Ireland.

European Finance ministers are adamant they will not be saddled with the bill Ireland has so graciously taken upon itself to pay bondholders laughing all the way to their banks in Germany and France.

Irish government has morphed into Irish Debt sheriffs of the troika. It has not fixed the banks. Kenny continuously alludes to the European Council meeting of 29th June 2012 that made a decision clearly referring to future policy for dealing with future crises in the banking sector.

Kenny though corrected repeatedly still peddles the erroneous and denied promise of retrospective bailout of the Irish banking sector.

Meanwhile mortgage distress has not been adequately dealt with, banks are not lending to SME’s, to prospective property investors or those seeking a mortgage.

QE (quantitive easing) in the US has led to a storm of money available to cushion out/loot property buyouts in the residential and commercial sector in Ireland.

This has created a false bottom to the Irish property market inflating prices and danger of creating a further bubble in property in Dublin. Irish so-called ‘pillar banks’ require high property prices to extort rent from large property loans that still are viable on their books.

QE in the US, a stabilisation of money markets with larger and larger volumes of hot money have made the international money markets nervous and more volatile with plenty of kindling for sudden bush fires caused by eg cutting back of QE.

This financial crisis is not over yet

Looting and pillaging of public services, the safeguarding of the assets of the rich at the expense of defenceless tax payers with unfair burden on the less well off is accompanied by frenzied propaganda that somehow with levels of commercial and private debt approaching 125% of debt to GDP, that we have turned the corner.

The Irish economy filled with the QE of US vulture fund money and troika bailout along with further deleveraging and asset destruction is about as safe as the Hindenberg

http://en.wikipedia.org/wiki/Hindenburg_disaster

The ECB’s non-standard monetary policy measures amount to the same print and burn money operation of the US, a feature of EU and ECB policy required to dodge explicit laws at European Treaty level to prevent QE or direct financing of sovereigns.

The workaround was to directly fund banks in return for promises based on collateralised  debt assets.

Returning property bubble pricing in Dublin

The ordinary couple in Dublin besieged by rising taxes and charges and victims of short-term contract labour if they find work, cannot pay the false bottom of property prices fed to them by the banks. On top of that, banks are not lending to such couples.

Propaganda states the property sector has bottomed out in Dublin and a bubble is forecast. The irony is that movement in the property sector is primarily the result of vulture fund activity. An economy being eaten by vulture funds is not a sign of growth.

Guarantee of low corporation taxation in Ireland allied to the promise of low taxation on high salaries including low tax on the wealth assets of the rich leading to an influx of postal box internet companies, is not a sign of growth.

But it is a sign of the transmogrification of the Irish economy into a proto banana republic economy such as those that existed of yore in Latin America or as a newer version of a satellite state of the former USSR with wider disparities in income and extinction of the middle class who witness their offspring take flight through emigration.

Nama is the Irish Borg vessel hiding a huge amount of vulture fund activity cloaked and protected under the FOI act with immunity from public scrutiny. The financial sector has learned to circumvent democracy. Perhaps some of the expensive court case actions against NAMA to be taken by developers protecting their property folios may issue more information on their operations currently cloaked from public scrutiny.

Ireland pays dearly and did not benefit from the ECB’s non-standard monetary policy measures used in the main to protect its inner core banks from the devastation incurred without such supports for banks in Ireland.

Traditional fixes, bailout and burn through austerity measures were imposed on Ireland

Ireland,  paying 30% of its GDP in terms of debt repayments to European institutions Ireland is a  scarecrow example of new European fiscal policy whereby both the market place and sovereign public institutions and public services are made slave to a new financial services model that both controls and perpetuates the smoke and mirror ball of smoke financial sector show on the road.

Co-opted into the project are the propaganda arms of the state and large parts of the media, who maintain large and growing gaps between the wealthy and the poor in Irish society are to be ignored.

Vulture Funds

Vulture funds have targeted both Ireland and Spain scooping up property portfolios at bargain prices in Dublin giving the false impression the return of property demand is due to economic growth rather than looting of the Irish economy.

“Vulture funds, such as private equity firms and hedge funds, have descended on Ireland and the rest of Europe since the downturn, seeking assets that have plunged in value and are now under priced.

Traditionally they buy up the debt on companies that are perceived to be on the verge of collapse for cents in the dollar and hope to turn a profit when the company defaults on its debts.”(1)

Already active picking the stressed assets of IBRC and in court to challenge the winding up of IBRC (2)

ECB’s Non Standard Policy Measures 

Jean Claude Trichet head of the ECB at the time of Ireland’s bailout,  FF ministers and the opposition who allowed the state guarantee of the Irish banking system opposition to go through. Central bank and Irish Regulators have yet to reveal in an Irish banking inquiry their role in support of the Irish economy previous to its collapse.

ecbwp1528 “provides an overview of the non-standard measures taken by the ECB (greyed areas) in comparison with measures taken by other major central banks during the financial crisis, and their associated risk profile.”

Though the authors argue against this, their work clearly shows the ECB protection of price and asset and interest rate stability in the euro area has come at the sacrifice of widening disparity between the inner core and outer core of the EU.

In fact, to cushion itself from the economic impacts of the financial crisis it is evident that countries such as Ireland have been sacrificed as pawns to protect the inner core.

Bailouts have extorted disproportionate cost of defending the euro to peripheral countries. This has led to widening gaps between rich and poor in bailout countries and similar widening gaps between inner and outer core countries with extractor bailout funds deleveraging of the outer core and strengthening the inner core.

As is usually the case big banks gain on the upside and gain on the downside.

The inner core countries of Germany and France have sucked wealth out of the outer core and funneled it back to itself damaging the credit union nature of the euro, binding the outer core into a compliant quid pro quo support of elites in programme countries. Democracy has been damaged with member countries reduced to protectorate status.

Bailout involves the conditional liability of supports for dysfunctional states in the euro area.

” As the euro area is not a federal union, the Treaty on the Functioning of the European Union(henceforth called the Treaty) includes a number of provisions to correct for disincentives to fiscal discipline that the single currency would otherwise imply. These provisions include, in particular, the prohibition of monetary financing by the central bank (Article 123),1 the prohibition of privileged access by public institutions or governments to financial institutions(Article 124),2 the “no-bailout” clause (Article 125),the fiscal provisions for avoiding excessive government deficits (Article 126) and the Stability and Growth Pact (SGP, which is actually separate from the Treaty itself).”

One can admire the casuistry of authors Philippine Cour-Thimann and Bernhard Winkler who argue that outright monetary transactions ECB’s bond purchasing programs are not in breach of European Treaty Law below “OMTs are aimed at ensuring the proper transmission of the ECB’s interest rates to the euro area economy and the singleness of its monetary policy.

Outright monetary transactions “OMTs are limited to transactions in secondary markets for sovereign bonds: the money goes to investors, not to the sovereign issuer. The transactions are focused on short-term maturities. Finally, and most importantly, OMTs require explicit conditionality attached to an appropriate European Financial Stability Facility (EFSF)/European Stability Mechanism (ESM) programme, to ensure that governments to make the necessary efforts to restore the sustainability of public finances.”

Lets think about this. Bonds rejected as dodgy by the markets are underscored and guaranteed by the OMT programme. Rotten apples become ripe because someone is willing to pay for them!

This contributes to a mirage economy manufactured by the Central banks. Illusion is the new reality, market forces are repudiated. The end of this game will lead to the euro becoming as valuable as a daffodil, a managed economic currency with the credibility of a previous USSR leveraging asset credibility from a time in the past before the distortion of values by Central banks post crisis.

Post crisis sows the seeds of further crises

Credibility and confidence in the euro area is no longer a function of internal markets in the euro area, rather it now becomes the function of esoteric financial markets with unlimited and supposed binding control of the real market place; complimented by the required compliance  of democratically controlled institutions now monetized into billable taxpayers.

http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1528.pdf

It would appear that support for financial markets is now driven by the ECB to the point that bondholders are now provided with unlimited guarantees irrespective of any underlying market forces whatsoever.

Indeed the bond market itself is now totally under the remit and control of the ECB. The market no longer controls the ECB, the ECB controls the market.

Countries such as Germany, in particular the German Bundesbank are worried that eventually such a policy will dilute German sovereignty making German taxpayers liable for losses  if this policy unwinds.

Restrictions to this policy expressed eg in troika control of Ireland’s economy and similar troika interventions in Greece, Spain and Portugal and even Italy express a watering down of Fiscal policy in the EMU leading to future erosion of the euro if such measures fail to deliver market stability. They will lead to loss of confidence in the euro.

However, on the plus side explicit conditionality is meant to curb the following abuse of the interbank market in the euro area:

“In particular, the banking system of a country with persistent current account deficits could easily fund net cross-border payment outflows associated with net imports of goods and services with money raised in the cross-border interbank market or by means of other forms of funding such as attracting foreign direct investment or placing debt securities abroad. As a result, imbalances in the current and financial accounts of the balance of payments of certain euro area countries were left unaddressed by national policies and continued to grow.”

Its clear the price for monetary reform at ECB level is increased Big Brother oversight of member states. Lack of credibility of such a policy will be expressed by market forces in two ways: 1. political stability in the euro area; 2. economic growth. Without the reward of economic growth this policy will founder.

Eventually economic growth will require expression in terms of employment figures and production of goods and services that adequately address the needs of people: not in terms of support of chimerical bond purchase programmes that provide temporary relief for the super rich in the hope of trickle down crumbs for the extorted poor.

Interest rate policy

On Feb 7, 2014, “Germany’s Constitutional Court will refer a complaint against the European Central Bank’s flagship bond-buying scheme to the European Court of Justice, removing the prospect of it curbing the programme.”

“The court said on Friday there was good reason to think the scheme “exceeds the European Central Bank’s monetary policy mandate and thus infringes the powers of the member states, and that it violates the prohibition of monetary financing of the budget”.

“While the ECB has no immediate need to use the plan, the lack of final clarity over its legality may still crimp its room for maneuver on other measures.”

“The German court said it will rule on the legality of the currency bloc’s permanent bailout scheme, the European Stability Mechanism (ESM), on March 18.”

“The ECB’s Outright Monetary Transactions (OMT) program, announced by ECB President Mario Draught in September 2012 at the height of the sovereign debt crisis and as yet unused, is widely credited with stabilizing the euro.

Any potential curb on it would alarm investors.

The OMT’s power lies in its promise of potentially unlimited sovereign bond purchases – a prospect that provided the necessary backstop to calm fears the euro would fall apart.”

http://www.reuters.com/article/2014/02/07/us-germany-court-ecb-idUSBREA160CW20140207

A new politics for Ireland

If we cannot leave the euro and simply leave  our relationship with Europe to that of Switzerland’s membership of EFTA, as this writer has advocated, if economic sovereignty with our levels of debt to GDP has been abrogated and capitulated at European level, if Irish politicians are so enamoured of the EMU, EU, ECB and IMF, perhaps its time to reengineer politics in Ireland to reflect new realities.

As a European protectorate Ireland does not require its current levels of political representation. A Swiss canton system with greater local representation with higher numbers of local independents might be more effective than our current banking bailiff system protecting the elite at the expense of the majority.

http://en.wikipedia.org/wiki/Cantons_of_Switzerland

Propagandists who support forgiving and paying the debts of the super rich have their eye on our public services. Super rich bondholders down to the ‘no tax as I’m a tax exile’ Dennis O Brien’s  pay little or no tax and if their casino investments are lost, they get bailed out by taxpayers with no one to pay the debt of taxpayers.

I wonder what the world would be like if things were the other way round.

As public services are pillaged, less public services mean less public investment in education and health. The rich can afford to pay for private health care and private education from their tax savings or other assets.

Further down the pecking order the axiom has developed that the more money you have, the less tax you pay; the less money you have, the more…you said it. Philanthropy ..the desire to promote the welfare of others, expressed especially by the generous donation of money to good causes, is less to do with helping the poor, than grandiose efforts of self glorification.

Beyond Outrage

Robert B Reich in his book, “Beyond Outrage”, Reich writes of ‘the decline of the public good’. 10% of all philanthropic charitable donations actually go to the poor. The rest goes to self aggrandising projects to further the prestige of the donor to win back  lost respect. No matter that million dollar dream deals are offered to football managers such as Trappatoni or current replacements, while school funding for sports and culture declines further.

The new mantra of scalping the poor and the public good with the public good masking private gain is seen in the recent unearthing of scandalous payments to those running our charities.

In the US according to Reich, ” total public spending on education, infrastructure, and basic research has dropped from 12 percent of GDP in the 1970s to less than 3 percent in 2011.”(5)

We are familiar with the decline of the middle class as realised by Obama in his ‘boost middle class speech’ speech (6)

In the UK here is a list of salary scales of executive positions in charities:

http://society.theguardian.com/salarysurvey/table/0,12406,1042677,00.html

In Ireland the Cork Examiner did a useful survey though the following charities refused to cooperate “* Six charities — Arthritis Ireland, Bóthar, Unicef Ireland, the Irish Society for the Prevention of Cruelty to Children”

“AN Irish Examiner survey of the pay packages earned by the heads of leading charities shows most are on salaries ranging from €100,000 to €150,000.”(7)

At first glance there is  a much broader standard deviation between salary scales in the UK compared to Ireland. The sample in Ireland is much smaller. Population in UK is approx 60ml compared to approx 6ml in Ireland. The fact that the job in terms of population levels must be 10 times harder in the UK is not reflected in salary scales between the two countries.

Obscenely it would appear some Irish charities have matched their salary scales to that of the Irish civil service Assistant  Secretary levels of (figures only given up to 2010) €120k – €150k and Principal level €85 – €105k

http://www.impact.ie/Your-Sector/Public-Sector/Civil-Service/Civil-service-salary-scales/Current-Civil-Service-salary-scales-2010/General-service-grades.htm

Salary scales in NI and UK

http://www.theguardian.com/politics/datablog/2013/jul/11/mps-pay-uk-foreign-compared

Elite have too many overpaid TD’s in Ireland

As we have now become a prota pretend state , a protectorate run from Europe with too many TD’s

From wikipedia “Number of members[edit]

“Under the Constitution of Ireland there must never be fewer than one TD for every thirty thousand of the population, nor more than one for every twenty thousand. In the 29th Dáil there was one TD for every 25,000 citizens, this is in line with many other European Union member state national parliament ratios with Malta having one MP for every 6,000 citizens and Spain having one MP for every 130,000 citizens. Ireland has a similar MP to Citizen ratio toBulgaria, the CzechRepublicDenmarkFinlandHungaryLatviaLithuania and Sweden.

With the adoption of the current constitution in 1937 the membership of the Dáil was reduced from 153 to 138, but in the 1960s the number was increased to 144, only to be increased more substantially in 1981 to the current figure of 166. The Electoral (Amendment) Act 2011 provides that the number of members “shall be not less than 153 and not more than 160”.[6] This will come into effect at the next general election.”

In present circumstances we could do with less than 100 td’s and a salary cut of one-third to bring representation and salary lines in line with that of other countries and our circumstances.

In the recent past TD’s have cost the Irish taxpayer billions. At European level they oppose a wealth tax on financial transactions. Their policies protect the wealthy and they prey upon the poor and defenceless. Development of services and infrastructure have been replaced with the transfusion of their lifeblood to foreign creditor puppet masters.

The Public Good  is considered bad by the wealthy who regard such interests as against their interests.

Taoiseach’s salary(8)

“When An Taoiseach came to office in March 2011, one of his first acts was to cut his pay and that of An Tanaiste, ministers and ministers of state by 6.6%, so An Taoiseach’s salary went from €214, 187 to €200,000 which was a gesture of sorts, but nothing like the €82,000 cut to the French president’s salary introduced by Francois Hollande in 2012 which brought the salary for that post down from €253,000 to €171,000.”

WorldLeaderSalaries

“And after today’s decline, An Taoiseach will still earn more than his counterpart in the UK, Sweden, Holland, France and Finland. Bigger economies, which are presently bailing us out. And An Taoiseach will still be earning more than double the salary of the prime minister of Spain, which is subject to a bailout of sorts, but which has an economy 10 times bigger than ours and a population 8 times greater.”

A bit of a laugh really!

Who is fooling you?

End.

8. http://namawinelake.wordpress.com/2013/02/25/taoiseach-to-take-a-pay-cut-but-still-earns-more-than-prime-minister-of-uk-france-holland-sweden-finland-and-spain/

1. http://www.independent.ie/business/irish/us-vulture-fund-to-buy-crosbies-point-village-29166091.html

2.  http://www.irishtimes.com/business/sectors/financial-services/us-vulture-funds-take-on-ibrc-in-1-billion-case-1.1531220

3. http://www.irishtimes.com/news/health/tanaiste-rejects-claim-that-tallaght-hospital-unsafe-1.1681928

4. ecbwp1528

5. Reich, Robert B. (2012-09-04). Beyond Outrage: Expanded Edition: What has gone wrong with our economy and our democracy, and how to fix it (Vintage) (p. 31). Knopf Doubleday Publishing Group. Kindle Edition.

6.  http://www.huffingtonpost.com/2014/01/28/obamas-state-of-the-union-address-2014_n_4590869.html

7. http://www.irishexaminer.com/ireland/charity-bosses-salaries-exceed-100k-168734.html

8. http://www.independent.ie/business/irish/us-vulture-fund-to-buy-crosbies-point-village-29166091.html

9. http://www.ft.com/cms/s/0/baa89656-9613-11e1-a6a0-00144feab49a.html

10. http://www.irishtimes.com/news/politics/noonan-to-seek-meps-support-for-debt-relief-over-banks-1.1652911

11. http://www.nationofchange.org/more-inequality-shock-1391440735

12. http://en.wikipedia.org/wiki/D%C3%A1il_%C3%89ireann

13. http://www.irishexaminer.com/viewpoints/yourview/too-many-tds-in-the-dail-199177.html

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2 Responses to “Lord Cardigan and Enda Kenny”

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  2. Thank you for sharing valuable information. Nice post. I enjoyed reading this post. The whole blog is very nice found some good stuff and good information here Thanks..Also visit my page Investment Property Accountant

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