Varadkar’s Vassals

June 28, 2017


In his book, p97  “And The Weak Suffer What They Must” Yanis Varoufakis gives praise to the following rather prescient observation of Margaret Thatcher, a politician he has next to nothing in common with:

“But if I were (playfully considering the notion if she were governor of the European Central Bank), there would be no European Central Bank accountable to no one, least of all to national parliament’s. Because under that central bank there will be no democracy, (and the central bank will be) taking powers from every single parliament and be able to have a single currency and a monetary policy and an interest rate policy that takes away from us all political powers.

Those words have borne true for politicians in Ireland and across Europe. Consider that new phrase ‘Fiscal Space’ that arrived on our shores only a few years ago following a visit from the troika. This means Europe dictates budgetary limits it has set for us, our politicians cannot borrow on behalf of the state to invest in the public housing infrastructure the state requires to combat homelessness.

With Ireland €200 bn in debt, political roles reduced to being the obedient and compliant messengers of European dictats  Ireland’s politicians have struggled to pretend otherwise. They pretend to have the power to end our housing crisis, to build our hospitals to build the infrastructure a growing population requires.

Instead of large-scale municipal housing projects, hapless “Help to Buy Schemes” for first time buyers has had the opposite effect of increasing prices for first time buyers.

Government  encouragement of the private sector to take the lead in increasing public housing stock on the scale required to end homelessness and extortionate rent, has failed. But politicians wishing to pretend they have the power still pretend they can respond to the mandate of the electorate that gave them their vote.

Instead Ireland is run managed by our banks and anonymous unelected officials from the European Central Bank and the European Commission more secretively by Ireland’s Economic Management Committee. Not even the European parliament as a toothless legislator can change that.

Investment in capital infrastructure in education, research and in health is bottoming out to make further burdening of the electorate of the present and the future, look dismal in the extreme.

In such a situation you would imagine that debate on whether it is wise that we should remain in the EU or exit alongside the UK would be worthwhile. but you would be wrong if you did.

We appear to have a severe case of Stockholm syndrome ..” is a condition that causes hostages to develop a psychological alliance with their captors as  survival strategy during captivity”. However this analogy is not completely fair as both our European captors and our politicians appeal to our sense of well-being promising a return to the good days prior to what Lisa Hand described as:

It was like a physical punch in the gut. Outside on Merrion Square, frozen snow glittered on the streets. But it was nothing compared to the icy chill which hung in the air of the press centre in Government Buildings on the desolate night of Sunday, November 28, 2010, as the packed room watched a group of strangers from the IMF, EU and ECB settle into seats just vacated by the Taoiseach and two cabinet ministers.

This Troika was our new government now – unelected, unwanted and absolutely indispensable. Three Kings bearing a bitter gift of €85bn for a broken nation teetering on the edge of the precipice. Thirty pieces of silver in exchange for our hard-won, precious sovereignty.”

On many levels we inherit an erstwhile disastrous  membership of the EU: political disempowerment above coupled with an unelected an unaccountable European Commission, unconscionable bailout that burdened Ireland with losses that should have been shared by European banks, billions that have been lost through our loss of fishing grounds, the prospect of Brexit causing losses of €5bn annually of agri business and further massive losses as yet unquantified, disastrous and deteriorating public services that presently buckle on the point of serious short fall.

The real problem with the euro is that it doesn’t have a system of circulating surpluses and deficits among member states as exists in the US under the FED. Instead the broken economies or Europe are meant to recover through a system of bailout and austerity in which every penny lost has to be returned from borrower to lender. This puts severe stress on already broken economies such as Greece.

Devaluation for member states as a system of self-regulation is not possible so states already burdened by bailouts are further burdened by austerity.

This is a loop that cannot be broken except by the breakup of the euro. Perhaps this fact alone is at the heart of Brexit many politicians in the UK perhaps having foreknowledge of the imminent breakup of the euro itself.

Negotiations over Brexit not only flag the exit of the UK from the single market the euro represents, but also flag the very survival of a euro severely challenged as it will be by Brexit.

Notwithstanding a budget deficit that is currently under control though weighed down by over €200bn of public and private debt, a serious housing crisis disastrously managed by NAMA (who’ve alarmingly sold off housing stock to the lowest bidder rather than contributing to the supply of housing in a broken residential housing market); Ireland INC finds itself inflated by rising housing prices;  a return to a bubble economy supported by fragile banks facing what could be a greater threat to its economy than the meltdown of 2010, Brexit.

In place of flooding propaganda from both media and political sources denouncing Brexit with an arrogance that grows by the day, there should be an informed debate on whether we too should exit the EU.

The EU does not work anymore. Its unelected and unaccountable  bureaucracy has forced member governments into submission to a euro system that is proving disastrous for member countries leading them down to a path to ruin.

Without economic shock absorbers see below it has failed to deal with the financial losses of meltdown inherited through the 2008 Wall St crash and has sought to recover by a system of bailouts kicking the can into the future rather than healing the wounds that brought periphery nations such as Ireland into economic collapse.

Following 2008 Nevada in the USA went into financial collapse. Though a system of deficits and surpluses administered by the FED surpluses of states were channeled to this deficit state along with measures to rein in its banks and put the state back on sure-footing.

No such system exists in the EU. Instead vast losses were piled on the shoulders of deficit states and their taxpayers burdened with these losses through bailouts growing the gulf between rich surplus nations and deficit nations.

The policy of returning member states to economic growth has failed in Europe. Further centralisation of Europe can only mean less democracy for member states and increasing authoritarianism for member states.

EU  has drifted far from its original aspirations.

As political accountability has lessened the gulf has grown between the disenfranchised poor, the people, and their politically disempowered representatives.

Can things get worse? Sure they can:

“Once Draghi stops buying government debt, we may see a meltdown in the euro altogether.

The ECB wrote: “It is to be expected that significant developments on both the global and the European level will increase the risks posed by clearing systems.”

ECB is moving financial clearing houses from London to Paris.

Into this vacuum has stepped the far right introducing the nightmare scenario of the rise of extremism growing by the day awakening memories of Germany in the twenties and the consequences of this for democracy. This is engendered by a Europe run by a faceless bureaucracy, a European Commission that is held unaccountable to political movement by the people, a toothless European parliament that cannot legislate for the people.

Meanwhile 2 more banks in Italy have failed “Two more Italian banks failed over the weekend– Banco Popolare di Vicenza and Veneto Banca.Banks in Italy”. It will take €17bn of taxpayers money to bail them out.

This will come close to emptying the pockets of taxpayers but the story only begins here and offside hidden in the wings are a vast number of other banks in Italy struggling under the financial losses hidden away since the 2008 financial collapse tsunami that swept across Europe in 2010 until now.

Next move will be to raid depositors money with bail in as happened in Cyprus.

Varadkar’s  statement that his door is always open to the UK to talk not of Ireland also exiting with Brexit but of UK remaining in the EU shows a  contempt for the will of the British electorate who’ve voted Brexit.

Ireland does not think twice of holding referendum after referendum until the people are lied to enough to ensure their compliance with the will of compliant and obedient politicians.

I’m sure his door is always open is persuaded by his failure to attract any interest from NI politicians in Irish government calls for a United Ireland while remaining in Europe. Surely one of Fine Gael’s greatest political conceits.

Arlene Foster has just done a billion sterling deal with the Tories in the UK in return for minority support of Tory government. Her DUP party campaigned in favour of Brexit.

It will be interesting to see how much of this money will go towards the provisioning of border controls between NI and southern Ireland when Brexit comes about. For sure this money is meant to cushion and shock absorb NI from the effects of Brexit especially in its relationship to Southern Ireland.

Interestingly no similar commitment has been forthcoming from the European Commission as a buffer support of southern Ireland. Nor have Irish politicians been engaged in any public lobbying of the European Commission other than the acknowledgement of the empty acknowledgement Ireland is a special case!

In regard to the provision of housing, health and education we have to question whether democracy in Ireland exists anymore.

See this def:

” :  government by the people; especially :  rule of the majority 

:  a government in which the supreme power is vested in the people and exercised by them directly or indirectly through a system of representation usually involving periodically held free elections

Varadkar’s government’s failure to make good their promise to build social housing only 10% of which were built last year from a ridiculously low base shows political impotence.

Varadkar is wedded to further erosion of democracy and would not think twice of re-running any Irish referendum if it didn’t suit his preferred outcome. This is implied in his door open statement.

Varadkar’s future for Ireland is a Vassal Irish state with powerless politicians paid exorbitantly to groom Irish voters to accept all medicine from Europe as it plunges Ireland into deepening austerity.

The future of such politicians comes with the tantalising opportunity to progress to political positions in any number of the vast network of Brussels based European institutions who run our lives without accountability or democratic input.

The forces ranged against rational debate of an Ireland IExit proposition in support of Brexit are extensive and wide-ranging. Interest groups against Brexit range from politicians to public servants, to farmers, to the financial sector, all of whom are beneficiaries of the current status quo inside the EU.

Government budgetary considerations trundle along on receipts from a ruinous property sector, Corporation tax receipts that can collapse at a moments  notice under adverse pressures from Donald Trump to Donald Tusk, President of the European Council.

Not leaving out the security costs of a hard Brexit border and the extra tariffs charged against our exports to the UK under Brexit. Perhaps large-scale emigration endured over previous years will return to take pressure off our public services.

We should be talking to the European Commission on the question of monetary flows from the European Central Bank into Ireland from surplus EU members to help us shock absorb Brexit. We’re not.

The fact that instead the European Commission, as it did for our bailout forced us to take it on the chin for Europe without its support on burden sharing, will leave this country to fend for itself under Brexit, should be sufficient reason for our politicians to want out of the EU.

We do indeed exist in a financial bubble many on this island benefit from. Many wish this party to continue. Storm clouds are gathering however and all bubbles are easily burst. Looks like Ireland could be one of those bubbles that Brexit bursts first.

This will happen in spite of Varadkar’s vassals putting their heads in the sand and hoping for a good outcome for Ireland under Brexit.

This will happen in spite of efforts by Mario Draghi, President of the ECB or Donald Tusk President of the European Council cementing the relationship of the European Commission and Ireland by perhaps making Enda Kenny our ex Taoiseach Tusk’s successor while embarrassingly our state crumbles under the effects of Brexit.

On such an imaginative digression, I thank you for reading the above.


till again


Commercial Sensitivity

January 12, 2014


I listened to a couple of broadcasters from RTE some of whom sounding genuinely surprised our venture into the market place had been such a success.

Aware that there was some irrational euphoria about on our exit from bailout, even neoliberal broadcasters were at a loss to explain Ireland’s bond sale success.

The clue to understanding lies in losing the notion that Ireland retains any semblance of democratic sovereignty consider instead Ireland as no longer independent but a transformed satellite of the EMU with protectorate and/or dominion status run by a rich circle of golden insiders.

“A relationship of protection and partial control assumed by a superior power over a dependent country or region”.

Governments acts in the role of sheriff of Nottingham debt extractors for the troika and in return it maintains its financial perks of salaries and other benefits that go with the trappings of power. Its right-wing neoliberal agenda much like a south American banana republic has seen its interests join with the financial sector in looting the economy. Democracy has become a deficit and casualty.

Markets consider the bailout of Ireland by the troika comes from money the ECB can borrow and owe to itself much in the way Japan with its debt/gdp ratio hovering at 212% borrows a large part of its debt from itself; Ireland is carrying out the austerity programme demanded of it by the troika.

If Ireland did not have de facto protectorate status, it would be in an Icelandic situation and probably better off as a result.

What gets protected in Ireland is mostly the status quo who got us into this financial mess. They are still on the take. Compliant with the austerity driven bailout, they endorse and execute as invisible bailiffs the looting of public services.

Gone are the days of the EMU as a credit union with equal rights shared among members. We have a new monetary union with Germany and inner core towing delinquent members in a union that fails to work.

Similar to a Latin American type of political hegemony of countries wedded to the dollar the European union with its satellites in order to keep its power elite in a dominant position, find politics lurching far to the right.

The lurch to the right

Lets look at an example by choosing the lens to look through that of Ruairi Quinn TD Minister for Education and Skills. No better example of this exists than the case of the Irish Labour Party.

The Labour party instead of defending the people against the financialisation of our economy and its subsequent looting of taxpayers, has betrayed its roots and under the pretext of reform and saving the state, has become a component of right-wing neoliberalism for which control of the public sector has been secured with a dismantled public sector as its main agenda.

A favorite tool of the neoliberal agenda is the term ‘reform’.

Whether it be ‘reform’ of the health sector through the dismantling of health services; or the ‘reform’ of the Junior Certificate through increasing class sizes, doubling the workload of teachers; or deregulation of education through the abandonment of standards measured by state exams; or culling of jobs in both sectors, all point to ‘inefficiencies’ that are being addressed by the destruction and running down of democratic achievements in health and education.

The running down of the health and education sectors in Ireland is the new norm.

Workers in the health and education sectors can tell you at first hand how services are being run down, how their jobs are being made more impossible and difficult to carry out, how their sectors are in a state of massive decline under austerity. Politicians in bailiff/bailout parties will tell you otherwise.

The scandal of the privatisation of state services, a new neoliberal public policy agenda, sees taxpayer money funneled upward to pay bondholders and the troika. Into the breach has stepped the private sector willing to pick rich picking opportunities. There is increasing private sector involvement in education and health.

Both a health and education deficit sees more and more private sector involvement stepping in to collect from those who are able to pay. State services from which we all benefit continue to deteriorate.

School Books Rental Scheme Fiasco

The latest Labour Party fiasco introduces a school books rental scheme nationwide among primary schools throughout the country. But the devil is in the detail. Many schools with hard-working enterprising managers, parents and staff who, in the absence of such a scheme, put in place their own scheme in past years, will be excluded from the new scheme.

You may wonder why this is not being challenged in court as we are all supposed to be equal under the constitution. It appears if you are enterprising, you are not equal, expect to be discriminated against by Ruari Quinn TD..

Recruitment to the teaching profession is at an all time low. Changes in curriculum at the Junior Cert level disguise the looting of the educational resources in this sector as it becomes starved of the public purse. Teachers in keeping with removal of external supports by way of curriculum development and state examinations, are forced to develop the curriculum, set examinations and manage certification.

With added punishing work loads teaching overwhelmed with administrative duties, suffers. We should expect standards to fall with knock on effects in our universities. Older teachers with valuable teaching experience retire while a new cohort of temporary contract workers provide the band-aid to a sinking profession with sinking standards.


Hedge Fund to hedge school

Ireland is like one of those internet based hedge fund stocks bearing only a loose relationship to the real economy. Their share price is held in place by hot air bubbles of speculation lifting the financial worth of the stock. Not unlike the 2000 internet bubble, but stable enough for investors to reckon the country will prevail protected by the acolytes and protectors of ECB  bondholders; the bet is the country will not be left for dead and at a loss should things unravel.

One could also argue the recent successful bond sale was born out of irrational exuberance that Ireland had helped itself to austerity and had successfully exited its bailout.

Such are the levels of media propaganda and education by media of the public on financial matters, many members of the public are of the view that we have paid back the €67 bn of bailout and that austerity has ended. Indeed government has fueled such disinformation by suggesting tax cuts for the next budget.

It was no coincidence the government through the NTMA chose to go to the market place shortly after our exit from bailout.

Ruari Quinn TD in return for this state of affairs awaits promotion to the office of EU commissioner.  Charlie McGreevy was made the European Commissioner for Internal Market and Services in recognition of his contribution to the financial meltdown of Ireland. So Quinn for trampling on the democratic left and upholding of the right-wing neoliberal agenda to cocoon Ireland in a web of debt extraction disarming its educational system, should be offered similar job soon.

Commercial Sensitivity

Question any of these arguments regarding the privatisation of health care, education, the environment, water charges and a myriad other charges for public services you thought were paid in your taxes, and you come up with the problem of commercial sensitivity.

The private financial sector is not only loosely couple with regulation, but it cloaks itself like the Borg and has made itself immune from regulation and scrutiny. NAMA, the banks, Irish water scandals, each throw their hands up into the air and declare ‘commercial sensitivity’ when some regulator or inquisitive person acting on the public’s right to know wishes to examine the financial sector.

Lets have a look at how the ruse of commercial sensitivity works from the top of the shadow banking financial sector down.

Hedge funds across the world have become an extremely popular form of investment for the super rich.

In 2009 estimated size of the global hedge fund industry was US$2.4 trillion. Steven A Coen rose from a simple options trader to found SAC Capital with a track record 60% a year profitability, multi-year profitability. The FBI are concluding a year-long investigation of this fund under the heading of insider trading. Enough prima facie evidence exists to show insider trading by a golden circle is endemic throughout the hedge fund industry.

“Hedge funds are made available only to certain sophisticated or accredited investors and cannot be offered or sold to the general public.[3]As such, they generally avoid direct regulatory oversight, bypass licensing requirements applicable to investment companies, and operate with greater flexibility than mutual funds and other investment funds.[4] Hedge funds have existed for many decades, but have become increasingly popular in recent years, growing to be one of the major investment vehicles and sources of capital in the world.”

The truth is Ireland got its bailout by being transformed into a Hedge Fund. Most hedge funds are held aloft by speculation/investment in the large part. Loosely coupled to the real economy Hedge funds can be manipulated by disinformation or even fraud.

In a classic economy playing its role in the real market place Dubai politicians would have coughed at the notion of investing in Ireland with its current ratings. A debt to GDP of 124% with employment hovering around the 13-14%, massive emigration, huge levels of commercial and private debt, would lead markets to assume Ireland was a basket case.

Instead markets have taken a benign view of our economy. Ireland is seen within the safe harbour of the EMU. The troika is bailing out this economy but is also extracting wealth from it. Some of those interested in purchasing Irish bonds may already be the lucky recipients of bond payouts by Ireland. Perhaps the most compelling reason for Ireland’s foray into the markets is the fact that the EMU is seen as paymaster of this economy and, for now, the euro is seen as safe.

If Ireland gets into difficulties, markets reckon the troika will bail out this economy again and their money is safe. The only problem with this scenario is that Ireland is no longer a sovereign economy. IT now resides as a forlorn puppet economy of the increasingly politicised EU in some outer poor boy’s club anesthetized by its EMU paymasters, safely defused with its puppet politicians happy bailiffs of the troika. Its also wedded to a programme of austerity decoupling Ireland from financial independence and leading to a spiral downward.

Ireland can look forward to an anemic future as it tries like Germany after Versailles or the Philippines after its return of colonial tariff to the French, through growth to pay back its odious debt. However, Ireland’s hedge fund managers do not see it quite that way. For them the lure is to attract in further investors to drive up investment and employment.

So, how does a hedge fund work:

“A hedge fund is a pooled investment vehicle administered by a professional management firm, and often structured as a limited partnershiplimited liability company, or similar vehicle.[1][2] They are usually distinguished from private equity funds, which use the more illiquid investment strategies associated with private equity. Hedge funds invest in a diverse range of markets and use a wide variety of investment styles and financial instruments.[2] The name “hedge fund” refers to the hedging techniques traditionally used by hedge funds, but hedge funds today do not necessarily hedge.[3] Hedge funds are made available only to certain sophisticated or accredited investors and cannot be offered or sold to the general public.[3]As such, they generally avoid direct regulatory oversight, bypass licensing requirements applicable to investment companies, and operate with greater flexibility than mutual funds and other investment funds.[4] Hedge funds have existed for many decades, but have become increasingly popular in recent years, growing to be one of the major investment vehicles and sources of capital in the world.[5]

There is of course the political partnership between the troika representing bailout lenders, the IMF, EU and ECB in turn protecting the vested interests of the banking sector/financial sector.

There are the native banks in Ireland. There is the asset base of the market economy in Ireland within the public sector. In all there is the dominance of the financial sector with  puppet politicians and hegemony of a golden circle out to conserve and protect their own interests in the service of the new Irish economy built upon the sands of the EMU financial sector.

Unlike a typical hedge fund the Irish economy is now heavily regulated to protect the assets of its owners. However, insider knowledge used in betting the derivative markets in short and long investment strategies by Coen of SAC, see above, are also critical in maintaining a good result for bonds based on this hedge fund. It’s crucial for buyers to know that Ireland will be maintained financially in order to buy into this fund.

Its less a matter for investors that the Irish economy should show signs of growth, than the belief the Irish economy will not be allowed to fail.

Austerity marks the Irish economy for the deep freeze its investors will expect to ensure taxpayers in Ireland be made to make their full return to their investor funds. Expect to see higher taxes and lower quality public services looted to be fed upward to the owners of the Irish hedge fund.

Do not expect the top 1% in Ireland to make their contribution to the IHF(Ireland Hedge Fund). Taxation will mean less tax for the rich or no tax with accountants hiding profits under capital gains tax or other tax devices to lessen their bill.

High earners in the MNC’s will be protected as government is lobbied and controlled by their financial representatives. Bankers on high salaries, bonuses and perks will be protected from austerity also.

Austerity will fall on the lower paid, on a looting of public services through cutbacks and other downgrades to Ireland’s infrastructure.

The shape of economies such as Ireland, Portugal, Greece dominated by the leveraged buyouts of large bailouts is anemic at best, absurdly misshapen at the worst.

The reality is a golden circle guarding the interests of Ireland’s hedge fund managers who run the show. They use ‘commercial sensitivity’ to hide from prying eyes.

It would be easy enough to address this. The appointment of one of our retiring judges to scrutinise documents on our behalf could decide whether charges should be brought in open court, or whether illegalities have taken place, or other investigations require to take place.

While the banking and financial sector are becoming more dominated by the values of the hedge fund and the financial markets, decoupled from scrutiny and regulation, those of us remaining who cling to democratic values, await patiently our banking inquiry. 

Debt Clock

It’s useful to study the emergence of the hedge fund as it mirrors the corrosive nature of the financial sector over the past 20 years. See 1 below.

“Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields. “

Maybe this notion has to be revised to include, it matters who the debt is owed to.  If the rich daddy is the ECB, well that’s a different matter.


Nama Republic

January 1, 2014

There are a slew of legal actions from developers fighting NAMA through the court system. This was expected by those who cautioned against the setting up of NAMA in 2009 eg. Here are some. Expect more.

“Central to proceedings is the developer’s bid to have Nama’s appointment of receivers to 36 of its prime Irish property assets overturned.

In taking the case against the State’s so-called ‘bad bank’, Treasury is, according to sources familiar with the matter, prepared to do everything within its still-considerable power to secure victory, and in the process expose what it sees as Nama’s “misleading, unreasonable and entirely unacceptable” behaviour in relation to its business.”

Awaiting an upturn in the Irish economy - geog...

Awaiting an upturn in the Irish economy – – 1734903 (Photo credit: Wikipedia)

Meanwhile sales of large property portfolios are ongoing at NAMA.

According to Peter Flanagan, Sunday Independent, Dec 1, “A slew of international bidders, including some of the top US funds who specialise in buying so-called distressed debt are believed to have made first round bids for the loan books, known as Project Rock and Project Salt.

Project Rock is worth about €7.8bn in total, but a little over €2 bn worth of those loans – mostly UK commercial real estate – are up to date and are expected to be refinanced by the borrower. That leaves more than 5.5 bn worth of loans that are in arrears.

Project Salt, meanwhile, is made up mostly of Irish commercial property loans, with close to €2 bn worth of lending that is now in arrears.”

Now that Ireland has been sent into cryogenic stasis through its odious bailout, it would appear international vulture funds are ready to make a killing on the Irish property market.

Along with an increase in property prices in Dublin over the past year,  a mini property boom in Dublin, this has attracted vulture funds  into the Irish commercial property market believing the market has bottomed out. They are ready to takeover at knockdown prices the pyramids built by failed Irish property developers.

This state of affairs has not been achieved without some cost. The Phoenix project below, check out website for articles and stories surrounding the 200,000 mortgages in distress currently. The recent personal insolvency bill has given precious little relief to the vast majority ensuring that mortgage arrears and loan default has still not been addressed satisfactorily by Irish banks.

The Irish property market remains severely distressed. The extend and pretend maxim has given ballast to the view there is a small recovery in the property sector. The extend and pretend maxim of the banks works hard to hand out propaganda to all sides that the balance sheets of the banks can be made good.

Thus letters sent by banks to commercial buy to let defaulters signifying no more than the banks want their money back allow the banks to pretend loan resolution is in progress. The reality is a large part of the loan book of Irish banks is in distress and the banks refuse to mark down realistic losses.

Hopefully in 2014 stress tests on Irish banks will reveal this truth.

A large effort is underway to deny the truth. In Ireland austerity has paved the way for deflation helped by banks not lending coupled with the onerous and odious fact that given Ireland’s cocooning in the euro, unable to devalue its currency, lack of inflation with its debt burden  growing not diminishing as a result of this, investment in the Irish economy is becoming more burdensome.

By not facing the truth of debt write down/burden sharing, those in default suffer by not having the reality of their circumstances dealt with realistically by the banks. Repossession would leave the banks with a problem of selling on distressed assets. The property market  would see a further collapse in values if its true worth were tested in fire sales.

With extend and pretend Nama benefits,  banks benefit,  enabling them to set  benchmark on property prices pretending doubts about the asset base of the banks are doubts without substance; vulture funds benefit, by seeing their investment yield a return.

Local business investors and the retail sector find it more difficult to pay the scalping rent and property procurement prices, find themselves  driven from the market. The retail sector is put under further pressure.

There can even be a small mini boom  prices as a result of the NAMA and bank induced coma of the property sector.

The euro has acted like a boa constrictor for the Irish economy. Because the bailout of €67 bn given to the Irish economy is backed by the IMF and the EU and ECB Ireland is subject of a leveraged buyout that can send the Irish economy into a state of permanent stasis.

Any doubts that we received back our economic sovereignty should be banished.

The Poisoned Well

More doubts about the manipulation of property prices by Nama surfaced last Sept:

According to Daniel McConnell/Ronald Quinlan,Roisin Burke, 22 Dec, Sunday Indo
“Nama bosses Frank Daly and Brendan McDonagh have come under fire from Fine Gael’s Eoghan Murphy of the Public Accounts Committee about the agency’s decision to take a 20 per cent equity stake in the €800m Aspen property portfolio, which it also provided the finance for.” “Labour Senator Lorraine Higgins claimed a senior government figure attempted to gag her on NAMA.

One concern is NAMA is setting inflated property prices, it may provide the finance to a private company, it takes an equity stake in that company, so smoke and mirrors, it sets the selling price and is first buyer hoping others will follow.

The whole matter of withholding commercial and residential property from the market in order to avoid fire-sales, once again, the reader can draw their own conclusions.

The dead cat bounce represented by such business activity has many questions to answer. In spite of mortgage lending being down last November on this time last year, there has been a surge in the Dublin property market.

The source of financing for such deals would be worth investigating by the PAC(Public Accounts Committee) to eliminate the possibility of market price manipulation by Bad Bank NAMA.

But PAC have other concerns re NAMA. Darragh O’Brien TD  has said, “The case for a sustained public inquiry by the Oireachtas into NAMA is compelling. The volume of complaints being received across all parties is astonishing.”

In August 2009 a list of academics, economists, signatories appeared in the newspapers:

“We therefore urge the Government to reconsider its approach to payment for loans to be taken into Nama, to pay no more than current market value – which can be ascertained even in these times – and to require the investors in the banks to bear some of the cost of restructuring the system.

To do otherwise would be economic folly.”

Government ignored this advice and bondholders were paid off.

In 2009 regarding NAMA I blogged the point:

” An enormous amount of business critical information will be collected if it hopes to manage the toxic assets. The value of this information to interested parties ready to exploit it will be extremely high and sensitive. It could very well be like a sieve with a potential for exploitation exceeding our worst fears.”

A large turnover of staff in NAMA have been snapped up into organisations run by international investors. It’s not inconceivable that NAMA is leaking information like a sieve.

Here’s how the scam might work. You get a portfolio management position in NAMA – gains you access to a lot of information right across NAMA. You see what deals are being made, what sells, what doesn’t, pricing, evaluations. Such information is gold to international property fund managers. Gaining a NAMA man must be like being given a torch in a gold mine.

To be fair to NAMA, its difficult to assess whereabouts NAMA is at present in spite of recent newspaper reports raising doubts once again: it is so cloaked in commercial secrecy laws that virtually no Freedom of Information requests from journalists are allowed.

Sharing concerns re the high turnover in staff at Nama, the PAC recently entertained the chairman of NAMA to give assurances assuaging similar concerns.

Transparency is the key word here ! Who is going to regulate NAMA. How much information will be given, for example, of the developers, bank shareholder  investments, the evaluation procedures and  nature of the toxic assets under review?

Hopefully coming court cases will ascertain what journalists have been unable to find out.

We do need an inquiry to assess directly if the public are being safeguarded from bad procedures, mistakes, incompetence, abuse, corruption.

Perhaps the most curious issue of all will be the evidence offered in support of the value put on toxic assets by a so-called independent system of independent valuers !!

NAMA may keep property off the market because a fire sale would lower property prices! In this regard, the tax payers and the business people of Ireland get to carry the high cost of inflated property prices thus making us more uncompetitive and returning us to the bubble situation where even professionals could not afford the falsely astronomical prices of recent years.

NAMA currently has no remit to discharge its affairs in a time frame of one or 2 years, it’s a lot more longterm than that! Perhaps it ought to be broken up and chinese walls set in place to protect the interests of the public. Perhaps its disposal of assets are on the basis of the worst wine kept until last.

Realistic targets and goals should be set in place and monitoring should be introduced to regulate its performance and investigate its workings. Currently it would appear the only monitoring would appear to be the monitoring of a casino high roller in Las Vegas.

NAMA at tax payers’ expense will increase the profitability of shareholder stakes in the banks, wipe out the debt of developers, create a gravy train of administrative feeders on NAMA, and burden tax payers of generations to come with a mountain of toxic debt. Though it could yet still cost the banks dearly.

There is still the valuable full blown argument that the toxic assets should have been left in the banks. They still had the best business experience to deal with rogue developers and supposedly have learned from their mistakes. The banks could have dealt much better than NAMA could.

Nama pusillum

Nama pusillum (Photo credit: Wayfinder_73)

Instead a state bureaucracy was created with developers who ran their toxic portfolios into the ground now on the state payroll. Are you having doubts about the Agency’s methods yet?

Opportunity given to developers working for NAMA to abuse their position and benefit from insider dealing have surfaced in the McKillen case:

The main struts of Paddy’s case hinge on the following:

“1. Paddy’s loans aren’t NAMA eligible assets.

2. Paddy wasn’t given enough time to re-finance his assets

3. NAMA valuations are lower than Paddy’s valuations

4. To be associated with NAMA is damaging to your commercial reputation

5. NAMA offends the Constitution and EU rules with respect to property rights”

Added to above is:

An allegation that NAMA undermined McKillen by selling off property loans he was associated with to the Barclay brothers with whom he is in commercial dispute.

Chief Executive of NAMA, ” Mr McDonagh said he believed there had been “a carefully orchestrated operation” to damage NAMA and undermine the financial interests of the State.”

In the absence of full disclosure of its business model in all its aspects, its impossible to accept the existence of an “orchestrated operation”. So far NAMA has cases ongoing against two of its former employees for leaking information.

Of critical interest is 3 above. Depending how the property market returns, other developers may choose to follow suit. State legal costs range in McKillen to €6-14mil to be borne by the taxpayer.

NAMA as a Hedge Fund?

In many ways NAMA is a hedge fund gamble by the Irish government to lock in investors, the Irish Tax Payer and the Bond Holders who fund NAMA.

While the rest of the world is steering clear of this type of investment having learned from the mistakes of others, we seem to be prepared to go where others have become undone before us!!

According to the Agency it is now making significant progress on managing the €72.3 billion of loans it has acquired from the five participating banks and maximising the return for the taxpayer.

But the taxpayer has few tools to monitor, assess and evaluate progress. An independent inquiry by Ireland’s PAC has about as much chance of coming into being as an open inquiry into Ireland’s banking collapse.

To pin the detail and bring clarity to this, we need to insist on more information, not smoke and mirrors, on how NAMA is going to work.”

Corruption involves more than the misappropriation of assets, eg  monetary or property assets. When an institution the state is responsible for or the state itself becomes corrupt or incompetent, power itself becomes corrupt.

I listened ruefully to Stephen Donnelly on NAMA


“Basically, what this note is saying is: we have enough money to last us until the end of 2013. By the end of 2013, we hope to have found a way to go back to borrowing from the private sector. Until then, we’re ok. Under previous plans, there was only enough money to last us until mid-2013, so this means we have six more months to work on the country’s financial situation and come up with a solution.

– €11,882 million: this is the amount of maturing debt that we need to pay back in January 2014. This is a big stumbling block. We have two years to find that amount of money – and to pay it off, Ireland can’t use its remaining assets at that stage, which would only amount to 10 billion euros. Besides, using them would mean we’d be left with nothing at all.

– €67.5 billion: this is the amount we owe the EU and IMF, and it’s only part of Ireland’s huge outstanding debt, which is close to 200 billion euros. The problem is that, for a long time (as long as there was enough money to go around), European governments racked up debt instead of trying to balance their budgets.”

It is not feasible to overcome the debt situation with the range of financial disciplinary measures that will cripple the economy and kill the patient in order to cure the illness….

Raison d’être of NAMA and Ireland’s possibility to pay back its bailout at every juncture hinges on growth of 3-9%. None of these figures are achievable in the current climate in the euro zone.

External Deficit procedure and Fiscal Treaty Rules

Michael Andrew FF ireland-republic-of

Freedom of Information rules….NAMA not obliged to publish itemised accounts only an overall account  cost us €30 bn..You can see what is for sale on its website….opportunity for corruption is enormous… selling under the market price

Ireland’s Debt Profile

Credit Ratings    ”

The Ratings

DBRS, Inc. (DBRS) has confirmed the Republic of Ireland’s long-term foreign and local currency issuer ratings at A (low) and maintained the Negative trends. DBRS has also confirmed the short-term foreign and local currency issuer ratings at R-1 (low) and maintained the Stable trends.

….. The IMF projects the Irish economy will expand 0.6% in 2013 and 1.8% in 2014. However, these supportive factors are balanced by significant challenges: the fiscal deficit is still large, the public and private sectors are heavily indebted, and the banking system continues to face deteriorating asset quality and weak profitability.

The Negative trend reflects DBRS’s assessment that risks stemming from the external environment remain skewed to the downside and that the expected primary fiscal balance in 2014 is still short of its destabilizing threshold. However, the trend could be changed to Stable, potentially in the near term, if there is greater evidence of a sustained economic recovery and fiscal consolidation remains on track.”

There are no signs of the kind of economic recovery that can make Ireland’s debt sustainability prospects more positive than negative.

Winter may see the dead cat bounce, but one swallow won’t make a summer.

Happy New Year.


We hear Prof Honahan is preparing yet another proposal for the ECB. His other proposals rejected outright, he’s running out of time and options and doesn’t understand the meaning of NO!.

It’s embarrassing he’s at this point following 2 years of intense negotiations. He’s been so compliant and submissive and persuasive  he risks being compared to Mrs Doyle of Fr Ted fame failing to persuade visitors to  one of her LTRO sandwiches.

The process referred to above of self humiliation of Ireland Inc continues led by our failed negotiators. This time they have surpassed themselves not by liquidating NAMA overnight in Leinster House but in fraudulently pretending this move is good for Irish taxpayers, or that it will leverage support from the ECB to Ireland’s debt negotiations currently unfolding and unravelling.

800 employees of IBRC are pretended to be laid off. Lets open the can of worms, shall we?

It’s difficult to kill a zombie bank that’s already dead, but this is how its done. All assets and liabilities held by IBRC are to be transferred to NAMA, zombie central. Not only that, but the promissory notes currently held by IBRC, a private bank, are also to be transferred to NAMA.

Now you see it, now you don’t. For our next trick, let’s do something about those 800 jobs. Let’s give all these people a job in NAMA to manage the IBRC portfolio currently transferring to NAMA.

Hey Presto, it’s another mess again NAMA in a Hammer Horror move, biting into IBRC taking the whole IBRC vampire into its NAMA fold of the undead.

Will the ECB issue a bond to the Irish government and risk the charge of directly funding sovereign members of the EMU and break its own rules. With NAMA, the current debt profile of Ireland’s banks, looming mortgage default threatening our banks once again, internal devaluation, austerity, is Ireland worth the risk to the EMU by attempting to bail us out with such a move.

Though secrecy surrounds the negotiations it would appear that the Mario Draghi rounds of LTRO funding of banks across the EMU extend only to the interbank market allowing participating banks to issue bonds backed by the ECB. This support of the EMU banking system does not extend to directly funding sovereigns, as a long-term bond issued to cover the promissory notes would entail.

You see there has been some concern that a future government could come in and decide we’re not going to pay the promissory notes. But transferring them to NAMA means the state has made what has been unofficially sovereign debt, official. Whatever future government we or or our children elect if the state exists (they are doing their best to collapse the state), will not have such a choice, the sovereign debt will already be theirs.

Meanwhile the compliance guards eg Prof Alan Ahearne is coaching Ireland not to be threatening  the ECB. Gilmore is saying everything is satisfactory. Heads in the sand. Let’s disregard the threat of the ECB to the very viability of this state and beg, borrow or steal to repay our ‘so-called’ debt obligations however odious they may be.

The IMF and the troika may not see this as a viable course as we have endured financial meltdown only to face a second meltdown risk to our banks because of internal devaluation, austerity and the erosion of a cliff of mortgage default creeping around our banks.

The best option for Ireland, ECB, troika is to allow Ireland default outside the EMU. Attempts to save Ireland could put the EMU further at risk.

Meanwhile bond issues to banks throughout the ECB, Ireland is being treated as the ECB scarecrow taking attention away from Spanish, Italian banks hiding behind our difficulties.

“According to Dalibor Rohac, the deputy director of economic studies at the London-based Legatum Institute, the plan can only do so much if indebted countries do not aggressively tackle their budget-deficit problems on their own.

“Ultimately these countries have to either fix their internal imbalances through internal devaluation, which is proving to be very costly, or they will have to try to find some other arrangement that might even involve an explicit devaluation  by leaving the euro zone,” he says.  “Ultimately the ECB can’t fix these countries’ fiscal problems and can’t fix these countries’ imbalances. And so we are still waiting for a solution to that longer-term problem.”

It would appear logical that we should consider leaving the euro zone if the ECB is intent on ransacking the state without providing an adequate restructuring deal on Ireland’s debt.

Its a risky option fraught with legal difficulties for the ECB to allow the Irish government to issue a 40yr bond guaranteed by the ECB at low enough interest rates to allow Ireland both reduce the principal on its promissory note obligations and pay back the bond at a reasonable cost to the state. Other permutations to such a deal exist but given the rejection by the ECB of deals proposed hitherto, it would appear there is little chance for this or other alternatives.

A major problem is that for Ireland to benefit from such a bond programme it is firstly required to be fully back in the markets,

Problem is that the ECB and troika can see as well as most that Ireland is capsizing because of its debt beyond the point of rescue without default. It’s not clear that under any terms without significant debt write-down including devaluation, that Ireland can be saved as a viable country in the EMU.

For this reason there is good reason to consider ejection of Ireland from the EMU where from outside, default and debt write down is possible, whereas from inside the EMU our currency profile is beyond the limits of sustainability.

The LTRO provision of short-term funding to European banks currently beginning its payback cycle and contributing to strengthening EU banks availing of it should not be confused with the underlying economic conditions in the EMU that continue to deteriorate and show signs of weakness.

The rise of Germany within the EMU is a worrying politicisation of the ECB that is increasingly unchecked. The democratisation of EMU that Ireland signed up for has not materialised.

They created NAMA and are looking for another long term bond, monetary financing, to grow this monster NAMA into Irelandstein.

It’s time to batten down the hatches and prepare for another round of panic and mess from our negotiators.

They’ve come up with the absurd idea that unlike Mario Draghi’s LTRO where institutions including banks lend to each other in the secondary market and these bonds are backed by the ECB thus lowering the risk for investors, that ECB through monetary financing should issue a long term bond to NAMA, a state institution?

Whatever chance IBRC/Anglo/NAMA backed by another deal from the ECB supporting the state through allowing a Greek type write-down, could issue a bond for say 80% of the promissory notes, rest backed by government, that would be backed by LTRO at EMU level, is now lost.

The Irish negotiators have trashed the state and given us a shambles.

If I were sitting on the governing council of the ECB, this move would be sufficient to investigate ejection of Ireland Inc from EMU.


Promaganda is a neologism meaning propaganda re Ireland’s promissory notes repayments. Feel free to use it.

News at one, Saturday, 1-2pm, Jan 5,  insouciant unconcern about our calamitous debt profile provided us with a gem of a piece, a priceless  example of how RTE mounts a burial party when it comes to investigating and researching issues regarding the state of our banks, our debt profile, the promissory notes.

This time they buried an item on the promissory notes underneath nearly twenty minutes of tedious waffle regarding the imminent abortion legislation. Mind you, I’m as concerned as the next person: the rights of women need protection. But we elected politicians to do this in a professional manner.

It should be easy enough but opportunity to make a mess cannot be ignored. So while the vast electorate have moved on unriven by vast and lengthy debate with a do just it attitude, politicians dither and now have elevated the matter of the abortion issue to give it a lengthy 20 minutes of airtime while once again our debt issues get relegated and hidden away buried once again by nonsensical incompetence.

You may spare yourself by adjusting the player forward to about 20mins in:!rii=9%3A20134708%3A11988%3A05%2D01%2D2013%3A

So here we had Saturday with Claire Byrne Jan 5 2013 Claire is joined by Darragh Calleary TD Fianna Fail, Pascal Donoghue Fine Gael, Prof Gary Murphy DCU and Harry Magee political correspondent Irish Times

Bill on abortion drafting contentious issue starts the programme and 18 and a half minutes go by before the promissory notes item.

Pascal Donoghue FG awed us with the incomparable interest fed to him in correspondence and contact not since another matter regarding animal rights had there been such heightened emotional outporings re the abortion issue in Ireland.

No panorama no investigation under the cover probes into NAMA, the banks, how well our politicians are doing in negotiations, nothing said. We may as well have been waiting for Godot.To be fair, Prof Gary Murphy DCU drew comparison to possible calamitous electoral disaster the government will face if there is no movement on the issue of relief from our ‘bailout’, in particular the promissory notes and our need to return to markets and get rid of the troika.

Since August 2011 with Trichet and continuing to today little has been achieved for our forbearance under austerity. The Irish government is not being proactive enough.

The blithe propaganda was trundled out that we were 85% through the austerity programme..

But then Pascal Donoghue let his guard down and made the statement that last years prom note was not paid out of general gov revenue. Defiantly he stated that the general government deficit was down by 10 bn euro. 

Unfortunately no one on the panel or Claire Byrne asked the simple question, was it paid? How was it paid?

The audience apart from yours truly and the few who know these things were left with the distinct impression that we had been let off last year and the money was not paid.

This was astonishing!

Suddenly a debt elephant had become invisible. Pascal seemed uncomfortable with this drama that the government might have to deal with the promissory note issue. After all, it was invisible to him.

Let me uncloak the invisible elephant  for Pascal. The elephant does exist and last year €3.1 bn was paid through a circuitous route involving the bank of Ireland, a bond and NAMA. NAMA paid the bill and your children will payup for NAMA’s bills.

Because the debt issue had become invisible, it was difficult to talk intelligently about the matter. For example, where are we in the negotiations? Are we going to pay the next installment,€3.1 bn. Will NAMA be raided for the money again? Will Ireland obtain debt relief from the ESM, a 100yr bond. Do Finance ministers favour this?

Nope, nothing of these matters. FG/FF and LB helped by RTE have succeeded in burying these matters under deflected debate on the abortion referendum, general innuendo and obfuscation and sheer avoidance.

Even without a prom note we would still need to do austerity. But Pascal believes a deal will be done.

Readers of this blog know we have no panorama investigations into our pillar banks, no grubbing around the corridors of the ECB and the troika looking for whistle blowers to tell us exactly what negotiations are taking place, have taken place, progress if any. Instead its veritable silence filled with innuendo

Enda Kenny is likened to’s_Ball  has been dancing for the troika and Angela Merkel in mercurial and ingratiating obedience since at least last June. Every time Kenny signals a new breakthrough re Ireland’s debt for June, October, January etc, Angela Merkel and latterly Finance ministers of Finland, Germany, Holland and France rule out easing bailout terms for Ireland

It would appear Irish negotiators talk incessantly to the ECB who weary of them, relent and offer false hope to them. This becomes public and the real power brokers in the EMU, the Finance ministers of Germany and France, step in to curb the ardour of the ECB and the Irish. then the whole periodic motion cycle begins again not helped by the lack of competence of the Irish to break out of a damaging and ruinous cycle of disaster for Ireland within the EMU.

While the UK considers a referendum on simply leaving Europe behind, the Irish refuse to consider such a move for Ireland. Such a unilateral move on the UK’s part would spell more disaster for Ireland as it labours under unconscionable debt.

“She stepped out and I stepped in again,I stepped out and she stepped in again, She stepped out and I stepped in again, Learning new steps for Hanigan’s Ball.”

Meanwhile an invisible elephant has escaped from the Dail. Little is known as to its whereabouts and even less data is known on this elephant named ‘Debt’ in spite of the fact the public in Ireland have been fed a diet of propaganda for the past 2 years that intensive negotiations on Debt have been taking place with the troika regarding debt that seemingly go on forever but of which no records exist or are publicly accessible? Europe becomes more likened to Russia before the 1998 collapse of the ruble!

It’s so confidential and highly classified and has verged on breakthrough so many time much like Hanigans Ball. As ministers from Labour and Fine Gael congratulate themselves on Ireland’s latest austerity budget you would believe good times are back and we are on the cusp of a new Celtic Tiger. Sadly, its all much ado about nothing. Ministers Noonan, Gilmore and Kenny, an Taoiseach have achieved less than nothing, zero on their management of Ireland’s debt scenario.

There is a difference between writing down Ireland’s debt and hiding it in another bailout or in smoke and mirror organisations such as NAMA.

Meanwhile another court case quite different in substance to the Quinn case highlighted in last blog is currently emerging. A case around  the promissory notes will claim they are unlawful. It is being taken on Jan 22 in the High Court by the New Beginnings advocate David Hall, he will be represented by the former Labour Attorney General, John Rogers.

According to p7, Sunday Independent, 06/0113, “Irish people were not consulted and their representatives bypassed”, “In a flagrant breach of the constitution, with no democratic legitimacy”. ..”the legislation may be in breach of Article 15.2 of the constitution, which says, “no other legislative authority” such as the ECB “has powers to make laws for the state”.

Readers will know we have been down that road before with challenges to the ESM referendum, but the arguments in the case should make for compelling reading.

Looking forward to seeing what our courts make of all this. Though the courts will not hold politicians accountable for the one in 10 mortgages in arrears, the collapse of the GNP local economy and the fact that so much of FDI exports is also invisible alongside the flood of immigrants and ‘this is no country for young people’.

Of course this is all double dutch to the comforting jollity of Pascal Donoghue and his invisible €3.1 of taxpayers money.

A must read, Simon Johnson, former Chief Economist of the IMF:

“Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique—the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large.”