Monday, December 28, 2009

Avatar the Movie

The Wall Street Journal reports that sci-fi film "Avatar" led the way to Hollywood's biggest US box-office weekend of all time. With a box-office total over the last three days of $278 million, this weekend's films beat the old record of $260.8 million from July of 2008, according to estimates from

James Cameron's 3-D epic "Avatar" took the top slot at the box office over the Christmas Day weekend, bringing in $75 million. Guy Ritchie's action-oriented retooling of "Sherlock Holmes" grabbed second place with $65.4 million. The film set a new record for a Christmas Day opening by grossing $24.9 million on Friday.

In the gaming age, many modern films appear to rely more on computer generated visuals rather than an engaging plot. In "Avatar," James Cameron, the director of "Titanic," presents spectacular imagery, decades after 3-D films made their debut.

I saw the film last week in Kuala Lumpur and while the technology is more impressive than the storyline set in 2154, it has a contemporary theme with a big corporation led by a military commander with a style that would have been admired by President George W. Bush, using "shock and awe" against the forest people on the distant moon Pandora, to secure mineral rights.

The Financial Times' John Gapper said "Avatar" will probably be one of the biggest money-spinners for Rupert Murdoch's News Corp, since Cameron's 1997 "Titanic," epic.

Gapper noted that in contrast with Murdoch's conservative slant, that film also had a rather leftist tone, with the poor people stuck in steerage displaying more moral fibre than the rich folks above.

Saturday, December 26, 2009

From Celtic Tiger boom and bust to the boom in books

There has been a lot of attention on the large number of books on the boom and bust of the Celtic Tiger, which have been launched for the Christmas selling market.

Independent senator, Shane Ross, appears to have hit the jackpot with his targeted subject of Irish bankers' central role.

Ross' book, The Bankers, is about the people who ran the banks - - chief executives, chairmen/chairwoman - - as distinct from other senior managers and directors who nominally had roles in running the organisations but in practice went with the flow.

Be it politics, the senior public service, business and religious organisations, that is the default pattern because it is the reaction that generally pays -- recessions and busts are rare events that lead to questioning of the insiders in a society.

Simply, in the money economy, the individual who takes a public stand against conventional wisdom, is usually the loser.

Last June, in an article on Finfacts, I asked: "Why did so few shout stop? There is a simple answer. Challenging conventional wisdom often comes at a high price and the whistleblower is more often than not the biggest loser. Any amount of legal protection will not change this reality across the globe. However, a society needs to have dissidents, to evolve."
The imbalance between self-interest and the public interest is often at the root of economic and business crashes.

Harvesting public anger is an old trick in politics and it is common for angry people to gullibly bank their hopes on the proverbial snake oil salesmen.

Some of the recently published books on the Irish economic crash, add some knowledge or focus on pertinent issues but it's also important to remember that self-interest is also at play here.

For example, the Prime Time Investigates programme, which last Monday, on the State broadcaster RTÉ, focused on bankers, is very unlikely to examine mismanagement in its own organisation - - including not only excess boom pay for so-called "star" broadcasters, but also for senior management - - even though it is an issue of public interest because of the compulsory licence tax/fee.

The programme also made a passing mention of former chief executive of Irish Nationwide Building Society, Michael Fingleton, giving special treatment to journalists in return for exposure on RTÉ and the newspapers, but it was the issue of his express processing of loan applications for politicians, that received in-depth attention.

It has been said that Shane Ross, who is business editor of The Sunday Independent, is very tough on public company boards with the exception of the board of the newspaper's owner.

Of course life involves compromises but it is a relevant point to make.

In September 2000, the then Sunday Business Business Post journalist Emily O'Reilly lambasted Ross for what she termed the former stockbroker's pitching of the shares in the public floatation of State-telco Eircom and later heading a public crusade against the company.

O'Reilly wrote: "Ross has made a virtual third career out of board bashing. As business editor of the Sunday Independent and part-time commentator on Today FM's Last Word programme, he and presenter Eamon Dunphy have developed a neat double-act. Outrage is the theme as the two handsomely paid media buddies rail against the handsomely paid business buddies on various company boards."
O'Reilly herself showed that she was another insider like the wealthy Shane Ross, and she hit the earnings jackpot when she was given the job of Ombudsman, which was a patronage plum in the gift of Minister for Finance, Charlie McCreevy. Her salary was hiked four or fivefold, to the level of a High Court judge.

Economist David McWilliams in his newspaper columns also mainly focuses on the banking crisis but he has noticeably refrained from taking a stand on the issue of public/private sector pay as if he does not wish to risk his appeal, for a section of the public.

 The public should bear in mind that the authors of the current round of books on the crisis, are generally well-connected and like the many in the supporting role of the Celtic Tiger crash, would unlikely take principled stands that would endanger their earnings potential.

A reader of the Irish Independent let rip at one of the recent articles on bankers: "I see that David McWilliams' latest analogy to explain the easy credit foisted upon us all by the evil bankers is one of drug dealers peddling their illicit wares to unwitting low-end junkie addicts (Irish Independent, December 23).

Believe it or not, most of us normal folk actually do have the capacity to comprehend such far-out concepts as 'banks' and 'credit'.

This constant dumbing down of his is becoming as tiresome as it is insulting. Please ask him to stop."

The story of the crash is a lot more complicated than the imagery of selfless heroes bringing dastardly villains to account, on behalf of a population of victims.

Indeed, the victims seldom merit the interest of trade union leaders or commentators.

It should be about a people who have for too long tolerated a broken political system with limited accountability and where the buck appears to stop nowhere.

Unless the process is changed, there will be further economic mismanagement in future and more material to analyse for generally wealthy journalists.

Finally, in due course, it will also be interesting to note how many of the authors who have set out to show how the Irish economy was ruined by a corrupt system that evolved to protect insiders and promote crony capitalism, will take an advantage of the 1960s era tax break for indigent artists and apply to an Inspector of Taxes, who has the odd job of deciding if factual books are works of "artistic merit."
David McWilliams - - a short-termist like his Celtic Tiger villains?

Wednesday, December 23, 2009

Wall Street Journal

Thursday, November 19, 2009

Cowen: A dyed- in-the-wool conservative

It would be indeed news if the leader of a very conservative country like Ireland was other than a dyed- in-the-wool conservative.

Britain bequeathed a 19th century era governance system complete with Victorian secrecy and it remains basically as inherited in 1922.

The only transparency on public spending is via parliamentary question s and Freedom of Information requests.

It's an inadequate hodge-podge of a system that provides little transparency in a system where the State conspires with private clients to maintain what ids termed "confidentiality" - - which is without any doubt not in the public interest.

It severely impacts accountability and protects connected individuals who benefit as insiders in the system.

Taoiseach Brain Cowen is a man without vision who would not be expected to question well established routines.

As a minister in several governments, he went with the flow.

He was not the author of one single innovation of significance, since his election to Dáil.

In the Irish system, that was not an issue of any relevance.

Cowen claimed on Wednesday this week in the Dáil, that the Freedom of Information (FOI) Act was being abused by long-winded requests.

He said public servants were being forced to spend an inordinate amount of time "trawling through" files when they could be doing other work.

"It is an expensive and time-consuming aspect of Government work," he said.

"I have no problem whatsoever with the legitimate use of the Freedom of Information Act for individual citizens or, indeed, for others,

"However, the idea of the department trawling every question that comes in from people who, perhaps, regard the departments of State as a source of generating information was not within the contemplation of the Freedom of Information Act and, to be honest; it is an abuse of the process," he added.

Why not try some radicalism?

Transparency on public spending with few exclusions, such as grants to foreign direct investors?

Political and economic reform in conservative Ireland and the promise of an "everlasting boom"

Monday, October 26, 2009

The euro, sterling and Irish SMEs

Economist David McWilliams wrote in the Sunday Business Post yesterday that Ireland trades in a currency that is sky-rocketing against our two main trading partners, Britain and the US.
He says we need a hyper-competitive exchange rate. We need an exchange rate that allows companies to export, rather than making it difficult for them. Yet the finest minds in Ireland are doing the opposite.

Should the travails of the SME sector in exporting to the UK with a weak currency, be solved by quitting the Euro?

Like much else in life, there are no panaceas and why are Irish SMEs unable to develop markets in the 16 member country Eurozone with a population of more than 300 million?

McWilliams says exports took off after a devaluation of the Irish punt in 1993 but as many others do, he conflates exports from the dominant US-owned sector with indigenous firms.

Exports exploded off from the mid-1990's not because of devaluation but because in the years preceding it; Ireland was getting 25% of US greenfield investment in Europe and from the entry of Intel in 1989, Dell in 1990, Microsoft significantly extending its software operations and companies such as HP, opening big manufacturing facilities, coinciding with the US high-tech boom, exports from these firms dwarfed SME exports.

Have a look at the charts on this page, which show that the value of exports from domestic firms basically flatlined from 1991.

The devaluation had no impact.

As regards the euro, I assume Ireland wouldn't have joined the EMS if its main US FDI firms had objected to it.

Today, these firms remain crucial for the Irish economy.

The typical Irish SME does not export compared with counterparts in Europe and over the past decade, little headway has been made in developing markets in the common currency area.

The EMS has expanded from 11 to 16 countries and so there is a big potential market without having to worry about exchange rates.

Quitting the euro to help the SME sector is hardly a serious proposal.

A more serious treatment of the challenges facing SMEs would be to address the fundamental problems facing them.

Developing new markets where there is little tradition of doing this, unfortunately means that there are no short-term eureka solutions.

Wednesday, October 14, 2009

Ryanair and hidden charges

Ryanair's Chief Executive, Michael O'Leary
After Monday's BBC’s Panorama programme with its “hatchet job” and “lies” (Ryanair’s terms), the Daily Telegraph on Wednesday reported that "the smile is back on the face of the airline’s foul-mouthed boss."

“We’d like to thank BBC Panorama for giving us this heaven-sent publicity opportunity during one of the shittiest times of the year,” a beaming Michael O’Leary said at a press conference in London on Tuesday.

The newspaper said that even before the programme aired on Monday, the Ryanair Pravda machine had cranked into overdrive with various pre-emptive howitzers.

Not least that the BBC hacks had flown with the wrong airline to doorstep O’Leary in Dublin. “If you are investigating Ryanair, the least you can do is bloody fly on us to interview me,” he chortles. “This is why the BBC finances are in such a mess. They prefer to have their fries and sausages with the two other people flying on the route with British Midland.”

A key allegation was familiar. That Ryanair’s ever-expanding extra charges - - check-in, baggage, booking et al - - mislead and infuriate its passengers

Michael O'Leary denied to the BBC that he had shook hands on a deal with John Leahy, Airbus' chief commercial officer, in 2001 and then went to negotiate with Boeing.

Maybe or maybe not.

O'Leary also rejected claims on hidden charges.

The last time I flew with Ryanair, I was trying to book a flight from Dublin to Cork two years ago, with an Irish issued credit card but an overseas address.

The website had limited system had a limited number of countries on a drop-down menu and "other."

The screen jammed and I had no option but to select "other" and in the final charge, there was a €12 credit card processing fee for charging a cast of about €20.

BBC video of interview with Michael O'Leary

Finfacts report: Why hate Ryanair? BBC's Panorama asks Monday; Michael O'Leary condemns ‘Hatchet Job’ agenda

Thursday, September 03, 2009

The Swedish bank rescue model and Irish "bad bank' NAMA

From Anglo Irish Bank's Annual Report 2006

The launch of the Irish State "bad bank" NAMA - - the National Assets Management Agency -- to quarantine and absorb toxic property loans valued at about €90 billion - - equivalent to more than half Irish GDP - - from Irish banks, has created controversy because the discount on the loans won't be related to the market value of the underlying secured property but to a range of assumptions of mainly insiders, who will determine what is termed "long-term economic value."

One proposal is that value of loans would be set looking back at property market cycles - - which had averaged seven years in duration - - since 1971.

These cycles have been heavily influenced by periods of reckless public spending and a system of land rezoning that makes land scarce in a country that is 4% urbanised.

On Sept 16th, Minister for Finance Brian Lenihan will provide an outline on how the valuation system will work.

SEE: European Central Bank, NAMA and long-term economic value

The Swedish bank rescue model is often touted in Ireland as a template to use for the Irish bank rescue but loans were not transferred by the Swedish because of the difficulty of valuing them.

US Treasury Secretary Tim Geithner announced a plan to clear toxic assets from US banks' books but the issue of valuation, effectively killed the chicken in the egg.

Nobel laureate Joseph Stiglitz at the time of the launch, was reported to be very unhappy. “‘The Geithner plan is very badly flawed," Stiglitz told Reuters in an interview during a Credit Suisse Asian Investment Conference in Hong Kong. He said the US government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said: "Quite frankly, this amounts to robbery of the American people. I don’t think it’s going to work because I think there’ll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer.”

Also last March, Peter Thal Larsen and Chris Giles of the FT, presented a detailed analysis of the model and it is not all it's cracked up to be.

Larsen/Giles wrote: "one of the first things visitors who ask about the 1992 bail-out are told is disconcerting. 'There is nothing Swedish about what people call the Swedish model," says Stefan Ingves, the Riksbank's governor, in his spartan office. Mr Ingves was a finance ministry official in the early 1990s and headed the Bank Support Authority, the agency Sweden set up to resolve its crisis. "What we did was to put the thing together but we did not invent the wheel - we used the knowledge that we could find wherever we could find it in other parts of the world.'"

The writers said: "Contrary to the myth that surrounds the Swedish model, the authorities nationalised only two banks: Nordbanken, which was already state-controlled, and Götabanken. Co-operative and savings banks were merged but other private banks ultimately chose to raise private capital."

Private banks were encouraged to place their bad loans in separate entities. However, in contrast with the recent debate in the US, the authorities never contemplated removing bad assets from those banks.

"There is nothing Swedish about what people call the Swedish model," said Stefan Ingves, governor of the central bank, the Riksbank.

Ingves was a finance ministry official in the early 1990s and headed the Bank Support Authority, the agency Sweden set up to resolve its crisis. "What we did was to put the thing together but we did not invent the wheel - we used the knowledge that we could find wherever we could find it in other parts of the world."

"We refused to buy assets from privately owned banks because it would have been impossible for us to agree on the price and we were never in the business of giving privately held banks subsidies," he said.

Sweden's banking system was relatively small. When Stockholm issued its guarantee, banks' total liabilities represented little more than a year's gross domestic product.

Sweden's kroner was devalued and during the recovery period, the international economic backdrop was positive.

Larsen/Giles write, that if the Swedish experience can provide some pointers for today's stressed-out policymakers, the country's subsequent approach offers a lesson in what not to do.

Having tackled the crisis, the authorities conspicuously failed to put in place longer-term reforms to help avert similar problems in the future. "The regulatory framework we put in place in the early '90s had sunset clauses. So the sun set and that was it," said Ingves. "The politicians felt, 'that won't happen again'," says Staffan Viotti, an adviser to Ingves and adjunct professor at the Stockholm School of Economics.

The FT says that during the recent credit boom, Sweden's banks embarked on another growth spurt, expanding their lending throughout the Nordic region and particularly in the Baltic states, where Swedish lenders account for a large chunk of the banking system.

The following article has links to material on NAMA, Irish house prices since 1970 compared with other developed countries and the corrupt land development system:

Kelly tells High Court Irish property prices are likely to fall back to mid-1990s levels

Thursday, August 20, 2009

Irish Economy: A banking crash inquiry?

UCD Economist Colm McCarthy

Last Monday, UCD economist Colm McCarthy who chaired the so-called "Bord Snip Nua" report, which recommended more than €5 billion in public spending cuts, said in a radio interview that a televised inquiry should be held by the Oireachtas on the reasons for the banking crash.

McCarthy said the “real bailout” was a bailout of depositors to prevent “a complete financial collapse.”

That meant that the taxpayers were going to end up footing the bill to some degree.

He said the general public still had not had a “thorough explanation” for what went wrong with "the Irish banking system.”

He said he believed an inquiry along the lines of the Dirt inquiry, by an Oireachtas committee for example, would greatly enhance public understanding of what had gone wrong in the banks.

Where should one start? — from where the fish rots: poor governance with limited accountability in a multi-seat system with clientism and pandering to vested interests dominant, in a culture where plundering the public purse is far from a vice; political parties relying on soundbites, rather than detailed policies and then in government outsourcing on grand scale to the consultancy industry while responding to events only when there a crisis, or more often than not, a dire crisis; cronyism; Victorian era secrecy benefiting the insiders; a culture where the supporting cast within the system, keep their heads down, accept benchmarking whether its is viewed as a sham or not - - a few years later in 2007, partake in another pay bonanza with the Secretary-General of the Dept of the Taoiseach getting a 25% rise.

It is worthy of note that despite the reckless mismangement, nobody saw fit to resign on a point of principle from the ranks of the senior civil service or the Central Bank.

Within the official circle was the State broadcaster RTÉ - - the political leaders’ preferred route to the public. The ineffective format of the Dáil, coupled with 2-minute door step interviews and a compliant RTÉ management coasting on an advertising bonanza, meant that there was never a risk of having to give what could be termed a forensic interview - -unless it was a self-serving response to a tribunal leak.

As regards economists, the academic economists may have had a disdain for the some of the prominent financial service economists, who were essentially well-paid PR men for the moneychangers, but these people provided the “intellectual” support for the boomsters.

In 2004 Bank of Ireland’s Dan McLaughlin had declared a “Golden Age of Construction,” at a construction industry dinner and then in 2007, said “there are a number of economic viewpoints about the Irish economy which are often voiced but have little in the way of support from the facts. One often hears that growth is unbalanced but a glance at the data from 2001 to 2006 shows average GDP growth of 5.3%, with all components growing in a 4.5% - 5.5% range.”

A year before, the myopic economists at NCB had produced their 20/20 Vision report, and again underpinned the fantasies of the politicians.

In June 2006, I wrote the following:
  • Foreign companies were responsible for 87% of Irish exports in 2005
  • Dell and Intel are Ireland’s biggest exporters. 2. Irish investors ploughed €30 billion into local and overseas commercial property in the past 5 years
  • Investment of €133m has been made in 75 Enterprise Ireland supported companies since 2001
  • One in five Irish private sector workers are dependent on construction and more than 100,000 will become unemployed within 10 years
  • No Irish-owned company has floated on the Nasdaq Stock Exchange since 1999. 5
  • Most workers in Irish-owned companies have no occupational pension.
  • The Irish Government awarded special pay increases to all current and retired public sector workers, including politicians, in return for a benchmarking performance system. Targets introduced are basically unmeasurable and aspirational
  • William Prasifka, the chairman of the Competition Authority, recently said that “in too many areas, Ireland has not willingly embraced competition.”
  • New Irish housing units are among the most expensive and the lowest quality in the Developed World
  • Since the end of 2003, output per worker in Ireland has been almost static. 10. Most foreign companies will have relocated from Ireland by 2025
  • In 1970, Ireland’s national debt was as healthy as it is now: just ten years later it was one of the worst in the world

BaNama Republic, NAMA and "long term economic value" as "demographics" is disinterred from bubble wreckage

Tuesday, July 28, 2009

Irish Royalty or Beggars on Horseback?

Ceann Comhairle (Speaker of Dáil Éireann - - the Irish Lower House) with his counterpart, Bernard Accoyer, President of the French National Assembly

It's no secret that the Irish Exchequer is for plundering by a legion of vested interests and the political class

There is no mileage in supporting parsimony in using public funds.

If we Irish want to blame the British, we might as well, as it's as good a self-serving excuse as any, but it puts our elite in the same class as the stereotypical African dictator.

We can look back to the early decades of the State for inspiration and there is much to admire but an RTÉ 1 documentary in 2004, showed that money also had its malign influence, when it detailed how Fianna Fáil party founder Eamon de Valera had funds that were raised in the US during the War of Independence (1919-1921), diverted for the establishment of the Irish Press newspaper, which ended up in the control of his own family.

The Sunday Tribune has reported that former Minister of Arts, Sport and Tourism, John O'Donoghue, his wife Kate Ann, and his private secretary Therese O'Connor, ran up a travel bill of over €126,000 and possible a multiple of that, in the space of just two years.

Among the expenditure were a series of €900-a-night hotels, €7,591 on "airport pick-ups" during a two-day trip to London, €120 for hat rental, €250 for water taxis and €80 to "Indians for moving the luggage".

On one luxurious trip to Venice, the former arts minister, his wife and the civil servant ran up hotel bills of €5,834 at the Albergo San Marco, the Hotel Cipriani and the San Clemente Palace. The ministerial entourage travelled to Italy by government jet, where they were collected by a private airport boat and taken to their luxury accommodation.

The water taxi to and from the airport cost €250, while the minister, his wife and O'Connor claimed a further €1,300 in subsistence and expenses.

On another trip to Paris, Kate Ann O'Donoghue's hotel bill included €56 for a haircut, but this was later paid back as "personal expenses".

The €56 saved will be scant consolation to the taxpayer when set against the €900 a night the former minister paid out for an "apartment" in the Hotel Le Bristol during two days at the hotel.

The Tribune said on another occasion, O'Donoghue, who is now Ceann Comhairle, stayed in even more expensive accommodation with the nightly room rate at the Hotel Montfleury in Cannes costing €990 a night, and a total bill of almost €5,000. Car hire for that trip, related to the famous film festival in the Mediterranean city came to €9,616, according to the figures released under the Freedom of Information Act.

Asked to comment by the Irish Times on Monday, the department said: “Ministers, given the nature of the brief, travel abroad to high-profile events, such as the Venice Biennale, the Olympics, the World Cup matches, all of which are regarded as contributing to the promotion of Ireland as a tourism destination and a venue for international sports events. The costs of flights and accommodation for such events invariably involve a high premium worldwide.

“In relation to the procuring of accommodation and car hire, every effort is made to secure the best possible rates for the Minister and the delegation. The cost of facilities at airports relates to fees charged at a standard rate.”

Tourism development and promotion was “one of the key objectives of the department.” The tourism sector was “underpinned by the arts and sports sectors, which also serve to enhance the tourism product.”

“Given the nature of the arts, sport and tourism brief, it is customary and necessary for the Minister to attend major events in Ireland and abroad. International marketing is regarded as an essential activity in the attraction of tourists to Ireland.”

Of course it is and what else can you say?

Is it any wonder that the average citizen gives the two fingers to pleas for sacrifice from these chancers?

Anyway, shur what's the big deal being made by small minded losers when it's a drop in the ocean in a €60 billion spending.

Add up all the feather bedding and reckless use of public funds and it would come to more than a molehill.

Ask UCD economist Colm McCarthy.

Is it any wonder that they want to keep public spending information in the Victorian age?

And for the information released via the Freedom of Information Act, the Irish Government asked for €523 for copies of the expense claims. What was released was incomplete, and did not include the cost of flights or the use of the government jet, which would easily double the travel bill.

The Bull came to public prominence in the 1990s by advocating a zero tolerance to crime and that was copied from the then New York Mayor Rudy Guiliani.

The Waste Land - - Bord Snip, Irish Public Spending Transparency and the motto "Never do anything for the first time"

Lenihan publishes Bord Snip report; Proposes €5.3 billion in spending cuts and public sector staff reductions of 17,300; Says public pension cost at 30% of salary

Monday, July 20, 2009

Bord Snip 2009 - - a response to Ireland borrowing nearly €400 million per week

UCD Economist Colm McCarthy.

The report of the group, known as An Bord Snip Nua, which was published on Thursday, contains proposals for saving €5.3 billion annually on Irish public spending - - less than 10% of the annual total.

Its recommendations include, merging of local authorities, cuts in hundreds of millions of euro worth of allowances for State employees and a reduction of €1.5 billion from the social welfare budget.

The report also calls for 17,000 State job losses, including a €300 million reduction in the Health Service Executive’s paybill.

Speaking on RTÉ Radio's This Week programme yesterday, UCD economist Colm McCarthy said the current situation, where the Government was borrowing nearly €400 million per week, could not be allowed to continue.

I made the following comment in the Irish Economy Blog - - on its Bord Snip threads:

Main thread

To me, the key issue is not ideology or the level of waste in different sectors but the dysfunctional nature of the Irish State.

Whether it’s public or private, the gravy train has had a kaleidoscope of characters; €1.6 billion annually for State drug purchases, which have an ex-factory price of €1 billion (even the factory price itself has a subsidy); multi-millionaire farmers on public welfare, then hitting property purchasers with a hidden tax through the corrupt rezoning system; huge outlays on IT projects via the opaque procurement process, for private consultants and then the cornucopia of allowances and other perks available in the public sector, led by the political class, while the majority of private sector workers do not even have a basic occupational pension scheme.

The biggest unreformed vested interest is at the top and I cannot recall any proposals of radical reform from the 216 members of the Oireachtas, most of whom are nonentities, in response to the current crisis.

In recent months, Senator David Norris made a plea in the Irish Times for the retention of the Seanad. It is however instructive, that his own significant contribution to Irish society, would always leave his membership of that defunct institution, as a footnote.

The cost of running the Oireachtas has increased at an annual rate of 12% in the past 5 years.
There has been resistance on both sides of the aisle to sacrificing priviliges and embracing radical change in the archaic system.

The 1828 US term, “‘to the victor belong the spoils,” likely sums up the outlook of the Opposition.

All roads lead back to the political system and Ireland needs to badly look in the mirror.
In contrast to the propaganda, the country remains deeply conservative.

Since a government collapsed in 1951, through pressure from the Catholic Church and the medical profession, the significant change in the system has been the neutering of the influence of the Catholic Church, related to its history of child abuse, and trade union power becoming focused on the public sector, because of its exclusion from much of the private sector.

The system of political clientism remains essentially the same and the vested interests retain their power, with the top earners in the medical profession post-1951, no longer against “socialised” medicine but having a well-healed foot in both camps.

An example of the insider system of little accountability is provided by the first “benchmarking” award, where a system of checks and balances could not work.

They all got the increase and the same Secretary General of the Taoiseach’s Department, five years later was given another 25% pay increase - - as were his 3 retired predecessors.

Inside the loop was RTÉ, the State broadcaster with a virtual monopoly in domestic TV broadcasting and while ministers never took issue publicly with evidence that the benchmarking system was a sham, they were never held to account elsewhere either.

The same people who resist necessary radical reform of the system and a surrender of their own over-the-top perks, are now responsible for selling the béal bocht to a public they had convinced a short time ago, that the free lunch had been invented.


Caution is required when bragging about export success when the better performance than elsewhere recently, is based on the operations of less than 20 American-owned firms.

Knowing the facts about Irish exports is not an easy process.

This week a public statement read: “Enterprise Ireland today reported that its client companies achieved new export sales of €1.3bn in 2008, bringing the total value of exports from Enterprise Ireland-supported companies to €14.3bn. This represents a net increase of 3% on 2007, which was itself a record year for export growth.”

So what does “new” mean?

EI confirmed to Finfacts on Friday that no additional exports came from new client companies of the agency.

Exports sales grew by €400m but but the €1.3bn makes a better headline.

Even the total figure is a guess.

More in:

Health thread

Energy, Environment and Transport thread

Finfacts article:

The Waste Land - - Bord Snip, Irish Public Spending Transparency and the motto "Never do anything for the first time"

Thursday, July 09, 2009

Pharmaceutical output from US-owned firms the bright star of the Irish economy

US pharmaceutical firm Merck's principal Irish plant at Ballydine, County Tipperary

The latest Irish manufacturing data shows the contribution being made by the US-owned pharmaceutical sector.

IBEC Chief Economist David Croughan commented today on the May Irish production figures: "Although the total figures recorded only a modest decline and compared well with many other economies, which have suffered sharper falls in output, the strength came almost entirely from the 18.7% growth in pharmaceutical output.

"Output in other modern sectors such as computers, electronic and optical equipment was down by over 22%. Output in the traditional sectors fell by an annual 13.8% in the first five months of the year, with very large declines of between 30% and 46% recorded in metals and engineering, non-metallic mineral products and wood."

Service exports fell in Q1 and about 20 US firms are responsible for 70% of merchandise exports.

In the pharma/medical devices sector, about 10 US firms are responsible for 57% of exports in Q1 2009.

It’s good that we have the US firms but let’s not brag about “our great success” and dispense with questions on why we have been a failure in developing a significant indigenous sector after 50 years of FDI.

The reason why there has been a such a steep fall in the economy is that the property boom sustained so many jobs.

In the period 1998 to Dec 2007, excluding the internationally traded goods/services sector and direct construction, more than 400,000 new jobs were added.

After 2000, jobs in the internationally traded goods/services sector fell by 11,000.

The property bubble added 127,000 jobs in construction and 400,000 in the public services, indirect property supporting services, distribution and tourism.

In 2006, the peak year of the bubble, 83,000 new jobs were added. Only 6,000 were in the internationally traded goods/services sector.

Average pay in construction was €40K compared with the industrial wage of €31K and that’s not including additional allowances in construction.

During the boom, the windfalls plus lending from Irish banks, made the Irish the second biggest investors in commercial property in Europe.

Typically, €10-€15 billion went annually into commercially property while venture capital investment was generally les than €200 million annually.

As for competitiveness, the World Bank said in 2007 that Ireland was among the four most expensive countries in the world.

Anyone who travelled, would not have been surprised with that information but as regards the issue of competitiveness, the dominant US -owned sectors and the indigenous sectors should not be lumped together.

Last month's IMF report on Ireland, does refer to the fall in our share of FDI in recent years, in contrast with the superlatives from the IDA but there are many more issues at play than local costs.

During the boom, apart from Ryanair, there was no big local export success and the hopes in the late 90’s for the high-tech sector were not realised.

So indigenous exports are still mainly concentrated in traditional sectors and dependent on the traditional market, the UK.

The best potential market sector for Irish firms is the Eurozone and if food producers have trouble selling to Tesco at home, it would not be easy elsewhere.

According to the ECB, Irish unit labour costs rose by 33% in the period 1999-2007, compared with Germany’s 3% and Finland’s 11%. Of course new product development and so on are are also relevant but if prices are out of line, the task of breaking into a new market is not an easy one.

Irish Economy: Home Truths on Irish Exports as Ireland faces a changed global economy in the decade ahead

Sunday, June 14, 2009

Developing Irish Export markets; Easier said than done

Ireland has no future in low-cost manufacturing and cash-strapped companies should focus their business efforts on exports and trade with new world economies, the head of Enterprise Ireland said this week.

A new generation of Irish companies with international links involved in the smart economy were making healthy profits, Enterprise Ireland chief executive Frank Ryan said.

Ryan told the Public Accounts Committee (PAC) of the Dáil that the way forward for businesses was through the smart economy, leaving behind an old industrial era.

"There’s no future in low-cost manufacturing," he added.

There were small companies with links to technology and computing making turnovers of over €50 million, he said.

Ryan added that businesses needed to target new economies like Brazil, India, China and Russia among countries. It's all easier said than done.

Irish SMEs haven't had a tradition of exporting and while 55% of total exports from Ireland in 1973, the year of entry to the European Economic Community, went to the UK, more than 50% of exports from Irish-owned firms still go to the UK.

Irish Economy: Home Truths on Irish Exports as Ireland faces a changed global economy in the decade ahead

Waterford Glass

When Tony O'Reilly headed Heinz, he often spoke about the importance of creating world recognised Irish brands and then put a lot of money into Waterford, which had more than 3,000 employed in the 1970's.

A combination of poor management; changing consumer tastes and cost structure, doomed the enterprise.

John Foley, chief of the Waterford Crystal unit, said in 2007 that the group employed 1,300 staff in Indonesia for the same wage costs as 90 staff in Britain, itself a cheaper labour market than Ireland.

Even after the industry had died in the 1850's, the craftmanship of the renowned glassmakers of Bohemia, was brought to Waterford in 1947 by Charles Bacik, grandfather of Senator Ivana Bacik, and the old brand was revived.

It is not easy to create a significant brand in a market such as the US and it would be foolish for Ireland to leave the Waterford brand die.

Louis Vuitton bags may be made in China or all but the design of the iPod is Asian, but consumers view them as French and American products.

Receiver appointed to Irish operations of Waterford Wedgwood; Glass making in Waterford dates from 1783; Czech immigrant Charles Bacik revived industry in 1947

The Irish Economy Blog featured a story on the US PBS Wide Angle film on the demise of Waterford Glass:

Sunday, June 07, 2009

McCreevy's Property Tax Incentives: Haughey's Artists' Tax Exemption for Artists and "Artists"

Charlie McCreevy speaking as EU Internal Markets Commissioner

Charlie McCreevy, the Finance Minister for the good times, gave out a lot of goodies to various sports.

It's easy to be generous with other people's money

McCreevy gave £20m of government money to the GAA, for the redevelopment of Croke Park. The horsey folk in his Kildare constituency, including Puncestown Racecourse, did well during his tenure and for sports folk such as Padraig Harrington and Brian O'Driscoll, double the pension reliefs available to the great unwashed.

The Sunday Independent today reports the right for high sports earners to claim back 40 per cent of their earnings in tax relief over a period of 10 years once they retire, could be abolished next year.

The Commission on Taxation will recommend that Finance Minister Brian Lenihan pulls the plug on various tax reliefs when it publishes its report in July.

The reliefs under threat also include the artists' tax exemption (which allows artists to earn up to €250,000 tax-free every year) and patent tax relief, according to a source close to the commission.

McCreevy's former boss Bertie Ahern, may well be puzzled as to why people are blaming him for the economic crash when everything was so hunky-dory during his lovefest with property developers.

At least, he gets some benefit-in-kind from doling out more State funds, without having to pay tax on it himself.

The former taoiseach is to get seats worth around €192,000 at the new Lansdowne Road stadium.

The FAI has given Ahern two seats in the Presidential Box at the new Aviva Stadium, which is due to open its gates next year.

However, in theory the seats have no monetary value so Ahern will not be subjected to Gift Tax.
Business Editor Senator Shane Ross makes a reference in today's Sunday Independent to "my imminent book on Ireland's bankers."

Ross would likely cover the additional property tax incentives, which McCreevy recklessly introduced at a time when the property boom was begining to accelerate.

An interesting question is will Ross claim a Haughey era tax incentive for indigent artists if the exemption remains?

Bizarrely, Revenue tax inspectors decide on the "artistic merit" of a book and RTÉ presenter Gerry Ryan who earns as much as a significant newsroom for reading from newspapers and doing interviews, was granted tax-free status under the artists’ exemption scheme by the Revenue Commissioners for earnings from his biography, which was generally regarded as self-indulgent pap.

The tax-free perk had already been granted to John Hearne for his work in editing on the tome Would the Real Gerry Ryan Please Stand Up, which was published last year.

In 2008, RTE's then chief reporter Charlie Bird and rugby writer and NewsTalk 106 presenter George Hook, were among the individuals whose memoirs were deemed to be art.

It way well seem as much of a joke as McCreevy's property incentives and have as much merit.

Sunday, May 24, 2009

Irish Economy: Arsonist Cowen claims credit for dousing the fire

In the week, the Ryan Commission reported on forty years of abuse at Irish juvenile prisons, known as industrial schools run by Catholic religious orders, and the conspiracy of the high and mighty in keeping the official more wholesome image of Ireland intact, an arsonist claimed credit for assisting in dousing the fire he allowed start and rage out of control.

Brian Cowen together with Bertie Ahern and Charlie McCreevy, through negligence and self-interest, head the guilty for responsibility, in the crash of the Irish economy.

His speech on Thursday night last, blaming the Opposition for the loss of Ireland's international reputation and claiming a "rapid recovery" is in store for the Irish economy next year, would not happen in most advanced democracies.

Given his own and his party Fianna Fáil's record of monumental misgovernance, people power elsewhere would have ousted such an appalling government from office and forced a general election.

In the past, "republican principles" were bragged about but the reality was grimly different.

The senior leadership of Irish banks have left or are on the way out, but Cowen like his predecessors, accept no responsibility for 12 wasted years.

What would suit him best is if the majority of the people remain as the eejits, Cowen' believes they are!

A Finfacts visitor made the following comment last Friday:

The guillotine is the only thing that this idiot Cowen would understand.
Either he believes the rubbish that comes out of his mouth, which means he is a
cretin, or else he doesn't, which means he is a lying, manipulative bastard. I
would prefer if it was the second, but I think it might be the first.

"The politics of the past" is about someone taking responsibility for the
dreadful state of Ireland's economy. Doubtful that this will happen, as
politicians need to fear the electorate to implement change, and there is no
fear in Irish politics. If FF lose power the life of an Opposition TD probably
isn't that bad, just sit on your hands and wait for the next election, bickering
over the minutiae, not addressing the real questions.....I really don't know
what it would take for a people power revolution, maybe the finances of the
country getting much worse.

I am coming around to the idea that the country actually needs some civil
unrest, needs the change and engagement that this might entail. The complete
inertia in the system seems totally incapable of coping with the requirements of
a small open economy.

Finfacts articles:

Irish Economy: Cowen says his policies will bring “rapid growth” in 2010; Rejects “dead-end politics of the past” but provides no credible vision of change for the future

Irish Economy: The 2001 economic consensus that paved the road to economic ruin

Ireland's economic recovery will be dependent on America's but President Obama's isn't making economically idiotic statements on a "rapid recovery" in 2010 even though the recession is expected to end in the second half of next year:

US Economy: V-shaped recovery unlikely: Recession has further to go; Prolonged convalescence likely

Saturday, May 09, 2009

Choice in Dublin Bye Elections on June 5th: Crony Ireland or New Ireland

There is no better illustration of the stark choice facing the Irish electorate, than the forthcoming Dublin bye elections on June 5th.

I have recently written how the Irish and Japanese systems have many similarities.

They both have a dominant political party which has ruled for decades.

Nepotism is a strong characteristic of both systems and the dominant parties have strong links with their construction sectors.

This week the governing Fianna Fáil Party, selected the 72-year Maurice Ahern to stand in the Dublin Central constituency and 35-year old Shay Brennan to stand in the Dublin South constituency.

Ahern wishes to join his brother former Taoiseach and Fianna Fáil leader Bertie and another brother Noel in the Dáil (Lower House of Parliament ) while Shay Brennan wants to inherit his late father's seat as did current Taoiseach Brian Cowen, Tánaiste (Deputy Prime Minister) Mary Coughlan and Minister for Finance Brian Cowen.

Days after Minister for Foreign Affairs Micheál Martin said he needed to retain his teaching job after 20 years on leave and prevent another person having a full-time job, because the job of a TD is "precarious," George Lee, the economics editor at the State broadcaster RTÉ, decided to run for the main Opposition party, Fine Gael, in Dublin South.

Lee had become a household name for his warnings of risk and bad policy making during the runaway property boom and the wreckage in recent time, left by the bust.

Ireland desperately needs hope of change from the current motley cocktail of teachers, auctioneers, small-town solicitors and farmers, who preside over a broken political system.

George Lee has left a secure job behind and Ireland needs more like him.

It's laughable that teacher and minister Micheál Martin had charge of enterprise policy when he encouraged entrepreneurs to take risks.

We need to leave behind the "bogman" politics and build a modern democracy with people of ability taking risks in politics and business.

I took risks myself in becoming a business entrepreneur and I applaud George Lee for his decision.

New approach needed to fix broken Irish political system

Ireland and Japan; the Human Cost of broken political systems

Monday, April 27, 2009

Irish Golden Fleece Award - - Minister still a teacher after 20 years on leave!!

Ministers Mary Hanafin and Micheál Martin, flanking former Taoiseach Bertie Ahern in 2007

For their brass necks and shameless greed, the Irish Golden Fleece Award goes to two senior ministers who have held on to their teaching posts and are each clocking up three pensions worth upwards of €140,000 a year in total - - almost 3 times the annual pay of a member of the New Zealand Parliament.

The Irish Independent says Ministers Micheál Martin and Mary Hanafin will benefit from ministerial, TD and teacher's pensions. And another nine TDs are filling two pension pots. They each stand to get upwards of €60,000 a year in pensions, an Irish Independent investigation can reveal.

Regulations allow for ministers and TDs to continue paying into their teacher pension fund, while a temporary teacher is employed in their school position.

Martin left his teaching post 20 years ago, while Hanafin took secondment 12 years ago.

Due to their high political office they stand to get a TD's pension worth in the region of €53,000, and also a ministerial pension worth about €70,000.

But on top of this they will get a teacher's pension worth several thousand euro depending on the amount they continue to pay into it while on 'Oireachtas leave'.

In Hanafin's case, with 17 years teaching experience, she would be entitled to around €12,500 on retiring her position.

The majority of Irish private sector workers do not even have a basic occupational pension scheme.

Before the Irish General Election in 2007, members used their role in electing members of Ireland's Upper House of Parliament known as Seanad Éireann - - a useless talking shop - - to force members of the governing Fianna Fáil to support demands for severance and pension payments.

Following news that 7 sacked junior ministers who had titles but no jobs, are in line for thank-yous worth over €50k even though they will still remain overpaid as TDs, the Sunday Tribune has reported, that local authority candidates who are not returned in elections will reap tax-free lump sum of up to €70k

City and county councillors who are not re-elected next June will be paid tax-free lump sums of up to €70,416 each out of a €10m goodbye fund set aside to compensate them. All non-returned councillors aged 50 and over will automatically qualify for immediate payment, whether or not they have stood for re-election.

They will be entitled to €3,300 a year for each year that they have served since 2000 and a lower amount for years before that. Councillors who have served since the 1999 local election will get about €30,000, while representatives with 20 years' service or more will qualify for the maximum payment of over €70,000.

Michael Clifford of the Sunday Tribune wrote that the status of politicians went through enormous change during the boom years. It was gravy all the way. Salaries leapt by over 100% since 2000.

"There was gravy aplenty poured in expenses and allowances. Any TD who totted
up less than €150,000 a year needed a lesson in creative management. For
instance, it would be interesting to know whether any TD ever submits a train
ticket for expenses instead of claiming the generous mileage allowance.

My own favourite expenses story involved the two Fine Gael TDs, Joe McHugh
and Olwyn Enright, who got married in 2005. As reported in this newspaper, the
happy couple continued to claim separate €140 overnight allowances for three
years, pulling in an extra €30,000.

The result of these readjustments was the servants of the people took on the
status of rulers. How could a TD awash with gravy relate to anybody on the
average industrial wage of €38,000? How could they empathise with, or serve the
interests of, the vulnerable, that constituency so beloved of political
speechwriters today?"

New approach needed to fix broken Irish political system

Ireland and Japan; the Human Cost of broken political systems

Lenihan says total cost of State pension for an Irish public sector worker hired after 2004 is 26.1% of pay - - benefits for politicians are even greater

Irish public sector pay excluding pensions exceeds private sector pay by 10% for top jobs to up to 30% for other grades

The European Parliament Gravy Train - - Irish MEPS on up to €360K in Annual Expenses

Irish MEP Kathy Sinnott claims to TV crew at 7:00 am sign-in for expenses, that she was working through the night!

Sunday, March 08, 2009

CNBC gives Financial Advice! UPDATE

A showdown between a comedian who the FT says has become one of America’s most challenging news commentators and a news commentator known for his comedic antics has shone the brightest spotlight on the media’s market coverage since the financial crisis began.

On Thursday night, two cable television celebrities squared off as Jon Stewart, host of The Daily Show news parody programme on Viacom’s Comedy Central channel confronted Jim Cramer, the former hedge fund manager and star of CNBC’s Mad Money programme.

Following a week of digs at the GE-owned financial news channel, blaming it for boosterish coverage of Wall Street institutions before they collapsed, Stewart played the role of a prosecutor as he castigated his guest in person as a “snake-oil salesman”.

Cramer, usually over-the-top, was sometimes contrite, admitting he had got many things wrong, and CNBC was fair game.

Jon Stewart v Jim Cramer in The Daily Show Episode March 12, 2009 in response to previous week's video below on CNBC

We at Finfacts are fans of the CNBC business television network, but as in so many areas of modern punditry, we are struck by the conveyor-belt of "experts" of the moment, who tender advice and make forecasts but their batting average doesn't seem to matter.

A brass neck appears to be a lot more important, than prescience, in the world of punditry. The term "inoperative" comes to mind.

In April 1973, Time Magazine reported that "White House Press Secretary Ronald Ziegler enlarged the vocabulary last week, declaring that all of Nixon's previous statements on Watergate were "inoperative." Not incorrect, not misinformed, not untrue—simply inoperative, like batteries gone dead."

On US cable talk television, apart from the contributions of "experts," presenters are given leeway to project their own prejudices.

In a recent article on the free market, I referred to CNBC's Rick Santelli angry reaction to bailouts for "loser homeowners," while Wall Street and wealthy rancher beneficiaries of the most recent Farm Bill, would be a fairer target for his ire.

Santelli has at least been consistent unlike colleagues.

The above is Jon Stewart of the popular The Daily Show, holding CNBC to account.

Tuesday, February 17, 2009

Ireland: Scapegoating the Euro - Giving Reckless Poltroon Politicians a Pass

Some Irish people besides economic illiterates, suggest that the euro is the primary reason for Ireland's economic woes. This claim is ridiculous and is an effort to provide a fig leaf to the poltroons in charge of fiscal policy during the boom, who set the economy on fire.

The notion that reckless fiscal policy would have operated hand-in-hand with prudent monetary policy, is an absolute joke.

The case was compelling for joining the euro in the late 1990s. Ireland was a developed country with the biggest dependence on foreign direct investment and its membership of the European Union was a key selling point in winning significant investment from America's biggest companies. A decade later, outside of the euro, the Irish economic crash would have become a meltdown comparable with Iceland's.

In recent times, anti-EU/Lisbon Treaty types, have latched onto arguments, that through joining the euro, Ireland had to accept interest rate levels suitable for Germany while forfeiting the flexibility provided by devaluation during an economic downturn.

So the euro becomes the main reason for the economic crash while reckless fiscal policy and comatose central bankers have a minor role in the dénouement.

Policy choices usually have downsides and even if Crony Ireland had an independent central bank, as the UK had since 1997, it would have had limited room for manoeuvre during a period of low inflation.

During the boom, when global rates fell to historic lows, the search for yield would have pushed up the punt rate.

The UK experience shows that fiscal policy is paramount in a period of sustained low inflation.

Even if an independent Irish central bank (not a credible concept in the real world) had maintained a margin of for example 3% above the ECB level, in Ireland's system of crony capitalism, where land is made artificially scarce in a country that is 4% urbanised, the politicians would of course found other means to keep the party going.

Even with a milder boom, outside the euro, we would not have been able to maintain a strong currency during the worst financial crisis since 1945, without double-digit interest rates.

Ireland and Iceland would have been in the same boat.

Financial Times - - Ireland woes are not linked to Emu membership

Published: February 16 2009 02:00

From Prof Philip R. Lane.

Sir, Bill Bailey (Letters, February 11) attributes Ireland's economic difficulties to its membership of the eurozone. However, the problems facing Ireland are not fundamentally linked to economic and monetary union (Emu) membership. Equally, it would be a serious misjudgment to believe that abandoning the euro would be helpful in promoting economic recovery.

In particular, it is probable that a significant housing boom would have occurred even if Ireland had not joined Emu: many peripheral European countries (including both members and non-members of the euro area) experienced a credit boom over the last decade, due to low global interest rates and the decline in risk aversion. Even if Ireland had been able to raise interest rates, policy rates have relatively limited impact on the housing market when bubble psychology dominates investor sentiment.

Accordingly, if the relevant comparison set is composed of other non-advanced European countries (in terms of income levels in the late 1990s), it is not clear that Emu was a fundamental factor in driving the Irish credit boom.

Had Ireland remained outside Emu, it is likely that it would now be suffering the same severe currency crises that face several countries in central and eastern Europe.

While Emu membership does provide a safe haven, the policy framework in Ireland requires a major overhaul in order to live more comfortably with the constraints imposed by participation in a currency union. In particular, success under Emu requires national governments to maintain discipline over budgets, the banks and the labour market.

On all three fronts, the Irish government is now actively engaged in active reforms.

Philip R. Lane,
Professor of International Macroeconomics,
Trinity College Dublin,
Dublin, Ireland

Saturday, February 14, 2009

Real-Time Economics - - Wall Street Journal

Economic insight and analysis from The Wall Street Journal.

Tuesday, February 03, 2009

Benchmarking of 9% still leaves Irish Public Sector in the Money after Cuts

The average so-called benchmarking increase for Irish public service staff was 9%.

The "benchmarking" scheme was shown to have been a sham and claims that private sector staff for comparable grades were earning more, were shown to be false.

No Irish Government minister has ever disputed the claims that it was a fraudulent scheme.

Add the subsequent increases on the average payment and a cut of even more than 10% would still leave public service in the money.

Before the recent spate of cuts in the private sector, public sector pay by comparable grade, had a margin of 10% to 30% according to the ESRI, research published in December 2008.

Crony Ireland and misperceptions on pay and pensions between Irish public and private sector workers

Saturday, January 17, 2009

Anglo Irish Bank seizure - a gift to Fianna Fáil's developer friends with support of Planet Bertie man Gormley?

Anglo Irish Bank closed at 22 euro cent on the Irish Stock Exchange, on its last day of trading before becoming a State-owned bank.

On February 21, 2007, the ISEQ index rose to an-all time high of 10,041 and the Financial sub-index rose to 18,098. Bank of Ireland closed at €18.65; Anglo Irish closed at €16.64 and AIB closed unchanged at €23.95.

A year later, on February 21, 2008, AIB closed at €13.80, Anglo Irish Bank finished at €8.84, while Irish Life & Permanent closed at €10.20 and Bank of Ireland traded at €9.50.

Seven issues dominate the Irish market and in recent years, overseas residents, dominated by institutions, have owned more than 60% of Irish bank shares. Ireland's biggest company CRH, accounts for about a third of Irish market capitalisation and in December 2007, foreign holders held 84% of the issued shares.

Strange times indeed when a bank that was trading at close to €17 on Feb 21, 2007, when the Irish stock index, hit an all-time high and two years later, Anglo Irish Bank closed at 22 euro cent last Thursday - - without reporting a loss.

Wthin hours, the Irish Government announced the seizure of the bank, as once very profitable Irish banks may yet have to take huge hits from the property market crash.

The current Irish coalition government is headed by the dominant political party Fianna Fáil, which has traditionally given primacy to construction interests and facilitated property developers to turn the Celtic Tiger boom, that had its genesis in the location of America's world-class companies in Ireland in the early 1990's, into an out-of-control property bubble.

The State takeover of the commercial property lending Anglo Irish Bank, has raised legitimate fears that Fianna Fáil will lend a hand to its over-stretched property developer friends through the control of the bank.

Irish Economy 2009: The Bulldozer at Bay and Benchmarks for Brutal year - - background on Irish crony capitalism.

In early 2007, Green Party politician John Gormley, warned about the nexus between Fianna Fáil and the property industry.

In his Planet Bertie speech, Gormley warned: "...there's a strange cult called Fianna Fáil, a type of religion without vision or values; and every year in August they go on their annual pilgrimage to one of their sacred sites, the tent at the Galway races (Ireland's Woodstock for Property Developers - - when Fianna Fáil sold influence to the highest bidders), where they pay homage to their gods and the gods bestow them with gifts for doing their bidding. Oh yes, it's a strange place Planet Bertie. So strange and so alien to our sensibilities, that it's a planet that we Greens would like to avoid. For let there be no doubt, we want Fianna Fáil and the PDs out of Government."

On Friday, Gormley as Minister for the Environment, defended the nationalisation of Anglo Irish Bank.

He said it was "too early to determine the cost to the taxpayers of the nationalisation."

"If we had not acted, the costs to the economy would be incalculable and that is why we had to act," he said.

This is absolute cant and bullshit as Gormley hasn't a clue what the public exposure is to the future bad debts of Anglo Irish, which has a loan book of €80 billion.

Gormley is reported to have said that everybody needed to see the bigger picture and he wanted to see the opposition backing for the Government's moves.

"We need to sit down and work in the best interests of the country. Let's put the national interest first. And let's stop the point scoring," he said.

The Planet Bertie man, who jumped on every passing bandwagon in opposition, knows who now butters his bread and the once scourge of Fianna Fáil and property developers, has become their poodle.

The Financial Times Lex column- Jan 16, 2009:

Anglo Irish Bank, Ireland’s most reckless commercial property lender, has at
last been committed to the safety of an institution: the Irish government.

Dublin procrastinated as Anglo Irish gasped its last, the chairman resigned
over governance lapses and risks grew of a dangerous run on the bank. Full
nationalisation fast became the only option to avert a collapse of the Irish
banking system.

Ireland’s banks got carried away in the heady years of a property and consumer spending boom that is now a sickening memory. The economy could contract 4.5 per cent this year, unemployment is headed for 10 per cent and with the government deficit zooming towards 10 per cent of GDP, there is even talk of a rescue by the International Monetary Fund. The government has been flat-footed from the outset.

In September, it tried to steal a march on other countries, by guaranteeing
all bank deposits and funding, but did nothing to bolster its banks’ capital
position, leaving them looking light when,shortly afterwards, the UK government
sharply raised capital requirements for HBOS, Lloyds TSB and Royal Bank of

Dublin then fatefully procrastinated until December, when it launched a €5.5bn bank recapitalisation plan. Bank of Ireland and Allied Irish Banks were offered €2bn a piece, and told to raise €1bn each in rights issues. Anglo Irish was in line to receive €1.5bn, in exchange for 75 per cent voting control, but the run on deposits has now intervened.

Bank of Ireland and Allied Irish Banks may be marginally safer bets now that the
government has removed the sector’s main systemic risk. Time, then, for Ireland’s cosy coterie of bankers and politicians to resume discussion of their golf handicaps in the club bars. But not for too long: neither bank has a price/earnings ratio of more than one, which speaks volumes about investor confidence in the sector’s prospects.

Irish Economy: State bank guarantee tolls the death knell of the Celtic Tiger; Fairytale ends debunking the myths and exposing the reality of foundations built on quicksand

Anglo Irish Bank says total level of loans to directors stands at €179m - Where were the auditors Ernst & Young?

Anglo Irish Bank to be nationalised; Europe's most successful bank during Irish property bubble becomes its biggest casualty

The New York Times Jan 04 2009: The Irish Economy’s Rise Was Steep, and the Fall Was Fast