Thursday, December 23, 2010

An Angry Irishman and the [Expletive Deleted] Celtic Tiger

Clip of an angry Irishman venting about Ireland's economic woes with a rich lacing of expletives!

Taoiseach Brian Cowen says sorry!

Sunday, November 28, 2010

Ireland, reform and the IMF

The empty Dáil Éireann chamber of the Lower House of the part-time Oireachtas (Irish Parliament). The members are amongst the best-paid in the world - - typical pay before last December's Budget was equivalent to that of a United States Senator's $169,000 plus tax-free expenses, which can amount to more than 100% of pay - - but the Parliament only holds about 90 plenary sessions annually and the shutters are pulled down each year for a 3-month summer break in common with teachers and the highest earners at the State broadcaster RTÉ.
Two members of the current Government - - who remain on the payroll of the Department of Education - - are building up credits for 3 public sector pensions while the majority of private sector workers do not have one occupational pension.

In 1940, Deputy James Dillon said in the Dáil in reference to the three year sentence to an industrial school, that was given to a child who had stolen some grapes: “Can you imagine the son or the daughter of a resident of Fitzwilliam Square being brought down to Morgan Place and sent from there to an industrial school because he stole 5/- (32 euro cent) worth of grapes?”

How times have changed! Or maybe not.

The IMF is possibly our best hope for a fairer society.

From the early 1950s, when the Catholic Church opposed ’socialised’ medicine and found common cause with devotees of the God Mammon in medicine, the protected professions have comfortably handled the schizophrenic existence of being both socialists and capitalists.

Even the free market side operates via what is effectively a tax (health insurance) as a dual system is the main plank of public policy. The ‘cartel’ charges at consultant level are simply obscene.

On independence, the English inspired legal system continued; why would any of the big wigs have changed it?

Payments to barristers by the DPP rose 11% to €15.2m in 2009 despite an 8% cut; the Irish Times reported last April that its own columnist Noel Whelan was the 5th highest earner at €234,766 (inclusive of VAT).

Lawyers become multimillionaires on the public payroll investigating corruption which should be confusing or ironic and besides reform of the underlying cause of one aspect of corruption, land rezoning, is a taboo issue.

“If you’re not inside, you are outside, OK?" the Gordan Gekko character says in Oliver Stone’s recently released ‘Wall Street.’

Robert Frank of Cornell University has written of “winner-take-all markets.”

These are markets in which small differences in performance (or even small differences in the credentials used to predict performance) translate into extremely large differences in reward.

While these markets have been evident in entertainment and sport for many years, when applied to professional cartels, it’s not just a pioneering surgeon like the late Maurice Neligan who gets big rewards but everyone who manages to get inside the circle.

Then there is a cascade ripple effect beyond.

American CEOs, for example, earned 419 times as much as the average worker last year, up from only 42 times as much in 1980. The top one percent of US earners have seen their real incomes more than double since 1979, a period during which the median income has remained essentially unchanged.

Over time, some of these CEOs will be shown to be duds.

As for the ‘independent figure’ proposed in the four-year plan, just three years ago, an ‘independent’ panel containing at least two multimillionaires proposed lavish hikes in the salaries of politicians and senior public officials.

The Dublin City Manger, just 18 months in his job, got a hike of 36% as did his retired predecessors and so it went.

In the legal world, to take silk should be more like taking nylon.

The Competition Authority (CA) says the legal profession in Ireland is organised into a highly rigid business model: access to barristers for legal advice is limited to a few approved clients, barristers cannot form partnerships or chambers or represent their employers in court.

There is no profession of “conveyancers” in Ireland, as in other common-law countries, and this limits competition in conveyancing services; the title of senior counsel is inclined to distort rather than facilitate competition; junior counsel generally charge a fee equal to two-thirds of the senior counsel’s fee, regardless of the work done by each barrister, despite the fact that this practice was identified as anti-competitive in an independent report on the legal profession 16 years previously; establish objective criteria for awarding the title of senior counsel.

The level of solicitors’ fees in the High Court increased by 4.2% above general inflation annually over the period 1984 to 2003 while the level of senior counsel fees in the High Court increased by 3.3% above general inflation annually over the same period.

The public sector is the biggest customer of the legal profession as with other professional services.

If not now, when will it change?

Transparency and political will to clear the dust from several CA reports is all that’s needed.

Meanwhile a report by the Comptroller and AuditorGeneral says sick leave has jumped since the 1980’s in the Irish  civil service  with the absence rate rising from 3.3% to almost 5%  of available working time, which was lost to sickness absence in  2007.

On average, 59% of all staff employed availed of sick leave in  that year.

The average employee was absent for just over 11 days.

Irish Economy Blog: More on the Four Year Recovery Plan

Finfacts article: Four Year Budget Plan: Ireland's first steps in long march; Real reform dependent on IMF

Sunday, November 21, 2010

Irish State Bank Guarantee and the arrival of the IMF in Ireland

Office of the Taoiseach, Dublin - - In this building on Monday, Sept 29, 2008, Taoiseach Brian Cowen made the most cataclysmic economic decision in the history of the State.

The Financial Times said the State bank guarantee turned the State and the banks into one entity from the viewpoint of financial markets and there is a direct link between the issue of a blanket guarantee on Sept, 30, 2008 and the arrival of IMF officials in Dublin m on Nov 18, 2010.

The English writer William Somerset Maugham (1874-1965) said: “It's no good crying over spilt milk, because all the forces of the universe were bent on spilling it.” Nevertheless, it's important to recognise the enormous consequences of the guarantee of existing bank debt in the State guarantee that was issued on Sept 30, 2008.

Ireland and Denmark were the only countries during the global financial crisis to guarantee existing bank debt and on the first day of the Irish guarantee, Minister for Finance Brian Lenihan said: “We are not in the business here of bailing-out banks.”

Advisers Merrill Lynch had warned that an extensive guarantee of liabilities at the State’s main banks could “hit the national rating” and allow poorer banks to continue in operation. However, they advised the minister against a policy of liquidation or letting a bank become insolvent, saying “this was the worst thing that could be done” as it would accelerate trouble for all other institutions. Merrill Lynch proposed an alternative to the guarantee scheme in the form of a “secured lending scheme” for banks whereby commercial property could be exchanged for Government bonds or cash.

There were exactly four months between the collapse of US investment bank Lehman Brothers and the announcement in mid-January 2009 that Anglo Irish Bank would be nationalised.

Strauss-Kahn referred to "one big bank" but there was also the recklessly run Irish Nationwide Building Society (INBS) and the bail-out of the two institutions will cost at least €40bn -- more than 25% of annual gross domestic product. INBS had become a commercial property lender with almost half its commercial loan book for property in the London region.

Minister Lenihan had declared the bank guarantee “the cheapest bailout in the world so far,” but it prevented a restructuring or orderly closure of two insolvent institutions and left taxpayers with the huge bill.

The period post-Lehman period was marked by the collapse of Icelandic banks and several rescues across Europe. Ireland would not have been an outlier in restructuring its banks and imposing losses on bondholders at that time.

Some months later, the Obama administration restructured General Motors in that manner.

Prof. Morgan Kelly of University College Dublin and Brendan Keenan, Group Business Editor of Independent Newspapers on Sept 30, 2008, the day the guarantee took effect. Kelly in a stunning tour de force, accurately presents the enfeebled state of Irish banking:

On October 02, 2008, Patrick Neary, the chief executive of the Financial Regulator appeared on RTÉ's Prime Time television programme, and in possibly the most bizarre performance by a public official on Irish television, since its launch in 1961, said that bad lending by Irish banks had nothing to do with the then international crisis which was all about liquidity. He said the banks had plenty of capital to absorb any losses on property loans and he did not believe that over-exposure to the property market was a weakness of the Irish banking sector.

Sunday, November 07, 2010

US Federal Reserve returns to Jekyll Island

President Barack Obama stands with Ben Bernanke before making a statement on his reappointment as chairman of the Federal Reserve during the President’s vacation on Martha’s Vineyard, Massachusetts, Aug. 25, 2009.

US Federal Reserve chairman Ben Bernanke spoke on Nov 06, 2010, at a conference held by the Federal Reserve Bank of Atlanta to commemorate the centennial of the Fed's birth, which was shrouded in secrecy on Jekyll Island in Georgia.

The conference took place at the Jekyll Island Club Hotel on Jekyll Island, Georgia - -  the same building where the 1910 meeting occurred.

In the 1830s, the US Congress with the support of President Andrew Jackson, refused to renew the charter of the then central bank, the Second Bank of the United States.

The secrecy of the 1910 Jekyll Island  meeting, has fed many conspiracy theories about the birth of the central bank, which Finfacts outlined last year:

The Federal Reserve and the paranoid style in American Politics

The following is a summary on the birth of the Fed from the Federal Reserve Bank of Atlanta:

Meetings can have lasting meaning, and a meeting on Jekyll Island, Georgia, 100 years ago this month was an important moment in the evolution of U.S. central banking. That meeting is also the reason for the gathering being held here today. An important outcome of the 1910 meeting was a proposal for an institution with multiple branches, which became the model for the Federal Reserve System.

The Aldrich-Vreeland Act of 1908: After a series of financial panics culminating in the Panic of 1907, Congress passed the Aldrich-Vreeland Act in 1908. This act established an eighteen-member National Monetary Commission chaired by Senator Nelson Aldrich of Rhode Island. The commission was charged with finding a way to reform the nation's monetary system. Progress toward that proposal began with the commission taking trips to major European banking centers and holding hearings in the United States. But by 1910 the commission could not agree on a plan.

The Jekyll Island Meeting of 1910: Aldrich then took matters into his own hands, meeting secretly with a group of bankers on Jekyll to formulate a plan. The group included Henry Davison, Frank Vanderlip, and Paul Warburg; also present were Aldrich's secretary, Arthur Shelton, and A. Piatt Andrew, a Treasury official. Warburg's attendance was critical because of his knowledge of European banking practices. Aldrich was well aware that his meeting with bankers outside of the commission proceedings would generate controversy; for this reason, the group met in private at a remote location.

Over the years, the clandestine nature of the meeting has been criticized as allowing undue Wall Street influence over the founding of the U.S. central bank. However, the meeting itself was just one step in the process that led to the creation of the Federal Reserve.

The Aldrich Plan: What emerged from the Jekyll meeting was the so-called Aldrich Plan, which was presented to the National Monetary Commission as a legislative blueprint.

The Aldrich Plan was a catalyst for debate about the role of the government and banking in the central bank's governance. The plan, and the bill that followed in 1912, proposed that a National Reserve Association would function as the U.S. central bank. The association would consist of a federation of regional bank associations, each presided over by boards of directors elected by local banks. This diffuse governance represented a departure from the centralized governance of European central banks. Aldrich's proposed central bank would promote macroeconomic stability. The proposals that came out of the Jekyll meeting remained the core of the subsequent steps in the creation of the Federal Reserve.

Aldrich put forward his central banking bill to the U.S. Senate in January 1912. The Senate did not act on it.

The Glass-Owen Bill: After the election of Woodrow Wilson in 1912, Congressman Carter Glass of Virginia assumed leadership of monetary reform. Glass had served for ten years as a minority member of the House Banking and Currency Committee and had led an investigation into concentration of power on Wall Street. Also working on monetary reform was Oklahoma Senator Robert L. Owen.

The Glass-Owen Bill kept the key macroeconomic stabilization mechanisms of the Aldrich Plan, but it differed in terms of the proposed institution's structure and governance. The Glass-Owen Bill provided for eight to twelve districts, with a reserve bank in each district—a departure from the Aldrich Bill, which called for fifteen districts, with a central bank branch in each. However, the most salient difference was the governance of the central bank. The debate about a U.S. central bank had been mired in disagreements about who would control the system—bankers or appointed government officials. The Glass-Owen bill limited banking interest representation. Of the nine-member reserve bank board of directors, only three could be bankers. Three other directors engaged in commerce, industry, or agriculture were to be elected by bankers, and the remaining three directors were to be named by the Federal Reserve Board in Washington, D.C.

The bill also identified the Federal Reserve Board as the controlling agency. The Board was made up of two ex officio members—the Secretary of the Treasury and the Comptroller of the Currency—and five other members appointed by the president and confirmed by the Senate.

The Federal Reserve Act of 1913: The reconciled bill was passed as the Federal Reserve Act and signed into law by President Wilson in 1913, and the twelve Reserve Banks opened about a year later.

Monday, November 01, 2010

Jon Stewart - - the king of US satire

President Barack Obama waves to the audience after taping an interview for The Daily Show with Jon Stewart at the Harman Center for the Arts in Washington, DC, Oct. 27. 2010. The irreverent 'news' show is one of America's most popular TV programs.

On Saturday, Oct 30th, three days before midterm elections, tens of thousands of people packed the National Mall in Washington DC at a rally organised by Comedy Central satirists Jon Stewart and Stephen Colbert, looking for a laugh and the opportunity to display their disenchantment with what the comedians said was a rally to restore sanity to America's political discourse.

It was a twin rally with Stewart leading a Rally to Restore Sanity while Colbert held his rally under the banner March to Keep Fear Alive and the comedians made clear their dismay with the angry mood of the nation.

Jon Stewart who presents a satirist's view of the news in his The Daily Show program, which is popular with liberal audiences, spoke on Saturday of 'fake news,' which he called, “the country’s 24-hour political pundit perpetual panic conflictinator,” that he added, “did not cause our problems, but its existence makes solving them that much harder.”

“The press can hold its magnifying glass up to our problems bringing them into focus, illuminating issues heretofore unseen or they can use that magnifying glass to light ants on fire and then perhaps host a week of shows on the sudden, unexpected dangerous, flaming ant epidemic,” he said, to roars of approval from the crowd.

Earlier in the week, President Obama appeared on The Daily Show to reach out to a young audience but he met some flak.

Clive Crook of The Atlantic magazine commented that the joke was on President Obama.

The president had come, on the eve of what will almost certainly be the loss of his governing majority, to plead his case before Jon Stewart, gatekeeper of the disillusioned left. But instead of displaying the sizzle that won him an army of youthful supporters two years ago, Obama had a Brownie moment.

The Daily Show host was giving Obama a tough time about hiring the conventional and Clintonian Larry Summers as his top economic advisor.

"In fairness," the president replied defensively, "Larry Summers did a heck of a job."

"You don't want to use that phrase, dude," Stewart recommended with a laugh, in a reference to President George W. Bush's infamous praise of his disaster agency head during the the Hurricane Katrina relief fiasco in 2005: "Brownie, you're doing a heck of a job."

Crook said the indignity of a comedy show host calling the commander in chief "dude" pretty well captured the moment for Obama.

There was worse.

"You wouldn't say you'd run this time as a pragmatist? It wouldn't be, 'Yes we can, given certain conditions?'"

"I think what I would say is yes we can, but..."

Stewart, and the audience, laughed at the "but."

Crook said actually they were laughing at Obama.

Bloomberg Game Changers: Jon Stewart; Bloomberg profiles Jonathan Stuart Leibowitz, now Jon Stewart.

Obama on The Daily show

Sunday, October 24, 2010

Life as Steve Jobs' boss

Apple CEO Steve Jobs at the All Things Digital conference, Tuesday, June 01, 2010.

Prof. John Kay wrote in his Financial Times column in Oct 2008 that John Sculley was chief executive of Apple from 1983 to 1993. He gave an extended account of his experiences to Fortune magazine, which posed the question: “Sculley – chump or champ?”

Sculley’s tenure included a period of great success - - Apple’s graphical user interface brought the present computer within the capabilities of everyone; and a period of serious failure -- Microsoft achieved almost complete dominance of the industry. How could one man have been both so right and so wrong?

Prof. Kay said the analysis overlooked the obvious answer - - that neither Apple’s success nor its failure had much to do with Sculley, an able corporate bureaucrat who rode the roller-coaster of high technology.

He said by describing Napoleon’s Russian campaign through the eyes of individual participants, Leo Tolstoy rejected the notion of history as the lives of great men. Of the battle of Borodino, he wrote: “It was not Napoleon who directed the course of the battle, for none of his orders was carried out and during the battle he did not know what was going on.”

On September 12, 1985 Steve Jobs stood up at an Apple board meeting and after years of internal political turmoil and power struggles, said in an unemotional voice, "I've been thinking a lot and it's time for me to get on with my life. It's obvious that I've got to do something. I'm thirty years old."

He returned to the company he co-founded in 1997.

John Sculley has given an interview on working with Steve Jobs:

Steve had this perspective that always started with the user's experience; and that industrial design was an incredibly important part of that user impression. He recruited me to Apple because he believed the computer was eventually going to become a consumer product. That was an outrageous idea back in the early 1980s. He felt the computer was going to change the world, and it was going to become what he called "the bicycle for the mind."

The one Steve admired was Sony. We used to go visit Akio Morita, and he had really the same kind of high-end standards that Steve did and respect for beautiful products. I remember Akio Morita gave Steve and me each one of the first Sony Walkmans. None of us had ever seen anything like that before, because there had never been a product like that. This is 25 years ago, and Steve was fascinated by it. The first thing he did with his was take it apart, and he looked at every single part. How the fit and finish was done, how it was built.

Apple became the leader of the mobile music market with the success of the iPod digital music, which was launched in 2001 .

Bloomberg BusinessWeek: Being Steve Job's Boss, Oct 2010

John Kay, Oct 2008: Could Napoleon have coped in a credit crunch?

Finfacts article, May 2010: Apple overtakes Microsoft as the world's most valuable technology company

Finfacts article, Oct 2010: Apple posts 70% surge in quarterly earnings eclipsing profit reported by IBM

Bloomberg Game Changers: Steve Jobs - - VIDEO: Through interviews with friends, former colleagues and business associates, GAME CHANGERS reveals the many layers of the intensely private Steve Jobs - his style of leadership, management and creative process. Interviews include Apple co-founder Steve Wozniak, former Apple CEO John Scully, journalist turned Venture Capitalist Michael Moritz, Dreamworks CEO Jeffrey Katzenberg, former Apple "Mac Evangelist" and Silicon Valley Entrepreneur, Guy Kawasaki and Robert X.Cringely, technology journalist and former Apple employee.

Monday, October 18, 2010

Irish State broadcaster RTÉ enters property selling market

Irish State broadcaster RTÉ has entered the property selling market in partnership with online property service

RTÉ.ie stated as the website of Radio Telefís Éireann, Ireland's National Public Service Broadcaster, which relies partly on mandatory licence fees payable by Irish resident owners of television sets, has launched the service 'RTÉ Property' and it is focusing on residential, commercial and holiday property sales.

The Irish obsession with property coupled with lax banking regulation, cronyism, a corrupt land rezoning system, poor planning and little concern for conflict of interest, has doomed the Irish economy.

During the bubble, senior politicians publicly urged citizens to buy houses in case they missed the boat; many of them did as the bubble headed for a peak in the crazy year of 2006 and they are now sinking with negative equity.

Maybe RTÉ might be able to get away with claiming that its property service is an advertising vehicle but in a well-run European country such an excuse would not wash.

If you present a business service to consumers under your name, you are responsible and excuses about partnerships would not matter.

The following is from a comment that was made in August on an online forum relating to issues of planning and conflict of interest.

The case that the planning system should be examined and reformed with the same seriousness that is being given to the banking crash, is very strong.

It was inevitable that in a small country with 88 planning authorities and a culture where conflict of interest is almost an alien concept, there would be serious consequences for the economy and much of the population, when there was a spike in demand for development land.

Development land is the main driving force of corruption across the globe and Ireland has been no exception.

In Ireland, the rezoning system has been used to create an artificial scarcity of land and during the boom site costs as a proportion of the cost of a house jumped and a small number became immensely wealthy from the system.

Restrictive planning is a big factor in house price inflation and in England, Tory controlled shires have traditionally restricted housebuilding to preserve the so-called green belt while in the cities, it has been in the interest of the Labour Party to keep populations hemmed in to preserve their core support base. In one year in recent times, there was no new house built in David Cameron’s constituency!

In Ireland, local government power had been transferred to county and city managers to reduce the opportunities for corruption but local councillors were left with the power to rezone agricultural land for development. It gave the often uneducated elected officials, a powerful means of raising funds, ostensibly for election campaigns.

RTÉ’s Prime Time programme in Nov 2007, disclosed statistics about the involvement of elected representatives in the land development and property business.

A total of 22% of councillors dealt in or developed land through their day jobs as estate agents, landowners and builders. In Mayo, that figure rose as high as 45%, in Offaly it was 44% and in eight other counties it was 33% or more.

Prime Time found that in Clare, declarations of interest showed that 97% of elected members had no beneficial interest even in their family home. In ten counties, two-thirds or more of the councillors had not declared an interest in the family home.

In Scandinavian countries, if a councillor intervened behind the scenes to influence a planning or rezoning decision it would be considered corruption – a criminal offence – but in Ireland, it’s the norm.

So in a country that is estimated to be 4% urbanised and despite the huge rise in new stock, Ireland has poor housing conditions compared with other countries with similar living standards, with floor areas per person of around a fifth less than the western European average, even though a large number of dwellings (45%) are detached houses.

The UK’s Policy Exchange think tank, argued during the boom that the Irish planning system creates too many ‘starter homes’, of often mediocre quality on monotonous estates, and allows insufficient quantities of larger, better quality properties. The lack of better properties has fuelled house price inflation, it argued, so that the high headline housebuilding figures gave a misleading picture of the true supply situation.

The quality of some apartments built in Dublin during the boom is a national disgrace; occupiers have not only to deal with negative equity but very limited storage space and poor soundproofing. In the Gas Works development in South Dublin, bicycles have to be stored on balconies. At least they don’t have to worry about storing coal in the bath — that’s if they have one!

Sunday, October 10, 2010

Irish corporate tax rate and FDI (foreign direct investment)

US chip giant Intel is Ireland's largest industrial employer. Since 1989, Intel has invested over $7 billion transforming the 360 acre former stud farm campus in Leixlip, Co. Kildare into a state of the art manufacturing centre of excellence.
Intel had peak employment in Lexlip of over 5,000; In 1930, Henry Ford, son of a native of Ballinascarthy, near Clonakilty, West Cork, had 7,000 employed at his Cork plant.

The following are contributions to a thread on the issue of the Irish corporate tax rate of 12.5%, on the Irish Economy blog.

A tax exemption on export profits was introduced in 1956; a 10% tax on manufacturing - broadly defined: it included growing mushrooms under galss - was introduced in 1981 as some companies were due to see their 1956 exemption expire.

Intel for example began on a 10% rate in the early 1990s.

The EC agreed in 1997 to one rate of 12.5% replacing the general corporate tax rate and the two schemes as outlined above.

The challenges for Ireland

A significant downscaling of costs and reform to have a governance system comparable with the Nordic model is necessary to meet the current challenges.

Declare open season on sacred cows; despite the crash, it’s private sector workers and business collapses where the real pain has been experienced.

The rest have experienced baby-step adjustments.

We have got most of the big US companies that are likely to locate in Ireland; the key challenge now is keeping them. This is why the recession period fall in costs is just not enough. Rivals in Eastern Europe have also had big drops.

Why has Intel got its original plant idle in Leixlip?; it has to have a strong reason to invest $3bn in another plant in coming years when the centre of economic gravity is moving eastward.

Research should focus on the food area; amazing isn’t it that Ireland’s cheese output could be as low as Sweden’s?; lower than in Spain and Greece while production in the Netherlands is six times the Irish level.

Amazing too that a New Zealand company could capture almost 40% of international trade in dairy products.

The the main focus of increasing exports should be in the single currency area.

Taoiseach Brian Cowen said last week there should be more trade missions to regions like Asia; we can’t be all over the place like a company with too many products or a restaurant with too many choices on the menu.

We have little recognition in Asia; Roy Keane and Boyzone gave us some; logistically it is also a big challenge.

I have some idea of what I’m talking about as I live in Kuala Lumpur!

EU Commissioner Olli Rehn recently said, Ireland has to prepare to be a higher tax economy and suggested that an increase in the corporate tax rate should be considered.

The European Commission is also critical of tax competition from Switzerland.

At present, companies in Lucerne for example, pay an average 23% combined local, cantonal and federal taxes on their profits depending. In two years time the burden will be reduced to 15%.

Adjacent canton Zug is well established as a location for the European headquarters of international firms, while Schwyz, Nidwalden and Obwalden also offer better incentives.

A KPMG study shows that global corporate tax rates were reduced by 7% between 1999 and 2009 with EU countries slashing their tax by 12% on average and Switzerland by 6%. Guernsey and the Isle of Man top the table with zero taxes on company profits. The British islands are followed by Montenegro (9%), and a group of countries – Bulgaria, Cyprus, Serbia, Albania and Bosnia & Herzegovina – on 10%.

In the canton Zug, about 30 minutes drive from Zurich, the corporate tax is about 16% but can fall as low as 9.5% for companies that do most of their business outside Switzerland.

Such a location may not suit big manufacturers.

There are 3 key tax factors in the attraction of Ireland for multinationals.

1) There is no tax on patent income

2) the corporate tax rate of 12.5%

3) R&D tax credits — it’s a while since I worked in MNCs but my hunch is that ‘R&D’ would be broadly defined and with capital allowances, the effective tax rate would be in single digits for big firms.

Microsoft operates 2 tax haven companies in Ireland.

Income from patents parked in Ireland is routed through Flat Island; licensing fees from 20 or more EMEA countries are routed through Round Island One.

As Round Island One paid over $300 million in Irish taxes in 2004, it is possible that half the corporate taxes paid by US MNCs are from the tax haven activities.

The tax haven income may well be worth up to $2m in taxes paid in Ireland - - 40% of total MNC tax paid.

As regards the zero tax on patent income, given that there is now an R&D tax credit, I don’t know what is the justification for it.

Irish residents are also tax exempt on patent income - - it is hardly the key motivator for innovation.

Intel CEO Paul Ottilini said in July in Aspen, Colorado that a new semiconductor factory at world scale built from scratch would cost about $4.5bn - - in the United States.

He said: “it costs $1bn more to build, equip and operate a semiconductor manufacturing facility in the US. Ninety percent of the cost difference is the result of tax and incentive policies.”

He said in Aspen: “At Intel, we generate 75% of our revenue and much of our profit abroad. The US tax treatment of that income makes it extremely expensive to repatriate that profit and invest here.”

Obama said this week that he is open to cutting the headline tax rate of 35% if it would be revenue neutral — eliminating various breaks.

FDI investment in Ireland has plateaued and while the country has been run in an appalling manner for decades, the positive aspect is the parallel MNC world.

As I have said before, without FDI, think of Albania or a big Sceilig Mhichíl theme park for American tourists.

We have had some new small scale projects in the past year and employment in the sector is back to 1998 levels.

We are not likely to be very attractive to emerging economy MNCc - - so we should keep the Yanks tuned up.

Ex-Intel boss Craig Barratt said Ireland is over-reliant on FDI. However, behind all the spin about developing the indigenous sector and advice from chairborne experts to put Mandarin on the curriculum, in the medium term Ireland has nothing else to rely on but the MNCs.

I reported earlier on Finfacts that Irish goods exports to China in H1 2010 were 1.9% of the total and only 6% of that 1.9% were from indigenous firms.

In the bubble years as the Irish became the second biggest investors in commercial property across Europe, policymakers didn’t give a damn about how new markets would be developed.

The reality now is that it takes years of perseverance, as long as key variables are positive, to develop new export markets.

Irish Economy blog: thread on FDI

Finfacts article: 1) Ireland can choose a path to greatness or perdition

2) EU-China Summit: EU27 exports to China in H1 2010 rose 43%; Germany accounted
for almost 50% of total; Ireland had trade surplus

Monday, September 20, 2010

US Rally to Restore Sanity!

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Rally to Restore Sanity
Daily Show Full EpisodesPolitical HumorTea Party
Jon Stewart announced his much-awaited “big announcement” on Thursday’s edition of his late-night program, “The Daily Show.” He plans to stage a rally in Washington to counter what he identified as extremists on either side of the political spectrum.

"I'm mad as hell, and I'm not going to take it anymore!"

Who among us has not wanted to open their window and shout that at the top of their lungs?

Seriously, who?

Because we're looking for those people. We're looking for the people who think shouting is annoying, counterproductive, and terrible for your throat; who feel that the loudest voices shouldn't be the only ones that get heard; and who believe that the only time it's appropriate to draw a Hitler mustache on someone is when that person is actually Hitler. Or Charlie Chaplin in certain roles.

Are you one of those people? Excellent. Then we'd like you to join us in Washington, DC on October 30 -- a date of no significance whatsoever -- at the Daily Show's "Rally to Restore Sanity." Ours is a rally for the people who've been too busy to go to rallies, who actually have lives and families and jobs (or are looking for jobs) -- not so much the Silent Majority as the Busy Majority. If we had to sum up the political view of our participants in a single sentence... we couldn't. That's sort of the point.

Think of our event as Woodstock, but with the nudity and drugs replaced by respectful disagreement; the Million Man March, only a lot smaller, and a bit less of a sausage fest; or the Gathering of the Juggalos, but instead of throwing our feces at Tila Tequila, we'll be actively *not* throwing our feces at Tila Tequila. Join us in the shadow of the Washington Monument. And bring your indoor voice. Or don't. If you'd rather stay home, go to work, or drive your kids to soccer practice... Actually, please come anyway. Ask the sitter if she can stay a few extra hours, just this once. We'll make it worth your while.

Schadenfreude from the old

Older people like reading negative news stories about their younger counterparts because it boosts their own self-esteem, according to a recently published study.

German researchers said older people generally are portrayed negatively in society and although they are
often described as wise, they are also viewed as being slow and forgetful.

And what about younger people?  Well, they just prefer not to read about older people.

Silvia Knobloch-Westerwick
These results come from a study of 276 Germans who were asked to read what
they thought was a test version of an online magazine featuring carefully
selected stories about younger and older people.

“Our results bolster the argument that people use the media to enhance their
social identity,”
said Silvia Knobloch-Westerwick, lead author of the study and associate professor of communication at Ohio State University.

“Older people and younger people have different goals when they use the
media, and it shows in what they choose to read.”

Younger people, who are less certain about their own identity, prefer to read
about other younger people to see how they live their lives, Knobloch-Westerwick said.

Older people, on the other hand, have greater certainty regarding their identity.  However, living in a youth-centered culture, they may appreciate a boost in self-esteem.  That’s why they prefer the negative stories about younger people, who are seen as having a higher status in our society.

Knobloch-Westerwick conducted the study with Matthias Hastall of Zeppelin University Friedrichshafen in Germany.  Their results appear in the September 2010 issue of the Journal of Communication.

The study included 178 younger adults (18 to 30 years old) and 98 older adults (50 to 65 years old).  All came to a computer laboratory, where they were told they were testing an online magazine that was not yet available to the public.

The experimental magazine was created specifically for the study and contained 10 carefully pre-tested stories.  Each story focused on one individual, but there were two different versions: one that had a negative spin and one with a positive spin (each participant was offered just one of the two versions).

For example, one positive article was headlined (translated here from German) “Visitation rights gained after daring protest – Demonstration at 100 feet high a success.”  The negative version had the headline, “Visitation rights denied despite daring protest – Demonstration at 100 feet high in vain.”

The stories included a photo of the person involved: half were clearly an older person and half were clearly a younger person.

Participants in the study were told they would not have time to read all the stories and were asked to click on the stories that they found interesting. 

Each was given a random mix of positive and negative stories about younger and older people.

The computer secretly logged which stories each participant clicked on and how long they spent reading each article.

All of the stories were extensively pretested by other participants to ensure that the stories were clearly positive or negative, and that the photos were clearly differentiated by age and that the people pictured were similar in how
likeable they appeared, Knobloch-Westerwick said.

Results showed that the older participants were more likely to select negative articles about younger people, but they did not show a strong preference for either positive or negative stories about people in their own age

Younger people showed low interest in articles about older individuals – regardless of whether the stories were positive or negative.  They did choose to read more positive stories about their own age group than they did negative stories, she said.

After participants finished browsing and evaluating the online magazine, they were given a short questionnaire aimed at measuring their self-esteem.

Results showed that younger people showed no differences in self-esteem based on what they had read.

However, the more that older people read negative stories about younger individuals, the higher the older people’s levels of self-esteem tended to be.

This study came about because a previous study by the same researchers, using this same data, had produced unexpected results, Knobloch-Westerwick said.  The original study had hypothesized that people prefer media messages that portray people like themselves – people of the same age and the same gender, in this case.

Overall, the original study found that was indeed true.  However, the researchers were puzzled by the fact that older people in that first study seemed as equally interested in stories about younger people as they were in
stories about older people like themselves.

“Now we know why older people liked reading about the younger people – they were looking for negative stories about them,” she said.

“Our new results go along with other research showing that people’s social identity helps shape what media messages we choose.  Age is just one type of social identity which may affect our media choices.”

Monday, August 23, 2010

Ireland's flawed smart economy strategy

Last week, we heard yet more about the government’s goal of creating a ‘smart economy’, this time in relation to the Leaving Cert maths and science results.

However, the government’s faith-based strategy will not provide an engine of  growth, and its approach is reminiscent of the fatal sense of infallibility it had about construction as a builder of prosperity.

We need to smarten up, fast
- -  article by Finfacts editor Michael Hennigan, published in The Sunday Business Post, Sun, Aug, 22, 2010.

SEE also Cowen's Innovation Fund Ireland, jobs, Irish start-ups and failed entrepreneurs - -  related articles at lower end of page.

Markets News Monday: Kingspan reports return to growth

Shares in building materials group Kingspan rose today more than 9% after it announced its first increase in operating profits in three years. It also said it will resume paying dividends.

Kingspan (Buy, Closing Price €5.08); Growth / dividend back on the agenda: Goodbody analyst, Robert Eason, commented -- "Kingspan has reported EBIT of €33.1m (+9% yoy) for the first half. This is significantly ahead of forecasts of €28m and management’s guidance in May for a decline of 'approximately 10%'. The variance reflects better top-line across all divisions (mainly outside the UK), which translated into stronger profits, particularly in insulation. EPS is further ahead due to a lower effective tax charge (16.5% versus 19%). The key takeaway from the results is the strong momentum given that sales were down 6% in Jan-Apr, but finished the period up 1.1% (-4% lfl). Management note that June was particularly strong. Order intake in most regions has also “trended positively throughout the period, and was substantially up in the Insulated Panel businesses globally” (order intake +15% UK and +14% in CEMEI). As a result, underlying profits grew for the first time in three years.

While management recognises the more cautious macro indicators recently, this has not been evident in either activity levels or pipelines ('order books across the business are as firm as they’ve been for some time' with order intake continuing to 'outpace 2009 albeit at a slower rate' than H1). Furthermore, it indicates that the improvements seen in Q2 have flowed through into Q3, all of which underpin a 'robust sales performance across the Group in the second half.' While short-term challenges will be managing rising input costs and pricing pressure in some markets, the Board has the confidence to reinstate the dividend (4c), which is 6 months ahead of our time frame. Given the better than expected H1 and positive outlook, we envisage increasing FY10 forecasts by over 10% to 27-28c but will be leaving subsequent years largely unchanged. These changes reflect our caution on top-line progression in the construction sector and the impact of higher raw material costs. Overall, the results demonstrate to us why Kingspan can outperform the wider construction sector (structural growth plus one of the strongest balance sheets in the sector) and why, therefore, the stock continues to offer value in the medium term."

Results detail

The German Ifo index due out this week could show a turning point for the economy, believes Rainer Gunterman, Eurozone Economist at Commerzbank. He shares his outlook with CNBC's Maithreyi Seetharaman, Yousef Gamal El-Din and Chloe Cho:

DCC plc, the business support services group, today announced conditional agreement to acquire Comtrade SA, a French distributor of consumer electronic and audio visual products to the retail sector in France. Comtrade is based in Paris and has 65 employees. The acquisition is subject to clearance from the French competition authorities.

Goodbody's Dan Cavanagh comments: "DCC has announced the acquisition of Comtrade, a leading distributor of consumer electronic products to the French retail sector. Based on the year to Dec 2009, Comtrade had revenues of €65m and operating profits of €3m. Initial consideration of €11.4m will be paid in cash for a 74% stake, rising to a maximum of €21.2m for the remaining interest over the next three years, on the completion of certain stringent earn out clauses. This places the deal, which is expected to close in October, at around 5-6x historical earnings. In terms of forecasts, this is unlikely to have any material impact to the current year’s numbers, but could add 2-3c (c.1-2%) to FY12. This deal is highly complimentary to the existing Banque Magentique business in France, which will: (i) extend SerCom’s footprint in the French retail distribution sector; and, (ii) offer integration savings on the back office and logistic functions of the combined business. At a group level, this bolt-on deal brings the total acquisition spend YTD to c.€50m, leaving plenty of head room for further deals as the year progresses."

ECB mindful of financial fragility; loose policy set to continue past year-end: Davy's Aidan Corcoran comments: "Axel Weber, the likely successor to Jean-Claude Trichet as governor of the European Central Bank (ECB), gave some guidance for a return to normal monetary policy on Friday. The Bundesbank president and former University of Cologne professor has ear-marked Q1 2011 as the likely time for an unwinding of the exceptional financing arrangements implemented in 2008.
The advance warning was clearly intended to avoid spooking markets. However, the softly-softly tone did not prevent a fall in the value of the euro of more than one US cent, to $1.27. With stimulus measures staying in place until year-end, the interest rate hike that would lead to a strengthening euro may be somewhat more distant than many commentators had expected.

The unusually loose monetary policy stance is good news for the Irish economy. Divergent inflation pressures within the 16-member euro-zone would pose a major problem for the ECB, which could be forced to undermine the peripheral recovery in order to keep prices in check. In this context, Weber's words provide some reassurance that the recovery, which is largely export driven, will be fostered.

Supporting the view that inflation concerns remain of secondary importance from the European standpoint, Irish Central Bank governor Patrick Honohan told reporters in Tokyo that 'inflation expectations are steady' and that he sees a 'stronger tone' to the European economy. Official data due for release tomorrow are expected to confirm strong export growth in Germany, while the Irish trade balance, due on Friday, should likewise show a recovering export sector."

The business community can live with a coalition or labor government, says Australia, Greg Bundy vice chairman of AIMS Finance. However, he warns CNBC’s Chloe Cho, Maithreyi Seetharaman & Yousef Gamal El-Din that if the government “lurches to the left”, markets will be unnerved.

Asia Markets

The MSCI Asia Pacific Index rose 0.1% on Monday.

The Nikkei dropped 0.68%; China's Shanghai Composite added 0.39%; Australia's S&P/ASX 200 Index fell 0.04%  and India's Sensex Index gained 0.16%.

In Europe, the Dow  Jones Stoxx 600 rose 0.49% Monday.

The ISEQ has declined 0.32% in Dublin.

CRH is upf 3.13%; Elan has added 1.82%; AIB has gained 3.58% and Bank of Ireland is up 3.57%.

European Benchmarks

Irish Share Prices


The euro is trading at $1.2695 and at £0.8163.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.


The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.
The BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index averaged 59% lower in 2009 than a year earlier.
On Thursday, July 15, 2010, the index  fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points,

On Friday July16th, the BDI rose 20 points or 1.12% to 1,700 to break the 35-session losing streak; on Friday last week, the BDI rose 112 points or 4.24% to 2,756.

Crude oil for September 2010 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $74.12 per barrel up 30 cents from Friday's close. In London, Brent for October delivery is trading on the International Commodities Exchange at $74.68.

The spot price of an oz of gold is trading in New York at $1,226.20, down $1.80 from Friday's close.

Eurozone recovery loses only slight momentum in August; Growth remained dependent on Germany and France

The Markit Flash Eurozone Composite Output Index, based on around 85% of usual monthly survey replies, fell to 56.1 in August, down from 56.7 in July, to signal only a slight loss in growth momentum over the month. The reading was still consistent with a robust rate of expansion and combined manufacturing and service sector output has now risen for thirteen consecutive months.

However, the solid outcome at the headline level masked worrying divergences between the national economies, as growth remained particularly dependent on the big-two of Germany and France. Eurozone manufacturers and service providers both reported increases in output during August, with manufacturing again leading the way. Although the pace of expansion eased in both sectors, their respective average growth rates so far in Q3 2010 are only slightly below those for Q2.

The deceleration in business activity growth was mirrored by an easing in the rate of expansion of new business. Manufacturers reported the faster increase in new orders, despite growth easing to the slowest of the year so far. Service providers saw a slight pick up in the rate of increase in new business. This suggested that growth again reflected improving domestic market conditions, especially given that manufacturing new export orders rose at the slowest pace since January and service sector business confidence hit a four-month high.

Output prices rose negligibly for the first time in four months, as higher factory gate prices offset a drop in service sector charges. However, the rate of inflation at manufacturers eased to its slowest in the current five-month period of increase, whereas the decline in service charges was the weakest since tariffs first fell in November 2008.

Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said: "The recovery lost only slight momentum compared to the bumper growth seen in the second quarter, with the flash Eurozone PMI for August consistent with gross domestic product for the region growing at a quarterly rate of 0.7%. However, the robust headline number masks some worrying developments.

"Of greatest concern, the upturn continued to be all-too dependent upon France and Germany. Growth in the rest of the euro area slowed to near stagnation, and services even contracted again as austerity measures bite. There is little evidence here to suggest that buoyant business conditions in the region's core nations are spilling over to the benefit of the periphery, meaning an increasing divergence in the euro area's two-speed recovery.

"Furthermore, manufacturing exports showed the smallest rise since January, meaning the stimulus to the recovery from global trade is waning as economic growth slows in important trading partners around the world. This could therefore lead to slower growth in the Eurozone's core in coming months."

The Eurozone PMI (Purchasing Managers' Index) is produced by Markit and is based on original survey data collected from a representative panel of around 4500 companies based in the euro area manufacturing and service sectors. The flash estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data.

We are adding news stories to the blog system as  we await a glitch in the news database to be rectified  on Mon, Aug 23rd.

News stories up to Friday Aug 20th are accessible from here:

Finfacts News Home Page

Eurozone stories and Related list at bottom of the page accessible here.

Monday Newspaper Review - Irish Business News and International Stories - - August 23, 2010

The Irish Independent reports that record numbers of applicants have pushed up the entry points for the majority of college courses this year.

Points have risen for a massive 700 courses, while remaining the same or dropping for the other 560.  And the figures reveal there is intense competition for courses that are tipped to secure the jobs of the future.

Some of the biggest point surges are in science and computing, reflecting higher student demand, in response to the advice that these will provide the skills needed to
secure employment after college. Medicine is also much harder to get into this year than last -- and, for the first time, a nursing course hit the 500-point mark.

The rising points for medicine will renew controversy over the Health Professionals Admission Test, which, instead of creating a more level playing pitch, appears to have
created new distortions.

Points for key courses in agriculture are also up this year.

But areas such as law, construction and business experienced a downward drift in points in key courses. Among the 851 honours degree courses, points increased for 462, while points fell in 216 and remained the same for 61.

The three Dublin universities all reported more point increases than decreases, as did NUI Galway and NUI Maynooth.

However, the position was reversed in the two Munster universities, with a decline in points for many courses in both UCC and the University of Limerick.

Points for degrees at UCD almost universally increased -- reflecting the first-preference popularity of its degrees.

Analysis shows that of the 428 higher-certificate and ordinary-degree courses, 233 experienced a points increase, while points fell in 93 and remained the same for 50 courses.


While some CAO applicants will be disappointed this year with the point increases, there were never so many offers.

It has been a record year all around for college applications, offers and acceptances, so far.

There were more than 77,000 applicants and more than 56,000 of those have received at least one offer, either for an honours degree course or an ordinary-degree/higher-certificate course.

More than 7,000 applicants have accepted a place on earlier rounds, up 12pc on last year.

Last year, 45,000 college places were filled at the end of the CAO offer season, which was the biggest number ever.This year, as well as the 45,485 students who sat the Leaving Cert and applied to the CAO, there were a further 20,000 applicants who sat the Leaving in previous years.

 Many of these 20,000 applications came from people who were in the workforce and had lost their jobs or wanted to improve their career prospects.

And in engineering, some courses experienced an increase in demand and higher points.

Many students are automatically ruled out of engineering because they don't have the necessary "honour" in maths.

Only 16pc of Leaving Cert students take maths at higher level -- a figure that worries the Government. Students who are offered places in science, engineering and maths were urged last night to take them.

The Irish Independent also reports that some debt holders in Eircom could receive as little as 10 cent in the euro if the telecoms company defaults on its €3.6bn of debts, according to an analysis by a leading ratings agency.

Standard & Poor's (S&;P) has done a 'recovery analysis' on the debt held by the parent companies that own Eircom.

While senior secured debt is likely to have recovery rates of between 90 and 100pc in the event of a default, debt holders further down the credit list could be facing big haircuts.

The second-lien loan, known as loan D, is only likely to leave holders with a recovery of between 10pc and 30pc of their principal.

The holders of a €425m payment in kind (PIK) loan would be facing the most severe haircuts. "The recovery rating on this debt is six, indicating our expectation of negligible recovery (0pc to 10pc) in the event of a payment default,'' state the company's analysts.

Eircom strongly rejects any suggestion that it could default on its debt load. However, speculators in the market who hold bond insurance -- known as credit default swaps (CDS) -- take a different view and this has sent the value of CDS contracts soaring in recent months.

S&P gives Eircom a valuation of €3bn in a distressed environment. It says that while Eircom has leading market positions and a "satisfactory business risk profile'', a default from excessive leverage cannot be ruled out entirely.


While Eircom is not in default on any loans, the pressure is building because the company's revenues and earnings are falling, potentially triggering a breach of its loan covenants.

S&P says: "We think revenues will continue to fall in the coming quarters as difficult economic conditions are likely to continue. This will compound structural declines in fixed telephony revenues."

Offsetting this is Eircom's ambitious cost-reduction programme, which has been noted by the ratings agencies.

The pension deficit at the company has also been tackled in recent months, but this has had little impact on the debt ratios, the agency points out.

"Eircom's cash-generating ability is likely to remain constrained because of its high interest burden, a difficult operating and competitive environment,
restructuring payments and significant capital expenditures,''
said the latest note.

While the company is facing a serious debt headache, the liquidity position of the company is strong, states the agency.

Eircom has €267m of unrestricted cash to call on in case of emergencies and another €123m in an undrawn credit facility. The debt problems facing the company are more long term, the agency accepts.

It points out that the undrawn facilities and cash cover "modest debt maturities'' of €44m in the next financial year and €88m in financial year 2012. Eircom's financial year ends in June each year.

The company seems unlikely to get any relief from the ratings agencies in the foreseeable future. S&P concludes: "At this stage, we deem the chances of a higher rating in the future to be remote, as this would likely require the removal of covenant pressure on a sustained basis."

The Irish Times reports that State toxic assets agency Nama has written to bank chief executives asking them to step up their efforts in providing it with full information about the loans that it is buying from them.

Nama will this week complete the takeover of loans with a nominal value of €8 billion from State-owned Anglo Irish Bank, whose reckless lending during the boom left it with a severely damaged loan book.

The agency will pay the bank slightly less than €4.8 billion for the loans, as it is applying a discount of just over 60 per cent to the value of the debts. The latest estimates of the cost of saving Anglo run to €25 billion.

According to bank sources, Nama chief executive Brendan McDonagh has written to his opposite numbers at Anglo, AIB, Bank of Ireland, Irish Nationwide and the EBS asking them to step up their efforts in providing due diligence on the loans that they are transferring to the agency.

Mr McDonagh’s letter also says that the agency has appointed Deloitte as its internal auditor and states that the firm will have the power to scrutinise the banks’ own processes for dealing with Nama.

Mr McDonagh has also told the bank bosses that after Nama has taken over the third tranche of loans from the five institutions, it will change how it times its purchases of their debts.

For the first and second tranche, the agency waited until all the institutions were ready to begin transferring their loans before it began taking them over.

It will continue with this approach for the third tranche, which it will begin buying next month. However, for the fourth, fifth and sixth tranches, which it will be taking over in October, November and December, it will begin taking over the
loans as each individual institution is ready to hand them over rather than waiting until all of them are ready.

To date, Nama has bought loans with a nominal value of €28 billion from the five banks, which is around 35 per cent of the €80 billion total that it is due to buy. It has paid less than half what the loans were originally worth.

Nama has already revealed that the banks originally misled the agency on the real value of their loan books and on how many of the debts were actually producing an income.

The result is that the discounts at which Nama is buying the loans are a lot bigger than what was originally expected. Nama completed the takeover of the second tranche of loans from all participating institutions except Anglo last month.

It took over €5.2 billion worth of debts from the other four banks, paying an average discount of 48 per cent.

It took longer for Anglo to transfer its loans as there were more of them and the total amount of money involved was higher than that owed to the other four put together.

The 60 per cent discount it is applying to the €8 billion worth of Anglo loans is far higher than the average discount applied to the debts owed to the other banks.

Nama is taking over all property-related loans worth more than €5 million owed to the five banks involved. It has pledged to pursue the developers involved for the full amount due.

The Irish Times also reports that the organisation set up five years ago to collect and recycle the Republic’s old TVs and washing machines is now a profitable exporting business with substantial cash reserves in the bank.

Waste Electrical and Electronic Equipment (WEEE), the industry-backed body that collects and recycles electrical and electronic goods, just reached its fifth anniversary this month.

The not-for-profit company’s chief executive, Leo Donovan, says it is one of the best performers in its league in Europe, because Irish people recycle more electrical goods than their fellow EU citizens.

The average across the EU is 4kg per person, but Irish people recycle 9kg per person. Their enthusiasm for recycling has turned into solid business that reuses and exports most of the material it collects.

Since it was set up in 2005 in response to a Brussels directive, it has collected and recycled more than 33 million units, which includes everything from dishwashers and TVs down to energy-saving lightbulbs.

Its brief covers everything that has either a battery or a plug.

That material included enough TVs and monitors to go around the M50 14 times. The metal contained in all the small household appliances it has collected since 2005 comes to six times the weight of the steel used in the construction of the new stadium at Lansdowne Road. It has collected enough fridges, washing machines and dishwashers to fill Croke Park 14 times.

WEEE is funded through industry membership fees and producer recycling charges, which are passed on to the consumer.

The material it collects falls into three basic categories: large goods, such as washing machines, fridges and dishwashers, TVs and monitors, and small household appliances.

The large goods are sent for initial processing to a plant in the north, from where they are then sent to Britain. There the material is broken down further and baled and sold as a commodity.

The TVs and monitors are 100 per cent recyclable, according to Donovan. They are processed in Ireland, and the glass is separated out and sold for reuse in new TV screens and monitors.

The smaller household appliances are processed in Ireland, where the material is prepared for reuse and exported.

“Overall, around 75 per cent of what we collect is exported and sold as raw material on world markets,” he says. The company’s export business is worth around €3 million a year, and supports jobs in collection and processing.

WEEE costs around €8 million a year to run and it generates a surplus on its activities. The company uses this to ensure that it maintains reserves.

The cost of collecting and recycling equipment is paid up front, before it is used or reaches the end of its useful life. The company has to maintain reserves against what it is paid up front.

WEEE has built up about three years of reserves, or €24 million, at this stage.

“So, if everything stopped tomorrow, we would still be able to meet our commitments to collect and recycle the goods that people have already paid for,” Mr Donovan says.

In a new development, the company has begun to target batteries used in consumer goods.

The Irish Examiner reports that Finance Minister Brian Lenihan said he understands the public "incomprehension and anger" at the vast sums of money being pumped into the banking sector, particularly Anglo Irish Bank.

Delivering the keynote speech at the annual Michael Collins commemoration ceremony in Béal na mBláth yesterday, Mr Lenihan said fury was "a quite reasonable response to the incredible recklessness and incompetence" that fuelled the banking crisis and that "like others, I hope that anyone who broke the law will face its full rigours". Defending Government support of the banks, Mr Lenihan said its decision was based on expert advice that it needed to stand behind the banks to ensure a sustainable financial system is established.

"And, in the case of Anglo, to ensure that the resolution of debts does not damage Ireland’s international credit-worthiness and end up costing us even more than we must now pay," Mr Lenihan said.

The minister said neither the bond markets nor our EU partners would tolerate any slippage and this meant, inevitably, that the next budgets will continue to have strict control of expenditure.

"What I can promise is that as minister I will try to ensure that the burden is borne by those who can best afford it," he said.

Speaking to reporters after the ceremony, Mr Lenihan said research had shown that those who were in the most exposed position had suffered the least in the recession.

He said he and the Governor of the Central Bank, Professor Patrick Honohan, agreed matters concerning the banks needed to be resolved quickly and that whatever solution was found "must keep the cost to the taxpayer to an absolute minimum" and must also secure the approval of European authorities.

Mr Lenihan said his department was in discussions with European officials to bring matters to a speedy conclusion.

He also said he did not believe his health was impairing his capacity to do his job. The minister, who is suffering from pancreatic cancer, said he had been to every cabinet meeting since January with the exception of a couple he missed while on European business. He also said he had not shirked participation in Dáil question time or avoided his legislative duties while completing various treatments.

The minister, who made history as the first Fianna Fáil party member to deliver the keynote oration at Béal na mBláth, called on all in public life to let the spirit of Michael Collins inspire them through the current economic crisis

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Editor's Picks:

Gillard to push for minority coalition
- - Australia set for hung parliament as elections deliver blow to PM.

Brokers face fines over role in flash crash   -- US watchdog clamps down on risk-management controls; The Financial Industry Regulatory Association is undertaking a “sweep” of broker-dealers that offer market access to high-frequency traders to find out if they allowed these firms to run computerised trading programs – algorithms – without undertaking proper risk-management controls.

Bonuses furore hits banking chiefs’ pay  -- Average chief executive pay dropped to $6m in 2009.

Tax clouds gather over Greek high earners  -- Yachts go up for sale as authorities launch probe; Last week the Finance Ministry set a target of collecting at least €2.5bn this year in fines and back taxes owed by thousands of Greeks who “forgot” to declare ownership of yachts, swimming pools and luxury cars on their annual tax return.

Suppliers collapse as contracts go on hold - - With billions of pounds in UK government orders cancelled or put on hold, insolvencies have surged among businesses in health, social services, education and defence.

Pessimism remains over UK economy  -- Almost half of UK households polled expected finances to worsen in the next year, while a quarterly survey of business professionals revealed weakening confidence in the recovery

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Editor's Picks:

Housing Fades as a Means to Build Wealth, Analysts Say - - “There is no iron law that real estate must appreciate,” said Stan Humphries, chief economist for the real estate site Zillow. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”

Now That’s Rich - - Paul Krugman says Republicans and conservative Democrats are eager to give hundreds of billions of dollars to the 120,000 richest people in America.

Proposed Restrictions on the News Media Cause Alarm in South Africa - - The Protection of Information Bill and a plan for a media tribunal have come amid increasing hostility between the governing African National Congress and the

Students, Welcome to College; Parents, Go Home  - - Faced with parents who have a hard time saying goodbye to their freshmen, colleges are formalizing the split; As the latest wave of superinvolved parents delivers its children to college, institutions are building into the day, normally one of high emotion, activities meant to punctuate and speed the separation. It is part of an increasingly complex process, in the age of Skype and twice-daily texts home, in which colleges are urging “Velcro parents” to back off so students can develop independence.

Stock Swing Still Baffles, With an Ominous Tone  -- Months later, analysts are still seeking the cause of a quick and mysterious plunge of the stock markets; some suspect a conspiracy; At a Washington hearing on the flash crash last week, Kevin Cronin, director of global equity trading at Invesco, a big fund manager, warned about “improper or manipulative activity” in the stock market.