Ireland’s Finances

 Posted by on February 6, 2009  Add comments
Feb 062009

What’s the difference between the government wage-packet and one from a private employer?

Well, one big difference is this: the government immediately gets to take back half the wages it pays out, in tax and social insurance.  It then takes another 20% of every euro spent out of the remainder, and every time a euro of that money is further circulated, the government takes another bite.  In the end it all goes back into the pot.

On the other hand, when a private employer pays wages, the money is gone.  He has to make more profits to pay the workers next week.

Therefore, the effect of public sector pay is exaggerated in two directions.  On the one hand, it doesn’t cost the government anything like what it would cost a private company to employ someone, because the government immediately takes back most of the money and grabs the rest as it filters through the economy.  This is not something a private employer can do.

So the real public wage bill is less than half of what it appears to be, which you would imagine is a good thing, but there’s a downside.  When you cut the public wage bill, the savings are far less than you think.

Anyway, it’s all a bottle of smoke.  The recent pension levy on the salaries of public servants will have almost no effect on the public finances, because it’s such a tiny element of the problem.  It won’t save the €2 billion so much beloved of Biffo.  It might save about half of that, if the affected workers don’t stop spending what they have left, depriving the economy of VAT and downstream income tax.

Did you know that the national debt is about 3% of the total debt incurred by this country through private and commercial borrowing?  Government debt is about €50bn, but the total borrowings of this country are somewhere around €1500bn.

That’s right.  You read it correctly.

One thousand five hundred billion euros.


That’s what this country owes.

€400,000 for every man., woman and child.  If there are five people in your household, that’s €2 million of debt they can pin on you.

Now you have to ask yourself something: did you incur this debt?  Did you remortgage your house to buy an apartment in Bulgaria?  Did you buy into the delusion that the price of a house is the same thing as its value?  Did you borrow €600 million to build a gigantic apartment complex in Dublin 4, or a skyscraper in Chicago?

I know someone who bought a house in Dublin.  An ex-council, semi-detached house in a fairly basic area, and for that he paid nearly half a million euros.  To be more precise, I should say he borrowed half a million euros.  Some bank decided that his newly-acquired ex-council house was worth as much as a beachfront property in California with its own swimming pool, or a chateau in the South of France.  So here we had a situation where we convinced ourselves that we weren’t living in ratty old former council houses with some knacker riding a piebald up and down the footpath outside our door, but instead we were living an Elysian dream.  Half the country thought they were living on the Upper East Side of Manhattan, and kept the curtains closed in case they spotted the knacker on the piebald and the dream dissolved.

And in that delusion, the bankers collaborated.  As did the property programmes on television, and the empty-headed wafflers who presented them, and the celebrity architects, and the estate agents, and the builders and the government.

Now, I’m about to do something you haven’t seen before. I’m going to let the government off the hook, but only a little.  You see, I’ve been saying here for three years, since I started, that the whole thing was a crock of shit, and I’ve been pointing the finger at Fianna Fáil.  This is true.  The politicians rode the gravy train, along with the bankers and the builders.  Every one of them had their snouts in the trough, and every one of them spun us the same line of pseudo-technical nonsense to bamboozle us.

I thought they were cynical, and I was right.  The politicians, the bankers and the builders were as cynical as it gets.

I thought the politicians, bankers and builders were greedy and in that I was also right.

But I never for a minute grasped just how fucking stupid the politicians, bankers and builders were.

It’s only now beginning to dawn on me that none of them a had a clue what they were doing, and the government still doesn’t.  After all, we’ve had a succession of finance ministers with absolutely no knowledge whatever of finance.

We had Ahern, who was nothing more than a political corner-boy with no training, education or expertise, a self-serving, two-faced little toad who could barely write his own name.  He was followed by Charlie McCreevy, a glorified bookie and political chancer, who believed in spending every penny he got.  He was followed by Cowen, the current Taoiseach, a man of better intellect, but with a legal background, and he in turn was replaced by another lawyer, Brian Lenihan.

What’s missing from that list, apart from integrity?

That’s right: what’s missing is any knowledge whatever of anything practical.

These were the inflated, self-aggrandising fools who preened themselves and felt gratified when a billionaire patted them on the head.  Good lads.

Peasants.  Plebs.  Out of their depth and holding on like grim death to the wads of cash.

I’m also letting the bankers off the hook, but only a little, because I think they may have believed their own bullshit.  How often in recent years have you heard an insurance policy, or a bank account described as a Product?  Not a service.  Not a deal.  Not an arrangement, but a Product.

This is self-delusion by bankers, aware of how insubstantial the thing is that they do, and so desperate to make it feel like a real activity that they adopted the language of hard industry.

Did you hear that fool John Hurley who runs the Central Bank last year assuring us that everything was all right? Do you remember him telling us that he’d stress-tested the banks?  More spurious theft of language from real, hard industry.

Will I tell Mr Hurley what a stress test is?  A stress test is where you take a piece of steel or concrete or laminated polycarbonate, and you twist it and stretch it and squash it and stamp on it and set fire to it until it fucking breaks!  And then you know how strong it is.

Hurley didn’t stress test the banks.  What he did was turn to his golfing partners some Saturday afternoon, and say, Eh, look, Fingers, Seánie, could I have a quick word?

And they said, Sure, Johnny.  What’s up?

Well, lads, I was just wondering if you were up to anything dodgy.  Everything ok?

No bother Johnny-boy.  Everythings’s laughin’

Oh all right.  That’s fine then.

Stress-test me bollix!

I’m even going to let the builders off the hook.  Not because I think they were less than greedy.  Not because I think they aren’t ignorant, illiterate gobshites.  Not because I think they’re honest.

No.  Just because they’re a crowd of pigs in the trough, and what would you expect from a pig but a grunt?


Previously on Bock:

Property Values in Ireland

House Prices

I Hate Duncan Stewart

Economic Mismanagement — The Irish Experience

Ireland second wealthiest country

Irish Government’s Budget Deficit

  29 Responses to “Ireland’s Finances”

Comments (29)

    Bock, surely a private employer pays tax back to the government for every Euro paid to employees in exactly the same way the civil servant’s pay gets deducted.
    Again, in the hands of the employee, what they then spend that money on gets taxed in turn, VAT, Corporation Tax etc so the multiplier effect works exactly the same way for both.
    They’re equal.


    No. A private employer can’t take tax back out of an employee’s pay-packet. Only the government can do that.


    A private employer deducts tax on the governments behalf from the gross pay, pays the employee net of income tax and PRSI and is responsible for forwarding the deducted taxes to the government, just the same as deductions from government employees.


    The private employer doesn’t get to keep the money. That’s the difference.


    Well described, Bock.

    The media seems to have missed the fact that Cowen announced in the Dáil that the pension levy would be taken from gross income, but others later said er… no… erm… after tax actually. That means that Cowen will be making far less than he boasted on his attack on public service workers.

    He didn’t even know.

    He needs to be sacked for years of incompetence, along with all of his incompetent pals.


    The PAYE worker will always be fucked in the ass. If you manage to calculate the amount of tax you should be paying and discover you’ve been paying too much, good luck getting your money back.You have to go chasing up the government for it.You have to deal with bureaucratic bullshit.
    If you were to calculate your tax yourself like a business owner then you too could partake in what has kept these slimy bastards in place so long. Imaginative accounting, where every meal becomes a tax deductable ‘business lunch’. Every journey a ‘business trip’. And if you didn’t pay enough, well the government have to chase you up. That is, if you weren’t already a member..


    It is worth mentioning that as well as the politicians, bankers, property developers the general population was and are resposible for the bulk of the mess we are in. They bought into the greed and avarice of the last few years.
    When Ireland was at it’s richest (on paper anyway) the populace spent their riches on SUVs, Overseas property, Holiday homes, shopping in New York etc. and we all were bored silly listening to people talk about how rich they were.


    Ok Bock. That’s the history and a sad story it certainly is. But what’s the future ? It’s no longer a question of how do we get out of this mess but a question of how do we survive without the IMF moving in. Remember Mr. Micawber’s definition of happiness and misery. Well this country is up to it’s neck in misery, and a large part of that misery is the cost of the public service. We have to either reduce the cost of running the country or increase the tax intake. It’s that simple. The government don’t have the balls to increase PAYE so they have decided to make the public sector contribute a bit more towards their gold plated pension. If a private individual wanted a pension with the same benefits they would have to contribute twenty five per cent of their salary, so even at thirteen per cent the public sector are doing well. It may be a reduction in gross pay but it’s not a pay cut. Everything they contribute will come back to them eventually. If you drive a Rolls Royce well then you should be prepared to pay for it. The two things wrong with the governments approach to this, and it’s so typical of these brainless cunts. is that the increase should only apply to salaries over 50 grand and public servants should have the option to opt out of the pension if they don’t want to pay the extra premium and take out a personal pension just as the private employee has to do. But somehow I don’t see too many public servants taking that option ! We all know how we got here and ultimately it’s down to the gobshites that elected and re-elected this bunch of numpties, not the actual numpties themselves. Hard times a coming !


    Depressing stuff, Bock.

    And there’s hardly a voice raised for those who paid half a million for crap houses. Time and again, the liberal establishment speak up for the social welfare recipients, some of whom were fit for work but never bothered their arses when there were thousands of jobs available. They have guaranteed houses, guaranteed benefits, guaranteed medical cards. The people who think twice about taking their kids to the doctor are those who work every hour to pay the mortgage on a grim house in some grip of an estate.

    Sorry – personal prejudice.


    When the default on all that debt happens, the government’s bank guarantees will activate, and the borrowings of property developers and the idiots who bought apartments in Bulgaria will become part of the national debt.

    When that happens, we won’t be discussing the public service pension bill because the national debt will be €200 billion. Forget about pensions for the public service. It’s academic. Nobody will have a pension.


    A small point of order, Bock.

    Charlie McCreevy was never a bookie. He was an accountant and co-owner of a practice called Tynan Dillon.

    You may be confusing his interests in horse racing and that his former constituency secretary and best buddy, Michael Fitzpatrick, now a TD, was and is a bookie.

    Fitzpatrick’s son, Darragh, is also a bookie and a County Councillor.

    One big happy clique, yes. But no, McCreevy was not a bookie.


    So Fintan O’Toole was right on the money about McCreevy in December’s I.T.


    Primal — McCreevy isn’t a bookie in the same way that Ahern isn’t a toad.

    Darwin — That just about sums him up.


    I see that my income levy and pension levy have been put to good use, as I knew they would……
    Bank of Ireland have issued a pay rise for their boys.
    Ah that’s mighty, Brians!



    The future problem as I see it……. We, the ordinary people, will have learned from this. We won’t get our fingers burned again because we learn from our our mistakes. However, move forward a couple of generations and the overwheming desire for greed and corruption will seep back into society because those with the experience to call a halt will have gone to the big gravy train in the sky. I know, I know I can be accused of total pessimism but there are signs in our history books that this is not the first time our global affairs have spiralled into this mess.


    Ireland’s NEW DEAL.

    The two Brian’s have finally worked out how to spell ABYSS.

    They are now having late night meetings on how they can make up a sentence including the phrase “Staring into the”.

    These people are incompetent maggots.

    The €8Bn would be better spent funding a new bank, and using fractional reserve banking, would allow the creation of €80Bn on unencumbered credit.

    The bailout of AIB & BoI is the biggest robbery in the history of this state and Sovereignty is now going to sold to the whoremasters at Goldman Sachs.

    By giving a guarantee to these banks the two Brian’s have killed the State stone dead.


    It’s fractional reserve banking that created this mess in the first place.


    Fractional reserve banking. I had to look it up, because I’m not familiar with most of the bullshit language of high finance.

    Fractional reserve banking seems to be the practice of not keeping enough reserves to cover your obligations.

    No doubt you’ll set me straight if I’m wrong, but isn’t that what all the banks did, resulting in a complete fuck-up of the world’s finances?

    It seems to me that if you lend money you don’t have, it’s either fraud or counterfeiting, or both.


    C’est La Craic

    I disagree. Fractional reserve banking did not create this mess. The global criminal abuse of fractional reserve banking caused this mess.

    Many wou cite fractional reserve banking as the cause (I don’t know your opinion) believe that reverting to a gold standard would (if not solve the problem) ensure that it cannot recur.

    There isn’t enough gold on the planet to satisfy the “currency” need.

    Our economic system depends entirely on faith.

    That is the faith in a fiat currency.

    What’s the difference between a euro banknote and a euro credit/debt in a bank account? There is none, both have no intrinsic value. Both are dependent on faith.

    A fiat currency is backed only by faith in the government which issues it.

    I suppose I could go on but, the problem is not fractional reserve banking as such but the loss of faith in Government and the shadow global banking system.

    The real problem is that Gloablisation as a political and economic system is imploding.

    This has only begun. We are headed at great speed to deep and painful depression. Your Government knows this and is lying to you. RTE (and other media) know this and are lying to you.

    They will propagandise “stimulation” while your sovereignty and freedom burn.



    My apologies for soiling your site with bullshit.

    If people knew what the two Brian’s were up to there would be revolution.

    I can see your instinctive logic and revulsion at the idea that a bank can take in a deposit of say €100 and lend out €1000 by maintaining only a fraction of deposits on call. However, on “issuing” credit of €1000 an equal and opposite debit is created. If you borrow €1000 from a bank and open a deposit account with that same bank there is no creation of “money”.

    Banks themselves do not create money. Governments use banks as agents to fulfil the “currency” needs of the economy. There must be a currency, whether it is shells, gold or paper is irrelevant. Currency is essential in any economic system beyond barter (which is where we may be going).

    It is not fractional reserve banking which caused the problem, it is the wilful neglect of government (ours and others) to apply the controls necessary to protect the currency and thereby “keep the faith”.

    The concept of fractional reserve banking originates (I think I am right here) with the goldsmiths of Italy. They had secure storage by the nature of their trade. People would request that they keep their gold safe (on deposit). The goldsmiths would charge a fee. The goldsmiths worked out that not everybody would come looking for their gold at the same time. The goldsmiths then started issuing “certificates” of deposit which became “as good as gold”. The goldsmiths then issued more certificates than they had gold and charged a fee (interest) on the issue of the certificate. Bank notes were created.

    The goldsmiths became rich and arrogant and started investing in risky schemes. The schemes failed. Goldsmiths were killed by angry mobs.

    It was not the banknotes that caused them to die it was greed.

    I think it is unfortunate but true that the real currency of this glorious republic for the last decade has been greed.


    True enough it’s not the sytem that has caused this mess but the criminal abuse of it, in the same way that it’s not the gun that kills but the person pulling the trigger.
    You also point out, rightly enough, that it’s a question of faith. Well I have no faith in the people who control national and international finance. The system in inherently corrupt. The people employed in any new national bank would without doubt be the same old heads who’ve been hanging around other banks.


    C’est La Craic

    I also have no faith in the people who control national and international finance.

    I however disagree that the “system” is inherently corrupt, if by that you mean an economic “system” that requires a currency as a mode of transaction. Such a system is not corrupt, and I find it difficult to conclude that any “system” is corrupt, other than a system which avowedly sets out with an amoral purpose. We might disagree on what is or is not moral; I dot not use the term in a religious context. So for morality I rest on the Constitution of the Republic (though not in particular this Gombeen Republic) It is people who are corrupt. That is our nature.

    That is why we have (in a democratic republic) checks and balances. What has happened here is that those appointed to the role of guardian have catastrophically failed in their duty. The Regulator and the head of the Central Bank.

    They became victims of regulatory capture. They WANTED to believe the shit they were being told.

    Sean Fitzpatrick took €300m from Anglo Irish Bank, gave €30m each to “trusted” associates to manipulate the share price of Anglo Irish Bank. Has the Minister for Justice instructed the Garda Commissioner NOT to have Fitzpatrick arrested for this? Why are we being fed by RTE and all other media that the Director of Corporate Law Enforcement is “on the case”?

    Remember DCC & Fyffe’s (the banana people). It took the Director four years to conclude that insider trading had taken place.

    The two Brian’s (who are either clueless bozos or are engaged in the greatest treason against this state) have shown comtemp for the Constitution.

    There is nothing in the Constitution which allows for the bailout of Anglo Irish Bank. The two Brian’s have exceed their authority under the Constitution and (the unelected (P)Resident in the Phoenix Park has failed in her duty to protect the Republic in the face of the Executive exceeding its authority. Why has a Council of State not been called to make a determination on the efficacy of the actions of the two Brian’s.

    I think you are right when you say the “same old heads”. But that is not a problem of fractional reserve banking in itself. It is, and is becoming patently clear, a “problem” with the “elite” “class” who run the Republic (including the (P)Resident.


    “The bank is understood to have been in touch with a number of the investors to discuss the loan agreements since it was nationalised and the changes made, although the outcome of these contacts is not known.”

    Brian Cowen & Brian Lenihan already know the names of these conspirators.

    Why are these ten names being held from public view?

    Are they part of some “elite” who just happened to draw the short straw, and were promised riches beyond their dreams if they played ball?

    Are there 10 * 10 * 10 of these conspirators?

    What is being protected here?

    It is not the Republic nor is it the Citizens of the Republic.

    Am I a conspiracy theorist or do I just know the smell of shit when I smell shit?


    Abbot- I’m probably being spectacularly stupid tonight, but please bear with me.

    Without accusing any named individual of committing a crime, would you please spell out precisely the mechanism you have in mind.

    In particular, are you saying that the bank’s value was artificially inflated in order to maximise the return from nationalisation?



    I do not consider you stupid.

    The reason I posted was my anger and absolute outrage at what the Soldiers Of Destiny are doing.

    I believe they have being doing this since the foundation of this State. Destiny was not for the Citizen of the Republic. Destiny was for the murderous gun running filth to take everything they could.

    They Achieved Destiny and now Goldman Fucks are going to make them (sorry us) pay the price.

    But the Soldiers of Destiny don’t care. They were bought off like a fucking whore a long time ago.

    And they say to the Citizen “Love You Long Time”

    Yes, they are Whore and they have made the Republic a Whore.

    I believe they never intended a Republic.

    They just intended replacing the former masters.

    To be clear I am not a Marxist (I despise the stupidity of that man) and I am not an “Irish Republican” (the thought of blowing up babies in prams for the sake of some filth abhors me).

    Let me think on your question.

    I apologies . I am absolutely enraged with anger.

    This filth must go.



    I will take the second part first.

    “In particular, are you saying that the bank’s value was artificially inflated in order to maximise the return from nationalisation?”

    I think I understand your question.

    The answer is no.

    The manipulation of the share price of Anglo Irish Bank, or the price of any share on the stock exchange is, a criminal offence. So the nature of the manipulation is irrelevant.

    The answer is yes,

    The criminals (all ten of them) who manipulated that share price anticipated that the guarantee offered by the Fianna Fail Filth would provide each of the ten with substantial return. More than any heroin dealer could dream of.

    My problem, Bock, is this.

    The Fianna Fail Filth knew that this share price manipulation was happening. They engaged in it. They intended profiting from it. They thought “everything would be honky dory”. The Filth have only just worked out that they have been fucked. And now were fucked.

    Who are the TEN.

    Why are there names not in the public domain?



    The first part second.

    Sean Quinn took out CFD (Contracts For Difference) on 25% of Anglo Irish Bank.

    I don’t have the detail but it is in the public domain.

    By using CDFs Sean Quinn was able to hide a possible attempted takeover of Anglo Irish Bank and then take it private (that is beyond public scrutiny).

    The reasons Quinn did this are curious. Quinn claims in his interview with Marian Finfuckin that it wasn’t him, it was his stupid wife and his stupid children.

    Was it just that Quinn, with his assurance company, cement company and hotels company thought it would be just a jolly wheeze to have a little bank. Or was Quinn so far in debt to Anglo that he used the resources of Quinn Direct (against the law ~ this is proven and he had to resign as Chair of Quinn Direct) to acquire Anglo before Anglo had to admit that Quinn owed them a shed load of money.

    However, I am sure I am completely incorrect in that conjecture.

    You ask me to “spell out” the mechanism.

    Jesus Bock,

    You’ve lost me there. It is just plain and simple. Manipulating share prices is a criminal offence.

    The reasons why one would do that are many. The intended result is always the same. Criminal profit.

    Fitzpatrick knew that Quinn couldn’t pony up.

    Fitzpatrick was going to loose everything.

    Fitzpatrick assembled a group of ten to manage the purchase of the 10% that Quinn did not have the money to buy. Fitzpatrick took €300m from Anglo to do this. This is criminal on so many levels it beggars belief. How did Fitzpatrick get the money out of Anglo. Who in Anglo authorised the loans. Why were the conditions of the loans changed once the Government Guarantee was given. Did Fitzpatrick, and people he knew, buy shares in Anglo before the Guarantee was announced.

    Do you see what I mean Bock.

    You see Bock, what I mean is ~ What the fuck is going on here..

    Why are Brian Cowen and Brian Lenihan so desperate to hide what was going on in Anglo?

    Why are the Irish Citizens on the hook for €10Bn.

    Do you want to wait ten years before the snail “Director of Corporate Law Enforcement” satisfies his job description.

    He can’t bring an action of fraud against anybody.

    The Director of Public Prosecutions is the only one who can do that.

    Two guesses Bock.

    Who appointed the Director of Public Prosecutions? Would that be the Filth?



    You seem to know summat about this shit. As a matter of interest what do you reckon, in all seriousness, is the worst case scenario for us all? Barter? Having to grow our own food? Buying a shotgun to fend of the rampaging hoards?



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