Sean Fitzpatrick Arrested

Seanie Fitz must be getting used to having his collar felt.  How many times is that he’s been arrested? Two?  Three, Four?  I’m losing count.

Don’t get me wrong now.  I’m glad that Seanie is doing the perp-walk because I think he contributed hugely to our national economic collapse, but he isn’t the only one I’d like to see arrested and charged with something.  Clearly, I’d also like to see his ridiculous glove puppet, David Drumm, extradited from the United States and hit with twenty or thirty charges related to his stewardship of Anglo-Irish Bank, the cess-pit of Irish finance.

On top of that, sadly, we haven’t yet seen Fingers Fingleton called to account for the non-bank he ran on the back of a cigarette box.

The notoriously arrogant Fingers turned out to be a complete failure and an utter incompetent, yet his failures cost the Irish people €6 billion to rectify.  Despite that, he retains the million-euro sweetener he managed to suck out of Nationwide (for which read, the Irish taxpayer) as it sank beneath the waves.  Even if he’s found innocent, I’d really, really like to see that man standing in front of a judge, if only to wipe the sneer off his beard.

But why stop with that?  What about, for instance, Bertie Ahern, the man who presided over the whole debacle?  Much though you might detest Brian Cowen — and he was the finance minister under Da Bert — he wasn’t the man in charge.

What.  What just happened there?  Did I suddenly experience a senior moment of compassion for that crowd of turdbags?  Sorry.  It won’t happen again.  Sorry.  I apologise.  Maybe Fianna Fáil developed an empathy weapon that persuades people they didn’t completely destroy the country.

Who should be arrested and charged?  Well, all of them, but failing that, the entire Ahern cabinet on the grounds of collective responsibility.  Since they shared the feeding trough, I see no reason why they shouldn’t share a dock in court, and with any luck, a cell.  McCreevy needs to be in that dock too, along with Patrick Neary, the financial regulator and John Hurley, former governor of the Central Bank.

Why not?  If they’re innocent, the court will set them free and their names will be cleared for ever more, but if they turn out to be guilty, nobody will be surprised.

Restoring our fiscal stability  is only one part of the puzzle.  The other part is a willlingness to track down and prosecute those responsible for the disaster.

Wait and see who’s called to account before deciding if this is a functioning democracy.  For some years now, my personal view is that this country is just a personal fiefdom carved up by the co-conspirators on both side of the Civil War and everything that happened since 1922 has been designed to disguise that conspiracy.

The next few years will prove me right or wrong, but at the moment I don’t feel optimistic.


Bock's People

Quinns Jailed — A Fistful of Euros

It’s hard to beat Country ‘n’ Western billionaires for entertainment, and it doesn’t get more C ‘n’ W than Fermanagh, home place of Seán and Peter Quinn, but the Deliverance theme has gone into overdrive with their latest caper.

What sort of shenanigans have the Quinns been up to at all?  As we speak, Seán Junior is lying on a bunk in his prison cell, staring at the ceiling and asking himself where it all went wrong.  I never done it, Sheriff.  I didn’t never do nothin’ to nobody.

Ok, Pete.   Tell it to the judge.

Meanwhile his cousin, Peter Darragh Quinn, is facing arrest once the posse finds him.  People less charitable would say he’s on the run from the law but let’s just say he’s incommunicado, and we’ll he might be since the judge issued a bench warrant for his arrest after he failed to turn up in court today.

The boys were caught trying to asset-strip what remained of their company’s value by hiding cash in dodgy Ukrainian shopping centre developments, and showed a very bad attitude when it came to complying with the court’s instructions, but that’s what you can expect from young fellas who grew up with a silver spoon up their arses.  Country ‘n’ Western billionaires are like that.

Seán Snr, once Ireland’s richest man, has been permitted to stay at large so that he can make arrangements to comply with the court’s instructions and return the €450 million he and the younger generation were trying to hide from IBRC (aka you and me).  This is in addition to the €2.5 billion that IBRC are trying to recover from the Quinn family.  The Quinns’ defence against this action is the most bizarre I ever heard, and it’s essentially this: since Anglo-Irish Bank illegally lent them the money to buy shares in the bank in an effort to fraudulently inflate the share value, they have no obligation to pay it back.

I’m still trying to figure that one out, but when I finally crack it, you’ll be the first to know.  Maybe if I send it to the Large Hadron Collider, they might bombard it with neutrons until it makes sense.

Anyway, Junior is in jail, pickin’ his banjo, blowin’ on his harmonica and a-listenin’ to the coyotes howlin’ at the moon.  Senior is begging a gang of grim-faced Russians to give the money back.  If he fails to convince them, Ms Justice Elizabeth Dunne will fling him in jail along with the young fella, and the cousin, if the Pinkerton agents ever track him down.

I wonder where young Peter is holed up?  Could it be in the Badlands of Monaghan, disguised as Big Tom or Declan Nerney?  Maybe he’s fixin’ to bust his cousin loose and go on a rampage across Cavan and Monaghan.  For all I know, he’s down in that there livery stable right now, with two fast horses, chewin’ a fat old cee-gar and linin’ up a stick of dynamite to toss at the jailhouse wall.

Sheriff, you better wake up that deppity o’ yours.  Looks like y’all could be a mite busy tonight.

Economy Favourites

Burning the Bank Bondholders. ECB Changes Position.

Hands up all those who said you can’t burn senior bondholders.

Anyone?  No?  You’re all very quiet over there.

When even the Financial Times was saying Ireland should impose burden-sharing on the failed banks’ bondholders by insisting on a debt-for-equity swap, there was a clamour, not only from European politicians and from the European Central Bank, but also from our own domestic doomsayers, predicting the end of the world if we didn’t bail out these mega-rich investors and save them from the consequences of having made a bad business decision.

And so we duly went and put Irish citizens into hock for generations to come so that unimaginably wealthy business people might not suffer any loss when their bet went bad.  I’ll keep repeating this until they physically hold me down and gag me.  The money poured into Anglo and Irish Nationwide was not a bank bailout.  Why?  Because those banks were dead and had no hope of ever trading again.  It was the rescue of gigantic hedge funds and private investors all over the world and it was heaped on the shoulders of the Irish people by two idiots, Brian Cowen and the late Brian Lenihan.

As a result of bailing out these speculators, our country is on its knees.  Imagine it.   These two buffoons took it on themselves to turn private-sector losses into public debt.  Did you ever hear the like of that?

B&B invented a new political ideology that was the very opposite of capitalism.  It was more like a demented form of communism in which the State took over not the means of production, but the means of making a loss.  Where it came closer to Soviet-style communism was in the fact  that the private citizen mattered not one iota.  Lenihan even had the effrontery to tell us that this was our patriotic duty.

Our patriotic duty, to subject ourselves to penury so that no gambler in the betting shop of the markets might lose a wager.

And if B&B were inept, they were enthusiastically egged on by Jean-Claude Trichet in the ECB.  When Trichet issued his instructions, his two bumbling marionettes in Dublin danced to his tune.  Even when the Danish government inflicted losses on bondholders, the mantra went on: you can’t burn the bondholders.

Well guess what?  You can.  Suddenly, since Spain and Italy ran into trouble, since Francois Hollande ascended to power in France and since Mario Draghi took over from Trichet at the ECB, it now becomes possible to do what the FT, Joseph Stiglitz and every other person of sanity has been saying.  Suddenly, it’s possible to stand back and let investors take their losses in true capitalist style.  That’s what Spain will be doing, with the blessing of the ECB.  No bank guarantee for them.  They’ll be saying this is a private-sector problem, with private-sector companies failing and it has nothing to do with the sovereign government.

Great news for Ireland, you’re probably thinking.

Eh — no, Ted.  Unfortunately, all the Anglo and Nationwide bondholders have already been paid off.  They’re gone and so is the money.  Gone, including Abramovich who bought Anglo bonds at ten or 20% of face value on the secondary market and insisted on getting the full price from our government.  How many Chelsea players did the Irish taxpayer fund with that handout?

Abramovich threatened to sue the government for going back on its commitments.  The threat was hollow, since the government was never obliged to stick with a unilateral guarantee that carried no reciprocal benefit for the Irish State and which was based on false information provided by the banks.  More on that another time as we begin to peel back the onion-layers on the night of the incorporeal cabinet meeting.  A virtual cock-up in every sense.

So where are we going with this?  What’s the end-game?

Well, we still have the issue of the promissory notes.  If you remember, these are debts owed by our government to the Irish central bank.  You see, in order to pay off the bondholders, the central bank created money out of thin air, as it’s fully entitled to do.  But our government must then pay yearly sums into the CB to write down that funny money.  Now here, as I see it, is where there might be scope for manoeuvre.  Because the ECB has accepted the principle of burden-sharing for Spain and Italy, Ireland is the only country left swinging in the breeze.  Up to now, at the insistence of the Germans who have a pathological fear of inflation following their experience with the Weimar Republic, there has been no possibility of quantitative easing, which is a nice way of saying printing money.  But Ireland’s money is gone and our government is on the hook to pay it back, so what I would do in Baldy Noonan’s shoes, is look for a derogation.

Let us be the exception in two ways.  First, we’re already the exception in having guaranteed the failed banks 100% at the insistence of the ECB, which now agrees that such a policy is insane.  Therefore, for a quid pro quo, let us also be the exception by permitting cancellation of the promissory notes, effectively increasing the Eurozone money supply.  The fig-leaf can be that it’s a once-off deal involving a piddling sum in European terms, to acknowledge that Ireland went far beyond what Spain or Italy are prepared to do and to recompense us for the pain caused by the obduracy and stupidity of Trichet’s policies.

That’s what I’d be looking for, but then again, I’m not an economist and I’m not a politician.

Maybe smarter people than I am might be able to explain it better.


Economy Favourites

Irish Fiscal Madness for Dummies

I’d like to introduce the latest member of the Bock Collective.

Brian Lucey is Professor of Finance at the School of Business, Trinity College Dublin, which means he knows a lot more than I do about the state of our economy.  I asked him to contribute an article for BTR and, after he stopped laughing, he said, Why not?

So here we go.  This is a piece on the insane Anglo bailout and a brief explanation of how the central bank is burning your money.



This recession has been a mixed blessing.  There has been some sense of recovery of a realisation of what’s importan , the gaudy lustre of the boom having faded.  Family, friends, light, heat, carbohydrates, that sort of thing. At another level it is a blight on the landscape, what with emigration returning like a nasty social disease we though we were too posh to suffer from, the persistent sucking sound that is the national wealth being siphoned off to the banks, the realisation that we overspent massivly in the boom and, banks aside, would STILL be broke. And then there is the explosion in social meeja.. We have seen the veritable good, bad and ugly of twitterati, bloggerati etc emerge, each vying for our spare time.

Among the more evolved blogs to emerge is this very site. For years now Bock, bless his black blood pumping organ, has been publicly, vocally, eloquently and occasionally accurately, analysing the mess we find ourselves in.  Schloss Bockstein must be a veritable hive of activity daily as minions scurry, henchmen worry and sycophants curry favour with The Bock, all to create what is a unique if somewhat dyspeptic view on the world. Has it been only 6 years since he sashayed onto the virtual stage? It seems much much longer….

One of the things that our genial host has been concerned about is the Anglo Irish Promissory Notes.  These are quare things that the 2008 geni loci, the cabinet of curiosities that was then our government, issued to Anglo, late of solvency. The point in doing so was to allow Anglo to ruck up to the discount window (second floor location ) of the central bank and swap them for money. This was because Anglo had run out of everything else to swap: normally and quite reasonably banks swap illiquid assets for liquid assets, pledging say a billion in commercial loans repayable in 4 years for 0.997b in cold hard cash to be repaid in a weeks time. If this sounds like pawning your coat, be assured that it is almost totally not.  The ECB does not have three balls.  Anglo had, in 2009, run out of everything to swap. Even the fairly liberal acceptance policies of the ECB had baulked when they turned up with crayoned letters issued as documentation for a loan on a soggy field in north Leitrim inhabited by rabid geese. So, they were in danger of going bust, and that we are told is A Bad Thing. So, to keep the show on the road and repay the bondholders the then government gave these PromNotes to Anglo, who swapped them for money at the Central Bank of Ireland.

Now, central banks create money out of thin air. That’s what they do and that is what my colleague Patrick Honohan did.  The problem is, what if everybody did that? It’s one thing a chap in Dame Street creating €30 billion and therefore allowing the repayment of bondholders. What if someone in Madrid did it? Or a fella in Rome? Sure we could find ourselves in Europe with a couple of trillion (remember when we used to care about millions) in extra euro floating about. This would make the Bundesbank, the core of the ECB, angry, as Germans have had … unfortunate… experiences with inflation what with the collapse of the Weimar republic, the rise of Hitler, genocide, the obliteration of Dresden, invading Russia and all that.  And inflation is a function of too much money chasing too few goods. So, no, to stop this dreadful spectre, the ECB demands that the Irish central bank gradually destroy the money it has created. The accounting treatment of this is enough to make an angel weep, but in essence this is the central bank each year getting 3.1b from Anglo (who haven’t got it so it comes from the State, you dear reader, having been borrowed from the Troika) and then offsetting that against the same amount of real money they earlier created.  Its borrowing money to destroy it. Which makes as much sense as wearing a dead badger round your neck to keep from getting toothache. In the context of a maximum of a couple of trillion (2) in a Europe that has about ten (10) trillion of money already sloshing around it may make even less.  And when you consider that the ECB has already in effect injected the thick end of two trillion into banks through a device called LTRO , allowing them to rebuild their shattered balance sheets, it may make even less sense. Europe, never mind Germany, is not on the verge of hyperinflation, so one sees here how culture beats strategy every single time.

So, we find ourselves caught. We have no friends in the Eurozone, only creditors. Our best friend in this crisis (because we are so intertwined economically that our mess is theirs) has been what my granny called Pagan England, who have created money hand over grubby fist to keep the show on the road. Meanwhile, in Frankfurt the ECB look with fearful eyes at the experience of the Weimar republic in the 1920’s (too much much too much waaaayyyy too much money) rather than the USA in the 1930s (too little, system seizing up due to too little money).

Lets do the time warp again ….




Previously on Bock

Banking Favourites

Making Sense of Anglo Debt, Promissory Notes and Burning Money in the Central Bank

For years, I thought my bank had a stock of anti-money in its vaults, and when my few shillings came into contact with the stuff, they were instantly annihilated.  They had to build a special cash-machine just for me, an ATM that reached out and gave me a manly hug because it couldn’t bear to watch a grown man crying.

Come here, ya big lug.

It was the only way to explain the fact that I was always broke.  The bank must be destroying my money, but guess what?  It’s not just me any more.  The whole country is at it.

You see, when the government borrows the next €3.1 billion and hands it over to Anglo, it won’t be going to the bondholders, like we thought, because they’ve already been paid off.  The Anglo bondholders are delighted, or at least, the ones who held onto their IOUs are delighted.  The ones who sold off their Anglo paper are slightly less happy but not to worry.  Every scam has a silver lining, because this cheap paper was snapped up by the likes of Roman Abramovich, who got paid full face value for something he bought for peanuts.

Great news for Chelsea and for Roman’s future ex-wives.  A yacht for everyone in the audience.

But wait, I hear you thinking.  If all the Anglo bondholders were paid off, where did the money come from?  Isn’t the government borrowing three billion a year for the next ten years to pay them?

The answer is no.  They’ve been paid.  It’s over.

What?  Then who is this money going to?


But they’ve already paid off the bondholders.

That’s right.

So, what are they doing with the money?

They’re paying it back to the people they borrowed it from.


The Irish Central Bank, that’s who.

But don’t we own the Central Bank?

We do.

And don’t we own Anglo?

Yes.  We do.

So are you telling me that Anglo borrowed thirty-odd billion from the Central Bank?

Well, I ran this past a well-known academic and he told me I was making a minor error.  According to this learned character, Anglo didn’t exactly borrow the money from the Central Bank.  Instead, they stopped the promissory note.  All the same, I think that means the same thing.

But I thought we were broke.  Where did the central bank get the money?

They made it up.


They magicked it out of thin air, which they were able to do because Anglo was holding the promissory note from the government saying I promise to pay the bearer a megazillion denarii on demand.

They can’t do that!

Oh yes they can, if they’re a central bank.  Remember the opening lines of the Latin Vulgate bible?


dixitque Deus fiat lux et lux facta est .

What does that mean?

It means And God said let there be light, and light was made.  Fiat lux.  Let there be light.

Let me get this straight.  Dixit Argentaria Prima fiat pecunia et pecunia facta est .  Is that right?

You got it.  Pro-Consul Holohanius snapped his elegant, erudite fingers, adjusted his laurel wreath, and called a Nubian slave.  Peel me a grape, he murmured, adjusting his toga.  Oh, and fiat lux while you’re at it. That’s it..  Turn on the shaggin light.

That’s why they call the euro and the dollar fiat currencies.  Fiat means let there be. They’re no longer backed by gold, but solely by an act of will and a corresponding act of faith.  A central bank can say Look!  Here’s thirty billion euros, just like that.

Ok.  So if we own Anglo and we also own the Central Bank, we’re just paying ourselves, right?


That means the interest rate doesn’t matter.

Correct.  It matters not a jot.  We’re paying it to ourselves.

We could stop paying ourselves, couldn’t we?  We could default on ourselves.

Eh, that’s where it gets complicated.

Looks plain enough to me.

Not really.  You see, the Central Bank had to get approval from the ECB before magicking up the new money.  Which means that when the Anglo guys arrive with a truckload of money, Pro-Consul Honohanius gets out his fiddle while the slaves make a big heap of money in the middle of the atrium and as the flames leap into the night sky –

He fiddles while the cash burns?

Yes indeed.

But why in the name of Zeus would he do a thing like that?

Because, my fine plebeian friend, it’s all about the money supply. It doesn’t matter how much money you create as long as you destroy it later.  The nett amount of euros remains the same.

But why can’t we just, you know, not burn the money?  Wouldn’t that sort us out?

It would, but you see, the Germans have this thing in their heads and Thatcher had it as well.  They reckon that the money supply is what drives inflation.

There’s a bit more to it than that surely?

Indeed there is, but the Germans still remember the hyper-inflation during the last days of the Weimar Republic and they don’t ever want to be bringing their wages home in wheelbarrows again.  So it’s all very well for Paddy to create thirty billion, but what if Luigi decides to create a trillion or two?  What is Stavros dreams up the odd hundred billion? What if Fernando decides he likes the look of an extra four trillion?

What?  We all pay our bills?

That’s what you think, but according to Merkel, before you know it, here comes Josephine Baker wearing only a ring of bananas, here come Brecht and Weill being as decadent as you like, and then we have  have beer-hall putsches, Nuremberg rallies  and Jesus knows what else.

So instead of burning bondholders, we’re burning money?


That’s mad, Ted.

It certainly is.  Now, off to sleep with you.



Investigating Anglo-Irish Bank

If you were in charge of a criminal investigation into the collapse of a bank, how many people would you put on the job?

Hmm.  Now there’s a tough one.  If it was the collapse of a piggy-bank, I suppose you’d do it yourself and blame Mr Nobody for pushing it off the shelf.  You might even choose to ignore those suspicious-looking chocolate-smeared fingers.  But suppose the collapse had lost thirty, forty, fifty billion or even more, and threatened not only to bankrupt a country but trigger the collapse of an entire world currency.  What then?

You’re probably already thinking in the hundreds, aren’t you?  Expert forensic investigators from all over the world.  Detectives.   Accountants. Psychics, even!   Torturers.  Waterboarding.  Extraordinary rendition.


No.  Not if you happen to be Ireland.

If you’re Ireland, you’ll put eleven policemen on the case.

That’s right.  I said eleven.  11.  One short of a dozen.

That’s how many cops we have investigating what is widely acknowledged to be the worst bank in the world.  The worst financial scandal in Irish history and perhaps even in the entire history of Europe is being investigated by a smaller team than most countries would assign to investigate a rural post-office robbery.

Is it any wonder that Anglo staff have failed to assist the investigation and in some cases deliberately obstructed it?

All they need to do is sit back and wait while these eleven policemen disappear under a mountain of deliberately-confusing paper. Seriously now, even if this little team is composed of the brightest and the best, what hope do they have?  There are some — perhaps many — Anglo employees from the bad old days still working in the newly-renamed dead bank, the Irish Bank Resolution Corporation, and it is not in their interests to help these eleven policemen.  Most of them may not fear exposure as criminals, but many certainly risk being shown up as fools, cynics, incompetents and general all-round gobshites.

In my opinion, Anglo requires the American approach.  Perp-walks and orange suits for everyone.  Scare the shit out of them so that everyone is terrified of even a hint that they might have resisted the inquiry.

That’ll get their attention.  That and four hundred extra police to kick down their office doors.


IMF Warns of Global Economic Collapse Due To Euro Crisis

The IMF is now saying that small countries shouldn’t be rescuing the European banking system on their own and that the EU as a whole should step in to deal with failed institutions.  That’s a bit late for us.  It was obvious to anyone with eyes in their head that it was a European problem, and not solely the responsibility of individual governments and the clue is in the name: European Union.  Yet for the last three years, this country has pushed the burden of the collapsed banks onto the backs of a tiny and financially exhausted population.
In doing this, we have adopted a language that fails to reflect the reality of what is happening.  We speak of bailouts, rescues and of protecting the banking system.   As recently as today, an Irish Times article about the Euro crisis refers to the recapitalisation of Anglo-Irish bank.

Christine Lagarde

Stop, I want to tell them.  Listen to what you’re saying.

Anglo was not recapitalised, and neither was Irish Nationwide.  Both of these companies are dead.  They are no longer banks.  They can’t be recapitalised.  What happened was that a huge amount of money was appropriated from Irish citizens and given to speculators who had taken a risk on these pyramid schemes masquerading as banks and who were in danger of losing their bets.  A significant amount remains to be paid to the same people.

Can we get that absolutely plain?  As far as Anglo and Nationwide are concerned, there is no bailout, no rescue and no recapitalisation.  It’s a straight transfer of cash out of your pocket and into someone else’s wallet.

Of the Troika members, the IMF has consistently taken the view that Ireland should not have to carry the burden alone, and that investors should be forced to share the loss.  Even though my view is that the shareholders should have been told to get stuffed, at least the IMF’s view is more rational that that of the ECB and the European Commission.  Even the Financial Times has been arguing that the bondholders should be given a debt-for-equity swap, which translates roughly into Congratulations. You now own a bust bank.

Two banks, which are currently the subject of a major police investigation, collapsed with huge debts as a result of bad management decisions.  They were private companies, with private investors, they served as conduits for property developers’ money and they had no role in the broader economy.  Neither bank had so much as a single ATM on a single street corner in the entire country.  Despite what we were told, if they had been allowed to collapse, nothing at all would have happened, and yet our government decided that you and I should make sure none of the investors lost a penny.

This is the great mystery of the insane bank guarantee scheme devised by Brian Lenihan in 2008.  This man was not a fool, so why on earth did he decide to sacrifice the future of generations in order to ensure that investors in a private company would not suffer?  The answer to this question will explain why Ireland is now so crushed beneath debts.  I believe that it lies in a combination of pressure from the ECB and a fear that some very dirty things would be exposed.

What might those dirty secrets be?  Well, perhaps they might include the amount of debt the two Ponzi banks owned involving senior politicians, judges, police, senior civil servants and all the other members of the elites in this little state.  Or to put it another way, it might expose the amount of favours that had been bought, and if that happened, who knows what sort of contagion might have been triggered?  Before you know it, one dirty secret might expose the next until the whole thing lay bare.  Much easier to sell generations of Irish children into poverty and emigration.

Ridiculous as Lenihan’s call to patriotic action was, at least it came from a man of privilege and member of the corrupt ruling party.  What would you expect from him?  But to hear Lenihan’s puffed-up Fianna Fáil nonsense repeated by Eamon Gilmore was nothing short of nauseating.  The Labour Party leader urged the opposition to pull on the green jersey and support the government in its talks with the Troika.  I remember when Eamon Gilmore had principles, but this statement was worthy of Bertie Ahern at his most venal.

Of course, there were those who insisted from the start that we should not take on these obligations, that it was foolish, and there were even some who said that the decision to do so was treason, including the same Eamon Gilmore who now calls on us to pull on the green jersey.  Gilmore made this charge against Brian Cowen little more than a year ago under parliamentary privilege, accusing him of knowing that Anglo was bankrupt when he issued the guarantee.

Not so long ago, we heard Pat Rabbitte, another Labour minister who once had principles, defending the disgraceful give-away of our gas and oil to multinational companies for nothing, so what exactly are we to make of our political leaders?  I don’t know.  Personally, I think we have no hope of mature political leadership in this country.  It seems to be a choice between Fine Gael, who are really Fianna Fáil, Labour who are quickly becoming Fianna Fáil, or the Shinners, who will eventually become Fianna Fáil.  Maybe we don’t deserve anything but gobshites in government.

Things are coming to a head, now that Christine Lagarde, the IMF head, has spoken so bluntly of the dangers facing the world economy.

Anglo and Irish Nationwide, the two dead banks, are now amalgamated into an entity called the Irish Banking Resolution Corporation (IBRC), or the First Bad Bank of Ireland, depending on your point of view.  This is the entity that gets all the banking money we borrow from the EU and the IMF, and while it’s true that Ireland’s costs involve more than simply pumping money into this bad bank, it’s a very large component of our costs.  We borrow €3.1 billion every year to pump into this financial black hole which in turn pays out a pile of money to creditors.

Now here’s the conundrum.  The famous promissory notes that everyone talks about attract an interest rate of 8.6%.  This is the IOU that the Irish government provided to Anglo.   And Anglo, in turn, was able to go to the only outside bank that would lend it a penny — the ECB, from which it got money at something like 2%.  Unfortunately, the idea of reducing the interest rate won’t save us anything, because we already own Anglo.  Whatever margin it makes on the money will come back to the exchequer in time.

The real disaster is that the cash is gone.   It’s been handed over to the investors who couldn’t believe their luck that some idiot was going to cover the losses they’d already written off.  If we had declined to take these losses onto ourselves, nothing at all would have happened.   In this respect, Anglo and Nationwide were no different from a company making engines or matchsticks.  Private companies go bust all the time.  Ireland’s credit rating would not have been reduced, since the liabilities were those of two private corporations and there was absolutely no reason why any government should take them over.

But as we know now, that’s not what happened, for reasons that have yet to be exposed.  My own view is that the lunacy of the banking guarantee was caused by a mixture of hubris, stupidity and corruption, although I don’t think these three things were necessarily all present at the same time, or in the same people.

Now that the IMF has come out so blatantly and pointed at Europe as the problem, perhaps it will be possible to re-examine the Irish bailout deal with the Troika, although in truth, it’s very hard to see where the scope for renegotiation exists, now that all our money has been stolen with the connivance of successive Irish governments.




Ireland — The Land of the Little People

There’s the Quinn family telling a court they don’t have to pay back the money to the bank because they got it illegally in the first place.

No fucking way, Judge, they told the court. The fucking eejits in Anglo made a mistake and that’s the end of it. We’re not givin’ it back, so there. Now.  Boo!!

It reminded me of those tossers you see in shops.  I know the law.  That’s the price you had on it and I’m entitled to get it for that.

It makes no difference to this crowd that the taxpayers are picking up the bills for Anglo.  Taxes are for the little people.

Speaking of little people, how many members of U2 does it take to fill out a tax return?

Answer: Nobody knows.  It’s never been tried.

But that doesn’t stop Bonzo pontificating to a nation on its knees about the importance of giving to the poor.

Bonzo, we are the poor, while you continue to salt away your obscene income in your offshore tax haven.  Fuck off.

Meanwhile, Michael Healy-Rae wins Celebrity Gobshite because some malignant little gnome camped in a Dáil office for a week punching numbers on a phone.

Do you use a Dictaphone?

No.  I use my finger.

There you have the Healy-Rae clan thumbing their noses at the intelligence of the entire country by answering one question with another in traditional slithery fashion, but that’s Kerry for you.  Fuck the rest of Ireland as along as we’re all right.  They took favours from John O’Donoghue, they accepted them from Haughey and it never occurred to them that for every marina built in Dingle or every sports centre in Tralee, some town elsewhere was deprived of a similar facility.

National solidarity my arse.

Meanwhile, Lowry and his cohort of clowns somehow managed to push through their proposal for a ludicrous casino in Tipperary so that people with a severe gambling problem can more easily spend their last penny on slot machines .  Marvellous.  Classy.

And what else will one do in Two-Mile Borris?

Fuck-all, that’s what, because there’s fuck-all else to do there, but that didn’t stop delegations heading out to the Gulf in search of Arab money for their scheme with talk of golf courses and leisure resorts.

Things that will never be built in a plan that’s all about the one-armed bandits.

Wait a minute.  Aren’t Muslims forbidden from gambling? Yes, but maybe not from investing in it, and perhaps that was the Jesuitical point Mr Lowry tried to impress on whatever oil sheikhs he happened to collar, while selling them the odd fridge as well to cool their beer in the boiling sun.

Oil sheikhs don’t pay much heed to the alcohol laws either — in the Gulf, just like in Ireland, some things are for the little people.



Ballsy Baldy Burns Bank Bondholders

Michael Noonan has decided to make the the bondholders carry a share of the losses, thereby restoring capitalism to its proper place: a risky business, conducted for profit with the corresponding danger of losing money.

We don’t think the Irish taxpayer should have to redeem what has become speculative investment, Noonan is reported to have told the IMF.

It’s ironic that it took a member of what would traditionally be considered a party of the Right to articulate this obvious point.  The decision of Lenihan and Cowen to shoulder the debts of Anglo and Irish Nationwide was insane, and should never have been inflicted on the general public.

If you think this is the 20-20 vision that comes with hindsight, let me remind you that people were saying this right from the start.  Anglo and Irish Nationwide were not banks in any sense you might ordinarily understand.  Anglo was a funding operation for speculators, while Nationwide was a building society taken far beyond its remit by Fingleton.  The debts of neither institution properly belonged to the State.

Even the Financial Times, a bastion of orthodoxy, urged the government to impose a debt-for-equity swap on the bondholders, but Lenihan and Cowen stuck to their original script even as the problem grew to cataclysmic dimensions, threatening the survival of Ireland as a country.

If Anglo and Nationwide had been allowed to collapse, it would have made not the slightest difference, except that we and our children wouldn’t now be saddled with enormous debts.

It’s too early to say if Noonan is just sabre-rattling or serious, but I hope he means what he says.   When it comes down to it, he’s defending the principles of capitalism, and therefore, in theory, he should have the support of like-minded politicians throughout Europe.




Nama Winelake

Economy Favourites

Morgan Kelly Predicts Irish Bankruptcy

I’d like to say that Morgan Kelly is an idiot.  I’d like to tell you that he has been consistently wrong in all his predictions about the Irish economy.  I’d like to inform you that this man has no idea what  he’s talking about.

But I’m afraid I can’t.

Morgan Kelly is far from a fool.  He has been consistently correct in his predictions and he knows precisely what he’s talking about.

The man who foresaw the banking crisis long before almost everyone else, who was ridiculed and dismissed by Bertie Ahern’s legion of halfwits, has written an article in today’s Irish Times that should scare the living daylights out of any thinking Irish person.

In Kelly’s own words, Ireland is facing economic ruin.

Tracing the source of the economic disaster back to Brian Lenihan’s absurd banking bailout in 2008, Kelly describes how Professor Patrick Honohan, the incoming governor of the Central Bank, could have used his international stature to reverse Lenihan’s original act of stupidity, but instead compounded the error by taking the ECB’s side and insisting that the banks’ losses were manageable.

A fool’s pardon might be available for Brian Lenihan, a man who manifestly failed to understand the fundamentals of the brief he held, but Kelly leaves no such room for Honohan.  Accusing his fellow academic of the costliest mistake ever made by an Irish person, Kelly has laid responsibility for the unfolding Irish disaster at Honohan’s door.

This is a very grave charge to make against the man everyone hoped would rid the Central Bank of its complacency and incompetence, but Kelly doesn’t stop there.  He goes on to accuse Honohan of undermining Lenihan when, for once, he was doing something right in resisting the so-called “bailout”.  As Kelly puts it, Lenihan was deftly sliced off at the ankles by his central bank governor.

He goes on to provide an interesting insight into who Ireland’s real friends were among the powerful nations.  The IMF’s plan to impose a savage haircut on bondholders was shot down by none other than the United States, in the form of treasury secretary Timothy Geithner, while the only voice in our defence came from the old enemy in the person of UK chancellor George Osborne, though of course, a word of caution is in order here.  Sir Humphrey might well have advised the chancellor to speak up in Ireland’s defence knowing that his position would be defeated.

But still.  A topsy-turvy world indeed when  some of our citizens will shortly turn out to protest against the visit of the English Queen, while others will flock by the thousand to fawn over the leader of the country that consigned us to our doom, and to prance about like leipreacháns while he holds up an embarrassing half pint of Guinness for the cameras.

That’s Ireland for you.  Never mind the reality.  Stick with the illusion.

In the end, Ireland’s bankruptcy was guaranteed by the European Central Bank, which had no thoughts of rescuing this country.  Ireland will be destroyed in order to frighten Spain into behaving as Trichet wishes it to, and it seems his strategy is working.  The bailout could never work, because the sums don’t add up.  We will shortly be facing debts of €250 Billion (with a B).  As Kelly says, try to imagine the Bank of England’s insisting that Northern Rock be rescued by Newcastle City Council and you have some idea of how seriously the ECB expects the Irish bailout to work.

An apt analogy indeed, since the citizens of Newcastle had about as much responsibility for the recklessness of Northern Rock as the average Irish person had for the six private banks that killed our economy through their greed and stupidity.

While it’s too late to make the bondholders carry their share, since Lenihan rushed to pay them all off last year, Kelly offers a solution that he concedes wouldn’t be painless but might at least avoid the coming disaster.  First, withdraw the bank guarantee immediately, and force the ECB to deal with the  issue of insolvent banks.  Second, cut government borrowing to zero, right now.

Does he think the politicians will have the guts to confront the ECB?

No.  He doesn’t.

I wish Morgan Kelly didn’t have such a way with words, but unfortunately, he’s on the button with his brutal analysis of the political reality.

It is easier to be led along blindfold until the noose is slipped around our necks and we are kicked through the trapdoor into bankruptcy.

Brace yourself for the drop.   It will be short and unpleasant, but its consequences will be permanent.


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I thought GW Bush had imposed an extreme burden on US citizens when I wrote this.  Little did I think that our government would soon go on to impose a far bigger burden on the Irish people, perhaps three or four times as large.