Talking points in time

Quotes. Mainly the two Brians. Links from broken because they’ve changed the site link structure.

Quotes. Make of them what you will…

Brian Lenihan; 19 Sept 2008. Six One News.

“Our financial sector is sound and we are determined to ensure that continues”

Brian Lenihan; 30 Sept 2008. Morning Ireland.

“Does this mean the Irish government is exposed? No that’s not correct, of course every Irish bank has to write up their assets and liabilities in balance. The banks would be insolvent otherwise”

Brian Cowen; 30 Sept 2008. Six One News.

We have a banking system which has over the past number of years had good profits, in a healthy state, well capitalisted, well-secured loans. The first people to hurt if anything happens in the bank are the shareholders

Brian Lenihan; 10 Oct 2008. Irish Times.

“the cheapest bailout in the world so far”

Brian Lenihan; 19  Nov 2008. Six One News.

“We’re not rushing into the banks like some governments in other countries without knowing exaclty what the situation is in those banks…”

Brian Lenihan; 14 Dec 2008. Six One News.

“There will be no exposure to the taxpayer on this [€10bn support fund for banks]…”

Brian Lenihan; 16  Jan 2009. Morning Ireland.

Interviewer: Is it possible that you could in a few weeks time that you could move to nationalise AIB and Bank of Ireland as well? “No it’s not… there are no difficulties in these banks, there is no problem”

Brian Lenihan; 8 Feb 2009. The Week in Politics.

“We are now going to commit an investment for a definite return to the taxpayer. This is not bailing out the banks. This is a commercial investment for the state…” Continue reading “Talking points in time”

WSJ on Govt negotiating position

This WSJ piece gives a decent outline of the position the Government finds itself in (though I think the poker analogy – now in use everywhere – is really soulless. I know, I know, it’s the WSJ.).

[…] This game is due to be played out over the rest of this week, with European Union and International Monetary Fund officials descending on Dublin to thrash out a deal. Ireland has signaled it is willing to consider a deal to recapitalize its banks, allowing them to borrow again in private markets.

That suits the Irish because it enables them to claim the government itself remains solvent and so shouldn’t be subject to any external fiscal oversight that might put its tax arrangements at risk. Legally and practically, this argument is nonsense, because any bailout needs to be channeled via the government, giving the lenders the right to impose any conditions they wish.

That may point to an extended standoff between Ireland and the rest of the EU. If so, this crisis simply would be following the path of every other period of stress over the past three years in Europe and elsewhere. But eventually, the market will succeed in pressuring policy makers into the response it is seeking.

I still can’t see business taxes remaining as they are now. It’s not politically possible for a German – or French – government to sell a bailout for Ireland to its public while Ireland poaches business from them due to its tax haven status.

Also, for the record; if we access the EFSF the euro will be gone within five years. It’s bloody awfully designed. More on this in a later post.

Irish Times; "was it for this?"

Hasn’t happened too often in recent years but… an Irish Times editorial with some guts.

The true ignominy of our current situation is not that our sovereignty has been taken away from us, it is that we ourselves have squandered it. Let us not seek to assuage our sense of shame in the comforting illusion that powerful nations in Europe are conspiring to become our masters. We are, after all, no great prize for any would-be overlord now. No rational European would willingly take on the task of cleaning up the mess we have made. It is the incompetence of the governments we ourselves elected that has so deeply compromised our capacity to make our own decisions.

They did so, let us recall, from a period when Irish sovereignty had never been stronger. Our national debt was negligible. The mass emigration that had mocked our claims to be a people in control of our own destiny was reversed. A genuine act of national self-determination had occurred in 1998 when both parts of the island voted to accept the Belfast Agreement. The sense of failure and inferiority had been banished, we thought, for good.

To drag this State down from those heights and make it again subject to the decisions of others is an achievement that will not soon be forgiven. It must mark, surely, the ignominious end of a failed administration.


NYT Opinion Pages debate where Ireland goes from here

Six non-doubt eminent, highly-qualified individuals debate whether Ireland should accept a bailout in the Opinion Pages of the New York Times. Read’em here.

Pretty candid and unsentimental.

Picture of the flats in the New York Times, eh? G’wan the ‘Mun. Amazingly the Telegraph managed to find an even less currently relevant image. Multimedia features using cutaways taken from Darby O’Gill and the Little People next.

Boone and Johnson on Europe

Been a while since I linked to a Boone and Johnson piece around these parts. This one is required reading

[..] For Ireland, too, sovereign debt, including bridge financing, will rise close to 150% of GNP by 2014, and is mostly external. But a sovereign default would require a much larger bank bailout than in Greece, potentially leaving private debt almost worthless if official debt has seniority. Total haircuts don’t happen historically – except in the wake of communist takeovers – but it is hard to imagine that private creditors won’t suffer huge losses in net present value.

Given this, we should expect Greek debt yields to rise further, despite the current IMF program. Likewise, an IMF program for Ireland – which seems increasingly likely – will not bring down domestic bond yields and reopen credit markets to any kind of Irish borrower.

If people start to think this way, Portugal, whose already high and growing debt is held largely by non-residents, becomes a candidate for default as well. In that case, it makes little sense to hold Spanish debt, either, which is also mostly external. Spain’s financial exposure to Portugal and its housing-led recession don’t help matters.

And, if Spain is at serious risk of default, government solvency is at risk throughout the eurozone – except in Germany. Perhaps Italy can survive, because most of its debt is held domestically, which makes default less likely. But the size of Italy’s debt – and of Belgium’s – is worrisome.

Given the vulnerability of so many eurozone countries, it appears that Merkel does not understand the immediate implications of her plan. The Germans and other Europeans insist that they will provide new official financing to insolvent countries, thus keeping current bondholders whole, while simultaneously creating a new regime after 2013 under which all this debt could be easily restructured. But, as European Central Bank President Jean-Claude Trichet likes to point out, market participants are good at thinking backwards: if they can see where a Ponzi-type scheme ends, everything unravels.

Word has it that a few media outlets have picked up on Gav and Lorcan’s latest post. Welcome aboard if you’re a first-time reader. Make sure you’ve your spinshield at hand, Government ministers are already out talking nonsense. 

It looks likely to be a wild ride over the next few days. We should know a little more following a meeting of EU finance ministers in Brussels tomorrow evening.

Eyes-peeled for a bail-out involving Ireland and An Other which will be spun as a broader European ‘restructuring’ (possibly of the banking system, not the State, as if it’s still possible to seperate the two) by our Government and thus no fault of their own.

Sure, all the correct decisions have been made and all the right corners turned, remember. Cheapest bank bail-out in the world, lads.

Only in…

Most insightful press release of the day goes to… drumroll please… Shell to Sea.

Today marks the 4th year anniversary of the baton charge and violence by Gardaí against protestors opposed to the Corrib Gas Project.

The 10th of November 2006 was chosen by the Shell to Sea campaign, as a suitable day of action as it marked the anniversary of the hanging of Ken Saro Wiwa and 8 other Ogoni activists who opposed Shell. Over 200 Gardaí were drafted in under the direction of Superintendent Joe Gannon (then Superintendent in Belmullet).

Ironically Superintendent Joe Gannon is now Superintendent at Pearse Street Garda Station, which today will be the focus of a protest march in opposition to Garda brutality against protestors. This protest was called in light of the violence that was dealt out to students in Dublin last week. Supt. Joe Gannon was present and personally involved in the scene at the Dept of Finance when students were violently removed from the building.

Shell to Sea spokesperson Terence Conway stated “In a investigation into Supt. Joe Gannon’s handling of a protest at Pollathomais Pier in which 20 people were injured, the Garda Ombudsman recommended to Garda Headquarters that disciplinary action be taken against him. However nothing happened and instead Supt Joe Gannon was promoted and has continued to police protests in the same manner that characterised his time down here in Mayo”.

Irish Times report on the Garda Siochana’s decision to reject the recommendation by the Garda Ombudsman is here.

Guess who's back, back again?

Shady’s back. Back again.

The gathering mortgage crisis puts Ireland on the cusp of a social conflict on the scale of the Land War, but with one crucial difference. Whereas the Land War faced tenant farmers against a relative handful of mostly foreign landlords, the looming Mortgage War will pit recent house buyers against the majority of families who feel they worked hard and made sacrifices to pay off their mortgages, or else decided not to buy during the bubble, and who think those with mortgages should be made to pay them off. Any relief to struggling mortgage-holders will come not out of bank profits – there is no longer any such thing – but from the pockets of other taxpayers.

The other crumbling dam against mass mortgage default is house prices. House prices are driven by the size of mortgages that banks give out. That is why, even though Irish banks face long-run funding costs of at least 8 per cent (if they could find anyone to lend to them), they are still giving out mortgages at 5 per cent, to maintain an artificial floor on house prices. Without this trickle of new mortgages, prices would collapse and mass defaults ensue.

However, once Irish banks pass under direct ECB control next year, they will be forced to stop lending in order to shrink their balance sheets back to a level that can be funded from customer deposits. With no new mortgage lending, the housing market will be driven by cash transactions, and prices will collapse accordingly.

The Digest – New format

I’ve no time these days to publish ‘The Digest’ at a set time and day so I’m changing the delivery format. Instead of appearing in the subscriber feed every Sunday there’ll be a constantly updated list of links on the right side of the website. Note; if you subscribe by email or through a feed you won’t be alerted when these are updated, you’ll need to click through to the site here to view the list.

The new delivery is running off my Google Reader shared items RSS feed, which was pretty much where I picked most of my links from each Sunday anyway. Six links will be visible on the site at all times, to see older links click the little orange square beside the ‘The Digest’ heading in the right sidebar.