Author: Mark Coughlan

Here.

Here is what is happening our bond spreads today:

Rare that we’d link to a non-biz/current affairs commentator around these here parts but Shane Hegarty, arts editor of The Irish Times, has a cracking column on Anglo this morning in Weekend Review. More please.

On Monday Anglo Irish Bank revealed that its latest half-year losses amounted to roughly the same as it would cost to rent a black hole and throw the country into it. At the same time the bank admitted that it was beginning an internal investigation into the overcharging of customers by as much as €50 million.

A few years ago this would have been a lead story, a match to ignite the parliamentary hot air. This week? It was an addendum, an “and finally . . .”, just another pile of cash to throw on the green-tinged pyre. It seemed, in the grand scheme, almost inconsequential. After all, it would amount to a mere 164th of the total losses – or just over 0.6 per cent. It is a throwback to the days when we were faced with figures we could almost understand. But now it is a pittance. Sure, you’d pay that off in half a generation.

It is a reminder of just how vast the scale of the Anglo money pit now is. How mind boggling. Once again the media rightly spent a good deal of time trying to put the cost into some kind of context – how many space shuttles you could buy, that kind of thing – but there is an argument that no amount of analogies or graphics or football pitches full of imaginary money can ever truly get the scale across to the average brain.

Tightly articulated, really need to read it all.

In case you missed it yesterday, Peter Boone and Simon Johnson (former IMF chief economist) of Baseline Scenario and The New York Times on Ireland…

Until very recently, Ireland was seen as Europe’s poster child of prudent reforms. Mr. Trichet himself highlighted Ireland as an example that Greece and other financially stricken nations should follow. His message was simple: If only Greece, or Portugal or Spain would cut public wages, reduce the budget deficit and make structural reforms as Ireland has done, then growth could occur and default prevented.

However, it is now apparent that Ireland has not done enough to stem its march toward further crisis. The ultimate result of Ireland’s bank bailout exercise is obvious: one way or another, the government will have converted the liabilities of private banks into debts of the sovereign (that is, Irish taxpayers), yet the nation probably cannot afford these debts.

[…] Ireland, simply put, appears insolvent under plausible scenarios with current policies. The idea that Ireland, Greece or Portugal can cut spending and grow out of overvalued exchange rates with still large budget deficits, while servicing all their debts and building more debt, is proving – not surprisingly – wrong. Such policies leave nations burdened with large debt overhangs that effectively tax businesses and borrowers – because interest rates must stay high to reflect risk.

Ray Kinsella is worth reading in today’s Irish Times too.

IN THE absence of transformational economic and social policy changes, a sovereign debt crisis is now all but inevitable. Whether such a crisis would ignite, or be part of, a more generalised crisis in the euro zone is not yet clear.

Oh… and FT Alphaville describe nicely the happy merry-go-round that is Nama…

Nama haircuts have been increasing, which means Irish taxpayers save on Nama expenses, but banks receive less in Nama bonds. That in turn, means they have less to pledge at the ECB’s liquidity facilities, and puts further pressure on Ireland’s financial sector — just as the banks need to refinance.

As well as picking up on a BNP Paribas note on Nama…

For this system to work, the ECB must provide unlimited access to its refinancing facilities. A couple of weeks ago, ECB’s Weber surprised markets by suggesting that unlimited access to ECB funds should be extended until the end of the year. The motivation for Weber’s intervention is that he wants to defend German interests. What Germany fears most is the activation of EMU’s EUR440bln rescue package. Once activated it invites abuse in the hope that surplus countries such as Germany will ‘pay the bill’. EURGBP longs remain our favourite trade.

S’fine though honest… it’s just a little banking collapse, it’s still good, it’s still good. It’ll be the cheapest bailout in history, we’re still good, we’re still good…

In the 1994 the courts declared that disruptive children had a constitutional right to be cared for by the State to a suitable standard. By 1999 a High Court judge, Mr Justice Kelly, found that “culpable time-wasting” in the department of health and children had resulted in this care remaining unavailable. He said the problems of accommodating such children had daily become more acute.

At that point the department had plans to bring a 24 bed custom-built unit on stream by early 2000. It was to be the first in the history of the state. The health-board run facility located in Ballydowd, Lucan, opened in mid-2000 but with only at one-third of its 24 bed capacity, due to difficulties with sub-contractors and recruiting suitable staff.

12 months later and the problems remained. The health board began seeking staff from abroad to allow them to open the remaining empty beds.

Six months later; the facility was facing a ‘crisis’ after a spate of resignations.

The South-Western Area Health Board (SWAHB) has rejected claims by one former staff member that the unit, at Lucan, was on the verge of “collapse”. But a spokesman admitted that it faced an “extreme challenge” to operate as originally intended, adding: “Failure is not an option.”

[…] Plagued from the start by recruitment difficulties, it has never been able to deal with more than eight children at a time. The latest resignations, of as many as six childcare staff, mean the unit is relying on agency personnel to continue to operate even at the current level.

In early 2003 the situation hadn’t changed. Still just 8 individuals were being cared for when Ballydowd should have been catering for three times that number. Teenagers with pyschological issues causing them to become aggressive were being sent to Mountjoy prison as beds in Ballydowd remained unavailable due to staff shortages.

By early 2005 there were 14 young people housed there, some as young as 13 years old. Despite there being teens who were being referred to Ballydowd by the courts, the HSE was unable to provide suitable care and instead was attempting to place them elsewhere. This included seeking to place children in the care of their parents, many of whom had originally sought help from the State due to their child’s conditions…

The case of a 14-year-old boy who has tried to kill himself three times is to be brought to the High Court for a judicial review in an effort to compel the Health Service Executive (HSE) to provide him with therapeutic help.

A psychological and educational assessment of the boy took place in the centre, which recommended that he should go to Ballydowd special care unit, a secure therapeutic residential unit.

[…] Nicola Carr, a court officer with the Special Residential Services Board, told Judge Ní Chondúin yesterday that the Finglas Child and Adolescent Centre had recommended a residential therapeutic care unit.

However, she added that the HSE has not provided a placement and has not made an application for the boy to be admitted to the Ballydowd special care unit.

In February 2006 it emerged that management had failed to act on fire safety advice provided following an inspection by experts…

A recommendation to improve fire safety procedures at a special care unit in Dublin for troubled young people detained on foot of court orders had still not been acted on when the centre was inspected 11 months later, according to a new report.

[…] a recommendation was made that senior managers should consider adapting bedroom doors in the centre so they opened outward. Fire blankets in the corridors between bedrooms were also recommended. “Neither recommendation was implemented,” the inspectors said.

They were concerned because in the year before the inspection by personnel from the Irish Social Services Inspectorate (ISSI) a young person had set fire to clothing inside her bedroom and was able to barricade herself in because the door opened inwards.

Come November last year and a HIQA report was recommending that Ballydowd be shut down “as a matter of urgency”. There were “serious concerns” for the welfare and safety of children due to “difficulties in the management of staffing and the physical environment”. The building had deteriorated to such a degree that it was “no longer an acceptable premises in which to detain children.” The HSE said its would set up a special project team to oversee the closure of the facility.

At that point there were 12 children housed there.

In February of this year the director of Ballydowd turned a fire hose on one of the children after she refused to get out of bed. Despite a HSE investigation concluding that the treatment could not be categorised as abuse under their guidelines, the individual did face assault charges after officers from Lucan Garda station received a complaint.

On August 2 of this year, exactly one month ago, the HSE was still planning on placing children in Ballydowd, despite the prior damning HIQA report.

Two days ago a further HIQA report again insisted that Ballydowd be closed, this time “with immediate effect”. However, the HSE says it will remain operational for a further 18 months until they can find elsewhere to house the children currently occupying beds. This HIQA report stated explicitly that “notwithstanding the demand for placements, inspectors were concerned that special care was currently being provided in two unsuitable, inadequate settings which do not meet required standards”. The Lucan facility “represents an unsafe situation for the children placed in special care units”.

And that’s where we currently stand.

10 years of Ballydowd, right on the back of the Celtic Tiger. Apparently never up to full standards.

How a custom-built unit – constructed just ten years ago, at the time apparently the only such building designed for the purpose in the State – could have deteriorated to such an extent that it is no longer fit for purpose, raises serious questions about the quality of the original work. I assume there was a tender process and a tender analysis completed. Is ten years a standard burn-out time for a building with this purpose?

One also wonders if Ballydowd has ever operated at full capacity, despite the consistent demand for treatment. I’ll see what I can find out in morning…

Sunday Times political correspondent, Stephen O’Brien, provides some facts…

The government plans to put thousands of dole claimants to work in their communities and cut off welfare payments from those who refuse to take up the jobs. Eamnon Ó Cuív the social protection minister, will employ up to 10,000 dole recipients over the next four months, providing childcare, working with sports clubs and on environmental tasks, such as improving forest and mountain walkways as part of a bid to break the cycle of long term unemployment and to disrupt the black economy.

The follow-up by RTÉ refines it slightly…

The participants are expected to work in areas like after school services, childcare, services for older people, environmental projects and in the improvement of sports and tourist facilities.

The proposals would see participants work 19.5 hours a week and receive around €210 in return.

To begin with you have to wonder how the department of social protection will find several thousand dole recipients with the garda clearance, qualities and abilities to work in after school services, childcare and services for older people within four weeks. As people have said today already, there is a six-month wait for Garda clearance at present. Anyway, that’s logistical question, it doesn’t consider the social impact of workfare itself. Continue reading “'Work for dole'”

A month or so ago we’d a story in the Sunday Times about Fás. It involved a Mr Terry Oliver, whose company, OSK, had been found to be “consistently successful” in winning Fás contracts. The headline read ‘Fás in new cronyism row over lease’…

FAS, the state training agency, is renting a warehouse from the former tax partner of a consultancy firm which has been “consistently successful” in tendering for work from the agency.

Unit 9 at Tolka Valley business park in Finglas, north Dublin, has been rented since 2000 from Terry Oliver, formerly of OSK, an accounting and business consultancy. Internal audits have concluded that Greg Craig, the former head of corporate affairs at Fas, had a conflict of interest in awarding contracts to OSK because of his close personal relationship with Oliver.

[…] According to documentation obtained under the Freedom of Information act, the Finglas warehouse was to be used to train apprentice plumbers and electricians. It appears no-one has ever been trained there and instead it has been used for storage or left empty due to concerns about it meeting planning standards. The rent is more than €40,000 per annum.

You can read the story as it ran in print here.

During that investigation we obtained about 600 printed pages of emails containing correspondence between individuals we believed to be of interest. I mean neither to imply nor state that anyone did anything wrong, I just think some them are worth a read.

Here’s one snippet from May 2009; Greg Craig emails Terry Oliver with a copy of this press release…

The Tánaiste and Minister for Enterprise, Trade and Employment, Ms. Mary Coughlan, T.D., has today (Thursday 14 May 2009) confirmed that the 3,067 construction trades apprentices currently standing redundant will be able to progress their training towards qualification through a number of special measures this year, providing a capacity for in excess of 3,600 redundant apprentices…

And adds…

Terry,

See below that should sort out Mr REDACTED. I am making a call also.

Greg.

And another one from August of the same year; Greg emails Oliver with an email attached from a Mr Oliver Egan, a Fás employee.

The correspondence – with the subject line; ‘Finglas’ – from Mr Egan reads;

Greg,

Apprentice will be given repeat & the services of an instructor — Bernard Bird -— to assist him. The other instructor will be found more suitable duties.

Regards

Oliver

Mr Craig forwards this email to Terry Oliver saying, simply…

Terry,

Sorted.

Greg

Might post a few more if I get time to re-read them over the next week.

… someone came and took your bed?

Don’t worry, be happy”.

The Economist have a piece on Irish banking out today.

Headline: “Money pit: Ireland’s banking mess – Austerity is not enough to avoid scrutiny by the markets”.

Anyway, we should be looking on the bright side, lads. The ECB will buy the rest of the bonds too.

“A’int got no cash to make you smile? Don’t worry, be happy now.”

More linkage. Working elsewhere.

FT Alphaville on Irish sovereign spreads last week. ‘Ireland shakes, rattles and rolls’.

… but as Lorcan Roche-Kelly says, tongue-in-cheek, in the comments, “don’t be worrying yourself, sure it will all be fine“.