TheStory.ie

Scared ya, didn’t I?

He’s still a sitting TD, in case you’d forgotten. Or at least he’s still being paid and claiming expenses as a sitting TD. Though he has hardly spoken in the Dáil for two years.

… is on Ireland today. It’s written in hard-hitting language.

However, this paragraph slightly undermines the authority of piece;

When a country has gone bust in such spectacular fashion, the causes for its crisis are bound to range far and wide. Primary among them we might count an overreliance on property prices both for the feelgood factor and for public revenues. During the boom, Dublin cut income and corporation tax and relied increasingly on property taxes.

We never had a property tax, at least not a residential property tax. In fact, if we did it probably would have cooled things down and stopped the bubble inflating to the extent it did. I’d guess the author was referring to stamp duty… but that’s a once-off payment, not a tax. Or perhaps I’m being too finicky and should accept ‘property tax’ to mean taxes raised from property development as opposed to property purchase.

Either way, the lack of taxes on property – and the multiple loopholes and tax breaks made available to developers – is what inflated the property market. The banks loan ‘policies’ contributed too, obviously. I’m not sure where property taxes came into it. Perhaps “Dublin cut income and corporation tax and relied increasingly on property development to keep money flowing around the economy”, would be more accurate. Or perhaps I’m wrong. Let me know, if so.

Footnote: this paragraph raised a smile;

As Pete Lunn of Dublin’s Economic and Social Research Institute notes, the elite directing the Irish economy is more tightly closed than an oyster shell – so that the top civil servant in the department of finance would normally expect his tenure to be followed by a stint as chief central banker. Policymakers shrank from calling the property bubble a bubble until it had popped. And when it had burst, they accepted too easily the bankers’ claims that they were merely short of liquidity rather than utterly bust.

You read that right, the ESRI lamenting that an oyster-like elite was allowed to form a group-think which resulted in a lack of dissenting voices.

A report by Carol Jordan broadcast in the last few days on CNN about ghost estates, shot in east Cork. It features Cian O’Callaghan of NÌRSA and Ireland After Nama.

Gav blogged photos of estates in the same region back in 2008.

Minister Brian Lenihan was interviewed by Bloomberg yesterday. You can watch it here.

He’s extremely definite in his views, I’ll have to add a few quotes in the QFBL section for future reference. One in particular caught my attention. “The position with Allied Irish Bank is; it will be fully capitalised and transformed and restored into its greatness”. Poetry, minister Lenihan, poetry.

The DIRT scandal.

Foreign exchange overcharging.

Revelations of €8.6m additional overcharging on a range of products ranging from trust funds to student and graduate facilities, effecting more than 50,000 customers, following anonymous tip-offs to the Financial Regulator.

Insurance Corporation of Ireland (which, if memory serves, we’re still paying for to this day).

The findings of the Moriarty Tribunal in relation to the settling of a £1m overdraft for a Mr Charles Haughey.

Faldor Ltd and the subsequent AIB executives’ settlements with Revenue.

John Rusnak.

Greatness? Jayzuz.

The author of the McGarr Solicitors blog on NAMA…

NAMA’s purpose is to defer the fixing of the valuation of the loans as long as possible. It claims that it is paying prices reflecting “long term economic value”. This is an admission, of course, that the loans are not currently worth NAMA’s estimate.

Long after the Government has left office we will learn the real value of NAMA’s “assets”. So, too, will the Central Bank and the Financial Regulator. Only then will the cost of the Bank Bailout be known.

The Government devised NAMA. It has designated NAMA as exempt from Freedom of Information legislation. When this writer asked for information on the agreement between the Government and the Commission of the EU on the NAMA loan pricing mechanisms, the information was refused.

Everything of relevance in the possession of NAMA is a secret…

Worth reading in full.

So while I’m watching our opposition politicans debate the extension of the guarantee, news breaks on the Financial Times about information they were looking for earlier today. Deficit to reach 30%. Is that a record?

Dublin will on Thursday unveil a fresh recapitalisation of Anglo Irish and seek to draw a line under its banking crisis. But doing so will raise the cost of its taxpayer-funded bail-out of the banks to up to €35bn ($48bn) and lift the country’s fiscal deficit to a record expected to be as much as 30 per cent of gross domestic product

In an interview with the Financial Times, Brian Lenihan, finance minister, said Ireland had no choice but to act.

“Any Anglo failure would bring down the sovereign. It is systemically important not because of any intrinsic merit in the bank. But because of its size relative to the national balance sheet. No country could contemplate the failure of such an institution,” he said. As part of the new bail-out the finance minister will authorise the immediate transfer of Anglo Irish’s remaining €25.9bn in non-performing property loans to the National Asset Management Agency, the government body set up to house troubled assets from the banking crisis. At one swipe, the move will halve Anglo Irish’s size.

On Wednesday Standard & Poor’s, the credit rating agency, downgraded Anglo Irish’s subordinated debt by three notches to triple C and warned there was a “clear and present risk” of a restructuring of the bonds. Earlier this week, Moody’s Investors Service similarly downgraded the bank’s sub bonds, but also downgraded Anglo Irish’s senior bonds by three notches because of the “greater marginal risk” that the government would not support those creditors.

In anticipation that Allied Irish Banks may now be targeted by the markets, Mr Lenihan is separately expected to announce a further taxpayer injection of about €2-3bn to help the bank meet the regulator’s year-end deadline to raise €7.4bn. Announcements by Mr Lenihan and the financial regulator will seek to restore calm to the debt markets where Ireland’s cost of borrowing was again at near record levels on Wednesday.

So that means effective nationalisation for AIB. €5bn more for Anglo too. “The cost of its taxpayer-funded bail-out of the banks to up to €35bn”.