Sunday, December 20, 2009

Classic Michael O'Leary-speak

This is an extract from an article in today's Sunday Business Post - it's classic Michael O'Leary.

"O’Leary told the Financial Times that he would retire in three years, by which time he said Ryanair would need a different style of chief executive.

‘‘I think you need me for the rapid growth and for the in cost reduction initiatives," he said, ‘‘but once they’re all done you then need to hand over to somebody who’s a bit more respectful of politicians and bureaucrats, talks about caring about the environment and old people and f***ing jungles and fish in the sea and all that shite.""

Tuesday, November 24, 2009

What is Art?

Every Sunday morning, Miriam O’Callaghan interviews a “couple” on RTE radio. Last Sunday’s “couple” was John Sheahan & Barney McKenna of the Dubliners.

Sheahan read a poem he’d written for the deceased Ronnie Drew – the closing section was where he hoped Ronnie had finally found the answer to life’s three great imponderables: “What is life, what is art and where the fcuk is Barney?”

I thought of it last night while watching a BBC2 programme about aspiring young artists competing for the patronage of Charles Saatchi.
Basically the programme had selected 12 wannabe artists from a much larger group, this 12 to be further whittled down to 6 during the programme, who would then be given 10 weeks to produce some new artworks. The ultimate winner will have his/her piece exhibited with Saatchi’s collection and be given a studio for 3 years.

The whittling process from 12 to 6 was the subject of the programme, with each participant having to present one art work to the panel (which included Tracey Emin) and the final choice to be made by Saatchi himself.

As a little surprise the 12 contestants were asked to complete a life drawing of a nude model, which merely served to prove that none of them can actually draw. There were only 3 painters in the twelve, the rest were showing a variety of installations, mechanical devices and videos.

They then, individually, had to discuss their presentation with the panel and each was asked the simple question: “Why is this art?”. None managed a credible answer, indeed, most were genuinely flummoxed by the question.

This inability to justify didn’t seem to faze the panel – who showed a “famous” video by an “artist” called Bruce Nauman, walking bare-foot along the edge of a square marked on the floor. Nauman famously found himself suffering from “artist’s block” while sitting in his studio. Then he had a blinding revelation: “I’m an artist and, therefore, everything I create is, by definition, art”. And off he went. He’s beloved of the art community because this rationale has been the greatest “get out of jail free” gift that could ever have been given to that community.

I don’t know if this was the first of a series of programmes, but I hope there will be a follow-up. At least half the final 6 chosen appear to be utterly talentless charlatans, so my education has obviously sadly deficient and I welcome all opportunities to bridge the gaps.

One girl who made the final 6 presented a handle attached to the wall, with a referee’s whistle suspended from it. Asked to explain it she mumbled stuff about tactile feel, action of blowing the whistle etc.. Tracey Emin elaborated for her – it’s sexual blah blah. But what they particularly liked was her drawing of the nude model – an incomprehensible series of marks, squiggles etc across two large sheets of paper. The human form could not be discerned in all of this. But I know that I’m wrong, because this “drawing” also caught the approving eye of Charles Saatchi!.

FIFA & the Thieffy Henry affair

There’s not a single word of regret or condemnation in the FIFA press release* denying the FAI request for a replay, nor anything from Sepp Blatter or Michel Platini. This demonstrates the moral vacuum in the body responsible for running world football.

The fish rots from the head, so it’s hardly a surprise that the actual players are so willing to cheat as part and parcel of the game.

FIFA is clearly a rotten cod.

*20 Nov 2009 Press Release from the FIFA website
“FIFA has today, 20 November 2009, replied to the request made by the Football

"Association of Ireland (FAI) to replay the 2010 FIFA World Cup South Africa™ play-off match held on 18 November 2009 between France and the Republic of Ireland in Paris.
In the reply, FIFA states that the result of the match cannot be changed and the match cannot be replayed. As is clearly mentioned in the Laws of the Game, during matches, decisions are taken by the referee and these decisions are final.”

Penalty Points for Criminality/Anti-social behaviour

There was a lively debate on RTE’s Frontline last night on the subject of criminality and anti-social behaviour.

Clearly any solution will have to be multi-faceted, a combination of carrot & stick measures.

Most of those appearing in our courts are described as “unemployed” or “on disability” – in other words, the state is supplementing their criminal lifestyle. In addition, it seems to be widely accepted that ASBOs have limited deterrent effect on juvenile offenders, who often make life hell for neighbours.

Here’s one “stick” measure which might be effective.
We have a penalty points system for motoring offences – why not have one for criminal and anti-social activity offences? Every citizen (and welfare recipient) has an individual PPS number, so it should not be rocket science to modify the system.

Every conviction to carry a points tariff, leading to a reduction in benefit payment to the convicted party. If that party is a juvenile, the reduction will apply to the child benefits paid on behalf of that child. Such a system might incentivise parents to take more interest into what their kids are getting up to outside the house!

As with motoring points, these new points would automatically fall off the system 2 years after they were awarded, so that a period of good behaviour will also be rewarded.

At a time when many people are facing cuts in benefits and uncertainty about their financial security, clamping down on those who have no interest in working, but rather are intent on pursuing a state-funded lifestyle involving petty criminality and anti-social behaviour, would seem like the first and most appropriate reform of the welfare system.

Sunday, November 15, 2009

Senator Shane Ross - fearless or toothless?

Saturday’s Irish Times Weekend section contains a review by Labour’s Joan Burton of Shane Ross’s “The Bankers: How the Banks brought Ireland to its knees”.

Ms. Burton tells us that Ross “has been a constant thorn in the side of corporate Ireland and has never flinched from exposing its practices to the public gaze”.

Shareholder in IN&M, Ross’s employers, might well be wishing that this was actually true as, in terms of the loss of value of their shares, they have now surpassed the beleaguered shareholders in AIB & BOI.

For many years the boardroom of IN&M was populated with various old faithful retainers and the offspring of our most notable press baron. Sir Anthony also filled the dual roles, for several years, of Chairman and Chief Executive - another clear breach of best practice in corporate governance principles.

While Senator Ross was routinely railing about comfortable cliques in other Irish boardrooms, he never once focused attention on his own employer.

The bold senator may like to present himself as a fearless newshound but, in matters relating to the business affairs of his paymaster, he has consistently shown himself to have all the bite of a toothless lapdog.

Friday, November 06, 2009

NAMA & the budget deficit - we don't need that crap.

I’m not sure what, if anything, the broadcast today of Pat Kenny’s radio programme from O’Connell St added to the debate on the state of the nation. It might well be perceived that staging the programme in this way was, in itself, an act of solidarity with the trade union organised protest.

However, one contributor (Kieran Allen) was allowed to make the misleading claim, oft repeated by left-wing commentators, union reps and opposition politicians, that the €54bn (estimated) bill for NAMA is somehow tied into the yawning annual budget deficit.

This claim is generally allowed go unchallenged by programme presenters, as it was today by Pat Kenny.

However, on Kenny’s own Frontline tv programme some weeks back, Colm McCarthy made it forcibly clear that this claim is nonsense. The fact that it’s routinely made by economists and opposition politicians – who must know that it’s a lie – makes it all the more important that it is scotched immediately every time it is uttered.

To paraphrase a well-known media figure (Pat Kenny) – we don’t need that kind of crap.

Monday, November 02, 2009

Some GPs opt out of Swine Flu Vaccination

It appears that some GPs are concerned that their professional indemnity insurance may not cover them in the event that they fail to identify all “at risk” patients on their practice list for the swine flu vaccine.

Their solution to this problem is to absent themselves entirely from the vaccination scheme, thus ensuring that all their “at risk” clients are actually put “at risk”.

Even if such blatant dereliction of duty does not invite legal actions from patients, which might well put “at risk” the GPs indemnity insurance, it surely must demand serious sanctions from their professional bodies.

No point in holding your breath!

Wednesday, October 28, 2009

Joan Burton - same accountancy degree as Bertie?

Labour’s Finance spokesman Joan Burton regularly reminds us that she is a qualified accountant.
I’m beginning to wonder if she graduated from the same college as Bertie Ahern.

For starters, Labour’s only detailed cost-cutting proposal for bridging the huge deficit in the public finances is to cap public sector pay @ €200k per annum.

Does even 1% of the public sector workforce earn over €200k? What miniscule contribution to cutting the deficit will such a token measure make?

Then there's NAMA.
Today in the Dail, Joan Burton is pushing all the populist buttons by implying that “nurses, firemen and doctors” are looking at pay cuts in order to fund NAMA.
Burton doesn’t seem to understand that the current budget deficit is not caused by NAMA and will not be changed by NAMA.

Any NAMA-related impact on the pay of public sector (and other workers) will only become a factor if NAMA fails to deliver in 7-10 years time.

So either Burton doesn’t understand the nature of the current budget deficit or else she’s playing populist politics by misleading the public.

In either case, that makes her very questionable ministerial material. Labour/Burton need to stop waffling, drop the NAMA populist bullshit and start putting forward some realistic solutions to resolve the budget deficit.

Thursday, October 22, 2009

Seanad turkeys squeal as Christmas approaches.

Enda Kenny's proposal to abolish the Seanad has certainly caused a reaction in, indisputably, the best club in town.

Yesterday featured the most animated and fractious "debate" in the Seanad - the turkeys can see Christmas coming. It was amusing to watch this bunch of self-serving wasters squealing at the prospect of their snouts being removed from the public purse trough. (There's the ham to go with the turkey/Xmas metaphor).

Even if Kenny's abolition proposal doesn't actually materialise, it must surely bring forward serious Seanad reform - and many of the current well-paid incumbents will be out on their ear. No great loss.

Monday, October 05, 2009

Mary Robinson for EU President?

Well, according to some Irish media (the Indo yesterday was prominent) Mary Robinson is on the short-list.

As she hasn’t a hope in hell, this cannot be a serious piece of news.

The EU is predominantly a trade-related political and economic conglomerate. Mary Robinson is a Mother Teresa-type figure who is into human rights rather than trade.

You can just imagine the relationship between China and the EU if Mary was the figurehead? They hated her guts when she was with the UN.

I looked up Paddy Power this morning but they don’t seem to be offering odds on her chances. However, I wouldn’t be backing her, I’d be looking to lay her. Now that’s an unfortunate turn of phrase.

Lisbon Dialogue of the Deaf is over - now it's time to change the rules

Well the Lisbon Treaty is passed, at least as far as Ireland is concerned and, whether you voted Yes or No, you must be somewhat relieved that the media noise on this topic has subsided considerably.

The arguments for and against could not possibly be described as “debate”. If anything ever qualified as “the dialogue of the deaf”, this was surely it - both times around. I’ve had a headache from Lisbon II for the past three months, thank God it’s all over. Now we just have NAMA and the budgetary crisis to live through. Pass the anadin, please!

I heard a good quote this morning from Mark Twain on the subject of newspapers – “if you don’t read a newspaper you’re uninformed, and if you do read a newspaper you’re mis-informed.” That piece of wisdom could have been very aptly applied to the Lisbon Treaty “debate”.

On the subject of referendums (or referenda), we seem to be completely hamstrung by a couple of Supreme Court judgements. The Crotty Judgement means that every major change in the EU cannot be passed by our elected Oireachtas but must instead be put to a national referendum. Allied to this is the McKenna Judgement which prohibits the Government from spending public money to promote one particular side of the argument in such a referendum. Then you have the national broadcaster, RTE, which is deemed to be obliged to provide equal exposure to the Pro- and Anti- sides in any such referendum.

The result is that you can get massive over-exposure for all sorts of cranks, whingers and unelected demagogues and every referendum is a perfect opportunity for these to get some media exposure – despite most of them having no mandate whatsoever from the public to speak on their behalf.

In the Lisbon campaign we’ve had Declan Ganley/Libertas given huge exposure – despite the annihilation of that party at the polls in the recent European elections. Then you get cranks like Richard Greene (the wrinkly wing of Youth Defence) representing Coir, Roger Cole of the anti-war anti-US alliance, ex-Green Patricia McKenna who’d start a row in an empty room, Tax-free republican socialist Bobby Ballagh – who always wants more taxpayers money spent on the needy etc etc..

Every referendum must be like Christmas for all these fringe groups who can’t get elected to anything.

I can’t wait for the “children’s rights” referendum we’ve been long promised. This, apparently, will include a revision of the legal age for sex – essentially the minimum age at which young girls can have sex with older men – without the latter incurring a charge of statutory rape. I can’t wait for that to be debated on RTE. To achieve balance, they’ll need some dodgy old men to represent the “No” side – spelling out the joys of underage sex and the benefits it brings to young girls. You can see what a nonsense the McKenna Judgement and RTE “balance” rule can result in.

So we need some sort of weighted majority mechanism – just like that proposed in the Lisbon Treaty – to allow our own elected Government to promote appropriate constitutional change and also to allow RTE to represent the views of the majority in an appropriate way.

A proven electoral mandate would have to be at least one constituent of such a formula – note that I didn’t include MEP Joe Higgins or Sinn Fein’s Mary Lou in my earlier line-up of cranks.

Corruption: The rotting of the body politic.

Most of us think of corruption as the taking of bribes, improper use of power etc etc., but the word can also mean the rotting process of a dead body.

When senior politicians are investigated for accepting money from “friends”, or spending lavishly at public expense, we are invariably told that either “no favours were done” or “it was within Dept of Finance guidelines”, so there is no case to answer as far as the politicians are concerned.

However, to the general public these are prime examples of corruption, as in “the rotting of the body politic”.

The level of John O’Donoghue’s expenses is a disgrace, but he’s probably the tip of an ice-berg of similar excess among the ministers who have held office over the past decade.

Incidentally, Nora Owen might well be forgiven the occasional hint of a smile.

Friday, September 11, 2009

FG plan endorsed by Stiglitz - I don't think so.

I know I'm like a broken record, but...

On tonight’s RTE 6-1 news, FG’s Richard Bruton was interviewed by Bryan Dobson.
Dobson pointed out the FG’s alternative to NAMA has not been endorsed by any major independent economist.

Bruton responded by claiming that the approach had been endorsed Joseph Stiglitz, the Nobel Prize winning economist. Bruton also cited the UK experience with Northern Rock as tangible evidence that the FG approach can work.

Strangely, the FG website contains no reference I can find to such an endorsement. A strange omission indeed.

Now consider this: Northern Rock was a middle-ranking, deposit-taking, residential mortgage lender in the UK. It’s involvement with the SME sector, or the national money transmission service, is negligible, if not virtually non-existent.

The UK Govt action was taken as a direct result of a run on Northern Rock, we all saw the tv pictures of early morning queues of panicky depositors looking for their money back, even after the UK Govt increased the guarantee for depositors.

What’s the relevance to Ireland of the Northern Rock experience in the UK, a market serviced by several much larger banks e.g. Lloyds-TSB, Barclays, RSB-NatWest, HSBC, HBOS etc – all of whom were continuing to operate?

However, in the Irish context, the FG proposal is effectively to pronounce a death sentence the two largest players in the Irish Market – AIB & BoI – who dominate the SME market and the money-transmission service. This bears no comparison whatsoever with the potential market impact of the UK Govt’s take-over Northern Rock.

Let’s be clear – FG proposes to asset-strip those two banks when the Govt guarantee expires in Sept 2010 – they’ve made that very clear. They propose to take the good assets and leave the stripped carcass behind for the shareholders and bondholders.

In the interim, they propose to set up their National Recovery bank – and propose to distribute loans through the very banks they intend to asset-strip. How likely do they think it is that those banks, and their shareholders, will collude in this?

AIB & BOI will be forced to aggressively shrink their loan books, and the associated capital requirements, in the hope of surviving that Sept 2010 deadline, even if it’s as Zombie banks. They’ll be helped in that by the National Recovery Bank (NRB) – because, assuming they actually agree to act as intermediaries, the majority of the new loans they pass on the NRB will be their own existing dodgy loans, repackaged as “new” loans to the SME sector.

Those systemically important banks will also embark on a number of key survival programmes:
1. Non-core asset disposal programme – GB, NI, US and Polish assets will be sold.
2. Savage cost-cutting programme e.g. involuntary redundancy for 10-20% of staff in ROI, closure of marginal branches & non-core business units, outsourcing/ downgrading of services e.g. call centres etc..
3. Ramping up of interest rates to remaining customers, particularly in the mortgage market. This will be facilitated by the absence of competition from the foreign-owned banks, who are all trying to reduce their exposure to the Irish market.

I haven’t seen any of the above business risks credibly addressed by FG.

Monday, August 31, 2009

Why FG's "solution" won't work.

Extract from Richard Bruton’s Irish Times opinion piece in last Friday’s Irish Times. It concerns their approach to the banking system in the NAMA-less solution they are proposing.

“In the event that the banks cannot pass such a stress test by the end of the guarantee period, Fine Gael’s proposal is to split each failed bank into two, leaving the assets with the most uncertain values (the developer loans) in legacy asset management companies owned largely by the shareholders and other classes of risk investors. Deposits, other short-term liabilities, personal loans, mortgages and business overdrafts, the branch networks and the vast majority of the staff would all move safely and seamlessly into a new, going concern “clean bank”, initially owned and guaranteed by the taxpayer.”

This extract illustrates one of the main challenges for FG – a complete absence of understanding as to how the situation is likely to evolve, and a naïve belief that if you write something down it makes it happen.

It was good to hear Richard Bruton finally admit, at yesterday’s committee meeting, that he hadn’t understood the difference between Senior and Subordinated bonds. (Joan Burton also demonstrated a need to read up on Derivatives).

A key plank in the FG solution is the setting up of a “National Recovery Bank”
Let’s assume that this “bank” can raise the necessary €20bn, as outlined in the FG proposal.
How long will it take to get it up and running?
How long to organise
- Fundraising
- Personnel
- Distribution Channels
- Accounting/Bookkeeping/IT/Loan processing Systems/Processes

At best it will take several months to get off the ground, and probably a couple of years before it could be fully operational.

In the interim, for the 2nd leg of FGs banking proposal, the two main banks servicing the Irish economy, AIB & BOI, are told that post-Sept 2010 there will be no extension of guarantees for their fund-raising activities.

What will they do?
- immediately withdraw from any new lending exposures
- commence a major pro-active de-leveraging of their balance sheets, cancelling/ calling in overdrafts
- engage in huge cost-cutting activities e.g. laying off staff, closing any marginal branches
Their sole focus will be in survival, at any cost, beyond Sept 2010 as Zombie banks, in the hope that they can, over time, work out their property loans and return to profitability.

In the process, they will also reduce the economy to a Zombie state – FGs National Recovery Bank won’t be up and running in time to make up the slack, and all the foreign-owned banks are firmly in retrenchment mode.

This aspect of the FG plan, supposedly focused on National Recovery, is mind-boggling in its naïve stupidity.

I have no difficulty with the proposal to leave the bad assets with the banks and letting the shareholders/bondholders take their chances with “long-term economic value” of the underlying security they hold.
But there’s also a need for a functioning banking system over the next 2-3 years while we, hopefully, work our way out of the current recession.
However, that involves allowing the Banks the prospect of trading through the period, so here’s the alternative proposal:

- The current blanket guarantee of all bank liabilities is allowed to expire next year and is not extended. This removes the comfort from the subordinated bondholders.
- The Govt extends the guarantee for ordinary depositors and senior debt providers.
- The Govt provides ongoing guarantees, but only for specific fund-raisings by the main banks on a case by case basis.

This approach gives the Govt considerable leverage in ensuring that the banks support the economy while, at the same time, trying to repair their balance sheets.

If additional capital is required by AIB and/or BOI post-Sept 2010, then the Govt can underwrite rights issues and, in the event that private investment is not forthcoming, will become a major, perhaps majority, shareholder in those banks.

The critical consideration is to maintain a functioning banking system through the cycle, not Zombify it a.s.a.p. as would inevitably happen with the current FG proposal.

The silence of the 46 lambs - not a baaa!

The silence of the 46 lambs is deafening – not a baaa from any of them.

Following Garret Fitzgerald’s critical comments on yesterday’s Morning Ireland regarding the quality of their analysis, in particular their exaggeration of the projected budget deficit, Pat Kenny opened his programme at 10.00am with a reprise of Garret’s comments.

Kenny revealed that the programme had contacted Prof. Brian Lucey about Garret’s criticisms. Lucey claimed that “the numbers weren’t important” (is that a first from an economist?) and declined to come on air to discuss the issue. (Now that definitely is a first for this ubiquitous media whore.)

Kenny then said that the programme had also attempted, without success, to contact several of the other signatories. He then issued an open invitation for any one of the 46 signatories to contact the programme.

Kenny closed the programme at 12.00 without any contact from the gang of 46. Will we hear anything from them today, I wonder?

Following Alan Ahearne’s dissection of their sloppy miscalculation of the value of the underlying security, Garret’s attack may well have terminated the credibility of this bunch of wasters.

Good to see that there’s life in the old dog still.

Friday, August 28, 2009

FG/Bruton anti-NAMA proposal is, sadly, rubbish.

There are legitimate arguments to be made on both sides of the NAMA/ Nationalisation debate, even if I detest the Lucey & Co/populist media commentator loose approach to the potential numbers involved.

But, as a life-long ABFFer I regret to say, the Bruton/FG approach, as espoused in today’s IT, is a clear recipe for disaster, as it displays a complete ignorance of how the real world economic/banking system works.

Firstly: we’re now faced with a banking system where foreign-owned banks e.g Ulster, BoS(I)/Halifax, NIB, ACC etc..are effectively in retrenchment mode, they’re actively seeking to reduce their exposure to the Irish market.

When it comes to domestic players, Anglo Irish & Irish Nationwide are dead in the water, while permanent/TSB & EBS are actively trying to deleverage and reduce their loan books – just look at the uncompetitive interest rates they are quoting.

The only real players in the marketplace are AIB & BOI – and god knows they’re fussy enough about extending new credit.

But, between them AIB & BOI are by far the biggest players in all our key banking markets – deposits, lending (both to SMEs and consumers, mortgages,) money transmission (current accounts, payments) etc etc..

So what is essence of the Bruton/FG proposal, insofar as it affects the real economy?

1. Put the two main banks that drive economic activity in this country (even more so now all the foreign-owned banks want to pull out) on a death-watch for September 2010.
2. Create a new “National Recovery Bank” with no branches/outlets of any kind.

What does Bruton/FG think that (1) above will achieve, other than cause AIB/BOI to pull lines of credit from any even slightly dodgy small business across the country, in order to bolster their balance sheets,never mind not extending credit to new business? Even if they wanted to lend they couldn’t – because the FG policy proposal would mean that depositors would immediately start to move their funds elsewhere – to banks which aren’t lending to Irish business/consumers.

How does he think that the National Recovery bank will operate for SMEs when it has no distribution outlets? Online/Phone perhaps? This is a serious question.
The only certainty is that it will pick up every bad business in the country as a grateful client.

There are legitimate questions/challenges for NAMA, mainly around how taxpayers interests can be protected. Nationalisation or majority state ownership of the two main banks may well be an outcome.

But letting the economy/banking system stew for 12 months more than necessary, as espoused by Bruton/FG, is simply a recipe for disaster.

Wednesday, August 26, 2009

Are we wasting 3rd level resources on women?

The introduction of the Health Professional Admissions Test (HPat), to be used in conjunction with the points score from the Leaving Cert in determining admission to University Medicine courses, has resulted in an approx. 50:50 mix of male and female successful candidates. This contrasts with a typical 60:40 skew in favour of females under the old points-only system.

This outcome has been attacked by female commentators, in particular former FG Education Minster Gemma Hussey who argues that the points system is the fairest way of allocating the most sought after 3rd level places.

Even if that is true, is it actually the best way to allocate them?

It is a fact that, in general, girls perform better than boys in the points race, while men, in general, perform better than women in the rat race. This would suggest that the current allocation of valuable and expensive 3rd-level resources may not be delivering the optimum return on investment, i.e. longer-term economic benefit to the country.

From a strategic point of view, the country might well benefit from skewing the allocation of 3rd-level places in favour of boys, reversing the current position. I think 60:40 would be a reasonable and balanced outcome.

Bloody academics - they're at it again!

Those bloody academics are at it again. This time 46, mainly unknowns juniors, have put their names to another Lucey anti-NAMA diatribe in the Irish Times.

On RTE’s Morning Ireland, Alan Ahearne neatly filleted Lucey & Co on the key issue – their willingness to pluck figures from the air without any hard information on the actual assets under consideration e.g.
- the level of equity originally provided by the promoter
- the current income generated by the development
- the ability of the promoter to service the borrowings from other income sources
- the location/value/potential of the individual assets

The number of gobshites willing to put their names to this media circus, run for the benefit of Messrs Lucey, Whelan and Gurdgiev, is frankly irrelevant.
The fact that the 46 are willing to put their names to this poorly researched, illogically argued valuation suggests that their opinions can and should be discarded.

I liked Ahearne’s line about this being a serious business and not just something for (idle) academics to mess about with.

Ahearne’s line from earlier this year that there are two types of economist – those who know they don’t know and those who don’t know they don’t know – is proving to be as true today as the day he said it, and the latter continue to outnumber the former.

Tuesday, August 11, 2009

Inventing the future.

A couple of critical inventions which will greatly improve the quality of life:

The Blackspot

This personal device creates a Wifi & Mobile phone blackspot for a radius of up to 100 metres from the wearer. The power output can be varied by the user to increase or reduce the diameter of this blackspot. In trials it has been effective up to 1,000 metres, but the microwave radiation at that range is sufficient to sterilise the user. Consequently, a maximum range of 100 metres will probably be deemed mandatory.

With the rapid spread of Wifi and mobile phone coverage now extending to aircraft, this device will become essential for anyone seeking a little peace. Indeed, you should not be surprised if, at some point in the near future, hotels and resorts start to promote themselves as “blackspots”, where the harried masses can come for some uninterrupted rest & recuperation.

The Pixeliminator

This clever device will shield the wearer from the unwanted intrusion of digital photography – whether by still or video camera or mobile photo.
The device works on the principle of monochromatism – it emits a low frequency radio wave which renders all the pixels of the wearer, as the intended subject of a photograph or video image, as a homogenous blob of one single colour and shade – with no discernible features. It doesn’t render the subject invisible to the camera, it merely records their presence as a blob.

This clever device will restore some semblance of privacy to the citizen and is destined to enliven the conversation over wedding photos & videos in years to come. “And who’s the blob dancing with Auntie Pam?”

Funding these projects:
To provide the necessary capital to finance development of the above devices, which will undoubtedly be highly profitable in due course (think Dyson), we’re about to launch the ultimate “cash cow”: Wii Adult!
No details, just use your imagination.

Saturday, August 08, 2009

Hats off to Rupert Murdoch!

My hat is off to Rupert Murdoch, who has recently declared his intention to charge for online access to his many media publications. It’s about time that someone, somewhere, sometime, declared that giving stuff away for free that actually costs real money to produce makes no economic sense and, ultimately, has no economic future.

The current business model on the internet not only makes no financial sense, it also creates a culture of entitlement to getting everything for nothing. Otherwise respectable middle-class people are induced into law-breaking use of unlicensed electronic equipment to steal cable tv, internet access, phone connections etc etc.. Such people should, of course, be reported and prosecuted – so watch out Bat!

The next step is to promote the creation of Wifi/Mobile phone “black-spots”, as opposed to hot-spots. What a relief it would be to find places where you can’t contact, or be contacted by, anyone else. Finally, you might regain control of your own time and your life without uninvited interruption or distraction. What a blessing that would be! I can see such places becoming a mecca for the overly-stressed – the next “big thing”

A firther important challenge is to kill 24/7 news and talk-radio!
Bruce Springsteen famously recorded a song which proclaimed that there were “57 channels and there’s nothing on”. Sadly, it now feels like there’s about 1057 competing channels and there’s still nothing on. Competition certainly hasn’t brought quality!

Our media is filled with the same talking/writing heads, endlessly repeating the same old tired guff ad nauseam. They speculate endlessly on what might happen if X, Y or Z was to occur, even when the result e.g. a general election, will be known within days. If you change radio stations, you’ll hear the same contributors turning up on RTE, Today FM & Newstalk over the course of any day. If only we could have a law that confined current affairs of any kind to 5% of station output we’d all be better off – believe me! That would be a boon to public service broadcasting. Perhaps coupled with a legal constraint on politicians – how much time per week/number of opinions they can give to media?

Give my head peace. Please.

Thursday, August 06, 2009

Republican band split

It’s part of republican mythology that a split in “the movement” is inevitable. So the IRA spawned “The Officials”, “The Provisionals”, “The Real IRA”, “Republican Sinn Fein”, the INLA etc etc.. (Brendan Behan famously joked that the first item on the agenda for a meeting of any Irish political party is “the split”.)

It now seems that the splitting virus also infects republican bands. Today’s Liveline featured the acrimonious 8-year split in The Wolfe Tones. Derek Warfield revealed that he hasn’t spoken to or seen his three fellow band-members since the split – and that includes his own brother Brian! Then the two non-fraternal band members phoned in to abuse Warfield.

Great stuff. I always thought the Wolfe Tones were a bunch of rabid dog, rabble-rousing wankers who weren’t worth listening to. So, in my opinion, this acrimony couldn’t have been visited on a more deserving bunch.

Strategic need to preserve independence of AIB & BOI

One aspect of the current banking crisis, which appears, to date, to have gone un-remarked, is the strategic imperative of maintaining the “independence” of our two main banks, at least insofar as it relates to ownership by foreign banks.

It now seems clear that the subsidiaries of foreign banks currently operating in Ireland e.g. Ulster, NIB, BoSI/Halifax and ACC, have effectively withdrawn from the new lending market, particularly in the mortgage market and the vitally important SME sector.

If AIB and Bank of Ireland were subsidiaries of foreign banks, there is little doubt that a similar retrenchment policy would be in operation and the ability of the Irish government to influence such a policy would be severely circumscribed.

If AIB was owned by a major UK bank, one can imagine that the discussion in the London boardroom would not be about whether they should dispose of AIB’s US or Polish interests in order to bolster the balance sheet of the Irish subsidiary, it would be about how to downsize or dispose of the Irish unit!

There is understandable public anger at banks and bankers, a “to hell with the lot of them” attitude is commonplace.

This anger is routinely stoked by populist politicians, academics and media commentators who make no distinction between the banks, despite the evidence that some have been considerably less irresponsible than others e.g. IL&P and BoI.
Those commentators might usefully, in future, reflect on the long-term national importance to the Irish economy of maintaining a strong indigenous banking sector.

The current economic crisis will, hopefully, pass within a couple of years, but the national strategic need to maintain local control over key elements of our banking system will persist. At some point in the future, hopefully distant, we will inevitably have another international economic/banking crisis which will test the ability of the Irish economy to survive/revive.

Given the open nature of the Irish economy, we will always feel the pain when our major markets suffer an economic setback. In such circumstances, the Government’s ability to influence events is very limited e.g. our exchange rate is fixed by the ECB, reflecting the perceived need of the larger community rather than Ireland, and our interest rates are largely dictated by our membership of the Eurozone.

The banking system remains one of the key levers of economic power that the Government can influence and we must maintain control of it. Perhaps there is a case for the Government to maintain a long-term minority stake in the two major banks.

Thursday, July 09, 2009

Ned O'Keeffe - gombeenism alive & well in irish politics

East Cork Fianna Fail TD Ned O’Keeffe is to be congratulated on the honesty of his stance regarding Rathcormac National School. It is good to see one of our elected representatives publicly demonstrate the type of self-serving gombeenism which many of us have long suspected to be common currency in national and local politics.

Deputy O’Keeffe insisted that this school was not a priority for him, as Rathcormac was not a place where he gained many votes. He knows this from the activities of the much-loved tallymen at the 2007 general election.

Media commentators were virtually unanimous in their condemnation of electronic voting, often on the basis that it would deprive them of several days entertainment at that blood-sport known as “the count”. The inevitable demise of the tallyman was cited as a prime example of the supposedly huge cultural loss entailed in a switch to electronic voting.

How do those commentators now feel about the use to which the tallyman’s work is applied? How do we reform our electoral system to stop gombeen politicians behaving like this in future?

Footnote: Published as a letter in the Irish Independent & the Irish Examiner.

Tuesday, June 16, 2009

Bloomsday again

It’s Bloomsday again and the posers have been out in force all morning around Sandycove and Glasthule. Lunchtime will be the signal to start the serious eating and drinking and, as usual, Caviston’s pavement is festooned with tables.

Doubtless Pete will be giving them all a reading from the great book while they try not to spill the vin rouge and/or gravy on their Edwardian outfits.

You have to hand it to Pete, he’s a great man for organising events. Today, he’s going to top whatever David Norris can manage in North Great George’s Street, for there’s a hearse drawn up outside Quinn’s Funeral Home and I’ll lay any money that Cavo is planning to recreate Paddy Dignam’s funeral scene from the book.

What a man of culture, truly Ireland’s very own Sir Les Patterson!

Friday, June 05, 2009

Greens fail the Principle test - again.

In recent days there has been considerable media kerfuffle about what transpired in a post-election telephone conversation between the leaders of Fine Gael and the Greens.

Given the size of the prize, would it not have been extraordinary of Enda Kenny had not given serious consideration to every possible political combination?

To his credit, principle triumphed over his ambition to occupy the Taoiseach’s office. The Greens, however, failed their test.

Footnote: Published as a letter in the Irish Independent.

Wednesday, June 03, 2009

Exclusive: The Kenny-Sargent transcript!

The scene: Trevor’s office. Trevor is seated behind desk, making a phone call.
Gogarty is rolling around on leader’s shag-pile rug, doing his education spokesman impersonation and playing with his favourite squeaky rubber duck.

Trevor: Hello, Enda, any news?
Enda: Not looking good, I’m afraid, Trev. The numbers don’t add up – we can’t make it across the line. I’ve spoken to Pat and he agrees. He’ll stick by the accord but he’s worried about a completely hung Dail and the pressure that might put on Labour to go in with Bertie. He’s determined not to do that.
Frankly, he’s hoping you guys will cut a deal and get him off that hook.
Trevor: No way! I’d have to resign the leadership. Mind you, Gormless is chomping at the bit to do that deal and shaft me in the process. Ryan is wringing his hands and gurning, in his usual display of anguish, over the decision. But he’s been out to get me ever since we took the wheels off his presidential pram a couple of years back.
Enda: Well, that’s tough, Trev, but that’s grown-up politics for ya.
Trevor: Could we not cobble together enough independents?
Enda: No, it wouldn’t last 6 months – far too unstable to be credible. They’re mainly FF-gene poolers. The media would crucify me if I did a deal with Lowry and no price would be worth paying to have to listen to Finian posturing 24/7. No, Trev, I’m afraid we’re out of options this end.
Trevor: What about the shinners, have you spoken to the shinners?
Enda: Ah, will you feck off out of it Trev. There’s no way I’m doin’ any deals with the shinners. That’s a bridge too far.
Trevor: Well what if they were willing to support you from outside Government – you know, you don’t have to have them formally in the coalition.
Enda: I can’t see them going for that – they’re far closer to Bertie on the North than they’ll ever be to me. And I’m not prepared to give them any concessions now or in the future, just for their support.
Trevor: Jeez Enda, surely it’s worth a try? Do you want me to make a few discreet enquiries for ya? Sure there’s nothing to lose.
Enda: Well you can if you want, but remember, no promises. There’ll be no concessions now or in the future. Frankly, Trev, I think you’re wasting your time. The best thing for the Greens is to do a deal with Bertie and you start writing that principled resignation speech.
Trevor: Thanks a million, big fella.
Enda: What’s that squeaky noise I keep hearing in the background? Are you taping our conversation?
Trevor: No, relax, that’s only Gogarty playing with his toys.
Enda: And to think I was worried about an unstable Government. You should keep a close eye on that boy, Trev, he’s for the birds. Best of luck Trev, see you around the house. Goodnight and good luck.

Trevor disconsolately hangs up the phone.
“I suppose he’s right” he mutters to himself.
“Hey Gogarty, get off the feckin’ rug and stop playing around. Give me a hand drafting this bloody resignation statement”.

So, technically, Trevor may be misleading the public without actually telling a lie. That’s politics.

Monday, June 01, 2009

A Modest Reviewer - is this a first?

Reviewing D-Day: The Battle for Normandy by Antony Beevor in the Sunday Times, Max Hastings pays the author the following tribute:

“I find it galling that he has contrived to write a book that resurrects virtually no scrap of material that I used in a book of my own about the Normandy campaign 25 years ago. Instead, he has assembled a mass of unfamiliar sources, fresh voices and untold anecdotes to create a saga as impressive as his earlier narratives of Stalingrad and the battle for Berlin. He makes my version, and those of many other historians, seem old hat.”

Hastings is an author, historian and former journalist. I couldn’t help contrast the generosity of his review with the acrimony we’ve seen in the letters page of the Irish Times where Messrs Ferriter, Coogan and Jordan have slugged it out over their biographies of Dev and WT Cosgrave.

Wouldn’t it be an interesting exercise for the Irish Times to get each man to review the relevant books written by the other parties. Would any of the reviews approach the Hastings review in generosity of spirit? I suspect (ok, hope) that it would result in a fantastic bitching-fest, but one well disguised in polished academic-speak, but no less poisonous for all that.

Tuesday, May 26, 2009

Dealing with the Religious Orders damned by the Ryan Report

Dealing with the Ryan Report in his Irish Times column today, Fintan O’Toole poses the question:“What, precisely, do we do with all those religious congregations who are apparently incapable of understanding the crimes for which they are institutionally responsible?”

Well here’s a possible solution:

The anti-gang legislation promised by the Minister for Justice has been prompted by the activities of the Limerick gangs.
Under the proposed legislation, leadership of a criminal gang could attract a life sentence while participating in organised crime could lead to a stretch in prison of up to 15 years. In addition, the Criminal Assets Bureau can seize assets acquired by a gang in the course of its criminal activities.

The Ryan report identifies what can only be described as systematic criminal activity over a prolonged period and, as such, it now offers an array of potential targets for the application of this promised legislation.
One, or all, of the religious orders involved should be closed down by the state.

Footnote: Published as a letter in the Irish Times & the Irish Independent.

Monday, May 25, 2009

Paper never refused ink - again!

Writing in today's Irish Times on the pursuit of developer Paddy Kelly by ACC bank, Business Editor John McManus welcomes it as the start of the process which, he predicts, will result in the liquidation of the portfolios of the beleaguered developers.

This process, he believes, will also inevitably bankrupt AIB & BOI as entire property portfolios are dumped on the market. He describes this outcome as “a truly awful mess” but concludes his article thus: “If it takes the precipitous collapse of Paddy Kelly to force everybody to jump into the unknown and get on with cleaning up the mess, then it is to be welcomed.”

At a recent seminar in Galway, economist Dr Alan Ahearne suggested that there are two types of economist – “those who know they don’t know, and those who don’t know they don’t know”. This might be applied with equal validity to journalists and media commentators.

On 26th January 2009, the same John McManus concluded an article on the banks with the following suggestion: “The solution may well be to split the difference – to nationalise Bank of Ireland and recapitalise AIB.” Recent events suggest that, were he writing that article today, he might reverse the prescription.

Academics and journalists enjoy the great luxury of having no authority to implement their proposed solutions nor any responsibility if they turn out be disastrously mistaken in their analysis.

A massive fire-sale of extensive property portfolios, in a lifeless marketplace and with little bank funding available for potential purchasers, seems like the least intelligent proposal for sorting out the mess I’ve heard in a while.

However, Mr McManus or the Irish Times won’t have to pick up the pieces and the ensuing financial chaos should provide him with copy for years to come.

Footnote: I emailed the above to John McManus and got the following response:
Thanks for your mail

With regard to Bank of Ireland and AIB, the point I was making is that the arguments between nationalisation and recapitalisation are quite finely balanced, but if you taker the view that trying to limit the costs to the Exchequer is a reasonable basis for policy, then doing a bit of both makes some sense. And it still looks like the possible outcome. The piece was not an analysis of the merits of one versus the other. Perhaps I should have said “recapitalise one and nationalise the other”. Several people have raised it with me.

As for today’s article, again perhaps I did not explain myself to well. The point I was making is that the system is paralysed by fear and something like the collapse into insolvency of one of the big developers could prove to be the catalysts to make the banks, Government and everyone else get on with trying to implement the proposed solution (the creation of Nama) because it suddenly starts to look a lot more attractive than the scenario you outline in your email

John McManus
Business Editor
The Irish Times

So he didn't really mean to say what he said in the article. He actually meant to say that they better get on with NAMA before the whole house of cards collapses. Incidentally, "the scenario" I outlined in my email was precisely the scenario he outlined and welcomed in his article.

Saturday, May 23, 2009

Leinster win the Heineken Cup - at last!

Leinster 19 Leicester 16

So finally, and deservedly, Leinster have won the Heineken Cup.

Defeating Leicester in a suitably intense and physical contest, Leinster finally proved that they can legitimately shed the “lady boys” tag and grind out a worthy victory against one of the real grinders in the business today.

This isn’t, in historical terms, on a par with the national team winning the Grand Slam, but it is still a great shot in the arm for Irish rugby and Leinster in particular.

Go mbeimid beo ag an am seo aris!

Thursday, May 14, 2009

Getting the Property Market Moving

The banks are the effective owners of many unsold residential developments, with the related loans to developers forming part of the impaired loan portfolios which are to be taken over by NAMA.

Many of these properties are in desirable locations but cannot currently be sold, even with significant reductions in the asking prices. This is because of the natural caution of potential buyers, who don’t want to risk buying in a falling market without any guarantee that we are at, or near, the bottom.

Is there a potential solution which would serve the interests of buyers, banks and the taxpayer (via NAMA)?

If a bank was to provide mortgages on a “non-recourse” basis for specified properties, it would mean that the bank can only rely on the property itself as security for the mortgage.

The benefit to buyers is the assurance that they can limit their risk, as they can return the keys and walk away in the event of a negative equity situation arising.

The benefit to the bank is that it can transfer a non-performing property development loan, or at least a portion of it, into a new mortgage loan. Even if the mortgage borrower subsequently hands back the keys of the property, the bank is actually no worse off than its current position.

The benefit to the taxpayer (via NAMA) is that any progress the banks can make in reducing the balances outstanding in their commercial and development property loan portfolios will result in a smaller balance to be transferred to NAMA. There will be a consequent reduction in the longer-term risk that the taxpayer will be stuck with any residual shortfall.

Clearly there are many details to be argued over, but some variant of the above solution might just help to get the property market moving again.

Wednesday, May 13, 2009


This is a test which determines your brain’s capacity to perform just 2 simple tasks simultaneously.

It only takes a couple of seconds to perform the test.

1. While sitting down, lift your right foot off the floor and make clockwise circles.

2. Now, while doing this, draw the number ‘6’ in the air with the index finger of your right hand.

If your right foot rotation changes direction, or becomes otherwise mis-shapen, while making the ‘6’ then you are suffering from Physiological Dis-coordination (PD).

PD is a condition which indicates that you should not become engaged in any employment or task requiring relatively complex multi-tasking or, particularly, preparedness for quick reaction to emergency situations.

Indeed, PD sufferers should possibly reconsider whether they should be driving a car or other mechanically propelled vehicle.

Repetition of the above exercise will not generally achieve any improvement in the outcome.
There is no known treatment for this condition, being a PD is a lifelong affliction.

Saturday, May 09, 2009

Irish Times grants posthumous pardon to Progressive Democrats

The 6th May Irish Times editorial “An unholy mess” (concerning the costly debacle of the 2003 Decentralisation political stroke) attempts to give a posthumous pardon to the Progressive Democrats. There is clearly no connection between Madam Editor’s formerly leading role in that party and her current role in the Irish Times!

The opening paragraph of the editorial in question:

ONCE DESCRIBED by the Progressive Democrats in government as representing “gombeen politics”, Fianna Fáil’s enormously wasteful decentralisation programme has finally run out of money and been suspended. At a rough estimate, it has cost a minimum of €360,000 for each of the 2,500 civil and public servants who have been relocated out of Dublin during the past six years. The cost is computed through the sale of €500 million in State property and an additional charge of €400 million for the acquisition of new sites and offices at scores of locations.

In reality, the PDs were fully supportive of that 2003 decentralisation programme and the term “gombeen politics” was most frequently applied to the actions and utterances of Tom Parlon TD; from the erection of “Welcome to Parlon country” signs in his constituency, on the very day on the announcement, to his ongoing performance as chief Govt cheerleader, as junior minister in charge of the OPW, for the decentralisation programme.

The Progressive Democrats were fully supportive of this blatant political scam back on budget day in 2003 when it was pulled, like a rabbit from a hat, by Finance Minister and PD-clone Charlie McCreevy. It was cheered to the rafters by all the occupants of the Govt benches, including the PDs.

That “back of envelope” Decentralisation scam represented a complete sell-out of the stated core principles of the PDs and, utterly compromised, may well have marked the beginning of the end for them.

Thursday, May 07, 2009

Walesa was paid €50k to address Libertas launch

Today's Irish Times reports that Lech Walesa was merely a speaker-for-hire at the recent Libertas european elections launch in Rome.

The IT cites Polish media reports that Walesa was paid €50k for appearing at the event.

Walesa is quoted as saying that he accepted the Libertas invitation because he is unable to live off his state pension.
Could that be classified as exploitation of the elderly?

How unlucky for him that he isn’t a retired Irish politician – he’d be swanning about the south of France on his index+ linked pension.

Monday, May 04, 2009

Just how clever are our very highly paid Legal eagles?

Just how bright are our very highly paid legal eagles – esp. the Senior Counsel grade, the “Masters of the Universe” we’ve been led to believe?

The reason I ask is that today’s Indo reports another embarrassing Govt U-Turn on a measure recently proposed by our Minister for Finance – Brian Lenihan, Senior Counsel.

It seems that, “on mature reflection”, Minister Lenihan’s stated intention to tax or means- test child benefit is “illegal” and he’ll now have to apply a flat-rate reduction to all such benefits. This will inevitably hit the families of the unemployed and low-waged proportionately much harder than the middle- and upper-classes.

This is only the latest u-turn forced on Senior Counsel Lenihan for “legal reasons”.

Most recently we had the budget announcements in the Dáil about removal of payment of ministerial pensions to sitting members of the Oireachtas, and the abolition of long-service bonuses to TDs. Shortly after the announcement, we were informed that, for “legal reasons”, existing recipients of these payments could not be stripped of them on an involuntary basis. This can only have been a most cynical political exercise by Minister Lenihan or else a demonstration of gross legal incompetence.

Most of the “ministerial incompetence” charges of late have been levelled at Mary Coughlan – and God knows, she deserves much of it. When Brian Lenihan was appointed Minister for Finance, many political opponents and media commentators pointed out that he had never served in an economic ministry or had any background in finance. We were reassured that, as a highly regarded senior counsel, he had the smarts to get very quickly on top of his new brief in Finance.

However, the constant unpicking, on legal grounds, of measures proposed by the Minister shortly after they are announced, leaves serious question marks over his legal, never mind financial, competence.

By extension, it also raises question-marks over just what value the state is getting from the array of legal eagles involved in our long-running plethora of tribunals. Many have literally earned millions - some of these guys have been getting €2,500 a day.
Now the Moriarty Tribunal is to re-open hearings, in light of the belated decision by Govt to disclose that then Minister Michael Lowry signed the mobile phone deal with Esat (Denis O’Brien) on foot of legal advice from the Attorney General, who had obtained external advice from Senior Counsel Richard Nesbitt.

This raises a number of important questions:
(a) Why did a succession of FF-led Govts conceal the existence of this legal advice?
(b) Had it been revealed at the start of the process, how much more quickly would the Tribunal have arrived at a conclusion?
(c) How much public money would have been saved in that event?
(d) How much extra cost will be incurred by the Tribunal having now to re-open hearings and the inevitable delay in producing its findings?

Sunday, May 03, 2009

Mick Wallace - due a haircut.

Last week the Irish Times published an opinion piece by Dr Alan Ahearne, a prominent UCG-based economist who’s now working for the Minister for Finance. Developer Mick Wallace wrote a fairly scathing letter, about that article, which was published last Wednesday 29th April.

Madam, – I find Alan Ahearne’s argument against nationalising one or more of our banks a bit weak (Opinion, April 25th). Why would the wholesale international money markets be less inclined to fund our banks if controlled by the State as opposed to the fine gentlemen who have presided over affairs for the past 10 years?
He argues that some banking decisions might be political rather than commercial if nationalised. Does he really think that our banks have been immune from political decisions? My experience as a developer has been different.
The State Bank of China is currently playing a major role in rejuvenating the Chinese economy with a huge investment in infrastructure – the smart money bets that they’ll probably deal with the recession better than most.
I’m amused to find Dr Ahearne praising a government that he spent so much time ridiculing not so long ago. But then it does pay his wages now. American economist Paul Krugman has noted that “people in power prefer to take advice from those who make them feel comfortable rather than those who will force them to think hard”. Pay, Pipers and tunes come to mind.
Yours, etc,

While reading Mick Wallace’s letter, and considering the position of banks and developers in the current property crisis and the impending NAMA process, the word “haircut” came to mind, for some obscure reason.

Leicester bookies favourite for Heineken Cup.

So it’s a Leinster v. Leicester final at Murrayfield.

The revised betting on the final is interesting, given that Munster were "odds-on" to win the competiton before the semi-finals.

Paddy Power is quoting 5/6 for each of the finalists,

Skybet, Betfair & Betdaq all have Leicester as odds-on favourites.

Skybet: Leicester 8/11, Leinster Evens

Betfair & Betdaq: Leicester 1.94, Leinster 2.02 (these numbers include your stake)

It looks like the bookies & betting exchanges suspect that Leinster may have played their “final” yesterday.

Tuesday, April 28, 2009

Judging Ferriter

There’s nothing as entertaining as a scrap between historians, the ego usually being
the largest denomination note in the average academic historian’s wallet.

There’s a debate underway in the letter’s page of the Irish Times regarding Dermot Ferriter’s “Judging Dev”.

In summary, Anthony Jordan discovered that RTE had a financial interest in the success of “Judging Dev”, which they actively promoted through an associated programme. This profit-sharing deal with the publishers was never revealed by RTE or Ferriter.

Copies of the book were distributed to all schools by FF Education Minister Mary Hanafin. To counter charges that this was a blatantly partisan move on her part to communicate a more sympathetic portrait of her party’s founder, Minister Hanafin offered to also distribute a suitable book from the other side to schools. However, an offer by Mr Jordan to provide copies of his biography of W.T.Cosgrave was rejected by the Dept of Education on grounds of “cost” – which seems a bit far-fetched for a free book.

Tim Pat Coogan then rowed in to complain that he had participated in RTE’s “Judging Dev” programme without realising the level of the station’s financial interest in promoting the book.

Ferriter had not been attacked personally or professionally by either Jordan of Coogan, but he has now launched an attack on both in a letter to the Irish Times – particularly directed at Tim Pat. Not a wise move, I suspect!

Some Quotes from Ferriter’s letter:

“Both Mr Jordan and Mr Coogan’s complaints, I believe, are motivated by other factors. Mr Coogan wrote two critical reviews of the Judging Dev book which, in my view, were fuelled by his personal antipathy to de Valera and because my book dared to challenge the conclusions of his own biography of de Valera. Mr Jordan, as he states in his letter, offered his own biography of William Cosgrave to the Department of Education for distribution to schools and he is annoyed it was rejected.”

“In my view, Mr Coogan’s assertion that the Judging Dev project was one “with an obvious . . . beneficial knock-on effect for Fianna Fáil” makes it clear he is incapable of distinguishing between past and present. He should not assume the same is true of others who are interested in Irish history.”

However, the bit that annoys me and treats IT readers as naïve fools is the following:
“the Judging Dev book was deemed to be suitable for schools because of its inclusion of original documents, the study of which forms a part of the Leaving Certificate history curriculum. His biography of Cosgrave contains no such documents.”

Judging Dev was distributed to schools by a FF Minister SOLELY because it was a much more sympathetic portrait of Dev than any previously published. If Ferriter is deluding himself that there was any other reason, then it puts a serious question-mark over his judgement in “Judging Dev”.

When are FF distributing the free copies of “The Wind that Shook the Barley”?

Sunday, April 26, 2009

Has a succession of FF-led Govts deliberately misled the Moriarty Tribunal?

According to today's Sunday Business Post, former FG minister Michael Lowry was advised ‘‘not to drag his feet’’ in issuing the state’s second mobile phone licence to Denis O’Brien’s Esat consortium, according to a confidential Govt memo, which has remained undisclosed for more than a decade, came to light after communications minister Eamon Ryan told the Moriarty Tribunal that his department was withdrawing a claim of privilege over legal advice his predecessor received on the issue. It is not clear why the department claimed privilege over the letter in the first place, nor why this position has now been reversed.

However, given the importance of the contents of the memo, it seems highly suspicious and strongly suggests that
(a) a succession of FF-led Govts have deliberately withheld crucial information from the Tribunal in order to keep a prominent former FG politician in the “corruption frame”, to counterbalance the rogues gallery of very prominent FFers already there and
(b) that withholding this document has probably extended the work of the tribunal, and its large associated costs, by several years.

The memo in question detailed the advice given by Senior Counsel Richard Nesbitt in May 1996 to the Attorney General after he was asked to assess the implications of businessman Dermot Desmond taking a share in the Esat consortium. In the letter, written to communications department secretary John Loughrey, Nesbitt advised that delaying the issuing of the licence would ‘‘not achieve any end’’.

Nesbitt wrote that Lowry was caught ‘‘between two competing interests’’ - claims by Esat that it had fairly won preferred bidder status on merit, and Persona, a rival bidder, which argued that the licence should not be awarded to Esat. Nesbitt advised the minister that if the Motorola-backed Persona group took legal action against his ultimate decision to grant the licence to Esat, ‘‘so be it’’.

‘‘I remain of the view that the minister should not drag his feet in issuing the licence. If there was to be any litigation, so be it, but delaying does not achieve any end,” he wrote.

He went on to say that delaying would ‘‘clearly damage Esat’’ and, if Persona wanted to stop Esat getting the licence, it would have to take appropriate legal action.

‘‘They will then be required to give undertakings to the parties affected, particularly Esat. This will concentrate their minds, particularly in circumstances where the commission are likely to be making unsympathetic noises in relation to their complaint.”

The effect of this memo is to say that Lowry and his Dept officials were acting on best vailable legal advice when they granted the mobile phone licence to Esat. It's hard to believe that, had this memo, along with the supporting legal opinion from Nesbitt, been revealed to the tribunal at the earliest opportunity, this whole expensive saga would have ended many years ago.

Saturday, April 25, 2009

More budget U-Turns - these ones favour the politicians

The ink was hardly dry on the emergency budget before the u-turns began. The vested interests, in this case the politicians themselves, appear to have prevailed again.

The result is that the credibility of the Government’s efforts to devise and execute a coherent plan to get the economy out of the current mess is further undermined.

This post-budget confusion only serves to confirm their inability to face down vested interests.

The country can no longer afford to simply throw money at problems, it’s time we had some firm and decisive political leadership.

Footnote: Published as a letter in the Irish Independent & the Irish Examiner.

Wednesday, April 22, 2009

Shamus Heeney replies to Paul Krugman

Nobel-prize winning economist Paul Krugman punned 'Erin Go Broke' to headline his recent article in the New York Times.

Perhaps we could get our own Nobel Laureate to draft a suitable riposte on behalf of the nation, to let Mr Krugman know that, while we may be down, we're certainly not out.

In the interim here's a piece of doggerel, written by Shamus Heeney rather than Seamus Heaney

'Erin Go Broke
An igNobel joke
Consigns us to the trash can
But we'll laugh last
And, crisis passed,
Refill our glass with Krug, man!'

Footnote: Published as a letter in the Irish Independent

I've also added the "poem" as a a comment to one of Krugman's blogs. Unfortunately not the infamous "Erin Go Broke" blog where it would have been most appropriate, as the NYT had already closed that one to further comments.

Titanic change to the junior ministerial ranks.

Was it just my imagination or did I hear, as the Taoiseach reshuffled the junior ministerial deckchairs, the strains of “Nearer, my God, to thee” playing quietly on the national broadcaster?

Tuesday, April 21, 2009

What constitutes an academic exercise?

What exactly constitutes “an academic exercise”?

Last Friday’s Irish Times Opinion piece signed by 20 academics should be a classic “academic exercise” in that
(a) the authors have no power to implement their recommendations and
(b) there will be no adverse consequences for them even if their recommendations are adopted and ultimately prove to be fatal.

The key conclusion of their published position paper is that they “see nationalisation as being the inevitable consequence of a required recapitalisation of the banks done on terms that are fair for the taxpayer.”

The academics arrive at this conclusion because “Analysts have repeatedly estimated the extent of bad loans at these banks (AIB & BOI) to be of the order of at least €20billion.”

As a consequence of asserting the reliability of the analysis of these 3rd party Analysts, the academics conclude that the Government’s stated goals for NAMA and the banking system cannot be achieved.

The academics summarise the Government plan as follows:
(a) purchase the bad loans at a discount reflecting their true market value;
(b) keep the banks well or adequately capitalised;
(c) keep them out of State ownership.

And their great fear is: “These three outcomes are simply mutually incompatible, and we are greatly concerned that the Nama process may operate to maintain the appearance that all three objectives have been achieved by failing to meet the first requirement. This would arise if Nama purchases the bad loans at a discount – but still well above market value.”

But there’s something here that’s fundamentally at odds with “normal academic standards” in this foray into public affairs by the 20 academics, and it is this:
Neither the analyst community nor this group of academics have had any direct access to the loan books of those banks, whereas the Government, through its agents, has been able to conduct a detailed inspection over a period of several months.

Is it not highly “unacademic” that, without any access to the available “hard evidence”, a large group of academics, representing some of our most prestigious 3rd-level institutions, should choose to publicly proffer such a definitive contradiction of the analysis made by Dr. Bacon & Co., who have had direct access to that "hard evidence".

And here’s an associated take on “academic exercises”: The cynics in the political opposition, the media and the academic commentariat have all loudly asserted that the Govt inspection of the loan books of AIB & BOI, and the stress-testing of these, in advance of injecting the €3.5bn preference share capital, is an “academic exercise” – a purely cosmetic due diligence to fool the public that they were not just throwing money at the banks.

Yesterdays about-turn by AIB – by some distance the more hardball, brass-necked of the pair of major banks – who were forced to accept that they needed to raise an additional €1.5bn in share capital, suggests that the due diligence and stress testing processes have been robustly conducted. Not just an academic exercise after all, perhaps?

The economic and banking crises have been a godsend for publicity-seeking academics, previously unknown faces are now familiar & their names are now on the lips of pub-goers in all parts of the country.
I suspect I’m not alone in being surprised at just how many “experts” there are on the payrolls of our publicly-funded 3rd-level institutions.

An Bórd Snip Nua please take note.

Thursday, April 16, 2009

It's baNAMArama time!

According to last Monday’s Irish Times
“certain senior figures in Government circles believe a 50 per cent discount should apply” to the value of assets to be transferred from the banks to NAMA.
“Government sources said that the new agency was unlikely to employ any Irish estate agencies for the purposes of valuing the properties”

The IT only names Dan Boyle but says that other unnamed senior politicians have also expressed the same view re 50% discount.

Apart the ongoing feeding of populist anger and using the banks as a lightning rod to deflect criticism for the state of the public finances away from the Oireachtas, on what basis would “certain senior figures in Government” arrive at a 50% number, never mind feel it appropriate to offer a view on the likely valuation of the loan books of individual banks at this point in the exercise?

The whole thing smacks of a tainted political exercise in hand-wringing, hand-washing, bank-bashing. Add the above to Lenihan’s declared intention of covering any long-term shortfall through a levy on the banks, but if the exercise ultimately produces a profit this will not be shared with the banks. Is it any wonder that market analysts – here and abroad – are taking a negative view?

If the Irish Times report is accurate, a “smash & grab” raid on the banks is planned – which would also help to explain the weakness in the share prices this week and the views of domestic and foreign analysts.

The scope of the banks to resist is limited, but they should use every means possible to block any Govt attempt to effectively expropriate their assets.
The primary duty of bank boards and executives is to protect what remains of shareholders value, rather than concern themselves with the public interest. The latter is the responsibility of the Govt & the Oireachtas, though they haven’t shown much skill in that regard over the past decade.

The interests of Bank shareholders would be better served by severely slimmed-down Zombie banks, with some long-term hope of recovery, than by nationalisation, which will extinguish entirely their investment interest. Zombie banks won’t serve "the national interest", but that’s not the concern of the banks or their shareholders.

I presume bank managements are actively working on such alternative strategies, in the event that NAMA is perceived to be acting in the manner suggested by the IT report. If the political, media and popular view is “fcuk the shareholders”, then shareholders can justifiably adopt a “fcuk the national interest” stance.

Monday, April 13, 2009

Legal problems getting snouts out of public finance trough!

It seems there are a number of loopholes and possible legal issues arising from those recent budget measures which were supposed to apply to members of the Oireachtas - in particular, the payment of the annual €6,400 long-service bonus to existing recipients and the legality of changing the rules regarding the payment of ministerial pensions to sitting politicians.

Similar legal concerns emerged regarding the imposition of the public service pension levy on the judiciary, which resulted in this group of highly paid individuals finding themselves exempted from that levy.

Are we to find ourselves legally hamstrung on every initiative aimed at addressing the excessive salaries and perks enjoyed by the upper echelons of the public service and members of the Oireachtas?

We have been promised a second Lisbon Referendum before the end of the year. The Government should use the opportunity to hold a simultaneous referendum which would confer on the Oireachtas the power to legislate for cuts in public service pay and benefits, as may be deemed necessary in these financially troubled times.

There’s little doubt that such a proposition would be approved by the vast majority of the electorate. Indeed, the strong urge to vote “Yes” might well transfer itself to Lisbon II as well!

Footnote: Published as a letter in the Irish Independent & the Irish Examiner

Wednesday, April 08, 2009

A "Smoke & Daggers" budget!

When Bertie Ahern added the phrase “smoke and daggers” to the English language we all smiled. Little did we suspect it would become the perfect metaphor for Minister Lenihan’s latest Budget.

While middle- and lower- income workers were peering into the smoke surrounding the income levy, perhaps breathing a sigh of relief that, for most of them, it had only increased by 1%, the Minister slipped his health levy stiletto, almost unnoticed, between their ribs.

This health levy increase is effectively a 2% hike in personal tax rates for everyone. Why not simply increase the income levy by the equivalent amount and face the music? If our political leaders want to gain public confidence, they’ll have to learn how to practise transparency and honesty in their dealings with us.

Footnote: Published as a letter in the Irish Times & Irish Independent

Sunday, April 05, 2009

First Ladies jointly promote Charity Shops

Frumpy frocks will be all the rage after this joint appearance. I can see women rummaging in attics and/or phoning their mothers to see if everything in this style has been thrown out.

And the best place to buy them immediately will be your local charity shop.

But do hurry, as they won’t be long on the rails!

Michelle Obama's advice: Marry the right guy!

Much has been made of First Lady Michelle Obama’s visit to the Elizabeth Garrett Anderson Language School in London on April 2, 2009 and her motivational address to the girls there.

"Nothing in my life's path would have predicted that I would be standing here," she told the girls. "I am an example of what is possible when girls, from the very beginning of their lives, are loved and nurtured by the people around them."

The reality is that if she hadn’t married Barack Obama, Michelle would not have been standing there.

She might well have pursued a very successful career as a lawyer, which would also merit acclaim, but to be "First Lady" you have to be married to the right guy. A blonde bimbo might equally well achieve that distinction.

Sunday, March 29, 2009

A Thuggery of English forwards

Former England hooker Brian Moore now works as a commentator on rugby, and was working yesterday on the BBC match coverage of the EDF semi-finals.
As a player, he came across as arrogant, aggressive and generally unpleasant – he was everything you love to hate in an English forward.

So, during the commentary, his co-presenter (name unknown) mentioned that, before the match, Moore had bumped into his former England pack colleagues Wade Dooley and Paul Ackford. Not a trio to be messed with, he opined.

“What would be the collective noun for that group?” asked Moore.
“A thuggery”, came the immediate response.

In all fairness to Moore, he immediately acknowledged the quality of the wit and, for about 15-20 seconds, he could be heard chuckling in the background while his Wildean co-presenter continued with the match commentary.

Tuesday, March 24, 2009

Vegetables on Leinster Lawn

First Lady Michelle Obama plans to use part of the White House lawn to grow vegetables.

Could this be a direct result of the Taoiseach’s visit on St Patrick’s day?

Did Mr Cowen let it slip that Leinster lawn has, for the past decade, been dedicated exclusively to the accommodation of Irish vegetables?

Footnote: Published as a letter in the Irish Times, much to my surprise.

Friday, March 13, 2009

Shane Ross's IN&M & BOI dilemma

Shane Ross is on the horns of a dilemma

Picture the scene: Shane Ross in front of the wife’s full-length bedroom mirror, for the umpteenth time practising his impromptu and unrehearsed verbal assault planned for the Bank of Ireland board at the banks EGM at the end of this month.

His climactic finale is a call for the Governor, Richard Burrows, and the entire board to publicly offer an abject apology to shareholders as a preamble to tendering their collective resignations.

Then, on Morning Ireland, he hears the dreaded news:
Independent News & Media - O’Reilly out, O’Brien's people in.

What to do?
Denis O’Brien will, as a director, be sitting at that Bank of Ireland top table. Ross has already used his poison pen in the Sindo to besmirch the reputation of the new power behind the throne. Will he risk attacking O’Brien for his role in Bank of Ireland?

On the evidence to date, Ross will do a major rewrite of that Bank of Ireland address.

After all, Ross has self-serving history in this regard. He’s always brown-nosed Sir Anthony, regardless of his many business failure (e.g. Fitzwilton, WW, now IN&M in danger) or scandal (e.g. Rennicks payments featuring in tribunal).

Ross has never mentioned that IN&M share price has collapsed by over 95% since the peak about 2 years ago – almost as bad as a bank.

Never a critical word about the perennially loss-making London Independent, another expensive Sir Anthony vanity project.

For a man who’s always rabbiting on about the incestuous nature of Irish boardrooms, Ross has never commented critically on the IN&M boardroom, where for a long period Sir Anthony was both Chairman & Chief Executive, with a bloated board filled with O’Reilly family members and old and faithful retainers who were never likely to ask an awkward question.

So I’m betting that the valiant Senator will do a major rewrite of his speech, removing from it any implied criticism of the independent directors, which would include Denis O’Brien.
Any attack will be focused specifically on Governor Burrows and the Executive directors.

Frankly, I hope O’Brien fires Ross and gets someone who actually knows something business and economics to replace the populist tosser.

Wednesday, March 04, 2009

Cromwell spells it out for Fianna Fail

Wouldn’t those FFers just get on your wick!

Minister Noel Dempsey’s Ard Fheis annoyance at supposed comparisons being made between Fianna Fail and the bankers is greatly exceeded by the annoyance of the bankers I know, who feel they’ve had enough abuse heaped on them without having to endure the odium of this new charge.

In making his historical references, Minister Dempsey bravely took the risk of being reminded of Cromwell’s famous injunction to parliament: “You have sat too long here for any good you have been doing. Depart, I say, and let us have done with you. In the name of God, go!”

Now that seems quite appropriate for this Government.

Tuesday, February 10, 2009

Bruton loses the plot - proposes illegal bank split.

Richard Bruton’s proposal on Morning Ireland is clearly bonkers and almost certainly illegal.

He proposes that AIB & BOI each be split into two parts – a “new” bank with all the deposits and the loans which can be assessed as having value, split off from the “old” bank which would contain all the bad and doubtful lending. The latter would no longer actively operate as a bank, its task would be to manage down its loan book in order to achieve the best possible level of recovery. Almost inevitably, a fairly high proportion of those loans would ultimately have to be written off.

However, part of Bruton’s stated rationale was that there’s c. €25bn in bonds issued by AIB & BOI which are not covered by the existing Govt guarantee and responsibility for repayment of these could be left with the “old” asset-stripped bank.

This idea that the assets of AIB and BOI could be split into “good” & “bad”, with a specific objective of leaving holders of €25bn in bonds, issued by those banks, without recourse to the good assets would undoubtedly be rejected in any court of law in Ireland or Europe.

It’s like Pat Kenny transferring all his assets to Cathy Kenny and then calling his bank manager to say “hey, remember that €2m you lent me to buy a quarry? Well come and sue me for it, but you’ll get nothing ‘cos I’ve no assets. Even the quarry is in the wife’s name.” The transfer of his assets would be deemed illegal by the courts and would be reversed.

Not only would Bruton’s proposal be deemed illegal, the mere act of the Govt even making the proposal would also tell international markets that investing in any Irish company is not for the faint hearted. The message would be that we have a cowboy Govt., no-one would want to do business in/with Ireland.

It might deter US multinationals from establishing, expanding or even maintaining operations in Ireland. Richard Bruton’s proposal would constitute nothing short of corporate fraud perpetrated by a sovereign Govt..

Is that the message he wishes to convey?

Footnote: I've emailed this to Richard Bruton.

Monday, February 09, 2009

Time for Bankers (& politicians) to go.

Media reports at the weekend that negotiations on recapitalisation between the government and the two main banks are ongoing but with a number of issues unresolved. One in particular seems to be the refusal of AIB Chief Executive Eugene Sheehy to step down, and he’s clearly got the support of the AIB board in this stance.

The reality is that it’s past time for Bank of Ireland Governor (chairman) Richard Burrowes to join his Chief Executive Brian Goggin in heading for the exit. AIB Chairman Dermot Gleeson and Chief Executive Eugene Sheehy should also be on their way.

The buck has to stop with them for the devastation of shareholder value in their companies, that’s what they’re paid the big money for. Indeed, the rest of the boards of AIB & BOI should also be actively considering their positions.

The issue is about the competence, or lack of it, displayed in the lending decisions of those banks and the consequences now for shareholders and, perhaps, for the very survival of the banks.

It is not a question of personal or business integrity, as has now arisen at Anglo Irish Bank. However, the longer these senior AIB & BOI bankers refuse to accept that the buck must stop with them and that there are inevitable consequences, the more it does raise the question of integrity.

I do have some sympathy with these bankers for having to endure the public hectoring of Government ministers. The sheer hypocrisy of these politicians, many of whom were directly responsible for the highly reckless fiscal policy which got us here, is particularly galling. For over a decade, every annual budget, presided over by a Fianna Fail minister, poured petrol on an already over-heating construction market.

The public are overdue a contrite apology from our political leaders, in particular Brian Cowen. Senior bankers must console themselves with the thought that they may well be joined in early retirement by senior politicians, when the public finally gets an opportunity to pass judgement at the ballot box.

Friday, February 06, 2009

New Government Structure

The Government has not inspired much confidence in its handling, to date, of the economic crisis.

In addition, there is a clear perception that the whole structure of Government and the supporting civil service is no longer “fit for purpose”.

The Constitution stipulates a minimum of 7 ministers, including the Taoiseach, and a maximum of 15 – which is, naturally, the number we currently have.

The following is a straw-man proposal for an entirely new Government structure, which is based on what a real business structure might look like.

The main objectives of the proposed structure are
(a) to reduce the number of individual ministerial and departmental silos and group them into more logical “business divisions”.
(b) to facilitate the proper prioritisation and allocation of resources – both financial, human and physical. Divisions would have an amalgamated annual budget, with prioritisation and allocation of resources within the division the responsibility of the relevant minister.
(c) to achieve economies and efficiencies through creation of shared interdepartmental support functions at a “head office” level.

For the purposes of simplicity, I’ve taken the existing Departmental titles and redistributed them, sometimes splitting out individual elements, into the new divisional structure.

In my model we go to the minimum number i.e. 7. Each "division" to be headed up by a Minister. Within each divisional portfolio, key elements might be under a Junior Minister where deemed necessary - but they would have a serious and meaty job to do.


1. Taoiseach

2. External Relations (Dept)
- Foreign Affairs
- European Affairs (currently in Office of Taoiseach)

3. Finance (Dept)
- Finance

4. Enterprise (Dept)
- Enterprise Trade & Employment
- Communications, Energy & Natural Resources
- Agriculture, Fisheries & Food
- Tourism
- Transport

5. Environment (Dept)
- Environment, Heritage & Local Govt

6. Social (Dept)
- Health & Children
- Education & Science
- Social & Family Affairs
- Community, Rural & Gaeltacht Affairs
- Arts, Sport

7. Security (Dept)
- Defence
- Justice, Equality & Law reform


- IT
- HR/Training
- Payroll
- Finance/Accounting
- Purchasing/Procurement
- Communications/PR
- Legal
- Operations (planning, co-ordination & implementation)

Cowen wows the Dublin Chamber of Commerce

Taoiseach Brian Cowen is widely reported to have delivered a highly motivational speech as guest speaker at a Chamber dinner last night.

The best since Colonel Tim Collins, I’m told. And we all know how Iraq turned out.

Thursday, February 05, 2009

Taoiseach Cowen calls for IMF to solve problems

One of the biggest problems facing Irish business is that the relative strength of the Euro, particularly with sterling, has made it very difficult to maintain exports and/or profit margins.

If Ireland still had the Punt as our currency, we could devalue to make our exports more competitively priced. As members, and very small ones at that, of the Eurozone, we have little say in the value of the currency and there’s no possibility that the currency will be devalued to suit our particular needs. After all, even in our pomp we were still only 1% of the wider EU economy.

However, a couple of months back something accidentally triggered a fall in the value of the Euro: a claim by a union leader that the Taoiseach had raised the spectre, during Social Partnership talks, of the IMF having to be called in.

So how could we engineer a repeat of this “accident”, without incurring the wrath of our EU and Eurozone partners?

Barack Obama swept into power on the back of a simple but very powerful and populist slogan: “Yes we can”.
Labour’s Eamon Gilmore nicked this at his party’s annual conference with his “is féider linn” call in the leader’s closing speech.
Now, in the Dáil, Taoiseach Brian Cowen has defiantly told the opposition that he’ll “do it my way” or, in the first official language “im modh féin”.

So Taoiseach Cowen should organise a series of open air rallies around the country to mobilise and motivate the populace, with local FF supporters primed to turn up with placards and rehearsed chants in supports of our leaders declared modus operandi.

To make it a bit snappier, any PR guru would advise that “im modh féin” be reduced to its appropriate TLA, that is, IMF.

Picture the sight beamed across the world by 24-hour TV channels - a belligerent Cowen roaring incoherently off a platform or the back of a truck, to a huge crowd chanting “IMF, IMF, IMF” and waving placards bearing those same initials.
That should be enough to send the Euro into freefall and take much of the pressure off our hard-pressed exporters.

Wednesday, February 04, 2009

Mike Soden - enjoying a cold dish!

The resignation of Mike Soden as Bank of Ireland (BOI) Group Chief executive was a surprise announcement on Saturday 29th May 2004. The market gave its judgement on Monday 31st May, the next working day, when BOI shares rose 4%.

Revenge, they say, is a dish best eaten cold and, almost 5 years later, Mike Soden is enjoying that dish and a new lease of life on RTE and other local media, where he is calling for the heads of the current bank CEOs and an amalgamation of AIB & BOI. Now where have I heard that proposal before?

Mike Soden succeeded Maurice Keane as BOI CEO in Feb 2002. Soden was an outsider, brought in from National Australia Bank, where he was Executive General Manager of Global Business and Personal Financial Services based in Melbourne, specifically to do the “transformational deal” which would take BOI from being a big fish in a very small pond in Ireland into a serious player on the European banking stage. It was felt that the internal contenders for the top job were all BOI “lifers” and lacked the experience, and possibly the imagination, to spot and execute such an opportunity.

Soden’s first big idea was to merge BOI and AIB to create a “national champion” with sufficient scale to ward off predators and expand geographically. This champion would have sufficient capacity to stage takeovers of mid-sized local players in other countries.

This “big idea” fell at the first hurdles – AIB weren’t remotely interested and the competition implications of combining the two largest players, by some margin, in a relatively small market like Ireland were overwhelmingly negative. However, Soden persisted with the promulgation of this idea long past the point where it was dead in the water, showing a distinct lack of business and political judgement. This didn’t endear him to the analysts community or, indeed, to his board of directors and senior executive colleagues. His preoccupation with this proposal, and obvious lack of cop on when it was clearly a non-runner, became something of an annoyance and embarrassment to his BOI colleagues.

Soden’s next big idea was to take over the troubled Abbey National in the UK – an October 2002 proposal which was badly received by the markets and the BOI share price fell like a stone. That deal was rejected by Abbey National and, in due course, it fell through, causing the BOI share price to rise.

In 2003 BOI signed a 10-year deal with the British Post Office (BPO) to provide financial services across its network of post offices. This deal was largely sealed on the back of the relationship built up with First Direct, a BOI subsidiary which has provided all the BPOs foreign exchange services since the mid-90s (and had grown to be the largest provider of FX services in UK).

Despite his clear remit to do “the transformational deal”, the BPO was the nearest Soden ever got to it – and, 6 years on, it’s still relatively small beer in the overall scheme of things. Long before the end of 2003, Soden had “lost the dressing-room” of his executive management team and was failing to convince the analyst community that he had any vision for BOI worth listening to.

So when, in May 2004, Mike Soden’s visit to an escort agency web-site was leaked by disgruntled IT staff to a newspaper, the Court (board of directors) was happy enough to have the opportunity to wave him goodbye. The nature of the transgression was embarrassing to be sure, but if they had felt he was worth saving they could have done so. Instead, it was made clear to him that he was going and a generous severance package would grease his exit.

Now he’s back – at least in the media. And what’s he calling for? The amalgamation of AIB & BOI. And the heads of the CEOs of the banks.

I heard him on Pat Kenny today – and he offered the view that the new bank heads should not come from the next tier of management within those banks – anyone who is tainted with the current policy/strategy failures.

Now Soden may well be right on this “firing & succession” point, but it’s hard to imagine that he’s not getting pleasure from shafting some of the people he feels shafted him.

But I will offer one piece of advice – don’t let Mike Soden himself anywhere near the helm of an Irish bank.

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