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.

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