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.

http://www.irishtimes.com/newspaper/opinion/2009/0828/1224253408843.html

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.

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.

http://www.irishtimes.com/newspaper/opinion/2009/0826/1224253267074.html

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.

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.

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.

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.

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.

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!

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.

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.

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.”

http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/books/non-fiction/article6378934.ece

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.

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?”

http://www.irishtimes.com/newspaper/opinion/2009/0526/1224247402157.html

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.

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.

http://www.irishtimes.com/newspaper/finance/2009/0126/1232474681059.html

http://www.irishtimes.com/newspaper/finance/2009/0525/1224247324865.html

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.

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!

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.

TEST YOUR MENTAL STRENGTH

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.

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!

http://www.irishtimes.com/newspaper/opinion/2009/0506/1224245992823.html

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.

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.

http://www.irishtimes.com/newspaper/ireland/2009/0507/1224246058450.html

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.

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.

http://www.independent.ie/national-news/cut-in-child-benefit-to-hit-all-after--new-uturn-1728495.html

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.

Footnote:
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?

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,
MICK WALLACE

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,

BUT
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.

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!

http://www.irishtimes.com/letters/index.html#1224245517916

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”?

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.

http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=IRELAND-qqqm=news-qqqid=41361-qqqx=1.asp

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.

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.

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?

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.”

http://www.irishtimes.com/newspaper/opinion/2009/0417/1224244902514.html

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;
and
(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.

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.
and
“Government sources said that the new agency was unlikely to employ any Irish estate agencies for the purposes of valuing the properties”

http://www.irishtimes.com/newspaper/frontpage/2009/0413/1224244559021.html?via=mr

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.

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

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

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.

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.

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.

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.

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.

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.

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.

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.

NEW DIVISIONAL Departmental STRUCTURE (7)

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

SHARED INTERDEPARTMENTAL SUPPORT FUNCTIONS (“Head Office”)

- 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.

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.

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.

Breakdown in Social Partnership talks.

It’s unfortunate that agreement could not be reached at the Social Partnership talks, but it hardly comes as a major surprise.

Several days appear to have been largely wasted as the Government’s initial input was so lacking in specifics as to be described as “a blancmange” by union participants.

This seems in line with the standard Govt approach to planning – evidenced by initiatives from the 2003 Decentralisation scam to the October 2008 budget. A “back of the envelope” approach to everything.

The second issue which always seemed likely to derail the talks was “Scope Creep”, where a weak "talks management process" allowed the talks agenda to become an ever lengthening wish list for all participants.

All the above simply raises further questions about the Taoiseach’s (and Govt’s) competence and ability to manage the economy out of its current distressed condition.

Footnote: Published as a letter in the Irish Times

Predicting Roy Keane's managerial demise.

You read it here first! While looking for an earlier post (on Dublin bus network), I trawled back to the start of this blog and found the following - my first post on 24th November 2005. Considering how things turned out at Sunderland, I don't think I was too far off the mark.

Roy Keane's latest bust-up 24/11/2005

Roy Keane seems to display some of the classic traits of a bully - he can hand it out but he can't take it.

Some media reports of the post-MUTV session with the manager & players say that, when reprimanded in front of the players by Alec Ferguson, Keane threw the "Rock of Gibraltar" affair back in his face.

If true, this clearly had nothing to do with the situation but was the petty, spiteful response to criticism that you might expect from a spoilt child.

It's sad that a footballer of his undisputed class has such an immature personality. It's hard to imagine him succeeding in team management where player motivation would be a key requirement.

Instead of fond memories of his exploits for Manchester United and Ireland, he'll probably be remembered for the sour taste of his departures from both camps.

A dog's life?

There's a good , if somewhat poncey, restaurant called La Petite Maison in Nice.

We ate there and the wife was horrified when the "madame", who directs the action like a circus ringmaster, actually kissed the little pooch carried by a regular customer.

The following day, I spotted on the outside corner of the premises this charming little feature - a "dogs-bar". So at least the fondness for dogs appears to be long-standing and genuine.

Reviewers differ and diners scratch their heads.

Today’s Irish Times restaurant review by Tom Doorley features Corrigan’s Mayfair, Richard Corrigan’s new restaurant in London, which was also reviewed by the Sunday Times last December.

I was amused by the following glaring contradiction in their experiences. Reviewers differ and diners scratch their heads.

“linguini cooked in red wine with bone marrow and pecorino, fabulously intense, sharp, salty, savoury, rich, weird but wonderful.”
Tom Doorley Irish Times 31st January 2009.


“Corrigan has occasional moments where the enthusiasm gets the better of him, and there was a fashion disaster. This was the linguine cooked in red wine, pecorino and bone marrow. It looked, smelt and tasted not a little like, not a bit like, not almost like, but precisely and exactly like drunk’s puke. I didn’t finish it. I didn’t want to meet it twice.”
AA Gill, Sunday Times 14th December 2008

I prefer Gill’s prose style – shades of Helen Lucy Burke at her most acerbic.

Footnote: I emailed the above observation to Tom Doorley and got the following reply:

Hi Mollox
Gill is a great writer and can tell you a lot about the overall quality of a restaurant. But his interest in food is limited...
Curiously, Jay Rayner of The Observer adored the linguini but described them in such a way as I wouldn't recognise it.
Yes, indeed. Critics differ and I suppose life would be very dull if we didn't!
Many thanks for letting me have that quote - I see Gill's stuff from time to time. I adore his description of vegetarians as "people who take pleasure in not eating things" (even if it's unfair to a few of them).
AAG, I was told last week by a colleague of his, is paid €1m p.a. I wouldn't mind swapping columns for a few weeks!

Every good wish
Tom

Social Partnership process - will we get real reform?

The current social partnership process is important as a means of reassuring both ourselves and international markets that the country is working constructively to find a way out of the current economic mess.

However, the Social Partnership model is also responsible for many of the compromises which have left us with the burden of an overpaid, oversized and under-delivering public sector and political system. What confidence can we have that the current process will not repeat the mistakes of the past and deliver fudged, temporary solutions which fail to deliver the fundamental long-term reforms required to terms of employment, work practices and organisational structures? This reform challenge applies just as much to the Oireachtas as it does to the wider public sector.

As someone who remembers (and paid) the very high personal tax rates of the 1980s, the prospect of paying more tax now is unwelcome; but it can be endured, if there is equity in how it is applied and if it is coupled with a transparent process which delivers meaningful reform in terms of efficiency, effectiveness and value for money. I do not wish to pay higher taxes simply to maintain the status quo.

This raises the question: who is representing the interests of ordinary taxpayers in the current process? They are not represented by employers, unions or politicians, who all have the agenda of their own vested interests foremost in their minds.

While the Government would claim to represent taxpayers’ interests, the reality is that the primary concern of most politicians is retaining power and preserving political careers. These same politicians have created their own bubble, enjoying high salaries, bizarre pension arrangements and an over-generous suite of tax-free, unvouched perks. And all the while TDs tell us how hard they work, regarding many activities which are solely aimed at their own re-election as the legitimate employment for which they are paid.

Therefore, we must see, within the "Framework for Economic Renewal" currently under discussion by the social partners, the clear commitment of the Government and the public sector unions to meaningful reform and a robust process to get us there.

If we can’t get commitment to fundamental change in the heat of the current crisis, we’ll never get it.

Footnote: Published as a letter in the Irish Times.

Should Queen Elizabeth visit Ireland?

Yesterday’s “Head to Head” in the Irish Times was on the topic of “Should Queen Elizabeth visit Ireland?”

http://www.irishtimes.com/newspaper/opinion/2009/0126/1232474680314.html

Making the “Yes” case was Mary Kenny, while Charles Lysaght took the “No” side.

I found much of Lysaght’s argument to be indicative of someone caught in a time-warp. Here’s a couple of extracts:

“I have grave misgivings about Queen Elizabeth paying us a State visit, with all its panoply of parades and speeches.”

“A parade by the queen through our streets would provide an occasion for displays of enthusiasm by some who are all too likely to provoke the hostility of others.”

“The queen would doubtless be expected to apologise for British misdeeds, including the Famine, but not allowed to mention benefits we derived from the British connection.
She would probably not be allowed to voice British gratitude to the many Irish who served the empire, including those who in Churchill’s memorable words, “hastened to the battlefront to prove their ancient valour” in the second World War.
She would have to walk the tightrope of praising the achievements of modern Ireland without sounding patronising.”

It seems to me that Charles Lysaght envisages such a royal visit as something one would have seen in an old Pathe News black & white newsreel, reporting on the visit of the monarch to the grateful natives of a loyal colony in the 1920s or 1930s.

Can’t you see it - the Queen in a gilded open-top horse-drawn carriage, Prince Philip beside her in full dress naval uniform, chest covered in decorations and topped with a feathered admirals hat. Escorted by household cavalry outriders, all gleaming breastplates & helmets, long leather boots and drawn sabres, with her majesty waving to the happy flag-waving natives. Our Army No. 1 band, in their new Ruritanian uniforms, playing God save the Queen at every opportunity.
Royal Speech: “My husband and I are happy to be here in Eire among our contented former subjects blah blah blah”

If the queen does come, I imagine that it would be kept relatively low-key diplomatic affair with few banquets and set speeches (and none by John Bruton after his cringe-making tribute to Prince Charles). I can’t imagine her apologising for the famine or, indeed, making much reference to our shared history.

I think we should just get it over with.

Footnote: An abbreviated (by me)version published as a letter in the Irish Times.

Gormley finally sees the light on bulbs.

In his “Carbon Budget” on December 6th 2007, Minister John Gormley announced new legislation banning the sale of the normal incandescent light-bulbs from January, 2009.

http://www.independent.ie/national-news/gormley-lights-the-way-with-ban-on-bulbs-1240074.html

This caused consternation among manufacturers, builders, householders and retailers.

Light-bulb manufacturers would have to change their equipment and processes as well as manage stock levels and the transition from old to new bulbs. When they sought detailed guidelines it transpired that it was only a light-bulb in the Ministers head, nothing had been planned and he’d be holding a consultation process.

Builders with unfinished houses/apartment blocks were faced with a dilemma. Should they continue to install the downlighters, dimmers etc., or should they change the lighting design altogether – given that no suitable non-incandescent replacements were then available. It’s worth remembering that downlighters and “mood lighting” involving dimmer switches have become popular among the

Householders with existing fittings – dimmer switches, downlighters etc. were worried that, in 12 months time, they would be unable to get replacement bulbs.

Now we’re doing it the way it should have been done from the start – on an EU-wide basis, with a reasonable lead-in time for all interested parties.

The Gormley approach illustrates the extreme danger to the economy posed by allowing the Greens too much influence. The ideas are often worthy, but they are thrown out in a top-of-head way which causes confusion among those who make their living in the real economy. They haven’t been thought through in sufficient detail – which is a clear responsibility of those making Government policy.

The change in the VRT/Road tax regime last year was another good example. By introducing it in mid-year, the initiative effectively killed the motor trade in the first half of the year – when they traditionally achieve over 80% of new car sales.

Spare a thought for the poor bankers.

Out of curiosity, I looked up the last published accounts of the 3 main banks AIB, Anglo & BOI to see how the main men involved there might be suffering financially from the catastrophic collapse of the share prices of their banks.

Anglo - only issued preliminary accounts for y/e 30/9/08, the last published full set of Annual Accounts was for the year ended 30th September 2007
At that date, Chairman Sean Fitzpatrick owned 4.5m shares, which would have been worth €75m+ at their peak price.
Chief Executive David Drumm owned 511k shares, worth €8.5m+ at peak, and had 1.2m share options.
All the above are probably worthless now.

AIB – last published accounts are for year ended 31st December 2007.
At that date, Chief Exec Eugene Sheehy owned 256k shares, worth c. €6m at their peak price. Today they’re worth about €250k.
In addition, Sheehy had 120k share options and a further 251k in a Long Term Incentive Plan scheme – all of these are presumably so far under water that they’re worthless.

BOI – last published accounts are for year ended 31st March 2008.
At that date, Chief Exec Brian Goggin owned 600k shares, worth c. €11m at their peak price. Today they’re worth c. €360k.
In addition, Goggin had 398k share options and a further 402k shares in a Long Term Incentive Plan scheme. All these are now probably worthless.

None of these guys will be on the breadline, but at least they will all have taken a very serious hit to their personal wealth, never mind their reputations.

It’s appropriate that they should be sharing our financial pain.
It may make you feel a little better.

David Bellamy - Global warming debunker

David Bellamy was on RTE’s Late Late show on Friday night vehemently debutting the threat of global warming. His views were broadly those expressed in this Sunday Express article.

http://www.dailyexpress.co.uk/posts/view/73486

It’s always confusing for those of us in the middle when long-standing and credible environmentalists like David Bellamy are so publicly and trenchantly opposed to the growing scientific and public consensus on global warning.

Ditto when you hear James Lovelock, creator of the Gaia Hypothesis, advocating nuclear energy – an energy source which is anathema to many Greens, particularly the Irish variety.

I’m sure most people would agree that programmes such as recycling, reduction in energy consumption, improving our living environment etc etc are all good and worth doing. Even if Global Warming was scientifically debunked, we should continue to implement such programmes.

What I worry about is a growing bunch of tree-huggers taking us back to an economic stone-age with their zeal for the new green religion. The process of transition to a new model must be achieved without destroying the economy.

The challenge is this: if it is necessary to change the tyres, we have to do it without stopping the car. (How unGreen is that analogy!)

Reform of Oireachtas allowance/expense regime.

The news from the Green Party conference today is typical Green populist posturing – they’ve heard public reaction on talk radio and they’re leading from the rear. Anything to try to grab back a bit of the high moral ground, having already compromised all their core principles to death.

Now here’s what the new expense regime should really look like.

1. Rev. Comm rules should apply to politicians in exactly the same way as they apply to ordinary Joe Citizen – e.g. BIK, receipts, limits etc etc..
2. State transport should only be supplied for state business – not for personal or party business. No garda drivers – if security deemed necessary for any minister, provide it in an appropriate manner. That should only apply to 2-3 key personnel. State cars subject to the same laws as ordinary motorists – e.g. speed limits, red lights, bus lanes etc etc.
3. No daily allowance, currently €60 per day, for attending at Dail Eireann – what other worker gets paid extra simply for turning up? It’s a bloody disgrace.
4. No overnight allowances – the Board of Works to supply hostel accommodation at a convenient location. Take it or leave it. Much of this hostel accommodation (might be split over several locations) can be let to tourists during the overlong summer recess, to offset some of the costs.
5. Travel Allowance – whatever the appropriate bus or train fare might be. Mileage allowance is only to the nearest train station or bus stop, whichever is appropriate. This should help familiarise our public representatives with the quality of our public transport systems.
6. No additional salary/allowances for work on Dail Committees, other than any genuine, vouched out-of-pocket expenses.
7. Constitutional limit on number of junior ministers (currently 20) e.g. maximum 15, as currently applies for full ministers. Others may be appointed if deemed essential, but with title only – no additional pay, perks or pension rights.
8. Dail to sit during normal office hours e.g. 9-5. This will be a more family friendly regime and might encourage more women to participate in politics. It will also allow our TDs to personally experience rush-hour traffic and might incentivise them to do something about it.

What would you like to add?

Economists - the new media terrorists?

Last September, in the wake of the Govt €100k deposit guarantee, David McWilliams was the first person I saw publicly call for the Government to provide a 100% guarantee of all the liabilities of the Irish banks, not just their deposits.

http://www.davidmcwilliams.ie/2008/09/28/state-guarantees-can-avert-depression

Then, at end December, he called for nationalisation of Anglo Irish.

http://www.davidmcwilliams.ie/2008/12/31/nationalisation-of-anglo-could-actually-be-a-help

However, included in this latter article is the following paragraph: “About a year and a half ago in ‘The Generation Game’, I wrote that “one of the big Irish banks is simply a leveraged hedge fund betting its own and its clients’ money on overvalued property” and “normally when the property market collapses, these type of outfits go bust”.”

Am I alone in finding it difficult to square the thinking behind these two pieces?

If McWilliams was convinced, as early as mid-2007, that Anglo was “simply a leveraged hedge fund betting its own and its clients’ money on overvalued property” and “normally when the property market collapses, these type of outfits go bust”, why, following the collapse of that property market, was he calling in September 2008 for the Government to guarantee all the liabilities of Anglo Irish???

When I listen to the plethora of economists who now seem to fill our media 24/7, there seem to be almost as many potential solutions as there are contributors.

The beauty of being a media talking head is that you don’t have to be consistent in your diagnosis, prognosis or prescription. Hindsight is your crystal ball and you will rarely be challenged on how your previous analysis has actually held up.

Government doesn’t have the same leeway – they have to take decisions and live, or die, with the consequences.

It reminds me of the standard line on terrorism: the security forces have to get it right all the time, the terrorist only has to get it right once.

Are economists our new “media terrorists”?

And who ever would have thought that our universities have so many professors of economics and banking – all budding media performers in recent months. It must be a tidy little earner to supplement their miserable college stipend. Some will be hoping this recession/depression lasts for several years.

Challenges to Public Sector Reform

There are three obvious major obstacles to achieving meaningful public sector reform:

The Government: Their long-standing display of a lack of political will and dearth of management competence gives no confidence in their ability to achieve any meaningful change.
Benchmarking, decentralisation and the creation of the HSE without displacing any existing Heath Board staff, all illustrate the scale of the problem.
Every potential problem in the past decade has been fudged or had money thrown at it. So we can expect a slash & burn “across the board” approach which is likely to leave the end-user, the citizen, as the biggest loser.

The Unions: David Begg, General Secretary of ICTU is the highest ranking representative of the Union movement in Ireland but his public persona is not at all representative of that body’s members in their modus operandi. Begg is a consummate media performer, always coming across as intelligent, articulate, measured, moderate and calm. On the other hand, SIPTU’s Patricia King or the ATGWU’s Brendan Ogle are traditional “not an inch”, “over my dead body” intransigent union reps – where the strike threat is the first rather than the last option put on the table. These are the type of union reps who will be “negotiating” change.

The Management: Senior management tiers within the public service are almost completely untried and untested with regard to executing major strategic change. In the private sector, such management in any large company would have been through a number of major restructurings. In the public sector, the dead hands of Government and the Unions have ensured that no senior manager would even attempt major structural change.

Paradoxically, the one major change attempted in recent decades has also been the one which has most alienated the same senior managers who would be charged with leading such change.
The 2003 Decentralisation political stroke effectively ended the career prospects of many senior civil servants, who were unwilling to move with their departments to locations outside Dublin. Has anyone calculated what impact this has had on motivation these people and what impact that will now have on their appetite to facilitate and lead the necessary change?

Other than the above, it should be a doddle!

The never-ending Middle-East conflict.

The holocaust was an unspeakable atrocity of extraordinary magnitude. In the post-war period, the world salved its conscience for the failure to protect European jews from virtual extermination, but it was at the expense of the Palestinians. The ongoing dispossession of the Palestinians is unconscionable and the world now has a duty to right that wrong.

Israel must treat seriously the threat to wipe it from the face of the world made by some of its neighbours and Hamas. The Jews have, after all, had first hand experience of such an evil enterprise within living memory.

At the same time, Palestinians cannot be expected to accept a life sentence for a crime they did not commit. At best, they are now second-class citizens, restricted to a small part of their own homeland. The Gaza strip has become little more than a self-administering prison camp.

No resolution of this impasse will come from Israel’s iron-fist approach, in its current military campaign against the Gaza strip and also in its longer term behaviour towards the Palestinians e.g. the wall, the settlements, the restriction on movement etc etc..

Neither will the rabid rhetoric of some of Israel’s neighbours, or the actions of Hamas, help towards a lasting peace.

As long as both sides do what they’ve always done, they’ll continue to get the outcome they’ve always got.

When, eventually, a cease-fire is agreed, a number of distinct steps are essential:

1. The US and the EU must formally guarantee the territorial integrity of both Israel and Palestine, based on a return to the pre-1967 borders of Israel. This will have to include a removal of settlements and the resolution of the status of East Jerusalem – perhaps as a UN protectorate?
2. Israel, the US and the EU must fund a compensation package for the dispossessed Palestinians, which should include some limited right of return.
3. Those three parties and the Arab League members must provide a 10-20 year economic stimulus package to help get the new Palestinian state on its feet.

Incoming President Obama has the opportunity to write on a clean slate. Let’s hope he takes that opportunity and provides the necessary leadership to finally resolve this ongoing injustice.

It is, after all, the great running sore that fosters ill-will between the Muslim/arab and Christian/western worlds. It's in everyone's interest that this confict is resolved and a long-term solution demands fairness and generosity for the Palestinians, as well as security for the Israelis.