I know I'm like a broken record, but...
On tonight’s RTE 6-1 news, FG’s Richard Bruton was interviewed by Bryan Dobson.
Dobson pointed out the FG’s alternative to NAMA has not been endorsed by any major independent economist.
Bruton responded by claiming that the approach had been endorsed Joseph Stiglitz, the Nobel Prize winning economist. Bruton also cited the UK experience with Northern Rock as tangible evidence that the FG approach can work.
Strangely, the FG website contains no reference I can find to such an endorsement. A strange omission indeed.
Now consider this: Northern Rock was a middle-ranking, deposit-taking, residential mortgage lender in the UK. It’s involvement with the SME sector, or the national money transmission service, is negligible, if not virtually non-existent.
The UK Govt action was taken as a direct result of a run on Northern Rock, we all saw the tv pictures of early morning queues of panicky depositors looking for their money back, even after the UK Govt increased the guarantee for depositors.
What’s the relevance to Ireland of the Northern Rock experience in the UK, a market serviced by several much larger banks e.g. Lloyds-TSB, Barclays, RSB-NatWest, HSBC, HBOS etc – all of whom were continuing to operate?
However, in the Irish context, the FG proposal is effectively to pronounce a death sentence the two largest players in the Irish Market – AIB & BoI – who dominate the SME market and the money-transmission service. This bears no comparison whatsoever with the potential market impact of the UK Govt’s take-over Northern Rock.
Let’s be clear – FG proposes to asset-strip those two banks when the Govt guarantee expires in Sept 2010 – they’ve made that very clear. They propose to take the good assets and leave the stripped carcass behind for the shareholders and bondholders.
In the interim, they propose to set up their National Recovery bank – and propose to distribute loans through the very banks they intend to asset-strip. How likely do they think it is that those banks, and their shareholders, will collude in this?
AIB & BOI will be forced to aggressively shrink their loan books, and the associated capital requirements, in the hope of surviving that Sept 2010 deadline, even if it’s as Zombie banks. They’ll be helped in that by the National Recovery Bank (NRB) – because, assuming they actually agree to act as intermediaries, the majority of the new loans they pass on the NRB will be their own existing dodgy loans, repackaged as “new” loans to the SME sector.
Those systemically important banks will also embark on a number of key survival programmes:
1. Non-core asset disposal programme – GB, NI, US and Polish assets will be sold.
2. Savage cost-cutting programme e.g. involuntary redundancy for 10-20% of staff in ROI, closure of marginal branches & non-core business units, outsourcing/ downgrading of services e.g. call centres etc..
3. Ramping up of interest rates to remaining customers, particularly in the mortgage market. This will be facilitated by the absence of competition from the foreign-owned banks, who are all trying to reduce their exposure to the Irish market.
I haven’t seen any of the above business risks credibly addressed by FG.
Friday, September 11, 2009
Monday, August 31, 2009
Why FG's "solution" won't work.
Extract from Richard Bruton’s Irish Times opinion piece in last Friday’s Irish Times. It concerns their approach to the banking system in the NAMA-less solution they are proposing.
“In the event that the banks cannot pass such a stress test by the end of the guarantee period, Fine Gael’s proposal is to split each failed bank into two, leaving the assets with the most uncertain values (the developer loans) in legacy asset management companies owned largely by the shareholders and other classes of risk investors. Deposits, other short-term liabilities, personal loans, mortgages and business overdrafts, the branch networks and the vast majority of the staff would all move safely and seamlessly into a new, going concern “clean bank”, initially owned and guaranteed by the taxpayer.”
This extract illustrates one of the main challenges for FG – a complete absence of understanding as to how the situation is likely to evolve, and a naïve belief that if you write something down it makes it happen.
It was good to hear Richard Bruton finally admit, at yesterday’s committee meeting, that he hadn’t understood the difference between Senior and Subordinated bonds. (Joan Burton also demonstrated a need to read up on Derivatives).
A key plank in the FG solution is the setting up of a “National Recovery Bank”
Let’s assume that this “bank” can raise the necessary €20bn, as outlined in the FG proposal.
How long will it take to get it up and running?
How long to organise
- Fundraising
- Personnel
- Distribution Channels
- Accounting/Bookkeeping/IT/Loan processing Systems/Processes
At best it will take several months to get off the ground, and probably a couple of years before it could be fully operational.
In the interim, for the 2nd leg of FGs banking proposal, the two main banks servicing the Irish economy, AIB & BOI, are told that post-Sept 2010 there will be no extension of guarantees for their fund-raising activities.
What will they do?
- immediately withdraw from any new lending exposures
- commence a major pro-active de-leveraging of their balance sheets, cancelling/ calling in overdrafts
- engage in huge cost-cutting activities e.g. laying off staff, closing any marginal branches
Their sole focus will be in survival, at any cost, beyond Sept 2010 as Zombie banks, in the hope that they can, over time, work out their property loans and return to profitability.
In the process, they will also reduce the economy to a Zombie state – FGs National Recovery Bank won’t be up and running in time to make up the slack, and all the foreign-owned banks are firmly in retrenchment mode.
This aspect of the FG plan, supposedly focused on National Recovery, is mind-boggling in its naïve stupidity.
I have no difficulty with the proposal to leave the bad assets with the banks and letting the shareholders/bondholders take their chances with “long-term economic value” of the underlying security they hold.
But there’s also a need for a functioning banking system over the next 2-3 years while we, hopefully, work our way out of the current recession.
However, that involves allowing the Banks the prospect of trading through the period, so here’s the alternative proposal:
- The current blanket guarantee of all bank liabilities is allowed to expire next year and is not extended. This removes the comfort from the subordinated bondholders.
- The Govt extends the guarantee for ordinary depositors and senior debt providers.
- The Govt provides ongoing guarantees, but only for specific fund-raisings by the main banks on a case by case basis.
This approach gives the Govt considerable leverage in ensuring that the banks support the economy while, at the same time, trying to repair their balance sheets.
If additional capital is required by AIB and/or BOI post-Sept 2010, then the Govt can underwrite rights issues and, in the event that private investment is not forthcoming, will become a major, perhaps majority, shareholder in those banks.
The critical consideration is to maintain a functioning banking system through the cycle, not Zombify it a.s.a.p. as would inevitably happen with the current FG proposal.
“In the event that the banks cannot pass such a stress test by the end of the guarantee period, Fine Gael’s proposal is to split each failed bank into two, leaving the assets with the most uncertain values (the developer loans) in legacy asset management companies owned largely by the shareholders and other classes of risk investors. Deposits, other short-term liabilities, personal loans, mortgages and business overdrafts, the branch networks and the vast majority of the staff would all move safely and seamlessly into a new, going concern “clean bank”, initially owned and guaranteed by the taxpayer.”
This extract illustrates one of the main challenges for FG – a complete absence of understanding as to how the situation is likely to evolve, and a naïve belief that if you write something down it makes it happen.
It was good to hear Richard Bruton finally admit, at yesterday’s committee meeting, that he hadn’t understood the difference between Senior and Subordinated bonds. (Joan Burton also demonstrated a need to read up on Derivatives).
A key plank in the FG solution is the setting up of a “National Recovery Bank”
Let’s assume that this “bank” can raise the necessary €20bn, as outlined in the FG proposal.
How long will it take to get it up and running?
How long to organise
- Fundraising
- Personnel
- Distribution Channels
- Accounting/Bookkeeping/IT/Loan processing Systems/Processes
At best it will take several months to get off the ground, and probably a couple of years before it could be fully operational.
In the interim, for the 2nd leg of FGs banking proposal, the two main banks servicing the Irish economy, AIB & BOI, are told that post-Sept 2010 there will be no extension of guarantees for their fund-raising activities.
What will they do?
- immediately withdraw from any new lending exposures
- commence a major pro-active de-leveraging of their balance sheets, cancelling/ calling in overdrafts
- engage in huge cost-cutting activities e.g. laying off staff, closing any marginal branches
Their sole focus will be in survival, at any cost, beyond Sept 2010 as Zombie banks, in the hope that they can, over time, work out their property loans and return to profitability.
In the process, they will also reduce the economy to a Zombie state – FGs National Recovery Bank won’t be up and running in time to make up the slack, and all the foreign-owned banks are firmly in retrenchment mode.
This aspect of the FG plan, supposedly focused on National Recovery, is mind-boggling in its naïve stupidity.
I have no difficulty with the proposal to leave the bad assets with the banks and letting the shareholders/bondholders take their chances with “long-term economic value” of the underlying security they hold.
But there’s also a need for a functioning banking system over the next 2-3 years while we, hopefully, work our way out of the current recession.
However, that involves allowing the Banks the prospect of trading through the period, so here’s the alternative proposal:
- The current blanket guarantee of all bank liabilities is allowed to expire next year and is not extended. This removes the comfort from the subordinated bondholders.
- The Govt extends the guarantee for ordinary depositors and senior debt providers.
- The Govt provides ongoing guarantees, but only for specific fund-raisings by the main banks on a case by case basis.
This approach gives the Govt considerable leverage in ensuring that the banks support the economy while, at the same time, trying to repair their balance sheets.
If additional capital is required by AIB and/or BOI post-Sept 2010, then the Govt can underwrite rights issues and, in the event that private investment is not forthcoming, will become a major, perhaps majority, shareholder in those banks.
The critical consideration is to maintain a functioning banking system through the cycle, not Zombify it a.s.a.p. as would inevitably happen with the current FG proposal.
The silence of the 46 lambs - not a baaa!
The silence of the 46 lambs is deafening – not a baaa from any of them.
Following Garret Fitzgerald’s critical comments on yesterday’s Morning Ireland regarding the quality of their analysis, in particular their exaggeration of the projected budget deficit, Pat Kenny opened his programme at 10.00am with a reprise of Garret’s comments.
Kenny revealed that the programme had contacted Prof. Brian Lucey about Garret’s criticisms. Lucey claimed that “the numbers weren’t important” (is that a first from an economist?) and declined to come on air to discuss the issue. (Now that definitely is a first for this ubiquitous media whore.)
Kenny then said that the programme had also attempted, without success, to contact several of the other signatories. He then issued an open invitation for any one of the 46 signatories to contact the programme.
Kenny closed the programme at 12.00 without any contact from the gang of 46. Will we hear anything from them today, I wonder?
Following Alan Ahearne’s dissection of their sloppy miscalculation of the value of the underlying security, Garret’s attack may well have terminated the credibility of this bunch of wasters.
Good to see that there’s life in the old dog still.
Following Garret Fitzgerald’s critical comments on yesterday’s Morning Ireland regarding the quality of their analysis, in particular their exaggeration of the projected budget deficit, Pat Kenny opened his programme at 10.00am with a reprise of Garret’s comments.
Kenny revealed that the programme had contacted Prof. Brian Lucey about Garret’s criticisms. Lucey claimed that “the numbers weren’t important” (is that a first from an economist?) and declined to come on air to discuss the issue. (Now that definitely is a first for this ubiquitous media whore.)
Kenny then said that the programme had also attempted, without success, to contact several of the other signatories. He then issued an open invitation for any one of the 46 signatories to contact the programme.
Kenny closed the programme at 12.00 without any contact from the gang of 46. Will we hear anything from them today, I wonder?
Following Alan Ahearne’s dissection of their sloppy miscalculation of the value of the underlying security, Garret’s attack may well have terminated the credibility of this bunch of wasters.
Good to see that there’s life in the old dog still.
Friday, August 28, 2009
FG/Bruton anti-NAMA proposal is, sadly, rubbish.
There are legitimate arguments to be made on both sides of the NAMA/ Nationalisation debate, even if I detest the Lucey & Co/populist media commentator loose approach to the potential numbers involved.
But, as a life-long ABFFer I regret to say, the Bruton/FG approach, as espoused in today’s IT, is a clear recipe for disaster, as it displays a complete ignorance of how the real world economic/banking system works.
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.
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.
Wednesday, August 26, 2009
Are we wasting 3rd level resources on women?
The introduction of the Health Professional Admissions Test (HPat), to be used in conjunction with the points score from the Leaving Cert in determining admission to University Medicine courses, has resulted in an approx. 50:50 mix of male and female successful candidates. This contrasts with a typical 60:40 skew in favour of females under the old points-only system.
This outcome has been attacked by female commentators, in particular former FG Education Minster Gemma Hussey who argues that the points system is the fairest way of allocating the most sought after 3rd level places.
Even if that is true, is it actually the best way to allocate them?
It is a fact that, in general, girls perform better than boys in the points race, while men, in general, perform better than women in the rat race. This would suggest that the current allocation of valuable and expensive 3rd-level resources may not be delivering the optimum return on investment, i.e. longer-term economic benefit to the country.
From a strategic point of view, the country might well benefit from skewing the allocation of 3rd-level places in favour of boys, reversing the current position. I think 60:40 would be a reasonable and balanced outcome.
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.
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.
Tuesday, August 11, 2009
Inventing the future.
A couple of critical inventions which will greatly improve the quality of life:
The Blackspot
This personal device creates a Wifi & Mobile phone blackspot for a radius of up to 100 metres from the wearer. The power output can be varied by the user to increase or reduce the diameter of this blackspot. In trials it has been effective up to 1,000 metres, but the microwave radiation at that range is sufficient to sterilise the user. Consequently, a maximum range of 100 metres will probably be deemed mandatory.
With the rapid spread of Wifi and mobile phone coverage now extending to aircraft, this device will become essential for anyone seeking a little peace. Indeed, you should not be surprised if, at some point in the near future, hotels and resorts start to promote themselves as “blackspots”, where the harried masses can come for some uninterrupted rest & recuperation.
The Pixeliminator
This clever device will shield the wearer from the unwanted intrusion of digital photography – whether by still or video camera or mobile photo.
The device works on the principle of monochromatism – it emits a low frequency radio wave which renders all the pixels of the wearer, as the intended subject of a photograph or video image, as a homogenous blob of one single colour and shade – with no discernible features. It doesn’t render the subject invisible to the camera, it merely records their presence as a blob.
This clever device will restore some semblance of privacy to the citizen and is destined to enliven the conversation over wedding photos & videos in years to come. “And who’s the blob dancing with Auntie Pam?”
Funding these projects:
To provide the necessary capital to finance development of the above devices, which will undoubtedly be highly profitable in due course (think Dyson), we’re about to launch the ultimate “cash cow”: Wii Adult!
No details, just use your imagination.
The Blackspot
This personal device creates a Wifi & Mobile phone blackspot for a radius of up to 100 metres from the wearer. The power output can be varied by the user to increase or reduce the diameter of this blackspot. In trials it has been effective up to 1,000 metres, but the microwave radiation at that range is sufficient to sterilise the user. Consequently, a maximum range of 100 metres will probably be deemed mandatory.
With the rapid spread of Wifi and mobile phone coverage now extending to aircraft, this device will become essential for anyone seeking a little peace. Indeed, you should not be surprised if, at some point in the near future, hotels and resorts start to promote themselves as “blackspots”, where the harried masses can come for some uninterrupted rest & recuperation.
The Pixeliminator
This clever device will shield the wearer from the unwanted intrusion of digital photography – whether by still or video camera or mobile photo.
The device works on the principle of monochromatism – it emits a low frequency radio wave which renders all the pixels of the wearer, as the intended subject of a photograph or video image, as a homogenous blob of one single colour and shade – with no discernible features. It doesn’t render the subject invisible to the camera, it merely records their presence as a blob.
This clever device will restore some semblance of privacy to the citizen and is destined to enliven the conversation over wedding photos & videos in years to come. “And who’s the blob dancing with Auntie Pam?”
Funding these projects:
To provide the necessary capital to finance development of the above devices, which will undoubtedly be highly profitable in due course (think Dyson), we’re about to launch the ultimate “cash cow”: Wii Adult!
No details, just use your imagination.
Saturday, August 08, 2009
Hats off to Rupert Murdoch!
My hat is off to Rupert Murdoch, who has recently declared his intention to charge for online access to his many media publications. It’s about time that someone, somewhere, sometime, declared that giving stuff away for free that actually costs real money to produce makes no economic sense and, ultimately, has no economic future.
The current business model on the internet not only makes no financial sense, it also creates a culture of entitlement to getting everything for nothing. Otherwise respectable middle-class people are induced into law-breaking use of unlicensed electronic equipment to steal cable tv, internet access, phone connections etc etc.. Such people should, of course, be reported and prosecuted – so watch out Bat!
The next step is to promote the creation of Wifi/Mobile phone “black-spots”, as opposed to hot-spots. What a relief it would be to find places where you can’t contact, or be contacted by, anyone else. Finally, you might regain control of your own time and your life without uninvited interruption or distraction. What a blessing that would be! I can see such places becoming a mecca for the overly-stressed – the next “big thing”
A firther important challenge is to kill 24/7 news and talk-radio!
Bruce Springsteen famously recorded a song which proclaimed that there were “57 channels and there’s nothing on”. Sadly, it now feels like there’s about 1057 competing channels and there’s still nothing on. Competition certainly hasn’t brought quality!
Our media is filled with the same talking/writing heads, endlessly repeating the same old tired guff ad nauseam. They speculate endlessly on what might happen if X, Y or Z was to occur, even when the result e.g. a general election, will be known within days. If you change radio stations, you’ll hear the same contributors turning up on RTE, Today FM & Newstalk over the course of any day. If only we could have a law that confined current affairs of any kind to 5% of station output we’d all be better off – believe me! That would be a boon to public service broadcasting. Perhaps coupled with a legal constraint on politicians – how much time per week/number of opinions they can give to media?
Give my head peace. Please.
The current business model on the internet not only makes no financial sense, it also creates a culture of entitlement to getting everything for nothing. Otherwise respectable middle-class people are induced into law-breaking use of unlicensed electronic equipment to steal cable tv, internet access, phone connections etc etc.. Such people should, of course, be reported and prosecuted – so watch out Bat!
The next step is to promote the creation of Wifi/Mobile phone “black-spots”, as opposed to hot-spots. What a relief it would be to find places where you can’t contact, or be contacted by, anyone else. Finally, you might regain control of your own time and your life without uninvited interruption or distraction. What a blessing that would be! I can see such places becoming a mecca for the overly-stressed – the next “big thing”
A firther important challenge is to kill 24/7 news and talk-radio!
Bruce Springsteen famously recorded a song which proclaimed that there were “57 channels and there’s nothing on”. Sadly, it now feels like there’s about 1057 competing channels and there’s still nothing on. Competition certainly hasn’t brought quality!
Our media is filled with the same talking/writing heads, endlessly repeating the same old tired guff ad nauseam. They speculate endlessly on what might happen if X, Y or Z was to occur, even when the result e.g. a general election, will be known within days. If you change radio stations, you’ll hear the same contributors turning up on RTE, Today FM & Newstalk over the course of any day. If only we could have a law that confined current affairs of any kind to 5% of station output we’d all be better off – believe me! That would be a boon to public service broadcasting. Perhaps coupled with a legal constraint on politicians – how much time per week/number of opinions they can give to media?
Give my head peace. Please.
Thursday, August 06, 2009
Republican band split
It’s part of republican mythology that a split in “the movement” is inevitable. So the IRA spawned “The Officials”, “The Provisionals”, “The Real IRA”, “Republican Sinn Fein”, the INLA etc etc.. (Brendan Behan famously joked that the first item on the agenda for a meeting of any Irish political party is “the split”.)
It now seems that the splitting virus also infects republican bands. Today’s Liveline featured the acrimonious 8-year split in The Wolfe Tones. Derek Warfield revealed that he hasn’t spoken to or seen his three fellow band-members since the split – and that includes his own brother Brian! Then the two non-fraternal band members phoned in to abuse Warfield.
Great stuff. I always thought the Wolfe Tones were a bunch of rabid dog, rabble-rousing wankers who weren’t worth listening to. So, in my opinion, this acrimony couldn’t have been visited on a more deserving bunch.
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.
It now seems clear that the subsidiaries of foreign banks currently operating in Ireland e.g. Ulster, NIB, BoSI/Halifax and ACC, have effectively withdrawn from the new lending market, particularly in the mortgage market and the vitally important SME sector.
If AIB and Bank of Ireland were subsidiaries of foreign banks, there is little doubt that a similar retrenchment policy would be in operation and the ability of the Irish government to influence such a policy would be severely circumscribed.
If AIB was owned by a major UK bank, one can imagine that the discussion in the London boardroom would not be about whether they should dispose of AIB’s US or Polish interests in order to bolster the balance sheet of the Irish subsidiary, it would be about how to downsize or dispose of the Irish unit!
There is understandable public anger at banks and bankers, a “to hell with the lot of them” attitude is commonplace.
This anger is routinely stoked by populist politicians, academics and media commentators who make no distinction between the banks, despite the evidence that some have been considerably less irresponsible than others e.g. IL&P and BoI.
Those commentators might usefully, in future, reflect on the long-term national importance to the Irish economy of maintaining a strong indigenous banking sector.
The current economic crisis will, hopefully, pass within a couple of years, but the national strategic need to maintain local control over key elements of our banking system will persist. At some point in the future, hopefully distant, we will inevitably have another international economic/banking crisis which will test the ability of the Irish economy to survive/revive.
Given the open nature of the Irish economy, we will always feel the pain when our major markets suffer an economic setback. In such circumstances, the Government’s ability to influence events is very limited e.g. our exchange rate is fixed by the ECB, reflecting the perceived need of the larger community rather than Ireland, and our interest rates are largely dictated by our membership of the Eurozone.
The banking system remains one of the key levers of economic power that the Government can influence and we must maintain control of it. Perhaps there is a case for the Government to maintain a long-term minority stake in the two major banks.
Thursday, July 09, 2009
Ned O'Keeffe - gombeenism alive & well in irish politics
East Cork Fianna Fail TD Ned O’Keeffe is to be congratulated on the honesty of his stance regarding Rathcormac National School. It is good to see one of our elected representatives publicly demonstrate the type of self-serving gombeenism which many of us have long suspected to be common currency in national and local politics.
Deputy O’Keeffe insisted that this school was not a priority for him, as Rathcormac was not a place where he gained many votes. He knows this from the activities of the much-loved tallymen at the 2007 general election.
Media commentators were virtually unanimous in their condemnation of electronic voting, often on the basis that it would deprive them of several days entertainment at that blood-sport known as “the count”. The inevitable demise of the tallyman was cited as a prime example of the supposedly huge cultural loss entailed in a switch to electronic voting.
How do those commentators now feel about the use to which the tallyman’s work is applied? How do we reform our electoral system to stop gombeen politicians behaving like this in future?
Footnote: Published as a letter in the Irish Independent & the Irish Examiner.
Deputy O’Keeffe insisted that this school was not a priority for him, as Rathcormac was not a place where he gained many votes. He knows this from the activities of the much-loved tallymen at the 2007 general election.
Media commentators were virtually unanimous in their condemnation of electronic voting, often on the basis that it would deprive them of several days entertainment at that blood-sport known as “the count”. The inevitable demise of the tallyman was cited as a prime example of the supposedly huge cultural loss entailed in a switch to electronic voting.
How do those commentators now feel about the use to which the tallyman’s work is applied? How do we reform our electoral system to stop gombeen politicians behaving like this in future?
Footnote: Published as a letter in the Irish Independent & the Irish Examiner.
Tuesday, June 16, 2009
Bloomsday again
It’s Bloomsday again and the posers have been out in force all morning around Sandycove and Glasthule. Lunchtime will be the signal to start the serious eating and drinking and, as usual, Caviston’s pavement is festooned with tables.
Doubtless Pete will be giving them all a reading from the great book while they try not to spill the vin rouge and/or gravy on their Edwardian outfits.
You have to hand it to Pete, he’s a great man for organising events. Today, he’s going to top whatever David Norris can manage in North Great George’s Street, for there’s a hearse drawn up outside Quinn’s Funeral Home and I’ll lay any money that Cavo is planning to recreate Paddy Dignam’s funeral scene from the book.
What a man of culture, truly Ireland’s very own Sir Les Patterson!
Doubtless Pete will be giving them all a reading from the great book while they try not to spill the vin rouge and/or gravy on their Edwardian outfits.
You have to hand it to Pete, he’s a great man for organising events. Today, he’s going to top whatever David Norris can manage in North Great George’s Street, for there’s a hearse drawn up outside Quinn’s Funeral Home and I’ll lay any money that Cavo is planning to recreate Paddy Dignam’s funeral scene from the book.
What a man of culture, truly Ireland’s very own Sir Les Patterson!
Friday, June 05, 2009
Greens fail the Principle test - again.
In recent days there has been considerable media kerfuffle about what transpired in a post-election telephone conversation between the leaders of Fine Gael and the Greens.
Given the size of the prize, would it not have been extraordinary of Enda Kenny had not given serious consideration to every possible political combination?
To his credit, principle triumphed over his ambition to occupy the Taoiseach’s office. The Greens, however, failed their test.
Footnote: Published as a letter in the Irish Independent.
Given the size of the prize, would it not have been extraordinary of Enda Kenny had not given serious consideration to every possible political combination?
To his credit, principle triumphed over his ambition to occupy the Taoiseach’s office. The Greens, however, failed their test.
Footnote: Published as a letter in the Irish Independent.
Wednesday, June 03, 2009
Exclusive: The Kenny-Sargent transcript!
The scene: Trevor’s office. Trevor is seated behind desk, making a phone call.
Gogarty is rolling around on leader’s shag-pile rug, doing his education spokesman impersonation and playing with his favourite squeaky rubber duck.
Trevor: Hello, Enda, any news?
Enda: Not looking good, I’m afraid, Trev. The numbers don’t add up – we can’t make it across the line. I’ve spoken to Pat and he agrees. He’ll stick by the accord but he’s worried about a completely hung Dail and the pressure that might put on Labour to go in with Bertie. He’s determined not to do that.
Frankly, he’s hoping you guys will cut a deal and get him off that hook.
Trevor: No way! I’d have to resign the leadership. Mind you, Gormless is chomping at the bit to do that deal and shaft me in the process. Ryan is wringing his hands and gurning, in his usual display of anguish, over the decision. But he’s been out to get me ever since we took the wheels off his presidential pram a couple of years back.
Enda: Well, that’s tough, Trev, but that’s grown-up politics for ya.
Trevor: Could we not cobble together enough independents?
Enda: No, it wouldn’t last 6 months – far too unstable to be credible. They’re mainly FF-gene poolers. The media would crucify me if I did a deal with Lowry and no price would be worth paying to have to listen to Finian posturing 24/7. No, Trev, I’m afraid we’re out of options this end.
Trevor: What about the shinners, have you spoken to the shinners?
Enda: Ah, will you feck off out of it Trev. There’s no way I’m doin’ any deals with the shinners. That’s a bridge too far.
Trevor: Well what if they were willing to support you from outside Government – you know, you don’t have to have them formally in the coalition.
Enda: I can’t see them going for that – they’re far closer to Bertie on the North than they’ll ever be to me. And I’m not prepared to give them any concessions now or in the future, just for their support.
Trevor: Jeez Enda, surely it’s worth a try? Do you want me to make a few discreet enquiries for ya? Sure there’s nothing to lose.
Enda: Well you can if you want, but remember, no promises. There’ll be no concessions now or in the future. Frankly, Trev, I think you’re wasting your time. The best thing for the Greens is to do a deal with Bertie and you start writing that principled resignation speech.
Trevor: Thanks a million, big fella.
Enda: What’s that squeaky noise I keep hearing in the background? Are you taping our conversation?
Trevor: No, relax, that’s only Gogarty playing with his toys.
Enda: And to think I was worried about an unstable Government. You should keep a close eye on that boy, Trev, he’s for the birds. Best of luck Trev, see you around the house. Goodnight and good luck.
Trevor disconsolately hangs up the phone.
“I suppose he’s right” he mutters to himself.
“Hey Gogarty, get off the feckin’ rug and stop playing around. Give me a hand drafting this bloody resignation statement”.
So, technically, Trevor may be misleading the public without actually telling a lie. That’s politics.
Gogarty is rolling around on leader’s shag-pile rug, doing his education spokesman impersonation and playing with his favourite squeaky rubber duck.
Trevor: Hello, Enda, any news?
Enda: Not looking good, I’m afraid, Trev. The numbers don’t add up – we can’t make it across the line. I’ve spoken to Pat and he agrees. He’ll stick by the accord but he’s worried about a completely hung Dail and the pressure that might put on Labour to go in with Bertie. He’s determined not to do that.
Frankly, he’s hoping you guys will cut a deal and get him off that hook.
Trevor: No way! I’d have to resign the leadership. Mind you, Gormless is chomping at the bit to do that deal and shaft me in the process. Ryan is wringing his hands and gurning, in his usual display of anguish, over the decision. But he’s been out to get me ever since we took the wheels off his presidential pram a couple of years back.
Enda: Well, that’s tough, Trev, but that’s grown-up politics for ya.
Trevor: Could we not cobble together enough independents?
Enda: No, it wouldn’t last 6 months – far too unstable to be credible. They’re mainly FF-gene poolers. The media would crucify me if I did a deal with Lowry and no price would be worth paying to have to listen to Finian posturing 24/7. No, Trev, I’m afraid we’re out of options this end.
Trevor: What about the shinners, have you spoken to the shinners?
Enda: Ah, will you feck off out of it Trev. There’s no way I’m doin’ any deals with the shinners. That’s a bridge too far.
Trevor: Well what if they were willing to support you from outside Government – you know, you don’t have to have them formally in the coalition.
Enda: I can’t see them going for that – they’re far closer to Bertie on the North than they’ll ever be to me. And I’m not prepared to give them any concessions now or in the future, just for their support.
Trevor: Jeez Enda, surely it’s worth a try? Do you want me to make a few discreet enquiries for ya? Sure there’s nothing to lose.
Enda: Well you can if you want, but remember, no promises. There’ll be no concessions now or in the future. Frankly, Trev, I think you’re wasting your time. The best thing for the Greens is to do a deal with Bertie and you start writing that principled resignation speech.
Trevor: Thanks a million, big fella.
Enda: What’s that squeaky noise I keep hearing in the background? Are you taping our conversation?
Trevor: No, relax, that’s only Gogarty playing with his toys.
Enda: And to think I was worried about an unstable Government. You should keep a close eye on that boy, Trev, he’s for the birds. Best of luck Trev, see you around the house. Goodnight and good luck.
Trevor disconsolately hangs up the phone.
“I suppose he’s right” he mutters to himself.
“Hey Gogarty, get off the feckin’ rug and stop playing around. Give me a hand drafting this bloody resignation statement”.
So, technically, Trevor may be misleading the public without actually telling a lie. That’s politics.
Monday, June 01, 2009
A Modest Reviewer - is this a first?
Reviewing D-Day: The Battle for Normandy by Antony Beevor in the Sunday Times, Max Hastings pays the author the following tribute:
“I find it galling that he has contrived to write a book that resurrects virtually no scrap of material that I used in a book of my own about the Normandy campaign 25 years ago. Instead, he has assembled a mass of unfamiliar sources, fresh voices and untold anecdotes to create a saga as impressive as his earlier narratives of Stalingrad and the battle for Berlin. He makes my version, and those of many other historians, seem old hat.”
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.
“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.
Tuesday, May 26, 2009
Dealing with the Religious Orders damned by the Ryan Report
Dealing with the Ryan Report in his Irish Times column today, Fintan O’Toole poses the question:“What, precisely, do we do with all those religious congregations who are apparently incapable of understanding the crimes for which they are institutionally responsible?”
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.
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.
Monday, May 25, 2009
Paper never refused ink - again!
Writing in today's Irish Times on the pursuit of developer Paddy Kelly by ACC bank, Business Editor John McManus welcomes it as the start of the process which, he predicts, will result in the liquidation of the portfolios of the beleaguered developers.
This process, he believes, will also inevitably bankrupt AIB & BOI as entire property portfolios are dumped on the market. He describes this outcome as “a truly awful mess” but concludes his article thus: “If it takes the precipitous collapse of Paddy Kelly to force everybody to jump into the unknown and get on with cleaning up the mess, then it is to be welcomed.”
At a recent seminar in Galway, economist Dr Alan Ahearne suggested that there are two types of economist – “those who know they don’t know, and those who don’t know they don’t know”. This might be applied with equal validity to journalists and media commentators.
On 26th January 2009, the same John McManus concluded an article on the banks with the following suggestion: “The solution may well be to split the difference – to nationalise Bank of Ireland and recapitalise AIB.” Recent events suggest that, were he writing that article today, he might reverse the prescription.
Academics and journalists enjoy the great luxury of having no authority to implement their proposed solutions nor any responsibility if they turn out be disastrously mistaken in their analysis.
A massive fire-sale of extensive property portfolios, in a lifeless marketplace and with little bank funding available for potential purchasers, seems like the least intelligent proposal for sorting out the mess I’ve heard in a while.
However, Mr McManus or the Irish Times won’t have to pick up the pieces and the ensuing financial chaos should provide him with copy for years to come.
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.
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.
Saturday, May 23, 2009
Leinster win the Heineken Cup - at last!
Leinster 19 Leicester 16
So finally, and deservedly, Leinster have won the Heineken Cup.
Defeating Leicester in a suitably intense and physical contest, Leinster finally proved that they can legitimately shed the “lady boys” tag and grind out a worthy victory against one of the real grinders in the business today.
This isn’t, in historical terms, on a par with the national team winning the Grand Slam, but it is still a great shot in the arm for Irish rugby and Leinster in particular.
Go mbeimid beo ag an am seo aris!
So finally, and deservedly, Leinster have won the Heineken Cup.
Defeating Leicester in a suitably intense and physical contest, Leinster finally proved that they can legitimately shed the “lady boys” tag and grind out a worthy victory against one of the real grinders in the business today.
This isn’t, in historical terms, on a par with the national team winning the Grand Slam, but it is still a great shot in the arm for Irish rugby and Leinster in particular.
Go mbeimid beo ag an am seo aris!
Thursday, May 14, 2009
Getting the Property Market Moving
The banks are the effective owners of many unsold residential developments, with the related loans to developers forming part of the impaired loan portfolios which are to be taken over by NAMA.
Many of these properties are in desirable locations but cannot currently be sold, even with significant reductions in the asking prices. This is because of the natural caution of potential buyers, who don’t want to risk buying in a falling market without any guarantee that we are at, or near, the bottom.
Is there a potential solution which would serve the interests of buyers, banks and the taxpayer (via NAMA)?
If a bank was to provide mortgages on a “non-recourse” basis for specified properties, it would mean that the bank can only rely on the property itself as security for the mortgage.
The benefit to buyers is the assurance that they can limit their risk, as they can return the keys and walk away in the event of a negative equity situation arising.
The benefit to the bank is that it can transfer a non-performing property development loan, or at least a portion of it, into a new mortgage loan. Even if the mortgage borrower subsequently hands back the keys of the property, the bank is actually no worse off than its current position.
The benefit to the taxpayer (via NAMA) is that any progress the banks can make in reducing the balances outstanding in their commercial and development property loan portfolios will result in a smaller balance to be transferred to NAMA. There will be a consequent reduction in the longer-term risk that the taxpayer will be stuck with any residual shortfall.
Clearly there are many details to be argued over, but some variant of the above solution might just help to get the property market moving again.
Many of these properties are in desirable locations but cannot currently be sold, even with significant reductions in the asking prices. This is because of the natural caution of potential buyers, who don’t want to risk buying in a falling market without any guarantee that we are at, or near, the bottom.
Is there a potential solution which would serve the interests of buyers, banks and the taxpayer (via NAMA)?
If a bank was to provide mortgages on a “non-recourse” basis for specified properties, it would mean that the bank can only rely on the property itself as security for the mortgage.
The benefit to buyers is the assurance that they can limit their risk, as they can return the keys and walk away in the event of a negative equity situation arising.
The benefit to the bank is that it can transfer a non-performing property development loan, or at least a portion of it, into a new mortgage loan. Even if the mortgage borrower subsequently hands back the keys of the property, the bank is actually no worse off than its current position.
The benefit to the taxpayer (via NAMA) is that any progress the banks can make in reducing the balances outstanding in their commercial and development property loan portfolios will result in a smaller balance to be transferred to NAMA. There will be a consequent reduction in the longer-term risk that the taxpayer will be stuck with any residual shortfall.
Clearly there are many details to be argued over, but some variant of the above solution might just help to get the property market moving again.
Wednesday, May 13, 2009
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.
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.
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