Quote of the Day

Gerry Adams wrote to John Bercow…

“A chara,

I hereby resign as MP for the constituency of west Belfast.

Go raibh maith agat.”

Iceland Shows the Way Forward for Ireland:Decouple, Default, Devalue and Develop

Iceland’s President, Olafur R. Grimsson, told Bloomberg TV on Friday that his country is better off than Ireland because they allowed the banks to fail two years ago and devalued the krona:

“The difference is that in Iceland we allowed the banks to fail. These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”

The Irish bank bail-out is being foisted on them by the EU and the IMF whereas sovereign Iceland let the banks go bust and restructured the financial sector to keep the commercial sector serviced. As a consequence, “Iceland is faring much better than anybody expected” says Grimsson:

“How far can we ask ordinary people – farmers and fishermen and teachers and doctors and nurses – to shoulder the responsibility of failed private banks… That question, which has been at the core of the Icesave issue, will now be the burning issue in many European countries.”

Under this plan 20 cents of every euro of Irish taxes will go to pay the interest on the bank bail-out debts. The Irish bail-out plan will cost €54,800 per Irish household. Ireland’s future thus looks a lot more bleak than Iceland’s path of debt default and a devaluation of 60% two years ago which has the country rebounding: exports and manufacturing are growing by 20%, tourism is back near all-time highs, real wages are rising, unemployment is declining sharply, interest rates fell from 18% to 5.5% and the stock market has rebounded 50% from its lows. In contrast this euro-banker’s bail-out will only burden the next generation of Irish who don’t flee with crushing debts not of their making…

Britain and europe should keep their bail-out billions rather than foist them on Irish taxpayers to cover the responsibility for bad investments made by their own private banks. They can use the billions to bail-out their own banks directly if they want, without involving the Irish taxpayers…

Feck Off Euro-Socialists

Euro-Socialist and Green MEPs have tabled a motion calling on Ireland to double corporate tax rates as part of a quid pro quo for a bail-out. Not a single Irish MEP has supported the motion. Ireland should just tell them to “feck off”…

Douglas Carswell is right, Ireland should decouple and default. Coupling the Celtic Tiger to the euro was a disaster, it was inevitable that when economic cycles were asynchronous the big core EU countries would set interest rates to suit themselves. The ECB kept rates too low for Ireland’s over-boiling property market, which predictably bubbled over. Exactly as Euro-sceptics from Farage to Redwood predicted would eventually happen.

The Irish property crash has destroyed the banks, none more so than Anglo-Irish Bank, a bank run by corrupt allies of the governing Fianna Fáil party. The state guarantees proffered in the panic of 2008 to Irish banks gave them the backing of the state’s ‘AAA’ credit rating. Those guarantees have now sunk the state’s credit rating.

A World Bank report from back in May 2009What Went Wrong in Ireland? written by Patrick Honohan, Professor of International Financial Economics at Trinity College Dublin, put the blame squarely on joining the euro and having the wrong interest rates:

…the underlying cause of the problem was … too much mortgage lending (financed by heavy foreign borrowing by the banks) into an unsustainable housing price and construction boom. The boom seemed credible to enough borrowers given sharply lower interest rates with adoption of the euro … it was Economic and Monetary Union (EMU) entry that really started the housing price surge by sharply lowering nominal and real interest rates, thereby lifting equilibrium asset prices…

Honohan isn’t some obscure professor, since writing that report Honahan has been made the new governor of the Irish Central Bank. Left-wing British commentators like the Fabian’s Sunder Katawala, the Indy’s Ben Chu and even Polly Toynbee are trying to blame Ireland’s woes on low tax rates and free market reforms. No serious Irish economist attributes Ireland’s crisis to low tax rates. The reason Polly, Sunder and Chu want to present that argument is to stick it to those of us on the right who praised Ireland’s supply-side economic policy reforms, which is why they point the finger at the likes of George Osborne, Dan Hannan, John Redwood and Nigel Farage. It is intellectually dishonest of them to cite derisively the British right’s praise for Ireland’s successful free market micro-economic reforms and ignore warnings from the same about the macro-economic systemic risk of joining the euro. That is exactly what the left-wing commentariat is trying to do.

The micro-economic reforms that led to the Celtic Tiger pre-date Ireland entering the euro and were designed to improve the supply-side potential of the economy, make markets and industries operate more efficiently and thereby contribute to a faster rate of growth of real national output. Low taxes and freer markets achieved that objective – incidentally many of those reforms were championed in the 80s and 90s by the Progressive Democrats – the party of which Guido was a member. After joining the euro in 2000 Ireland had negative real interest rates, sparking an out of control property bubble.

German economic advisers from Frankfurt have been in the Irish finance ministry and central bank for nigh-on a year. Last month the ECB in Frankfurt mandated the Irish government to pay off European holders of Irish bank bonds – the European bail-out of Ireland is really a bail-out of European lenders to Irish banks. In joining the euro Ireland’s economic sovereignty was surrendered by Fianna Fáil with the support of almost the entire political class, consequently the next generation of Irish taxpayers have had their future mortgaged. Guido could cry for what the europhiles have done to his country…

End of an Éire

Thousands died in the transition from being England’s first colony, to an Irish Free State and finally an independent Republic. The ironies arising from the situation in Ireland are many. Joining the Euro, hugging the state tight to the whole European project and Dublin’s politicians slavishly obeying their new masters in Frankfurt has ended in disaster. Why fight the English for 400 years for sovereignty only to surrender it to Germany?

O’Connell, de Valera and Collins must be turning in their graves as the heir to the Baronetcy of Ballentaylor, in County Tipperary, and Ballylemon, in County Waterford, contemplates rescuing the Irish Republic with English pounds. The heir normally prefers to go by the name of George…

Quote of the Day

John Redwood blogs

“If Ireland does not wish to take any EU money, the UK should be Ireland’s ally. The stated Irish wish to see their own way through their own deficit problem is wholly admirable.”

Quote of the Day

Fine Gael TD Michael Ring said

“Now look at the mess we’re in and look at the mess this country is in. Next year the Queen is talking about coming to Ireland for a state visit. Maybe we should say to the Queen when she comes ‘you know, we have our own independence now, we’ll hand you back the country and we’ll apologise for the mess that we’re after making of it. Because at least when they were running the country they didn’t put it into the mess and the hock that we are in now.”

Anglo-Irish Bondholders Should Take the LossesIs the ECB Forcing Ireland to Protect German Investments?

Anglo-Irish Bank did not represent a systemic risk to the Irish economy, it wasn’t a high street bank like AIB or the Bank of Ireland. If it had been allowed to go the way of Lehmans the only losers would have been shareholders and bondholders. The Irish state stepped in and nationalised a bank that was basically run by crooks lending to property speculators. The Irish people are taking losses that should rightly have been shouldered by bondholders.

Every child in Ireland is being bequeathed a huge debt at birth to protect the interests of foreign, mainly German, bondholders – why? Guido was once a bond trader, it was always understood that sometimes the bond issuer defaults. That is the risk investors take.

So why is Dublin’s political establishment so keen to protect foreign investors at the expense of future generations? Guido has obtained the list of foreign Anglo-Irish bondholders as at the close of business tonight. These are the people whom Dublin’s politicians really seem to care about:

Between them they hold Anglo-Irish bonds with a face-value of €4,034,756,880. Shouldn’t they take the hit rather than future generations of Irish taxpayers? Capitalism is a system of profit and loss, they took the risk of investing in Anglo-Irish Bank. Is the Irish government under pressure from the European Central Bank in Frankfurt to protect German investors?

10% of Anglo Irish Bank’s Profits Came from Defrauding Customers


Guido has been given documents coming from inside Anglo Irish Bank’s Treasury Department dating back to 1997 which strongly suggest there was a board level approved conspiracy to over-charge corporate customers. The scale of the fraud was massive and it may have contributed up to 10% of the now nationalised bank’s profits.

The Anglo-Irish Bank’s fraud comes from overstating the DIBOR base rate on which customer’s loans were calculated. DIBOR is the Dublin Interbank Offered Rate, calculated and published daily like LIBOR, it was set in stone and used by all Irish banks as the basis for settlement of trades and financial transactions before they joined the Euro.

Essentially Anglo-Irish lied to customers as to what that the real base rate was by adding between 1/4% to 1/3% to the official underlying rate, then they added the usual banker’s spread that they will have agreed contractually with their corporate customers.

Guido’s source says that inside Anglo-Irish the false rate quoted to borrowers was known internally as “TIBOR” after Tiarnan O’Mahoney, the Director and Chief Operating Officer to whom Des Whyte, the treasury manager who prepared the figures, reported. Sources say that the “TIBOR” version of “DIBOR” was not used with sophisticated money market customers who would have queried the rate.

Guido has done some back of an envelope calculations based on the bank’s 1999 Annual Report. The customer loan book is reported to have been €5.7 billion (IR£4.4 billion). Assuming that only half the clients were over-charged the average of 30 basis points the bank will have made an extra €8.6 million, (IR£6.6 million) on the bottom line. That was some 10% of the bank’s reported profits.

According to a source the fiddle continued throughout the late 90s into the early half of the next decade as Anglo-Irish’s loan book grew on the back of the Celtic tiger. Customers could have been ripped off by as much €100 million.

N.B. Guido has documentation to back up this story – if the Dublin authorities want it…

UPDATE : There was an error with the graphic illustration above earlier which has now been corrected to show the correct corresponding date.

FLASHBACK : Happy Saint Patricks to Irish Dave.

He drinks Guinness you know.  Dave says draught Guinness* in cans “is one of the great inventions of our time “No, really O’Reilly.

According to Debrett’s Peerage, Dave is William IV’s great, great, great, great, great grandson through Elizabeth FitzClarence, the King’s illegitimate daughter, one of at least ten children he had out of wedlock with Dorothy Jordan, an Irish actress from County Waterford, and his long-term mistress, who is in fact Mr Dave’s great, great, great, great, great grandmonther. So, as the lyrics say, “inside Dave, there’s an Irish heart beatin’ “…

*How many cussing plugs do they need before they send a truck load?

The Budget Britain Needs Was Delivered in Ireland

By coincidence here in Ireland it was also budget day, the Finance Minister Brian Lenihan delivered a 7% cut in public expenditure to match the 7.5% fall in GDP in 2009.  To equal that Alastair Darling would need to have announced £40 billion in public expenditure cuts today.

Here are some of the reasons Guido thinks Ireland will bounce back faster than the UK:

  • Corporate and capital tax breaks for start-ups have been extended
  • Corporation tax rate of 12.5% is ‘here to stay’
  • “Green tax cuts” for zero emission vehicles
  • VAT has been reduced by ½%
  • Public services efficiencies sort
  • Welfare benefits reduced to 2006 levels, social welfare bill cut by equivalent to 1.5% of public expenditure
  • Dole allowance to be reduced to €150 a week
  • Social welfare to be cut 4.1%
  • Politicians’ pay will be reduced in line with public sector grades
  • Public sector pay cut of 5% on first €30,000 salary, 7.5% on the folllowing €40,000 of salary and 10% on next €55,000
  • Taoiseach (PM) to have pay cut by further 20% on top of previous 10%
  • Permanent pay reduction of 12% for those on over €200,000 in the public sector
  • Savings of over €1bn on public sector pay bill

Darling has gone the other way, introducing penal tax rates at the top, and hiking NI payroll taxes on people on only £20,000.  He put up VAT which as any left-winger will tell you, is regressive and hits the poorest hardest.  What struck Guido was that this is an odd class war political budget, their own core voters are being hit hardest.   Low paid, public sector workers on £20,000 get a pay freeze, a tax hike and whacked by VAT increases – a triple whammy.

Ireland welcomes UK corporations with a tax rate nearly half the UK rate and best of all, Lenihan also announced that alcohol and cigarette taxes are to be reduced…

Irish Speaker Resigns in Expenses Scandal

irish-speakerJohn O’Donoghue, the Ceann Comhairle (speaker) of Dáil Éireann the lower house of the Oireachtas (parliament), was forced out of office last week in an expenses scandal arising from Freedom of Information requests exposing his troughing to the tune of €200,000.  He became the first Ceann Comhairle to be forced out of office in Irish history.  The picture of his robe of office draped over the chair is set to become iconic.

With the usual sense of exaggerated self-entitlement that is characteristic of politicians the world over, he tried in his resignation speech to justify his nights in Cannes hotels and trips to international horse race meetings as in the Irish national interest.  FoI revelations that he had taken a private Lear jet from Dublin to Cardiff for the Heineken Cup rugby match, before heading on to Cannes for the film festival and then to London for a Ryder Cup promotional event before returning home to Kerry in a trip that is estimated to have cost the taxpayer in the region of €32,450, did for him.

The Irish Taoiseach Brian Cowen shares his fate with his British counterpart, Gordon Brown. Like the Prime Mentalist he is the former finance minister, like Gordon he is unelected and without a personal mandate, having succeeded his more politically skilled predecessor, Bertie Ahern.  Like the former Chancellor he can’t escape political responsibility for the state of the economy. The parallels across the Irish Sea are remarkable.

Irish Need a Tie-Break Referendum

lisbon_yes_noWell it is looking like a bad day for Irish sovereignty. Guido feels a bit guilty about not going home to vote. The entire Irish political establishment including the formerly anti-EU Greens backed the Brussels gravy train, the state media and the press likewise. With Declan Ganley neutered the anti-Treaty forces were lacking in leadership. The likely result according to exit polls is a ‘yes’.

That makes it No 1, Yes 1, so surely we need a tie-break referendum?

Euro Results

Euro Vote 09Everyman and his blog is doing an election results service based on, well, mostly watching TV, so Guido won’t bother with that. Very disappointed that Guido’s Libertas vote looks like it went to waste. At the New Ross polling station in Wexford on Friday a neighbour said “it is our job to choose between the liars”. Wise words.

Hoping UKIP beat Labour, very worried that Dan Hannan may have won his bet that Labour will come fifth in his region. Due to Pimms-related intoxication Guido offered him 10/1 odds. Ouch, think it is bedtime for Guido…

Nick Griffin Gordon Brown

UPDATE : Nick Griffin will be thanking Gordon Brown tonight.  He could not have done it without him. Brown has achieved one policy goal, he got a British job for one British worker, the British National Party candidate who is going to Brussels.  Labour MPs should reflect on that, do they fear losing their jobs in an election more than they loathe the BNP.  As long as they keep a Scot who can’t connect with English working class voters as leader, the stronger the BNP becomes.

Libertas Demands Exposure of MEPs Expenses

Yesterday Guido did momentarily consider voting for Fine Gael, Libertas however have guaranteed one more vote in Wexford today.  This is obviously not some cheap photo-opportunity publicity stunt putting words in the mouth of page three girl Amy Diamond :“I am delighted to bare all for Libertas. What have MEPs got to hide?  I want them to get everything off their chest like me. Stop covering up if they’ve got nothing to be ashamed of.”

Robin Matthews, who leads Libertas in the UK, makes the point that: ‘The expenses scandal is rife in Europe, it is not just our MPs here at Westminster with their noses in the trough. Greater abuse is taking place at the European Parliament. The only way to sort this out and make change is by MEPs baring all and letting us see what they have spent our money on’.  Quite.

Totty Watch : Fine Gael's Fine Girl

 

emma-kiernanThis is Emma Kiernan, who is standing for Fine Gael on Newbridge Town Council, Kildare, Ireland.  Guido was until now thinking of voting for Libertas in Ireland.  This could change things.  She certainly looks a lot different from her official photo which, unlike this Facebook picture, is not splashed all over the Irish media and political blogs.

Emma says “Admittedly it’s not a great photograph”, Guido begs to differ.  She now has a Facebook fan club…

EU Dirty Ratifiers

Reports from Brussels coming in suggest that Ireland’s political elite are allowing their arms to be twisted by the EU into ignoring the “No!” vote in the referendum and having another one. This comes as absolutely no surprise – the undemocratic nature of the EU project has always been manifest. It has a semblance of voting but the outcome is as pre-determined as a Soviet-era party congress. On the rare occasions when the project comes off the rails, nothing, not even the will of the people will stop it.

Irish citizens were the only people in Europe allowed to express their democratic will. They said “NO!” The EU’s dirty ratifiers won’t accept that answer.

Credit Crunch : Irish Politicians Lead with Pay Cuts

Hopefully this is another Irish example that will be followed here. The Irish President Mary McAleese has announced that she will be taking a 10% pay cut in light of the current budgetary troubles. The finance Minister Brian Lenihan says he and his ministerial colleagues will also take a 10% wage cut. The opposition leader has instructed his party’s parliamentarians to take a 5% cut. The governor of the Irish Central Bank and Financial Services Authority has volunteered to also surrender 10% of pay. RTÉ’s top six executives are taking a “significant reduction” in pay. This follows the government’s announcement of a round of spending cuts as recession bites.

The Irish ruling elite realise that they need to show leadership by example in tough times.

Will British politicians follow suit? After all their pension’s profited from short selling. Will they get their snouts out of the hard-pressed taxpayer provided gold-plated troughs? Perhaps some of the senior executives at the BBC could follow the example of their counterparts at the Irish state broadcaster? They all want the bankers to sacrifice their bonuses, but don’t the Chairman of the FSA and the Governor of the Bank of England need to make sacrifices? It is not as if they have been brilliant at bank regulation. If they were all paid on a performance-related basis they should be losing 30% or more – the same as the stock market has cost pensioners…

Top o’ the Credit Ratings To You

Despite Gordon’s whining to the EU it is now the case that Irish banks now represent the safest place to deposit money in Europe, with a AAA guarantee from a country with the lowest national debt to GDP ratio of any AAA country. Thanks to Gordon’s prolificacy Irish commercial banks are safer than even the Bank of England.

UPDATE : Lots of whining in the comments about this, so may as well mention that WPP is joining the taxodus and leaving Brown’s Britain and re-domiciling in low tax Ireland.

UPDATE October 2010 : This is quoted at Guido on a regular as some kind of evidence of terrible analysis. It is the case that Irish bank paper became safer in 2008 than any other European bank paper once the state guarantee was in place. The question that should be asked: Was a state guarantee a good idea? The impairment this has now brought to Ireland’s sovereign credit rating suggests not.

EU to Ireland : Tough Luck

Back in the last century Guido was very much in a minority in Ireland opposing swapping the punt for the euro – “it is the future”, “it will make things easier when we go on holiday”. Not the strongest economic arguments. More often the antipathy was blamed on Guido spending too much time in the company of British Eurosceptics.

Now times have changed. Being in the eurozone is recognised as having exacerbated the property bubble. Interest rates were just too low and cheap money flooded into over-priced property. If Ireland’s central bank had interest rate sovereignty it would have raised interest rates – it couldn’t and the Irish property crash will be one of the world’s worst as a result. 

Now the economy is in trouble Irish interest rates should be lowered to make the currency more competitive and the attractive to U.S. investors. Ireland is a high cost country for American investors who now look elsewhere. Irish finance ministers John Bruton in 1986 and Bertie Ahern in 1993 drove down the punt to bring in foreign investment when economic growth was faltering. But as a member of the euro, devaluation of the exchange rate is no longer an option.

Yesterday the president of the ECB, Jean-Claude Trichet bluntly told Paul Tansey, economics editor of the europhile Irish Times that “the ECB has to care for the superior interest of the euro area”. Tough luck, Ireland isn’t important, monetary policy will not help the Irish. Anti-treaty campaigner Declan Ganey says the Irish are not eurosceptic, they are Brussels-sceptic. As the Brussels political elite’s contempt for Irish democracy becomes clearer, that could change…

Secret of Irish Profits

Two interesting bits of Irish news yesterday. Research released Wednesday shows that in Britain the average company makes a profit of some €22,500 per employee. This compares to Irish companies who on average make a profit per employee of €45,800. This is after transfer pricing and other disortions were stripped out.[…] Read the rest

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Quote of the Day

John Curtice on fiscal policy:

“Attitudes to taxation and spending are basically counter-cyclical. If a government comes in and tries to reduce spending and taxation, after a while people will get worried about the state of public services. If a government increases taxation and public spending, after a while they’ll get concerned about increasing taxation…. In as much as there are lots of ideologues out there who think the state should be this proportion of GDP, they’re all wrong. Because the public’s view is counter-cyclical to the recent experience. It’s basically impossible to satisfy the public.”

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