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.”
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 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?
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.
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?
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…
John 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.
Well 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?
Everyman 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…
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.
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.
This 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…
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.
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…
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.
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…
In a landmark ruling yesterday the European Court of Human Rights ruled that the British government’s scheme of external surveillance was not “in accordance with the law”. Of course the British government tacitly allows the Americans to do the same to you.
When the result came in yesterday Mark Mardell looked shocked and sounded exasperated. The BBC has continually been running this line in its reporting of Ireland’s historic vote on the Lisbon Treaty:
“Just over three million Irish voters are registered – in a European Union of 490 million people.”
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The real comparison with Ireland is even far more dramatic and much less democratic than the image the BBC has been projecting….