The Irish Republic

[Sean South]

Reducing the min wage won't push more people on the Dole because the Dole is being cut too.

 

That wasn't clear when I posted. However there is no details of any dole cuts - just a "review". So far it's pretty slim on actual details on some of the major points. As usual the poor, working class and middle class are getting fucked. Politicians and their rich cronies getting off as expected. Full text of recovery plan here.

Exactly. Ireland is very good at screwing the weaker in society. They are cutting back on front line education particularly in the areas of special needs and disabled. They are cutting front line medical care also. The Dole will be cut by around 30% over three years. The minimum wage is decreased by arouund 15%.

 

Nobody is answering what the net effect of the extremely sudden drastic deflation will have. For example, in a small town where there is 20-30% are une,mploted and many more are on low wage. The effect of sucking such an amount of essential spend out of the town will be catastrophic for small business. Only the Tescos etc of Ireland will survive and that is very dangerous.

[Snaipyr]

The incremental VAT increases won't do much for tourism either.

[Bananaman]

At least some applauded him

 

 

I like the cut of his jib!

 

One point that smacked me was - how they're happy to destroy democracy. Yet we peddle democracy in other areas.

[gazza]

At least some applauded him

 

 

I like the cut of his jib!

 

One point that smacked me was - how they're happy to destroy democracy. Yet we peddle democracy in other areas.

 

i like that man,

 

i was waiting for him to come and say your no better than nazi germany

[localyokel]

It looks like Europe is finally admitting that the gamble of launching a premature and dysfunctional currency without a central treasury, or a debt union, or an economic government to back it up has been a gross mistake. That is before the economies, the legal systems, the wage bargaining practices, the productivity growth, and the interest rate sensitivity of North and South Europe has not come anywhere near sustainable convergence.

 

Their best bet is to buy somewhere quick. Buy a micro nation like us as your hub. Put your central bank in the IoM, get the legal agreements in place, set up a centralized stockmarket listing to sell your debt, and then do what the Steam Packet does and shunt all your debt into a AAA rated environment and let it go tits up at some stage.

[IOMRS97]

Couldn't disagree with anything he said there. Most unusual to hear a politician tell it like it is...

[bellyup]

It looks like Europe is finally admitting that the gamble of launching a premature and dysfunctional currency without a central treasury, or a debt union, or an economic government to back it up has been a gross mistake. That is before the economies, the legal systems, the wage bargaining practices, the productivity growth, and the interest rate sensitivity of North and South Europe has not come anywhere near sustainable convergence.

 

Their best bet is to buy somewhere quick. Buy a micro nation like us as your hub. Put your central bank in the IoM, get the legal agreements in place, set up a centralized stockmarket listing to sell your debt, and then do what the Steam Packet does and shunt all your debt into a AAA rated environment and let it go tits up at some stage.

 

Sounds like a great idea

[manshimajin]

The funny thing about the irish situation IMO is that the Irish economy (excepting construction and retailing) is in a pretty reasonable shape and is exporting strongly in pharma, high tech and agriculture. The Government (for all its cronyism poblems) acted far more quickly than any other EU country (Latvia excepted?) to rein in government spending when revenue started falling. It was way ahead of the UK in dealing with the deficit. But it got, to quote a politician, bandjaxed by its commitment to fully guaranteeing the banks and to ensuring also that senior bondholders and subordinated bondholders in the banks didn't have to share in the downside of the appalling banking and bank regulation throughout the decade. IF they had given imited guarantees like the UK and IOM and if they had taken the 'free market' position and allowed bondholders to participate in the downside of their investment - then I think Ireland would actually be not be doing too badly now. But the commitment to the banks has been the killer.

 

It is ironic that the current crisis was exacerbated by Angela Merkel making noises that in future bondholders would have to share the pain - and also that the EU is basically telling the Irish government that this does not apply to Ireland - Ireland must protect the bondholders.

 

At the end of the day it's a mess and one can't help feeling that the EU/ECB have not even now got their thinking straight on how to handle things but are making decisions on the run.

[manshimajin]

From today's Irish Examiner:

 

THIS has been doing the rounds:

 

It is a soft day in a small Irish town. Times are tough, everybody is in debt, and everybody lives on credit.

 

On this particular day, a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.

 

The farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the pub. The publican slips the money to the prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. The hotel owner then places the €100 note back on the counter so the rich traveller will not suspect anything. The traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town. No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism. And that, is how the bailout works.

[Snaipyr]

From today's Irish Examiner:

 

THIS has been doing the rounds:

 

It is a soft day in a small Irish town. Times are tough, everybody is in debt, and everybody lives on credit.

 

On this particular day, a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.

 

The farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the pub. The publican slips the money to the prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. The hotel owner then places the €100 note back on the counter so the rich traveller will not suspect anything. The traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town. No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism. And that, is how the bailout works.

 

Brilliant stuff!

[manshimajin]

Moved from this thread

 

The Raven King

 

As a result of the Celtic Tiger soaking up subsidies right, left and centre I guess you're right - there'll be some continuing to enjoy life to the full. Pity the folk who, through no fault of their own, are left on the sh*theap again. Ah well, they can always go back to begging on the street.

 

Indeed. Ireland reminds me of the UK. Banks that went bust. Vast amounts of public money pumped in to shore them up. A huge deficit that means services must be cut. Goodness the Brits have even needed to cut VAT returns to us here by £100-140 million.

 

It's worth pondering that the Brits have given Ireland the same amount of money they are letting their 'expert' bankers take as non-refundable bonuses this year from their sagging, propped up banking sector.

 

Do you believe in the next 12 months that the Brits who can still afford it should be allowed to spend money on themselves - whilst the young and older workers are confined to the British sh*t heap? Let's smell the breeze...nowhere is exactly rosey and Britain is in a bad way despite politcian hype. We need people who are positive and allow everyone to move on ather than getting stuck in the 'slough of despond'.

 

Why be wretched if you don't need to be - we have left the era of self-flagellation and sackloth and ashes behind.

 

Anyway RK push over a bit and make some more room in cardboard city.

[pongo]

From today's Irish Examiner:

 

THIS has been doing the rounds:

 

It is a soft day in a small Irish town. Times are tough, everybody is in debt, and everybody lives on credit. etc

 

The butcher - baker - hooker story has a lovely homespun touristic feel about it - maybe Ireland is finding comfort in these sort of rosy glow analogies. In reality there are going to be multiple calls on every € because of the way in which banking operates. Almost certainly, the landlord's first call is going to be at the bank where he will use the €100 to make a very late less than minimum payment on his business loan.

 

In his wonderful book The Ascent Of Money, Prof Ferguson explains how fractional reserve banking operates by using a simplified example:

 

…. first - year MBA students at Harvard Business School play a simplified money game. It begins with a notional central bank paying the professor $100 on behalf of the govt, for which he has done some … consulting. The professor takes the banknotes to a bank notionally operated by one of his students and deposits them there, receiving a deposit slip. Assuming, for the sake of simplicity, that this bank operates a a 10 per cent reserve ratio …. it deposits $10 with the central bank and lends the other $90 to one of its clients. While the client decides what to do with his loan, he deposits the money with another bank. This bank also has a 10 per cent reserve rule, so it deposits $9 at the central bank and lends out the remaining $81 to another of its clients. After several more rounds, the professor asks the class to compute the increase in the supply of money. This allows him to introduce two of the core definitions of modern monetary theory: M0 … which is equal to total liabilities of the central bank …. and M1 … cash in circulation … By the time the money has been deposited at three different banks, M0 is equal to $100 but M1 is equal to $271 … illustrating in a highly simplified way how modern fractional reserve banking allows the creation of credit and hence of money.

 

The professor then springs a surprise on the first student by asking for his $100 back."

 

Your analogy might be more believable if, somewhere late 2006 the pig farmer had borrowed € millions from the bank in order to build an estate of bungalows miles from any center of economic activity. Most of the the bungalows were never finished. Only one was ever sold*. The rest are already vandalised and gradually decaying. The bank will never get that money back - most of the loan was sold on for the commissions (along with many other bad loans) - diced and sliced - sold on again - repackaged - sold on again at a paper profit - and so on. So now nobody can be quite sure now how much of the money which is supposed to be in the system is actually made up of bad debts.

 

* the buyers almost immediately defaulted on their mortgage btw

[manshimajin]

Your analogy might be more believable if, somewhere late 2006 the pig farmer had borrowed € millions from the bank in order to build an estate of bungalows miles from any center of economic activity. Most of the the bungalows were never finished. Only one was ever sold*. The rest are already vandalised and gradually decaying. The bank will never get that money back - most of the loan was sold on for the commissions (along with many other bad loans) - diced and sliced - sold on again - repackaged - sold on again at a paper profit - and so on. So now nobody can be quite sure now how much of the money which is supposed to be in the system is actually made up of bad debts.

 

* the buyers almost immediately defaulted on their mortgage btw

What actually happened (in real life):

 

The pig farmer was approached by a developer who offered him €32million for the land. The farmer agreed to the deal. The subsidiary of a UK bank eagerly lent the developer the money taking a lien over the land as its security. Pig farmer collects and goes off into the sunset. The developers starts to build but the recession hits. Work stops and he cannot service his debt. The bank calls in its security over the €32million loan. The land value is now back to 'agricultural' value and is worth €660,000. One very happy farmer. One very unhappy bank. This happened with a development outside Athlone and no doubt lots of others.

 

Ulster Bank (RBS) also lent money (I understand about €400 millio) on a very high rise development in Dublin. They did so before the developer had his planning permission! The council rejected the development. Recession hits. Ulster Bank left holding a very much smaller baby than it had lent money against. Great risk management...no doubt the bonuses got paid though because "the bank can't afford to lose experienced staff".

 

I have heard very similar stories from the UK too - which is no doubt one of the reasons that RBS lost 97% of its value and fundamentally ended up nationalised.

 

The unfortunate thing from Ireland's perspective is that due to actions taken by the Government the Irish taxpayer has ended up having responsibility for the appalling decisions taken by bankers on behalf of their shareholders and bondholders who are/should be the real risk takers.

 

IMO it would have been much better to follow the Northern Rock and Bradford and Bingley route and give some protection to depositors and let the banks fail. Mind you the UKG didn't do that with RBS and Lloyds HBOS. OTOH I recall the screams when the Icelandic banks went broke.

[Cambon]

Mind you the UKG didn't do that with RBS and Lloyds HBOS.

 

That was never an option. Forget Lloyds, they were never in trouble. But, ukg could not allow RBS and HBOS, especially HBOS to fall into foreign ownership, which is what would have happened.

[pongo]

ukg could not allow RBS and HBOS, especially HBOS to fall into foreign ownership

 

Why ?