Sunday, December 27, 2009

Reporting the Lenihan diagnosis

THE Sunday newspapers report a widespread adverse reaction by the public to the broadcasting of details of a medical diagnosis of an individual by TV3 News - a reaction that is not at all surprising.  If any of your readers are particularly infuriated about the reporting of this matter, or even distressed by the principle of such news reporting to the extent that they believe that it constitutes an infringement of the privacy of an individual, there is a potential remedy.  Members of the public may register a written complaint with the Broadcasting Authority of Ireland (BAI) under S48(1)(c) of the Broadcasting Act 2009.  This section covers the broadcasting of matters that contravenes the privacy of an individual.  It would be an appalling development were this type of voyeuristic news reporting to become a recurring feature of what would inevitably become a diminished standard of news dissemination in this country. 

Complaints must be made to the Authority in writing within 30 days of the date of broadcast in question and include a summary of the basis of the the complainant.  Full details of the appropriate procedure and the complaint form are available on the BAI web site at

Tuesday, December 22, 2009

Irish mortgage arrears biting

2009 11 28_1147_edited-1 I estimated that the retail value of residential property sales during the economic bubble (2003 – 2007) was in the region of €130 billion.  The vested interests speak of a 40% drop in value since 2007 and which would imply negative equity in the region of €52 billion, with those bearing 100% mortgages being really severely hit.

But the escalating scale of the issue does not reflect the full impact of negative equity.  Some consider this a reflection of the forbearance of lenders while others see it as banks not wanting to record bad debts because they would have to raise additional core capital to comply with liquidity requirements.


Status of mortgage market 
– September 2009


  € Million Share
Principal dwellings   78,615 71.6%
Buy-to-let residences   30,045 27.4%
Second homes     1,104   1.0%
Adjusted for securitisation 147,983  
Number of loan accounts 791,634  


Mortgage arrears at 30 Sep 2009

  Number of accounts Balance
€ Million
€ Million
91 – 180 days   8,504 1,589.27   47.68
Over 180 days 17,767 3,238.39 306.73
Formal demand issued   4,565   957.53    57,82
Court proceedings issued to enforce debt/security on a mortgage   3,617   699.49    84.17
Legal proceedings issued to enforce debt/ security during Q3 2009      491    118.44     9.95
Cases concluded during Q3 2009, of which:      218     39.22     4.29


28 properties were voluntarily surrendered and 10 were concluded by abandonment.  The mortgages in respect of 60 others were renegotiated and those in respect of 10 others were dealt with by new arrangements – struck out, settled, adjourned, dismissed or judgement entered in favour of the lender.


Residential loan volumes Q3 2009

There were 12,189 loans drawn down in the third quarter of 2009 - this represents 3.9% fewer loans than in the previous quarter, and 56.4% fewer than in Q3 2008.

The breakdown of these was:

  Share Number Value € M
First-time buyers 29.8%   3,633    764
Mover purchase 20.3%   2,472    611
Top-up 31.0%   3,783    283
Re-mortgage 13.2%   1,602    304
Buy-to-let 5.7%      699    183
TOTAL   12,189 2,145


The amount drawn down in Q3 2009, €2,145 million, compares to €3,539 million in Q3 2008 and €8,282 million in Q3 2007.

The temperature of the residential property sector is as arctic as the prevailing weather!

Saturday, December 19, 2009

Judge bishops by what they do, not by what they say

2009 11 29_2589_edited-1 THE posturing continues.  The bruised egos are being paraded on the catwalk of public opinion.  The imperial pride is wounded but there is no appetite to place the common good ahead of personal vanity.  As the moral authority of bishops’ ebbs away they need to be judged on what they do rather than what they say.

It is now 23 days since the release into the public domain of The Murphy Report which portrays decades of the most devastating sex abuse by 46 priests that was shielded from civil process by the secrecy and antics of generations of archbishops and bishops of Dublin.  These are merely specimen cases within the time frame 1975 – 2004.  The bishops have had access to this report for several months but their response has been, at best, lacklustre and at worst, devious (“I dun nothin’)

Donal Murray former auxiliary bishop of Dublin resigned as Bishop of Limerick on December 17th  on the grounds that “my presence will create difficulties for some of the survivors who must have first place in our thoughts and prayers”.

Bishops are in a fish bowl – no term limits, no process of accountability and no established means of revalidating their mandate.

Open Terms

Five serving bishops served as auxiliary bishops of Dublin during the period covered by The Murphy Report.  All were ordained by the disgraced Cardinal Connell and between them have in excess of 90 years tenure as bishop.

Name Ordained bishop Years service as bishop
Martin Drennan (65) 28 May 1997 12.24
Raymond Field (65) 28 May 1997 12.24
James Moriarty (73) 26 Jun 1991 18.24
Donal Murray (69) 4  Mar 1982 27.67
Eamonn Walsh (65) 7  Mar 1990 19.66


Response to article in The Irish Times

It is interesting to compare the response to The Murphy Report with the response to an article published in The Irish Times on 27 July 2002.

This article was concerned  a group of seminarians in the ‘senior division’ of St Patrick’s Seminary Maynooth, Co Kildare, who in 1984 had expressed serious concerns to the senior dean regarding the strange and worrying behavioural patterns of a senior staff member towards younger students.  That staff member was Michael Ledwith vice president of the College. .

The article reported that the senior dean transmitted those concerns to some bishops.  Senior students who had conveyed their concerns directly to certain bishops and whose reports were responded to with reactions of incredulity, began to fear (especially when their actions became known) that their interventions might result in disciplinary action, such as a denial of ordination, being taken against them.  The article indicated that the bishops ignored the allegations. 

The senior dean was promptly sent on a 1-year leave of absence to Rome after which his resignation from Maynooth was demanded by the Primate Cardinal O’Fiaich, on the rounds that “the bishops are gunning for you”. 

Four days later on 31 July 2002, The Irish Times published a letter from four of the surviving nine bishops named rebuking the paper for publishing to original letter without any prior reference to them.  These four categorically stated in that letter that “such an allegation was never made to any of us at any time”.  None of the other bishops named ever mentioned such an allegation to any of us” 

The signatories of this letter were Cardinal Cahal Daly (aged 92),  a bishop since 26 May 1967 who retired on 1 October 1996; the retired Archbishop of Tuam Joseph Cassidy (aged 76), a bishop since 24 August 1979 who retired on 28 June 1994; retired bishop of Derry Edward Daly (aged 76), a bishop since 31 January 1974 who retired on 26 October 1993 and serving bishop Colm O’Reilly (aged 75 on 11 Jan 2010) a bishop ordained by O’Fiaich on 24 February 1983 and who has served for almost 27 years as Bishop of Ardagh and Clonmacnoise in succession to Cahal B Daly.


Investigation by senior counsel

Mr Denis McCullough SC was retained by the bishops in June 2002 to investigate the allegations reported in The Irish Times that complaints were made alleging sexual harassment of seminarians at Maynooth College in the early 1980’s and that those complaints did not receive a proper response.  Specifically it was alleged that complaints had been made by seminarians to the bishops and Trustees of Maynooth College that Monsignor Michael Ledwith who was then Vice President of the College had sexually harassed seminarians.

McCullough’s investigation did not require him to inquire into the behaviour of Ledwith either in the early 1980’s or at other times but simply to investigate whether complaints about him were made by seminarians to bishops or trustees of the College.


Ledwith Promoted

Ledwith was appointed Presdient of Maynooth College in 1985, a post he held until 1994.  The Ferns Report cited him for sexually abusing a boy aged between 13 and 15 years.  Ledwith is now a teacher at the Ramtha School of Enlightenment, in the United States.


McCullough’s Conclusions

McCullough completed his report in March 2005 and it was published by the bishops who commissioned it on 16 June 2005, less than three months before the publication of The Ferns Report.

Those he interviewed agreed that there were no complaints made by the seminarians themselves to bishops about sexual abuse by Ledwith of seminarians in Maynooth College.  But McCullough confirmed that “concerns of apparent propensities rather than accusations of actual crime or specific offences” had been communicated to a number of bishops by the senior dean of the college – the whistleblower who had been ostracised by O’Fiaich.  McCullough concluded “that to have rejected the senior dean’s concerns so completely and so abruptly without any adequate investigation may have been too precipitate, although, of course, to investigate in any very full or substantial manner, a generic complaint regarding a person’s apparent propensities would have been difficult”.

So the decided to promote him as the principal figurehead in charge the education of future priests rather than turn him over to the police.

Response to McCullough

Cardinal Brady stated when the report was published “we accept the findings of the report.  A complaints and disciplinary procedure is included in the revised College Statutes.  These procedures are kept under constant review in the light of best practice in that area.  We regret any hurt felt by those involved and that the investigation in 1984 was not more thorough”

Thursday, December 17, 2009

Death of Russian leader with an Irish twist

Marshal ZhukovTHE former acting Prime Minister of the Russian Federation in the early stages of the Yeltsin era took place on December 15th and it had an Irish twist.  Yegor Gaidar was only 53 years old when he succumbed to the blood clot that killed him last Tuesday.  He was the inaugural Minister of Economy and Finance from 11 November 1991 until 19 February 1992, shortly after Boris Yeltsin assumed power.  He became acting Prime Minister of the Russian Federation  from June to December 1992.

Gaidar’s task was to transform the former communist state to a free market economy which he set about doing by deploying economic ‘shock therapy’.  This was based on the abrupt elimination of price and currency controls, the withdrawal of subsidies and the liberalization of trade within the Russian Federation as well as the large scale privatisation of state owned assets.

Several American economists backed this approach including Jeffrey Sachs then a Harvard professor but not of Columbia University New York.

The consequence of this approach was chaos and the looting of assets by individuals who were to become known as oligarchs.  Industrial output collapsed and unemployment soared.  Famine and scarcity was rampant.


Visit to Ireland


Gaidar came to Ireland in November 2006 to promote his book titled Lasting Time : Russia in the World at the National University of Ireland in Maynooth, Co Kildare.

He suddenly became ill, vomited and fainted in Maynooth and was rushed to James Connolly Hospital in Blanchardstown with suspected food poisoning where he was detained overnight.  This incident took place just five days after the death in suspicious circumstances in London of Alexander Litvinenko

Litivenko became ill on 1 November 2006 shortly after meeting two former KGB officials, one of whom, Andrei Lugovoi, had been Gaider’s bodyguard.  This visit took place shortly after Litivenko, a former Russian intelligence officer had accused the authorities of attempting to assassinate Boris Berezovsky, an anti-Putin oligarch who acquired the Russian oil giant Sibneft for a modest consideration and who controlled the major Russian television channel.

There had been speculation that Gaidar had been poisoned in Ireland but no conclusive proof supported this.

Mr Litvinenko is thought to have died after being exposed to the highly hazardous radioactive isotope polonium 210. On his deathbed, he accused the Russian president, Vladimir Putin, of being behind his death.

The Russian Embassy in Dublin said at the time that Mr Gaidar was diagnosed as suffering from gastroenteritis, and that his medical report states that his life was not under threat following this incident.

Wednesday, December 9, 2009

His Imperial Majesty, the Emperor of Japan celebrates his 76th birthday

IMG_4670-copy_edited-1 WHEN I was learning history by rote at a Christian Brothers school in Dublin over 40 years ago I never anticipated that I would be attending a party to celebrate the birthday of His Imperial Majesty, the Emperor of Japan.  It is also almost 20 years since his accession to The Chrysanthemum Throne, the oldest continuing hereditary monarchy in the world (from 660 BC) and this was also celebrated.  But His Excellency, Toshinao Urabe, the Ambassador of Japan in Ireland played the role of a gracious and genial host to an interesting cross section of the great and the good last Tuesday evening at his elegant Foxrock residence.

Emperor of Japan

Emperor Akihito was born on 23 December 1933 and became Crown Prince on 10 November 1952.  His father, Emperor Hiroito died on 7 January 1989 and he acceded on 10 November 2000 as the 125th emperor.  The Emperor of Japan is the only head of state in the world today accorded the title ‘emperor’.  He is head of the Japanese Imperial Family and also of the Shinto religion.

He married Empress Michiko on 10 April 1959 and they have two sons.  The older son, Crown Prince Naruhito, born 25 February 1960 has a daughter, who is ineligible to succeed to the Throne.  But the wife of their second son, their second son, Prince Akishino born 30 Nov 1965 gave birth to a son,  6 Sep 2006 Prince Hisahito, their 3rd child, on 6 September 2006 meant that succession by the male line to the Throne was assured after a gap of 41 years.

The Emperor of Japan had been considered an all-powerful spiritual and temporal leader from the time of the Meiji Restoration in 1868 until the Japanese surrender that ended World War II,

The Imperial Japanese Armed Forces spent the first half of the twentieth century conquering vast swathes of Asia, fighting the Russians and the Americans, and threatening Australia and New Zealand. A new Steven Spielberg television mini-series created in Australia titled The Pacific which chronicles this will become available in the New Year and will feature my son Stephen playing the part of a US marine on the Japanese coast.  Japan’s defeat in 1945, however, prompted Emperor Hirohito was forced to renounce his divine status, as well as all direct political power.

According to the Constitution of Japan, Akihito is a "symbol of the state and the unity of the people, deriving his position from the will of the people with whom resides sovereign power."

The Emperor of Japan has official duties that include receiving foreign dignitaries, awarding decorations to Japanese citizens, convening the Diet, and officially appointing the Prime Minister as selected by the Diet.

This narrow scope leaves Akihito with a lot of free time to pursue hobbies and other interests.  He typically rises  at 6:30 every morning, watches the news on television, and then goes for a walk with the Empress Michiko around the Imperial Palace in downtown Tokyo.

If the weather is unpleasant , Akihito drives in his 15-year-old Honda Integra. Reportedly, he obeys all traffic laws even though the roads in the Imperial Compound are closed to other vehicles, and the Emperor is exempt.

The mid-day is filled with official business: greeting foreign ambassadors and royalty, handing out imperial awards, or performing his duties as a Shinto priest.

If he has time, the Emperor works on his biological studies. He is a world-class expert on goby fish, and has published 38 peer-reviewed scientific papers on the topic.

Most evenings include official receptions and banquets. When the Imperial Couple retires at night, they enjoy watching nature programs on TV and reading Japanese magazines.

Like most royals, the Japanese Emperor and his family live an oddly isolated lifestyle.  They apparently have no need of cash, they never answer the telephone, and the Emperor and his wife are said to avoid the internet. All of their houses, furnishings, belong to the state, so the Imperial Couple do not own any personal belongings.

The true role of the current emperor of Japan seems to be two-fold: to provide continuity and reassurance to the Japanese people, and to apologize to the citizens of neighbouring countries for past Japanese atrocities.

Emperor Akihito has made particular efforts to repair relations with adjacent countries such as China, South Korea, and the Philippines.  Emperor Akihito has visited Ireland twice ~ in 1985 as Crown Prince and in May 2005.


Ambassador Urabe

IMG_4678-copy_edited-2 Toshinao Urabe (59) became Ambassador to Ireland on 30 January 2008 along with the Ambassadors of Ukraine, Vietnam and Bujina Faso

He graduated from Hitotsubashi University (BA: Law) and joined the Ministry of Foreign Affairs in 1974. After two years of language training in France, he joined the Japanese Embassy in Cairo as Third Secretary in 1977 and observed President Sadat pursue his peace detente towards Israel.

Returning to Tokyo in 1979, he participated in the organisation of the first Tokyo summit in 1979 and the second in 1986 before being appointed Deputy Chief of Mission in the Embassy in Colombo.
In 1988, Ambassador Urabe returned to Tokyo as Deputy Director for Policy Co-ordination of the Minister’s Cabinet and was involved in the coordination of the Ministry’s response to the collapse of the Berlin Wall and the first Gulf War.

After a brief Directorship at the Oceania Affairs Division from November 1990, he was called in at short notice to serve as Private Secretary to the Vice Minister for Foreign Affairs in July 1991. He was subsequently posted in Canberra in 1993 and Bangkok in 1996, during which time he observed the evolution of the economic crisis of 1999.

He again returned to Tokyo in 1988 and was promoted to Director of Financial Affairs of the Minister’s Cabinet. In 2000 he was appointed Consul General in Atlanta where he observed the election of President George Bush and 9/11.

In 2002, while serving in Seoul as Deputy Chief of Mission, he focussed on bilateral relations while keeping an eye on the presidential election and the North Korean issue. 

Urabe was posted to Paris in 2005 as Deputy Head of Mission and observed the transition from President Chirac to President Sarkozy.

Monday, December 7, 2009

Should Ireland review diplomatic ties with The Vatican?

Papal Apartment

Why should a rain-sodden, destitute and spiritually bankrupt nation on the on the fringes of Western Europe continue to tolerate a Machiavellian and mischievous diplomat as Dean of its Diplomatic Corp when not one, but two incumbents, behaved so treacherously toward their host nation?

The sovereignty of The Holy See is captured in three treaties signed with Italy on 11 February 1929 acknowledged, among other things, the full sovereignty of the Vatican and established its territorial extent; however, the origin of the Papal States, which over the years have varied considerably in extent, may be traced back to the 8th century.

The oldest diplomatic service in the world is that of The Holy See when legates were originally essentially spiritual emissaries.  Permanent papal representatives began to appear In the mid-15th century and by the 16th century, there are records of the  establishment of apostolic nunciatures in different countries, with an exchange of representatives between those countries and the Holy See. The very first apostolic nunciature was established in Venice in 1500.

As affirmed in the Vienna Diplomatic Convention 1961 of April 18, 1961, the Holy See's ambassadors, or apostolic nuncios, are considered the deans of the diplomatic corps of the country to which they are accredited by agreement with the receiving State. The Holy See currently exchanges diplomats with 162 nations.

Canon Law 364 defines the duties of a legate: "to send information to the Apostolic See on the conditions of the particular churches ...; to assist the bishops by action and counsel, while leaving intact the exercise of the bishops' legitimate power; to foster close relationships with the conference of bishops ... ; to transmit or propose the names of candidates to the Apostolic See in reference too the naming of bishops ..."  There is precious little evidence of assisting bishops by actions and counsel in Ireland when the issue is child sex abuse.

The Vatican

Popes in their secular role ruled portions of the Italian peninsula for more than a thousand years until the mid 19th century, when many of the Papal States were seized by the newly united Kingdom of Italy. In 1870, the pope's holdings were further circumscribed when Rome itself was annexed. Disputes between a series of "prisoner" popes and Italy were resolved in 1929 by the three Lateran Treaties, which established the independent state of Vatican City and granted Roman Catholicism special status in Italy. In 1984, a concordat between the Holy See and Italy modified certain of the earlier treaty provisions, including the primacy of Roman Catholicism as the Italian state religion. Present diplomatic concerns of the Holy See include religious freedom, international development, the environment, the Middle East, China, the decline of religion in Europe, terrorism, interreligious dialogue and reconciliation, and the application of church doctrine in an era of rapid change and globalization. But their concerns do not encompass the the sodomy of Irish children by far too many priests. 


Diplomatic relations with Ireland

The failure of the Congregation for the Doctrine of the Faith at The Vatican to provide information to The Murphy Commission on reports of clerical child sexual abuse from 1975 to 2004 which had been conveyed to the Congregation by the Archdiocese of Dublin highlights that the Irish people of all religions, and none, have a political and a civic relationship with The Holy See that is separate from its ecclesiastical relationship with Catholics.

The decision by two incumbents' of the office of  Papal Nuncio to Ireland in 2007 and in 2009 not to forward to the Commission all documents in his passion relevant to the Commission’s terms of reference cannot be construed as other than a demonstration of contempt towards a Commission that is independent of the Government and towards the Irish people for whom cooperation was an issue of vital national importance.

There is clearly no point in Ireland pursuing a high-level, but non-productive and inert, diplomatic relationship in such circumstances. I therefore agree with the suggestion of Des O’Malley that the Irish Embassy in Italy ought to take care of whatever diplomatic business arises with The Vatican on a non-residential basis.

Dean of Diplomatic Corp

The passage of the 5th Amendment to the Irish Constitution deleting the text conferring the recognition of the State on the 'special position of the Holy Catholic Apostolic and Roman Church as the Guardian of the Faith professed by the great majority of the citizens' on 5 January 1973 must surely challenge the practice of the Papal Nuncio continuing automatically to be the Dean of the Diplomatic Corp in this country. If it is necessary to appoint a Dean why not pursue the practice in other countries where the longest-serving ambassador fulfils this largely ceremonial role? This would ensure that this role is undertaken by a range of ambassadors over time and the Government and the people are less likely to be humiliated when the titular Head of the Diplomatic Corp chooses to ignore the authority of the State on ascertaining the truth with respect to vile criminal, carnal acts.

Wednesday, December 2, 2009

“Twaide up to a bigga house” Bank of Ireland

2009 11 25_1274 THE other morning I wondered if I had awakened on April Fools Day. it was stills dark as my transistor radio came to life and the morning news reported that the awful devastation from flooding throughout the country was now impacting the capital. Then there was an advertisement from Bank of Ireland Mortgages urging listeners’ “to twaide up to a bigga house”. 

I gathered my chattels and then I spotted the house of my dreams, pictured above.  Perhaps I really should escape the park bench,  which is my winter home, having recovered form the symptoms of swine flu and apply to Bank of Ireland Mortgages with my Roma gypsy lover before she starts her 10-hour shift begging from the early morning commuters and offering herself to truck drivers at the Ferryport.

I thought how tuned in Bank of Ireland are to the sentiment of the country. Those that are not bailing out flood water are coping with 413,000 on the Live Register, 12½% unemployment, the prospects of further cuts in income for one reason, or another. Had the captains of finance had become the admirals of empathy, equipped with new periscopes?

Bank of Ireland My mind wandered again and I imagined what would Bank of Ireland be like if it were a human being and not a corporate entity. I had this vivid image of an osteoporosis-stricken female in her seventies, who had lost 37% of her bone density, strutting along a beach in The Gambia. Her hair had once been blonde, but now it resembled dry bleached straw under the unforgiving late morning sun. Her heavily tanned body was almost fully exposed as all that covered the critical wrinkles  was a bikini bottom made from dental floss. While her appetite for pleasure and hedonism was infinite her finer assets were no longer as elegant as they once had been. She had seduced an East African migrant, 50 years younger than her, who was a vendor on the beach selling fresh pineapple to tourists. A woman with an established lifestyle of elegance, a wheezing voice and rustic charm, she also had great ambitions for him, her horny, insatiable go-getter. His formal education ended at the age of nine but she envisaged him becoming her house boy at her suburban Dublin mansion, Chew Fatima. His Bermuda shorts would be replaced by tailored trousers and a white Charvais shirt complete with silver plated cuff links. An occasional visit to a barber was intended to make him socially at ease with the the other court jesters already employed in the cellar of the mansion.

The Governor of the Bank, Mr Molloy, appeared in Leinster House last week to brief the legislators about current trends and future prospects. He was accompanied by the young buck his predecessor hired to mind the shop and report the Bank’s losses every six months, most of them attributable directly to himself. Old Mr Molloy has been around for a long time. His value is not just in what he knows but who he knows.  The Long Fellow and The Short Fellow ran the show in Ireland when his career commenced. Éamon de Valera was Taoiseach and Seán T O’Kelly was President and principal kisser of the rings of all bishops’ and whatever other part of their anatomy required soothing.

Molloy described to the legislators  ‘the appreciation’ of the Bank for the ‘significant’ support provided by the people. Allowing for the Doctrine of Mental Reservation the significance of this support is that the people have provided €3.5 billion to a business with a market capitalisation of €1.68 billion. He outlined how the Bank is meeting the needs of Irish customers, business and personal, many of who are skittish about credit availability and the rules and procedures to access same. For the record – the Bank has deposits of €34 billion from Ireland and has loans due from Irish customers of slightly over €62 billion.  They obtain around €53 billion of deposits elsewhere but the Bank is coincidentally curtailing its business activities elsewhere.

I was particularly intrigued by Old Mr Molloy’s remarks about mortgages. The country as a whole owes €147.8 billion in residential mortgages as of the end of October 2009. The Bank of Ireland share of this is €28 billion of which 21,000 of their 196,000 Irish mortgage customers are in negative equity-land. €1.5 billion has been lent in the first nine months of 2009, of which 31.6% went to first time buyers. This implies they lent €1.05 billion to other categories. They consider 350 mortgage applications per week – 18,000 a year who are acquiring properties in flood plains, settlements, townships of more remote fields of thistles – always mindful of the circumstances of the 3,436 individuals who claim tax relief in respect of urban renewal, the 1,149 who claim tax relief in respect of town renewal and, of course, never forgetting the 1,167 who claim tax relief for seaside resorts or the 2,137 who qualify for tax relief in respect of rural renewal.

Mr Molloy saw mortgage trends that no other white man has seen in Ireland this year – signs of an uplift designed to raise the spirit of harassed legislators. This, he said, is reflected in “an improvement in overall applications and drawdown trends compared with previous periods”. Wow!  Could a Nigerian even outclass this man’s supreme optimism?

This is the official position with respect to mortgage approvals and payments in Ireland for the first six months of 2009 compared to the same period in 2008:


New Houses

  2008 2009 Change
Number of loans approved 15,805 7,264 -8,541
Value of loans approved €4,164.2 €1,592.7 -€2,571.5
Number of loans paid 14,759 4,732 -10,027
Value of loans paid €3,971.1 €1,117.5 -€2,853.6
Average loan paid €269,000 €236,158  


Secondhand Houses

  2008 2009 Change
Number of loans approved 19.736 7,739 -11,997
Value of loans approved €5,784.1 €1,948.7 -€3,835.4
Number of loans paid 30,033 12,216 -17,817
Value of loans paid €8,430.1 €2,921.1 -€5,509
Average loan paid €280,690 €239,120  


I am not really sure what this old man’s optimism is based on.  Perhaps he is thinking of the first year he worked for the Bank of Ireland when 2,000 women in Ireland, who already had 10 children, gave birth to an eleventh.

Tuesday, December 1, 2009

Begging bowl out at Dublin Docklands

2009 10 10_0717 IS it necessary for the taxpayer to invoke the Doctrine of Mental Reservation when reading the recently published 2008 annual report of Dublin Docklands Development Authority (DDDA), evaluating the opaque character of its corporate governance since its inception in 1997 and its overall viability? Its annual report lacks candour. It fails to inspire confidence in its board and taxpayers’ should be alert lest they be plundered to compensate for a disgraceful episode of buccaneering speculation.

DDDA lost €212.9 million in 2008 and its net assets withered from €177 million in 2007 to €26 million in 2008. This did not arise through the diligent prosecution of its corporate mission - to be a paragon of sustainable development in the inner city that would offer a major contribution to the social and economic prosperity of Dublin and the whole of Ireland. But it did occur as a consequence of harum-scarum commercial and residential property speculation that could only have succeeded if potential customers had become submerged with overwhelming and unsustainable debt.

The former city dump at Ringsend was purchased for €412 million in 2006, a price well in excess of what it was professionally valued at that time. This property was valued at €50 million on 31 December 2008, a write-down of 87%. The former chief executive informed an Oireachtas committee in February 2009 the revaluation would be 30% lower than the purchase price – a clear inconsistency within a matter of weeks. He has departed from DDDA but there is no explanation in the annual report of either the circumstances, or the terms, of his departure.

Sixty percent of the Ringsend development was to have been residential with the most basic unit, a one bedroom apartment adjacent to an incinerator and the city water purification facility, purportedly intended to sell for €500,000. The average gross household income of a person(s) with a mortgage in 2006 was €58,190 so a prospective purchaser with a 92% mortgage would be borrowing €460,000, or 8 times income. The 2008 annual report bemoans ‘the huge problems caused to DDDA by the collapse of the property market’. Perhaps it would be more candid and honest to recognise that the final episode of the economic terrorism of the Celtic Tiger had been averted from a consumer perspective.

The 2008 audited accounts for this state agency include a charge of €5.43 million for legal fees. The Master of the High Court consistently criticises lawyers’ costs but there is no indication as to who the recipients of this money are; what the basis for the costs are, or any rational foundation for the taxpayer to see a basis of value for money. Given that there are reputedly 800 unemployed solicitors and presumably a proportionate number of under-employed barristers, this is a very large unexplained cost incurred by an agency that has never winced when it comes to throwing money around.

The board of this agency has failed its stakeholders, gambled its resources and lost. The chances of DDDA ever accomplishing its original mission are as probable as me becoming the Mayor of Monte Carlo. Does the Minister for the Environment, Heritage & Local Government intend to declare this a failed agency and close it, or is this to become another example where speculative profits are the trophy of speculators’ but uninsurable risks and the flotsam and jetsam associated with these, are the burden of taxpayers' while they distract themselves planting bluebells?

Sunday, November 29, 2009

Dublin bishops’ cited for priests’ sex abuse cover up since from 1975

2009 11 29_1227_edited-1 The Murphy Commission is the third major State sponsored investigation into child sex abuse in Ireland perpetrated by Catholic clergy.  Its report was made public on Thursday, November 26th.

The first investigation, The Ferns Report, was published in October 2005 and concerned the abuse of children in the Diocese of Ferns.  The second investigation, The Ryan Report, concerned the abuse of children by religious orders, male and female, in industrial schools.

The Murphy Report bears the name of its chairman, Mrs Justice Yvonne Murphy, a Circuit Court judge since March 2006.  She is the wife of Mr Justice Adrian Hardiman, a member of the Supreme Court of Ireland.

The Murphy Commission found that the Bishop Donal Murray, currently Bishop of Limerick but formerly an auxiliary bishop of Dublin did not deal properly with suspicions and concerns that were expressed to him an abusing priest and that his failure to investigate suspicions was inexcusable.  Murray himself, in 2002, accepted that he had not dealt well with the situation.  This case concerned Fr Thomas Naughton about whom sex abuse complaints were filed by 20 people and there are suspicions of additional episodes of sex abuse involving other unidentified people.

Following the publication of The Murphy Commission report there have been calls for Murray’s resignation to which his response has been that at no time did he receive and allegation of sexual abuse but that his inability to determine the truth was attributable to his own lack of skill and experience.

Donal Brendan Murray is 69 years of age.  A priest since May 1966, he was appointed auxiliary bishop of Dublin in March 1982 by Archbishop Dermot J. Ryan at the age of 42 and held this position for 14 years until his appointment to Limerick.  Ryan, along with his predecessor, Archbishop McQuaid and his two successors, Archbishop McNamara and Cardinal Connell have been severely criticised in The Murphy Commission Report for not reporting sex abuse allegations to the Irish police from the 1960’s to 1995.

The publication of the report of The Murphy Commission ought to have promptly triggered the instant and simultaneous resignation from their current post of the surviving bishops and monsignors cited in the report rather than a display of stubborn obduracy in the case of some and silence, evasion and cunning in the case of others. That gesture would have recognised the gravity of the findings, the pain and damage inflicted on the surviving victims, the premature deaths of those who didn’t survive and the need for a response from the Church that attempts to be coherent, comprehensive, credible and effective. It need not necessarily have precluded the reappointment of some of those concerned.  They would then at least enjoy the confidence of their future contribution having been validated in the light of the Commission's findings rather than groping around a grossly dysfunctional organisation whose very survival is threatened.  It would also allow the Catholic Church organisation in Ireland to define its future.

The response that unfolded highlights the lack of personal accountability within the Church. Bishops' are only accountable to the face that smiles at them in their foggy shaving mirror each morning. Their record of obstructively suppressing the details of clerical sex abuse and paedophilia is grotesque but their subsequent posturing in lamentable. Bishops are apparently never fired. Those that depart ‘agree to resign’ and even our Taoiseach and their own colleagues are reluctant to utter a comment that might hasten their departure as if they are respectfully curtseying to a dictator or kowtowing to a despotic ruler.  The Papal Nuncio, Dr Giuseppe Leanza could also allow his voice to be heard beyond to portals of the Dublin diplomatic cocktail circuit where is presence is generally friendly and companionable.  He may consider that his silence is self-effacing and discreet but it is also toxic and contributes to the contagion of the catastrophe.

When allegations of the recurring sexual harassment of seminarians in St Patrick’s College Maynooth were made in the early 1980’s against the Rev Dr Michael Ledwith Vice President of the College by the Senior Dean, Fr Gerard McGinnity (now parish priest of Knockbridge, Co. Louth), these were completely and abruptly dismissed without adequate investigation. The bishops’ response of was to ostracise and demonise the whistle-blower and to promote the target of the accusations to President of the College in 1985, a post he held until he abruptly resigned in 1994 following allegations that he abused a 13 year old boy in the early 1980’s, details of which were set out in The Ferns Report. When Fr McGinnity completed a one-year sabbatical in Rome in 1985 the late Cardinal O’Fiaich told him “the bishops are gunning for you Gerry”. That sentiment has prevailed and Church authorities have never offered Fr McGinnity either an apology, or reparation, in the subsequent 25 years. 

While the commitment to transparency demonstrated by Archbishop Martin is commendable that alone is not sufficient to inspire confidence in a Church that staggers from one catastrophic self-inflicted crisis to another. If the Church in Ireland cannot meet its basic obligations of decency, probity and compliance with the criminal law it will soon cease to exist except as a topic of academic curiosity to a future generation of anthropologists conducting research at interpretive centres that were once church buildings.  The time has arrived to judge the Church by its actions, decisions and gestures not by its vacuous apologies nor its meaningless pleas for forgiveness.

Friday, November 20, 2009

Macedonia makes haste on the road to virtue

Macedonia PM THE Prime Minister of Macedonia, since August 2006, Nikola Gruevski (aged 39), came to Dublin yesterday to promote his country’s candidacy for EU membership and to present its attractiveness as a destination for foreign direct investment. His delegation included the Macedonian Ambassador the the United Kingdom and Ireland, Her Excellency Mrs Marija Efremova.

Macedonia, along with Turkey and Croatia are candidates for EU membership and both must now travel along the tortuous road to virtue before the yellow ribbons of welcome hang from EU Headquarters.

Macedonia achieved its independence from Yugoslavia in 1991. It was the least developed of the former Yugoslav republics in 1991, contributing only 5% of federal output.

Macedonia is slightly over one-third the size of Ireland and has a population of two million. It should not be confused with the ancient region in the north-east of Greece, the birthplace of Alexander the Great, which bears the same name. There has been a dispute with Greece about the name of the Republic of Macedonia arising from duplication that remains unresolved, although trade relations between these two nations has stabilized since 1995 when Greece lifted a 20-month trade embargo.

Unemployment in Macedonia is approximately 34% and almost 30% of the population exist below the poverty threshold. The average monthly wage is €476. The corporate and personal tax rate is 10%. Its GDP is about 10% of that of Ireland ($18.8 billion in 2008).

EU Membership

A progress report was published by the EU last month and it points to encouraging developments under a number of criteria with respect to Macedonia.

Political criteria is sufficiently fulfilled with respect to the conduct of elections, stability of Government and effectiveness of parliament

Some progress is reported in the area of judicial reform and the reform of public administration but further efforts are needed to enhance transparency. Macedonia ranks 71st in the 2009 Transparency International corruption perception index., tying with neighbours’ Bulgaria, Greece and Romania. Further progress is necessary to demonstrate the independence and impartiality of the Macedonian judiciary.

The legal and institutional framework for human rights and the protection of minorities is broadly in place but more refinements are necessary. – including alleged ill-treatment by the Macedonian police and the protection of women from domestic violence.

Macedonia is well advanced with respect to the economic criteria for EU membership and has continued to make progress in the development of a functioning market economy. Privatisation is largely completed but the quality of public spending is giving rise to concern especially in relation to transfer payments in excess of inflation, increased public debt, reduced foreign direct investment.

The capacity of Macedonia to assume the responsibilities of EU membership has improved with respect to issues such as transport, customs, taxation, justice, freedom and security. Less progress has been achieved with respect to energy, the environment, employment and social policy.

Conclusion of EU Commission, Oct 2009

Macedonia has substantially addressed the key priorities of the accession partnership. On this basis, and in view of the overall progress of reforms, the Commission considers that the country sufficiently fulfils the political criteria set by the Copenhagen European Council in 1993 and the

Stabilisation and Association Process. The country has moved closer towards becoming a functioning market economy and has made progress in a number of areas linked to its ability to take on the obligations of membership.

In the light of the above considerations and taking into account the European Council conclusions of December 2005 and December 2006, the Commission recommends that negotiations for accession to the European Union should be opened with Macedonia.

Maintaining good neighbourly relations, including a negotiated and mutually accepted solution to the name issue, under the auspices of the UN, remains essential.

Wednesday, November 18, 2009

Red-neck AIB Mujahadeen jihad designed to humiliate the Government

Bankcentre THE imperial tribal elders’ at AIB failed to fulfil the Government preference to appoint an external candidate to the top job and attempted, through stonewalling,  to bust the salary cap imposed by the Government.  Their smug and conceited attitude was tantamount to economic terrorism and had they prevailed over the Minister for Finance they would have humiliated this nation.

The Chairman of the Remuneration Committee, after being cudgeled into submission,  emerged wearing sandals from from his wigwam today and rattling his worry beads wailed, whinged and moaned in the media about the prospect of their chosen candidate earning reduced remuneration and how the salary prescribed by the Government was an impediment to attracting candidates. 

It is a pity that their chosen candidate didn’t choose to make his brilliance available to the world’s financial markets instead of dealing with an extra €1 billion of bad debts at AIB if he is to be so terribly underpaid and earning less than the plastic bag salesman paid by the State at Dublin Airport.

The gilt-edged genius that led the three Irish banks throughout the property bubby receive €34,807,000 over the five years from 2003 to 2007.

The remuneration of the chief executive of AIB during the property bubble was:

Year Incumbent Salary Total Remuneration
2003 M Buckley €660,000 €1,445,000
2004 M Buckley €775,000 €1,399,000
2005 to 30 Jun M Buckley €430,000 €1,459,000
2005- fm 12 May E Sheehy €520,000 €1,104,000
2006 E Sheehy €860,000 €2,436,000
2007 E Sheehy €916,000 €2,105,000
TOTAL €4,161,00 €10,048,000


The remuneration of the chief executive of Bank of Ireland during this period was:

Year Incumbent Salary Total Remuneration
2003 M Soden €800,000 €1,610,000
2004 M Soden €900,000 €1,318,000
2005 to 29 May M Soden €167,000 €1,594,000
2005 fm 3 Jun B Goggin €911,000 €1,115,000
2006 B Goggin €1,000,000 €2,525,000
2007 B Goggin €1,100,000 €3,998,000
TOTAL €4,878,000 €12,160,000


To complete the profile of those Irish banks that have gouged €11 billion of taxpayers’ money, a gesture, described in the latest Interim Report of Bank of Ireland as ‘significant’ in its case – the remuneration at Anglo Irish Bank is set out below:

Year Incumbent Salary Total Remuneration
2003 S FitzPatrick €494,000 €1,885,000
2004 S FitzPatrick €649,000 €2,346,000
2005 S FitzPatrick €775,000 €2,721,000
2005 fm 22 Sep D Drumm €6,000 €19,000
2006 D Drumm €663,000 €2,354,000
2007 D Drumm €956,000 €3,274,000
TOTAL €3,543,000 €12,599,000

Friday, November 13, 2009

Risk displacement strategy of Irish Hotels Federation is to pimp Irish taxpayers

2009 09 01_0378_edited-1 THE latest posse of knuckle-dragging parasites attempting to loot Irish taxpayers’ are the nation’s  hoteliers’.   Their mouthpiece, The Irish Hotels Federation, want to remove investor risk by slipping their greasy fingers around you tax payments because it has dawned on them that their industry has been an economic basket case since 2002 and they need to eradicate all risk to their investors!  The investors comprise fat cats who opted for tax avoidance rather than taxation.   

***** The Grand Vision  *****

This tale of woe has its origins in 2003 when The Irish Hotels Federation successfully hollered and yelped for tax allowances on capital investment to be spread over 7 years rather than 25 and their wish was granted. There were 42,235 hotel bedrooms in 860 hotels at the end of 2002. The Irish banks sector provided credit of €2,862 million to the hotel sector at that time (equivalent to €67,763 per room, with a loan-to-value ratio of 1.4) . If the capital tax allowances they so desperately sought were granted they intended to add 3,707 bedrooms in 45 new hotels bringing the total complement to 45,942 bedrooms in 905 hotels by the end of 2005.  The new rooms were to generate additional annual sales revenue of €61.85 million, having cost €463 million to construct (average construction cost €125k per room).   Another  important objective was to attract international hotel companies, such as Marriott, Radisson, Hilton, Four Seasons, Westin, Quality Hotels to operate them.

The lynchpin to achieve this was to attract the support of fat cats – high net-worth individuals with high anticipated tax liabilities in Ireland over the subsequent 7 years that could be avoided through the availability of capital allowances on new hotel projects.  If these allowances were not to be granted that “would have serious consequences of the industry as whole”.  The fat cats, the IHF said, would have otherwise invested their abundance outside Ireland and on villas in the Mediterranean.

A hotel building project costing €12 million would attract tax allowances over 7 years worth €4.92 million.  The fat cat would invest half of this, €2.46 million and the remainder would be borrowed with recourse to no other assets that that hotel.  The grand plan was that after 7 years milking tax allowances the property could be sold at multiples of its construction cost.  Unfortunately for those concerned, the property bubble burst.  Many of these hotels never made profit so their capitalised value is also down the toilet.  Therefore, the risk of loss must be passed to the taxpayers’ and ranked higher than welfare in priority. 


The ensuing dilemma

The Irish hotel industry in 2009 apparently comprises 917 hotels with almost, – and, wait for it, 60,000 bedrooms. Approximately €1 billion has been claimed in capital allowances by the fat cats since 2003 and a further €600 million is potentially claimable. While hotel bedroom capacity increased by 42% the brilliant and astute Irish banks increased credit to the hotel industry increased by 188% to over €7billion (equivalent to €116,000 per room – but with a loan to value ratio of 1.88). 

Bed-night demand by overseas visitors increased by 33% to 13,585,000 between 2002 and 2008 . As you can glean –everything is a little out of kilter and urge of fat cats to avoid paying Irish taxes ran somewhat ahead of reality and needs of the market place.  Not enough consumers came traipsing in their hotel doors willing to pay exorbitant prices and tolerate the impersonal  service provided by a badly paid, poorly trained, non-unionised. Eastern European labour force.


Foreign visitor trends

Total bed nights via overseas visitors increased by 15% from 2000 to the end of 2003.  The number of US visitors dropped by 140,000 in 2001 but recovered by 437,000 in 2002 before dropping by 106,000 in 2003.  The main source of growth was from Great Britain – almost one million extra bed nights between 2000 and 2003.  But it was visitors from other parts of Europe that made the numbers expand between 2003 and 2008 – from 2.4 million bed nights to 5 million.

The annual capacity of the Irish hotel sector is of the order of 21 million room nights and the number of beds per room trend has increased.


Cue the Pimps

When the consumers don’t show up to be financially castrated the next category to be raped is the taxpayer.  The Irish Hotel Federation looked into its soul and found the practice of reducing prices, so that they somehow relate to the consumer’s perception of value, is a flawed practice because it leads to market failure. Their pre-Budget submission this year ‘no more taxes but bucket loads of subsidies’.  They want State support to survive the recession caused by the banks who lent them too much money.  The natural consequence of any failed commercial adventure is that they go out business and that’s what these hotels need to realise.  Perish and get lost.

This means essentially that industry revenues are lower because extra transactions do not materialise. “The traveller is becoming more demanding in securing value for money” – their words, not mine.

Pimps’ begging list

Facilitate the closure of 217 hotels built since 2005 containing 15,600 rooms through the following ‘exit strategy’.  They call for ‘a managed process’.

  • If these hotels close, the IHF requests that capital allowances already claimed should not be clawed back from the fat cats by the Revenue Commissioners on grounds that the hotels have been built less than 7 years ago. They argue that allowing hotels to exit without consequences for the investor in terms of the value of the tax allowances would have no financial implications for the Exchequer compared with the situation where these remain open for 7 years”.  There’s insight for you! 

Well, they certainly do have major financial implications.  The Government has decided to save €233 million by cancelling Christmas welfare bonuses.  A €1 billion claw-back could pay the welfare Christmas bonus four times over were the Revenue Commissioners to nail these belligerent bastards to the contingent liabilities.

The want the Financial Regulator (if he’s awake) to oblige Irish banks to recognise bad loans in hotels. But the banks are playing ‘cute whore’. 

They are reluctant to do define a loans as bad because if such a bank asset is not realisable they need to raise more core capital and they are not in a position to do so – hence NAMA

This grand plan could also mean that if a large portion of the extra €4 billion in bank credit provided since 2003 becomes bad, the taxpayer is left with the liability.

  • The want a Hotel Restructuring Fund to arbitrate in situations where currently insolvent hotels are deemed to be (do I construe systemically?) important for the recovery tourism against hotels which maybe solvent currently  but which (wait for this …) “have little or no strategic importance to the development of the Irish tourism product internationally”!  The profitable business may have no strategic importance internationally but some loss-making derelict incompetent ought to be bailed by the taxpayer because he is ‘strategically important’.  What unadulterated crap!

Having written off hotel debts and saddled the taxpayer with them, the parasites reckon that such hotels could be recycled back into the market at low capital cost and this would have long-term implications for competitors so they anticipate that this risk would need to be managed.

  • Next on the list is a High Level Working Group, with large lactating breasts, who might remove hotels from the tourist accommodation sector and operate in sectors that do not threaten stability.  Presumably multi-ethnic brothels, homes for abusing priests, or lesbian nuns might fit the bill here.
  • A Government Loan Guarantee is the next step on the road to risk elimination.
  • Local Authority charges should be frozen to “improve competitiveness” .

Finally, now that all risk has been shoved onto the taxpayer the IHF advocates ‘transparency’.  The morons have apparently been charging different tariffs at home and overseas – ripping off foreign tourists and taking what they can get from the locals.

Wednesday, November 11, 2009

AIB Board need to get off their vain, egotistical, stubborn arses and recruit an outsider as CEO

2009 10 25 AIB HQ AIB have been flying kites about the prospect of its recently appointed Chairman, Dan O’Connor, becoming an executive chairman. O’Connor, who is also a director of CRH Plc since June 2006, became an AIB director in 2007 when the property bubble had burst. He succeeded Dermot Gleeson as Chairman some months ago.

But what would such an appointment mean for corporate governance at AIB and public confidence?  There are three and a half billion reasons why AIB need a new broom in the corner office and these have to do with sweeping away the viral influence and toxic legacies of Mr Scanlon, Mr Mulcahy, Mr Buckley and Mr Sheehy, each of which severely degraded the stature of AIB.  Being systemically important does not imply that those trusted with this ‘importance’ ought to consider themselves immune to the architecture and principles of acceptable standards of corporate governance.

Cadbury Report on Corporate Governance

The Cadbury Report on Corporate Governance was published in December 1992.  There was extreme concern at that time about standards of financial reporting and accountability and this was heightened by the closure of Bank of Credit and Commerce International (BCCI) and the Robert Maxwell saga.

BCCI was closed after major episodes of fraud and manipulation prompting thousands of creditors to sue the Bank of England for failure to properly oversee BCCI. Robert Maxwell drowned in November 1991 when he fell overboard from his yacht, the Lady Ghislaine. which has been cruising in the vicinity of the Canary Islands.  His publishing and media business collapsed as a consequence of fraudulent transaction that he perpetrated, including the illegal use of pension funds.

The Cadbury Report established a code of best practice intended to achieve adequate standard of good governance for all listed companies and those listed on the London Stock Exchange were to be obliged to state if they are, or are not in compliance.


Role of Chairman

The chairman’s role in securing good corporate governance
is crucial. Chairmen are primarily responsible for the
working of the board, for its balance of membership subject
to board and shareholders’ approval, for ensuring that all
relevant issues are on the agenda, and for ensuring that all
directors, executive and non-executive alike, are enabled
and encouraged to play their full part in its activities.
Chairmen should be able to stand sufficiently back from the
day-to-day running of the business to ensure that their
boards are in full control of the company’s affairs and alert
to their obligations to their shareholders.


Separation of Powers

Given the importance and special nature of the chairman’s role, it should in principle be separate from that of the chief executive. If the two roles are combined in one person, it represents a considerable concentration of power.
We recommend, therefore, that there should be a clearly
accepted division of responsibilities at the head of a
company , which will ensure a balance of power and
, such that no one individual has unfettered
powers of decision.
Where the chairman is also the chief executive, it is essential that there should be a strong and independent element on the board.  No such independence has been apparent on the board of AIB, Irish Life & Permanent, Irish Nationwide or Bank of Ireland who have behaved like myopic overfed sheep.  The board of EBS at least jettisoned their deadbeats promptly.


Recent Irish Financial Sector History

It doesn’t take a genius to understand the appalling consequences of concentrated power in two of the six financial institutions that are now standing with their begging bowls at the door of NAMA.

The overwhelming influence of Sean FitzPatrick provided him with an uncluttered platform to do what he wanted with impunity.  The behaviour of Michael Fingleton, at Irish Nationwide Building Society meant that 80% of the business of a mutual society was focused on property speculation and obscene financial self-aggrandisement on a woeful scale.

AIB has an appalling record of corporate governance which ranged from aping FitzPatrick, DIRT evasion, Insurance Corporation of Ireland collapse in 1985, flagrantly overcharging customers’, allegations of share price support for Dana Exploration through a transfer into the widows’ and orphans’ account in the AIB staff pension fund in 1988, personal tax evasion by former chief executive Gerald Scanlan, facilitation of endemic tax evasion by its own customers through illicit overseas accounts, chaotic supervision of its US subsidiary, Allfirst resulting in the Rusnak $691 million FX rip-off during the tenure of former CEO Michael Buckley, .  Everyone remembers the standards of corporate governance by these sycophants when they deferred like 18th century slaves to the whims of their KBI (key business influencer) Charles Haughey and Des Traynor 

I would be astonished if O’Connor is not an individual of the highest probity and virtue but the audacity of the AIB board attempting to subvert the wishes of the Government having stung the taxpayers’ for billions of €, is absolutely unconscionable. The destiny of this business rests with taxpayers’ not shareholders’.  The toxic corporate culture must be exterminated.  The ultimate failure of this brazen culture is in it flaccid impotence to maintain adequate core capital without State intervention and its final act of devastation was to the role it played to inflate the property bubble that collapsed the Irish economy, perhaps for a decade. 

Tuesday, November 10, 2009

Irish construction industry not pivotal to economic vitality

CIF THERE are facets of the construction industry in Ireland that have a most vile and debased legacy.  The 1980’s and 1990’s are littered with episodes of an endemic corruption.  The national planning process became the toy of county councillors’ and squalid developers’.  Their medium, bribes, was the currency of the realm stuffed into grubby brown envelopes, often delivered in the foyer of council offices or in  a local pub, directly after planning votes had been taken.  This was not a victimless crime.  Bad planning decisions meant low, or no, physical planning standards.  Cluttered housing estates and inadequate infrastructure, with partition walls of houses and apartments so thin that one set of neighbours could hear another set copulate, flushing their toilets, or taking a shower in an adjacent house became a common feature of suburban life. The losers were the citizens’ obliged to pay daunting sums for overcrowded, sub-standard residential accommodation. 

The next phase involved massive land arbitrage with fields of thistles in isolated locations trading for millions of € both prior and post the planning permission stage.  Our population started to expand in the mid 1990’s and by 2003 the circumstances that created a property bubble became mature.  The € became the day-to-day currency of Ireland in 2003 and interest rates were set by the European Central Bank.  Its decisions would not necessarily take account of local Irish credit circumstances.  There was no effective regulation and credit leached like a leaking sewer into the Irish economy. The sales of helicopters and luxury vehicles soared.  The badge of success was excess, vulgarity and self-aggrandisement.

We observed prospective newly built slums being released for sale in ‘phases’.  The difference between one phase and another were enormous price hikes based on no other reason that supplies could command it.  The Irish Government picked up higher tax revenues in the form of stamp duties, value added taxes and income taxes from an expanded construction workforce.  The losers’ continued to be the house purchaser who was obliged to borrow unsustainable multiples of a modest wage to fund this madness.  Several banking parasites offered mortgages with a loan-to-value ration of 100%, or more.  The creators of this orgy embraced the lifestyles of the medieval aristocracy – but without a change in personal social status.  Once an ignorant peasant – always a peasant, with or without a silk handkerchief and a booming culchie accent.

Today among Ireland is coming to terms with the debris of this orgy.  Markets are paralysed because there is no natural demand – quantitative, or financial.  The parasites that speak for the industry now want citizens to subsidise trade in non-existent markets.

WHEN I read the pre-Budget deliberations of Philip Crampton (50), Vice President of the Construction Industry Federation, I wondered if these has been prepared by a world-wise Harvard educated economist whose quest for a Nobel Laureate had been callously overlooked, or had it been prepared by an economically-illiterate bucolic peasant with an imagination honed in the Soviet era.  Crampton’s overall thrust is to  “stabilise the property markets”.  But is there  nothing more stable than a frozen, decaying, abandoned corpse?


CIF Shopping List

The shopping list includes a time-limited (presumably of 100 years duration)  tax-credit initiative for first time buyers of their members’ recently constructed, but unwanted, shanty huts built in thistle-choked fields adjacent to the Irish provincial townships’.  That incentive would directly benefit the pick-axe wielding galoots’ who created the property bubble and enable them pay their dues to the CIF so that there are funds to pay the €250,000 per annum salary to its emblematic Director-General.  The State must not induce moral hazard by recreating another phase of the property bubble.

They hold out ‘the prospect’ of the Government generating €1.2 billion in VAT.  But how is it proposed to derive sales of shanty huts for which there is no discernable demand?  That prospect is as realistic as the probability of a 60-year old woman bearing triplets each of mixed race ethnicity.

The CIF also support the abolition of residential stamp duty (simply abandon €400 million -  €1 billion of tax revenue) on second-hand houses – which they admit would not create a specific return to the State but “would underpin the market’s confidence and give home owners greater mobility in line with changing work and family circumstances”.  What inane rubbish!  But would you really expect anything else? 



A ‘time-limited’ tax credit means tax foregone that must be replaced by other taxes or additional debt above the €54 billion for NAMA and the current Irish National Debt of €73.26 billion. 

The October Exchequer Statement profiles an economy with a deficit of €22.7 billion exacerbated by a 16.5% drop in tax revenue.  Does Mr Crampton expect the potential purchasers (and others) to pay higher income taxes or VAT to fund this proposed tax credit? 

The potential of generating additional VAT from a market that is dead would require sales of €5.71 billion (22,840 new houses at €250k each).  This would require mortgage funding of €5.14 billion in an economy where mortgage debt is €148 billion and record levels of unemployment are escalating each week. The banks cannot maintain an adequate customer deposit base to sustain such borrowing and lend to the productive sector of the economy.  They are forced to reduce lending in order to sustain an adequate capital base.

Customer deposits at AIB dropped by €10 billion to €83 billion from January to June 2009.  Customer deposits at Bank of Ireland on 30 September 2009 were €87 billion but only €34 billion of this is attributable to Irish customers’ and the impairment charge on its Irish residential loan book increased by €54 million between March and September 2009.


Negative Equity

Some €52.72 billion of this was lent in respect of 265,000 new houses built while the Irish property bubble was inflating between January 2003 and June 2007.  A further €67.09 billion was lent to purchase 283,000 second-hand houses during this period. 

The retail value of these properties would have been approximately €125 billion if the loan-to-value ration of these loans was 95%.  It was, in practice frequently higher and based on spurious and unsustainable definitions of ‘income’. If the value of these properties has dropped by 40% since 2007 that would represent negative equity throughout Ireland of the order of €56 billion.  

The Bank of Ireland claim to have 21,000 mortgage customers’ experiencing negative equity.  If the €28 billion it has lent in residential loans accounts for 19% of the market is it not likely that it is connected to 19% of the 548,000 houses sold between January 2003 an June 2007?  If so, perhaps as many as 104,000 houses with Bank of Ireland loans are in the negative equity arena.  This, of course, adversely impacts consumer confidence and Mr Crampton’s dreams.


Abolition of Stamp Duty

The stamp duty derived in Ireland from property transactions between 2003 and 2008 was as follows:

Year Stamp Duty from land and property
other than stocks and shares
2003 €1,075,014,734
2004 €1,460,934,182
2005 €2,001,538,417
2006 €2,989,442,013
2007 €2,381,063,507
2008 €1,045,025,016


Last year stamp duty from property accounted for 60% of total stamp duty.  Stamp duty receipts between January and October 2009 were €729,151,000 of which perhaps €437 million is property related. 

Mr Crampton – the bubble has burst and the construction industry is no longer central to Irish economic recovery.  It may have a potential marginal contribution make.  30,000 mortgage holders are in arrears.  There will only be a recovery in this sector when your members provide a product that people actually wish to buy at a location that they desire at a price they can afford.  The galoots with pick-axes, the champagne, the brown envelopes and the helicopters will be humiliated into destitution and clinical insanity - pistol whipped by their voracious greed. 

Asset bubbles are created when the value and price of an asset diverge.  This is characterized in the housing sector when the potential yield from renting a property doesn’t have appropriate correlation with the price of that property – when the anticipated reward is in the form of a capital gain instead of an income flow.   If CIF members cannot deliver product at prices customers can afford they simply don’t have a viable business.