Tim Geithner helped sink Ireland

"France has no friends, only interests," said General Charles de Gaulle in response to a question from Winston Churchill. It's a telling reminder that in international relations it's one thing to talk about our "friends" in Europe or America or wherever, but quite another to believe such talk.

Saturday's Irish Times carried a column by economics professor Morgan Kelly in which he laid out the events that have led to our "economic ruin." If you've been following this story you already know that the Irish government and banks led us into an economic disaster and that the government then (& quite possibly now) didn't know what it was doing and made mistake after mistake.

Kelly not only points the finger of blame at Honohan for his "miscalculation," but also hints that Honohan undercut the Minister for Finance last November when he sided with his fellow Central Bankers on the European Central Bank Council rather than support the Minister who was refusing a bailout on onerous terms because he rightly understood that the goal of the ECB was to force us to take a bailout that they hoped would stop the panic spreading to other euro member countries.

Damning stuff. Arranged against Ireland were most of the power-brokers in the EU and ECB and, interestingly, US Treasury Secretary Tim Geithner {photo}. Kelly says that Geithner torpedoed efforts by the IMF to help the Irish government rid itself of the massive bank debts. In fact, Kelly says that "only one to speak up for the Irish was UK chancellor George Osborne," which goes a long way to proving de Gaulle right.

Ireland's only friend in its hour of need last November was Britain, although not because they love us but because a collapse here was more damaging to Britain than was the collapse of the euro.

I'm not in a position to argue with Kelly's analysis, but I'd like more than he gives me on Geithner's rationale for forcing ruin on us. Kelly implies that it's simply ideological: taxpayers should bail out failed banks. I'd love to imagine someone asking President Obama about this when he comes to be cheered on O'Connell Street and in Moneygall.

Why did his Treasury Secretary veto a deal that could have prevented ruin here? My guess is that European subsidiaries of American banks were afraid of the losses their European off-shoots would incur if euro members were allowed to restructure their debts.

Regardless, Kelly says that it is only a matter of two years or so before Ireland is bankrupt, at which point our reputation will be shot. We cannot recover. Eventually, we will be EU protectorate, "Europe’s answer to Puerto Rico."

We did this to ourselves, but we had help. Our European 'partners' and the European Central Bank were a big part of what went wrong here. And, as it turns out, the Obama administration played a role in twisting the knife when it was firmly planted in our backs. Et tu, Brute?

Stand silent for Ireland on Thursday

It's always easy to be cynical and believe me I can be good at it. So when I saw on Twitter (#IrishMinuteStand) that some people were trying to organize a protest against the bank debts that we the taxpayers of Ireland are expected to bear my initial reaction was to cringe. No one's going to pay attention and what good will it do anyway? This is just a pointless, possibly embarrassing, gesture.

The organizers want to highlight the people's rejection of the imposition of the debts of "crooked and incompetent banks" on taxpayers and that Ireland is being forced to "carry the full financial responsibility for saving the Euro."

The protest will take the form of a minute's silence at noon on St. Patrick's Day. {I presume they mean noon wherever you are, not 12:00 in Ireland.} The organizers are especially keen that parade organizers support them in their bid.

The cynic in me can't see that happening. I can't see any parade of size taking on a protest organized via Twitter. Besides a protest of such scale would need a lot more time to get it right. Twitter is fine, but it's not going to get a big parade to stop for a minute's silence. Such a protest needs organization, explanation and negotiation.

Still the more I thought about it the more I realized just how great such a protest would be. Imagine if Dublin fell silent at noon on Thursday. That would be great. But imagine if 5th Avenue fell silent on noon on Thursday. That would be powerful. What a TV moment!

That would be something else, something for Ireland's hangmen - Sarkozy, Merkel, Barroso, Trichet & Rehn - to ponder. At the moment it's not hard for them to ride roughshod over us because Ireland is a small nation. It would be great to show them that while Ireland is a small nation, the Irish are not. They would probably not be happy at being called out in Dublin, but I suspect they'd experience a cold sweat if they saw such a protest in New York.

The difficulty, of course, is that we (thanks to our elected officials) are largely responsible for the country's economic collapse. People here acknowledge that and we all know that those debts incurred by our feckless government's excessive spending are ours to bear. On our own.

What we reject is that those debts incurred by Ireland's banks, owed to German and French banks and other institutions are ours? Why should we pay for the bad loans made by those banks to our stupid banks? Why should we pay if Europe's regulators failed to act to stop what they could all see (more clearly than we could) - that entire country was becoming a property bubble?

Ireland's facing a generation of economic pain if the bank debts remain ours alone. The powers of Europe don't much care about that, however. They don't want their banks troubled; they don't want to be honest with their citizens about the role played by their banks in our problems; they don't want to ask their citizens to share the burden. All they want is for us to pay back those debts regardless of cost or morality. That is far more cynical than I could ever be.

Stand silent for Ireland on Thursday.

Irish Government speaks as if the potato famine has returned

I met a friend of mine from America here early last week and he asked me to give him two minutes on the state of Ireland. I told him I didn't need two minutes: The young want out, the old are afraid of cuts and the middle aged are looking at a retirementless, childless future.

That was my assessment of mood of the country before we were forced to accept the IMF/EU bailout over the weekend. I think I can safely say the mood has not improved. In fact, if anything the mood has darkened, grown angrier and the focus of that anger is the government, which is now on its last legs.

There are a million reasons for the Irish people to be disgusted with their leaders, but this past week takes the cake. All week the government denied that the IMF was at the door - even denying what was happening after the IMF man arrived in the country!

Yesterday was even better. Taoiseach (Prime Minister) Brian Cowen and Minister for Finance Brian Lenihan gave a joint press conference at which they admitted that we needed "help" from the IMF and the EU. It was an amazing, mind-boggling performance as they took obfuscation and denial to a new level.

Neither man ever used the word "bailout", but both talked about capital, contingencies, etc. At one point Lenihan referred to the "problems that have beset us."

Beset. My wife was all over that. She turned to me - more in wonder than in anger - and said, "Did you hear that? Beset? He's talking like potato blight is once again wreaking havoc across the land. It's like he believes neither of them had a role in bringing us to this point."

She is totally right. Both the Cowen and Lenihan, especially Lenihan, have frequently spoken of our problems as if a disease arrived on a ship and infected our banks. And, while the credit crunch did sweep the globe after the fall of Lehman, the dead black centers in our banks were made jointly by our greedy wreckless bankers, feckless regulators and (criminally) careless government.

Never during the past two plus years, since the banking crisis blew up, have we had a full, frank admission that mistakes were made. More importantly, never did the government either (a) level with us as to the depth of the banks' problems or (b) learn the full truth themselves. Now the people are furious because they never had the truth nor leadership during the past few years capped off this week with the loss off all pretense of Irish independence. And it wasn't lost in a natural disaster.

Ireland has a new Chief Secretary

The position of Chief Secretary for Ireland was abolished following the establishment of the Irish Free State in 1922. From that moment Ireland has had varying degrees of independence, but it was basically independent. Until now.

There can be no more argument on the matter. Many people have claimed with each new European Union treaty that Ireland was no longer an independent nation, that we were just a state in a vast European federal union. Others argued otherwise and it is, or was, a complex matter.

However, this week all pretense of independence evaporated as the Irish people got to meet our new Chief Secretary, Olli Rehn {photo}. Unlike the last Chief Secretary, Canadian Hamar Greenwood, Rehn is not a member of the British Government, but is the European Union's Commissioner for Economic and Monetary Affairs. However, the roles are similar enough because the Chief Secretary's role was to see that British policy was enforced in Ireland as Mr. Rehn's is to see that the EU's policy is followed by this state.

Rehn dropped in for a visit this week. With the budget due in only a few weeks, Rehn's presence is a signal to all in the parliament that the real power here demands that Ireland toe the line on deficits, spending and taxation. Rehn reiterated his view that Ireland can no longer be a "low tax country" but must move towards being a "normal tax country," which means overall taxation rates should be similar to what applies in other EU countries.

Rehn helpfully offered the support of the European Commission to "Ireland and its citizens as they faced into the challenges ahead," but he offered nothing else other than "thou shalt comply" and get the deficit under 3% by 2014.

This is the price of being the good Europeans, the English-speaking country that was enthusiastic about the European project. We adopted the euro, unlike the bad Europeans across the Irish Sea. We opened our borders to the work‑hungry Latvians and Poles, unlike the Dutch, French and others. We showered love on all that was European, blindly ignoring that the powers that be were eying us coldly the whole time, waiting for an opportunity to punish us for our foibles and weaknesses.

For a while we thought we were rich, but it was a mirage. No, it was a trip, like we were on LSD. We were the debt addicts and we thought our wealth was real, but it was illusory.

Now it's not just cold turkey for us, but punishment. The EU is punishing us for our addiction, but the pushers, the German and French (& others') banks and investment funds who threw money at our banks and property developers, who fed our addiction, are not only getting away with it, but are being protected by the same people who are now dictating how Ireland is to run its affairs.

So we're stuck with stern-faced Olli, accepting his lectures like the bad children the EU always knew we were and, it seems, people here are taking it. The only question is how much longer before the people decide to send Olli to join Hamar Greenwood.

'Bankers' hours' – a phrase from another time

Bankers' hours. It was a phrase I was familiar with before I moved here, but I didn't quite understand it until I arrived in Ireland.

I had worked in a bank as a teller in Albany during the summer when I was in college. The bank opened at 9am and closed at 4:00. After closing the staff had to check their figures and paperwork and count the cash in their drawers which meant it was usually after 4:30 at the earliest before anyone left. Twice a week, however, we had 'late hours' when the bank reopened at 5pm for two hours. And the bank was open from 9 – 1 on Saturday mornings.

All in all, I never had the feeling that the people working there were under-worked. They sure as heck weren't underpaid as the rates of pay were pretty abysmal for tellers and the branch manager alike. {I'm not talking about me here. My parents were still housing, feeding and clothing me; I didn't need the money. I was making the minimum wage and saving most of it.}

All of this explains why I was so surprised when I got here and found out that (a) bank employees were fairly well paid as compared with wages generally and (b) banks were almost never open. The banks were open from 10-3 each day, BUT they closed for an hour at 12:30 for lunch. Suddenly I understood what bankers' hours was all about.

There were no late hours and no Saturday hours. If you had any sort of a job at all you probably couldn't get to the bank unless you opted for a late lunch and were willing to wait 30 minutes or so on line.

The banks and a large number of those who worked in them were arrogant. Nobody involved in banking seemed much interested in the customers' concerns. ATM's, which were a recent development when I first got here, were the only nod to the customers.

Gradually over the years the banks' hours changed. These days banks are open to 4 (5 on Thursdays) and the lunch break has been eliminated. A few years ago one Scottish bank tried to make its mark here by opening some branches on Saturdays.

That bank is now gone from the Irish market, but the other day I was in my own bank's local branch and they had a sign up advertising that they were now open on Saturdays. My first reaction was 'about time', but then I thought a little more and I realized they're too late. I only go into the bank two or three times a year. I do all my banking online these days.

Of course not not everyone banks online - yet, but that day is coming. Regardless, I can't understand why anyone would need the bank to be open on Saturdays, what with the ubiquitous ATM's and debit cards and telephone and online banking. Who cares what the bank's opening hours are now?

So it's come to pass that bankers' hours has lost all meaning here. Decades too late. Just as it was too late when the Irish people shed the deference they used to show bankers, a deference which the bankers arrogantly demanded before they ruined the country.

Ireland to the bond market: "We shall never surrender"

The Minister for Finance made a big announcement this morning on the state of Ireland's finances. Little in his announcement was really unexpected, but the reaction here is as if people were half hoping that things weren't really that bad and that we have been over-reacting. They are and we haven't.

What was funny was that as I listened to Minister Brian Lenihan I started singing "Turn out the lights, the party's over" in my best Don Meredith voice. Do you remember Meredith? He was the cowboy (and ex-Cowboy) who was part of the three person team of announcers for Monday Night Football back in the 70s and 80s. When Meredith burst into song the trailing team was usually still playing hard trying to win, but it was all over for them. I couldn't help thinking that's how it feels here today.

The Minister's announcement basically locked in the Irish people - those who are alive and nearly as many again who have yet to be born - to paying back debts they didn't incur on behalf of our criminally mismanaged banks. I know America's banks did stupid things, but American banks did different stupid things than our banks did and American banks were nowhere near as deranged in their pursuit of stupidity.

America's banks were led down the garden path by people who were the new alchemists: technologists who could turn risky loans into safe ones through securitization. Ireland's banks got into trouble because they didn't believe in rainy days and never gave a moment's thought to the fact that a three bedroom townhouse outside Dublin cost more than a three bedroom penthouse on the west side of Manhattan. Just plain D U M.

Now we all have to pay because, well, I'm not sure really. You see our banks are bust for making all those bad loans, but for reasons that escape me the Irish government has decided that those banks and pension funds and others who lent all the money to our banks - I think psychologists call them enablers, but they're really known as senior bondholders - must be repaid at all cost.

Yes, today the Minister announced that

We shall pay on the beaches, we shall pay in the fields and in the streets …

The figures are more than daunting. A cool €45bn ($61bn) or so (could be an even €50bn [$68bn] if things break just wrong) is what's supposedly required. That's about €10,000 ($13,600) per person. My family owes an extra €50,000 ($68,000) and, this is the best part, we have nothing to show for all this. Nothing.

You'll often hear people talk about a nation's or state's debts in these terms, but at least they'd have the satisfaction of having better schools or roads or hospitals or whatever. The only other situation that gives rise to such debts is war, which I think our government believes we're in. That might explain all the macho rhetoric.

All we have is the knowledge that German and French politicians and bureaucrats are telling us that we'll be fine and that we should ignore the fact that their bankers will not endure any pain for having stupidly lent all this money to our banks in the first place.

It gets better. This is all just to solve the big boys' problems. As many people on the radio have reminded us this morning, none of this takes into account all those small investors who borrowed money to buy a house or apartment or two as an investment and who now can't repay those loans. And there are many such people. All those bad debts have not yet been reckoned with. So our banks' debts remain unknown unknowns.

There weren't supposed to be any more unknowns - known or unknown - after this morning. The Minister's statement was flagged well in advance as the moment the government would provide clarity so that the markets could settle and we could get started on the decades of work required to turn this around. Unfortunately, all we've learned is that "Never was so much owed by so many to so few."

Potholes in the roads and black-holes in the banks are a source of fascination

Irish people used to almost love complaining that "we have the worst roads in the world." I don't know how true that was, but the roads are so much better now that nobody would make that claim today. However, we now own a new "worst in the world title": Ireland now boasts the worst bank in the world.

Of course all of this depends on how you measure the quality of a bank. I'm sure there is a bank out there that someone might believe is worse than Anglo-Irish Bank, but I doubt they'd be able to point to any facts of figures to back them up. It would almost certainly be based more on anecdotal evidence borne of frustration.

That's not the case with Anglo-Irish. Oh no. Unfortunately, we have an actual quantifiable measure by which we can compare the performance of banks and Anglo topped the list in 2009 as having lost the most money.

Of course, losing the most money doesn't necessarily make a bank the "worst" in the world, but it's an arguable case. However, Anglo – which is NOT a big bank – lost €15bn ($18.5) in 2009. That's more than Royal Bank of Scotland lost, more than Citibank lost, more than any of the massive conglomerate banks you can think of lost, which I believe certainly qualifies it as the worst bank in the world. At least for 2009.

These days Anglo's not so much in the business of losing money as taking it. Anglo is now fully owned by the government. That means that each and every taxpayer is a (probably not too) proud owner of a piece of the worst bank in the world. The price we pay for this claim to fame is that we're all paying back the money Anglo lost in 2009. The joys of nationalization.

That brings me back to the roads. Back in the days when the number and size of the potholes was almost a daily news item, cars were regularly wrecked by, and occasionally lost in, potholes, so vast and so deep were they. Whenever people spoke about this issue they always conveyed anger and frustration, a sense that it didn't have to be this way and that a large dose of mismanagement and corruption helped create the problem.

At the same time, people always managed to convey - I don't know - a sense of wonder that the roads could be so bad. Wonder is probably not the word. It's more a fascination with the grotesque.

It's the same today whenever people talk about the banks. Nobody fails to express their anger and frustration at the mismanagement and corruption that created the Anglo-Irish Bank black-hole and the other banking black-holes. Yet I sense that same sense of fascination when people speak of the banks. If the banks were just bad, there'd be only anger, but they are in such bad shape that people seem to marvel at the fact that we may well have "worst banks in the world."

Walking away from mortgages will be Irish emigrants' revenge

A couple of recent reports here say the fall in house prices is declining. That's the good news. House prices are still falling, but at least they're not going down as fast as they were.

I know American house prices have also declined, but nationally the price of the average American house is down about 20% from the peak. Here prices are down about 50% and we have another 10% decline to go - at least. {Ireland's experience matches that of Las Vegas, which is appropriate given the way the government and the banks kept doubling down time after time til the bubble finally burst.}

In the area where I live I've seen two "SOLD" signs recently and those are the first in quite a while. That had me believing that maybe we were really near the bottom and that things might get better.

HOWEVER, this past week I came across another report, this one aimed at investors in residential property. The report focuses on Dublin, Cork & Galway so it's not a full national picture, but still the headline figures are chilling. Houses are still overvalued by somewhere between 37% and 43%! That would mean that a house worth €500,000 in 2007 will eventually fall in value to around €150,000*.

Already approximately 40% of Ireland's homeowners are in negative equity. How many more will end up there if houses are still 40% overvalued? It doesn't bear thinking about, although looking away probably won't make it go away.

What does this mean for Ireland's future? It means a generation or more of Irish people are trapped. They can't move to a bigger house as their family expands and they can't move to another part of the country if there is a job there for them. Trapped.

Unlike in America, Irish homeowners can't just walk away from their mortgage. Bankruptcy laws are different and the bank can (& will) pursue you for the loan even if you've handed back the keys. The only way someone can walk away from a mortgage is to walk away from Ireland, which I suspect many will eventually end up doing.

At least that will make a change. In the past, official Ireland was all too relieved when the potentially discontented, underemployed young people left for opportunities abroad. This time, at least, they'll take their free college educations and leave behind a big hole in our already devastated banking system.

For the first time departing emigrants will be able to stick their fingers in the eyes of those whose policies drove them away.

*I'm willing to believe I'm misreading or misunderstanding these reports. If I am please let me know.

'Foreigners' may yet end up running Ireland

I want to finish my thoughts about foreigners 'telling us what to do' from the other day.

You might recall that elected representative Ned O'Keefe (TD) said we don't need "foreigners running our business." What makes O'Keefe's argument almost amusing is that whether we have any choice regarding "foreigners running our business" hangs by a thread.

Look at Greece. The Greeks probably don't want foreigners running their business, but they no longer have the option to keep the foreigners out. The Germans are now Greece's masters. And while it's true that Ireland is not Greece, let's just say that financially and economically we're in the same neighborhood. Irish independence is on a knife edge.

Our new 'foreign' Financial Regulator, Englishman Matthew Elderfield, is actually doing a bang up job of trying to save us from the Greeks' fate. Unfortunately his efforts (and those of the head of the Central Bank and others) may be in vain.

We're in a very bad situation, trying to row back up stream against a strong current pushing us towards a waterfall. For that we owe thanks to some of those who O'Keefe {photo} calls "our Irish people who are well educated" and who O'Keefe would like to see remain in charge of "running our business."

O'Keefe's demand sounds like a sure-fire way to ensure that the foreigners really do start "running our business." I prefer the 'foreigner' working for us any day.

Ireland needs this "foreigner" to fix the banks

A few weeks back one of our elected representatives stood up in the parliament (the Dáil) and essentially declared that we don't need foreigners here telling us what to do. Now before you get too upset, Deputy Ned O'Keefe was not referring to me nor was it a reference to any American for that matter nor to any of the so-called 'new Irish' who mostly come from Africa or Asia.

No, Deputy O'Keefe was speaking of one particular "foreigner", the new Financial Regulator, Matthew Elderfield, who is originally from England. Now you can see where Deputy O'Keefe was coming from when he said §, "Michael Collins, Liam Lynch, Patrick Pearse, James Connolly, would not have those foreigners running our business. It is about time we looked after our Irish people who are well educated."

The funny thing is, O'Keefe is wrong, totally wrong and I'm not talking about political correctness or revisionist history. I refuse to believe that Collins, Lynch, Pearse or Connolly would have objected to an independent Ireland choosing to appoint an Englishman if that was what was best for Ireland, if the Englishman was the best person for the job. After all Elderfield is still going to be subordinate to his employers, who ultimately are the Irish people.

As far as I can tell O'Keefe is not just wrong, but alone (among non-bankers, anyway)*. Elderfield seems to be mostly winning friends among the Irish people, who don't seem to mind one bit watching an Englishman slap the Irish bankers around. He is like (and has been called) the sheriff in a western coming to clean up the town and drive all the riffraff out or into jail.

Elderfield is, as Irish people say, putting manners on the bankers. He's changing the culture of financial regulation in Ireland, beefing up his staff and basically taking all sorts of stands that would have the bankers howling, if the evidence of their greed and stupidity weren't so well known.

Yesterday, for example, Elderfield declared that the day where a closed clique of a few people could dominate the Boards of Directors of the financial services companies or where ex-CEO's could semi-retire into the Chairman role are OVER. Better oversight of our banks from their Boards of Directors is crucial and Elderfield is going to see that we get it.

It's all great stuff and long may it continue. But I worry. I worry that Elderfield's time laying down the law won't last long enough. Why? Because Ireland is a very small country and Dublin is a small city and Elderfield will quickly find that the people he's busy cracking down on tend to dine out where he dines out, play golf where he plays golf, etc.

Same goes for his wife - she'll find her social outlets also contain quite a few bankers' spouses - and children (I don't know if has children), who will almost certainly be in school with some of the leading bankers' children.

It will take a mighty effort on Elderfield's part not to be sucked into the bankers' milieu and, eventually, their way of thinking. It would be better if he didn't actually live here, but that's asking a lot. I'm confident he'll remain independent long enough for us to get out of the hole we're in. Yet, how long can he remain an outsider, a "foreigner?" Will it be long enough to stop the bankers repeating the same dumb mistakes? Ireland needs the answer to be yes.

---
§ Can't link directly to the page, but it's page 4 of the banking motion debate.

* If you read the minutes from the Dáil debate where deputy O'Keefe made his comments, you'll see a member of the opposition implies that O'Keefe's main concern is his own bank shares.

Ireland's future: everything's riding on bank bail-out plan

Today is the day that the Irish government unveils the details of the bank rescue. This afternoon after the markets close the Minister for Finance will tell the Dáil (Parliament) and the nation exactly how much it is going to cost to save Ireland's banks.

This day has been coming since the end of September 2008 when the government was forced to guarantee all Irish bank obligations. Since then the government has nationalized the scandalously (possibly criminally) badly run Anglo Irish Bank and provided the two big banks with billions. Those were stop-gap measures designed to get us to today.

Today Brian Lenihan {photo} will give us the details on Nama - the government's 'bad bank' where all the banks' property loans are heading - and the additional billions that Allied Irish Bank and Bank of Ireland need to keep going. The rumor is by the end of today the state will be the majority shareholder in AIB and a 40% owner of BoI.

All of this can be pretty dull, but it's crucial. If everything goes according to the government's plan, this will mark the turning point where the economy starts picking up, unemployment stops rising and actually begins to decline and businesses begin to grow and foreign investment begins to come back to Ireland.

If it doesn't go all that well, the Irish taxpayer will be saddled with a massive debt that will take 20 years to pay off. Unemployment will remain high, government services, welfare, other benefits and public sector pay will remain under severe pressure and emigration will really take off. If it's a complete disaster, we'll have all of that, only more so and the state will, for all intents and purposes, no longer be independent, but rather a German vassal.

I'll be tuning in (here, if you're interested) around 11:30am EDT and then switching to CNBC to see how the plan affects the NASDAQ share prices of AIB and BoI. If those share prices head north after the Minister's speech I'll assume us taxpayers have been suckered into overpaying for the banks' garbage loans and their junk shares.

Ireland needs a 'Tea Party' movement

On Wednesday night BBC's "Newsnight" did a segment on the Tea Party movement in America. I'd heard about the Tea Party-ers, but only as a vague protest movement. The other night the BBC put a human face on them, interviewing a small gathering in someone's home in Washington, MO.

When it was over I thought to myself, "nothing like that would ever happen here." I don't know why, but the scene I was witnessing just seemed so American: people in a small town getting together to discuss what they could do to affect national politics. They seemed so determined to make a difference, to influence policy and - they stressed - to ensure that they weren't used and/or abused by one party of the other.

Ireland is only 1/100th the size of America, yet I think most Irish people feel a greater sense of frustration that there is nothing that can be done, that what 'they' (politicians) get up to is out of our control.

Ireland's issues and Irish voters are not the same as America's, so the Tea Party goals would not suit Ireland. Yet, the manner in which the Tea Party movement has channeled frustration with politicians among a segment of the electorate is a model that could be useful here.

The biggest source of anger in Ireland right now is the banks and the government's support for them. The Irish economy is on its knees, barely treading water. The NY Times recently mentioned Ireland as possibly having to default on its obligations, so great are the debts the government has taken on to shore up the banks.

Needless to say, many people are hopping mad that all of us taxpayers have to stump up to save the bankers, all of whom seemed to be coining it during the Celtic Tiger years.

This past week the government announced that they were going to hold an inquiry into what happened with the banks, but the inquiry is going to be held in secret. No tv cameras, no press, no nobody other than those who the government appointed inquiry head asks. The inquiry is expected to be complete by year's end.

There's a general cry out 'whitewash' across the country as everyone knows that the banking problem was a result of bankers' greed (and/or stupidity), developers' greed, regulatory bodies ineptitude and government indifference (or worse) until it was too late. Despite the frustration at the banks, politicians and developers the closest we've come to a protest movement here was when, in a widely applauded move, a man threw eggs at the chairman and chief executive of Allied Irish Banks last May.

If there was a Tea Party type movement Irish people might be able to use that anger to better effect, instead of simply stewing or calling and texting talk radio programs.They might just, perhaps, get the public inquiry and maybe even a banker or two on trial.

Roll out the carpet for America's bankers

Back in early December, economist David McWilliams stated that the changes to British banking laws represented a "gilt-edged opportunity" for Ireland and our struggling economy and underemployed young graduates and workers.

Today's NY Times confirms what McWilliams said last month. The Times reports that British based American bankers are not prepared to accept Britain's new laws on bankers' compensation. The British government wants to restrict banks' and other finance houses' bonus policies and has imposed a limit of £1m for a bonus, beyond which only 40% of the bonus can be used immediately. This change, coupled with Britain's new 50% tax on bankers' bonuses has made American banks unhappy.

As McWilliams says, it's not hard to sympathize with the British motives, but that doesn't change the fact that those disaffected American banks could be a real boost to our small and weak economy. If they can be enticed here the banks would boost the government's coffers with corporation tax (even at 12%, the amounts would be large) and income tax on those bankers' salaries.

We have the space, there are many, many empty corporate offices in Dublin now, we have the telecommunications infrastructure, we have the unemployed college grads,we have frequent flights to NY or anywhere in Europe and Ireland is English-speaking.

It's a no-brainer. I'm sure the Industrial Development Authority is already on the prowl, but if you happen to have the ear of any bankers over there, you might point them in our direction. A hundred thousand welcomes awaits them.

Nama will be a symbol for tomorrow's emigrants

Posted by TheYank at 9/17/2009 10:18 AM EDT


Sorry I've been so silent here the past few days. Maybe you heard we had a fairly serious crash in Dublin between a bus and one of our new(ish) on-street light rail trains?

I nearly missed the Bus-Luas crash story yesterday because I'm completely distracted by the other big story here. Really, the biggest story in Ireland. Nama. Yesterday evening I switched radio stations every time the talk veered away from Nama.

Yesterday the Irish government finally unveiled the plans for bailing out our broken banks. Nama - the National Assets Management Agency - is the plan.

Everyone in Ireland is sick of the sound of it: Nama, Nama, Nama. Sick of hearing about Nama, but equally worried sick about what Nama will mean for them. No one tunes out even when they want to. I'm the same.

Will it work? I have no idea, but like most people here I'm pretty skeptical. Skeptical that the idea is not some form of boondoggle to benefit the governing party's (Fianna Fáil) developer and construction friends; skeptical that anything this government tries could possibly work. Simply skeptical.

Yeah, in truth, I don't think it's going to work for all sorts of reasons. I think the government is paying too much for properties that will be a long, long time (if ever) recovering their value. I think we're being saddled with a debt that will mean a decade (or more) of economic stagnation. And, I think the dusty old "how to" manuals on emigration will be getting a thorough look again. Yup, I think we're about to see a net outflow of people from Ireland. Again.

A lot of young Irish people will soon be looking beyond these shores for an opportunity to work just as generations of Irish have before them. They're not going to stay here to earn low wages - if they can get work - and pay high taxes, both of which are as near as guaranteed thanks to the necessity of having to bail out the banks. Someday in the future thousands of Irish emigrants will think of Nama as a symbol of all that went wrong during the '00s and forced them to leave home.

Already there is a generation of builders, engineers and architects out of work. They're gradually being joined by people who used to work in the banks or other office occupations. Once things pick up in Britain or (whisper, whisper) America, they'll be off.


Have to keep it down about America because very few of those who will be heading west in the next few years will be going with legal visas, etc. Unless of course, that issue gets somehow resolved over the next few months or so.

Independence is the stake in the Nama bet

Posted by TheYank at 10:52AM on 8/21/09

Nama. Have you heard the name? If yes, you probably have a vague idea that Nama is some government scheme or new department to bail out the banks. And you're not wrong.

I'm not going to give a full economic/financial/philosophical explanation of Nama. All you need to know is that Nama is the government's last throw of the dice. Taoiseach Brian Cowen and friends have a stack of chips and they're betting it all on Nama. Nama's going to rescue the banks and get the government out from under the guarantee it provided to every bank depositor and bondholder last fall. If Nama fails, Ireland's banks will fall and they'll bring the state with them. And Ireland - for all intents and purposes - will cease to be an independent country.

What are the odds of a win or a loss? Well, I can't say with any certainty, but neither can the government or anyone else. The people who have drawn up this plan and made this bet are basically schooled in the same rules and philosophies as the people who got us into the mess in the first place. In fact, many of the people involved are the very same people who led us into this.

That makes me uneasy about this bet. A month ago or so I thought the government might just scrape by, but now I'm less certain. If I wasn't so invested in the government winning its bet I'd probably be looking to see if I could take some of that action myself and bet against Ireland succeeding. That's how shaky things seem right now.

Today we learned that the leading opposition party, Fine Gael, is going to vote against the government's Nama plan when it comes up for a vote in September. That's maybe not all that remarkable, but I like the language from party leader Enda Kenny: "At its core, Nama is a €90 billion 'double or quits' gamble by Fianna Fáil on the property market. A €22,500 bet for every man, woman and child in this country." I have very little faith in Kenny, but at least he seems to get what Nama is.

And if Nama fails, "What then?", you may well ask. Well, Ireland will have to be bailed out by some other entity and that will almost certainly be the European Central Bank - that is, the Germans. So after nearly 90 years of incrementally increasing independence and stability, a few short years of inebriated investment and indulgence could see Ireland as a 'province once again.' Only this time we'll be a German province living by Germany's rules.