THE HANDSTAND

 DECEMBER2010



I borrowed a tin and drummed for an hour to hide my tears ...

There was only one cry at the gates of the Dail in my mind "ALL OUT - EXCEPT THE CLEANERS AND THE GUARDS"

While the Budget speeches drifted like ordure from the sheds, drover of cattle, Brian Lenihan, for the second time (Awarded the title of the Worst Finance Minister of the entire EU by the Financial Times) with his pathetic schoolboy rhetoric, pocketed the ice and snow for use another day, I stood behind the huge Shell to Sea posters calling for NATIONALISATION OF MAYO'S GAS CONTRACTS TO SHELL , and beat that drum with a dozen young people who kept a monstrous heart-beat echoing over the Dail Courtyard from 3.30 in the afternoon for nearly two hours, and those with horns blew their long sombre calls to the grazing cattle within.
And the grazers came out good, as we all knew they would as this was a budget for the well heeled, the rich - maybe Dermot Desmond will actually re-open the Ormond Hotel on the Liffey for the race of tourists who will come in to buy up broken businesses and pocket their tax free management schemes under their vests.

A grocer who, for three generations has had special credit schemes in the late autumn to buy specialities for Christmas was this year refused by the Bank. He has had to close his doors and apply for emigration.
How much money flooded out of Ireland since September 2008 - money that only needed a sharp decision in the Dail to be restricted. Quinlan removing even his daughters from their schools to Switzerland is even now selling his properties in millionaires row because he GOT OUT WITH HIS LOOT. He will not have to pay a penny to the superior bond holders, among whom he surely numbers, with the French,German and UK Banks.


We now know that Charlie Haughey, whose planned gift to the stockexchanges in exchange for deals in his Financial Centre, his green glass palace on the Liffey, gifts ranging from share buyouts in nuclear facilities to Shell Oil Company, has wrecked our independence, our freedom of a Republic, and he can frolick in his Devil's Bones. Our grovelling Ministers who in inherited his financial testaments have, or think they have, fastened the last iron padlock and told us to breed, to breed and linger on the street corners of our Land. They go to the cloakrooms to wash their greasy fingers clean, to grasp the last glass on the tap of Fianna Fil's regimes, and then to buy buy buy all the small Irish business they have wrecked and live on those tax free perks for the rest of their lives.


Here is a jolly parable I read on a Blog:

  • Cearbhall O'Dalaigh Says:
    December 8th, 2010 at 10:48 am

    Slightly off topic, but useful nonetheless ………

    CRASH COURSE IN IRISH ECONOMICS

    Mary is the proprietor of a bar in Dublin. She realises that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronise her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

    Word gets around about Mary’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Mary’s bar. Soon she has the largest sales volume for any bar in Dublin.

    By providing her customers freedom from immediate payment demands, Mary gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Mary’s gross sales volume increases massively. A young and dynamic vice-president at the local bank recognises that these customer debts constitute valuable future assets and increases Mary’s borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

    At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets. Naive investors don’t really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

    One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Mary’s bar. He so informs Mary.

    Mary then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Mary cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.

    Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks’ liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

    The suppliers of Mary’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

    Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion euro no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Mary’s bar.


  • Who writes this today - the very phrase that brings my rage and tears: "WE ARE EUROPEANS. The present battle within Europe - philosophical + political + economic + financial + social + psychological - is happening NOW. Let’s play vigour_US_ly."

    One can only quote another blogger Gerry Fahey:
    True experts, it is said, know when they don’t know. However, non-experts (whether or not they think they are) certainly do not know when they don’t know. Subjective confidence is therefore an unreliable indication of the validity of intuitive judgments and decisions. “High-validity” forecasting environments exist when there are stable relationships between objectively identifiable cues and subsequent events or between cues and the outcomes of possible actions. Medicine is practiced in environments of reasonably high validity. In contrast, outcomes are effectively unpredictable in zero-validity environments. To a good approximation, predictions of the future value of individual stocks and long-term forecasts of political events are made in a zero-validity environment.



    *******************

    LETTER JUST CAME IN FROM AMERICA:

    Just saw this on a blog

     

    Government of Gobshites ! Lenihan is officially the WORST Finance minister in the E.U. - F.T. yesterday. And, BIFFO is an exception to Shakespeare's dictum that "there is no art to see the mind's construction in the face". Idiots and eejits all.
    Had there been any E.U. goodwill and any Irish negotiator worth his over-stuffed salary the "bail-out" fund for Ireland would not carry an interest rate of 7+%, overall - taking into account the Irish dipping into their pension fund to top-up the " bail-out".
    The Irish taxpayer does not owe this vast amount of money to anyone. The BANKS owe it to other BANKS and Fianna Fail have treasonously foisted this debt onto the Irish people and are now guilty of subverting the State - something that the I.R.A. have failed to do - up to now.
    de Valera stole the money raised for the Irish Press in America. Haughey stole all that he could. Reynolds sold Irish passports to Third Worlders and took money for his dogfood factory. Ahern paraded his mistress at State expense, to the disgust of the Nation, and his corrupt financial dealings have only been touched on by the current Mahon Tribunal in Dublin. Ali Ba BIFFO was the Finance minister, unqualified for the job, who oversaw the financial schweinfest, for the benefit of the F.F. golden circle of gombeen men, which landed their country in the current mess.
    Why do the Irish, generally astute people, elect such thick, ignorant and unfit people to govern them ? As an Ireland watcher I was shocked when they re-elected Ahern to government in 2007. Even then, his chicanery and dishonesty was bubbling to the surface.


    December 08, 2010

    The Creepy Millionaires' Budget

    The ‘creepy’ is in the detail which the Government didn’t reveal.

    Social welfare rates will fall by 4 percent (except for pensioners). Regarding low-average earners this is what the budget tables tell us.

    Creepy 1

    All low-average income earners – self-employed and PAYE (both private and public sector) will suffer considerable falls in income.

    This is where it starts getting creepy. Those who receive income via rents, dividends, interest and self-employment (non-wage income, or Schedule D taxpayers) are, unsurprisingly, the wealthiest in society. When we hit the stratosphere of high earnings – over €150,000 per anum – those who receive income via non-wages make up nearly 75 percent of all income received above that level; the remaining 25 percent comes from high-earning PAYE taxpayers (e.g. managers, executives, higher professionals, etc.).

    Creepy 2 What happens to these high-income, non-wage earners? According to the budget tables.

    They get off pretty lightly – seeing their net income fall by approximately 1 percent. Contrast that with low-average income earners, including social welfare income. It’s substantially less.

    But this is where it gets really creepy. The budget tables stop their comparisons at €175,000. With the help of the Deloitte tax calculator, we can go higher. This is what Deloitte tells us for non-wage incomes that leave the stratosphere and circle far above the planet the rest of us live on.

    Creepy 3 That’s right – those are not negative figures. Budget 2011 provides considerable tax breaks for those on very high non-wage incomes. If you happen to be a millionaire you are nearly 6 percent better off with Fianna Fail’s budget. How does this occur?

    This is how Deloitte breaks down the millionaire’s budget. They will pay €11,936 more on income tax and PRSI. However, under the Universal Social Charge, they pay €34,931 less than under the Health and Income levies which the Charge replaces. That really puts the ‘Social’ in Universal Social Charge.

    And at the risk of totally creeping you out, the ESRI estimates that there will be no wage-growth next year. However, non-wage income (rents, dividends, interest, and self-employment) will grow by 29 percent. So those very high non-wage earners can look forward to not only an increase in their incomes, but tax breaks on top of that.

    Truly, a millionaire’s budget.

    COMMENT FROM IRISH ECONOMY BLOG:

    WHAT GOES UP SAYS:

    The fundamental truth behind the desire to name and shame all the protagonists though is the need to recognise the fraud that is at the root of the system.

    Residential and commercial banks made fraudulent loans. Investment banks used unregulated financial instruments to make fraudulent financial products from these loans. Ratings agencies used fraudulent methods to rate these instruments as solid as sovereign investment. Banks, pension funds and other, supposedly professional, investors bought these instruments with the full knowledge that it was the investment banks who paid the ratings agencies for the rating. The “game” was on and everybody had enough chairs to keep playing.

    And then the music stopped!

    People aren’t angry and wishing for the State to default because they don’t wish to pay the bill. They are simply saying the system was built on a mountain of fraud and it is this which needs to be dismantled.

    Creating debts from Ponzi schemes and turning them into sovereign obligations is an outrage.

    another says:I remember around 2008, a debate erupted in the offices of Zoe developments over the ownership of ‘the boom’. Someone proclaimed, The government haven’t a clue where the boom came from! We started the boom! The thing that we have to bear in mind here, is that politcians in Ireland don’t come up with anything by themselves. They simply ‘latch onto’ movements that are first created by the private sector. You can see a similar thing happening today, in how the politicians would not know a social networking concept if he jumped up and bit them. But that doesn’t prevent them from riding on that wave all the same. I once read a comment on ‘cool stuff’ that teenagers devise for themselves. The corporations monitor this very careful and then try to reverse-engineer it, re-brand it as their own and sell it back to the very same youth market at high street price levels. Of course, the flooding of the market ensures that it isn’t cool anymore, so some clever upcoming generation have to make up something new to distinguish themselves and the whole cycle begins all over again. What we witness in Ireland with our politicians is precisely the same. They never set the ball rolling by themselves, but rather try to high jack something that ‘looks cool’ out there in the marketplace. I predict that in another 15 to 20 years, we will be sitting here at the Irish Economy blog site, debating the fall out from the collapse of the social networking industry in Ireland. Shock horror! By that stage though, the political classes will have forgotten about this property crash, and will be busy cranking up another. The trouble with this endless joy-riding on the latest wave of cool-ness in the private sector, by the political classes - is that they end up shoving far more resources in that direction - than it was ever intended to bear in the first place. The Construction industry would have been okay, had it not been for political intervention by idle people in Leinster house. If a party was to run on a mandate for the next election, it should be, please politicians keep you paws away from the social networking industry. BOH.

    and another says:I was listening to a lecture by David Harvey by podcast only the other day. He observed that land prices in Japan are still going down today. That is, almost twenty years after their peak. But if I may take this debate out of the context of politics & macro-economics for a moment. It is a phenomenon observed within many industries also - where something is being toyed around with in the laboratories by the engineers - and the marketing department of company takes ownership of that cool new thing, proceeding to build the entire corporate strategy around it. This was a phenomenon which people such as Clayton Christensen have studied in much detail. Namely, where an idea that would be fine if left on its own, at its own scale to generate more modest profits would have developed medium to longer term into something very interesting. But unfortunately, management often pumps resources into something - akin, to the Olympic athlete going on a force feed diet - and you end up with nothing, except the scandal and the fallout. And of course, the management who run out the door with bonus payments, for destroying the company. We could analyse property in Ireland, as that kind of laboratory experiment, which the engineers in the banks had under development in the early 1990s. BOH.

    KARL WHELAN SAYS: “We may have been rescued from the wolves. However, it is open for debate whether our rescuers are planning to feed us to the lions.”