Profile of Morgan Kelly

For me, the most memorable image from Morgan Kelly’s Irish Times pieces, was in December 2008, when he suggested the first State investment of €1.5 billion in the builder’s bank Anglo, might as well be incinerated on St. Stephens Green – – and that was only €1.5 billion!

http://www.irishtimes.com/newspaper/opinion/2008/1223/1229728473144.html

Then, given lending of about €80 billion to developers, it follows that Anglo Irish is facing losses on the order of €15 billion. The true figure could easily turn out to be twice as large.

Everyone was a genius and nobody could lose.

You didn’t have to be an economic genius to write the first article Morgan wrote, in December 2006 (although Morgan is a fantastically gifted economist). You needed something far more important: moral and intellectual integrity and courage. I have known Morgan for over a quarter of a century, and he has always possessed these qualities in spades.

I’m not ragging on Kelly or anything, but I always find it a little odd when newspapers do profiles on their own contributors.

@Ahura Mazda
The cronys hit the roof all right:
“Jim Power of Friends First described them as “ridiculous” pointing out that Irish banks are very well capitalised.”

I think Alan Ahearne also deserves some kudos for pointing out the dangers of the overly frothy property market before the crash.

I’d like to take a little credit too.
Anyone who’d buy me drink was welcome to my predictions

@All

Only 33% of Nama loans being repaid

The National Asset Management Agency (Nama) has found up to 100 per cent speculative lending on agricultural land was “approved at all levels within the banks” and that only one-third of loans due to transfer to it are generating interest repayments.

http://www.irishtimes.com/newspaper/breaking/2010/0413/breaking54.html

McWilliams definitely well ahead of the pack on this one. Yes he was premature, but that was partly due to the loose monterary policy, both in the eurozone and the US and the increase in ‘financial innovation’.

If December 2006 is the earliest record of Morgan Kelly’s predictions then the predictions were very short-term and certainly no more farsighted than your average punter (who had bought well in advance of the crash).

His main contribution was to highlight the scale of the property crash, which in itself was hardly rocket science, but it did require some moral courage. McWilliams on the other hand, continues to get up the nose of the establishment be they political, financial or academic.

In fact, I think it is fair to say that McWilliams has, by some distance, been the most relevant economist in Ireland over the last decade. Any potential house purchasers who listened to him should now be sitting pretty. As for the rest, they would have left you in negative equity. Perhaps NAMA could fund a new chair of economics in Trinity or UCD specially set aside for Prof. Williams.

@ Hugh
Time will tell. Remember McWilliams getting heckled at a property/equity conference in UCD around 2000. There may have been others like you said but no names spring to mind. Can anyone else out there think of an economist who can rightly claim membership to the ‘i told you so’ club?

What would be hugely interesting is to get a profile of Brian Lenihan and to try to identify the moments in his career when he got the training and knowledge to let him be a Minister of Finance in one of the most crisis affected countries in the world.

A short article in the Times perhaps…”Brian Lenihan’s qualifications to be Minister of Finance”. From what I know it’d be up there with the other short tomes you might find on this list. http://www.naciente.com/shortbok.htm

Now, whether or not you think that Brian Lenihan is an honest, intelligent man – or perhaps especially if you do feel that he’s an honest intelligent man – the fact that the article would be very short is a major problem when it comes to Ireland finding the right solutions to a monster financial crisis.

Having well qualified academics and journalists who are entitled to say “I told you so” is nice, but having a well qualified Minister would be even better.

@Michael Hennigan

Take a Chair Michael. The Institute for Stating the Bloody Obvious (ISBO) has one available at the mo.

@Michael Hennigan
Well done, it took great courage on your part. We can now see from the NAMA debate just how much pressure the establishment exerts against dissenters. I wonder if anyone knows of people who were inclined to speak out but were bullied into silence? It’s still happening:
http://www.irishtimes.com/newspaper/weekend/2010/0403/1224267604942.html

@Paddy Orwell
“Can anyone else out there think of an economist who can rightly claim membership to the ‘i told you so’ club?”
I love this Peter Schiff clip even if the Austrians are not that popular on this site. I note he was frequently figuring on McWilliams most recent TV series. I guess David is a paid up member of the school!
http://www.metacafe.com/watch/2677198/peter_schiff_was_right_2006_2007_cnbc_edition/

” ‘He certainly brings plenty of prestige to UCD…’ said one Government insider.” LOL, ’cause the rest of the faculty are a bunch of HACKS just shooting the breeze down at Belfield, obviously….

Well done to Morgan Kelly.

Is it possible to draw up a “blacklist” of economists who were cheerleaders in the boom and now crack the whip in the recession.
I don’t mind people getting it wrong or not pedicting things – it’s the arrogance with which these same people now sermonize that’s most galling.
Regarding Brian Lenihan I can’t help but think that he can never stop being a barrister. He’s mastered his brief just enough to deliver his greatest piece of advocacy – letting the guys who robbed the country off scot free and having the rest of us framed. I used to think he was innocently duped by those gangsters but now I begin to wonder. His attitude regarding the public sector is sadistic. Even the language used is inherently abusive. He does not like us very much (us includes the private sector) I would venture to say that he does not like us at all. But I hope I’m wrong.
I’m not an economist but it seems to me that the debate that’s happening on this blog should be happening in cabinet.
I propose an end to this sadistic tyranny. Let’s give the govt until Jan 2011. If growth has not returned to the economy by then we have a national strike until they go. We replace them with a government of national unity with economists with a track record forming an emergency economic advisory cabinet.
Simple as…

@Jagdip Singh – yes, that NAMA stuff is pretty hot alright. Fill your wellies and dive in there – you clearly have a gift for analysis and communicating your findings based on what I’ve seen of your posts here.

@Eureka – “He does not like us very much (us includes the private sector) I would venture to say that he does not like us at all. But I hope I’m wrong.
”

I’m sure there are good barristers out there but I haven’t met one yet. Most seem to think that all people outside their own profession are the scum of the earth and they treat everyone else as though they are ignorant serfs.

There’s also a negative side to them (hat tip to gonzo journalism).

As for the topic. Morgan Kelly is a diamond geezer innit? At least he’s got the guts to go with his convictions and is prepared to stand up and be counted (as are some of the other guys on this blog).

Let’s not forget that there are some good people around in economics in Ireland and we are lucky enough to get to hear some of them here.

Handbags!

Wait a second Yoga

Do you want to leave the Euro?
Do you really want to leave the Euro?

Besides, dont you know he has talked to Patrick Honohan.
It would be great if the Professor got to grade his ministers!
Or even a public viva!!

Anyway, back on topic, when are we going to see economist top trumps, and who will be the star trump?

Said this on the Pin today and will paraphrase.

Morgan is the best writer and the best polemicist (both equally) of all Irish Economists.

Others can be very good, Messrs Whelan Ahearne (once) Lucey ( a U Limerick Guy whose name escapes me soz ) Michael Hennigan who is easily our most prolific Financial Journalist of all and of course David McWilliams who was great on Vincenzo lst night.

None have been so utterly devastating over what has been a rather short series of written articles in the Irish Times ….no more than 10 articles in total I think.

Some achievement. As the man said …..”I love the smell of napalm in the morning” 🙂

@Al
I’ve read with appreciation many of your wry observations. Just wondering though where do you stand overall? As for the celebration of Morgan Kelly, we really do need to celebrate dissenters.

@Puzzled
“For instance, it’s hard to imagine representatives of the US press going to policy conferences and declaring that Roubini should not be allowed speak at such gatherings.”
This is explained here:
http://www.irisheconomy.ie/index.php/2009/10/19/free-speech-and-the-green-jersey/

Sadly we cannot execute Anglo and INBS now that NAMA has accepted certain loans from those pieces of sh1t.

Well Maybe we can total INBS because we are not the shareholders.

@all
How can all this talk be translated into action?
I’m not a young hot-head. I’ve a young family and I’m sick and tired of another lenihan grooming our children for export.
This has to stop!
We must stop it!
We know who has been right. We know who has been wrong.
“For evil to thrive all it needs is for good men to do nothing…” well blogging and writing may be distracting from the fact that we are, in fact, doing nothing!
Oliver’s point on pairing – I don’t understand 100% – but it sounds like a plan.
Morgan Kelly is a great great man. So too btw are many of the people writing on this blog. We must seek to ensure that this great man (and others like him) triumph. There is a tone of history to this thread. Can’t write history while we’re still making it.
Bring on the ideas for converting this into action

@All

Methinks the supine less supine – but still insufficient for a 1789. A little more ……………..

If he doesn’t have one already, Morgan needs to get himself a blog so that he can get his voice heard. It’s no surprise to me that the muppets whose lives exist only within the bubble of the D4 chattering-classes – namely, our great and glorious Irish media corps – probably detest him all the more now that he’s been proven right.

I’m just thinking of a States-side econoblogger who finds himself in the same position, and who was (like Morgan) warning about what he termed the “Big Shitpile” of their property boom for years – Dunacn Black, ‘Atrios’.

http://www.google.com/search?client=safari&rls=en&q=atrios+big+shitpile&ie=UTF-8&oe=UTF-8

@ Oliver Vandt

“Williams deserves huge credit too. The tactics used by Official Ireland – the most discredited establishment in NW Europe – against them both are now being used by Official Ireland against Brian Lucey for an honest mistake. I hope the evil and corrupt Vatican of NW European democracies fails in this effort.”

First off I would like to say that I like David McWilliams and that he always has the best of intentions when giving economic advise in his commentary however a huge weakness that I think he has is that he often does not think enough about the consequences of his suggestions.
When an inventor comes up with something new in their head that they think is a great idea, the next step is to then ask themselves Why wont this work?
Mcwilliams can sometimes skip this step.

Many people now see the Blanket guarantee given on the 30th of September as the Biggest financial mistake in the history of the state.

However in the days leading up to the Guarantee it was McWilliam’s who was writing articles suggesting this type of blanket guarantee. We also know from his own book ‘Follow the Money’ that Minister Lenihan paid him a visit on the faithful night to ask him for his opinions.
The Minister was carrying a copy of the independent.

On the 24th of Sep McWilliams had written the following in his weekly article.
“We can’t afford to do what the US is proposing and set up a similar toxic fund to bail out the Irish banks’ property debts. We don’t have the cash.

However, there is something we can do. By giving a full deposit guarantee now, the State could re-energise creditors’ — both big and small — confidence in our banks. In fact, given what is happening all over the world, a comprehensive guarantee would prompt foreigners to lodge their money in Irish banks. As a member of EMU with the lowest State-debt-to-GDP ratio, Ireland would be ideally placed to offer itself as a financial port in this international storm.”

As Richard Bruton says in his review of McWilliams Book
“The idea of the blanket bank guarantee which McWilliams had been hatching in a series of articles was brought to life on his kitchen table.”

Bruton goes on to defend McWilliams

“McWilliams’s vision was that the guarantee would give breathing space, not to get the taxpayer to buy bad loans in order to save all the banks and their bond holders, but instead, to force the banks to confront their problems, to take their losses, and then Ireland would emerge with a smaller but fundable banking system”

However when you think about it the problems with McWilliams plan, which the minister essentially followed, was that once you give a blanket guarantee banks may use it as a bargaining tool and once given it is not that easy to take it away again.

McWilliams seemed to miss the point that once you give private financial institutions a blanket Guarantee at a time when they are hours away from meltdown, they may be likely to use this guarantee to their advantage.

In his Article in the independent on the 1st of October entitled ‘Lenihans Masterstroke has bought us time to sort out our own problems’ he says

“The minister obviously thought that by guaranteeing some banks and not others — as many of his advisers argued — he would open up the prospects of the weaker banks undermining the stronger ones. He has put the system first and this can only be a good thing.”

The question we will not know the answer to is if Mr Lenihan had followed the advise of ‘his advisors’ and let anglo go rather than McWilliams advise how much would it have saved the tax payer and burned the bond holders?

@Eoin: You haven’t bothered to ask the EU. So what you posted above is just idle speculation. Do you have any evidence that the EU is thinking that way or is it just “spouting off”?

@ Eoin
Not sure if you took this up wrong

“By giving a full deposit guarantee now, the State could re-energise creditors”
are not my word but the words written by McWilliams on the 24th of Sept 2008

@Eamonn Moran
I would define the blanket guarantee as covering deposits AND all bondholders. Did McWilliams propose this or just all deposits? Incidentally everyone is agreed that depositors are totally covered.

@ Eamonn Moran

“By giving a full deposit guarantee now, the State could re-energise creditors”
Yes, that is what he said.

You appear not to know the difference between a depositor and a bondholder.

Much like the Department of Finance in September 2008. Have they learned since then?

@ Eureka

‘Blogs and newspapers won’t move this arrogant sadistic gombeenment’

An Taoiseach presided over the bubble, as MoF. His position is now hugely embarrassing. The steps taken by the current MoF are equivalent to putting up scaffolding around an unstable building. We can bluff for a while longer for a while longer, but the gig is up.

‘We know who has been right. We know who has been wrong’

With respect, and sympathy for your obvious frustration, this is a time for cool heads. The economic and social challenge before us is much more complex than you suggest.

This wasn’t all the doing of a few individuals, or of one political party. While the vested interests are most glaring in case of FF, they are present in all parties, and in both public and private sectors. The property bubble and the public spending bubble are all part of the same unsustainable process.

Insiders put the arm in, and facilitated others in doing the same, at all level of the economy. Services went crazy too. Like all bubbles, the common belief was that rising asset values would keep it all rolling along.

The major private sector players, including the banks and especially their bondholders, knew that bubbles always burst, but they were confident that the state would rescue them. As indeed seems to be the case. Thus far.

From a citizen’s perspective, it seems NAMA/ Anglo is about sustaining a certain status quo (saving capital investors and sustaining property prices), at the cost of employment, emigration and regression of the state. It seems also designed to preserve and protect institutions and professional bodies who abandoned their own claimed standards of integrity. Covering up once more.

Those who support the current ‘recovery’ strategy are well organised and close to the levers of power. The opposition lacks political coherence, and includes various other vested interests.

This blog includes folk who know much more about the specifics than you or me, and luckily they are willing to share their insights, so let’s try to reach a bit more consensus before we go charging ahead.

@ Oliver vandt

I am curious about the article you quote from in your post of April 13, 7.15pm.

See link http://www.irishtimes.com/newspaper/weekend/2010/0403/1224267604942.html

In my view the article doesn’t ring true.

There are a number of odd things about it. For example, the liquidity rule doesn’t sound right. I’ve never heard of a liquidity rule whereby daily cash inflows have to equal 90% of cash outflows. I’ve heard of rules where cash balances have to be a percentage of debt, but not the ratio described in the article.

I would also be curious if people find it credible that a risk manager who was only in the company for a few months would be allowed call in an outside Risk Management company from the UK to audit the company’s books.

Morgan Kelly has been up front about his criticisms of Government policy. However this article quotes an anonymous risk manager about an anonymous company. I would be very sceptical about this article, but would be interested in what other people think.

@ Eoin and Yoganmahew

I think you guys are missing the point that I am trying to make.

Oliver was saying that David McWilliams deserved huge credit as well as Morgan Kelly.
What I was suggesting was that his Idea for a bank guarantee scheme to cover all banks including Anglo was essentially championed by him.
Remember this type of guarantee had not been tried before.
According to McWilliams, other advisors to the minister suggested otherwise.
McWilliams wrote in his article on the 1st of Oct 2008
“the minister obviously thought that by guaranteeing some banks and not others — as many of his advisers argued — he would open up the prospects of the weaker banks undermining the stronger ones. He has put the system first and this can only be a good thing”

It is now argued by many that although letting anglo go would have had a negative impact on the other banks it would have been better not to have included it in the Guarantee.

You may have noticed that McWilliams himself is now arguing that the Guarantee should be allowed to run out and that Anglo should be liquidated.

@Eoin: You are still spouting. Just because you post three long paragraphs does not make your point. If anything it shows the opposite! This document talks about inter-bank deposits and short-term debts. Nowhere do I see any reference to retail deposits.

Must try harder!

@Sarah,
Other possible answers:

1)If they didn’t cover Anglo, the Govt could have been in breach of competition law. As it was it was obliged to extend the guarantee to the British banks, but this became superfluous when the British implemented their own scheme.

2)I imagine Anglo’s shareholders would have had a strong legal case against the Govt if it had been excluded from the scheme causing the bank to collapse.

3)Confidence. What would have happened if depositors queued up and found that Anglo hadn’t the money to pay its depositors? It would have undermined confidence in the whole of the Irish banking system. The idea that your money is not safe in a bank would have been a big psychological jolt. The effect could have been depositors withdrawing money from the other banks notwithstanding the guarantee.

@Eoin
“for the same reasons as above, a blanket deposit scheme would actually have the affect of making it more likely that banks would only lend to each short term rather than via longer term bonds, as cash is a callable liability in most cases while a bond is a term specific funding agreement. As such, it seems likely that having catch-all deposit schemes (rather than 50k limits) would make matters worse for bank funding situations, rather than better.”

Not if you have a credible deposit guarantee and a guarantee of new bond issueance – the EU suggested solution and the standard (i.e. market expected) method of dealing with financial crises.

Would a decision on the fateful night to close all banks for a few days have created a breathing space for more informed decision-making or would it have just caused even more problems?

@ Peadar

Michael Hennigan is probably right about the order of responsibility. An Taoiseach is, unfortunately, on that list. Certain things follow (or ought to )follow from that. Unless, of course, we intend to carry on regardless.

It would be genuinely helpful to me if you were explicit about which of my comments you feel are out of place on this site, or likely to frighten people away. I am simply describing what I see, and I am happy to be challenged or corrected.

@Eureka

Re: How can all this talk be translated into action?

How to kill the zombie banks!
http://www.thepropertypin.com/viewtopic.php?f=50&t=29428&p=373161

PS as a ‘for instance’, i was talking to a large Irish insurance company today and they said they are still keeping a huge amount of their capital purposely with only the Irish g’teed banks. They’re just waiting until Sept when the g’tee ends and then they are going to decide what to do with it in terms of bonds etc…

I don’t understand the comments that this type of guarantee was completely novel and had not been tried before as I thought that this was the kind of extensive guarantee used in Sweden previously. I have not read about the Swedish guarantee since last year so but I recall Bo Lundgren saying when he came to the Oireachtas that he was supportive of an extensive guarantee and he specifically argues about covering the bondholders. I just found his comments where he did say by the way, that an alternative was to close down the banks for a while like in the US during the Great Depression as someone mentioned earlier. http://debates.oireachtas.ie/DDebate.aspx?F=FIJ20090707.xml&Ex=All

“We presented a comprehensive package in September 1992 when we had a total collapse in confidence like Lehman Brothers in the US suffered last September. It was due to the currency turbulence in the medium-sized Gota Bank going bust. We had to guarantee the creditors of the bank and then suddenly one saw the spreads widening immensely and markets stopped working and we had to put the package into effect. The main ingredient to restore confidence was a blanket guarantee for all creditors, not for shareholders, not for perpetuals but for all creditors and all depositors. That gave immediate confidence, even if we had to explain the situation. That can be achieved in other ways. In 1933, President Roosevelt with the help of the former administration closed down all US banks for one week and then reopened the banks that were solvent. That gave back confidence to the banks and the banking system even if they had more problems in the US economy at that time. We also said that under the umbrella of the blanket guarantee we needed to be able to support banks since most of the big Swedish banks needed some kind of support. We got parliament to give us unlimited economic frames to go in with capital injections, mainly equity in that respect, provide guarantees or whatever measures were needed to handle the situation in different banks.”

A speech on the Riksbank website also talks about a guarantee for the entire banking system.http://www.riksbank.com/templates/speech.aspx?id=1722
“In September 1992 the Government and the Opposition jointly announced a general guarantee for the whole of the banking system….The bank guarantee provided protection from losses for all creditors except shareholders.”

I am not saying that the Swedish decision to issue a guarantee was infallible and should be followed blindly in all cases but I don’t agree that the Irish guarantee was some mad decision concocted out of the blue with no rationale behind it. Without a bank resolution scheme, which we badly need and should have had in place (did the Swedes have one, I wonder?) I don’t think that we would have gotten an orderly wind down of Anglo with no repercussions for the banking system. I also think that it was reasonable AIB and BOI to be afraid of the impact of the collapse of Anglo on the system. I think that I might be in a minority on this site with that view though.

@Oliver Vandt
If the basic details of the story are wrong, it also calls into question the basic thrust of the article below:

http://www.irishtimes.com/newspaper/weekend/2010/0403/1224267604942.html

I would still like an opinion on whether:

1) the Financial Regulator’s Office has a liquidity rule whereby daily cash inflows have to equal 90% of cash outflows. I’ve heard of rules where cash balances have to be a percentage of debt, but not the ratio described in the article.

2) it is credible that a risk manager who was only in the company for a few months would be allowed to call in an outside Risk Management company from the UK to audit the company’s books, especially if the company was indulging in dodgy practices.

If you are saying that because you think Ireland has a huge number of financial scandals that gives journalists licence to make up stories to prove this “truth”, I would have to disagree with you.

@Eoin: Fair enough. Though I would say that the regulator and government can make an explicit rule to keep deposits from bank subsidiaries and shell companies out of the guarantee. In general I agree with the ECB that unlimited deposit guarantees are a form of moral hazard and I don’t see the need to guarantee any deposits including retail above a limit say 100k or 200k. If you have that much in cash you can afford to do the due diligence.

PS: Obviously if you are only guaranteeing deposits to 100k you cannot give a guarantee to senior debt.

@ Jim Power

This is a very admirable contribution.

I wrote last year on economic policy in 2001:

A survey by Finance Magazine before the 2001 Budget, of the leading economists working in Ireland’s financial institutions, showed a substantial majority providing broad encouragement for the Government’s economic policy approach, with approval given to continued cuts in income taxes.

Economists such as Jim O’Leary, Dan McLaughlin, Eoin Fahy, and Alan McQuaid all called for cuts in both the top rate of tax and the standard rate, with ABN AMRO’s Dan McLaughlin pointing out that the old target rates for income tax of 40% and 20% should be replaced with new medium term targets of 30% and 10% respectively.

The dissenting voice amongst the nine economists was Jim Power, chief economist of the Bank of Ireland, who rejected the supply side consensus.

“Cutting taxes further will not increase the supply of labour,” he said. “It is fine to make headlines about the need to attract foreign workers into the country, but the reality is that we are not in a position to house these workers.”

http://www.finfacts.ie/irishfinancenews/article_1016709.shtml

@Eoin
thanks for that post – hadn’t heard of this guy I confess but a quick sniff along the google trail seems to indicate the answer to the mystery question I was asking last week elsewhere on the site – i.e. where has all the money gone? Somebody suggested the “gnomes of Zurich” or the “elders of Zion”, or some such. But a more plausible explanation albeit still a conspiracy theory is Goldman Sachs. Here he is on them:

http://www.bloomberg.com/apps/news?pid=20601039&sid=a2X3hNaWcbeg

.. and from Matt Taibbi in Rolling Stone of all places:
“. All that money that you’re losing, it’s going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it’s going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.”
http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine

@ Jim

It’s heartening to hear someone fess up when they called things wrong. Fair play to you.

I think more of this is what is required when people talk about tolerating failure – it is okay to fail and to make mistakes so long as we learn and move on.

@John Martin
“If you are saying that because you think Ireland has a huge number of financial scandals that gives journalists licence to make up stories to prove this “truth”, I would have to disagree with you.”
I believe that we’ll have to agree to disagree.

@Michael Hennigan
I think the boom went on for so long and seemed so unstoppable – especially after the slowdown after 9/11 was so short – that some who had been cautious either kept silent or joined the cheerleading. I am not an expert so my overview of the state of the nation was based on the views of others with greater knowledge (negative on house price bubble) and what I read and watched (positive generally).

In late 2007 my summary would have been that Ireland was:
an exporting country;
which was having a housing boom like Britain in the eighties;
but with strong fundamentals.

I thought that the house prices would fall significantly for some years but would recover in nominal terms within less than say 10 years due to a dynamic, young, exporting, flexible, energetic, golden, sunlight uplands future economy. This was the impression the government gave me up to and long after the 2007 election (minus any reservations about house prices).

Then we hit the iceberg they had been steering the country towards at ever greater pace for the previous half decade.

And even now, the Government appoints people to advisory committees who think the banks were well-regulated and that Kelly was simply a sensationalist.

P.

@ Jim Power,

Jim, hats off for your apology to MK and your humility in accepting your mistakes. One doesn’t hear much of this in Irish public life and it is tremendously to your credit that you are holding your hands up.

It does, however, continue to baffle me as to how all you guys called it so wrong. I got a dodgy B in my Economics Leaving Cert some time in the last millennium and even as an amateur I could see this all coming from 2003 or 2004 onwards. There was never a moment of doubt in my mind. I am genuinely non-plussed as to how professional commentators and economists in such overwhelming numbers couldn’t see it. I guess it is a testament to the power of bubble psychology.

Anyway, I don’t want to be unmagnanimous by having a go. All I really wanted to say was fair dues to Jim.

Jim,

Well done and bravely said. I might now refrain from circulating the link to the aformentioned Prime Time clip which I use to illustrate the hubris of the financial establishment and its spear-carriers during the boom.

Instead, I think I shall use your mea cupla comments on this thread to illustrate that nemesis is possible, and can be recognised as such. Someone once said that for a apology to matter it must hurt a bit.

Now it’s my turn. Some years ago you and I regularly debated the wisdom of the UK and therefore NI joining the euro. Thank Jaysus we didn’t. Now we have to figure out how to deal with the deficit, but the facts are that the ECB would never have allowed a eurozone state run up the deficit which Alistair Darling did to (necessarily in my view) mitigate the recession in the UK.

Now, of course, the Tories are planning to undo all that by xeroxing the great plan which has wrecked the economy of the Republic of my birth. But that is something for another thread…

@All
I am not posting this one sarcastically!
http://www.nytimes.com/2010/04/18/weekinreview/18dash.html

http://www.crackshackormansion.com/

This game reveals a mass of concern about Vancouver. I got 13 out of 16. Not too hard, once I got the hang of it. Prices can be set at the margins, by significant buying by persons unfamiliar with the market, and even can be self reinforcing. Sounds like a winner!

Jim Power
The credit cycle is what banking is all about. A creeping madness that ends as a myriad of mal investments the yanks call Ponzi schemes. Pyramids. It takes two generations, Yogan!

Sarah, I need a lotta loving!

I am not so sure about Jim Power’s mea culpa. I noted ever since I saw a youtube video of Power and Joe Higgins in a socialist party debate in Wynns hotel a couple of years ago that he was making moves to cross over to the ‘other side’ in the post crash scenario, for purposes of future survival or because of a genuine new-found enlightenment I could not tell.

As we see here the transformation is ongoing. A lot of you will no doubt find that unmagnanimous but I would ask you to bear the following in mind:

– during the bubble Jim Power ran with the crowd. Now in the new environment he is running with the crowd. Therefore he has form in this regard.
– I am not an economist but over the last 8 – 10 years I have educated myself on economic matters primarily by reading the commentary available on the internet, which was fully available to all of these ‘experts’. The quality and depth of this commentary has been superb, especially by independent american and english commentators and former insiders.
It is not credible to anyone who has read the commentary available on the web that the homegrown crop of ‘experts’ who have populated the television, radio and newspapers in Ireland during the bubble were speaking from a position of understable error. When one is acquainted with the facts there is little chance that these people were speaking from error because the outlines of the crisis were clear and inevitable for at least the last 7 years or so. It is much more likely that these people were liars looking to the main chance, particularly their careers.
In light of that Jim Power’s assertion that he now realises “that I was totally duped by what the regulator and the banks themselves were telling us about the health of the banking system. I had no idea that the banks could possibly engage in the quality of lending that they did or indeed that they could possibly get away with the quality of guidance that they were providing up until very recently” rings untrue to me. It is simply not possible that this is the case and I say this as one who is not economically trained.

You may say this is unmagnanimous but I would reply that I am merely employing logic, which I have done at every point throughout this decade and which, along with the excellent and honest commentary on the net, has steered me right for a decade.

Perhaps Power is genuinely remorseful, if so that is a private matter for him. In the public sphere neither he nor any of the other ‘experts’ who have wrought such havoc upon our country by their actions should be allowed to occupy further public space. That is the least penalty they should pay for what they have done.

As in all things so in this: caveat emptor.

http://www.brisbanetimes.com.au/queensland/housing-shortage-hits-home-in-qld-20100428-tqnu.html

Note in particular the comments to the article. The msm is puffing the shortage. Yet houses are for sale. The population is growing. Yet again, land availability is at the core. So maybe there is a shortage, but housing is so expensive that many cannot afford the extra land costs.

Not an Irish problem?

http://www.latimes.com/business/la-fi-south-la-20100425,0,3267386.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+latimes/business+%28L.A.+Times+-+Business%29

More stupidity! But it illustrates the point of liquidating stock. Economic activity, even if premature, will pick up!