Former Taoiseach, Brian Cowen, delivered a speech at an event in Georgetown University in Washington last Wednesday. His prepared remarks entitled “The Euro: From Crisis to Resolution?: Some Reflections from Ireland on the Road Thus Far” can be read here.
33 replies on “Brian Cowen Speech”
So he will talk to a private meeting in the USA (was it pay-in? if so for whose benefit?) but wont talk to us. Then he blames everybody but himself.
From page 1:
I’d like to talk about the context in which policy decisions in Ireland were made during the years of strong growth and during the crisis.
The recent Mahon tribunal report gave everyone a good flavour of the policy context I would have thought?
Ireland has just experienced the greatest property crash in the history of mankind. In 1999-2000-2001-2002-2002-2003-2004-2005-2006-2007-2008 Independent economist David McWilliams told the Irish government and all other Irish politicans that there was a property bubble in Ireland and when this bubble bursts hundreds of thousands of Irish househoulds will experience negative equity. He was vilified, laughed at, and told to commit suicide.
It’s pure Bourbon — learned nothing, forgotten nothing.
Jesus wept!
One sentence grabs me: “With the benefit of hindsight, budgetary policy should have leaned more heavily against the wind.” I wonder whether we’ll be saying something similar in the foreseeable future.
Mahon Planning Tribunal report 21st March 2012
” Corruption in Irish political life was both endemic and systemic. It affected every level of government,from some holders of of top ministerial offices to some local councillers,and it’s existance was widely known and widely tolerated”.
Ha! Ha! Ha! Ha! Ha!
Jesus – we dodged a bullet with this moron.
Imagine if we’d made him Minister of Finance…
Oh wait…
It’s bad enough that people are wiling to listen to Cowen, a traitor who then gets free advertising in this Blog….
I am outa here. Sick of this “yes men” blog
“It is the case that no discounts were applied to senior bonds, which raises the question as to whether the State could have reduced the bill for the banks by excluding senior bonds from the guarantee, either at the beginning or subsequently. The extent to which losses could be imposed on senior bonds of European banks is limited by the legal framework that requires equal treatment of all senior bank creditors, including senior bondholders and depositors. This state of affairs is very different from the US, where senior bonds and depositors can be treated differently.
Notwithstanding these legal issues, what the passage of time has shown is that, in reality, as a member of the euro area, the senior bonds of Irish banks had to be repaid in full, even if there had been no guarantee. At no stage during the crisis would the European authorities, especially the European Central Bank, have countenanced the dishonouring of senior bank bonds. The euro area policy of “No bank failures and no burning of senior bank creditors” has been a constant during the crisis. And as a member of the euro area, Ireland must play by the rules.
A question that is sometimes asked is why Ireland didn’t renege on the guarantee when the true scale of the banking losses became apparent. The reality is that the guarantee was enacted by Ireland’s parliament by a huge majority and reneging on it would have amounted to a declaration that Ireland was a bankrupt state.”
Ireland must play by the rules??????? Utter nonsense.
We unilaterally introduced the guarantee to the consternation of the British, amongst others.
The notion that we couldn’t separate deposit holders from depositors legally is patent nonsense.
The senior bank bond guarantee expired in 2010 and no issue of renaging would have arisen.
2,800 ghost estates, 33000 residential homes, upward only rent reviews, property bubble
http://www.rte.ie/news/2010/1022/ghostestates.html
You get naught of the above in his speech. Apart from some nods to countercyclical policies that might have been adopted, but would have reduced employment levels,
most of the speech is an attempt to rewrite history with sweep his dirt under the carpet ruminations on global monetary matters.
“In Ireland, funding conditions in 2008 were getting more difficult and the weakening in the property market was a growing concern.” You’d feel like taking him by the ear for a four day trip around the 2,800 ghost estates.
There are some lies in the speech, eg “There was a belated recognition that up until that point, each Member State had been left to fight its own battles using principally its own resources and that this state of affairs was not satisfactory.”
Errr no, Alistair Darling, UK Chancellor for the Exchequer and Christine Lagarde then French Finance minister, freaked when they heard of the guarantee. The UK were terrified it would cause a run on UK banks. Cowen could have coordinated policy at European level and passed the problem to ECB. Totally pilot error.
“In the months that followed, there was a marked step up in the level of activity at a European level, including enhanced regulatory coordination, development of new legislation for banks, and better systems for communication in relation to distressed banks” Partly motivated by the Irish elephant in the glass house running amok with the crazy guarantee.
More pilot error here, but I attribute this one to a Irish Lord Cardigan charge of the light brigade led by Honahan. If there are mitigating circumstances in regard to Cowen, one should look to the poor support in Department of Finance and NTMA to whom some of the disastrous decision making should be attributed.
“In signing up the EU/IMF programme, we were aware that the 5.8 per cent average interest rate attached to the loans was high. It was, however, the best rate on offer at the time, as some Member States were anxious to dissuade countries from borrowing from the EFSF.”
What a crap deal that was. There we had the Troika ready to eat out of our hands due to contagion fears and they end up delivering a 5.8% scambolic disaster to Honahan.
Leaving aside our compliance and subservience and incompetence and our odious acceptance of the IBRC debt, Cowen does make a good point re the PN’s current negotiators should take note of, especially in the light of current discussion re switching debt out of PN’s into some type of sovereign bond issue:
“Second, promissory notes are a form of debt that can be restructured at some future date without running the risk of triggering default clauses in other types of government debt”
Lets just restructure that debt now, refuse to pay the ¢31 bn subject to determination by the International Court for Banking Settlement. To make the case we need a proper inquiry into Anglo: 10 of those ghost estates, 50 detectives, public, video evidence in open court, call all the witnesses from the bank lenders and the crony developers, canaries will sing.
Overall, I believe most of the disastrous decisions made by the Cowen government were made on the basis of, ‘We felt…’ Often the heart ruled the head contaminated sometimes by greed, sometimes by fear, sometimes by arrogance and mostly, it would appear, Brainy of the numbskulls was on holiday.
@Colm
Converting the PNs to government bonds would be a serious mistake,especially if the rate of interest on both instruments is similar…as it would have to be if the “cash value” is to be maintained as recently observed by our EU friends.
Will Mr Cowen allow the state to deduct his state pension by the amount of money he recieved for making this speech?
Still can’t figure out how you can have negative fiscal debts in a rational banking system – increasing private debt levels to even more absurd levels – Dear Brian somehow wishes the Irish taxpayers subsidise private equity even more via a larger pension pot that would be subsequently liquidated to pay for private bond holders.
Its a sick world out there.
Watch out for Spain doing a Ireland soon , with Italy and its lower private debt ratios giving it a temporary reprieve.
The man is riding high after his standing ovation in the RDS from FF. Now convinced of his own skill, he attempts to rewrite history. Pity he did’nt bother to look out the other door in the RDS and see the many queuing to get a job in another country.
Summary
The banks led us astray; the people led us astray; for the most part we made the right choices. When you all grow up you will agree with that.
“We know too well from recent experience that large budget deficits bring serious political challenges, but so too do large budget surpluses. There was no support from any quarter for higher taxes and lower spending.”
‘I was only leading you all where you wanted to go’
The building boom and FFs part in it has been airbrushed from history.
There is something sad about this. Prostituting himself after pimping out the country.
Next govt should be made up of page 3 girls and something nice for the ladies. Nicer to be screwed by something nice to look at.
You cannot blame Bog Boy Brian for changes in the global banking system which changed profoundly in the mid/ late 1980s.
We Irish are a sad bunch – we are unable to accept we were a mere conduit for the Banking Cartel.
Ducks on a Fois Gras Farm although some ducks put on more weight then others………….
To see what happened on the European level look no further then this excellent yet simple interactive graph.
mazamascience.com/OilExport
Looking at oil consumption the UK , France & Germany had a static to declining trajectory – they have been deeply in Deflation for decades – refusing to invest in domestic capital intensive but long term capital improving projects.
But this defaltion has had effects………. inflation must happen elsewhere.
Meanwhile Ireland ,Iberia & Greece have experienced explosive growth in consumption during those years.(Italy experienced explosive growth in gas imports rather then oil)
Anyhow almost none of the fixed capital investment during that period has been productive , indeed it has been extractive of capital as depletion moves takes its toll.
No Moneypoints , no Ardnacrusha (Ardnacrusha still has a cash flow after all these years) , no nothing other then roads that were needed so as to subsidise the cores mercantile / bank bubble “investments”
Brian cannot be accused of intellectual bankruptcy as the man had no understanding of the process anyhow and indeed even if he did he had no control as the capital was free to move anywhere anytime.
I know there’s a market for gurus. It now seems there’s a market for the anti-guru. Even Bertie is getting gigs in subsaharan africa. Though I do think the taxman should send someone along to these talks just to make sure it’s not some elaborate scam to launder bungs 😀
Interesting speech but under the causes of the banking crisis there’s no mention that banks create all digital money through loans. And no mention that every euro has a matching debt as a result. No mention that digital money is deleted through loan repayments.
Under possible resolutions there no acknowledgment that any money required for growth in the economy will also have to come from bank loans, and will also have a corresponding debt.
“At the time the guarantee was given, the advice was that the banks were solvent but were experiencing a liquidity problem. In those circumstances, it is difficult to see how any government would have experimented with allowing any one bank to fail or take any risk in that regard. Of course, it subsequently transpired that the banks were insolvent but that was not known at the
time of the guarantee…”
The mystery remains – how was a guarantee drawn up in such an amateurish fashion that those guaranteed could lie and still remain covered. Every insurance policy has such an out clause. This was and remains, the major crime of the guarantee, I have yet to hear a plausible attempt to address this question.
…”Some analysts have focused on the international crisis in financial markets following the collapse of Lehman Bros”
Now, that you have said it Brian, that does ring a bell. Especially, as it was lip synched from every minister in your cabinet at every available opportunity.
But wait? It gets curiouser. “Some people may expect me as a previous Prime Minister of a European country to defensively suggest that the Euro crisis was caused only by international factors or developments in the US”
“But I simply do not believe that this is the case.” Bingo! Damascus Road conversion or Just wiping the “whiteboard” clean to rewrite history or just the fact that he is in the US?
”
Counter cyclically I could have taken measures but that would have caused “7% unemployment” but that would have made me unpopular and all that valuable “research” being funded n the hospitals would not have been able to go ahead and we would not have our new state of the art children’s hospital and that would have been even tragic. Was this “research” into how long people could possibly survive on hospital trollies? What about the random but not stratified test that was carried on by not opening 10,000 GP referral letters to Tallaght Hospital? I must say they were great lateral thinkers when it came to the art of medical “research” but I am not sure yet about his economic legacy. The jury is still out as to whether to just put them all in jail or confiscate their pensions.
@ Georg R. Baumann
Don’t go Georg.
If the posters are ‘yes-men’ then alternatives are needed.
But actually, I think the ‘no comment’ nature of the posting – here is what he said – is by no means an endorsement, but simply a case of providing him with his own rope.
The speech is shocking and the context is shocking, and for the set of three, if you want to get angry, the selective and critical way the IT has chosen to present this is also shocking.
“Cowen accepts role in economic collapse”
http://www.irishtimes.com/newspaper/frontpage/2012/0327/1224313955594.html
@ceteribus 8:14
+1
” Mr Hall, College Grove, Castleknock, Dublin – a founder member of the New Beginnings group of business people and lawyers – said he has, for some time, had “grave reservations about the manner and way the public finances of the country have been run”. The benefit of the promissory notes scheme or “trick”, done with the alleged connivance of the Central Bank and perhaps the European Central Bank, was that bondholders got paid and no European bank reneged on its debts, he said in an affidavit. ”
“The Irish people, having never been consulted about this and in circumstances where its representatives were bypassed, were being asked to honour a deal made in flagrant breach of the Constitution, with no democratic legitimacy and in breach of the Treaty on the Functioning of the EU, he said.”
http://www.irishtimes.com/newspaper/ireland/2012/0327/1224313952719.html
@ Gavin
appreciate it, I answered you per email info at fish…
Best
Georg
“A countercyclical policy stance would probably have required budget surpluses of 5-6 per cent ofGDP and an unemployment rate around 7 per cent.”
Where did this 7% come from? Is this an ESRI number based on churning through their macromodel? Or perhaps a CBI number? Or pulled out of thin air?
@ Georg
Fan tamall. You should stay.
There was something very melancholic – I believe the Turks call it hüzün – about Cowen saying there was one chance to calm the markets on the day they gave the guarantee. It was that they had no clue about what the exposure was. Because they never went into details like that. And just as Istanbul has that hüzün feeling for the lost glory of the Ottoman empire Ireland has a big dose of it as well.
Has anyone ever considered that Brian (and many other ‘leading’ politicians) were just simply acting way way above their ability level?
…and probably still are today.
@REFERENDUM (comment from Nevin? …
May 31 is a foolish date ….. it ignores developments in other parts of the EZ
The Debate in the Bundestag is ongoing – and no way will the Bundestag have voted on this by May 31 …
See: Anglela’ Korset, The SPD/GP forced compromise, the debate on the Korset including measure for growth etc …. & [Hi Olly!] the superior Wisdom of Festina Lente in this case:
Der Spiegel International Today ….
Separately, the main opposition parties on Tuesday rejected plans by Merkel’s government to push a European pact on budget discipline, the so-called fiscal pact, through parliament by June, saying more time was needed to complement it with measures to boost growth.
http://www.spiegel.de/international/europe/0,1518,824104,00.html
@ PR guy
Agreed. They were way out of their depth. Even if Cowen had 15 years experience of European negotiations or whatever it was no preparation for the return of Great Game power politics to Western Europe. Metternich would have eaten him for breakfast as well.
Goerg – Lucinda needs you … she is looking for Germany as someone has just brought its existence to her attention …. Herr Bund and Ms d’Estag are not, apparently, amused. Dinny O’B, of course, is absolutely terrified that Shelock Holmes’ nemesis has changed sides.
As I suspected a wee bit of Conflationism at 6.8% Wonder does Lucinda understand Conflation? Does Noonan? Spose the Governor would term it a modest touch of Conflation? Hope Juncker enjoys those cigars.
Minor point:
Wonder on which laptop in UCD was most of this speech written? Or could it be NUIG? Naw … prob UCD. At least he is honest enough to admit explicity that he made a balls of the Irish economy; unfortunately, unlike BMW, it is proving a mite more difficult to witdraw that ludicrous guarantee! But might there be a BMW precedent here? Constitutional even? We live in hope – loose-enda’ll sort it.
@Georg R. Baumann
Text from Blind Biddy:
Illegitimi non carborundum.
The boom and the crash and Cowen and Lenihan’s Saturday night call – I was reading the Gingerbread Man to my daughter tonight and the parallels were striking . Cowen guided the Gingerbread economy. It ran faster than anyone thought – saying you’ll never catch me – but when it came to Lehman’s the gingerbread economy had to cross the river – it it met a fox known as Trichet and it got gobbled up and that was the end.
Just another ex politician taking the money after performing his duty for an outside interest.