“If they saw the enormity of it upfront . . . they might decide they have a choice”

The Irish Independent carries the story of recorded conversations in 2008 between Anglo Irish executives. The tone of the calls is really shocking, leading to widespread domestic opprobrium. The international reaction has been split. Jamie Smyth in the FT makes the case for a banking inquiry, while Sam Cage at Reuters pushes the party political angle. Listening to the tapes, it’s hard not to get very annoyed. Here from the FT article is an excerpt of the conversation. The bankers are discussing how best to extract the maximum monies from the State.

“The strategy here is you pull them in, you get them to write a big cheque and they have to keep – they have to support their money,” Mr Bowe said in the recorded call, when explaining why the bank had asked Ireland’s Central Bank to provide €7bn in aid when, in fact, he believed Anglo Irish required much more.

“If they saw the enormity of it upfront . . . they might decide they have a choice,” said Mr Bowe. “They might say the cost to the taxpayer is too high.”

They might have indeed.

The Anglo tapes, in one sense, describe nothing new: we already knew bankers were aware of the possible losses at Anglo, and mislead senior policy makers in 2008 as to the extent of the losses. What we didn’t know—and still don’t—is how common this reprehensible behavior was across our banking system.

Anglo is the bad boy of Irish banking, but readers should remember it was bailed out with money borrowed by the State at ECB rates. AIB, which swallowed almost as much capital as Anglo, did so at a much higher relative cost to the taxpayer in terms of cost of capital. Were executives at AIB, Bank of Ireland, and other banks, similarly aware of possible losses in their banks around the same time as these tapes were made? If so, did they deliberately mislead officials when meeting them over a possible bank guarantee? Were any officials within the Department of Finance, or the Department of the Taoiseach, similarly aware of a divergence between what the banks were saying around this time?

These and other questions have not been answered. We have had three reports into what happened in the lead up to the collapse, each giving possible reasons for why the banking collapse happened. Each report has been excellent within its limited terms of reference. Despite these reports, we have not had any satisfactory answers to simple questions revolving around a central theme: who knew what, and when?

Comments

comments

Author: Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

223 thoughts on ““If they saw the enormity of it upfront . . . they might decide they have a choice””

  1. No one saw it coming… some of us did.

    http://www.thepropertypin.com/viewtopic.php?p=158692#p158692

    Sidewinder
    Post subject: Re: Government needs to stop f**king around with the banks
    PostPosted: Mon Nov 17, 2008 7:59 pm

    Recapitalisation is a stupid idea. You could sink €100bn into these lemons and they’d still need more.

    The existing Irish banks are Dead. Just give them a decent burial already. The last thing we need is 20 years of propping up zombie undead banks. Let them fail, let the State buy up a branch network and the clearing technology for a pittance, create a State-run bank with a remit to focus on providing credit to the indigenous SME/start-up sector. That can get the wheels of industry turning again, and in 3-5 years we’ll be through this mess and out the other side. Let the liquidators waste their lives trying to extract some value from the corpses, at no expense to the taxpayer.

    It’ll be far quicker and far cheaper than arseing around for a generation trying to staunch the wounds on the Irish banks. It’s like waving a cotton bud at a man who has just had his arm cut off.

  2. Gut wrenching. Remind me again, how many of these guys are in jail? Still though, Neary should have known they ‘pulled the figure out of their arse’. what was it again ‘Irish Banks are so well Capitalized’.

  3. So when does anyone get held accountable for all this?

    If I walked down to Headford tomorrow morning and robbed the bank there of a single euro, I’d be arrested, tried, convicted, sentenced, put in jail and served my time all before any of these people hears a whisper of accountability.

    These people stole billions essentially. The harsh economic reality is leading people to their graves through high stress and the illnesses it causes or straight up suicide. Even more are emigrating and their talents are enriching other countries.

    When is enough enough? When is there accountability? And when do we put competent people in charge of these institutions?

  4. I am sure you have heard of the whistleblower Jonathan Sugarman who worked for Unicredit as risk manager at the IFSC. The regulation of the Irish financial system is rotten to the core. The politicians on all sides are aware of whats going on. In the following article, scroll down to the heading Opposition Politicians and have a read if you have time. No wonder Matthew Elderfield is gone.

    http://www.villagemagazine.ie/index.php/2013/04/still-waiting-for-the-truth-from-the-regulator/

  5. At the heart of the banking disaster is a fundamental error in pricing property assets. Why oh why we are still not really willing to face up to the fact that banks priced property before the crisis and have continued to do so during the crisis and sadly continue to make a complete horlix of it is something that will forever dumbfound historians when they analyse this crisis if we ever see the light and the back of it.

    The Anglo directors were willing to lend billions into residential property ventures where the rental yield on new builds would have to have been c1% or less for the venture to break even let alone turn a profit and all the while the CBI couldn’t commute that perhaps this was potentially risky and a likely dangerous banking practice. It beggars belief.

  6. In their recently-published book on the end of the Celtic Tiger Donal Donovan and Antoin claim:

    “Another myth the book seeks to shatter is that the blanket bank guarantee issued in September 2008 was the moment when Dublin gambled its future on banks and lost. In reality, the government had no viable alternative by this stage, according to the authors. They are probably right.”

    Mr Bowe’s cynical logic was shrewder.

  7. @Stephen Kinsella

    Despite these reports, we have not had any satisfactory answers to simple questions revolving around a central theme: who knew what, and when?

    Correct. Here’s the Irish government’s position in late December 2008. More specifically this was Michael Martin’s position in official communication with the European Commission

    The primary objective of the Guarantee Scheme was to address the loss of confidence in interbank lending markets that led to liquidity difficulties for even fundamentally sound banks.

    and

    According to the Irish Government, Anglo is a fundamentally sound institution.

    However:

    The Commission does not share the view of the Irish authorities that the bank remains fundamentally sound.

    Given the overwhelming and compelling evidence available by end of December 2008, the Commission’s view was commonplace, while that of the Irish government incomprehensible.

    As such the evidence points to fraudulent misrepresentation of the situation by Anglo to the Irish government and fraudulent misrepresentation of the situation by the Irish government to the EU Commission.

    The fact that setting up a comprehensive banking inquiry is still being discussed 5 years after the meltdown, and that same Michael Martin is now topping the opinion polls, is evidence that at heart, Ireland is a third world country from a governance point of view. It is a country that just doesn’t “do” accountability for the insider classes.

  8. The pathetic, mealy mouthed response of E. Kenny takes the cake. “Mr Kenny said legislation to help form a long-awaited Oireachtas inquiry into the banking collapse is to be introduced before the summer.”

    Sick, sick, sick, we have a sick government,sick regulators and a sick criminal justice system.

    The usual Irish cure for inept government is to vote out tweedle dum and return to office their inept predecessors tweedle dee.

    This is not a country it is a sick joke unable to face up to reality. To cap it all off there is no end in sight.

  9. “Despite these reports, we have not had any satisfactory answers to simple questions revolving around a central theme: who knew what, and when?”

    Omerta is the name of the game in collapses of this magnitude. Most of the people nominally in charge were praying to St Jude. The crisis went way over their heads. It destroyed the credibility of the crowd who inherited the steering from the Protestants about 50 years ago.

    They needed to know what was going on in 2005 . It was way too late when TSHTF to do anything. “Who knew what and when” – surely “who UNDERSTOOD” would be more pertinent

    It’s not about when the flood comes. It’s about when the flood defences are weakened. That is when you need to act.

    Sean Fitzpatrick on Quinn

    http://www.cashcowadvances.com/paydayblog/i-dont-feel-ashamed-but-i-do-feel-regret-very-serious-regret.html

    “David was more up to speed clearly about the activities of CFDs. He was bringing me because he always felt that Quinn regarded me as a superhuman, as a superhero. He wanted Quinn to see how disappointed I would be.”
    When FitzPatrick learned the size of the Quinn holding “I was physically shocked. I wasn’t expecting that. I said: What! David said afterwards to me that he looked at [Quinn] and that he saw the surprise in Quinn’s eyes at my reaction.”
    “David was more up to speed clearly about the activities of CFDs. He was bringing me because he always felt that Quinn regarded me as a superhuman, as a superhero. He wanted Quinn to see how disappointed I would be.”
    When FitzPatrick learned the size of the Quinn holding “I was physically shocked. I wasn’t expecting that. I said: What! David said afterwards to me that he looked at [Quinn] and that he saw the surprise in Quinn’s eyes at my reaction.”
    Fitzpatrick thought Quinn was a “real 1960s Irishman. He was one of those hail fellow well met, ah sure I will go down there and play the old cards, five or six lads for 10 bob, or whatever it was. He was always producing all that and would be nearly blessing himself. Everything will be all right. He was very human but, I didn’t easily like him.”
    On March 25th, 2008, the four men met again, this time in a room in Buswells Hotel in Dublin. The ongoing fall in the Anglo share price was threatening the Quinn business empire and the bank. At one stage Quinn and FitzPatrick were alone in the room.
    “He was very close to tears. He could see what was happening.”
    . He was very human but, I didn’t easily like him.”
    On March 25th, 2008, the four men met again, this time in a room in Buswells Hotel in Dublin. The ongoing fall in the Anglo share price was threatening the Quinn business empire and the bank. At one stage Quinn and FitzPatrick were alone in the room.
    “He was very close to tears. He could see what was happening.”

    Sure how were any of them to know neoliberal capitalism was about to fail ? And that this was El Gordo.

    RTE almost lost its nerve one week in November 2011. It is still a bit shaken.
    It took a good while to reset the memes from “the Pope’s children” to “15% unemployment” . But I think the viewers understand now.

  10. This appears to have been a discussion by Anglo with the Central Bank about the possibility of ELA.

    Anglo didn’t get ELA till somewhat later. Instead the system got the guarantee.

    The irony is that had the situation been managed by ELA in August, and no guarantee, it would have been easier to pull the plug later, subject of course to Bowe’s correct analysis that CBI might have felt sucked in by that point.

  11. @Stephen Kinsella

    Messed up the indentation – trying again. 9:33 could be deleted

    Despite these reports, we have not had any satisfactory answers to simple questions revolving around a central theme: who knew what, and when?

    Correct. Here’s the Irish government’s position in late December 2008. More specifically this was Michael Martin’s position in official communication with the European Commission

    The primary objective of the Guarantee Scheme was to address the loss of confidence in interbank lending markets that led to liquidity difficulties for even fundamentally sound banks

    and

    According to the Irish Government, Anglo is a fundamentally sound institution.

    However:

    The Commission does not share the view of the Irish authorities that the bank remains fundamentally sound.

    Given the overwhelming and compelling evidence available by end of December 2008, the Commission’s view was commonplace, while that of the Irish government incomprehensible.

    As such the evidence points to fraudulent misrepresentation of the situation by Anglo to the Irish government and fraudulent misrepresentation of the situation by the Irish government to the EU Commission.

    The fact that setting up a comprehensive banking inquiry is still being discussed 5 years after the meltdown, and that same Michael Martin is now topping the opinion polls, is evidence that at heart, Ireland is a third world country from a governance point of view. It is a country that just doesn’t “do” accountability for the insider classes.

  12. Am I missing something here? Why didn’t Neary look at the books, cash flow should have identified the extent of the problem no?

    Surely a full audit should have been conducted by the regulator before accepting the bravado of a couple of glorified sales men from the banks?

  13. Interesting to note that the defense this morning was the Bart Simpson one but by evening it was ” deeply regrets the language and tone…according to the IT.
    Nothing about content.
    The government now have no alternative but to proceed to an Inquiry now that the whole country is aware of the depth of knowledge of senior executives of Anglo even if it is a bit late, being five years down the road come September.
    But will any lessons be learned? As Stephen said..what did the others know…and is there tape recordings of the critical discussions.
    I am afraid that any inquiry will be overwhelmed by the existence of millions of documents known to be discovered in the proceedings in being in the case of Anglo and will be further delayed by such proceedings.
    Don’t expect much light anytime soon.

  14. Stephen wrote,

    “Were any officials within the Department of Finance, or the Department of the Taoiseach, similarly aware of a divergence between what the banks were saying around this time?”

    What I do know for a fact, was that from late 2006 onwards, that senior members in the Irish government were involved with Mr. Sean Quinn’s shopping spree about the republic to purchase various institutions that were distress. A rot sort of set in there, whereby Mr. Quinn was been given various assurances by the cabinet in the republic, in regards to his opportunities for investments and asset buy-ups.

    The Quinns are having to subpoena a lot of legal documents, and reports issued to the Irish government now, for their own legal proceedings, which seek to prove beyond a doubt, what the Irish government did and did not know. Remember, this is the barrier of prove necessary in a court environment, beyond reasonable doubt – and it is very important in relation to the question that you ask above, that the Quinn family case in particular goes ahead (regardless, of whether one is pro-, or anti- Quinn family).

    But there is no doubt, that there was a very concerted effort by many in the case of Quinn, to cover some tracks that were left there, when the buying spree that happened in 2007/08, went so drastically wrong – because what it underpins, is this contention by Mr. Sean Quinn himself, that he took on face value what he was shown in financial regulator approved reports at that time.

    What today’s story really does, is it underlines the validity of the Quinn family case, as I said, regardless of whether one may be pro-, or anti- Quinn family (and much of the public appear to be either one or other). BOH.

  15. I hope the tapes don’t distract from the root of the problem.

    If we had a one tier money system in which businesses & households dealt directly with central bank money we would never ever have to bail a bank out.

    If we could stop the deletion of money by banks we’d make great progress in sorting out our money shortage issues.

  16. One should try to imagine the unrecorded conversations going on at this time and one should also ask what the then Finance Minister (RIP) actually knew…… that he took to his grave with him……. but of course we aren’t allowed to talk ill of the dead elite, especially in Ireland.

  17. The last thing that is needed is an inquiry.
    What is needed is a criminal investigation followed by charges and a trial.

    If the Gardai are not deemed competent to conduct a criminal investigation and there are no competent prosecutors or indeed judges capable of doing an honest days work. Then the time has come for the government to resign so as the voters can have their day in court.

    The Taoiseach himself says publicly that there is a mountain of documentation in the Governments possession. The last thing we need is a bunch of Irish politicians using that treasure to increase the flow of “campaign contributions” during a window dressing and sham inquiry. If this placates the public then they deserve what they are getting.

    If I wasn’t so cynical I could get angry. When I think of previous inquiries and the fact that the only positive outcome was to enrich the legal profession, anger is justified.

  18. I think that the point is being missed:
    1: Anglo epitomise what is wrong with banking at a global level. There is no moral guide. He who dares wins
    2: This is a global problem and a global crisis. It needs to be tackled globally
    3: The problem is with banking. It starts and it ends with banking.

  19. I’m just back from the opening night of Fishamble’s Guaranteed in Newbridge. I think poor Colin has been so caught up in getting it on stage that he doesn’t realise yet what he’s achieved. I think drama can get to the truth better than a report because you see human weakness rather than cold logic in all its glory. I highly recommend it. Just one week though so catch it wherever you can.

    My take is –
    1. the politicians didn’t realise until it was too late what was happening. If they’d switched on sooner, they mightn’t have been squeezed so tight in September.

    2. it was all down to who was in the room. Merrill Lynch and JP Morgan and plenty of domestic advisors had good ideas. But they weren’t in the room when the crunch came

    3. Trichet was no help and made everything worse with the no bank left behind policy.

    So my recommendation is:
    let’s re-run that Dail enquiry referendum and this time the Irish Times declines to publish letters from pensioned former A-G’s who don’t want politicians stealing their thunder and fees.

  20. The Secret Sauce Of Iceland’s Success Story: Debt Liquidation?

    http://www.zerohedge.com/node/475643

    All efforts to date have bled the sovereign and the tax payer for insolvent banks that have loan books in the Alice in Wonderland ranges. No matter what they are going to have to do debt write off.

    With 144,000 in arrears, the same people being taxed to death for the banks I hope that it will be sooner rather than later the penny drops, that mad cap loans based on the Tiger Economy fantasies are totally unsustainable under any circumstances they might like to dream up.

    The loans need to be written down to 110% of their current market values al la Iceland and if they are still not capable of being serviced they need to do their Personal Insolvency and Code of Practice on Mortgage arrears, they are putting the carriage before the horse.

    First must come the write down across the board.

  21. People are surprised by this? Bankers are dishonest, devious, greedy liars — criminals in my opinion — and everyone knows this.

    The content of these tapes was known beforehand by almost every taxi driver in the capital. This is the class of people who run Ireland, who ruin Ireland, for their own personal gain.

    Bankers are fundamentally criminal. News at 6:01.

    @Sarah Carey

    let’s re-run that Dail enquiry referendum and this time the Irish Times declines to publish letters from pensioned former A-G’s who don’t want politicians stealing their thunder and fees.

    Firstly, all three national newspapers published that letter.

    Secondly, it doesn’t matter. Suggesting that one letter from eight blustering plotters from some old sepulcure of a legal society caused 50% of the Irish population to suddenly vote against a banking inquiry is a patently absurd notion. At most 10-15% of the population would have even known who those windbags even were, and half of those would have voted no based on that letter alone.

    The truth is, the Irish population voted no because they didn’t want a banking inquiry. They still don’t want a banking inquiry. You put another referendum up there and they still won’t want it. Why? I have absolutely no idea, but the facts speak for themselves.

    Paddy was given his chance to roast the bankers. He declined and went back to the pub. He might use his phone to write the odd blog post, but he’s not coming back out.

  22. @ Stephen Kinsella,

    To put things another way, if Mr. Sean Quinn had been a large American multi-national company seeking to invest money from abroad into Ireland, would he have been treated differently?

    But the fact, that the Quinns came down from Fermanagh, those in charge of regulatory practices in Irish financial institutions, may have been willing to do that Irish thing – a sure, he’s come in to the town from the country, and we’ll teach him a little lesson, about how not to be so trusting.

    Similarly, think of all those shareholders, many of whom had liquidated their own assets in businesses and property, and what not, from all over the island of Ireland – and flung all of that ‘net worth’, into institutions such as the Irish banks – and were wiped out clean.

    That seems to be okay too.

    To hell with regulatory finance and scrutiny. If it is a foreign multi-national who sets up in Ireland, we will make absolutely sure that they don’t pay a single buck beyond what that owe. But if it is Irish investors, large or small, then fleece them out and leave them stranded. They are ‘fair game’.

    Bottom line is, what all of those ‘silly’ Irish investors should do, is take their business to America, like some Irish companies did in the 1980s onwards – because at least then, you may not have to sit in a jail cell. But if you’re Irish, and you invest in Ireland – then you had better ‘brace’ yourself for the bang.

    And the Anglo recordings published by the Irish Independent today, just go to underline that. Simple as. BOH.

  23. @ All,

    Why don’t all former Anglo Irish share holders get together now and just sue whoever they can, for dis-respect, if nothing else? And the same at AIB. That is what ought really to happen. BOH.

  24. Already we are rationalising despicable behaviour. World banking may have more than its fair share of crooks. That does not mean that we cannot hold our crooks to account.

    Aw sure the boysheen bawns came in from up the country and were fleeced by the banking and government kleptocrats. What did they expect, that we were all altar boys in Dublin 4. The Tinkers are looking like paragons of virtue as time goes by.

  25. It is an insult to the travelling community to compare them to bankers. The Travellers didn’t destroy this country.

  26. @ All,

    Mickey, and others will, I have no doubt will succeed in making my point for me. That in Ireland, it is a crime to have some money, and and an even bigger crime, to have enough cheek as to try and invest that money in some way, back into the Irish economy. Therefore, that only ‘moral’ thing to do, to bring things back into balance, is to facilitate our high net worth individuals to lose everything that they have – and that is somehow right.

    But what does that say about Ireland as a nation?

    That we have for so long, been conditioned to the idea that we are so poor, that we have to ‘sneak’ into places such as north America, as illegals, and unless one goes through life along this most difficult of paths, then one really hasn’t done one’s duty of being a good Irish person.

    This is a sort of inverted snobbery.

    As author Michael Lewis commented on, in an interview recently on the Charlie Rose show, in Ireland, it is whoever is the person who has had the ‘most suffering’, gets to talk.

    That’s why we embraced austerity, and shareholder losses, and all of the Irish banking debt on our shoulders. We love it! We are happiest, when we are making news bulletins and documentaries about the money that isn’t going into our infrastructure, and our schools and our services.

    We’ve had that story for so long now, since the foundation of the state, that we feel guilty operating in any other fashion.

    But the point is taken, that certainly the investors in such institutions as Anglo Irish bank were not dumb. They certainly had a choice, not to invest, in such opportunities if they had wanted.

    But I would just like to emphasize my point, that while banking shareholders in Ireland may have been guilty on some charges, or wanting to turn over profits (which may make them evil in the eye’s of some Irish), we should not hold them guilty on one count – of having the money (in large, or small amounts), to invest in the first place.

    And I would like to end by saying as follows. I’ve heard too much from Irish mainstream media about the ‘taxpayer’, and the taxpayer-as-victim, and what can be done to save the taxpayer from its exposure to losses, following on Anglo etc.

    The real question, and it is the one that nobody seems to raise, is who did the Anglo managers recorded in these conversations actually work for, at the end of the day?

    It was their shareholders.

    Someone who is a professor in an Irish business school, might correct me here if I am mistaken in that. In September 2008, the executives recorded in these conversations, did not work for the taxpayer – and the taxpayer had not yet made any commitment, one way or another to Anglo Irish bank.

    The question, I would have liked asked on RTE six one news, or on Irish radio this evening on the 24th June 2013, was in what way did the conversation and ideas being tossed around by these executives in these phone recordings, relate back to their duty to their owners – the Anglo Irish shareholders?

    And it is in that light, I am trying to look at the Paul Williams, Irish independent story. What were the Irish executives, in Irish banks in 2008 doing, which was in any way reflective of a strategy or a plan, to preserve or add shareholder value? Or had that concept just been thrown out the window with everything else?

    And we should stop talking about Anglo Irish bank, in September 2008, even three days prior to the bank guarantee scheme, from a tax payer point of view – because at that point in time – the bank executives, still worked for their shareholders (and again, business school professors, do feel free to correct me on this point if I have gotten it incorrect).

    No one ever talks about shareholders, and the state’s duty shareholders – and I’m surprised by how our fraternity of business academics in Ireland, haven’t addressed that issue. Because that is the issue today. How does one re-build any degree of confidence in Ireland, in order that anyone can ever invest anything in the economy again. Because NAMA was sold as the solution to re-establish lending back into the local economy, and that hasn’t worked.

    Where is that conversation gone? Where is that review of performance and goals of NAMA as a project gone? BOH.

  27. That in Ireland, it is a crime to have some money, and and an even bigger crime, to have enough cheek as to try and invest that money in some way, back into the Irish economy. Therefore, that only ‘moral’ thing to do, to bring things back into balance, is to facilitate our high net worth individuals to lose everything that they have – and that is somehow right.

    Oh God. More Gonzagain Randism. The poor beleaguered Irish upper crust. What crosses they bear.

    The reality is most of those people obtained their wealth through connections, backroom dealings, Galway tent-ism, and generally by feasting on the carcass of Ireland. If they had actually lost all their money in the banking collapse, Ireland would have been better off for it.

    But they didn’t. The same system that installed the amoral and feckless Anglo bankers hear in these tapes, is the same system which ensured that the people who mattered in this country were bailed out by the people who didn’t.

    The real question, and it is the one that nobody seems to raise, is who did the Anglo managers recorded in these conversations actually work for, at the end of the day?

    First and foremost they worked for themselves. Secondly they worked in tandem with the major stakeholders in Ireland inc. — magnates, firms, funds, large shareholders — to ensure that no golden circle was clipped.

    Small shareholders and the taxpayer were prey to be eaten. Such is the calibre of Irish “leadership”.

    How does one re-build any degree of confidence in Ireland, in order that anyone can ever invest anything in the economy again.

    A purge. Institute a purge of the amoral, the incompetent, and the criminal from the upper echelons of Irish industry and government. The simplest way to do this is to let the banks fail, realise the losses, and expose everyone who has been swimming naked.

    If we front-loaded the pain 5 years ago, we wouldn’t have lost 300,000 people, and we wouldn’t have to put up with the same crowd of criminals still in charge and laughing at the rest of us.

  28. One question that remains unanswered about the evening of Sept 29, 2008, is why Anglo’s top two executives were told leave Government Building while the top executives of AIB and BoI remained?

    Presumably is was to avoid the impression that the Government was saving just FF’s banking division.

    The following is an extract from a piece on the guarantee:

    “Liquidity, not capital, is the main issue in the current crisis,” the financial regulator wrote to Kevin Cardiff, head of banking at the Department of Finance in early September 2008. A week later, days after the Lehman investment bank crash, Anglo executives were in Merrion Street with assurances: despite the cash crunch, the outlook was healthy: “Loan book remains strong,” they said.

    In the US, there was a full-scale panic with Treasury yields falling to World War 2 levels; two giant financial institutions AIG, and Citigroup, had to be bailed-out by the federal government. Yet, bizarrely the ’soft landing’ was still the narrative in Dublin.

    Anglo had more than €50bn in deposits and €10bn in senior bond debt.

    US Investment bank Merrill Lynch produced a document setting out various scenarios and in respect of Anglo, said only 3% of its loans valued at €72bn were impaired, according to the banks’ management. It said Anglo needed to raise funding of €4.9bn by Oct 24th.

    Early on September 29, 2008, a PricewaterhouseCoopers (PwC) partner emailed Kevin Cardiff saying Anglo “borrowed €0.9bn from the Central Bank and do not have any reserves left.”

    It was one day to the bank’s year end and it was seeking a loan of more than €4bn from Irish Life & Permanent, which would be treated as a deposit in the year end accounts. However, IL&P needed a Central Bank guarantee to cover the loan.

    Speaking points were produced for the taoiseach on September 30, 2008, the first day of the State guarantee.

    The asset quality in the financial institutions, the document said, was good with a strong concentration in residential mortgages with a relatively low loan-to-value ratio. It said there is a “very significant capacity within the institutions to absorb and losses.”

    http://www.finfacts.ie/irishfinancenews/article_1025552.shtml

  29. @ OMF,

    Thanks for that considered and thoughtful response above. You do make very good points, and its really nice to hear the views shared here on the web site. I really don’t consider myself to have any monopoly on wisdom. But regardless, of what the answers may or may not be, I just don’t understand why more of our professors in the Irish business schools haven’t taken any kind of ‘lead’ on this – except to show up on PrimeTime specials and things, when it suits them, to forward a certain kind of academic model of things.

    What I am really talking about, are real practical questions, about what ought to be good, decent guidelines for behaviour in business and goals worthy of trying to achieve. I’ve spent a lot of time in business myself, and this certainly doesn’t seem clear out there.

    You may well be correct in stating that in 2008, Anglo executives were working for themselves and for a whole range of other stakeholders.

    And if that is the case, then is there anything we would like to alter in that model? My naive impression, based on observation of many industries over the years, was that executive management did work on behalf of shareholders, and as I understood it, a lot of other stuff (like ethics, behaviours etc), flow out of that arrangement.

    But what is kind of scary, is that in Irish media, our culture of ‘victim-isation’, and suffering, down through the decades ensures that we can’t even talk about shareholder’s rights, or duties of executives to the companies legal owners.

    The ‘safe’ issues that we always hear on conversations on national radio, whenever something like this breaks, is what implications does it have for taxpayers – and how could taxpayers be affected, or not, by something. No mention at all about the actual legal owners of these institutions, and what their concerns might be.

    We have a lot of business schools in Ireland, and teach a lot of business courses, but there seems to be little real genuine conversation about ‘enterprise’ and what it should ‘look like’, on an island like Ireland.

    Nothing.

    And yet, in the same breath, in national broadcasting, we fill endless slots with things about ‘SME’s’, etc. We pay lip service to it, but we don’t really want to offer any protection for shareholder capital tied up in businesses at the same time.

    We still haven’t figured out what shareholder capital really is, in Ireland, and that is at the root of most of this. In that sense, we are not a modern advanced economy.

    The lack of recourse, or some justice that shareholders seem to have had in Ireland since, 2008, I think that any foreign investor would be inclined to run a mile from these shores. BOH.

  30. @ Sarah Carey

    Trichet can be blamed for other issues later but the Sept 2008 phone call is a red herring.

    There is no evidence that there was any consultation with the 3 EU institutions: ECB, ECOFIN and the Eurogroup, before the guarantee was agreed.

    It must be presumed that the folk in Merrion Street did not wish to hear dissent.

    @ Brian O’Hanlon

    The primary interest of senior managers in banks, state-owned organisations or big commercially run charities, is their own interests.

    Individual shareholders have no power to influence big companies except create an embarrassing situation for the top brass at an AGM.

    See the Anglo share price chart via the article link above.

    The time to bail-out was on Feb 21/22 2007. It was almost 2 weeks after HSBC Bank announced multi-billion dolalr losses on subprime mortgages in the US.

    By Aug 2007 when the international credit crunch showed that the game was up, holders of shares for a few years would still have made a good profit.

    About 60% of Anglo’s shares were owned by overseas residents – hedge and other funds.

    Regulators of course were negligent and NTMA, the national debt agency, viewed the bank as too dodgy to place significant deposits there.

  31. Thanks Michael,

    I am genuinely interested in hearing many peoples’ response, to that simple question, of who exactly did executives in institutions such as Anglo Irish bank, actually work for in September 2008, pre- the Irish banking guarantee and all that followed afterwards.

    Because, if I hadn’t studied some small bit of business and enterprise subjects in school, to obtain some vague impression of what a shareholder was, and who were the actual legal owners of companies, then from listening to broadcasted interviews on Irish national media – I could be forgiven for walking away with an impression, that the Irish taxpayer owned Anglo and all the banks, even before the Irish bank guarantee – and that we always owned Irish banks. We were always going to be on the hook.

    And I just always wonder where that notion came from.

    I certainly don’t remember learning that in any text book, that I ever came across during my limited experience with ‘Enterprise’ subjects in school. Yet, in the Irish national conversation today, it seems like the concept of a shareholder, or what the value of that kind of species might be, has evaporated into thin air.

    It has become a conversation, only about how much more weight can be loaded on top of ‘tax payers’, while removing more and more supports at the bottom, which may help to support the increasingly large load on top.

    It just makes one wonder, like in the former USSR in the late 1980s, when it is all going to collapse like a cheap deck chair, in Ireland? Like, if you don’t get a general understanding amongst Irish society, of what the function of a shareholder is, and how they one needs to force more of them in there underneath the load, to help carry it . . . you are in trouble.

    Because eventually, the ‘tax payer’ that everyone seems so concerned about, might think they can carry everything. But they can’t. But it is ‘unpopular’ in Ireland to try to make that point. BOH.

  32. Where did the tapes come from? Did somebody leak them? Why did they surface now? Is it linked to a court case?

  33. @ Seafoid,

    The contention by the department of finance yesterday, that they did not know of their existence even, five years after the Irish economic collapse, is to say the least a bit sickening.

    But even though, we now have this impression from listening to Irish media that they have come into existence. They have, yes, entered in a public domain, but their real value comes when they have been subpoenaed as part of an Irish legal battle. And that hasn’t happened, and legal firms etc would have been quite careful over the last five years to make sure, that that remained so.

    A lot of people reading here, might assume that I have gotten infected with some ‘daft’ notion about shareholder rights etc – but the value of mounting even the simplest court case, in defense of the share holder (and I think that this is the point, that blog readers here have not managed to grasp so far, in their zeal to insult bankers in more and more creative ways), is that when the Anglo shareholder group takes a case, or the AIB shareholder group, or IL&P etc, then the tapes are subpoenaed, and then they really do become a matter of public record.

    But until that happens (and I understand that it may not be some peoples’ political leaning to look out for shareholders), all the ‘Morning Ireland’ slots, and column inches in print media, really doesn’t mean a thing.

    As someone said, Paddy will write the odd blog on their phone, but want to remain seated in the drinking hole, instead of worrying about things like investigation. That is why I believe the shareholder direct suit, does offer the best chance to finally gain back ‘accountability’. And I realize that I might differ from many economists in this opinion. BOH.

  34. @tull

    Your ideology (dominant then as now) demanded that they “do” their “jobs” with a light touch.

  35. Indeed, I’m sure that if there had been effective regulation, you’d have been complaining about the dead weight if the public sector preventing the vital forces of society from soaring to their appropriate level.

  36. Sean Fitzpatrick’s Core Philosophy

    Extract “The Fitzpatrick Tapes” by Tom Lyons and Brian Carey
    Page 123
    “Our exposure is not to the building,it’s to the money that comes from leasing it”, he said. “If the value of the property goes down,it dosn’t matter. We still get our loan repaid.” Fitzpatrick was nothing if not consistent in this,one of his core philosophies”

    If you examine Sean Fitzpatrick’s core philosophy,if the property was worth zero it didn’t matter, because he had the rents coming from the Irish feudal commercial property leases i.e. upward-only rent reviews tied to 25/35 year leases. No other country in the eurozone, or the rest of the world tolerated this feudal lease law.

    Reckless Irish banks lent tens of billions against these ruinous leases,not the properties themselves, and created the greatest commercial property bubble in the history of mankind. When this bubble burst, it bankrupted the banks and the sovereign

    1

  37. @Yields or Bust

    “The Fall of the Celtic Tiger” by Antoin Murphy aand Donal Donovan
    Page 7

    ” The property market crisis resulted from the collapse of a classic asset bubble. The bubble involved the massive overvaluations driven by the general view that property represented the fastest and easiest way towards wealth and that, at worst,a ’soft landing’ for the market would result.”

    Below is the link to the elementary property valuation error that bankrupted the country;
    http://www.independent.ie/opinion/letters/bubble-values-26826609.html

  38. @MH

    I didn’t think there was any doubt that Trichet had made the “save your banks” call. The issue was that he didn’t mean that we employ the methods we did.

    @OMF

    Oh c’mon. The intervention of the A-Gs was absolutely pivotal in that election. They scared the bejaysus out of voters. What give politicians power!!! It did matter.
    We need a do-over.

    Even if you’re right and the people didn’t want an enquiry then, well the tapes have provided all the motivation they need.

  39. I see the Indo wants an enquiry

    http://www.independent.ie/business/irish/anglo/these-tapes-are-just-the-tip-of-the-iceberg-we-need-a-proper-inquiry-29369350.html

    It complains of “handwringers” in the Dail whilst simultaneously deriding “show-trials”.

    But which is it? You want a hearing that can compel witnesses and make findings against named people or not? The same writer took the legal eagle’s side in the referendum.

    http://www.independent.ie/opinion/analysis/dearbhail-mcdonald-we-need-a-proper-debate-before-voting-on-handing-over-our-rights-26782859.html

    If we want an enquiry then it’s either a properly constituted Dail enquiry or we’re back to Tribunal land. If the people rejected then, and still intend to reject giving politicians the power to do the enquiry, then it’s not consistent to complain about the politicians not holding an enquiry.

  40. @ BOH
    ‘Yet, in the Irish national conversation today, it seems like the concept of a shareholder, or what the value of that kind of species might be, has evaporated into thin air.’

    This not the US, where equity markets have a long (and chequered) history, and most middle class folk hold equity stakes in their pension portfolio. It’s not the UK, which once ruled the oceans, gave birth to the Industrial Revolution, and was central to global money markets. It’s not Germany, whose merchant banking traditions go back to the Middle Ages, and whose craft traditions are second to none.

    This is Ireland, an island where the native population were beyond the Pale, which was the manorial system established by Norman colonists. As the anthropologists put it, we were the Other, and in some respects, we still are. Grattan and his ilk tried to establish separate governance for the colonists, but we were too wild and threatening to be accommodated. The Act of Union followed shortly after the French revolution. Notwithstanding the efforts of Tone, our echo took the form of a jacquerie, or peasant uprising.

    Ireland’s 19th economic development was subjugated to the needs of Empire, the infrastructure for agricultural exports was laid down, and the natives were duly decimated by famine and emigration. Like the cattle and the eggs, the remaining farmer’s deposits were channelled to London banks and the British capital export machine.
    The term gombeen has taken on very unpleasant connotations these days, but originally referred simply to a local trader who bought farm produce and supplied credit for seed etc. Irish banks always lent against land and property, and those without property were generally excluded from credit. This factor retarded economic development, investment and employment. The SME sector could not go beyond the level of small family firms with a domestic market focus.
    This structural problem was recognised by people like Dunsany, who founded the co-operative movement. There were many Protestant employers, including some Quakers, who tried to build sustainable productive enterprises mainly in the food sector. But these were all private businesses and the bank deposits kept flowing to London instead of where they should have flowed, into Irish enterprise.
    I again recommend Joe Lee’s Ireland 1912-85, as a good introduction to the economic development problems faced by the new Irish state. The current stink over Google’s tax avoidance (polite) is the inevitable consequence, of policies pursued by Lemass, Whittaker, and Haughey among others. They tried to bring enterprise, and they got some, but mostly we just got capital flows.
    It is truly ironic, and Irish, that a nation which could not get credit has come to grief as result of excess credit. I suppose it is not surprising, though that we should have misused it when we got it. The notion of endless credit combined with the security of property was a national wet dream. Yes, yes yes as Molly Bloom said.
    http://www.youtube.com/watch?v=_sEOK0En6Pk

    Banks borrow much more than other businesses, and today’s banks borrow like rabbits. Leverage is how the CEOs make their pile. The days of the private partnership are over, individual shareholders are generally powerless, so there is no one to represent shareholder interest. It’s a principal agent problem, of the type described by Joe Stiglitz.

    People who invested in Irish bank shares were gambling after 2000, because there is no way that the old style bank shares could have taken off in the way they did. Our bankers got on the end of a big Euro credit hosepipe, and blew their banks up. Lots of people got locked in as a result of bad financial advice, but they did choose to invest/gamble in that way. Others didn’t, and still got stuck with the bill.

    Margaret Thatcher dreamed of a shareholder society, but mostly she divided Britain. It is pretty clear by now that the fundamental power structures within business and finance are not amenable to simplistic notions of that type. There is nothing wrong with shareholding, but we might be better to focus on stakeholders, and to insist on a bit more transparency about who has a finger in the pie. That will not be easy.

    Michael Noonan would have us believe that he ‘didn’t know’ that bankers conversations were recorded, on instructions of the CB. That is to say, he is fairly sure that the matter has not been brought to his attention in a form or forum which might have required an acknowledgement from him. Of course he didn’t know, not officially you see, and he didn’t see it as his official business to enquire. It is not in the interests of the lawyers to have the tapes exposed to public scrutiny either, as they would lose their value as bargaining chips in the settlement process.

    In sum, our democracy is the loser, while the circus of private vested interests, and secret stakeholder negotiations, continues.

  41. @Ernie

    The PS are apparently on average better qualified than their private sector counterparts. But they didn’t have a clue either.

    When it turned into senior hurling there was nobody on the field.

  42. @ All

    There are two points which need some emphasis IMHO.

    First, as these very shocking tapes also reveal, the entire Irish banking system was going down the plug hole i.e. the choice was between taking the risk of letting Anglo-Irish collapse and seeing the entire banking system come to a halt, and with it the Irish economy, or providing “the cheapest banking bailout ever” (a description that some investors bought into for a period).

    It was a lonely choice with the loud sound of chickens coming home to roost.

    Second, the revelations, especially the singing on the tapes of an extract from a certain national anthem, as Tony Connolly pointed out on RTE just now, will highlight the conflict between the two narratives; the popular one of irresponsible foreign bankers and the real but considerably less attractive one of self-inflicted injury through near total lack of domestic regulation.

  43. Kenny’s PR people have advised him to stall until the Dáil goes off for its long summer holiday – probably hoping people will go back to watching “Ireland’s got X-rated talent” and most will forget about this by the time it returns due to their relatively short attention spans.

    Put out a few platitudes, wring a few hands, announce an inquiry (but hobble its TOR later on), tell ’em you’re constrained about what you can say because of ongoing investigations, that kind of thing – just pick something out of yer arse – but don’t do anything concrete. These people have a lot of dirt on us all you know!

  44. There was a willing suspension of disbelief on the part of the officials and elected representatives who swallowed the (self-contradictory) fictions that Anglo and the rest, 1. suffered only a liquidity problem, not a solvency one, 2. required only a minimal recapitlisation, 3. presented a systemic risk, 4. that all creditors must be made whole to avert that risk and that 5. otherwise the State would not be able to access the bond markets.

    As we see, there are many who still cling to these fictions. To do otherwise would be to admit either they are fools or were party to a massive fraud.

    A very important and supplementary untruth has also been circulated. This was that the bail-out was a one-off, never to be repeated event which would secure the fundations of the banking sector. Instead, the effects of austerity are eroding the quality of bank assets, even while they are alleviated by ever more predatory lending and repossession practises. But with 10% of all mortgages in irrecoverable (360 days +) arrears then it seems only a matter of time before this fiction too is exposed.

  45. Great first night of ‘Guaranteed!’ at the Riverbank, Newbridge, last night with valuable and insightful contributions from Sarah Carey,Brian Lucey, and playwright Colin Murphy. Audible gasp at the bit where Anglo goes in to the Regulator and then the Central Bank for the 7 billion. Judging by the size of the audience who stayed back the issue is very live.

    If you fancy coming along and putting in your take it’s in a range of venues this week and early next week.

    http://fishamble.com/guaranteed

    I can’t say I’m shocked by the Anglo tapes – what did people think they were up to?

    I think Stephen Kinsella’s questions about AIB, Bank of Ireland and the other banks are important.

  46. @DOCM

    the choice was between taking the risk of letting Anglo-Irish collapse and seeing the entire banking system come to a halt, and with it the Irish economy, or providing “the cheapest banking bailout ever” (a description that some investors bought into for a period).

    Ehhhhhhh… you need to listen again.

    The insiders knew the whole system was going to collapse, irrespective of what anyone did.

    The choice was to protect the economy from being dragged down with a banking collapse or to sacrifice the economy to protect the insiders.

    The politicians choose to protect the insiders and, in doing so, destroy the economy.

    The “cheapest banking bailout ever” was Lenihan-speak for saying that the price to be paid by the insiders was going to be contained by putting the burden on the still healthy part of the economy.

  47. @PQ

    “It is truly ironic, and Irish, that a nation which could not get credit has come to grief as result of excess credit. ”

    Antony Beevor’s “Berlin” includes a vignette about what happened to the Red Army soldiers who conquered Berlin. More than a few died of excessive wine consumption after 4 years without any.

  48. @seafóid

    “Where did the tapes come from? Did somebody leak them? Why did they surface now? Is it linked to a court case?”

    I think you may be on to something here !! (Hardly too complicated to work out where this information is coming from)

    I was made aware of the content of these tapes about 6 months ago. It is simply untrue that the Govt wasn’t aware of their existence. That is a blantant lie. We should gear ourseleves up to lies from Govt sources here on in. I believe this issue will topple the Govt.

    I would ask readers to focus on what Paul McWilliams said this morning on radio that these tapes only represent the tip of the iceberg. I for one can confirm that this is absolutely the case. In the words of the American Looney Tunes cartoons “You aint seen nothin yet folks”.

    Hold on to your pants.

  49. @ DOCM

    “the choice was between taking the risk of letting Anglo-Irish collapse and seeing the entire banking system come to a halt, and with it the Irish economy and….”

    Isn’t that what essentially happened ?
    The Irish economy had radical brain surgery- and it is still in intensive care. The alternative was to let the Irish economy have a stroke and end up in intensive care .

  50. @DOCM
    “the choice was between taking the risk of letting Anglo-Irish collapse and seeing the entire banking system come to a halt, and with it the Irish economy and….”

    Was that the only option? Couldn’t Anglo have been nationalized on the night of the 28th and possibly ring fence the others with a limited guarantee.
    The Spanish managed to avoid the catastrophe we ended up with whilst having a very similar situation I.e. a property bubble.
    And then there was the AIB fiasco…sell off all the good assets at fire sale prices and be left with the rump? Seems like a no brainer!

  51. Allegedly, the T ruled out the nationalisation of Anglo on the night according to press reports. That is a question for the enquiry.

  52. @Sarah Carey

    Oh c’mon. The intervention of the A-Gs was absolutely pivotal in that election. They scared the bejaysus out of voters. What give politicians power!!! It did matter.

    This logic fails because the AGs wrote against two referendums. The bank inquiry referendum and the judges pay referendum. The pay issue was obviously more fundamental, yet 80% of the population voted Yes with relish.

    But a No to the bank inquiry was in the offing long before the AGs decided to wipe the lobster from their lips to say a few words. The Irish do not want the power to hold public inquiries. The concept of a public good is an alien notion here.

  53. @Sarah
    Re banks still pulling strings.
    aIB announce major fee increases from August. Not a whimper out of joe public.
    As for the prize bonds..where is the competition authority?
    Great little country.

  54. One had to ask who is benefitting from this wall to wall coverage,it’s basically in house gallows humor…bad taste yes,but welcome to banking culture.
    With the vast majority of loans in NAMA,or for sale via the liquidator some borrowers must be pleased,perhaps these reveleations will strengthen a court case or two.Now let me think what BIG borrower,also has media interests and would benefit by undermining the work of NAMA and The IRBC liquidator….
    Way to go guys why not shot yourselfs in the foot again…at this stage is not returning the maximin to the state the primary objective.In the case linked above the borrowers are looking to have significant PG’s waived…

    “They have asked an American court to force Nama — which now houses former Anglo loans — to cancel all of their outstanding debts.
    They also want court permission to rescind the personal guarantees linked to the loans. The case has been filed in New York. ”

    A banking inquiry would be great,but most major actors will not testify,self incrimination and all that.Better off offering immunity to one two senior players,get full cooperation quicker cheaper.

  55. @ Fiat

    “Was that the only option? Couldn’t Anglo have been nationalized on the night of the 28th and possibly ring fence the others with a limited guarantee.”

    How would nationalising Anglo have helped? It was the unwillingness and inability (for whatever host of reasons) to wind down Anglo and put losses on creditors (of whatever variety) that is the problem, not the relatively small delay in nationalisation.

  56. Everybody wants a banking inquiry!

    Where have all the FF groupies gone?

    Lots of reasons for outrage in recent times on the Hidden Ireland:

    Magdalene Laundries, Ryan report and several others.

    Two public tribunals lasted over a decade and the planning tribunal had the bizarre spectacle of lawyers earning as much in a day putting lots of hours in on investigating backhanders to politicians and digouts at equivalent to their daily rate.

    A visiting intelligent Martian would have been confused as to which was the more corrupt system?

    However, after all that, the corrupt land rezoning system remains intact and in a country that is 4% urbanised, land can still be made artificially scarce.

    If the IFA could put the frighteners on jellyfish rural TDs on education grants, imagine the reaction there would be if the future chance of winning their lotto was taken away!

    Land acquisition accounted for 23% of the cost of roads projects in Ireland during the bubble, but just 12% in England, 10% in Denmark, 9.4% in Greece and 1% in Iceland. A further 2% of the €18.5bn provided in the Government’s Transport 21 for road building was allocated for archaeologists.

    Minister Richard Bruton, a landowner himself, has said public staff pensions including his own are “construed as property rights,” but the majority of the private sector workforce have no such rights – a choice made by politicians.

    Anglo’s ‘best and brightest’ behave like louts and ministers with credit cards that had €50,000 limits, went to town as beggars on horseback.

    What has really changed since?

    Banks will remain in a limbo for a decade or more but the system of limited accountability, where the buck stops nowhere endures as does the parish-pump politics supported by a significant chunk of the electorate.

    The traditional parties maybe discredited but look at the alternative so-called independents who won seats in the last general election.

    Ballymagash Abú!

  57. The real scandal here is the lack of prosecutions. There has been no talk of anyone being prosecuted for misleading the central bank despite their being prima facie evidence that such was done.

    The Minister for Finance may not be able to interfere in cases but he can find out why they are going so slowly. For instance, there is software (created by Autonomy I think) which can transcribe voice recordings. Is this being used?

    Also, why on earth must the Central Bank not proceed to prosecute people solely on the basisi that the DPP is prosecuting them for DIFFERENT crimes? The Central Bank has the following in its 2012 report:

    “Significant Financial Cases
    Irish Bank Resolution Corporation (IBRC)

    In May 2011, the Gardaí informed the Bank, following consultation with the Director of Public Prosecutions, that to proceed with the Bank’s examinations at that time could prejudice any future criminal prosecutions. Accordingly, the Bank decided to defer its examination but will keep this decision under review. Given the seriousness and sensitivity of criminal proceedings and the strength of the sanctions available to the Gardaí and the Office of the Director of Corporate Enforcement (ODCE) this is the most appropriate approach to take where there is a reasonable possibility of multiple proceedings. Regular liaison with
    these agencies is continuing.”

  58. Interesting article here from the Economist…8th June 2013.

    http://www.economist.com/news/leaders/21579008-why-not-build-new-european-currency-inadequate-foundations-it-worked-so-well-first

    It’s all very well picking over the bones of what happened 5 years ago with Anglo. Criminal proceedings should be commenced by the AG against the people who had their hands on the wheel at the time. Stop talking about it, just get on with it. Why is it up to a bunch of hacks to expose this rot now? Why is the establishment not acting in the national interest? Unless accountability is delivered… repeats will occur.

    But what we probably should be more concerned with now is the new banking supervision and how it will work in the future.

    The hair cuts placed on depositors in Cypress could become the new “Normal” when a bank gets “wobbly”.

    The problems in Italy have not gone away, poor growth, high debt, the Italian sovereign is not in a position to bail anybody out… haircuts all round when the crunch comes, perhaps as high as 80%.

  59. @Sporthog

    “Stop talking about it, just get on with it. Why is it up to a bunch of hacks to expose this rot now? Why is the establishment not acting in the national interest? ”

    Because it is not their interest.
    How many times in the last 100 years has the establishment acted in the national interest, BTW?

    And it is not much better at EZ level.
    Why is the Euro crisis 5 years old ?
    It’ll be doing the Leaving Cert before you know it.

  60. @ Seafoid,

    With the access of the www internet etc… other countries experienced an “Arab Spring”…. even now look what is happening in Brazil….. people are getting organised and annoyed…Even if the Govt controls state media… it’s hard to control the www.

    I wonder just what it would actually take to get the Irish really angry?

  61. @ Sporthog

    I have been following the situation in Egypt post revolution and it is quite similar to Ireland- there was a lot of anger with the ancien regime but it did not translate into political change . Instead the establishment (in Egypt’s case the army) closed ranks and there was virtually no meaningful reform although there was an election. Loads of promises but the same old crap afterwards. It all boils down to political economy and who controls the cashflow.

  62. @Brian O’Hanlon

    Anyone in business in Ireland knows that making campaign contributions to Town Councils, County Councils and members of the Dail or even people running for the Dail is essential to success. If it is not you have a small and simple business. This is a all perfectly legal and acceptable to the vast majority of Irish people. If you are well off it is highly likely you have bought and benefited from favours.

    What people are missing is that the Regulator, National Bank of Ireland, Dept. of Finance and Ministers not presented with the true facts. To put it quite simply they were defrauded. As taxpayers we were also defrauded. Irish banks have a duty under Irish law, rules, regulations and policies to report the facts as they are in a timely fashion. Instead the Irish Govt. and its agencies were treated with disrespect and gamed shamelessly.

    As I understand it the fine upstanding citizens (there are some) of this country think that kind of behaviour is acceptable. To someone like myself who has worked mostly abroad for three governments and over a dozen large corporations what has gone on in Ireland since 2007 is stranger than fiction. Surely there are people in Ireland who are capable of stepping back and taking a look at the carry on.

  63. MHickey,
    I think it would be a useful use of your time to acquaint yourself with the limits on donations to political parties, the associated disclosure requirements and the limits on expenditure. It is not as easy as you think.

  64. @ zhou_enlai

    The narrow focus on alleged company law breaches, is both self-serviving and will likely derail any chance of justice.

    @ Mickey Hickey

    Maybe all those folk in Dame Street were well-meaning amateurs but it surely was some dysfunctional organisation when the discovery by the regulator’s staff of inter-bank transfers in respect of large director loans, remained unknown to the regulator for 8 months. The office must have resembled a Trappist monastery.

    BusinessWeek had done an investigation in 2005 on the big rise in interst-only laons in certain regions of the US and following a local report in early 2006 that 75% BoI’s buy-to-let mortgages were on a 10-year interest only basis, I contacted the Central Bank for data on such loans.

    It wasn’t collected from the banks even though it was the main fuel for the BTL sector.

  65. @ DOCM,

    Good point re China Shadow banking and growth slowdown.

    Most certainly this will have ramifications for growth in the European core.

    However I believe the Chinese are putting the brakes on “too late”, they should have taken note of what was going on in Europe back in August 07, the horse has well and truly bolted by now.

    As for the Anglo debacle, defrauding the state etc…. I suspect if the establishment has done nothing by now….. most probably nothing will ever happen.

  66. @ OMF and Sarah Carey,

    Jane Suiter, Michael Marsh and other pol scientists, together with Red C Research, conducted a study on why voters rejected the Oireachtas Inquiries Referendum 2011, which was presented to the appropriate Committee in February last year. The full report and the presentation are available here:

    http://per.gov.ie/research-on-reasons-behind-voter-behaviour-in-the-oireachtas-inquiry-referendum-2011/

    What’s of particular interest is that 75% of those who participated in the study were in favour of Oireachtas Inquiries into matters of public importance, even though the government’s proposal had already been decisively rejected in the referendum. Thus the problem was not with the ‘principle’ of the thing; clearly there were other problems with the way in which the government framed its proposal (including the notorious sub-section 4. which made it look like yet another ‘power-grab’ by an administration that was already veering towards an authoritarian style of governing); lack of trust; lack of information and so on.

    In short, the problem was not with the idea of Oireachtas Inquiries per se, which commanded majority support before and after the referendum; it was with the way in which the government went about framing the proposal that was put to the people and how it conducted its business throughout the referendum process.

    From listening to the array of ‘penny in the slot’ backbenchers trotted out over the airwaves in the past couple of days, it appears that the ‘line’ now is to ‘blame the people’ for voting ‘no’ to an ill conceived constitutional change proposal, not the government who made such a mess of framing it in the first instance.

    In terms of responding to the Anglo tapes at a political level, cool heads might be advised all round rather than knee-jerk reactions. Yes, it’s a great story and an even greater vindication of the importance of the media in our society (which we tend to lose sight of every now and again); but the most important thing from a government perspective, I would have thought, is to select an option for an inquiry that will best satisfy the public’s rightful expectations rather than to serve base party political considerations. From what I’ve heard on radio and TV from certain quarters since the story broke, though, I have that old sinking feeling…

  67. Listening to the goys from Onglo, roysh

    http://www.rte.ie/news/player/2013/0625/3553101-david-drumm-and-john-bowe-discuss-getting-the-money-in-after-the-bank-guarantee/

    Was it not just that the bonks were run by Johnny know nothing Southsoiders who ran rings around the culchies in positions of power ?

    http://www.youtube.com/watch?v=UuHRulXfzGA
    http://www.youtube.com/watch?v=YK7w6fXoYxo
    http://www.youtube.com/watch?v=O3_rSQLxyFo

    A car crash that not even AA rewdwotch could have stopped.

  68. @tullmcadoo

    You are joking now.

    There are limits related to legality and to tax reduction. The sky is the limit on wads of unmarked cash and brown envelopes.

    This is Ireland you are living in.

  69. @veronica
    This country has been corrupt since birth. It is so deeply embedded in the culture that is the culture. It will take a wide scale collapse before there is a perception that the Kildare Street stables need a thorough cleansing.
    Thanks for the link.

  70. Mickey,
    I was referring to my experience of living in Dublin, where we pay our taxes, obey the law and as concerns the non FF majority we do not bribe public officials in the main. It may be different down your way.

  71. @Bond Eoin Bond.
    How would nationalization of Anglo on the night in question have helped?
    It would likely have prevented the contagion spreading to the other banks and as I said, if coupled with a limited guarantee, would have helped prevent the sudden implosion of the entire banking system and the fire sale of assets which have proven to be valuable.
    We are the only country where a “property bubble” brought down the entire system. Look at the USA and Spain.

    On the enquiry…typically the politicians have sought political advantage before the common good. Listen to Enda in the Dail this afternoon.

    I listened to a criminal lawyer on rte this afternoon and he is perplexed as to why the Gardai have not sought to bring charges of ” obtaining pecuniary
    Advantage by deception” against some of the perpetrators. Seems sensible.

  72. Given the confirmation we now have that Irish banking is an amoral business why is the State intent on returning it to the private sector?

  73. In short, the problem was not with the idea of Oireachtas Inquiries per se, which commanded majority support before and after the referendum; it was with the way in which the government went about framing the proposal that was put to the people and how it conducted its business throughout the referendum process.

    Well, it was more the way that the legal junta framed it, but I digress. Basically what this study advocates is that the Paddies are one moronic electorate, who, when presented with an opportunity to do their worst to a hated class of criminals, will meekly recoil from imaginary phantoms cooked up by whichever interest group says “boo” the loudest, unless the whole thing is explicitly propped up by a reassuring propaganda campaign. If that is truly the case, then this country should not have referendums anymore. If the Irish electorate really is so unsophisticated, then all referedums should be put on hold indefinitely.

  74. Fiat,
    Of much more interest to me is where did the unlimited guarantee emerge from. We know Merrill advised against it. Moreover, it appears from the tape not to be the Anglo cunning plan. In addition there are hints from the tape that there was a proposal to merge Anglo with AIB…how ironic.
    We also know that DOF had info to the effect that Anglo was insolvent even then.
    So who decided to wrap an unlimited guarantee around Anglo and who advised the pols to do this. Was it CB,DOF, outside voices or did the 2 Brians magic it up themselves.

  75. Again on the banks…is Michael Noonan directing operations of all Irish State owned banks?
    Today Ingrid Miley stated on rte that the Minister had directed Irish Permanent reduce the wage costs by 6 to 10%…which they are apparently achieving by closing down the current pension scheme.
    Yet when it comes to charges being increased time and time again and deposit rates being reduced to minuscule levels the Minister claims he is not entitled to interfere in the management of the banks…despite having majority control in some of them.
    It would appear that we are being misled!

  76. And in other state owned banking news,where people actually know what they are doing…but the tapes,oh the tapes……..a nation captivated !

    “The process can be tortuously slow. The Swedish state has owned part of Nordea since it put money into Nordbanken, a predecessor, in 1991. Erste Bank’s repayment of its participation capital was postponed in 2011 because of trading problems. Commerzbank has taken five years to repay its hybrid capital and the German state still owns an equity stake of 17 per cent. Belgium’s KBC repaid €3.5bn to the federal authorities last December but is still paying a similar amount back to the Flemish authorities. What a contrast with the US, where the government completed its exit from Citigroup last month, at a $13bn profit, and has long since got out of Bank of America and AIG.”

    http://www.ft.com/intl/cms/s/3/042a536e-dd94-11e2-a756-00144feab7de.html?ftcamp=published_links%2Frss%2Flex%2Ffeed%2F%2Fproduct#axzz2XABarhKs

  77. @ Tull
    Neighbours green bins were set on fire last night 1.30 am and other neighbour woke up to find Black bags of rubbish outside their doors, deposited there in the middle of the night. A couple of hundred meters away in the Children’s Court in Smithfield judges are regularly being told to F off by defendants and in response say, ” I would love to lock you up, but unfortunately there is no place to put you”.

    Meanwhile, one papers headline this morning read, “Why is nobody in Jail?” Well, it is obvious. they are not in jail because most of them were actually promoted. Don’t know about you but I think Dublin is pretty lawless.

  78. @ All,

    The tapes today in regards to Anglo Irish bank, reveal the attitudes that existed at that institution on Friday 3rd October 2008. What is also interesting to add to that, to further ‘paint a picture’ of Ireland at that time is as follows.

    Only two weeks later, on Friday 17th 2008, the Society of Chartered Surveyors of Ireland (property valuers professional body, many of whom are ‘civil servants, in NAMA today), held its annual conference, at the O’Reilly hall in University college Dublin, simply entitled, ‘Ireland’s Future in a Global Economy’.

    Key note speaker at that annual conference, was none other than David Drumm of Anglo Irish bank, who was slated to talk to the attendees about ‘Banking and Property, at home and abroad’.

    It was nice to note that attendance at such an event was mandatory for Chartered Surveyors, and it formed no less than ‘six hours’ of their continuous professional development, of CPD as it is known as in the trade.

    Bearing in mind the conversations that we have already heard today, in today’s Irish Independent newspaper articles about the Anglo boy discussing how life would be employed as ‘civil servants’ in a nationalized Irish bank, it should also be pointed out that many of those who attended the SCS conference on the 17th October 2008, are also now employed at the National Asset Management Agency, on lucrative five year employment contracts. So in that respect, Mr. Drumm would have been an appropriate speaker at the conference in the O’Reilly hall.

    Also, what I liked most of all was the particular poster image, which show a little fish (meaning Irelannd), jumping from its small bowl, into a much larger bowl. The idea, that having finished out construction on the homeland, Ireland was now set up to go and conquer the wider global market in construction and property. That was the ‘strategy’ that was in place in late 2008, as I recall it, and it was the strategy that was being handed down to myself and others at junior office level in the Irish construction and property boot camp.

    But at least, finally on June 25th 2013, I finally get an opportunity to listen to what my ‘master strategists’ were saying at that time. And another thing, I’ll be perfectly honest, as long as one is installed in such a system and one is happy working there and being ‘respected’, one really doesn’t care about Irish society or anything. It’s really only when one loses ones job as I did shortly afterwards in 2008, that it really hits you. That is the only time when one begins to ask questions about oneself and one’s occupation. So I cannot claim any high moral ground on this, myself. That is being honest about it. I couldn’t throw any stones at any of these former associates of mine.

    Regards, BOH.

  79. @Brian O Hanlon-about 100 grand a head,as a famous model once said hardly worth getting out of bed for that.The better boys are girls from the RICS are too busy assisting in asset stripping,sorry helping the de-leveraging off the varios banks to work for the NTMA.

    “All NAMA staff are employees of the NTMA and under section 42 of the National Asset Management Agency Act 2009, the NTMA assigns staff to NAMA. NAMA reimburses the NTMA the costs incurred by the NTMA in assigning staff and providing business and support services to NAMA. NAMA staff costs, excluding employer pension contributions and PRSI, were €21.952m in 2012. NTMA staff members are subject to the Public Service Pension Deduction. The average number of NTMA employees assigned to NAMA during the year was 214.
    NAMA also draws on the NTMA’s shared services in a number of areas including Finance, HR, IT and market risk. Staff costs in the provision of these shared services are not included in the above figure.”

    http://www.kildarestreet.com/wrans/?id=2013-05-08a.175&s=section%3Awrans+speaker%3A102#g176.q

  80. Did Michelle know something-what an interesting question,tapes,recordings eh what ?

    “Michelle Mulherin (Mayo, Fine Gael) | Oireachtas source
    76. To ask the Minister for Finance if he will confirm if surveillance is being used by the National Assets Management Agency, the former Irish Resolution Bank Corporation and or State funded banks of developers or individuals who owe money to these institutions including the interception of communications such as telephone/mobile phone calls, phone and text messages and emails; and if he will make a statement on the matter”

    “I have been informed by the Special Liquidators that as part of normal business practise telephone calls to/from IBRC (in Special Liquidation) are recorded for training and quality purposes. Further, emails to/from IBRC (in Special Liquidation) are monitored as part of the Data Protection policy. Other than the above, the Special Liquidators are not aware of the interception of communications of developers or individuals who owe money to IBRC (in Special Liquidation).”
    http://www.kildarestreet.com/wrans/?id=2013-06-19a.198&s=noonan+ibrc#g200.r

  81. @ John,

    Thanks for that break down. It was interesting.

    I might add this to your comment if I may. What really did strike me, in 2008 and 2009, as I circulated about Dublin in assorted company of banking staff, property staff and so on – was the separation between the two.

    I boasted that a friend I had who valued some of the most expensive sites in Dublin at the time, was earning €150k p.a., and he was younger than myself (I had intended that comment to impress the banker person I was talking to, by the size of the salary I had mentioned . . . my own salary was a fraction of that, and I just wanted to prove in the company that I was in, that I at least knew people who earned ‘the big stuff’).

    What I wasn’t prepared for at that time, was their reaction.

    The two bankers (both in their mid thirties as I was myself at the time), just sort of looked at each other and shook their heads, saying it was very little really.

    Of course, not missing a beat, I puffed out my own massive chest, and chimed in, yeah, it really isn’t a lot is it.

    I mean, if you wanted to float around in those circles in AIB or Anglo, at that time, you didn’t disrespect the company you were in, by mentioning anything that even resembled an average industrial wage, or even several multiples of an average industrial wage was still regarded as ‘chicken feed’. It was at that time, it really sunk home to me that I needed to get out of construction, and into finance as fast as I could. And I decided to return to education.

    But what I also want to mention is that the property valuers and chartered surveyors who do earn decent money, do work very hard at that top end of the scale between €100k and €200k. I mean, they do work to the extent that it becomes hard on things like family and relationships etc. But even at that ‘high end’ in the property professions, you are still only at the ‘first golfing tee’, when it comes to the yard sticks used in banking.

    So while an Anglo chief executive spoke to a conference in October 2008, about international banking and property was earning megabucks, the audience receiving the lecture were on much smaller incomes and did work hard for that too. BOH.

  82. @Tull Macadoo

    Of much more interest to me is where did the unlimited guarantee emerge from. We know Merrill advised against it. Moreover, it appears from the tape not to be the Anglo cunning plan.

    Apparently the entire guarantee was conceived and planned in its entirety at 2am in David McWilliams’ kitchen over tea and garlic. The fact that the DoF had guarantee plans in Feb 08, and that Gleeson, Burrows, Sheehy and Goggin explicitly asked for one on the night had nothing to do with it.

  83. @ OMF, Tull & company,

    What the tapes today show, is the Anglo executives had no clue about the wider strategy outside the bank, of the Quinn family investments into Anglo, and other distressed Irish institutions, which the cabinet in Ireland from 2006, 2007 onwards were involved in, in some ways, which I do know about from very good sources, for an absolute fact.

    This is why the Quinn family case, is the missing piece of the puzzle. I know its hard to feel sympathy for the Quinn family, and many might be right in not feeling an ounce of sympathy. But trust me on this, I know, that what would come out in a Quinn family full-blow court case, would turn out to be even more shocking than anything you have heard of in these Anglo executive tapes of 2008.

    I know this for a fact. And that’s why the game was only, to ensure the Quinns no longer had even the resources by which to mount a proceedings. I’m not saying this either, out of any pro-Quinn sympathies, but only out of what I know to be the events that were happening behind the scenes at the time. BOH.

  84. @ OMF, Tull & company,

    Or put this another way. Don’t get the impression that the guys at Anglo were the ‘clever’ ones, and the guys down in the regulator and CB, were the dumb ones. It’s more like the other way around.

    There was a much larger plan in existence at the time, involving the cabinet directly, and it goes all the ways back to mid, to late 2006, and prior to the the ’07 election, and the Green coalition government that was formed.

    So bear that in mind, in what you take away from the phone conversation tapes. They pull focus away totally, from a much larger ‘playbook’, so to speak, which was hatched by the cabinet far back, independently of Anglo altogether. BOH.

  85. @ All,

    This is really why the guys at Anglo are being ‘thrown to the wolves’, at this moment in time. There was always a value in keeping ex. Anglo personnel around until 2012/13, to be used as sacrificial lambs, in case the Quinn family case ever got any legs. It’s that simple. That’s why the tapes are out there. It’s no real big scoop or anything – but it is a good story, and hat’s off to those people in Independent media. BOH.

  86. It is disgusting to listen to further Anglo Tapes with what appears to be a ‘post-snorting’ rant of some description.

  87. It’s really important to big picture this.
    1: Democracy has recently delivered very mediocre dullards who have ambition with no talent
    2: The person running our finances (mof) has no qualifications and no experience of finance
    3: the regulators have no incentive to regulate properly
    4: Sovereign states should not be allowed raise debt. This has lead only to the electorate being bought off by liars and enslaving their children

    Banking enquiry solves nothing. We know what the problems are – human nature has a dark side – accept it and control it

  88. I can’t believe that nobody has pointed out that enormity doesn’t mean what he thinks it does… it’s enormousness. Although, ironically, enormity is actually far closer to the mark.

  89. Someone above mentioned the criminal lawyer wondering why the prosecution hadn’t been proceeded with.

    It is the question here. They had 4 years. It’s the cops. No political involvement at all in the process. No civil servants. And obviously it was a garda who leaked the tapes, no doubt in frustration. What IS taking them so long? Not like there’s any shortage of evidence?

  90. @ Sarah Carey,

    For my own point of view, I thought that economist Colm McCarthy’s suggestion seems about right (and I think that the other panelists on RTE’s PrimeTime show last night agreed broadly with Colm).

    That in many of these cases of individual institutional bank failures in Ireland in 2008 (including the heavy losses sustained by the UK owned institutions, which it might be added were operated and managed by a lot of clever Irish blokes), there may have been no criminal behavior involved.

    But that whenever there is a huge corporate failure of this sort, criminally motivated or not, there should be a public enquiry.

    I think that this is about the size of it. We want to support enterprise and innovation, we want to sustain jobs, create new ones and bring back investor confidence. Colm’s point about the $600 million ‘vapourised’ within AIB’s balance sheet ten years before 2008, and the report produced internally within AIB for its shareholders at that time . . . . and nothing whatsoever like that, has even been offered to shareholders of AIB, since 2008.

    So what is that all about? Whatever about accountability to justice, what happened to good, old-fashioned accountability to the shareholder even? BOH.

  91. ‘Guaranteed’ by Colin Murphy on at the lovely and spacious Draiocht, last night.

    A big crowd of the good people of Blanchardstown plus a number of interesting spots in the audience including the Governor, Patrick Honohan.

    I chaired the post show with Minister Joan Burton, Cllr Kieran Dennison FG Mayor of Fingal), Stephen Donnelly TD, Lilian Harris (formerly of the Blanchardstown area partnership) and Colin Murphy.

    The debate was public and the panel so informed. Any reading feel free to correct or add.

    After Colin set the scene, I brought Stephen Donnelly in first and asked what he would have done on the night of the guarantee. He was big enough to say he didn’t know and talked about the pressure of the situation. He did recall that at the time he looked at the numbers and thought that this couldn’t be happening because the sovereign would not be able to afford the losses in the banks. The IMF were in the post. His preferred option at the time (and from the outside), was liquidate all except Bank of Ireland. Later in response to a question of the floor he said very firmly that it is an international finance problem. He used the term neo-liberal. There are firms and institutions (including ECB) that simply see the needs of finance as core to the social welfare of the globe and at all times put their interests first. This is a very big problem.

    I then turned to the Minister. This was a bit tricky as I think years of expecting to be interrupted have caused her to go on at length and I needed a couple of goes to get to her key points rather than restate her record. Take-aways were that she did recognise the world of the play, with its advisers, PR Guys, reports, pressured decisions. Right at the end under pressure about the sovereignty or otherwise of the country now, she talked about the importance of being part of European structures and that friends in Iceland had told her things weren’t so hot there and they were thinking of joining to larger institutions. It was fascinating to hear the ‘not Iceland’ meme from a serving Minister.

    Lilian Harris gave the local context for the bubble and afterwards and talked about the rise of employment, the improvement in houses, windows gardens and cars and the current fall. She made the points that in some ways the current situation is worse than the old days as jobless people are disorientated and distressed as they had gained qualifications and had expected to work and senior citizens were very unsure as to how far their money could stretch. She saw a lot of pain and anxiety in the community.

    I asked Kieran Dennison a tricky question about whether the public and politicians together weren’t part of the problem in that they were expected to be public servants, eternally attending events, rather than elected representatives. He said that was a problem – although you got to be close to the world of people who elected you – and that he would like to see local taxes managed by Councillors so that they could do their job and TDs could operate more nationally “that’s the way it should be”. He thought it a problem that he received inappropriate letters of representation from high up politicians because somebody knew somebody who they thought could get things done. A part of the Irish mentality is to go straight to the big man.

    A very lively audience was frustrated by the end that there was no more time for questions and we could easily have gone another hour.

    Tonight we’re at the Pavilion (sold out!), with President Higgins attending and on the panel, Colin Murphy (writer), Dr. Constantin Gurdgiev (economist), Richard Boyd Barrett (TD), Peter Daly (actor).

    If you have any suggested questions please chuck them in. I’m not looking to trap people so it’s more to get the best out of their insights.

    I used up the ‘role of the media’ question on Sarah Carey who, supported by Brian Lucey, gave a very interesting answer but as I can’t remember if I warned the panelists that this was a fully public meeting, I shall save for another day.

  92. There have been some comments to a blog of a few days ago about using the government equity shares in Allied Irish Bank, BoI and PTSB, via dividends and later capital gain, to fund the payment of the promissory note new bonds of €25 billion. A lengthy period required, well in to the 2020s, perhaps even into the early part of the 2030s. Presumably on the basis, in general terms, that the banking business will recover in time.

    In view of our awakened disgust at what happened in Anglo Irish Bank and Irish Nationwide Building Society can I suggest that, not only would this be a good idea, the country should go further: The shares in Allied Irish Bank, BoI and PTSB should not be sold until those same shares recover to the last euro all of the bailout to Anglo Irish Bank and Irish National Building Society, the €25 billion in bonds plus the earlier promissory note payments, €6.2 billion, plus the earlier payments of €4.1 billion.

    That would be the foremost in relieving my anger – one set of banks bailing out the other lot, and nothing from the taxpayer.

  93. @Brian O’ Hanlon

    You need to recalibrate your legal settings – there was rampant fraud (already known about – illegal share support scheme, illegal directors loans, illegal balance sheet manipulation, etc), as is always the case in asset bubbles.

    It should be like shooting fish in a barrel.

    The question is why no one seems hungry?

  94. @ Sarah
    Spot on. It’s a criminal matter end of…..

    The desire to set up a parliamentary enquiry is driven by politicians trying to seem useful. They are a talentless shower only capable of slinging mud at each other. That’s all they’re qualified to do.

    You think Anglo is bad – the real scandal is that we’re still on a path to nowhere being strung along by narcissitic eejits.

  95. @Gavin Kostick
    In a democracy power comes from the ballot box. The book stops at the Taoiseach’s desk.
    Why did the corrupt politicians organise sovereign leases for their families and financial backers, using ruinous Irish commercial property lease law i.e. upward-only rent reviews tied to long leases, and waste billions of our money.

    Why did Brian Lucey pontificate to lay people that there was going to be a soft landing. ?

    Why did the surveyors who organised the bogus property valuations get the top jobs in NAMA.

    Why did Joan Burton and the Labour liars promise commercial tenants market rents and then did not deliver?

  96. @Sarah,

    I’m not clear exactly what point you are seeking to make here? The ‘cops’ compile files of evidence of criminal law-breaking on which a prosecution might/might not be based depending on the DPP’s decision as to whether a prosecution is warranted or likely to be successfully pursued. As for no ‘shortage of evidence’, it’s quality, not volume, of material that’s important. Secondly, on what basis do you suggest that ‘obviously it was a garda who leaked the tapes’? In all the circumstances, that’s a pretty big assumption.

    Apart from enraging the entire country, and rightly so, publication of the tapes creates immediate pressure for some kind of public inquiry into what was going on in the banks in the run up to the guarantee – an inquiry that is long overdue. The vacuity of the political response on the government side – more reminiscent of the Claude Rains’ ‘I’m shocked, shocked to see that gambling has been going on in this establishment’, as he pockets his roulette winnings in the scene from Casablanca, than anything else – and pointed signals from a succession of government ministers, including the Taoiseach, that the purpose of any Oireachtas-based inquiry will be to redeem the government’s flagging opinion poll ratings through a wantonly politically partisan exercise, do nothing to reinforce public confidence that an Oireachtas based inquiry as envisaged by this government has much to offer either in terms of the public’s right to an explanation or satisfaction, at least at some level, of a public expectation of justice. Cool heads definitely called for all round.

  97. Am I misinformed or mistaken that Mr.Somers has stated that he met with his senior colleagues in the NTMA and expressed serious concerns at the state of the borrowings and balance sheets of all of our banks and wondered what the ‘crowd in Dame Street were about’?
    And did the NTMA decline to place any funds in Anglo?

  98. From the NZZ link above

    Waren die damaligen Spitzen der Regierung derart inkompetent, oder sahen sie keine Alternative zu den unverschämten Forderungen der Banken, weil die Manager ihre Golfkumpane und Geldgeber waren?

    Both. And then some

  99. Morgan Kelly spoke about being dependent on the kindness of strangers but in reality there was no comfort from any quarter.

    The regulators were out of their depth
    FF were simply inept
    The bankers couldn’t care less- it wasn’t their problem
    They were so arrogant
    Trichet was deluded
    The spivs in London and elsewhere who steered the country into the bailout just wanted to play and make money- it was a good laawrf
    The IMF didn’t speak up
    The economic growth projections were dud

    and it all ended up the responsibility of the taxpayer. The Lender of Last Resort. LOL. R.

  100. @Gavin Kostick

    Keep up the good work. Questions for your panel? More recordings to come?

    I wonder who is currently thwarting the criminal investigation and why it is taking so long (and please don’t let anyone get away with the “because there’s so much material to sift through” answer – the sifting has been done)?

    How many people are aware that banks all over the world have ‘dirty tricks’ departments – mostly staffed by ex police and military – that spend lots of their time getting dirt on powerful/influential people? Just in case it comes in useful one day.

  101. A snippet from an article in the Observer today about a totally unrelated case..

    “The seven have been charged with conspiracy to commit fraud by false representation between 2009 and 2013.”

    Wonder if we have a similar offence?

  102. What goes up wrote,

    “You need to recalibrate your legal settings – there was rampant fraud (already known about – illegal share support scheme, illegal directors loans, illegal balance sheet manipulation, etc), as is always the case in asset bubbles”.

    Well I don’t need to re-calibrate anything, to be quite honest.

    The legal and law enforcement in this country have been free to pursue anything that they feel they want to, and they must pursue in regards to that.

    But what has happened in Ireland, is the ‘pending’ legal investigations, has acted like the biggest and best smoke screen of all, for those who do not wish to step up and accept one of the most basic responsibilities of all, accountability and whatever reputational injuries that may be sustained, as a result of been proven to be able to perform one’s job.

    That’s the problem in Ireland – and it flows right through from teachers in classrooms in school, up to the highest office in the land – it is unacceptable to call someone out for their inability to perform their job. And it may come as no coincidence at all, in this, that those who do graduate to holding the highest office in the land, also begin in life as teachers at the bottom.

    And I think, you see, that is what happens. The teachers in Ireland who graduate to become office holders, think that the whole world is like the secondary school that they grew up in – and that the odd ball science or maths teacher, that everyone knows can’t hack it – is sort of ignored for the sake of just getting along.

    I’d laugh actually at the spectacle of seeing some of the teachers/politicians in Ireland, get a go at rattling some of the cages of the private sector bankers – because it would mean that our fantastic politician, secondary school teachers – would have to exercise muscles in their bodies, that they never even knew existed.

    It would be a real Dad’s army affair, but worth the price of admission, just to see the teacher/politicians put on public display in their ineptitude – as much, or even more than the bankers themselves. I’d love to see our ex. school teachers, take a swing at it, at least. That would be most revealing of all, for the Irish public, to see for once just exactly who they have elected to hold these places in high office. BOH.

  103. @Seafoid

    Yields or Bust Says:

    June 24th, 2013 at 9:12 pm
    At the heart of the banking disaster is a Fundamental Error in Pricing Property Assets. Why oh why we are still not really willing to face up to the fact that banks priced property before the crisis and have continued to do so during the crisis and sadly continue to make a complete horlix of it is something that will forever dumbfound historians when they analyse this crisis if we ever see the light and the back of it.

    The Anglo directors were willing to lend billions into residential property ventures where the rental yield on new builds would have to have been c1% or less for the venture to break even let alone turn a profit and all the while the CBI couldn’t commute that perhaps this was potentially risky and a likely dangerous banking practice. It beggars belief.

    Seafoid -it’s not that complicated–below is the link to the elementary property valuation error that bankrupted Ireland;

    http://www.independent.ie/opinion/letters/bubble-values-3034584.html

    Professor Neil Crosby’s online response to this letter;

    The analysis may be simplistic but unfortunately it is not flawed. Banks
    ask valuers to tell them what the market value/exchange price is at a
    point in time and then lend vast amounts over time based on that simple
    number. The surveyor gives them that simple number and do not think it
    is their job to tell the banks that the question they have been asked is
    stupid on its own and what they should have asked for is the underlying
    value. It was obvious in 2005 and 2006 that prices in the property
    market were higher than could be sustained by any rational cash flow
    analysis. But in a culture that rewards individuals for short term
    performance rather than longer term perspective, it was in neither the
    bankers’ nor the valuers’ interests to stop it. I cannot see anything in
    what the UK regulatory authorities have proposed that makes me think
    they understand the role of property valuation in driving asset bubbles
    and will prevent it all happening again sometime in the 2020s.

    Neil Crosby Professor of Real Estate and Planning University of Reading;

    Neil has been Professor of Real Estate at the University of Reading since 1994 having been previously Professor at Oxford Brookes and lecturer at Reading and Nottingham Trent Universities. Before that he was a practising valuation surveyor in a combined residential and commercial property private practice firm based in Nottingham. He specialises in commercial property appraisal and the commercial Landlord and Tenant relationship and has undertaken a series of major research studies funded by the UK Government and the UK property industry in these areas. In 2002 he was awarded the International Real Estate Society’s annual achievement award for his work in real estate research, education and practice. He has published well over 100 papers on the various topics listed above and the third edition of his textbook on Property Investment Appraisal with Andrew Baum was published in 2007.

  104. @ Ernie,

    Alright, I admit, it was a low-ball, cheap shot.

    But would someone such as yourself not concede also, that if we want the ‘gloves to come off’ so to speak, in regards to holding someone accountable in Ireland – then the nature of how politicians often get their job in the first place, by being part of a community, being polite to everyone and NOT ruffling any feathers – is not the best skill set for the task of an enquiry?

    I still think that we ought to have the Oireachtas hold some form of public enquiry, and allow the ‘spectacle’ of such a proceeding to be the ‘over the top’, going out of one’s way, to be polite and harmless style of Irish politicians – as it will be about bashing bankers.

    I think that the last thing that will emerge from any enquiry is any bashing of anyone – and that is what I think will prove most noticeable about an enquiry – because we live on a small island, where everyone is very careful not to offend anyone else.

    I think the ‘feather light’ punches we are likely to see landed on bankers, in an enquiry, is itself going to reveal as much or more about Irish public office, as anything that might emerge as evidence against banking employees in these proposed enquiries.

    Would you not agree? BOH.

  105. I blame that Sir Fred the Shred guy (is he still a ‘sir’?) – our bankers were just aping his behaviours. We seem to copy what happens in the UK a lot…… for example:

    “Ten of thousands of British public sector workers are to lose their automatic annual pay rises, chancellor George Osborne said today as he unveiled a spending review involving £11.5 billion in further cuts.”

    They’ll be giving the government in Ireland ideas before you know it and the copying what happens in the UK will just continue!

  106. @Gavin Kostick
    In his memoir, Back From The Brink, then UK Chancellor of the Exchequer Alistair Darling recounted his surprised reaction to the Irish move: “It meant the Irish Government was effectively underwriting its banks in a way no other country in the world had done.” He continued: “I knew full well that if the Irish Government’s bluff was called they would be bankrupt. It was a promise on which they could never deliver.”

    Question;
    Why did Brian Cowan and the FF cabinet decide to bankrupt the country?

  107. @ John Corcoran

    The Alistair Darling scene is in the play. The whole play is about the decision so it might be worth you coming.

    I reckon the upward only rents question is a good one and I’ll try to get it in to an appropriate guest.

  108. @PR Guy

    I blame that Sir Fred the Shred guy (is he still a ’sir’?) – our bankers were just aping his behaviours. We seem to copy what happens in the UK a lot…… for example:

    The copying was the other way around. The bank disaster was an entirely home-grown operation. Never think otherwise.

    @Sarah Carey

    It is the question here. They had 4 years. It’s the cops. No political involvement at all in the process. No civil servants. And obviously it was a garda who leaked the tapes, no doubt in frustration. What IS taking them so long? Not like there’s any shortage of evidence?

    Well, one of the guys in the investigation was busy lining up a job in BoI as I recall. I imagine a few other members of the investigation were up to the same. Gamekeepers, poachers, etc. Hard to get a job in a sector which regarded you as the bogeyman.

  109. Lots of breastbeating but the reality is that despite the crash, the constituency for significant change remains a minority interest.
    The status quo endures and prevails.

    It’s not a crime to be a fool or pig ignorant.

    After years of delusion, it’s striking how stupid or in denial so many people in key positions were.

    There should have been no surprise in September 2008 and despite the crisis overseas, the working assumption among the Irish ‘experts’ was that it would soon blow over.

    Bar a day, a year before Lehman Brothers collapsed, Northern Rock announced that “extreme conditions” in financial markets forced it to approach the Bank of England for assistance. The announcement triggered the first run on a British bank in more than a century.

    In February 2009, exactly 2 years after the subprime crisis broke out in the US, the Irish unit of Prcewwaterhouse Coopers (PwC), the biggest of the Big 4 accounting firms, delivered a report on Anglo Irish Bank to the minister of finance.

    It said:

    “These annual impairment charges were €2.3bn and €3.0bn respectively per annum under the two scenarios for the years ended 30 September 2009 and 2010. The two PwC impairment loss scenarios exceeded Anglo’s worst case impairment loss scenario.”

    Jones Lang LaSalle valued a sample of 160 properties held as security in relation to the top 20 land & development exposures on Anglo’s books.

    Anglo Irish Bank reported a loss of €12.7bn for the 15 months to the end of December 2009 –  the largest loss in Irish corporate history – after charging €15bn to cover bad debts.

  110. @ All

    The reality is that there are skewed narratives across all the countries involved, Germany being no exception. The exploited innocent victim one popular in many quarters in Ireland has probably been finally put to bed. But that does not mean that the crisis in Ireland was entirely homegrown. The excessive nature of the FAZ coverage illustrates that there is still a long way to go in Germany.

    The populist approach has its critics in all countries, not least in Germany.

    http://www.project-syndicate.org/commentary/germany-turns-against-the-euro-by-marcel-fratzscher

    Populism impacts on the positions that countries adopt to the extent that it limits the freedom of action of their leaders (Merkel being the leading example). Ultimately, countries act out of self interest.

    http://uk.reuters.com/article/2013/06/26/eu-cars-idUKL5N0EX35X20130626

  111. I am at the Council of Europeanists conference in Amsterdam. The Anglo tapes came up in two different plenary sessions on the crisis to illustrate just how ridiculous the Irish bank guarantee was (and the huge implications it subsequently had in shaping the broader European response). I have not had time to read the comments so perhaps it has been mentioned already. But it seems to me that this is another reason to think that the argument put forth by Donal Donavan – that the government had no choice but to introduce the guarantee – is categorically wrong.

  112. DOCM,

    I wonder what you find “excessive” in the FAZ article. Could you be specific?

    The Reuters is just the usual slander. Reminding you folks that I do not own ANY car, or own ANY car stock (well, technically via index funds I also own probably some tiny little piece of Danone), the trick with the fleed CO2 consumption is just a mean trick to take it out on German car producers BMW, Porsche, who do not have a low cost segment. What is easy to achieve with an 840 kg FIAT Panda, becomes completely insance in terms of money spend on engine technology with an 1600 kg BMW 7 series

    It is this systematically dishonest, slandering, destructive behavior of neighbor countries, which makes more and more German people wary of Europe and any further integration.

    Angela Merkel, as all other chancellors, gave an oath to deter (this kind of) evil from the German people “Schaden vom deutschen Volke abzuwehren”

    If a rotten character Kansas-Hoenig engages in this kind of behaviot, it is one thing. If a neighbor country, where people are discussing running EC commission candidates on pan-EU party platforms, engage in this kind of bahavior, I say

    No! No! No!

    : – )

  113. Michael Hennigan wrote:

    “Lots of breastbeating but the reality is that despite the crash, the constituency for significant change remains a minority interest”.

    Here is my take on it, if the audience here wouldn’t mind too much, bearing with me as I endeavor to explain what little insights, that I might be able to shed on things.

    Michael, I think that is mainly because of the fact that the single largest block of democratic voters in this country . . . are of minister Michael Noonan’s generation . . . and are of, minister Michael Noonan’s disposition.

    In that minister Michael Noonan, today in June 2013, during his Ecofin sessions go on public record, displaying his anti-whistle blowing prejudices of that very generation in Irish society, that he is a part of.

    I was personally involved in sending some information which had come my way in relation to all of this.

    And furthermore, I would say that it was information that came to me as of September 2012, where what I could only classify as whistle-blowers, within the banking and property post-crisis asset management world – came to me out of a sense of desperation – that some things that have conspired SINCE NAMA, and IRBC, and all of that was set, should be brought to public attention.

    And I did pass such information on to what sources in Irish media I knew could handle what I had to provide, as an intermediary for whistleblowers, with the due attention and care that it described from the journalist community.

    And I’m very pleased today, that in summer 2013, such journalists have indeed taken the time and care, and the effort to work through this material and publish it. And I knew from as far back as autumn of last year, that this would somehow have to burst into the open – because, the honest to God truth of the matter, as reported to myself – was that the old order were still very much in the driving seat in Ireland (and that nothing had changed at all).

    And astonishment was expressed to myself in autumn of 2012, a year and more after the election of Fine Gael into power, that so little had in fact changed.

    I think that this is the point, that journalist Paul Williams and the team at Independent news and media, seem to have finally uncovered ‘independently’ for themselves – and did so with the full resources of such an establishment as Independent news and media – which were the kinds of resources I had un-available to me, when whistle blowers were banging down my down as of six months ago.

    So for minister Michael Noonan, to try and adopt the tone that he has done in these past few days in Europe – reflecting on the emerging of whistleblowing evidence – that relates as much to his period since early 2011 in government, as much as anything prior to that . . . is very disappointing, and I can only say reflects the wider anti-whistle blowing prejudices of a certain older generation of people on the island of Ireland.

    Brian O’ Hanlon

  114. Francis,
    I can assure you lots of people believe there should be less integration, the euro should be broken up, national currencies should return and Germany should takes its proper place on the,margins of Europe.

  115. Tull,

    Germany is right the in center of Europe, geographically, economically.

    Ireland, Greece are the fringe, geographically and, as it looks here, also with the customs controlling the political and economic sector.

    And when I look at the many good character people here in this blog, like BOH, Michael Hennigan, John Gallagher, Tony Owen, Dorothy, and so many others, I also think that you are the minority in Ireland.

    For Greece, all the good character people I know, have emigrated.

  116. Francis,
    Yes, I revel in the fact that I am ina minority. I realise that you are the type of German that has difficulty with minorities. That of course puts you out of the mainstream.

    Rest assured, if Germany followed your lead, you will have hit the trifecta.

  117. @ francis

    Guten Abend

    ‘It is this systematically dishonest, slandering, destructive behavior of neighbor countries, which makes more and more German people wary of Europe and any further integration.’

    Germany has the strongest economy in Europe, so Germany has the greatest responsibility for leadership. The first action of a responsible person/nation is to inform themselves as fully as they can. The alternative is conflict and chaos.

    If you think that the attitudes of the Anglo execs are bad, and I do, then consider where they learned to behave in that way. Anglo was big in the Irish context, but it was nothing on the global scale.

    DBK, on the other hand, has, like the Walls St banks, a big footprint. I would guess they have management which is smart enough to make sure that those kinds of incriminating conversations take place somewhere where there are no recordings. IMHO, the Anglo execs were no more irresponsible or cynical than other bankers, but they were a bit careless. Maybe they had a feeling that the whole banking game is FUBAR anyway, and maybe they wanted to be caught.
    It happens.

    And please read the evidence below before you leap blindly to the defence of German banking. Europe is about co-operation and co-existence. All DOCM is doing is asking you to think about the fact that the political narrative plays out differently in each country. Finance may be integrated, but national politics is not. That said, I don’t see much that is excessive in the FAZ report.

    http://www.newstatesman.com/books/2013/04/reviewed-bankers-new-clothes-what%E2%80%99s-wrong-banking-and-what-do-about-it-anat-admati-an

  118. Francis wrote,

    “For Greece, all the good character people I know, have emigrated”.

    Francis and others take note, that in late 2012, I found that many of the people that I would normally go to talk about something that was worthy of bringing to a public attention in Ireland . . . had actually left.

    Even look at institutions such as the Sunday Business Post, which would have reported widely and extensively, on matters pertaining to business in Ireland, was itself very close to going out of business in recent months.

    And what happens, every time like a Sunday Business Post or other important journal, which documents or comments on aspect of Irish life goes under . . . what happens is, that people simply leave. One looks around, and there are less and less people in Ireland that whom one can trust and can go to about anything. It becomes more and more of a dog and pony show, the more time that goes on. And that is where the ‘pub culture’ comes from. Even in the darkest and worst times of recession in Ireland in the 1980s, which I do remember as a young teenager, everyone did retreat into the pubs and go drinking – and what ‘public officials’ do out there in public life in Ireland, is something entirely separated from the hum drum existence of normal Irish people.

    Even today, if one were to take a ‘sample’ of opinion about Ireland in ordinary streets, cafes, pubs etc – one wouldn’t hear a word almost about Anglo Irish bank or a referendum. The only place that that conversation does exist is in a few national broadcasting radio or television studios, and within a small cohort of journalists in Ireland who still raise issues. But politicians in Ireland know, that what disturbs everyday people in Ireland, is a very long distance away from what is in the Irish media and in newspapers.

    David McWilliams wrote a column piece in today’s Irish Independent newspaper for instance, where he explained how the Irish banks were able to take the Irish government ‘hostage’ in 2008. But what McWilliams failed to go on and point out, in the space he had available to him in his Irish Independent column, was the extent to which the Irish government then in turn, hold the Irish people a hostage – and have done so, since far longer than 2008.

    If we held a referendum today in Ireland, to go to the Irish populous once again, to give better powers of enquiry to members of the Irish parliament – then the result would be much the same, as it was in late 2011 – when the Fine Gael government put forward the question originally. Because Irish people, down at the ‘rank and file’, ordinary members of the citizenry, won’t stick their heads above the parapet – and mainly out of a sense of shame about themselves, and having no livelihood, or not much of a livelihood, and maybe not very good prospects either.

    And I think that the public officials in Ireland – be they officials in ‘permanent government’, or officials in private banks like Anglo Irish bank, and even to an extent officials of elected public office – know this too well, and in my opinion, even enjoy knowing the fact, that the Irish people are so ashamed of themselves and their predicament in the world, that they will never pass any referendum to hold public enquiries – not matter how many Anglo Irish tapes and transcripts, that they will have their noses rubbed in, again and again.

    The Irish people are just too ashamed, of themselves in particular, and maybe that ought to be changed. But it won’t happen under the existing administration, or any of those like it. We did see a change in Ireland, as Paul Quigley and others will point out, in the late 1950s with Whitaker and Lemass’s adminstration (and very shortly afterwards with the president John F. Kennedy visit to Ireland in the early 1960s). We are due another such changed, of that magnitude and depth in Ireland, before the Irish will ever again know how to stop feeling ashamed and responsible for everything that has befallen them over the years. BOH.

  119. so why the tapes now? And how come they are released through the good agency of Paul Williams a journalist whose links to sources on the criminal world are next to none. Almost as if he were being given juicy bits from the …

    Put both together and maybe you get an idea of why know when you look at cui bono. Current government does well to refocus the debate back 5 years and onto Fianna Fail. A ff who were rising in the polls and looking strong. Well this wont help them climb the polls will it.

    Handy then that Paul WIlliams with his amazing sources somehow got hold of these tapes. Well wonders never cease eh!

    I hold no candle for FF. I think anyone who votes for them is an idiot and anyone in them today is a gombeen traitor but still its a sickener to think alot of this might be driven by short term political gain rather than the need to nail the crims who brought us down.

    Why else 5 years later has nothing much happened. We are the only country whose crisis was without foundation.

  120. @Mickey Hickey

    Yep..the NZZ links includes:

    Auf den neuen Tonbändern von Telefongesprächen gebärden sich drittklassige, grammatikalisch unterentwickelte Schieber als Herren der Welt:

    On the new tapes third class grammatically challenged racketeers behave as if they rule the world.

    …sounds about right to me..

  121. The revelations call the credibility of the Irish state into question on at least 3 counts: failure to regulate the banks prior to 2008, stupidly agreeing to guarantee the banks in 2008 without establishing the true facts, and failure to hold anyone to account since 2008.

    Given the scale of the losses involved and the fact that an international bail-out was needed to accomodate them, there is a big question mark over whether Ireland has the level of governance needed to make it in the future as a sustainable independent state, The answer seems to be no. We are on the same path as before: pretending that everything is hunky-dory and not delving too deeply into anything negative, so that we can fool foreign investors and gull foreign governments into giving us money.

    Our leaders don’t seem to want to know what went on in Anglo, in part because it harms our case for getting German tax-payers to pay for it. But failure to hold decision makers to account for what happened in Anglo causes long-term harm to Ireland’s political and business governance culture. Without a strong governance culture, where is Ireland going?

  122. @ skeptic01,

    What strikes one most of all, if one looks at politics in Ireland today, and one looks at news coverage in the media of this breaking story – is that it’s all middle aged men and much older – who seem to be still laying out the guidelines for it all. You could see for instance, on the RTE PrimeTime special last night, there wasn’t even one young person present ‘at the table’.

    One might be forgiven in all of this, that in fact, Ireland is a country now only made up of old men, who make most of the decisions.

    Yet, it would seem that the financial situation is something that young people in particular would have the most stake in – and that voice again, is missing in the conversation. Maybe, because as I hinted at, that young people don’t have the luxury nowadays, of worrying about things such as Anglo Irish bank enquiries. BOH.

  123. @Aidan R

    But it seems to me that this is another reason to think that the argument put forth by Donal Donavan – that the government had no choice but to introduce the guarantee – is categorically wrong.

    Donal Donovan’s argument is a false dichotomy – that the only two options were the bank guarantee that took place or some ill-defined “banks shut their doors” scenario (for how long – a day, a week, a year? – remember that even with the ridiculous botched bank resolution in Cyprus, the ATMs stayed working all the time).

    In reality there was a spectrum of guarantee coverage and duration, and a spectrum of resolution mechanisms that could have been used. The argument that the legal framework didn’t exist for resolution has proven to be bogus – again look at Cyprus or the Greek PSI, or even the 2010 Irish Credit Institutions Stabilization Bill. Sweeping legal changes were made in a matter of days – all that was needed was the right “motivation”.

    For example the guarantee could have
    – excluded subordinated debt
    – excluded existing debt
    – had a much shorter duration, with its extension contingent on the results of a realistic stress test
    – treated retail banks differently from property development banks
    – imposed per-bank and per-system caps and limits (as was done with guarantees given by other governments)
    – addressed the possibility of insolvency instead of willfully ignoring the issue (again as was done with other guarantees)
    – not created a two year cliff that was a disaster waiting to happen

    The position that there was no alternative (TWNA?) is a false narrative that depends on an all or nothing, black or white approach. Almost any of the possible shades of grey would have been cheaper than what was adopted. The extreme nature of the guarantee, and the manner of its introduction, are rightly viewed as ridiculous and hugely damaging by others.

    Also assuming the latest EU bank resolution deal stands, what was done in Ireland will now be illegal, and not just unwise.

  124. Or
    War in Syria blamed on Irish public servants.

    @ Michael – dare you to criticise international banking …. Just once

  125. MH,
    Good post. The scale of the debt burden in Ireland & indeed the rest of the periphery plus FR & maybe NL makes default and euro breakup inevitable.
    It is not a policy choice. It is driven by the maths.
    After that true austerity & reform begins. Will we become Cuba or Singapore – our choice.

  126. @Gavin Kostick

    Thanks,I have tickets for the Bray showing on Friday next–hope to see you there.

  127. @ John Corcoran

    I shall be there.

    @ All

    ‘Guaranteed!’ by Colin Murphy played to a packed house at the Pavilion last night. The President insisted on staying for the discussion.

    Unfinished business. What Sarah Carey and Brian Lucey were saying about the media was that if you voiced contrary or dissenting voices during the bubble (and after?) you were likely to be called in and given a very heavy going over – discussions about your future career, who pays your wages, etc. I said, the politicians did this? And they said, no, the high up civil servants.

    Getting down to it. Guests, Colin Murphy, Peter Daly (actor), Constantin Gurdgiev, (economist TCD), Richard Boyd Barrett (Socialist Dun L TD)

    Actor in the play (and accountant) Peter Daly talked about the challenges of getting this workshop presentation up and the lengths gone to by the actors and director to make sure they could make sense of what was being said in the script: technically and as part of the dramatic story. To entertain mr paul quigley and as the President was there I lobbed him a question about the importance of social and cultural as well as economic capital. He said, yes, and if he was driven by money he’d have stuck by the accountancy and though he modestly claimed to be ‘only’ a character actor, he was indeed concerned to be a part of new plays that actually said something to a live audience and the events surrounding them. Actor as concerned citizen.

    I asked Constantin what his advice would have been if he had been called into the room on the night. He talked about the appalling lack of knowledge and pointed out that even now the banks don’t know a huge amount of stuff, such as the amount of ‘strategic’ mortgage defaulters. He had been asked to help with that and had declined for personal reasons. He, like Donnelly and Lucey, said he didn’t really know what he would have done, but he probably would have given liquidity all round, gone to the ECB and if they hadn’t been supportive let Anglo go – everyone ‘takes a shower’. It’s a disaster less so than the actual outcome. I asked about the idea of putting very large schemes out with huge potential costs which were essentially designed to act as a ‘message to the markets’. I asked was this insane? He said not only insane but idiotic. Going for confidence measures when you’re a man falling from the 25th floor with no parachute can make you feel as great as you like until you hit the asphalt. He started to talk about groupthink.

    To Richard Boyd Barrett I put that he, now, as a revolutionary socialist was in a way moving into the politic bubble and was in in danger of being the officially tolerated outsider. He agreed about the problems he saw in that groupthink and stressed the importance of public action, campaigning and getting away from the idea that a politician was some one who could just do everything for you. He thought public activity – such as this night out – was empowering for the people involved. He gave some good examples of artistic activity in France, ’68. I put it to him that as the Neoliberal agenda always and everywhere weakend labour and had been dominant for thirty years (I gave the example of the reduced share of capital going to labour and trade unions buying in to the strategy of the state) that this idea of working people striking and demonstrating their way to victory was not likely. In a thoughtful reply he accepted the defeats and disarray of the left over this period but asserted that it was the way to go in the long run and talked about actual and potential campaigns in Ireland where small victories could be claimed and built on – but people have to take that initiative.

    During a series of clear and at times heartfelt questions, there was surprising agreement between Constantin and Richard that more transparency, more direct democracy, more people power is needed in the state. Constantin saw it more as a failure of both left and right with the left needing to come back. Constantin pushed the rot back to the USA and corrupt unions in and after WW2, but was not against unions per se.

    On the subject of an inquiry Constantin said he was looking for an inquiry that could compel witnesses, was totally transparent (all live on TV), had politicians and non-politicians, all expert advice in public and could make consequential findings: punishment. He said it was a high bar but it had to be aimed at.

    I asked Colin was the overwhelming maleness of the affair a key issue. He said that it certainly would be better if representation was 50/50 (applause), there are some female senior civil servants, but that though he agreed it was a general problem he wasn’t sure if it would have made any difference to the decisions of the night, once it had gone that far.

    “President hails ‘important’ new play on bank guarantee”

    The lad in the centre of the photo is Fishamble’s Jim Culleton.

    http://www.irishtimes.com/news/politics/president-hails-important-new-play-on-bank-guarantee-1.1444605

    http://trueeconomics.blogspot.ie/

  128. @Govin Kostick

    Therefore the best solution was to bankrupt the country–and ensure the wide boys got their money out.

  129. http://www.irishtimes.com/business/sectors/financial-services/eu-strikes-deal-to-push-cost-of-bank-failure-on-investors-1.1444621

    I had already taken steps to remove any money I still had in Ireland except for the non-pillar banks (which will be protected when it hits the fan). Although less than 100k, my main concern was how long it might take for me to get it back. Months? Years? If you have more than 100k in an Irish (or other periphery)…. well, that’s your concern.

    Meanwhile, further bads news from Leinster House:

    http://www.irishtimes.com/news/politics/austerity-leaves-bitter-taste-as-leinster-house-sweet-shop-shuts-1.1444618

  130. @ GK

    As emerged in the course of the discussion, the central issue was, and remains, the inability of public servants to “speak truth to power” with a question being raised as to where the dividing lay between senior public servants and their political masters.

    The present legislative basis underpinning this relationship consists of two pieces of legislation introduced by previous governments.

    http://www.irishstatutebook.ie/1997/en/act/pub/0027/

    http://www.irishstatutebook.ie/2004/en/act/pub/0033/

    The first is based on a fundamental error of political judgement i.e. that the “responsibility” that the political head of a department holds can somehow be delegated piecemeal throughout the entire organisation of government, the second on the idea that recruitment to the public service ought somehow to be entirely distinct – and with it the public service – from recruitment arrangements across the economy in general.

    No wonder getting in under the safety of the public sector tent – politicians and elected representatives seemingly now included – is such an attractive proposition; even for bankers!

  131. @ Tull
    The flaw in your logic is that you assume that after things get worse they will inevitably get better. Things can often just get worse.
    The time to reform is now. The reform must be:
    1: International
    2: Tackle all sectors and in particular finance
    3: Be based on principles such as income of top 10th in any country should not exceed 3Xincome of bottom tenth and similarly for countries. The new deal worked because it allowed wealth redistribution in a country. The next new deal will require wealth equalisation between countries.

    There is a way to get this right. It is much better that it come through evolution than revolution.

  132. Wonderful discussion here today. This site is particularly interesting whenever some fresh info comes to light .

  133. @ All

    Some more info!

    http://www.bbc.co.uk/news/world-europe-23062291

    The Irish Presidency can legitimately claim the credit for achieving agreement on three vital dossiers; (i) long-term budget (ii) CAP reform and (iii) framework agreement on Banking Union.

    The taped hysterical bravado of the Irish “masters of the universe” from five years ago makes good media copy but the wagon train moves on.

  134. @ DOCM
    Budget deal = self serving for EU
    Bank deal = insufficiently thought through. Those deposits are going to chase asset bubbles. People are entitled to deposit their money for safe keeping. They can do so at no or negative interest but it is their entitlement. It is not their entitlement to have any guarantee on money they invest since that is a risk they incur. So this scheme is just wrong.

    So yes the EU can do things. It just does all the wrong things. It is not fit for purpose – too much of a democratic deficit and a skills deficit at the top.

  135. @DOCM
    While the masters of the universe were busy running Europe poor little old Ireland was going to the dogs… Officially back in recession.
    http://www.rte.ie/news/business/2013/0627/459187-gdp-economy/

    As for that deal last night….Cyprus is now the official template and Noonan has agreed that no bank retro recap will take place before 2018.
    So much for all the promises. It’s time to get real.

  136. @DOCM

    The reality of course is that the vast majority of the donkey work in relation to these issues was well progressed before we took over the Presidency. The timings were fortunate for the Irish Civil Servants to claim ‘success’ in getting these issues over the line. Don’t be under any illusion that we’re any better at this game than the other players. It fairly obvious given whats emerging over the past number of days that the Civil Service is stuffed to the gills with many many plodders.

  137. @Eureka

    It’s a disaster of a deal. Cyprus demonstrated that hitting depositors would bring the house down. The only reason Cyprus has not lost all it’s deposits is Capital Controls. Reports today that their deposits are down another two percent ..seven percent the previous month….and that’s with capital controls.

    It is now not safe to hold large deposits in any European bank….don’t mind 2018… Watch them use the so called “template” if any bank gets into trouble before then.

    The cost of capital is bound to increase for all banks..with all the unintended consequences.

  138. @ DOCM

    ‘No wonder getting in under the safety of the public sector tent – politicians and elected representatives seemingly now included – is such an attractive proposition; even for bankers!’

    Indeed. Our state is captured by vested interests, and our hard-won democracy is thereby subverted. The judiciary have unfortunately played their part in facilitating this, and the professions are part of the problem big style. While the Troika, and the like, might ‘see the need for restructuring’, the web of entrenched insiders do not and will not. It is up to the rest of us to move that one forward.

    Too may of our people are reared to see themselves as part of a natural elite, where the ‘extras’ are standard. L’Oreal. The PD agenda fitted beautifully into our leafy suburbs , but there’s nothing very beautiful about the outcome with thousands and thousands on the dole. Pierre Bourdieu has examined this sort of self-reproducing co-optation dynamic at length in such master works as the State Nobility. Ireland is a bit more more barbarian, of course, but the hand still goes neatly and discreetly in the glove.

    Our electoral political world is pretty open, but our institutions guard their exclusive status jealously, under the too often spurious rubric of ‘preserving excellence’. What they are mostly preserving, I am afraid, is bigotry and socially corrosive private privilege. It was, by and large, the ‘suitable appointees’ who led us to where we are, and it is the same ‘suitable appointees’ who are determined to make sure their failings are obfuscated.

    People come and go but the mahogany and the oil paintings are forever. That sort of mentality is alive and well in the senior ranks of the PS, and it is a relic of colonialism. The public sector has no other purpose than to serve Joe and Jane public, as we are and in the here and now. Stuffy, po faced mediocrity has provided the perfect breeding ground for an epidemic of chancers, and as Justice Brandeis put it in 1914 ‘Sunlight is the best disinfectant’.

    http://www.brandeis.edu/legacyfund/bio.html

    Goodonya Gavin. You are putting up to the Indo. 🙂

  139. @paul quigley

    “Too may of our people are reared to see themselves as part of a natural elite, where the ‘extras’ are standard.”

    That statement reminded me of a 6 Nations match I attended last year. Sitting behind me were a load of young ‘goys’ from a well known fee-paying school. They told me the IRFU had given them free tickets to attend the game. I asked if there were so many of them from the one school because Ballymun school had sent their allocation back as they had already bought their tickets.

    They didn’t get it.

    I’m sure you wouldn’t be surprised by their answers when I asked them what they wanted to do careerwise.

  140. I’m sure you wouldn’t be surprised by their answers when I asked them what they wanted to do careerwise.

    Spill it. Don’t spin it. Give it to us straight. I want to know what golden circles coming up the tracks has learned from all this.

  141. @ Paul Quigley

    Some great quotations there from the Justice Brandeis link!

    It seems to me that they only route forward is to keep asking the rather obvious questions. And to view the bottle as more than half full rather than half empty. The basic integrity and capacity of the public sector remains intact. The problem lies with the confused leadership and the mediocrity which you rightly underline pertains right across the entire spectrum of the Irish “establishment”, media included.

    Our single best hope is the fact that the country cannot continue to borrow to fund current expenditure. The non-traded sector must cease to wag the traded sector dog. Otherwise, the downward spiral will continue. I linked to this paper on the Frank Barry thread on “Lessons from the ’50s”.

    http://ipa.ie/pdf/Admin60_3/IrelandStat.pdf

    This extract is pertinent.

    “Even in a small country such as Ireland, government (in the general
    sense, which encompasses the totality of public administration) is a
    large and complex entity with countless services and programmes
    being delivered by a range of departments, offices and agencies.
    Presenting all of this information in a uniform way that is
    comprehensible and usable by the public and the political system is a
    challenge to be addressed in the first instance by public servants
    ourselves.”

    The information certainly needs to be presented in a uniform way. But the public sector certainly does not need need to be managed centrally in a totally uniform manner. The very idea is a nonsense. However, the management guff produced under the current legislative framework is still accepted without question!

    Neither, of course, is it a challenge to be addressed “by public servants” but by the entire country.

    On dramatic evenings on what went wrong, while I do not doubt their entertainment value, they would be hitting the nail more squarely on the head IMHO had the dramatic director been forced by a mini-riot to declare that the “audience had disgraced itself once again”; as a reaction to the mirror being held up to it.

  142. @ Paul Quigley

    I should add, before I draw the usual criticisms of “blaming everything on the public sector”, that nothing could be further from my intention. Rather is it the desire to see an end to the stultifying impact on it of a mistaken policy approach.

    The point can also be made that the problem of the tail wagging the dog is the unifying characteristic of the countries in trouble i.e. all, with the exceptions of Germany and the Scandinavian countries. Osborne in the UK is taking some dramatic actions, including, for example, the abolition of increments. This would also be a very good move in Ireland with salaries negotiated and tailored to levels of seniority and skill in terms of the nature of the activity and the organisational structure best suited to achieving the objectives that are meant to be met. That is to say, ONLY in the context of a re-think of the entire approach and new legislation.

  143. @ Eureka

    Michael – dare you to criticise international banking …. Just once

    Too hard on the local boys? Order me up a green jersey!

    From Feb 08 2007 when news broke of HSBC’s huge subprime losses and on Goldman Sachs long before it was called a vampire squid, the good and bad was covered.

    I began work at the age of 10 in West Cork’s first supermarket and I don’t doff my cap for anyone.

    Too many turn a deaf ear to bitter truths.

    @ DOCM

    Irish ministers should get credit for their talents when it comes to announcements and spinning.

    Concrete achievements reflecting an art that is in short supply at home, cannot be ascertained via the media.

    Richard Bruton via numerous statements, claimed credit for the opening of the transatlantic trade talks, which is bull of course and ephemeral.

    @ Gavin Kostick

    The key question is what has fundamentally changed?

    Like the recent Murphy/ Donovan Irish Times article on their book, it’s easy to list off all the negative factors: groupthink, drowning out dissent or ignoring it and so on.

    Both of the authors are in comfortable retirement!

    I would suggest that little has changed.

    The issue of corporate tax avoidance only became a topic that would get local attention because of parliamentary hearings in London and Washington.

    The ESRI today published a report which was commissioned by the Dept of Health and the HSE to answer some questions posed by the Troika.

    Last year, the Organisation for Economic Cooperation and Development (OECD) reported that in 2010, at €528, Ireland spent more on pharmaceuticals than any other European country on a per capita basis. This is 50% above the average across EU member states of €349.

    Order me up a report!

  144. @ Michael Hennigan

    Your inability to see any Irish bottle other than the one that is half empty and rapidly leaking is remarkable. On the opening of the trade agreement talks with the US, for example, given the last minute posturing by France regarding its “cultural exception”, I doubt if there was any country better placed to break the impasse than Ireland.

    The job of being an impartial chairman is never easy. It is clear that Irish ministers, without exception, have acquitted themselves well, especially in relation to the three large dossiers I identified above. Maybe they do better away from the chorus of criticism at home!

    On just how difficult the job can be cf.

    http://www.ft.com/intl/cms/s/0/90476704-de81-11e2-b990-00144feab7de.html#axzz2X7O8c9Ni

    http://www.sueddeutsche.de/wirtschaft/co-emissionen-deutschland-lehnt-geplante-abgasnormen-ab-1.1706891

  145. @OMF

    “I want to know what golden circles coming up the tracks has learned from all this.”

    Er, basically their career interests were around money, power and being able to make and interpret the law. Stockbrokers, lawyers, that sort of thing. I didn’t detect a great deal of imagination. One did say ‘actor’ but he may have been thinking of law/politics as they both employ a lot of acting too imho based on some of the theatrics I have seen in the courts and Dáil.

  146. @ DOCM

    ‘The job of being an impartial chairman is never easy.’

    With respect, the notion that our Taoiseach could treat a phone call from Angela impartially in the present economic conjuncture, lacks, as the lawyers say, credibility. No wonder the French and Italians reared up. Power at the level of international politics is pretty naked.

    I am not saying it’s simple either, and maybe the Micks performed well enough in the 6 month residency, all things considered. As Palmerston said:

    ‘“The Schleswig-Holstein question is so complicated, only three men in Europe have ever understood it. One was Prince Albert, who is dead. The second was a German professor who became mad. I am the third and I have forgotten all about it.”’ 🙂

  147. @ Paul Quigley

    That would be to miss the point! Most decisions can now be taken by QMV but in politics proceeding to a vote is a delicate operation in circumstances where to do so creates a major political problem for the country, or countries, on the losing side. Indeed, de Gaulle walked out of the old EEC for six months on that very issue until an agreement to disagree was achieved i.e. continuing discussions in such circumstances.

    One useful by-product – assuming the press reports are correct – is that it might help persuade remaining doubters of the reality that business between states is not a morality tale.

    Regarding the Schleswig-Holstein story, this relates, as I understand it, to negotiations that go so long and are so intricate that no one really cares – or understands – what they are about; apart from the unfortunate principals involved.

    Apropos, this commentary by Quentin Peel on “Teflon Merkel”.

    http://www.ft.com/intl/cms/s/0/d3b1f26e-df23-11e2-881f-00144feab7de.html#axzz2Wpg7O1DS

    I do not think the title is quite right. The one thing that has not stuck to Europe’s by now veteran leader is the capacity to achieve a majority on her own; not the moment to be upsetting CSU support in Bavaria!

    Incidentally, we seem to be seeing the birth of politics at – dare I say it – a federal level in the EU.

  148. overseas readers may need a little help with the following: when John Bowe (the treasury manager of Anglo-Irish bank) says to David Drumm (as they plan a meeting with Ireland’s central bank): “you will need the donkey in the room”, you may begin to see why the Bank was given the odd name “Anglo-Irish Bank” – let us finish this paragraph with the name of a very, very different Irish passport holder to these two ‘past pupils’: J.J. Lee, who wrote in the 1980’s that the Irish language should have been made the -only- language in use at the Irish central bank in the 1920’s…’oh his prophetic soul…’

  149. As a retailer I was sad to learn of the Leinster House shop closing down. I understand the bar is still doing a roaring trade and perhaps its time for another bar to meet the increase in demand.

    The greatest bank and property crash in the history of mankind started with one house–Leinster house.

  150. @ All,

    It is interesting to listen to coverage on this story today – quoting various people, and various politicians already trying to sanitize it all, and explain how all of this happened five years ago, and that Anglo Irish bank was a ‘rogue’, isolated case – and that it doesn’t represent the wider industry in banking in Ireland.

    When everyone I know, knows it to be the case, that in the 2000s Anglo Irish bank started turning away new commercial property borrowing customers, and that those candidates which Anglo of all institution . . . REJECTED . . . simply went down the avenue to Bank, and Allied, and immediately were taken care of.

    At least, it has to be said in the case of Anglo Irish bank, it probably took a better part of a decade to accumulate what it called it’s ‘collateral’. Whereas in the cases of Bank and Allied, it took just a fraction of that to realize equivalent losses in its loan books.

    So the whole narrative that is be touted, that it was five years ago, and that Anglo Irish bank was an isolated rogue bank – just doesn’t stack up.

    And another thing, from what contact I have had with people – the reason that people want to talk, and release information now in 2013, is that because they have been waiting since the election of early 2011 for things to change in Ireland – and it hasn’t. It has remained the same. BOH.

  151. @ Paul Quigley

    I have not claimed that German banks are any better.
    When some people here, a few weeks ago brought up the Deutsche Bank (DB), I asked the very open question, for what should be allegedly be wrong with it.

    I have done as hard as possible to “The first action of a responsible person/nation is to inform themselves as fully as they can”, certainly not only here, and not just recently.

    As you correctly said “Germany has the strongest economy in Europe, so Germany has the greatest responsibility for leadership”, but that certainly does not mean that I exploit poorer Germans to benefit (the) richer (in) other Euro countries. Please see the Credit Suisse Global Wealth data book link I gave, which includes Ireland. I have given multiple similar links here before, especially including prior versions of Piketty Zucman, OECD, and the Allianz version.

    Quite frankly, people like you need a lot more moral leadership.

    I have addressed several issues. I explained to you that the dishonest attack by Kansas-Hoenig is a pretty transparent attempt to break the rule of international banking rules (BASEL 2.5 – 3) in order to tilt the level playing field with national US rules, and the unilateral subjugation of non-US banks, not only the DB but French and Swiss banks as well.

    The letter from Barnier as a response is a typical example, why there is strength in numbers, why a European Union protects its members against such blatant bullying. And we will see more of that in the future, then also from China.

    There is nothing new about this. I remember well, when the US tried, a quarter century ago, to bully European countries into buying certain defense goods from them, and destroying the European industry for it, with some one time extra price, just to be then later able to extract any price for any second grade stuff they were willing to give us.

    The nowadays EADS / Airbus were the joint European answer to that.
    And we did observe how they played that later with the Korean and Japanese.

    That you insinuate “consider where they learned to behave in that way” on the very same day we have to hear the cynical tapes of Irish bankers laughing about the gullible German bankers, I find this somewhat galling.

    The Deutsche Bank is the last and only one, which seems so far being able to swim with the Anglo-American Sharks. All the others, Commerzbank, Dresdner Bank, Hypo, and not to speak of the eternally gullible Landesbanken, got mauled.

    Please read the text around “bastardisation” in your new statesman link very carefully, because I think this describes it very well, these constant attempts to somehow blame Germany for mistakes others made, and trying to extract money from my people via that.

  152. Francis wrote,

    “As you correctly said “Germany has the strongest economy in Europe, so Germany has the greatest responsibility for leadership”, but that certainly does not mean that I exploit poorer Germans to benefit (the) richer (in) other Euro countries”.

    Francis, it’s like putting money into a third world country some times.

    It ends up in Swiss bank accounts of the most powerful within a very short space of time. The whole property thing in Ireland was about just that, a way to syphon money coming into the country off into various bank accounts of a few. That is why Anglo Irish bank became as successful as it did, and somehow still managed to create a ‘paper profit’ of almost ‘a bill’, for the year ending in 2008. The reason that Anglo Irish bank worked in Ireland, was because it provided a service that people wanted in Ireland.

    And you will notice how, the administration of that day, were in no rush whatsoever, to scrutinize those numbers – even though, there were millions and millions of ordinary Irish peoples’ shareholder capital in all of the Irish banks being washed down the river. That was the ‘working capital’ that the Irish had, to use for this decade, and for the next, all washed down the river.

    It’s as simple as sliced bread really. The Irish wanted something like Anglo, and it wouldn’t have worked as well as it did otherwise, or been ‘propped up’ to the extent that it was by the axis of collusion between it and public officials – if someone, somewhere in Ireland, did not believe that Anglo Irish bank was the best model for Ireland to follow.

    One has to remember that at the time of these tape recordings, those executives working in Anglo Irish bank and other institutions like it in Ireland – were extremely well respected people – and as I mentioned, David Drumm himself was invited to be the key note speaker to explain things to the Irish society of chartered surveyors and property valuers about ‘Banking and Property, at home and abroad’, on October 17th 2008.

    I know that in Ireland at that time, a lot of Anglo’s best customers had all hatched plans to invade eastern Europe, in the property market, and mount a huge, and well funded offensive. There was literally nothing that could stop us.

    It was quite literally ‘Deutschland, Deutschland’, at that time in Ireland. We were using German funding to mount our very own Irish version of operation Barbarossa into Eastern Europe. I have advertisements from the Irish property developer’s conference, of 2008, which saw a glittering array of Anglo customers, explain how they had set up their centres of operation throughout eastern Europe, and how we were getting all geared up for the big offensive.

    This is the ‘background music’, that you are not hearing in any of these tapes – but if you were at places like the Irish property developer’s conference, or at the O’Reilly hall in University College Dublin, on October 17th 2008 (a couple of weeks after the Irish bank guarantee), you would hear that all engines were still roaring, and that Ireland was set to mobilize into the wide open spaces of the caucuses.

    We had used up all of our own ‘living space’ for property and construction in Ireland, and we needed to expand. So the ‘life’ that Bowe and Drumm speak about, was kind of all connected to that ‘Lebensraum’ strategy in Irish property and banking as of 2008.

    This is the broken blueprint for ‘Ireland’s future in a Global Economy’, from October 2008, that we are still paying for in Ireland – and it is still ongoing to an extent even today – in what we refer to as the National Asset Management Agency (which was only a revision to the exact same 2008 blueprint).

    Brian O’ Hanlon

  153. @ All,

    These are the dark and shameful things, that no one in Irish public life wants to even mention today. It was all ‘so five years ago’.

    Lise Hand’s characterisation of ‘an episode of the Soprano’s’, today in the Irish Independent newspaper, isn’t correct. It was not only some bunch of guys riding around new Jersey in SUVs, collecting pay off. It was much more institutionalized and embedded than that.

    We may not have had the brightly coloured red flags, but we certainly did have the blueprints and the ambition, as of 2008. And that is a fact, that none of us will want to admit to today. That this, is the kind of hubris, we are paying for.

    Brian O’ Hanlon

  154. @ francis
    As others have stated, your perspective is very welcome on this board. Many posters here have worked in Germany or have family members who are German. Everyone knows, or should know, how much grief and loss has been visited on German people over the centuries, and how much work it takes to fix things when they are broken. The whole point of the EC is to prevent destructive conflict and promote co-operation. No one said it was easy, and not all conflict is destructive.

    We distinguish between governments, which are corporate agencies, and people, who mostly have to make a living. Our government is far from perfect, but there are no perfect governments. There is inequality and unfairness here, as there is in Germany too.

    You are putting a lot of time and energy into your researches, and I am sure that there are many other German people who are making that genuine effort to be fair. I respect that very much.

    I read, and enjoyed Adam Smith’s Theory of Moral Sentiments (1759). It is very relevant today. There is no economics without politics, and there is no politics without morality. While I don’t want to ‘take a room’ with DOCM, I do agree with him/her that we can’t leap directly from economics to morality. We have to go by way of politics, which is more about preventing the next disaster than laying blame for past ones.

    It behoves us to learn about German politics, and it behoves you to learn about Irish politics. That still leaves French, Italian, Spanish, and, dare I say, British politics, as well as many others. National politicians can only deliver what their national traffic will bear, and your narrative may not run in this quarter. And vice versa. Language is not a barrier for you, but it is a serious barrier for most Irish, and it is our task, as a people, to solve that. As we say, ‘nuair is cruaidh don chailleach, caithfidh si rith’ or ‘needs must when the devil drives’.

    I would not see it as a positive that DBK can swim with the sharks. What is good for DBK is not even necessarily good for Germans, let alone other Europeans. We Irish have no skin in the global financial domination game that goes on between Washington, London, Paris and Frankfurt etc. IMHO, this pi55ing contest needs be called to a halt because it is a zero sum Arms Race which makes ordinary citizens into losers.

    Banking is sick, and megabanks are really sick. Some of the criticism is, as you say, poorly thought out, but the New Statesman article goes on to say:

    ‘The pressing question is how western banking is to be reinvented and restored to health – in Cyprus, Britain and elsewhere – so as to relieve economies of the crushing legacy of private debt.’

    Absent a solution to this problem, we can look forward to endless recession, if not worse.

  155. Everyone knows, or should know, how much grief and loss has been visited on German people over the centuries, and how much work it takes to fix things when they are broken.

    Oh, please. I think I’m going to be sick.

  156. @ Michael

    “I began work at the age of 10 in West Cork’s first supermarket and I don’t doff my cap for anyone.”

    Did you ever read about Chapel Lane graveyard in Skibbereen during the famine?

    Elihu Burritt visited the town in 1847

    http://www.gutenberg.org/files/25115/25115-h/25115-h.htm

    “We entered the grave-yard, in the midst of which was a small watch-house. This miserable shed had served as a grave where the dying could bury themselves. It was seven feet long, and six in breadth. It was already walled round on the outside with an embankment of graves, half way to the eaves. The aperture of this horrible den of death would scarcely admit of the entrance of a common sized person. And into this noisome sepulchre living men, women, and children went down to die; to pillow upon the rotten straw, the grave clothes vacated by preceding victims and festering with their fever. Here they lay as closely to each other as if crowded side by side on the bottom of one grave. Six persons had been found in this fetid sepulchre at one time, and with one only able to crawl to the door to ask for water. Removing a board from the entrance of this black hole of pestilence, we found it crammed with wan[8] victims of famine, ready and willing to perish. A quiet listless despair broods over the population, and cradles men for the grave.”

    That was classical economics

  157. For them as are still reading, and want Billy Wilder’s take on how the tape story will be fed, here’s a great clip from 1951’s “Ace in the Hole”. It features rattlesnakes.

  158. @ Ernie

    With respect, please show some respect. My people were in the Trenches in WW1, and I know that many Irish fought with Britain in WW2, but mostly it was ordinary workers (hint) who murdered each other for the flag. Mistakes were made, and we are trying to move beyond that now.

  159. @JG, Headlines in NWL Digital Magazine Issue 3:

    “NAMA faces financial wipe-out in New York fraud case”

    What’s your professional assessment of the impact on the value of NAMA’s and IBRC’s loan books if these allegations are upheld, John? I understand it will be heard by a Jury. Amazing that the most significant legal case in this whole debacle will be heard by the inhabitants of lower Manhattan!

  160. John Doyle of Tipperary is recommending these Irish-American movies. Quite a change since Bells of St. Marys and the Quiet Man.
    Ray Donovan (TMN)
    Boondock Saints
    Blown Away
    The Matchmaker
    The Departed

    Light entertainment with a criminal undertone, Roman Catholicism, Loyalty to a neighbourhood as described by JD. As a diversion to our present circumstances it is quite tempting.

    http://www.theglobeandmail.com/arts/television/meet-ray-donovan-his-la-is-so-sordid-even-the-tabloids-dont-go-there/article12839419/#dashboard/follows/

  161. ‘Guaranteed’ last night at my own backyard in the ever welcoming Axis in Ballymun.

    @ DOCM

    “As emerged in the course of the discussion, the central issue was, and remains, the inability of public servants to “speak truth to power” with a question being raised as to where the dividing lay between senior public servants and their political masters.”

    Good to have you along at Blanchardstown. Yes from memory, Stephen Donnelly made the point that Civil Servants feared being ‘wrong’ against majority opinion as they could be sidelined whilst being wrong collectively didn’t necessarily harm your career. I made the point to Councillor Dennison that there was a confusion between public servant and elected representative.

    Panel last night included Suzy Byrne of Maman Poulet blog, Tom Lyons, co-author of ‘The FitzPatrick Tapes’, actor Peter Daly and playwright Colin Murphy.

    As Tom was there I asked about the issue of the notes for the night of the guarantee going missing (I thought this was the case – see story below). Tom said that they had frequently asked under Freedom of Information, but what they had got was only very sketchy hand-written notes. Not at all the meticulous detail you might expect. He said that probably the Attorney General, as a legal person, would have the best notes but that wasn’t under FOI.

    It was more of a discussion about the rotten cultures that were being exposed. Suzy Byrne said, yes, it is and was a male issue and when she said things like that online she would get sniped at. She didn’t know if having women in on the night would have made any difference, but she couldn’t think of a woman she knew who would say ‘give me the moolah’. She felt that online activity wasn’t enough for protest but couldn’t see where that public protest would come from. She said there was a basic injustice in people, for example with disability, having to pay whilst bondholders who made risky bets got paid in full.

    Tom Lyons made the point that bonds in Anglo had been sold on and on until they had been bought at only 20 – 30 cent in the euro. These were now owned by hedge funds who were expecting some sort of write-down – not to make a loss but they were not expecting what they got: 100 cent in the euro. He also remarked that though, yes, Anglo had no economists on the Board, Fitzpatrick said that they had commissioned and used economic works from outside consultants. He named a couple of them. This only goes to show the danger of people writing stuff they think their clients want to hear. I put to him the issue of the bullying of journalists and agents by Civil Servants in the DoF. Tom said that George Lee had talked about this. Apologies for the dodgy p.ie link below, but as I note it is said to be in the book by Donal Donovan I shall bring it up tonight.

    The audience, I think was passionate and engaged again. Colin was asked about the role of the ECB. Colin said all he had found was the message from Trichet relayed indirectly to Brian Lenihan to save the banks. Colin was asked about the extraordinary lack of action in the six months prior (dealt with in the play), and he said that was the key question and the mystery. He was challenged that in doing his interviews he too had become captured. He said he had human sympathy was the people he was interviewing but he didn’t think he had gone over the line. He said that there were issues raised that could not be dealt with in the play for legal reasons.

    So although Peter Crawley in the Irish Times says today: “this is an effort to understand all that happened – for which post-show panels are an essential part of the experience – as though substituting for our long-delayed public inquiry” an real actual inquiry is very definitely required.

    Tonight I’ll be chairing the post show at the Mermaid in Bray. I’ll try and get the upward only rents part of the jigsaw in for John Corcoran. The guests are a fairly heavyweight and varied Kieran Allen, Donal Donovan and David Marsh. Blokes again. They’re all interesting but I’d be particularly keen to know how to get the best value out of David Marsh.

    http://www.politics.ie/forum/economy/211960-george-lee-wear-green-jersey-else-department-finance.html

    http://www.thejournal.ie/shredded-bank-guarantee-enda-kenny-fianna-fail-484682-Jun2012/

  162. @Gavin Kostick
    “The Fall of the Celtic TIger” by Donal Donovan
    Page 7
    “The property crisis resulted from the collapse of a classic bubble. The bubble involved massive overvaluations driven by the general view that property represented the fastest and easiest way towards wealth and that, at worst a soft landing for the market woyld result”

    Below is the most important letter ever written to an Irish newspaper re property;

    http://www.independent.ie/opinion/letters/bubble-values-3034584.html

    Professor Neil Crosby’s online response to this letter;

    The analysis may be simplistic but unfortunately it is not flawed. Banks
    ask valuers to tell them what the market value/exchange price is at a
    point in time and then lend vast amounts over time based on that simple
    number. The surveyor gives them that simple number and do not think it
    is their job to tell the banks that the question they have been asked is
    stupid on its own and what they should have asked for is the underlying
    value. It was obvious in 2005 and 2006 that prices in the property
    market were higher than could be sustained by any rational cash flow
    analysis. But in a culture that rewards individuals for short term
    performance rather than longer term perspective, it was in neither the
    bankers’ nor the valuers’ interests to stop it. I cannot see anything in
    what the UK regulatory authorities have proposed that makes me think
    they understand the role of property valuation in driving asset bubbles
    and will prevent it all happening again sometime in the 2020s.

    Neil Crosby Professor of Real Estate and Planning University of Reading;

    Neil has been Professor of Real Estate at the University of Reading since 1994 having been previously Professor at Oxford Brookes and lecturer at Reading and Nottingham Trent Universities. Before that he was a practising valuation surveyor in a combined residential and commercial property private practice firm based in Nottingham. He specialises in commercial property appraisal and the commercial Landlord and Tenant relationship and has undertaken a series of major research studies funded by the UK Government and the UK property industry in these areas. In 2002 he was awarded the International Real Estate Society’s annual achievement award for his work in real estate research, education and practice. He has published well over 100 papers on the various topics listed above and the third edition of his textbook on Property Investment Appraisal with Andrew Baum was published in 2007.

  163. @ Brian O’Hanlon,

    Re: Your post 27th June 0731..

    Don’t give up hope yet old chap…..

    Mrs Merkel’s comment on Anglo…from Independent.ie 28th June.

    “It is a real damage to democracy…for everything we work for. The tone seems to be similar across all banks,” she said

    If Europe’s top politician is aware of the nature of these bankers… then there is hope for all of us.

    By the way… on a different topic…. I read your recommendation some time back… “Dec is dead… long live Dec”, insightful should I say.

  164. @ Sporthog,

    The thing is, unlike many of the economists who maintain this website, I like some others have been deeply embedded in the property development area in the last decade – and to see, hear and witness things, such as one hears today on these so called Anglo tapes (and a heck of a lot worse some times) – was almost a weekly occurrence for me.

    The thing is, the amount of distance, that I guy such as myself is able to put between their self and the low standards as exhibited in the Anglo tapes . . . becomes more and more difficult, as guys like those in the elected government, and officials all over the place . . . continue to maintain this ‘see no evil, do no evil’ approach.

    In other words, it gets to a stage, where one becomes so out-numbered by the Anglo types, in one’s daily work in construction and property in Ireland – where the most unscrupulous appear to succeed far and beyond, what someone who tries to follow a reasonably sensible path will do – that eventually, one is forced to join the ranks of the Anglo boys, or get out of the game altogether.

    And I’m pleading with those in public life in Ireland, to do something, and please grow up . . . because I can tell you what, you let it slide now, and I can personally guarantee the next generation of Irish citizens, to a certainty almost, that it will be someone such as myself you are listening to on these tapes in another couple of decades. And when I look back at ‘where it all went wrong’, . . . what I will have to reflect upon, is that I didn’t start out like that, . . . and that it happened slowly, over time, and by degrees.

    And that the first step, that will have led myself, or someone else (it doesn’t really matter), down the path to de-fraud-ing a whole other generation of poor Irish citizens, is when at some stage twenty years back, Taoiseach so-and-so, and his cabinet were simply to dis-organized, or didn’t give enough of a darn, to fix any of it.

    I can guarantee anyone, that as a matter of the course of going through one’s daily tasks, that one will end up right back where these ‘Anglo tapes’ left off, in short order, if results aren’t got right now. I can guarantee that to a certainty. BOH.

  165. @WSTT-number of interesting areas in that case-if they prevail it will render the loan book worthless,but,but…FirTree:)
    This will come into play-NWL has a copy of the judgement,here is a short review,most of the ‘good stuff’ behind paywalls.
    NWL is covering the case,in my opinion it gets tossed on jurisdiction grounds-trying track down a copy of the BANKCheck report,that would be worth a read.
    More likely a case will prevail in Ireland-sorry not in the US with a jury.
    WSTT not much left stateside,Spire sale agreed,Paddy’s site in Fla about hit market if not already on.
    “Nationalized Irish bank immune from U.S. jurisdiction under the Foreign Sovereign Immunities Act”
    http://www.lexology.com/library/detail.aspx?g=b65ef018-5e13-44ee-9ae7-fffc3bbdedbf

  166. “If they saw the enormity of it upfront”  is VERY poor English, innit.
    It also sounds like someone describing part of a horse’s anatomy.

  167. @ All,

    Perhaps the missing part of the jigsaw needed in any ‘Irish’ bank inquiry, would be to have representatives of German and French public office also present on the panel, during the full course of investigations in Dublin.

    A joint effort undertaken with the European partners, who may be able to fill in a ‘time line’ to suggest the activities of banks (creditors to Irish banks), in other countries at the same times as the Irish banks were busy expanding their size.

    I mean, the main problem that we are looking at here now in 2013, in Europe as a whole, is the free and easy movement of capital between one location and another one, within the EU. Who is to say, that as savings which accumulate in one region in the EU, might not wind up getting diverted into other small emerging nations ‘in the club’ (to use Herman von Rompuy’s phrase from today, when Serbia sat down at the table in Brussels, to discuss its membership in the EU).

    Yeah, small nations like Serbia, will know that they are ‘in the club’ alright, like Ireland does today, ten years after we joined the ‘club’, of the Euro zone and found ourselves reeling from the spin, of ten years of un-interrupted, cheap, credit fueled asset bubble inflation.

    I believe that what ought to happen in any ‘Irish’ banking inquiry, is that it isn’t seen as an Irish investigation into an ‘Irish’ only problem. But perhaps, that we try to document and log into the record also, the exact nature of the relationship between small, rogue banking institutions such as Anglo Irish etc, with their European creditor banks.

    And also, what was the nature of the public political liaison there also, which facilitated this very large delivery system of credit, from Europe into Ireland, that led to such inflation in the size of our banks, and in the prices of high price ticket assets on the island of Ireland.

    One of the most positive aspects of a full, well publicized ‘Irish’ banking inquiry, is that it may offer the opportunity to our European neighbours also, to witness the effects that private institutions operating inside their borders, had on such smaller member states as Ireland. BOH.

  168. @Dorothy Jones

    Thanks for the link.

    Karl Whelan adds a comment-
    “Some Anglo execs (in Ireland, we have another bank called Allied Irish Bank and we call them AIB) have been charged. Others may still be under investigation but as of yet, none of the execs on the tapes have been charged. There is a general sense that enforcement of corporate crime in Ireland is very weak.”

    It is blatantly obvious that Irish governments actively avoid dealing with corporate crime. This is a long standing problem with its roots in cronyism, nepotism and the catchall cute hoorism. Kenny’s behaviour is proving to be quite supportive of the longstanding dysfunction. The strategy now in place is to run out the clock past the statute of limitations. Debates dragging on for months and years as to whether a Parliamentary Inquiry can be held. A referendum on the same subject no less. Anyone who has been exposed to normal government practices sees this as evidence that the Irish government is grossly incompetent and has been for a long time.

    In a just society our government could be charged with aiding and abetting with a good chance of success.

  169. @ Gavin Kostick,

    To what extent, do you feel that the Fishamble production reflects the theme of European integration, as a strand running though all of this?

    I mean, in the following sense, in particular.

    Recent, a documentary hour broadcast on RTE radio, featured a group of women in Waterford city who have been busy working on a ‘tapestry’, about early Norman times in Ireland. It was overseen also I think, by some very good historians from Trinity college Dublin, who were supplying a lot of information in regards to accurate historical research. I.e. At the time of the coming of the Normans in Ireland, one still had a part of Waterford city which was owned the a ‘Viking’ community. And at the same time as you had armoured horsemen from northern France walking around being promised various small Irish towns, one also had bankers from Italy operating in coastal towns in the south east of Ireland. What one had in those days in Ireland was a boom period in the wider European region of trade and commerce.

    As we know, before the first world war in Ireland, we were part of Britain, whose monarchy in turn was linked in various ways to other monarchical houses through out Europe. And before the second world war, when a lot of science, innovation and engineering was being developed, it was a very strong network in Europe of researchers and seats of learning, universities etc, which led the world.

    By the time we get to the 2000s in Ireland, Europe has yet again, began to another phase of its integration – that of electronic transactions and banking – where boundaries did not defined so much as we would expect them to be, but were defined by things like ‘interest rates’.

    I.e. Europe has found itself going through intense periods of integration at various times, for various reasons. And what we do remark from the so called ‘Anglo Tapes’, is on the one hand a group of people who walk and talk in a kind of Norman age, Waterford city, rather than being restricted to the idea of an isolated island. And on the other hand, what we remark in 2008, are the policy makers working from the no-so-up-to-date map of Europe, and trying to think about it from a purely national perspective.

    This is why, I think it would send a very important message about Ireland and about commerce in the wider region, if the banking inquiry did reflect the true nature of electronic finance in the 2010s – rather than been witnessed as a spectacle – whereby the policy makers are still stuck in the dark ages, whilst the electronic traders seem to embrace the whole wider environment. Why don’t Irish regulators and German ones, and French ones, all talk to one another, as it seems clear that our bankers are doing? BOH.

  170. Fintan O’Toole writes in todays Irish Times newspaper, in his piece entitled The smartest guys in Ireland. BOH.

    “The hidden clauses in the Anglo game plan are national bankruptcy, Nama, the troika deal, the loss of national sovereignty, mass unemployment and mass emigration.

    Instead of seeing the Anglo boys as idiots clinging to illusions in the face of catastrophe, we have to face the truth that they were the ones who grasped the fundamental truths that Anglo could play the State like a Stradivarius and that Ireland would dance to its tune”.

    http://www.irishtimes.com/news/the-smartest-guys-in-ireland-1.1446502?page=2

  171. @MickeyHickey

    Anglo Tapes : Sometimes the picture IS the story….

    Coverage from German Tabloid Bild this morning 130629, carries a photo, whicch although crude, shows how timid Irish media was when covering the bank scandals through the crisis. I’ve just popped the image on the Irish Busines Blog here: http://www.irishbusinessblog.com/

    The link to the Bild article is here : http://www.bild.de/politik/inland/angela-merkel/merkel-platzt-der-kragen-31037150.bild.html
    Title: Merkel Platzt der Kragen

  172. Thanks, seafóid

    ‘Guaranteed!’ by Colin Murphy in the excellent Mermaid in Bray last night for another full house and energetic post show discussion.

    The panel included Colin Murphy (playwright), Kieran Allen (People Before Profit) Donal Donovan (exIMF, Irish Fiscal Advisory Council, co-author with Antoin Murphy of “The Fall of the Celtic Tiger”), David Marsh (Finance expert and author of ‘The Euro’).

    Colin always gets the first questions to set the scene. This time I asked him if (a) the people he has interviewed now regret the decisions and (b) might actually welcome some sort of inquiry. He said that there was a lot of regret and ‘mistakes were made’, but when pushed to defend the guarantee they would often move to arguing that the alternatives were worse. He thought that some might welcome a chance to put their side of the case but that the format could be a problem for them.

    Donal Donovan thought that the play was fair and when I asked him what his advice he would have given on the night, he said that the mistakes had largely been made in the run up and something like what happened had to happen. Perhaps some sub stuff left out but that was dealt with 2 years later at the expiry. I pushed that this was a failure of capitalism: private banks retained profits but socialised losses. He said yes, but he pointed to the development of a banking union as the future for dealing with this, with protecting taxpayers a key issue. I put to him the ‘upward only rents’ issue and he said yes, it was part of the problem, yes the current government had said the would get rid of them and hadn’t, apparently on legal advice. The position seemed to be that they had wanted too but couldn’t.

    Kieran Allen thought the play was very dramatic, but by framing the events in the way it did, did not allow the frame itself – capitalism – to be questioned. He did then, though, cite the play which shows the profit motive sucking in first AIB and then, by implication, BoI. He pointed out the real distress in people’s lives as a consequence. I put it to him that we were living in an age of disarray on the left with the NeoLiberal agenda on the front foot across Europe. He talked about Friedman and Hayek but ultimately said, no, that the two most active periods on the left in his experience were 1968-‘early 70s and now. He remains optimistic. Kieran also pointed up the current ‘transfer pricing’ issue, he said that Ireland’s own capitalism is very weak, and so it depends on a not-exactly-stated willingness to allow aggressive ‘tax-planning’ by major international companies. So Ireland is still part of that neoLiberal world.

    I wasn’t sure what to expect from David Marsh. He comes across as old-worlde English gentleman but or/and he was very negative about the banks and the current architecture of the euro. He felt banks were like kids in a sweet shop and if you gave them a chance for an easy profit they would just take it. He did think it an international problem, very much alive, with Ireland a small chink of it. I put the ‘male problem’ and work of Gillian Tett to him and he said, oh yes, men are a problem because given a chance they will f*ck up. He said he had known Trichet for 25 years and the Central Bankers of Europe (nearly all men), and they are indeed a very strange bunch.

    I was suprised again that there was much cross panel agreement from left to right that the current model of (financial) capitalism is deeply broken.

    Questions were strong and varied. A detailed question was asked putting the Irish problems in 2002 in the separation of the powers of the Central Bank and the Financial Regulator, so no one was in charge plus the ignoring of internal whistle-blowers. Colin thought that the problem wasn’t so much the separation of powers as capture from two sides: the banks and 15 years of a FF lead administration. Donal was clear that it was the Central Banker’s job to have oversight. He was the guy they looked to and it was his job to go out looking.

    Local/National issues were once again front and centre. Kieran Allen thought that a democracy where people could say one thing at an election (he gave examples), and then ignore them once the ballot box had closed was a real problem and perhaps the ability to recall politicians who did not do what they said they were going to do would be a way to go.

    As with the other posts above, these are just a few notes and from memory.

    http://www.amazon.com/Euro-Politics-New-Global-Currency/dp/0300127308

    http://global.oup.com/academic/product/the-fall-of-the-celtic-tiger-9780199663958;jsessionid=1BD9D9B398EB1244064B4EB926BE7CAC?cc=ie&lang=en&

  173. Re: Latest set of Anglo Tapes

    Which describe the week starting on Monday December 1st 2008, and ending on Friday December 5th 2008.

    What we have here is a quite interesting week, and a week in which I think that if Mr. Drumm were to return to Ireland to give his testimony, we may find out a lot of things. Because it appears as if on the Monday, Mr. Drumm is still very much trying to keep the Anglo boat afloat and implement a strategy.

    But by Friday of that same week, it appears that the ‘deal’ he has done with the Irish department of finance in the month of November, to impose haircuts on Anglo’s creditors, as been boxed away – and Mr. Drumm is roundly told that his time with the institution has come to an end.

    Looking at these Anglo tapes from this mornings release, I am wondering about that whole month of November 2008. We know from this mornings tapes that Anglo nationalization had been refused as an option, by the powers that be, despite the strongest recommendation in that regard from Merrill Lynch. And we know that the month of October witnessed Anglo Irish bank, busy filling its deposit base with €6 billion of new deposits.

    At various times, the Anglo executives warmed up to the prospects of becoming civil servants in a nationalized bank, and Mr. Drumm was telling his colleagues, ‘Don’t worry, we will be around for a long time’. As it turned out he was right, except in his own case, where he was gone from the bank by early December 2008.

    What we don’t know, is what changed between the start of the November 2008 month and the start of December 2008, where Mr. Drumm it appears had been working through all sorts of negotiations with the department for Finance – and by was then summarily dismissed from his position.

    What changed, or what went on, in November on the political side, which Mr. Drumm seems not to have been privy to? That week ending on Friday December 5th, seems to have been one of the strangest weeks of the whole thing. BOH.

  174. @Gavin Kostick

    Good to meet you and your son last night and thank you for asking the question on our unique ruinous commercial property lease law i.e upward-only rent reviews tied to the longest leases in the world. I enjoyed the show and the discussion.

  175. Correction overhead:
    Which describe the week starting on Monday December 15th 2008, and ending on Friday December 19th 2008.

    The week between 1st December and 5th December 2008, was when Anglo released its preliminary annual report (on Wednesday 3rd Dec).

    It was a whole two weeks after that preliminary report, by the time Mr. Drumm and Fitzpatrick left. BOH.

  176. @Dorothy Jones
    Excellent link, thanks.

    The Germans as usual are even handed.

    A Fairytale
    Gerald Berger Brown
    FAZ

    25.06.2013 · At the height of the financial crisis, the bankers of the “Anglo Irish Bank” about politicians, supervisors and foreign investors have quipped. A settlement with arrogant villains.

    Take a bag and put in it: First, the management of the former Anglo Irish Bank, and those employees who are newly published audiotapes to behave like arrogant brat.

    Second, donors of all kinds such as shareholders, bondholders and depositors from home and abroad who have entrusted these so-called bank money after the crisis broke.

    Third, the time in Dublin, officials in government, regulators and central bank have been watching the goings far too long – regardless of whether they did not see or could not see the debacle.

    Fourth, the authorities in European institutions, only watched how the Irish State was lifted to its banks and the European Central Bank could act in a way that probably is more than just on the border of monetary state financing. The bag is filled with these people suggest a long with the stick until the wail is unbearable. Then take all the decision makers in Europe by the hand and secure the citizens that they are like that Anglo Irish Bank will never allow a debacle.

    In a nutshell

    Put the Anglo-Irish management from 2008 and the speakers on the audio-tapes in a bag. Along with anyone who gave money to AngloIB after the crisis broke. In addition put in the heads of the ECB, EC, EZ who stood idly by as the Irish Gov’t destroyed its country.

    Then beat the bag until the wailing becomes unbearable. This will ensure that the Irish banking disaster will not be repeated in Europe.

    Cheap, quick , efficient and effective as one would expect from Germans.

    We are getting phone calls from our German relatives with stronger suggestions. What outrages them is the disdain for government displayed in the tapes. You can imagine how this case would have been handled in Germany. They do not see Germany suffering and are aware that the Irish taxpayers are picking up the tab. Their ire is largely directed at the banks. The repercussions for Ireland is directed first at the Irish government who is now seen as ineffective and second at the Irish public for allowing such carry on. Disappointment and regret enters into it.

  177. Re: Latest Anglo Tapes, Sunday 30th June 2013

    What we notice now, that on December 15th 2008, that three important strands are inter-related and inter-locked, for better or for worse.

    A) ‘Bag the Elephant’, (to use the phrase from Oliver Stone’s movie, Wall Street.

    Sean Quinn, yer man, north/south of the border . . . comes in late each evening when the markets quieten down to buy in more into Anglo Irish bank . . . and our boys in Anglo have picked up on this pattern, and seem glued to it like episodes of Coronation Street.

    As long as the bank remains on the open market (Merrill Lynch seems not to have gotten very far, in its advice given to nationalize Anglo Irish), there still remains a hope that Anglo might bag the elephant, the man north/south of the border.

    B) The Irish government has been fully impregnated now by Anglo Irish bank, and its time that the government sees it in that way.

    The boys at Anglo on December 15th 2008, have settled in very nicely into this comfortable political narrative of them self as systemically important. And furthermore, there is not much point even going through the motions of due diligence, given that the guarantee is done. It’s there in place since September 29th 2008.

    (And observe here also, Mr. Drumm’s exact use of dates, in that he didn’t say September 30th 2008 . . . but rather the 29th) When the officials in the department of finance encourage Mr. Drumm to start getting together due diligence, Mr. Drumm’s attitude to that is, ‘don’t insult my intelligence’, or the intelligence of Anglo at large – because the department of finance is already well in for the €100 billion by that stage – and there is no much they can do about that. You can’t be a little pregnant as the saying would go, and part of Mr. Drumm’s job is to assist the department of finance to understand that (and ensure that such message is dispersed more widely among his executives at the bank).

    C) Ministers who won’t live up to their commitments.

    ‘Him’, . . . at department of finance, . . . the Fianna Fail minister needs to be roughed up a little.

    The Fianna Fail minister has created some ambiguity in terms of the comfortable political narrative that the Anglo boys have constructed for public consumption, . . the media are catching on to a destructive idea, that Anglo Irish bank and its €100 billion in liabilities, may not be systemically important, and that it may not be covered by the Irish blanket banking guarantee.

    But the main thing to watch here, is the interplay between these three different strands. By extending the bank guarantee to cover Anglo Irish, instead of just the main pillar banks, . . . that during the months of October and November 2008, Anglo re-builds its broken deposit base, allowing it to go public with its preliminary annual report on December 3rd 2008. BOH.

  178. @ Occam

    Not really that different, simply not very popular! The tapes rather than the play have dramatically changed the situation.

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