statement here.

126 replies on “Moody’s”

This is very positive – methinks a little too positive. That said, the sheeple will be well informed over the weekend on the upgrade from junk to Baa3.

The National Treasury Management Agency (NTMA) welcomed tonight’s decision.

“As a result, Ireland now enjoys investment-grade status with all three of the main ratings agencies for the first time since July 2011,” it said.

NTMA chief executive John Corrigan said: “I am pleased to note that one of the main drivers for today’ s upgrade was Ireland’ s restored market access.”

“The change to the ratings outlook represents a positive context for future rating reviews,” he added.

It is an interesting point to debate how much all the recent good news on Ireland is contingent on external factors, as markets have become less panic-prone recently.

International “Sentiment” (as defined) in the video below has improved:

“with improved solvency and restored market access” isn’t that a case of simply following the herd???

@Rory – your use of “surely” instead of “maybe” demonstrates a certainty that’s admirable.

@ Aiman, well all the news I’m reading on the state of other european banks’ assets has been bad and they will probably fair badly. What effect will that have on us?

If punters in the US are back buying subprime financial instruments surely Ireland deserves an upgrade.

@ Seafoid – thanks for making the point I was trying to make. The search for yield due to low US interest rates/tapering will surely diminish as the US economy improves. Will we have reached escape velocity before then?

That search for yield and cov light and back to the MBS crap while corporates hoard massive amounts of cash are all signs that things aren’t great, I think. There is just too much money hanging around with nothing to do. It’s like unemployment. Maybe they are linked.

Moody’s right….

London, 07 November 2008

— Moody’s has today assigned backed-Aaa ratings to certain debt securities of
six Irish institutions as a result of the guarantee that has been put in place by the Irish government. Existing
long-term senior unsecured debt securities of Allied Irish Banks, Bank of Ireland, Anglo-Irish Bank, Irish Life
& Permanent, EBS Building Society and Irish Nationwide Building Society, as well as those issued through
branches and of certain subsidiaries (see below), that mature prior to 29 September 2010, have been
assigned a backed-rating of Aaa. Dated subordinated debts maturing within the guarantee period have also
been assigned backed-Aaa ratings (prior to 29 September 2010 only Bank of Ireland has subordinated debt
maturing). These backed-Aaa ratings reflect the fact that these obligations are guaranteed by the Republic of
Ireland, rated Aaa. The outlook for the backed-Aaa ratings is stable in line with that of Ireland.
Moody’s has also today assigned a backed short-term issuer rating of Prime-1 to Irish Nationwide

What exactly is the point of a ratings agency that slowly follows market sentiment rather than leads it?

@Rory – “well all the news I’m reading on the state of other european banks’ assets has been bad and they will probably fair badly. What effect will that have on us?”

Oh, “panic”, probably.

“The head of the European Union’s bailout fund has said that Ireland’s currently low cost of borrowing may be a reward from the market for not imposing losses on senior bondholders of bank debt.”

Ireland blushed and agreed to sleep with the man. She was later disgusted to find out that he had used the same chat up line with Portugal, the girl working in Tesco. “Anything with a pulse” is not true love, she told herself.

“Irish sovereign debt yields little more than UK Gilts, despite the trauma of Ireland’s banking sector collapse; the yield on Portugal’s 10-year government paper has fallen 30 per cent in four months.
All of these valuation movements, from Palo Alto to Lisbon, can be explained away individually. Maybe rich Russians will flock to Moncler’s Alpine shops this season; Asos might achieve its global ambitions; and the thermostats of the future may be smart and beautifully designed.
But it is clear they share a common fuel: quantitative easing. Cheap money has given us a period of “wild abandon”, says Andrew Lapthorne of Société Générale. Roll on QE4.”

And there’s not much use at the moment for valuation methodology because “you can’t bet against the Fed”.
The consequences of not valuing assets comme il fallait are on display at the Beacon South Centre, just off the M50, for an indefinite period.

@ MH: “So with the moneymen ready to lend, all that’s missing is a credible strategy for future growth.”

Indeed. Maybe someone; ECB?; IMF?; WTO; WB? or WdF* is putting the finishing touches to the factory that will produce those millions of clone(y) consumers. Each with an NSA approved personal, wrist-mounted i.screen, a non-replacable, and a no-limit credit chip. And at absolutely no cost to anyone! Should be fun! 😎

* Who deh F*%k.

@ Bond. Eoin Bond
And, when the “research” carried out proves to be grossly wrong, do individuals, funds, get compensated for the bad “research”? How many of these agencies have been successfully sued or are trying to defend themselves from lawsuits? All our banks were triple “A” rated even though their balance sheets were about to explode with imprudent borrowings. The ratings come after the events that is called hindsight. As Morgan Kelly said. “those ghost estates and empty sites, that is the capital of the Irish banking system”. Where were the ratings agencies?


Why should anyone get compensated? The agencies clearly state that “Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact.” (lifted from S&P).

I can see why compensation would be in order for corrupt research, but bad opinions? If that’s the case we should all get compensated every time a taxi driver opens his mouth.

All one ever wanted to know about rating agencies but were afraid to ask!

The fact of the matter is that the commercial credit rating sector is dominated by a number of large US firms that came into existence to meet a clear commercial need and branched into unsolicited sovereign rating as the links between the private and state sector became so strong that the two could not be separated.

These agences are now de facto part of the international financial regulatory system.

In the bizarre parallel universe that is this board a minor good news story has got spun into a conspiracy by the illuminati.

@RB,first amendment rights over here-FREE speech/opinion.They have been sued over RMBS but they were getting paid to rate them,also a limited audience but some big girls claim they “relied” on the agencies instead doing their own ecker,there’s always one……

Oh well at least it’s not junk anymore,this will unleash the hordes of investors from Asia,who have been chomping on the bit to have some!
It is good news,diversifies the investor base and provides a nice exit for the yank hedge funds,thanks:)

Kinda blows any recap of the banking sector,careful what you wish for….

It’s good to get a raise from junk but the rating agencies potentially have a lot more smacht over Ireland and if nobody else is going to do it they could.

Grumpy’s list from last week is so depressing

…sustainability of Croke Park, reform, posturing over ‘negotiating’ debt write-offs or defaulting, off-loading the blame on foreigners, willingness to have a proper banking inquiry, bank provisioning….

Glenn Greenwald on Obama but it’s basically about any power structure

“In response to political scandal and public outrage, official Washington repeatedly uses the same well-worn tactic. It is the one that has been hauled out over decades in response to many of America’s most significant political scandals. Predictably, it is the same one that shaped President Obama’s much-heralded Friday speech to announce his proposals for “reforming” the National Security Agency in the wake of seven months of intense worldwide controversy. The crux of this tactic is that US political leaders pretend to validate and even channel public anger by acknowledging that there are “serious questions that have been raised”. They vow changes to fix the system and ensure these problems never happen again. And they then set out, with their actions, to do exactly the opposite: to make the system prettier and more politically palatable with empty, cosmetic “reforms” so as to placate public anger while leaving the system fundamentally unchanged, even more immune than before to serious challenge.”

Ireland did SFA in terms of fixing the problems that led to the last episode of TSHTF.

AIB never fixed the structures that led to either John Rusniak OR ICI and when the wolf came knocking the third time the house fell down.

@ John G

you did ask whether Hollande will do a Schröder, and the answer is, half.
By now he is probably pretty aware, that he will be a one-term president, so he just has to get it over with : – )

After DOD dreams here, that one famous day the Germans will give in on the maastricht treaty,

I thought I visit our greek friend

playing strategist with the DOD Frankfurt school friends at the second last comment in their intense dialog with the revolutionary masses on 22 Nov 2013 : – )

The last comment was from a guy, who complained that their claim about one article about a gay football guy being too long headline at the Spiegel, to be evidence of a anti-Russian conspiracy, seems to be a little far fetched : -)

But they are of course sure, that they are the true representatives of the working masses.

“In the bizarre parallel universe that is this board”

But you keep coming back, duntcha, Tull ?
It’s a good place to be when everything is trina cheile and the papers are figuring out what’s happening.

I spoke to a punter in NY yesterday who reckons there’s going to be a big correction in 2014 and that the rally is just a massive dead cat bounce.

Even if SPX tanked from here it will still be above level you went bearish at. The reality is any bear trade in line with your analysis is massively offside.

@ Seafoid

“I spoke to a punter in NY yesterday who reckons there’s going to be a big correction in 2014 and that the rally is just a massive dead cat bounce.”

I don’t see what ur getting at or why it should be of interest that some random “punter” thinks the S&P is going lower? Do we need to know what taxi drivers think too?


He was telling me about a friend of his who was fired by Moody’s in 07 during a presentation on some financial engineering whizz when she asked the bank “are you assuming there’ll be someone to buy this stuff”

I think it’s interesting to hear what thinking people are thinking.

@ JF

“The agencies clearly state that “Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact.” (lifted from S&P).”

Reminds me of our own crowds claims, this mortgage product has been regulated by the regulator and the ICB sort of thing. Products on offer were not the slightest bit robust nor were they properly regulated. It was a false claim. Have things changed? No unfortunately, one sub prime lender “Secured Property Loans Limited” SPLL were given a licence from the Central Bank in November 2009, a year after the blanket guarantee fiasco and every single one of the loans they made is now the subject of litigation and they are claiming that every single one of their customers are in default. Unbelievable but true.

In short, the ratings agencies are saying give us your money, “investments can go down as well as up, hence” we bear no responsibility, though our “research” was good at the time it was carried out and was carried out under the principle of Uberrima fides! When their research is “Correct” which it is bound to be 50% of the time they take the credit but when it is not correct 50% of the time they are not responsible and simply state it was up to you do your own due diligence.

@ John G

Hi John! Enda Kenny and the government are now busy moving the goal posts because they know there is going to be no retrospective compensation for the money we have poured into the banks to “save the Euro”. Even heavily redacted documents from our own night of the long knives have started to disappear. The new mantra is “growth” but the headwinds facing the Irish economy are gale force. I expect that as soon as we have used up the 24bn pre borrowed we will be back in another bailout. However before that becomes blindingly obvious a general election will be called and they will try and secure another term.

@Pienaar et al.


@all – lighten up on the Moody Blues I

A recent poll conducted by Democratic-leaning Public Policy Polling indicates that 58% of Americans support the legalization of marijuana. This is consistent with other recent survey data showing that public opinion is moving in a pro-legalization direction. In 2011, a Gallup poll showed 50% support for legalization for the first time. As with other recent surveys, the PPP polls finds that support for legalization is highest among younger people. But this is a generational effect in which each generation is more supportive of legalization than the one that came before, rather than a cohort effect in which the young are pro-legalization, but quickly turn against it once they get older. In the PPP survey, even people between the ages of 46 and 65 are far more likely to support legalization (44%) than those over 65 (32%).

@all – lighten up on the Moody Blues II

In Ireland, support is growing slowly for legalisation of cannabis
At the moment, people who use marijuana to relieve medical conditions face criminalisation, a €2,750 fine and up to 12 months in prison for a second offence
[…] Polls here suggest Irish public opinion could follow a similar pattern. In 1998, 24 per cent of Irish people supported legalisation, according to the Health Research Board. In a Red C poll this month, 38 per cent of Irish adults supported legalisation, a 50 per cent increase in 16 years.

Blind Biddy reckons that growing tobacco should be made a ‘criminal’ offence; and when Mad Oul Jozie down_the_road gets a bit dangerous a little toke works wonders.

@francis,the big question over here is who will be the First Lady for the impending state visit,but in typical fashion he can’t make his mind up:)
Haven’t been following the Greek tragedy too closely,you don’t really think your getting your money back there,but will read Yanis link a little later tks.

Good news for german savers,Moody’s is off the opinion that Irelands ability to service it’s rather mountainous debt load is sustainable,they actually have a better record with sovereign ratings than corporates.

DOCM gave great link for EU info few US bits pieces.

@Robert Browne,FF released a rather humorous assume it’s was satire statement will link it.

@Gregory Connor,it’s a lagging indicator you are not suggesting ….true economics has some good work on CDS,can get you irish banks Monday.

FF statement maybe they smoking some DOD’s stash,c’mon David what’s an ounce over there off good quality hydro set ya back,or you just posing again as usual:)

“We should not be deflected from efforts to achieve relief on the bank debt by the comments of either President Barroso or Klaus Regling of the ESM. Ireland has a strong moral and practical argument for alleviation of the cost of the banking collapse and the case for this must continue to be made until practical effect is given to the June 2012 summit commitment to break the link between sovereign and bank debt.”

CDS spreads sovereign not bank,but interesting point by Gregory as always.

@ John,

there is that much to be seen at yanis, just the same tiny group of the same people dreaming about the revolution.

In a certain way I admire that, this ability to just ignore reality, and drone on forever.

I do expect to get some money back from Greece. The Terms are now 1.5% interest over 30 years, no payments the first 10 years, and they still continue with yag, yag, yag. NPV is maybe 0.4

There comes a point, where people say, just let them crash. And we can wash our hands

My understanding is that about half of Irelands debt is on similar terms.

As far as I know, there was a 1000 page court finding in Australia, that did find some rating agency liable for feeding ridiculous assumptions in some ratings

The present archont of Bavaria, Seehofer, also needed a few weeks to sort his harem out, and look at him now. There will be some more years before he disappears in a Lasagna : – )

He plays enough to the far right voter potential, to keep them under 5 %, the internal fights of the far right have already started, and that is it, works everytime, like a charm.

@francis,they have settled a few cases over here but “caveat emptor” should prevail,the buyers were all over 18 could read supposedly investment pros,no widows and orphans or duped irish borrowers buying that esoteric stuff!
I admire you optimism regarding Greece…

As it’s Saturday night,just heading out and we have kinda gone off tread someone in Irl had their panties on a bit tight last week,maybe one the “locals” can give the backstory.

Speaking off the far right….

“The UK Independence Party is the most favourably regarded of all the main parties, according to a ComRes opinion poll exclusive to tomorrow’s Independent on Sunday and Sunday Mirror.

Although 19 per cent of voters say they would vote for UKIP in a general election, 27 per cent said that they had a “favourable view” of the party – just ahead of the 26 per cent who are favourable to the Labour Party, 25 per cent to the Conservative Party and 14 per cent to the Liberal Democrats.

Voting intention:

Con 30% +1
Lab 35% -1
LibDem 8% ±0
UKIP 19% +1
Other 8% -1

@ JG

Would the dash for trash/ revived market positivity towards PIIGS sov debt as a result of whatever the name of that ECB program is not qualify as fulfilling “the June 2012 summit commitment to break the link between sovereign and bank debt.”

U-kip at 19% for the General is a big short. They will get nothing like that when power is at stake. They will get a big vote in the EP election but nobody cares about that in the UK. Come the GE, the vote will go home to the Tories.

One of the UK councillors believes legalising gay marriage causes bad weather. Nutters.

@Tull,you would enjoy the betting over here,next weekend it’s the Super Bowl,most popular form is “box” betting basically roulette.
Ten across ten down,so 20:1 odds 50,000 a box in some bars,but 5 dollar boxes also available,cash too:)

Regarding “nutters”…
“Just as that case moved into another stage, The God Slot, RTE radio’s flagship religion programme managed to start a whole new row over how Ireland talks about gay people. The show’s twitter account, trailing the contents of the Friday evening episode, tweeted: “Can gays be cured of being gay? Try The God Slot Fri 17/01”.

One of the interesting questions with regard to the future of the Irish economy, and its capacity to service an exceptionally high burden of debt, is the extent to which reform of governance is a sine qua non.

There is more than a hint that a shambolic change of direction is, in fact, taking place divorced from anything that the current establishment has in mind, assuming that it has any thoughts on the subject other than to continue as before.

Colm McCarthy in the Sindo this morning lays stress on the shambolic character of what is taking place.

Noel Whelan had a piece in the IT seeing a little more order.

Mandy Johnston concentrates on the “show trial” aspect of the work of committees.

I would suggest that all three authors are missing an essential point viz that the public has woken up to the fact that there is no pot of gold at the end of the rainbow and that rather than viewing their representatives as “going up to Dublin” to get this benefit or that for either themselves or their locality now appreciate that they are being taken for a ride. Either the money is being spent without proper supervision, indeed misspent, or to the cost of some other sector of society in which they may also have an interest.

This is a sea change in Irish attitudes and the politicians are responding to it. What is needed now is to set the new mood music in legislation, with regard to the reform of Dail procedures in particular.

To be continued…


I find Colm McCarthy’s article a little, shall I say, confusing. That fact that the committee seemed to ignore very fundamental questions on Irish Water, was perhaps necessitated by the reality that they had more than enough to be getting on with.

“All of the consultants hired by Irish Water were given their assignments in full compliance with Irish and EU public procurement rules..”

The real question was whether the assignments were necessary in the first place; and lets not downplay or diminish the amounts of money involved.
I have argued elsewhere that all that Irish Water needed to get off the ground was a billing system and a metering system and some other administrative systems used in most companies in the country.
The Irish Water play on the 11 billion of assets was disingenuous rubbish. [They paid 11 million for a souped up fixed asset register to ‘record’ and, wait for it, ‘manage’ the assets. This souped up asset register will be so good that it tell them when the front gate to the Limerick Corcanree plant need painting]
Whether the public were milked by the amounts charged by the consultants or by the very fact that consultants were supposedly necessary in the first place, is a moot point. The public were milked anyway and they will in turn be milked by the Regulator, as they are for electricity, where I am informed, we have the most expensive electricity in Europe, bar none.

Last week revelations, while lacking in probity, pointed towards a very definite conclusion.
The Semi State sector in Ireland has gone rogue. It is time to rein it in. This time without the assistance of of consultant or consultants reports.

@ jg: “to make money someone has to be on the other side off the trade, embrace it:”

Fairytale stuff John. Its Traders +10: Customers -10: Very unfunny game. Well organized and accepted rigging of everything now. High-frequency stuff. Even blatant admissions of fraudulent selling – before the fact! Rule-of-Law is in the dumpster – except for a handful of dupes. Big Boys get monetary slaps-on-wrists – no handcuffs, orange suits or perp walks.

Lesson Time:

Hazard: = the capacity to do harm – an immutable attribute

Risk: = the probability of harm/no harm occurring/not occurring – its a staty thing: a or (1-a) – whatever.

What’s the difference in the level of hazard (harm) inherent in ‘investing’ at the race track v ‘investing’ in a home? Relative? Maybe, but try to think hard and slow on this. The harm – aka: personal harm.

What’s the probability (the level of risk) of personal harm involved when you put up your money (either real of virtual) – your nag comes in last and you lose your wager or you lose your home due to some constraint on your income and/or your property goes into negative equity? In the case of the purchase of a home that risk must be low, as in low, low and low! The harm will be massive if the event occurs! Its inherent, and very real.

So, how is this residential property ‘risk’ determined? By whom? Its an information asymmetrical situation – yes? Sure is. Is personal knowledge and experience of historical stuff a significant information thingy – or just a bauble? So who would (or is that a maybe?) have the historical information on private residential sales and the performance characteristics of those sales over 3 decade intervals? Why, the very sellers of the credit is who. Well fancy that!

Maybe, John, the critters doing the sales pitches to the purchasing punters were just ignorant SoBs – got a basic basic + a nice % commission! Hired by the day. No experience necessary. However, a Golf handicap of 6 or less would be most desirable!

What’s this I hear about Moral Hazard? Is that the name of the second favourite in the 2:45 at Leopardstown? Form Book says it needs to wear blinkers – being scared of shadows, and all!

John, you (and a few others) need to “get a grip”, as they say.

@BWSnr,is it mandatory to buy a house or “invest” in something you know absolutely SFA about ?
You are not trying to suggest that estate agents may be say conflicted cause they eh get paid to sell houses,or mortgage brokers,bankers who’s renumeratuon is based on flogging something to you,no way really !
Oh I have a good grip thanks off reality,the game is rigged correct,get educated or stay out if it:)

@BWSnr,as the resident energy chap,who’s done a better job with their natural resources.The Norwegians in setting up a sovereign wealth fund or the brits?
Should the nanny state hold your hand through life or do you believe in personal responsibility and consequences…..


“One of the UK councillors believes legalising gay marriage causes bad weather. Nutters.”

I see your Councillor and I’ll raise you Michael Gove


Have you read this?

In one of the projections the world’s population declines by 50% by 2200 – and not because of resource shortages, all to do with fertility rates. All these projections (to the up and down sides) are fantasy of course – we have no idea really what is round the corner. I remember being involved with a demographic projection exercise in the mid-90s with the ESRI – we ended up completely overestimating the ageing of the Irish population over a very short time period. If you can’t even project the population of a small homogeneous country like Ireland 15 years into the future then what is the point of worrying about the US or Africa?

Gove may well be an idiot but he is not as far out on the lunatic fringe as UKIP and nowhere near as dangerous as Ed M, who increasingly reminds me of Bertie. He will say anything, promise anything and do anything to get power.


I know that. But Cameron doesn’t use the nutter tack with the U Kip any more. Now he says he respects how people use their vote and he wants to debate with them. Big difference.

This generation of Tories are nowhere near Margaret strength. They need to get everything right if they want a majority.

jg: Morning! ” … get educated!”

Excellent career suggestion! Eh? Now. What’s this thing about ‘opportunity cost’? That might be not be a significant matter? Naw! And there would not be a temporal issue with the acquisition of a meaningful level of understanding. Naw! Not to mention the acquisition of the desirable skill of slow and hard thinking v the fast and vacuous kind – which is excellent for ‘fright’, ‘fight’ or ‘flight’. But is a crock-of-shit for dealing with large, expensive purchases. Which if they go pear-shaped, may result in your penury.

Did I suggest you get a grip? OK! I meant (in the best possible of paternalistic taste, you understand!) that it should be vise-like, not slippery-eel like. Bit of a differ!

We’re making progress here! See yeh around!

@ JF: Thanks for the link. Will print and read.

” … what is the point of worrying about the US or Africa?” Not much. Except it help keeps me out of the pub! 😎


@BWSnr,morning Brian arctic vortex is back in NY,wrecking the outdoor activities,with the exception off ice skating.

My somewhat flippant comment was directed at seafoid who I assume has some level of investment expertise,in that Ireland is defiantly on a “roll” no point in getting in the way off it.If someone strongly believes Irl Inc is mispriced take a position,plenty off people have 🙂

just read BL’s excellent link,thanks Brian terrific piece.

Most funds require a minimum net worth,excluding the PPR,at JP Morgan Private it’s 10,000,000 or 10mil min. to even receive any prospectus,the intent is to “protect” those who haven’t a clue.

And yes it behoves people making the biggest financial decision off their lives to read up,get educated before pulling the trigger,eh like can I afford it ?
Stress test your financial position or deal with the resultant stress,no one is under any obligation to buy a gaff or “invest”.

Don’t get in the water if you afraid get wet or can’t swim,watch out for the sharks too,since when is stupidity or ignorance an excuse for greed?

@ JG

I always enjoy the discussions with you.

Just reading the FT there. P 11
“Equities turn choppy as earnings disappoint”.

The/A US recovery is fully priced in to equity levels. If I buy something I have to do my homework. I prefer to buy stuff expecting the price to rise later. You do need 2 parties for a sale but you can’t say that anything in the market has an intrinsic value no matter what.

I have been following the FT on valuations for the last while and very few equities look decent value based on the oldfashioned methodologies.

I think there are 2 conflicting dictums.

-Never bet against the Fed
-Try not to be the last one into the rally

There was a piece about dumb money a while ago that really resonated.

I have a lot of time for John Authers. Have the fundamentals really changed significantly since last June ?

“The lessons of the past week are that markets are terrified about the Fed’s eventual exit and that timing the market in the short run is a nightmare.
Tapering too late might create less risk of a dangerous market sell-off than tapering too soon. And hence the chances that the rally in stocks builds into a true bubble also increase. Anyone who could time this correctly might bank enough money to survive what follows.
But basic truths remain. It is easier to forecast the long-term than the short. And the long-term does not look good. ”

Harpers had an interesting stat in their Index a while ago. Apparently 47% of Americans would have trouble raising $2000 in one month.
Must be Mitt’s 47%. But it doesn’t augur well for a sustainable consumption-driven recovery.

You are ignoring the slew of better than expected data from the properly run economies of the Anglo Saxon world. Recoveries are verging on escape velocity.
Secondly, the gurus in your favourite articles are concluding that stocks are relatively less expensive than bonds, although neither is cheap. Funny thing is you seem to be of the view that equity markets are most at risk. There has been a sneaky cracking in the foundations of risk free assets that nobody is commenting on. I think y/y returns in bunds are close to negative.

@ Joseph Ryan

I do not think that we will get anywhere by concentrating on the case du jour, rather an attempt has to be made to draw some general conclusions on the central question; who is responsible for what? Ian Kehoe has a stab at answering it in today’s SBP, correctly pointing out, by way of example, the confusion between public and private sector in the case of the CRC, and the expectation of the latter to be able to have it “each and every way”. This deliberately engineered confusion extends right across the health sector and the beneficiaries of it are in no hurry to give it up.

The Department of Public Sector and Reform is ostensibly embarked on an attempt to also answer the question but in a manner which avoids the larger issue i.e. can the question be answered at all if the current system of government is left unchanged.

My answer is no.

Will it happen? It seems to me that the budgetary pressures that are unavoidable for at least a decade – and to which the country is now committed at an EU level – will leave the politicians with nowhere to hide (especially when the water charges kick in). There is no need to re-invent the wheel. Other countries have done it by (i) putting an absolute ceiling on expenditure on the basis of a rolling budget the broad parameters of which are set as part of the broader policy debate (ii) fixing ministers with the political responsibility for staying within overall budget (iii) writing clear legislative and operational mandates for the public servants and semi-states responsible for executing the policy decisions made and (iv) making the last-mentioned subject to monitoring by dedicated committees of the Dáil organised on the basis of the broad budgetary categories.

The reform would, of course, greatly limit the capacity of ministers to attempt to ensure their own and their parties’ re-election by dispensing the taxpayers money as they rather than an organised evidence-based system saw fit. There is the rub!

The reform would, of course, greatly limit the capacity of ministers to attempt to ensure their own and their parties’ re-election by dispensing the taxpayers money as they rather than an organised evidence-based system saw fit. There is the rub!

@DOCM Well said.

@Brian Lucey
A lot of numbers in your linked article…interestingly, Irish banks equity = 37 b
Of which 31b represents AIB. I hope Mario isn’t using similar numbers for his stress test.


if I would be the Fed,

I would organize the taper in a way, that the year on year yield on 5 year bonds (^FVX) (the typical maturity of government debt inventory) does not fall significantly (say 2-3%) below what you can get with a money market fund, lets say t-bill rates (^IRX) , especially at years end.

You wouldn’t want people to start thinking about withdrawing money from funds like PTRAX.

I wouldn’t be surprised if the ECB and the bunds would follow similar trends : – )

@francis says
Greenspan,held that bubbles cannot be prevented,and the government’s task is merely to clean up after them. Greenspan’s practice was to foster one bubble after another,until finally came along one so vast it destroyed the entire system on the way.

The global crisis was, at it’s source,an American housing crisis,not one of too little housing but of too much. Below is the link to the elementary property valuation error that created the crisis;

Robert Schiller has some interesting thoughts on house-price expectations here.


if you would be a German insurance manager,

who sold folks a Riester Rente

(15 Mio contracts x 4% of income to be contributed of lets say 35 000 Euro, making for a captive audience with a volume to be invested safely of about 20 b Euro per year, plus maybe 10 years x 3% = 30% of that in interest to be reinvested) with a guaranteed interest of 1.75%,

what would you do?

Germany issued just 54 b in 10-yr bunds last year, 56 b in 5 yrs BOBLs with a rate of 0.7%

String yourself up, or cry into your pillow and buy the 10-yr shit, because it is the ONLY rule conform way?

And nobody will hear your screams.

@francis says and Michael Hennigan–sorry for the delay with the link;

June 11, 2011
The Sickness Beneath the Slump
THE origins of the current economic crisis can be traced to a particular kind of social
epidemic: a speculative bubble that generated pervasive optimism and complacency. That
epidemic has run its course. But we are now living with the malaise it caused.
News accounts of the economic crisis rarely put it in these terms. They tend to focus on
distinct short-term developments or on the roles of prominent people like Federal Reserve
governors, members of Congress or Wall Street financiers. These stories grab attention and
may be supported by some of the economic statistics that the government and private
institutions collect.
But the economic situation is primarily driven by hard-to-quantify sociological factors that
play out over many years.
The uptick in the unemployment rate, to 9.1 percent from 8.8 percent two months earlier
and the drop in stock prices over the last month have attracted notice, yet in a sense they
are symptoms of a deeper economic sickness.
Real estate prices have been a significant indicator of this ailment. An unprecedented bubble
in American home prices started in 1997 and ended five years ago. Home prices rose 131
percent in that time, or 85 percent in real inflation-corrected terms, according to the S.&
P./Case-Shiller National Home Price index. (I helped to develop that index, along with Karl
Case of Wellesley College.)
Around the same time, there were bubbles in the nation’s commercial real estate and
farmland. And there were real estate bubbles in many other countries, too.
Consider this: Home prices rose nearly 10 percent a year on average in the United States
from 1997 to 2006, long enough for many people to become accustomed to the pace and to
view it as normal. The conventional 30-year fixed mortgage rate averaged 6.8 percent over
those years, far below the appreciation rate on housing, so even if you had a substantial
mortgage, you were becoming wealthier by the day, at least on paper. People who owned a
home over that period had reason to feel pretty well off and proud of their investment
acumen. That fed a contagion of optimism and helped to drive the speculative bubble,
propelling the economy and the stock market in a feedback loop that repeated year after
Professor Case and I have conducted annual spring surveys of home-buyer attitudes for
many years. We ask about long-term expectations: “On average over the next 10 years how
much do you expect the value of your property to change each year?”
The survey we conducted in spring 2005, near the end of the bubble, included 407 home
buyers. In it, the median expectation for home price appreciation over the next decade —
until 2015 — was 7 percent a year. That is substantially less than the 10 percent a year that
Americans had recently experienced.
But expected increases of 7 percent a year still implied another doubling of home prices by
2015. And about a quarter of our respondents in 2005 anticipated increases of at least 15
percent a year for the next decade. Something was very wrong with this picture, but few
noticed it.
As it turned out, of course, those expected increases didn’t happen. Instead, home prices
tumbled 34 percent nationally from the peak in the first quarter of 2006 to the first quarter
of 2011 — or 40 percent in real terms — and they still appear to be falling. The brief
“recovery” in home prices of 2009 and 2010 was most likely spurred by federal housing
stimulus measures like the home buyer tax credit. After that stimulus ended, prices
resumed their downward trend.
During the bubble, the sense of rising wealth and high expectations gave people a good
reason to spend and a greater willingness to plunge into investment, too. Government policy
makers breathed in the same optimism, which no doubt encouraged them to be lax on
regulatory restraint.
The mood is far different now. Our latest survey, covering April and May of this year,
included 296 home buyers, and their median expectation for annual home price appreciation
over the next decade was down sharply, to just 3 percent. And, in comparison with the 2005
results, few people had extravagant expectations.
The 3 percent figure is well below prevailing rates for 30-year mortgages, now hovering
between 4.5 and 5 percent. Amid such low expectations, buying a home with a mortgage
certainly isn’t being viewed as a way to get rich.
Even for people who have other reasons to buy a house, there may be little urgency to do so.
Our 2011 survey found that the median expectation for home price appreciation next year is
just 1 percent. So it won’t be surprising if new home sales remain abysmally low and few jobs
are created in the hard-hit construction industry. And it shouldn’t be a shock if the personal
savings rate stays at around 5 percent, as it has recently, up from around 1 percent in 2005.
This would mean that consumer spending will not drive a strong recovery.
A half-century ago, there was a lively discussion among economists about the dynamics of
price expectations. For example, Alain C. Enthoven, then of the Massachusetts Institute of
Technology, and Kenneth J. Arrow of Stanford wrote in 1956 that expectations that
extrapolate past price increases can produce economic instability. But that thinking was
largely cast aside in the 1960s, when my profession embraced the theory that efficient
markets formed by people holding rational expectations could explain virtually all economic
As a result, economists in recent decades have not developed expectations theory much
further. That needs to be corrected in coming years. In the meantime, this failing helps
explain why the current crisis was generally unpredicted, and why its future course is so
poorly understood.
Robert J. Shiller is professor of economics and finance at Yale and co-founder and chief
economist of MacroMarkets.

John Corcoran,

please, where did I mention Greenspan, and god forsake in any way approvingly? Where?

We hate bubbles here around and those who organize them.

And summing up my previous musings about interest rates, and how they might develop,

pondering what I would do, as Ms Watanabe or a 55 – 65 year old Joe Smith in the US, I see plenty of room for the SPX to increase its overvaluation of 10% by another 5 -10%, as a privately pretty rational behavior.

All the consequences of driving the whole US system so far out of equilibrium

@Seafoid,FT had something on Thursday,Barron’s yesterday on Puerto Rico,worth a look could make a few bob playing there:)
The FT and Barron’s a little late,I spent a few days there taking a look around,but it’s been on lots peoples radar screens for a while.

I don’t sense much panic here,oh hold on….

“The Markit CDX North American Investment Grade Index, a credit-default swaps benchmark used to hedge against losses or to speculate on creditworthiness, increased 1.2 basis points for the week to 65.2 basis points, according to prices compiled by Bloomberg. The measure was little changed today at the highest level since Jan. 13.

Investors have pushed the index up from a more than six-year low of 62 basis points reached on Dec. 26 after Fed policy makers signaled they would start paring bond buying that’s boosted credit markets. The Fed said on Dec. 18 it would reduce monthly purchases of Treasuries and mortgage securities to $75 billion from $85 billion, citing improvements in the labor market.”

Reminds me of another little island with quite a bit of debt….

@ Tull

Equities are cheap relative to bonds but expensive compared to earnings. The assets have to generate real cash to justify the prices.

What are bond prices saying ? That people are afraid to invest in equity. Maybe there’s just too much money looking for a home.

It’s not unusual for markets to run ahead of what’s happening in the real world and then correct when the data doesn’t support the story.

What’s going to be the growth driver now that credit is compromised ? That’s the big question for me.

Percent change in U.S. labor productivity since 1972 : +114
Percent change in wages during that same period : –6
Percent increase in food-stamp usage in 2010 : 13
Chances that a U.S. millionaire does not “feel wealthy” : 2 in 5

I think the big story of the last 30 years was companies capturing productivity gains and palming off workers with credit. That trade isn’t going to be repeated at anything like the intensity needed to drive sustainable growth for the next 20 years.

And interest rates are still very low. Why ? There’s a big misallocation risk especially in property. It all looks quite fragile.

Traders will have to trade tomorrow so they’ll buy and sell but where is it all going ? I know you have to follow your market and all that but what is driving the dynamic ?
What’s in your pitch book ?

Seafoid ,
I have no axe but I would not own risk free assets ahead of an emerging growth surprise in The Anglo Saxon world. There are plenty of cheap equities around. There always are- just not the safe duvidend payers with stable cash flows.
The big question to be asked of the actuaries in 2014 will be why they recommended selling risk assets in 2011-12 and buying bunds.

There are always going to be undervalued companies Tull but would you advise an ordinary punter to put 15% of their income into the stock market ?
The volatility is going to be something shocking if growth is anaemic.
Andrew Lo of MIT says buy and hold is dead. What does that mean for the ordinary punter ? And then you have all the asymmetric information.

And you bang on about how well run the UK is but have you ever read Old Sparky in Private Eye on the electricity system and “keeping the lights on” ?
Where is the money going to come from to replace all the crap infrastructure ?

“The big question to be asked of the actuaries in 2014 will be why they recommended selling risk assets in 2011-12 and buying bunds”

Surely not if equities tank and it’s just a DCB.
I mean who has any credibility left at this stage ?

One more thing, Tull

You say there are always equity bargains but aren’t a substantial proportion of funds these days index driven ? Consensus funds came in a good while ago. If you want an actively managed fund how do you know the manager isn’t following the index? My impression was that it was like the economics profession- most forecasts tend to be bunched .

well, before I go to bed, just jotting a 5 year scenario down, for future reference:

End 2014 US U-3 unemployment 6.0%, then tapering to 5.5 %
(eerm, getting to more real numbers over time)

The Fed begins raising rate in June with 0.75% per year, up to 2.5%

5 year rates rising by 0.15% per year up to 3.5%

and stocks following with a risk premium of 4.5%, calculated back

all in nominal notation

The EU following suit with a 0.5 – 1 year lag

For comparison:

Gurriers, spinnere & ‘doom porn’ merchants look away now. Fun time! Out of ‘junk’ & away […] from De Troika. Irrational Exuberance Time. We are all saved. Wow! World Class! We are World Class.

“Celebrating the Exit
The bailout for Ireland has been a resounding success. The austerity programme that has been in place since 2008 has brought us back from the brink and piloted the economy back into recovery and economic sovereignty. Let us rejoice. Let us spread the word among the nations. We have succeeded. We are the solution to everyone’s problems everywhere.

And we have so much to celebrate.

Nearly 300,000 jobs have been destroyed, – more than one in every twelve jobs. Our job destruction rate is five times the rate in the Eurozone. We lead the EU in precarious work. We have one of the highest level of low-pay.

One-in-seven of our young people have fled the island due to the recession.

25 percent of the population suffer multiple deprivation experiences – over one million people. Over 30 percent of our children live in deprived conditions, while one-in-five people at work suffer deprivation at home.

One-in-ten people suffer from food poverty – it’s called hunger.

Ireland has absorbed over 40 percent of all bank debt imposed on European governments. Every man, woman and child owes €9,000 in private bank debt (throughout Europe its only €200). We are paying off the debts of banks that don’t even exist anymore. But, as Ollie Rehn said, that’s water under the bridge

State debt has increased by nearly five-fold in only six years. Households have debts nearly twice their income while half of SME debts are underwater. Nearly 25 percent of all mortgages are in arrears or have been restructured. Welcome to Debtor Island.

Hospital waiting lists are on the rise.

Domestic demand has fallen by 20 percent – the biggest fall suffered by any economy since the war except for Greece, another Troika project. In fact, we’re still in a domestic demand recession (but shhh, don’t tell anyone, we’re trying to celebrate).

Social Protection payments have been cut by over 10 percent in real terms over the last four years.

The Government sends young people job offers in foreign countries.
The minimum wage hasn’t been increased over its 2007 level. Statutory protection for the low-paid has been cut. Real wages are still falling.

Our tax haven tax efficient policies allow multi-nationals to get away with a 2 percent tax rate. No wonder profits are rising faster in Ireland than anywhere else in the EU.

Investment in Ireland is half the level in the Eurozone. Corporate investment is on floor. But investors are getting real bargains, buying up distressed assets at knock-down prices. Now that’s confidence.

Despair is up, car sales are down, manufacturing output is stagnating, homelessness is on the rise, most pension funds are insolvent and we have some of the highest paid bankers in Europe.

So come to Ireland and help us celebrate. The experts were right. Our Government Ministers are wise. We were right not to listen to the doomsayers and naysayers. We are one people going forward together into a brave new future.

And don’t worry about our democracy – it won’t disturb the revelries. We hold elections, we change governments but nothing ever changes.

For we live in a one-policy state. We have so much to celebrate.”

Hey – this Taft guy is good. What an Aesthetic Turn!


They sure talk a good béal bocht don’t they? However, I can assure you behind the scenes they are laying down the marble tiles and making sure the state of the art offices are available for the hard working representatives of Ireland’s “proletariats”. After all, the austerity has brought them and their members to their very knees, has it not?

Only last week, I was talking to some of the workers who have been renovating Unite’s Offices on Middle Abbey Street, next door, appropriately enough, to “The Twisted Pepper” home of great coffee btw. Work began, the best part of a year ago and they have been working more or less flat out including some all nighter’s.

No expense has been spared on the renovation, including shower facilities and state of the art data comms meeting rooms with full conference facilities. Michael Taft should be nice and fresh for negotiations or he can do his regular appearance complete with the obligatory red tie, with Vincent Browne, without ever having to go home to freshen up! Austerity? Not on my watch says Taft!

SIPTU is also stuffed to the gills with money, as evidenced by their attempts to knock down Liberty Hall and rebuild it even higher of course planning has been refused but I’m confident they will find some other projects to keep busy. The INMO has just concluded the purchase of the former Richmond Hospital on North Brunswick Street near Smithfield for a mere 2.7 million. Nice to know that Croke Park and Haddington Road Agreements have piled the coffers even higher in our trade union sector. Union subs being deducted as usual with absolutely no chance of having to pay out strike pay for the period 2010 – 2017. Halcyon days for Jack and the boys.


It is true that there is a lot of political theatre, while the spending of a real €24 billion in a decade to achieve the official goal to become a ‘world class’ knowledge economy by 2013, maybe too boring to examine or above representatives’ heads to query the well-heeled beneficiaries.

Nevertheless, this merry-go-round will be back again if boring process does not get attention, as you highlight.

PPARS (Payroll, Payment and Related Systems) for health staff was budgeted to cost €8.8m in 1998 and was rising to €200m when publicly disclosed in 2005. Another project FISP: Financial Information Systems Project was budgeted to cost €30m and in 2005, the cost was estimated at €176m.

Freedom of Information does allow some light through the Victorian cobwebs but it does not provide adequate transparency.

Brain Cowen said in 2009 that public servants were being forced to spend an inordinate amount of time “trawling through” files when they could be doing other work.

“It is an expensive and time-consuming aspect of Government work,” he said.

Modernise the archaic accounting systems; use a common chart of accounts and put information online in a user-friendly format. Then charge for FOI requests at commercial rates.

The State is the biggest procurer of goods and services in the economy – about €12 billion annually – and whose interest is protected by shielding big suppliers from price competition?

The big professional services firms provide minimal public information about themselves or none.

Isn’t it odd that a unit of the State would be suing a private firm for negligence while another unit is giving it a multi-million euro contract?

The culture of self-serving secrecy means that it would have been strange for Irish Water to have put its budget online last year. It also is evident with charities in receipt of public funding. When the Department of Health requested information on spending from Rehab, it was told to get lost because the public grant covered other spending.

Isn’t it a joke that an FOI request was necessary to discover that Enterprise Ireland lost €124.97m on its investments in 11 years between 1999 to 2012. 😳 What’s the purpose of an annual report from a public agency?

Support ministerial spin, of course.

Ministers cannot micro-manage while the buck stops nowhere 🙄

Remember before the undertakers were summoned, news broke that 32 staff at the former Anglo Irish Bank were being paid more than €200,000 a year with 6 on more on €500,000 despite half-million euro cap on bankers’ pay?

Mercer had been asked by the Government to report on IBRC’s salary levels in Nov 2012.

@ MH

Without wishing to be facetious, I would see your approach as that of continuously setting out a litany of egregious policy failures. John McManus has another pertinent example in the IT today.

But this approach only gets us so far (and could be applied to a greater or lesser extent in any modern democracy).

The key question is whether the appropriate lessons will be drawn and radical action not so much taken as forced upon the political and administrative echelons of the country. The blatant contradictions between the public and the private interest in the mish-mash of public/private operations across a variety of sectors, but most notably the health and charitable sectors, are such that they can no longer be glossed over. As John McManus points out, the mood is black and getting blacker.

And the pot calling the kettle black comes to mind in the rush to judgement in which politicians are now indulging. The issue of bonus payments to Irish Water employees comes to mind in respect of which they have been pirouetting like wind vanes.

@Robert Browne

Hmmmm I note your little excursus on the Oirish trade union leadership. I have a few ‘beefs’ meself on same.

That said – the post refers to some empirics/FACTS noted by Michael Taft – an economist in the tradition of ‘British Empiricism’ – bit like Colm McCarthy if their interpretations might differ at times. I take both seriously even when I do not agree with their interpretations – they are empirically reliable on facts …

Surprisingly, you do NOT Dispute any of the ‘FACTS’ in the Taft’s piece: Do you challenge e.g.:

The figs on ‘food poverty’ – u know, those parents and kiddies who cannot afford enough food – even “junk”_food?
The facts on emigration?
The facts on %odious financial system debt?
The facts on state policy FF/FG/Lab/PD/gp?
The facts on SME impaired lending? [methinks Seamus Coffey (bit of an empiricist himself) provided some detail here a few threads back based on recent CBI data]

Hey, the (il)logic of your response demands that you provide an excursus on University College Cork, who employ Seamus …. shurely u have a few beefs on the Uni sector? [have a few meself – but again not the focus of his thread]

Further to the Prof Orla Hardiman demand yrs and yrs ago on some ‘legal’ relief for MS sufferers [in link above]

Barack O’Bama joins the debate:
“As has been well documented, I smoked pot as a kid and I view it as a bad habit and a vice, not very different from the cigarettes that I smoked as a young person up through a big chunk of my adult life,” he said in an interview with The New Yorker magazine

“I don’t think it is more dangerous than alcohol.”


Your regular use of the descriptive ‘CORRECT’ without the normative qualifier IMHO (in my HUMBLE opinion) is becoming tiresome – very school mistress/master and SO un-scientific.

Oh – I see. Your BAU profile notes that you did not register on the ‘Humility Index’ [not to worry – help is available for this condition]

In the interim, why not try the IMH (in MY opinion) – e.g. “IMO correct”; atta boy/gal


‘..Andrew Lo of MIT says buy and hold is dead. What does that mean for the ordinary punter ? ..’

When I this nonsense regarding equities I understand why the Warewolf of Wall Street at some level actually is quite true. Its not true however about the brokers is actually a true reflection of the stupidity of investors. Its a great story for the broker community to hear that the notion that buy and hold is dead .. more churn, more commissions as a result how bad?

The sad fact is that timing in the market always THE most important aspect of investing. In case you hadn’t noticed by the S&P in the first week in March 2009 was at 667 – todays level is c1870 – please tell me how a near 300% return in 5 years represents a bad investment on a 5 year time horizon??

Buy and hold dead – my arse it is.

@DOCM how come “enterprise” is above the fray?

“The state body is a very expensive operation to run. It received almost €293m in exchequer funding in 2012, paying out €186m in grants and other supports to Irish companies. The quango also racked up €86.2m in costs associated with its “administration, operation and promotion”. This includes over €61m in pay and €4.2m in travel expenses.”


You seem to have grabbed the wrong end of the stick.

I suggested that the first step is to give citizens and politicians access online to a lot more public information. It should include public procurement above a minimum value.

I didn’t go into detail on accountability below ministers but if there was political will, that is hardly a huge undertaking.

There is the problem of the lifetime job guarantee and accountability /sanctions for poor performance. I have raised this several times but it’s a taboo subject.

One option would be to end it above a certain grade.

In Denmark more employees are employed under private labour law in the central ministries than civil servants. In addition, most other member states employ staff under labour law in their central ministries.

Sweden , with approx. 31% of public employees among the economically active population has almost three times more public employees than Germany (about 11% of the active population), but almost all public officials are employed under legal provisions and/or rules which do not differ very much from those working under labour law. In Sweden, less than 1% of the total public workforce has a specific public status (mainly judges).

Back on topic – Irish 10 year yields dropping like a stone – heading towards parity with gilts and possibly below 3%.


First off I am just wondering about the rank hypocrisy? I am sure many of the “facts” are true that is how they all operate, weaving the truth with myth. I will have a look at his “facts” later when I get a chance!

It does not really matter if Moody’s evalution of Ireland’s prospects are correct, as long as they lower our debt servicing costs. I think no one believes a damn word they say and, as with much of the institutional paraphernalia of global financial capitalism, they just serve to protect investors from having to take responsibility for their own decisions. Moody’s made do it and the ECB (and formerly IMF) will make sure I get my money back.

Regardless of this Ireland’s upgrade from junk to “near junk” is a real boon. Remember that we still have sixty billion euro odd to pay back for the pleasure of protecting international capital from its own mistakes. Every cent saved on financing the budget deficit can go into paying for the banking debt imposed on us by the ECB and their German owners.

@ JG

Mea culpa! Put Enterprise on the list.

@ MH

I am not disputing the points that you make being in broad agreement with them as you know. My point related rather to the futility in my view of arguing from the particular to the general which, in Ireland’s case, is like playing handball against a haystack, a rather disheartening exercise aided and abetted by an incompetent or servile media or a combination of the two.

My conviction is that only a response by elected representatives to the clearly expressed wishes of the electorate for a radical change in thinking and approach – as the examples you give underline – will work. That that change in sentiment is on the way is certain but it seems very uncertain as to whether it has sufficient staying power. Paradoxically, only continued budgetary and personal financial pressure can ensure that it does.


Paradoxically, only continued budgetary and personal financial pressure can ensure that it does.

One could be forgiven for mistaking your enthusiasm for austerity as a way of achieving economic stability for a desire to immiserate the voting population until they give in to your extreme political position. Undermine voters personal financial situation so that they gradually come to believe that the remorseless self interest of the neoliberal right is the only way to stay above water.

No one could be that loathsome though, could they?

@ DOCM: ” …playing handball against a haystack, …”

The mind well and truly boggles! But, you know what? – this is just what those duffers are actually doing!

“My conviction is that only a response by elected representatives to the clearly expressed wishes of the electorate …”

I would opine that our elected reps have zero interest in the ‘clearly expressed wishes’ (a profound oxymoron!) of the citizens – except perhaps the shrieks of the Vested Ones (windmill haters; pylon haters; water meter haters; local hospital lovers, etc., etc.) who infect our polity.

It used to be – some decades ago, that the ‘grassroots’ would inform their local TD and he (usually a he) would in turn inform the partee. Policy might follow. Now? Well, Il Duce, suitably briefed by his useful idiot handlers informs his spokesmodels who inform the meeja. And they all twitter the citizens. Well, those that can receive the twits from the twitters. Or should that be twitters from twits? No matter. Democracy courtesy Apple Inc. Embrace it! 😎


The clearly expressed wishes of the electorate hitherto have resulted in a remarkable capacity to elect leaders with the ability to run the economy into the ground at intervals of roughly twenty years. This phenomenon arose largely, it seems to me, because of a widespread belief in the electorate that the government had an inexhaustible supply of money unrelated to the taxes they had to pay. The sudden interest of their leaders in protecting the taxpayers’ money suggests that this illusion may be fading. The paradox, as I have pointed out, and this is not a value judgement but an observation, is that it probably has to continue to fade for the necessary radical reforms to come about. If not, we will simply repeat the errors of the past.

If you bought in March 09 you would be fluirseach but very few people did. I’d say even Tull only got in a few months later.

Here’s a chart showing S&P from 1990 to 2013 Q1.

Even if it broke new ground recently it hadn’t been going anywhere for 10 years. With long term sideways you make money selling when the schmucks get in and buying when they get out. That’s what he meant. Buying and Holding wouldn’t have made you much from 99 to 13 but if you knew how to short the f#$% out of stuff and then had the balls to buy it back when everyone else was scared you could make serious money.

And your average pension fund has serious difficulties generating returns in that sort of environment.

The big question now: Is it time to get out or is it really a new paradigm.

@ Seafoid

“Even if it broke new ground recently it hadn’t been going anywhere for 10 years.”

You’re aware of the concept of dividends, correct? S&P has returned 80% since 1999 in terms of total return.


take the S&P since 1928, add dividends, subtract taxes on it, inflation, do a log fit, and you get an average real growth of 4.3%, and it is now about 4% above what I expected it to be today, calculated back in 2005

This 4.3% depends a little bit (like 0.1 – 0.2%) on writing down taxes back before Reagan, when marginal tax rates on income were up to 70%, and those on dividends a little murky

@ DOCM: Something about ‘light in tunnel’ – until the realization (usually quite late) that its some class of a locomotive – whose driver and footman have since jumped off!

I hope you’re correct about the fading bit – and its not another Bejing-style pea-souper. Hey! – there’s a champion idea. Export the Blessed Mary (H), who is slated for national sainthood, to China, as she was single handedly responsible for banishing Smokey Coal from Duvlinia!

It’s possibly just me, but I find that the word “methinks” is an infallible signifier of a post not worth reading. I find it both precious and silly. Maybe I’m too sensitive and prescriptive though, methinks, I doubt it.

somewhat off topic at first glance, it may seem,

as a second answer to John Gallaher about Hollande,

what I also see, is people rising with their job and experience/age.

2 years ago I saw Sigmar Gabriel also as a laughing stock,

now he grows into his role pretty remarkably, and we have already the next generation growing
The photos and quotes are really priceless:

“Die Antwort auf ihre Frage lautet: Das entscheiden die Landesverbände. Nicht schlecht oder?”

Fahimi schweigt und weiß, sie muss noch viel lernen.

But so did little Angela Merkel 20 years ago, too.

And now look at her.


I know about divs. What sort of fund charges would you deduct and what would Dick n Jane be left with ?

@Shay Begorrah

‘No one could be that loathsome though, could they?

Methinks they could. What a Jungian case study – domage, I don’t have the time to waste.

Is a typical main street punter likely to have been in an ETF over the period in question? I think charges on average would be higher than 0.1%.
As Lex said a while ago an RoE of 11% (Squid 2013) would be doable with far less risk by investing in a boring municipal water utility.
Growth has to return if wealth management is to go anywhere. Innit.

But growth is returning in the US and UK-properly run economies on a relative basis both. In H2 the annualised rate of GDP “grew by” in excess of 3% in volume terms in both. That is not too shabby, maybe below the desired level but far from the disaster level that you witter on endlessly about. We shall see what the spring brings but thus far it is green shoots.

@ Tull: ” … thus far it is green shoots.”

What of …?

US retail is going into the toilet – slow, but sure. Holiday ‘visits to retail stores’ has fallen by 50%!! since 2010. Retail accounted for 60% – 70% (depends on your metrics) of US GDP. Onp-line sales ar up, but not enough to counter the in-store losses.

Median wages are static – or falling. Definitely down a lot over the decade. That’s real bad! The proportion of working-age adults (18 – 66 years) v the total US population is at 58% and looks like its trending down. From 1988 – 2002 the proportion was over 65%.

Those ‘green shoots’ again? Poison Ivy?

@ Tull: ” … thus far it is green shoots.”

What of …?

US retail is going into the toilet – slow, but sure. Holiday ‘visits to retail stores’ has fallen by 50%!! since 2010. Retail accounted for 60% – 70% (depends on your metrics) of US GDP. On-line sales are up, but not enough to counter the in-store losses.

Median wages are static – or falling. Definitely down a lot over the decade. That’s real bad! The proportion of working-age adults (18 – 66 years) v the total US population is at 58% and looks like its trending down. From 1988 – 2002 the proportion was over 65%.

Those ‘green shoots’ again? Poison Ivy?

@BWSnr,morning or almost lunchtime Brian,had wait almost half hour yesterday for a table,stores,hotel,restaurants packed:)

“(Reuters) – U.S. retail sales edged up in December with a core spending gauge posting a big jump, a sign the economy gathered steam at the end of last year and was poised for stronger growth in 2014.”

“”The problem is that there are multiple possible explanations” for why the jobless rate has been falling since 2009, said Ann Owen, a former Fed economist who now teaches at Hamilton College. “There’s no one thing that ties it all up” and makes it absolutely clear what is happening.”

@ JG: thanks for that update. I have formed the opinion that reading the labour (and other econ) stats from the US is a tad ‘risky to one’s understanding. They ought to come with a severe mental health warning!

“The problem is that there are multiple possible explanations for why the jobless rate has been falling since 2009 …”

We know that! Its the probable ones we need to figure out. You do that by eliminating all the possible ones. Gee whiz, Ms Owen. You did mention you are an economist?

Just read this – like, real careful like:-

““(Reuters) – U.S. retail sales edged up in December with a core spending gauge posting a big jump, a sign the economy gathered steam at the end of last year and was poised for stronger growth in 2014.”

“edged up” “a big jump” “a sign the economy gathered steam” “poised for stronger growth”

Anything strike you as odd, about that statement? If not, it should!

@ Tull

UK as a properly run economy.

Tell us what you think of PFI
And where is the electricity going to come from 10 years hence.

50 marks

@BWSnr,the shops are slammed now,like a scene from a vampire movie,people fighting over batteries,milk…
Nothing odd about the statement,yeah we have a few too many big boxes.But always new concepts or alternative uses,lots medical demand,”edutainment” a cross btw. kids play area and preschool,it’s a very dynamic marketplace.
Investors are bidding yields/cap rates to 5% for prime necessity retail,that’s a grocery store and a few shops.They looking for barriers to entry,grocers who are number 1 or 2 in their category,things like getting your hair cut,mani pedi,medical day spas can never be done online no matter how fast the bandwidth gets.
Whole Foods,Traders Joes and Aldi opening stores,REI doing great.Are the problems in that category sure but there is always a silver lining,some fantastic opportunities repositioning distressed RE assets:)

@ jg: Thanks, again! Are you in Dublin or ?

Statement was nouns, adjectives and verbs – but nary a single number – apart from the year! That’s what I thought odd about it – it is opinion – not factual.

@BWSnr,in East Hampton today,far end of Long Island was a holiday yesterday MLK day.But we have a pretty severe snowstorm,great single malt weather.
Not sure if this is an area of interest for you but the ICSC does a lot of good “biased” research in this area,the link you provided has some costar data also very good.
I’m not in total disagreement regarding the over retailing of certain parts of the US,can’t deny that online is becoming a major force in retail.
But extremely strong demand from investors for the A or prime stuff,it’s a cliff after that,hence the interest in Irish RE by some the funds here,it’s yield chasing.


“where is the electricity going to come from 10 years hence”

The UK is sitting on a vast reserve of shale gas, coming on line this year. You’ll have to pin your hopes on some other form of doom – an asteroid perhaps?

PFI is constantly overhyped by the doomsters who (i) forget to factor in inflation (ii) don’t understand that the repayment schedule peaks very soon (4-5 years) and then declines after that – it’s not like it goes on forever (ii) realise that the overall amount is still small compared to the UK economy (iv) act as though PFI didn’t actually buy anything – stuff that adds to the productive capacity of the economy.

This is what a lifetime reading Private Eye gets you.


What’s the plan to get the shale out?
Tull said the UK is well run. Is PFI efficient or not ?
Are the railways efficient ?

The problem with PFI as I see it is you end up sucking money out of the business to send offshore in higher interest (untaxed) and you’re left with less to run the business.
Like Man Utd, innit.

According to the French the UK is so badly run that the elite & talented are leaving Franch to decamp to London to escape the 75% tax. That socialism for you… Drive the wealth out & then wonder where the deficit came from .
Good defence of Mao & Adolph by the way . What matter genocide as long as you are sound on the green stuff.

You could argue that high oil prices are a tax on western consumers to keep dictatorships afloat, so if prices fall, western disposable income goes up. Off we go to the shops & car show rooms to buy more stuff so boosting domestic demand and employment etc etc. But surely that could not happen.
Glad to hear the shops are wedged.

@Tull,was having a bit fun with Brian,the stores were extra busy today in tri state area due to the weather.In fairness to Brian,retail sales ain’t great Best Buy,big box electronics,reported awful sales again.
Regarding oil/energy that’s Brian/Francis area,but yes cheap gas is always welcomed over here.

“The US only recently became a net exporter of oil, driven by an explosion in shale fracking. In October 2013, imports were at their lowest since February 1991.
And there’s been a lot of debate recently about a decades-long ban on crude exports, as a senior Republican senator called last week for an end to the “antiquated” export ban, the Financial Times reported.”

@ Tull

According to the FT the 75% is more of a symbolic thing – less than 0.5% of French are affected. the FT had a feature on this a few days ago – I think they had a headcount of 10 and it was a plug for some West End estate agent

Also not a million miles way from this video
-You know we gotta retain this talent
-Whaddaya talking about you stupid f#cker
That’s the same talent that f#cked the whole place up

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