‘Hardball’ v ‘Equity Sale’

The Irish Times today features two contrasting strategies for dealing with the debt legacy created by the Irish bank bailout.

An interview RTE’s Sean Whelan did with Willem Buiter is available here.

169 replies on “‘Hardball’ v ‘Equity Sale’”

David
Indeed !
Our local bond vigilanteen hath spoken. Its astonishing how many global banking giants are ditching their ex central bank ex EBRD ex NBER ex GS advisor Chief Economists and queuing up for Irish carry trade specialists.

Would a sovereign default if we don’t get our way allow us to cram down other expensive liabilities such as those owing to over priced university lecturers not noted for their judgement.

oh, and TRull? If you were 1/1000 of the man you puff yourself up to be youd tell us who you were. But I guess that might cause trouble for your employer. Thats the standard coward excuse isnt it?

“Asked whether the plan to sell the Government’s holding would preclude retroactive direct recapitalisation from the ESM fund, Mr Noonan replied that it wouldn’t, pointing out commitments had already been made about the retroactive recapitalisation of Irish banks.

Any retroactive direct recapitalisation by the euro zone’s rescue fund is likely to involve the ESM taking a direct equity holding in the Irish banks. ”

Seems funny to me.
‘I plan to sell a stake in AIB, but its worth a lot more than it says on the tin (battered tin), because after I sell a tooth fairy (ESM) is going to buy the shares that I just sold to you, but you won’t get any money for those shares, because they were my shares. before I sold them to you.’

That prospectus will really be a novelty. Lots of money for the legal consultants drawing that one up!

The whole idea of selling AIB or the BOI stake is nuts. We sell them, after eating up the losses and just as they hopefully ‘are swinging’ into profitability. That seems odd to me, but perhaps the Troika are mandating that too. Or is it that this country hasn’t got the confidence to look forward ten or fifteen years, to see that banks will time make money out of Ireland. Why give it away for a song now?

Why does everyone focus on the ESM? They did nothing wrong in Ireland’s case, and are constrained by the ESM treaty from special deals for any aggrieved party with bank shares to sell.

The ECB, now there is a more plausible candidate.

@John Gallagher

Thanks for the link on Noonan Interview with Bloomberg.
It was worth a look, and gave a different timeline/impression on the sale of bank than the newspaper report.

From the airing on the other thread :

Does anyone know exactly what the “commitments” mentioned by the Finance Minister are in this quote?

“Asked whether the plan to sell the Government’s holding would preclude retroactive direct recapitalisation from the ESM fund, Mr Noonan replied that it wouldn’t, pointing out commitments had already been made about the retroactive recapitalisation of Irish banks.”

Docm suggested:

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/137569.pdf

Can anyone suggest anything more concrete than that – it doesn’t seem much of a commitment to me because the document itself seems to suggest it wouldn’t cover IBRC retro-recap for summary reasons and Article 22 of ESM Treaty causes a difficulty ESM funding at above ‘fair value’ for the rest – and that is what Ireland is after.

Is the Minister’s position that there can be said to be a commitment to consider the possibility of a retroactive re-cap of AIB and BoI only and at current valuations only, or is there some other additional commitment?

Viz:

(Scroll on if you read this earlier).This was from RTE quoting the Irish government view:

“The framework agreement also specifically stated that “retroactive” recapitalisation could be a possibility “on a case-by-case basis”, sources say.

Sources also point out that such a move could be done under Article 19 of the ESM treaty, and that therefore the ESM’s charter would not have to be changed, although it would have to win the unanimous support of all 18 eurozone countries, including the approval of five eurozone parliaments.”

A grumpy analysis might be:

Article 19 allows Articles 14 – 18 to be altered. That means the facility contained therein to lend money to a state so it can recap its banks could, theoretically, be altered to allow the ESM to directly recap a bank. That’s true. Its effectively been done to allow in principle, future direct recaps, see:

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/137569.pdf

Journalists should read the whole document, but here are extracts:

“Following the 29 June 2012 statement by the Heads of State or Government of the euro area reaffirming the need to break the vicious loop between banks and sovereigns, the Eurogroup has worked intensively on the operational framework of the future ESM direct recapitalisation instrument. The main features of the instrument are now agreed in view of having the instrument
operational once an effective Single Supervisory Mechanism is established….

…To ensure the most efficient use of ESM resources, the ESM will assist to directly recapitalise only those institutions whose viability can be secured through a capital injection and restructuring plan. [ie forget about IBRC]…

A robust valuation
Before any final decision to grant financial assistance and capital injection, a thorough due diligence and rigorous economic valuation, based on a sufficiently prudent scenario…

…It is imperative that the ESM safeguards its resources…”

Article 19 itself does not allow Article 20 to be altered, but Article 20 specifically allows the Board to do so. So theoretically still a go for retroactive recap.

“ARTICLE 20
Pricing policy
1. When granting stability support, the ESM shall aim to fully cover its financing and operating costs and shall include an appropriate margin.
2. For all financial assistance instruments, pricing shall be detailed in a pricing guideline, which shall be adopted by the Board of Governors.
3. The pricing policy may be reviewed by the Board of Governors.”

But note:

“FINANCIAL MANAGEMENT
ARTICLE 22

Investment policy

1. The Managing Director shall implement a prudent investment policy for the ESM, so as to ensure its highest creditworthiness, in accordance with guidelines to be adopted and reviewed regularly by the Board of Directors. The ESM shall be entitled to use part of the return on its investment portfolio to cover its operating and administrative costs.

2. The operations of the ESM shall comply with the principles of sound financial and risk management.”

So the price paid for Irish bank shares in an ESM retroactive recap would have to be “prudent” and not negatively affect its creditworthiness. The board can set guidelines, but there is a strong implication that those guidelines must be consistent with prudence.

Also 2) appears to specifically require that any retroactive recap “shall comply with the principles of sound financial and risk management”.

This seems to be at odds with the idea of deliberately buying shares in an Irish bank at a price which is way above fair value – which, from the Irish perspective, would be the whole point of the exercise.

Whatever about getting all the ESM states to agree to use Article 19 to insert the theoretical capacity to retroactively recap, getting agreement to do so either in bankrupt IBRC or on a clearly uneconomic basis in the other banks, would seem to be something else.

The Irish government does not yet seem to have convinced the other ESM contributors that they forced Ireland to act against its own interest and should use the ESM to apologise.

@Colm McCarthy

“The ECB, now there is a more plausible candidate.” Absolutely.

The rule book at its elbow, at all times.
ECB cannot finance states, but, no problem in sinking states with private debt.

Of course, Grumpy disagrees. Ireland cannot produce a smoking gun, just a very singed backside.

@ grumpy

This contribution by Ninap on the other thread, which I am taking the liberty to reproduce, is also relevant.

“This ongoing pseudo debate about bondholders and retrospective bank recapitalisation is turning into a classic Irish morality play, where, just like abortion, a discourse continues that bears little or no relation to the reality of the situation, but allows many people to pontificate and feel good about themselves.

The mundane facts are that 64 billion euro was used to capitalise the banks. The (relatively) small amount that went to Bank of Ireland has been or will be repaid at a profit to the Exchequer.

Some of what went to AIB may be repaid, but in any case was essential to prevent the collapse of a ‘systemically-important’ bank. In other words, there was no question of burning the bondholders in either of these institutions.

The 34 billion that went into Anglo could perhaps not have been given to that monstrously badly managed bank. But, we should recall that its shareholders were wiped out, and certain classes of subordinated bondholders were also burned. The money Anglo did receive of course repaid depositors as well as senior bondholders.

How much was paid to senior unsecured bondholders? About 10 or 11 billion. This is the amount that the Government could argue that the ESM should contribute to. But presumably, that would also leave Ireland liable to pay its share of any re-caps of other European banks? In any case, the amount has to be set against our General Govt Debt of c 220 billion, and the very favourable terms we enjoyed (eventually) under the Programme, and in terms of ECB lending to Irish banks.”

The only – somewhat regrettable – fact that has to be added to this comment is that the perception that Ireland must be reimbursed – by someone – the full amount of the bank bailout – as blithely commented on by Buiter – has a degree of public acceptance in Ireland the extent of which no politician dare put to the test this side of the next election and, possibly, the final addition of the bill.

cf. in this connection the remarks by MOF on Bloomberg and those by Regling at the Euro Group press conference on the capital cost to Latvia of the country’s obligation to join the ESM.

@Coffey
@Lucey
Thanks for the Willem Buiter link

Buiter is sharp and concise. His comment that Germany = Malta in voting rights is obvious but seems to have escaped the notice of the Kildare Street brain trust since 2007. Almost half the EZ members are in over their heads and if inflation does not pick up a majority of EZ members will meet the same fate.

Did we suddenly become bereft of our much vaunted persuasive powers. Have we alienated the rest of the PIIGS by caving in so eagerly to Frankfurt, NY and London. Or is it the fact we cannot communicate with our natural allies in their native tongues.

Buiter also highlights the fact that the ECB is violating established policy by allowing inflation to drop to 0.8%. He also alludes to the Irish Gov’t wishing to be liked.

Christian Viveros-Faune in an Art Review article hit the Irish nail right on when he wrote (2011).
“On the way home from a Dublin boozer. I was jarred nearly sober by a sight I had not expected to see in the Irish capital. A political demonstration had parked itself in front of the Irish Central Bank. Claiming through chants, banners and makeshift signs kinship with recent protests in Greece, Spain, Wall Street….. Dublin’s regularly resigned residents (centuries of Catholic education will do that) stumbled wearily past on their way to bed.”

One chant was “If you do not let us dream we will not let you sleep.” Shortly after, Ireland went back to sleep.

@ Joseph Ryan

Totally contradictory, make it up as you go along time from Noonan. It is very hard to turn into a shark when you have been playing “Flipper” all along. Flipper the dolphin that is! Just to be clear.

In Weidman comment 89 I commented that Land that sold for E162,000 acre in 2007 sold for E14,300 in 2014.

Is this indicative of the whole rural developable land market or is it a County Kerry outlier. If this is a true reflection of the market as a whole we are in much deeper trouble than I bargained for.

JG posted a state of the Union and it’s dismal.

http://www.rollingstone.com/politics/news/27-shocking-numbers-that-reveal-the-true-state-of-the-union-20140128

The UK is on another debt solo run

http://www.ft.com/cms/s/0/2201edec-84ed-11e3-8968-00144feab7de.html

“Mark Carney said on Friday that the long hangover from the 2008-09 crisis will ensure interest rates are likely to remain “well below historical norms” in the medium term even as the British economy recovers.
The Bank of England governor also signalled that the central bank will drop the simple link between interest rates and the unemployment rate in a speech to British business leaders at the World Economic Forum in Davos. ”

Private Eye 1355 p 6

“We have warned for several years that the boom in household indebtedness was unsustainable” said George Osborne. “As I said two years ago, an economy built on debt is living on borrowed time”
..this was Osborne the shadow chancellor speaking to fellow smarty- pants at Harvard. He went on: But the British government ignored this problem because their economic policy refused to see it as a problem. The result is that household debt stands at 175% of incomes, higher even than the 140% in the US”
In the intervening 5 and a half years this ratio has dropped to just over 140% but will, according to the Office for Budget Responsibility rise to over 160%, well into what Osborne called unsustainable. This is not some unfortunate side effect. The predicted economic growth that put such as smile on George’s face last week DEPENDS on personal consumption that, given no wage growth, has to be fuelled by debt.”

Another 15 years at least of talking about turning corners

-“We gotta retain the talent”.
– “What are you f**king talking about motherf**ker? That’s the same talent that f**ked the whole place up”

@ Mickey

I think that is reflected across the serious football counties other than Dublin.
Most of the people who would have bought the houses have emigrated.

http://www.rte.ie/news/business/2014/0128/500720-aib-pay-cap/

AIB has approached the Government about setting up an incentive plan to retain top executives before it starts selling the lender.

1. Senior AIB executives will not be allowed use matches within 6 weeks of the publication of results

2. Petrol will only be made available to C-suite members with the approval of a Protestant

3. Long term bonuses will be paid in the form of water.

-“We gotta retain the talent”.
– “What are you f**king talking about motherf**ker?
That’s the same talent that f**ked the whole place up”

Snippet from Obama’s State of the Union speech.

So let’s make that decision easier for more companies. Both Democrats and Republicans have argued that our tax code is riddled with wasteful, complicated loopholes that punish businesses investing here, and reward companies that keep profits abroad. Let’s flip that equation. Let’s work together to close those loopholes, end those incentives to ship jobs overseas, and lower tax rates for businesses that create jobs here at home.

Ninap via DOCM above, gives a very good summary of the situation.

Noonan left the cat out of the bag when he told Bloomberg:

“The government will have an election at the latest at the end of March, early April 2016, so we might test the market sometime ahead of that.”

He hopes to be in a position to claim at election time that AIB is worth more than the public investment.

With the likelihood of low interest rates for years, Joseph Ryan is right to warn that an early sale of a bank that has worked through its losses and has a comprehensive domestic network, may not be wise.

This is from the communiqué of the June 29, 2012 European summit:

“We affirm that it is imperative to break the vicious circle between banks and sovereigns. The Commission will present Proposals on the basis of Article 127(6) for a single supervisory mechanism shortly. We ask the Council to consider these Proposals as a matter of urgency by the end of 2012.

When an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalize banks directly. This would rely on appropriate conditionality, including compliance with state aid rules, which should be institution specific, sector-specific or economy-wide and would be formalised in a Memorandum of Understanding.

The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme. Similar cases will be treated equally.”

Based on the final line, several countries would be entitled to be reimbursed for past public bank support.

Kenny claimed ‘a seismic shift’; Gilmore said: “This is a massive breakthrough..it changes the game in terms of our bank debt”; Noonan said: “This [deal] takes this further in terms of policy and the intention now is to separate certain bank debt completely from the sovereign balance sheet.”

Noonan’s comment was closest to the reality.

There is no harm in asking for money but at least present a case that wont have others laughing up their sleeves.

@ Brian Lucey

It was Denis Healey, former Labour chancellor, who made the comment about being ravaged by a dead sheep, in reference to his successor.

You often allude to courage, backbone and cojones. Just a simple relevant question: Have you ever had to make a professional decision that has potentially significant consequences for many people, on the upside and downside?

Telling little emperors that they’ve no clothes is a positive thing but even though the recovery is likely to be weak, it’s premature to be preparing obituaries.

The US could remain as the world’s biggest economy through to 2050 and a wise man named Warren Buffett often says:

“It’s never paid to bet against America. We come through things, but it’s not always a smooth ride.”

Even though big companies have about $7tn in cash, capital expenditure (capex) is forecast to fall this year. It could be more positive in 2015.

Cautious optimism among big and small companies is crucial for economies.

In 20 years, almost half of the world’s countries could depend on their resource sectors for growth.

However, few things last forever and ahead of Chinese New Year, I’m in a place called Ipoh that had a tin mining boom in the 1930s.

Remember when sweets, biscuits etc were sold from tins and in West Cork, the crafts people who repaired them were called tinkers?

The first time I was in Ipoh in 2003, the ‘Old Town’ was a wreck and slowly new investments are changing its prospects.

A Malaysian Chinese women asked me today: “Why are ghweilos (ghost people: a Cantonese term for whites) so interested in taking pictures of old buildings?”

Apart from Yangon (Rangoon), for obvious reasons, most Asian cities have been overmodernised.

The Washington Post had a feature on Ipoh last week:

An accidental trip to Ipoh, Malaysia

Morning Michael
You often allude to courage, backbone and cojones. Just a simple relevant question: Have you ever had to make a professional decision that has potentially significant consequences for many people, on the upside and downside?

yep. Every day we sit on exam boards we determine what will happen people. Every time I reject a paper that causes a tenure decision to be rejected. Every time as an interview chair or member we select/reject people. You might sneer at academics but guess what? Qualifications, or more generally certification matters.

WTF do you think we do all day Michael? Fan ourselves with the flayed skins of private sector exiles? You constantly demonstrate an astounding and irritating ignorance of what exactly academia does. You havent a clue. Not a bog. But that doesnt stop you critiquing it, or more especially the people in it. As I say, you have plenty of chances to come in and see but I guess where ignorance is bliss it is folly to be wise.

Oh and Michael In the spirit of reciprocation, you? Ever do anything etc etc?
I guess not all of us can be brain surgeons or conquer new lands. Some of us run news aggregators from afar (must really irk you seeing Mark Little eh…whats he got that you dont) ; others are academics.

@ Michael

“Apart from Yangon (Rangoon), for obvious reasons, most Asian cities have been overmodernised.”

http://www.youtube.com/watch?v=JRSnT7bxKNs

What does modernised mean? It depends who you talk to.
Most of the peasants who leave the fields of EM Asia to go to the city end up in slums

Dúinn is éigean Cónaí a dhéanamh
In árais ó dhaoine
A leagfadh cíos
Ar an mbraon anuas.
Beidh cuimhne orainn go fóill

http://www.youtube.com/watch?v=fR608CQ_MnM

The music is Tamali M’ak (you are my hopes) by Amr Diab, the Egyptian singer

This is a system issue .

Seafoid
Im sure somehow in MH mind the urban poverty of Malaysia (truly asia remember the ad) is the fault of academics/public serpents/’dem dere’ .

@Mickey

Wall St didn’t like all that GOP “we gonna blow up the Beltway” brinksmanship last year because they work off certainty and it was way too close to the bone for comfort. Even the Chinese were wondering what was going on. Very embarrassing. And picking Obamacare as the Alamo was lacking in credibility. Everyone knew the adults would come in and sort it out. More or less.
But it was also tactical. They wanted to show what they could do in extremis.

The S&P 500 people aren’t going to let the IRS anywhere near their record cash piles and they are not going to allow anything to disturb their valuation models because that is what drives the bonuses.

Debt and tax cuts have the S&P where it is today.As David Harvey says the MBA crowd that have been running the show since Morning in America are very poor at generating real value. The corporate tax load is lowest it has been since the 70s. That was very innovative alright.

And this is senior hurling. This is what it is all about. Money and power.

Obama does not have the political capital to do anything about inequality.

He couldn’t even close Gitmo FFS. And he is no Jimmy Barry Murphy anyway. I think he’s more like the Kildare footballers, very fit but useless when it counts

http://www.nybooks.com/articles/archives/2011/jul/14/obama-his-words-his-deeds/

Disney will still sell the people the memes but they don’t put any food on the table

http://www.youtube.com/watch?v=moSFlvxnbgk

Watch out Switzerland. He might bitchslap UBS for the home gallery. Enda should tell the boys and girls to STFU for a while. But no meaningful change in the States.

How realistic is hardball anyway ? Grumpy or Tull would be better at setting it out but reform has been a joke and AIB has basket case in its corporate DNA.

Oscail mo shúile
Nìos mò
Èist è sin
Ar an tsáile snámha

Open my eyes
Saltwater rain

http://www.youtube.com/watch?v=ET1-6Bef9xU

http://www.nzz.ch/wirtschaft/wirtschafts-und-finanzportal/massive-zinserhoehung-in-der-tuerkei-1.18231244

Weit stärker als erwartet hat die türkische Zentralbank in der Nacht auf Mittwoch die Zinsen erhöht. Der als Leitzins geltende Satz wurde mehr als verdoppelt. Thomas Fuster analysiert, warum dieser Schritt zwar sehr spät kommt, aber in die richtige Richtung geht.

+Turkey jacks up interest rates much higher than expected

http://www.nzz.ch/wirtschaft/unternehmen/electrolux-fordert-lohnreduktionen-1.18231011

Italien kämpft nach wie vor mit Strukturproblemen. Nun droht der schwedische Konzern Electrolux mit der Schliessung seiner Werke im Lande, falls die Arbeitnehmer die geforderten Lohnkürzungen nicht akzeptieren. Italiens Industrieproduktion leidet unter einer mangelnden Wettbewerbsfähigkeit und ist seit 2007 um einen Viertel eingebrochen, legt Nikos Tzermias aus Rom dar.

+ Italy has a serious structural problem . Electrolux is threatening to pull out if salary cuts are not accepted Italy’s industrial output has a competitiveness problem

It’s a big mess out there. How long before the markets join the dots ?

Trull, imagine how little I care about your fears. Then divide by a light year. Then your getting close.

I notice no one has come up with any additional “commitments” yet.

Can we all agree there aren’t any, or is someone holding back?

@Colm McC

The Irish side have started “loosing” documents. How do you think that looks wrt pursuit of the ECB who would in any case argue the 2008 guarantee was an Irish decision and that the 2010 ELG was another Irish decision made because that’s what investors demanded to not pull funding?

Irish gilt yields are super low and people are literally falling over themselves in South Dublin to buy €750k houses. How is Ireland going to persuade other, less well paid, poorer EU citizens to wear the cost of Irish stupidity?

Grumpy, the issue (the only issue) is whether the ECB acted inside its statutory remit. If not, consequences. This is a law-bound enterprise.

@BL

At the risk of being opportunist – your own lack of concern for what your employer thinks about your represenations on sites such as this gives us a sliver of insight into the difference between the private and public sector on a number of levels.

apart from that – totally agree with yoo btw.

Colm, I can recall the Irish finance minister stating in interviews that the Irish was that it was in Ireland’s interest to pay all the bonds (even the non ELG) because that would support the market for Irish gilts. Nonsense, but ergo, self-interest.

I can also recall him exaggerating the pari-passu in wind-up by stating “depositors and bond holders are the same” (that is verbatim).

I can’t recall an Irish official, never mind a minister stating bonds were being paid against the government’s better judgement and undefr duress -fter it became apparent it was nuts.

Why is the action the ECB is supposed to have taken not clearly outlined by the Irish side? Some phone message urging some sort of action to sort the banks from Trichet in 2008 and vague stuff like a comment “a bomb will go off” years later cannot, surely, have been enough for action known by a government to be against the interests of the state to be taken under duress. There must have been clarification sought at a minimum. Where is it?

I think the whole thing is very ropey and that there is a not insignificant and therefore forget about putting it in the model (fat tails are not the speciality of any of the MBA courses, are they? ) chance Albert E is right and that the whole lovingly QEd superstructure of the markets will topple

http://www.youtube.com/watch?v=as5FZJI6xJU

If that happens then the SD housing market is hardly going to stay where it is.
Then the idea would be to join with the rest of the losers and make a go for some restitution. But there would have to be a good dose of credible reform before this happens because BOHICA is not particularly agreeable.

” In the authors’ view, a wide-ranging and systematic reflection on what is required for Ireland to establish a fundamentally sound policy decision-making process is called for, so as to help to guard against another crisis such as the two already experienced in our short history. Based on a detailed and analytical examination of all the available evidence, the book shows how Ireland experienced four crises – a property crisis, a banking crisis, a fiscal crisis and a financial crisis”

“We don’t really know what is happening in advanced economies,” said Lorenzo Bini Smaghi, a former European Central Bank board member.”

” Albert Edwards, Société Générale’s famously bearish global strategist, warns “there has been immense confidence in policy makers” and a decline “will cause a very large correction in asset prices”.”

“The economic numbers are not as good as people think they are. In 2008, economies were growing and EM was strong. Our situation is far more precarious today
– Bob Gelfond, MQS Management”

“The downside of this approach is that investors are participating in markets that are being distorted by central bank policies. ”

“The move in gold has taken the juice out of speculation, and clients that were pretty bullish on the S&P a week ago are now cautious,” he says.
Such circumspection could well linger as risk managers review their value-at-risk models and ask harder questions about the possibility of big swings suddenly erupting across asset prices.
“Peter Tchir of TF Market Advisors makes the observation that risk managers will probably create “fatter” tails in their models that reflect a higher chance of a severe shock hitting portfolios.
“Some spike in volatility, previously unheard of, will be used in models,” he says.” (WTF)

“Prof Summers assumes his “secular stagnation” is primarily a demand problem. That is not at all clear. There are lots of other entirely plausible reasons for persistently lower-than-expected growth. In terms of economic performance, the late 20th century increasingly looks to have been a one-off “golden age” for the developed world, because of an end to the protectionism of the interwar period, a huge increase in labour supply thanks to the increased participation of women in the workforce, a dramatic rise in the numbers in tertiary education, a massive expansion of household debt (which, in turn, paved the way for more mass production) and, most obviously, the impact on labour supply of the baby boomers.

“”Last attempt from the babyboomers to remain young forever: drink the blood of a younger generation, bypassing the generation in between.”
By vebe on Emma Jacobs: Old hands steered by the young ”

” But basic truths remain. It is easier to forecast the long-term than the short. And the long-term does not look good.
Investing in such circumstances is as hard as it gets. Conditions are almost – but not quite – consistent with a return to normality. They are also almost – but not quite – consistent with the onset of a vintage emerging markets crisis.
In such circumstances, it is best to ignore those who say they know what is going on, admit ignorance, and hedge your bets”

@ BL

Did you ever think of teaching a course on Lex thinking ?
It could work wonders for the next generation.

Tull,

at least in the field I am coming from, if one magazine doesn’t take your paper, you just go to the next one. Patents are something, which sometimes really is worth the fight over.

One paper more or less certainly doesn’t make or break a career.

What is interesting, is that BL seems to believe that he has this power.
What Journal with what impact factor is he controlling?

And the patent office has the monopoly to grant you a monopoly on your idea : – )

Journals go by the dozens

Not getting involved in the general arguments here, but I dont think in the majority of private sector jobs (with a few obvious exceptions) your boss would really care about your online persona (unless you were completly obnoxious – trolling people abusively on twitter or something) A lot of this depends, ofcourse, at what level you are in the company – but the equivalent of a tenured prof? Na

its cute how the trolls have managed to deflect this from the issue – should/will we get any money back and if so from whom. We should, we wont.

On impact factors – http://blogs.lse.ac.uk/impactofsocialsciences/2012/06/08/demise-impact-factor-relationship-citation-1970s/ etc etc etc etc. Broken beyond belief. But from a troll who thinks im in essence cheating my students and abusing my role, what can one expect. Back under the bridge Francis and bone up on modern bibliometrics.

also, last thing. the public/private dichotomy on public speech (or whatever) is obviously b******t. Obv there are circumstances specific to academia where free speech is institutionally protected, but that doesnt carry over to, say, civil servants, gaurds, people involved in health service, teachers etc
In fact a lot of pub sector workers are more likely to have theyre ability to voice their opinions circumscribed.
Which is to say its not always public vs private sector, which is an inane and nonsensical narrative, at the best of times

@ BL

Lex, the FT oracle

Stuff like
“Value can also be generated by a fall in interest rates and a tweak in an Excel projection” and

” The freedom to be as avaricious as possible within the law keeps companies hard, fast and efficient, which is how we like them.”

Seafoid
Ah, yes. Great idea. Problem is that its next to impossible within the present TCD structures to add a stand alone module to the last year or third year. I have tried for a while to get several ideas off the ground – a module on reading business classics, one on Crises, etc but no joy.

@ seafood/ Brian Lucey

Im sure somehow in MH mind the urban poverty of Malaysia (truly asia remember the ad) is the fault of academics/public serpents/’dem dere’ .

Beyond this bit of pigeon English, it appears that the knee-jerk reaction is to search for negativity.

When 16 Georgian houses were demolished on Fitzwilliam Street Lower to make way for the ESB hq, maybe a majority wondered why a colonial architecture should be retained.

Why should raising the issue of the destruction of existing or old urban architecture imply a lack of concern for urban poverty?

Cities are important for economic development and it’s often said that Manila lost its heart when Intramuros, the Spanish walled medieval town, was destroyed in the closing months of World War II.

@BL

I think MH’s point about consequential decisions was not so much concerned with whether you have responsibility for such matters as accepting or rejecting academic papers for publication, but whether or not for you to get a decision wrong would have significant consequences for yourself and others. The simple fact – and I speak as a fellow public servant – is that we are largely protected from our bad decisions; first we tend to be risk-averse, and second ‘collective responsibility’ and a lack of accountability absolves us of individual guilt when things go wrong.

I do not denigrate the work of public servants, including those in academia, but many are protected by tenure or a ‘job for life’, and do not, as a result, operate under the same pressures as most (not all) in the private sector.

Trichet’s position on his defence is clear. He claims that, in the words of our PR, “there was no discriminatory treatment of Ireland and the ECB acted as a collegiate body”. That he has claimed it does not necessarily make it fully true.

It also does not necessarily make for a good defence, even if it is true. Ireland’s treatment may have been illegal regardless of whether it is arguable that it was non-discriminatory.

Whether or not specific measures taken by the Irish Government were approved by the ECB, the late Brian Lenihan made it clear in public that at some level he was following instructions from Trichet to “save the banks at all costs” when he introduced the bank guarantee. Trichet’s “collegiate body” stuff sounds to me like an argument that whatever Trichet said to Brian Lenihan as President of the ECB should not have been taken seriously because it did not come collegiately from the ECB’s board. To my mind, this “defence” strengthens the likelihood that instructions from the ECB were a significant factor in the decision to introduce the ill-advised bank guarantee.

@ BCT

I simply drew attention to the “Trichet defence”. I did not endorse it.

If you are correct that it may be accepted as regards the non-discrimination argument, is it not a matter of logic that whatever assumed illegality occurred also impacted the other countries mentioned?

On the collegiality issue, it is the European System of Central Banks (ESCB) that is, so to speak, the parent body of the ECB. Trichet has already indicated, if I am not mistaken, that he will not attend any banking enquiry that may be established, referring to the role of the Irish Central Bank in this context.

Whether one is a proponent of the hardball or softly softly approach, the requirement must be to advance arguments that stand up in respect of one position or the other. I have seen none that are even remotely persuasive with regard to the possibility of a successful legal action. There is not even the vaguest proposal as to who might embark upon it.

Summoning JC Trichet to the forthcoming Dail inquiry might help. I doubt he will come but that in itself would be useful. P Honohan could also be asked to come in and tell what he has found out in his tenure on this decision. A whole host of characters could be summoned. They could be questioned robustly. I will be surprised if they are.

Apropos nothing in particular!

http://www.independent.ie/opinion/analysis/fitzgeralds-wild-assertions-on-irish-water-staff-have-no-foundation-in-fact-29959270.html

A little bit of ordo-liberal thinking might be in order. As one blogger remarked, Ardnacrusha was built by the Germans (Siemens).

The other story of the day, that of the pylons, and the suggestion that house-owners would be paid up to €30,000 if there house was close to one (a very likely prospect as there has been no planning control whatsoever over where houses are built), the philosophical question is not so much whether politicians believe that the electorate is as venal as they are but that they may be correct in that assumption.

@DOCM

re: Phil Hogan’s Omelette:

Minister Hogan, were learned recently, had set up an impromptu body of county managers and former county managers, at a cost of between €6 million and €8 million.

We can be fully sure, can we not, that for that spend of €6million or €8 million, that a full strategic plan and a detailed budget, including existing staffing, proposed staffing etc etc, has been prepared and is on the Ministers desk. Lets see it, if it exists.
I would expect nothing less for 6 million. How about you?

The reality, of course, is that the body in question had a lot of work to do. Sorting out well pensioned retirement homes for themselves and their buddies was probably a lot higher on the agenda that a detailed budget.

fyi – senior hurlers only

The Real State of the Union

Posted on January 29, 2014

The state of the Union is crap. 20% of the country is doing OK. 1% is doing fantastically. 0.001% is doing so well it’s criminal, literally. They don’t own everything yet but they do own the politicians, judges, regulators, academics, and reporters. So they’re getting there. The other 80%, the rubes, the muppets, the serfs, are mired in an undeclared, ongoing depression.

50 years on I can safely state that the War on Poverty has been won. The poor have been defeated, the middle class conquered. They just don’t know it. Many sense that something is wrong, even drastically wrong, but few realize they have been totally and thoroughly betrayed by those they trusted with the governance of the country and themselves. They cannot admit –they have been admirably taught not to admit — even the possibility of the class war waged against them and which they have definitely and definitively lost. They continue to look to those who did this to them to fix things and make them better. They may grumble but there is no hint of real opposition or organized rebellion. Theirs is a Union of misery, lost hopes, lesser lives. The Union of the rich and elites is triumphant.
[…]
There is, again, the class war and the war against the middle class. An important theatre in this war is the war against the rule of law and the Constitution. In our two Unions, the two Americas, there are two rules of law. The rule of law for the rich is that the rule of law does not apply to them. Barack Obama and Eric Holder have investigated no one, prosecuted no one, and sent to prison no one for nearly destroying the economy 6 years ago or for any of their economic crimes since. Jamie Dimon not only isn’t in prison, he’s still head of JPMorgan, and just got a multi-million dollar raise. Financial terrorism is infinitely more destructive than al Qaeda, infinitely better paying, and can be practiced with impunity. As for ordinary Americans, they face a militarized police and a Dickensian legal system.

http://www.nakedcapitalism.com/2014/01/real-state-union.html

@the usual suspects

‘Financial terrorism is infinitely more destructive than al Qaeda, infinitely better paying, and can be practiced with impunity.’

@ BL

What are the terms of reference of the Dail Inquiry
? Can the Dail order the disclosure of all relevant info to get to the bottom of what happened ? What power have they got to stop the DoF pushing it all into never never land ?

Or is this another area where Ireland is well behind the curve of modernity ?

The No_Names Senior Hurling line-up: Apropos of nothing in particular.

3 French [Trichet, Sarkozy, Lagarde]; 1 German [Merkel]; 1 American [Geithner]; the ‘found-ons’ at the DoF [DoF head honcho; Lenihan; Cowan; 2 legal eagles (Arthur Cox); 2 bankers (AIB, BOI); 3 barmaids (anonymous)].

Subs bench tbd.

@ DoD

Apropos Senior hurling

Capitalism vs Mother Nature’s allstars

is the match most aficionados will want to see

When the gameplan has to be revised after the Wall St dugout is flooded and the hurls float away
And they moan to the ref (that they couldn’t buy) about the jostles
And they hit the ball and it doesn’t move as it did in the past
and the match goes into eternal iterations of extra time

‘… eternal iterations of extra time

Nietzsche’s ‘Eternal Recurring’ – bit like the blog, Lenin’s ‘useful ordo_idiots’ and, of course, ‘the usual suspects’.

“and do not, as a result, operate under the same pressures as most (not all) in the private sector”

@ninap

As someone working in the private sector, and with a little experience in corporate situations, I can say that many middle managers have little authority or responsibility and that even when they do their continued employment is more dependent on the vagaries of corporate priorities than on anything they do. In the upper echelons, where individuals have actual responsibility and power, failure is often rewarded to avoid embarrassment. In contrast I understand that much of academia is now on short term contracts with little job security (figures anyone?) and with a very high pressure to perform so the tables are somewhat reversed except for the lucky few with tenure. This is not to say that some of academia, the semi-states and the public service are not sclerotic and self interested but the idea that they need to aspire to private sector levels of efficiency and achievement is aiming pretty low. Eircom and o2 spring to mind.

On that note it bears repeating that the European component of the global financial crisis is a private sector one. It baffles me still that the European neoliberal chorus is allowed to blather on about the benefits of the Troika’s[1] intervention and the need for structural and market “reforms” when the biggest experiment with market reforms has almost sunk Europe (and might yet still) and Ireland is still 65 billion down thanks partially to two thirds of the Troika.

It is an Alice in Wonderland situation where the answer to huge crisis in the financial sector is “reform” in the public service, and the aftermath of a disastrous experiment in market liberalism in the same financial sector is, wait for it, market liberalism everywhere!

Sweet suffering Jesus it just boggles the mind that the IMF is the least reactionary organization involved in the European program for immiserating the periphery. How did the EU end up going so wrong (It is not just Germany and neoliberalism)?

Why are there so many apologists for the EU’s failures? Where is the accountability there?

@D*CM

The European Institutional Kremlinology is getting pretty old. It is intended as a distraction from action of course.

—
[1] “The Troika” has an appropriately authoritarian ring to it, like an interdisciplinary branch of the secret police. The lack of attention that the anti-democratic nature of EU intervention in the peripheral’s affairs gets is bizarrely low key.

@ Shay

“As someone working in the private sector, and with a little experience in corporate situations, I can say that many middle managers have little authority or responsibility and that even when they do their continued employment is more dependent on the vagaries of corporate priorities than on anything they do.”

That’s why The Office is so hilarious.

I have seen 4 strategic changes of direction in less than 10 years. Each of them is presented as 100% rational.

1. Was make it into the FT top 200 companies list from position 346 I think
2 Was “grow in Asia”, “accelerate the balance sheet” (WTF). That crashed in 09
3 Was then “back to basics”, “Capital strength” “fit to compete” and “grow in Asia”
4. The latest is
-Build on what works, but eliminate what obstructs
-Right people in the right place: more active people management
-Change in mindset: leadership, entrepreneurship, common sense and true team work
(And grow in Asia)

That is so vague. I think I could sell it to the Kildare footballers.
Still nowhere near the top 200.

And analysts don’t believe the 5th rehash of “growth in Asia” either

Senior execs around this time of the year roll into presentations saying how Google inspire them. Google is a totally different industry at a totally different stage of development you muppet.

“The private sector is far more efficient than the PS”. Not clear. I have a yet to see a management system that is human brain proof.

http://www.ft.com/cms/s/3/6a3734a0-2d04-11e3-8281-00144feab7de.html#ixzz2rrOjXc4e

According to analysts at Barclays, since 1999 reported profits at large European banks (ie those that actually go to shareholders) have been €100bn lower than underlying profits. Not all of that is due to conduct charges. Non-core assets, gains or losses on disposals and restructuring charges are also to blame. But that is an awful lot of shareholder value destroyed.

As UBS say “Wir werden nicht ruhen” “we will not stay still”

I like what Louis CK says about cell phones . I think it’s linked

My proposal is that the Irish Government should take the case against the ECB. As our current government will certainly not do it without a major change in circumstances, our best chance lies in keeping the idea alive until circumstances change. There is a good chance that sooner or later there will be an electoral revolution in one of the stressed countries that makes it take the padded mittens off in its dealings with the ECB, changing the objective conditions for the Irish Government’s choice. Until then, the correct way forward is to give the idea of a case against the ECB a boost every now and again to keep the possibility alive.

“If you are correct that it may be accepted as regards the non-discrimination argument, is it not a matter of logic that whatever assumed illegality occurred also impacted the other countries mentioned?”

No. A demand that a country that would certainly rescue bust banks and bank bondholders anyway should do so is very different in its impact to an identical demand on a country for which that is a poor policy. For the former, its meaning may be no more than a mutual back-patting exercise that troubles no one, while for the latter exactly the same communication may amount to demanding money with menaces.

And in any case it is not likely that the communication was exactly the same for, say, Ireland and Germany.

It’s a pity that, now Richard Tol has moved to greener pastures, the blog’s attention to economics of the environment has largely dried up. Water, waste and the rebuilding of the electric grid to support wind power are all issues of public concern right now, with disputed economics, and barely word on here.

@ Shay B / Seafoid

Ultimately, badly managed or uncompetitive businesses, of whatever hue, will go bust. Badly managed public sector organisations can limp on forever.

I agree Ninap but incompetence is everywhere .
I don’t buy the notion that Private sector is superior.
I know a lot of PS stuff is crap already 🙂

My starting point is Neil Postman

“One way of looking at the history of the human group is that it has been a continuing struggle against the veneration of crap”

Sometimes work can be fascinating. I am working on a presentation on modeling and I found this gem from a 2005 conference , given by the Swiss Regulator

Acceptable modeling

Clearly stated and assumed assumptions
Clear on idealisations and simplifications
Transparent on which effects are neglected
All relevant risk factors taken into account
The model relies not purely on historical data but aims to model the future risks using theory, scenarios, expert opinion
The model is tested
The model is regularly challenged and compared against industry best practice

Unacceptable models

Theory is misapplied
Pure stats, no explanation
Hidden and unclear assumptions
Too many simplifications
The model is not tested against the real world
Inappropriate or stale parameters
The model is not sufficiently understood within the company

Just thinking about climate change

And I’d love to see BEB’s bond model

@ Ninap

“Ultimately, badly managed or uncompetitive businesses, of whatever hue, will go bust.”

Er, er, do I get a prize if I can name a badly managed business that wasn’t allowed to go bust?

Folks, its with great regret that i must announce my retirement from IrishEconomy circles.

The odd and relentless unwillingness of the Trinity Professor to just accept that some people have their own reasons for not revealing their identities in public (notice how he only seems to care about those who disagree with him?), and his penchant for trying to get into childish public spats with them (too many to note), has made it simply too risky and not worth the grief if something was to go awry on here (believe it or no, but banks are kinda sensitive to negative PR these days). Previously i considered it an acceptable risk, as those who knew my real identity (ie the people who own this site and didnt care about pseudonyms) had the good sense to not forceably reveal it, but the Prof shows no willingness to abide by this basic set of rules and manners.

He continually complains about trolls, when he is in fact just as guilty, if not moreso, of the same thing (note the insults thrown at Tull accusing him of being a coward). Remember, i’m only on here in a personal, anonymous capacity (as a person working in the markets and hopefully informing people of what is going on there or the view from there), there can be no professional gain to be had from commenting here. Only those using their true public persona’s could possibly gain from commenting on here (as well as obviously lose, if their reputation was to suffer or their employer was to disapprove, two issues which the Prof seems to be immune from in his secure academic position). The Prof refuses to accept this reality, and believes everyone should be as self-publicising as he loves to be.

I will remain an observer and reader of the many interesting and informative discussions which take place on here, but sadly will no longer be an active participant in them. Best of luck and many thanks for the last few years of debate and discussion.

@ BEB

I think that is a pity. I really value the insight you deliver and you were way ahead of the curve on the bond rebound. Whether or not it is sustainable is another matter but I think your market view is very valuable and it would be a pity to lose it.

If this was an intercompany issue the industry would probably appoint an arbitrator respected by both sides to see if a solution could be found.

Could Grumpy do anything ?

I suspected who Eoin was. But now he has made it clear. Remember, I amnt a moderator or a owner of the site. All I am is a commentator.

I stand by my views – if you cant say it under your own name dont say it. This aint Syria. More especially, if you do want to be anon, then Grumpy can show us an exemplar. But Id prefer to know who he/she is, as I think sunlight is the best disinfectant. And when it comes to banks, that goes in spades

@

Concur with seafoid. We need the financial market perspective on the board. It’s what Bourdieu would recognise as a largely, but not entirely autonomous sphere of human activity, with its own internal dynamics. It can only be regulated, not managed. The ad hom and paranoid stuff really needs to stop.

@ grumpy

‘Irish gilt yields are super low and people are literally falling over themselves in South Dublin to buy €750k houses. How is Ireland going to persuade other, less well paid, poorer EU citizens to wear the cost of Irish stupidity?’

@ ninap

‘Ultimately, badly managed or uncompetitive businesses, of whatever hue, will go bust. Badly managed public sector organisations can limp on forever’

We would need to deconstruct the notion of ‘Irish stupidity’. Most states are thoroughly captured by financial sector private interests these days.

http://www.amazon.com/THE-BUBBLE-BEYOND-Michael-Hudson/dp/3981484207

It’s obvious in retrospect that Anglo was fostered, from the creditor perspective, as a Trojan horse. It made a monkey of the regulator and opened the door to previously unimagined levels of banker and property interest looting in Ireland. Insofar as Irish people were ‘stupid’, the only stupidity was failing to recognise the extent to which the looters had captured the political party system as well as the banks. The telecoms story shows that the rot extended far beyond FF, the ‘obvious’ delinquents. The real story is about how the conservative, buttoned-down brigade partied.

The top ranks of the PS were key ‘players’, and I use that word advisedly. Many of these ‘public servants’ were busily leveraging their high-level state connections for private gain, with the assistance of their independently-regulated 🙂 professional associates. As looting is not merely tolerated, but lauded, in today’s neoliberal, revolving door, environment, our elites have merely played their part in a destructive global order. Given the unprecedented levels of obfuscation and spin by private and state media alike, it’s no wonder that most citizens were, and still are, suckered.

The ‘recovery’ is mostly property and financial asset valuation based. We will see how far that beer reaches.

@BEB, that’s a pity but very understandable. Thank you for your contributions over the years, and best of good fortune for the future.

@Bond. Eoin Bond

Ta for the tutorials. Your insights will be missed.

Blind Biddy is furious with the said Prof who is, quite simply, way out of line.

@Professor Brian M. Lucey

Kindly accept the ‘Tantrum out of the Perambulator of the Year Award’.

@BEB

I am truly sorry you cannot continue–your contributions were always worth reading. The site will be lesser without you.

For the record, the views of Wilbur Ross in the SBP of 26 January.

“… For a while, it was Ireland that that was holding back Europe – now it is clearly Europe, if anything, that is holding back Ireland.

Ian Kehoe: They’re so interdependent. Ireland is a small open economy, the first word there is “small”.

WR: I think Europe finally recognised that. For a while there, it looked like they were just going to reward bad behaviour. Greece would fail to live up to its objectives, and they give it more money – or more lenient terms.

Then they eventually restructured the Irish debt, and I think that was a monumentally important thing. The Irish government campaigned and campaigned, and held ground firmly against people in Europe who were trying to push it, raise taxes, do all those things that would have been, in the long term, destructive to the Irish economy. But the Irish leadership hung in there, and eventually got a very good restructuring of their debt”.

Allowing for the fact that the interviewee has skin in the game, but recognising that he, at least, should know what he is talking about, the impact of such opinions on the countries expected to settle the still, in the view of many, unpaid balance of the invoice for “taking one for the team” merits consideration.

One conclusion might be that only some extraneous considerations would prompt any acceptance that such a balance exists. An obvious candidate would be a deflationary spiral in the EA which would make the servicing of the very high level of debt, whether viewed as restructured or otherwise, in peripheral countries in general impossible to service.

BEB,
Make up another identity and keep posting. Do not let the Prof get at you. I am getting a badge made saying he called me a coward. Given his track record, I expect to be awarded a medal for bravery.

You know, management in the public sector is largely useless. In my university, most of them could get zapped up to the planet Zircon tomorrow and nothing would change (other than that we’d have an instant budget surplus, could afford more lecturers and thereby have smaller class sizes, and could probably cut the fees the students are paying).

Unfortunately, the distinction between management and those who, you know, actually perform the public service (teaching, healing, putting out fires, etc.) is always lost in most of the public sector/private sector debates in the media. Look at how often the Independent refers to senior university administrators as “academics,” thereby not only tarring all academics with whatever scandalous management actions they are highlighting, but also ignoring the fact that many if not most of the sorts of senior administrators in question are years if not decades removed from any sort of teaching or research…

@BEB

Your professional expertise has been evident in your contributions while I think it would be hard to guess Mr. Lucey’s day job from his — he doesn’t even have the right to open threads on the blog.

@ All

On systems, there is a big arsenal of whataboutery for any position.

However, in the sweep of human history, the greatest changes have happened in just over two centuries while in the post 1945 world, there has been a consensus in democratic countries that mixed economies offer the best potential for human advance.

Of course arguments arise as regards the mix and excesses, power of organised interests and so on have consequences. However, the overall story on a global scale is of stunning human progress.

In Europe when Ireland joined the EEC on Jan 01, 1973, military juntas ran Portugal, Spain and Greece while Italy was at risk of falling under the control of the pro-Moscow communist party. It was just over 4 years since Soviet tanks crushed what was called the Prague Spring and anyone who tried to leave the communist utopias without permission risked summary execution.

Times have changed!

” if you cant say it under your own name dont say it. ”

No. Some of us have jobs in rigid hierarchies, you know.

I have learnt a lot on this site in the last 4 years and it’s way better than internet porn, which is the real enemy of HR wallahs.

It is such a great resource and we need a bit of dúthracht especially with people we don’t agree with . If you took out DOCM you wouldn’t know what the spin was, agus mar sin de.
I very rarely agree with her but she’s very consistent.

And one of the most interesting things is following how the thinking of people evolves (or doesn’t) as the circumstances change.
Tull’s transformation has been fascinating for example. Lord grant me the serenity to accept the things I cannot change I guess.

It shouldn’t be too hard to drop the ad hom stuff. It doesn’t add anything.
And as well in the ceasefire if all references to some paper from 2007 could be quietly strangled.

I think Paul Hunt would also add a lot to the mix.

And the Dork of course.

@Michael Hennigan

Modern human genomes reveal our inner Neanderthal

[…] Genome sequences harvested from Neanderthal bones have previously confirmed that the two groups mated, and that about 2% of the genomes of people who descend from Europeans, Asians and other non-Africans is Neanderthal3, 4. The Neanderthal contributions are peppered across the genome, and different people have different Neanderthal genes.

http://www.nature.com/news/modern-human-genomes-reveal-our-inner-neanderthal-1.14615

@seafoid

Mad Oul Jozie down_the-road reckons that DOCM is ‘wan a dem Macks from Montenotte who had a rale kushy number on the maneland’! She also fancies Tull!

@Ernie
+1 – you and Shay in a week. Must start taking my medication again.

Re BL, he’s obviously in the wrong re outing the identity of an anon. poster, but to be fair he has also been wronged by quite a few of us (me included) taking cheap shots re his housing market calls. It’s unfair because I/we get to hide behind our anon. identities and don’t put ourselves up to the same scrutiny. I agree with seafóid, time to put all that to bed.

Another consideration that might impact on how solvent countries view the situation in countries that risk – again – not being viewed as such is the tendency of banks in some countries to load up with the bonds of their own governments. (H/t Eurointelligence),

http://www.project-syndicate.org/commentary/lucrezia-reichlin-and-luis-garicano-offer-three-options-for-severing-the-link-between-sovereign-debt-risk-and-domestic-banking-stability

The remarks of Weidmann in his recent speech to the BIS are of interest in this context. He did not, however, hold out much hope of anything happening in the immediate future, joking that the much-delayed Berlin airport would be completed beforehand.

First of all, I would like to say, just look at the assessments of “grumpy” again. Pretty realistic from my point of view.

The Republic of Ireland has a total ZERO of a case against whatever Euro institution, especially after not doing any serious investigation in the last 5 years, of former government and banks, destroying evidence.

The idea, that Ireland has any chance to play “hardball” with threatening blatantly illegal actions, is bizarre. It would trigger immediate, perfectly legal and legitimate consequences

Just look at Cyprus last year. It was made clear with a 21/1/1 vote, that they either sign the dotted line, or will be cut off Target 2 in a matter of 4 hours. And that one abstaining vote from Luxembourg is not in office anymore.

Some information on the side:

1. A while ago, I think it was with Sarah in the Hirschman thread, I said, all these private pension plans which are not totally disconnected, have a strong tendency to be grabbed by government.

Today Poland did it too:
http://www.ft.com/intl/cms/s/0/ac8221f4-88e3-11e3-9f48-00144feab7de.html?siteedition=intl#axzz2rZohxNb5
Although no spikes on the EURpln=X to be seen recently

2. Yesterday I watched a presentation of a Danish Insurance Risk manager, about Solvency II

Denmark, with a stellar AAA rating runs a very tight peg to the deutschmark / Euro afterwards, at 7.45

But there have been attacks, just look at EURDKK=X at yahoo over the max available time period

And those result in a formal currency risk of 2.39%

That runs havoc on standard risk assessment models I terms of regulatory capital, at first at home, where they control /postpone stress tests, but second on the availability of Euro area buyins. The guy was a little surprised that absolutely all attendees voted for “simplified rules” a.k.a. zip the spikes out : – )

Now imagine, how Ireland (with close to junk ratings) and its financial services would fare, in a case of threatening crime against Europe. You would be pig feed a few weeks later. Nobody would sign off on “zip the spikes out”

@ DOCM

There is no “diabolic loop”, to the contrary, interest rate spreads are falling, and these 2 are not the ones to propose any 3 illegal options.

The only legal options are:

1. behave financially responsible and draw up plans how to repay your debt, and convince investors that 1 Euro = 1 Euro, and reduce your country risk premium

2. Go crash, and get your turnaround plan drawn up by the ESM

3. The criminal option would be to go bankrupt against all of Euro, and watch your GDP drop permanently by 30 – 50%, my gut feeling from looking at Argentina, they just come in at 8 to the dollar now, vs 1 ten years ago

First of all, I would like to say, just look at the assessments of “grumpy” again. Pretty realistic from my point of view.

The Republic of Ireland has a total ZERO of a case against whatever Euro institution, especially after not doing any serious investigation in the last 5 years, of former government and banks, destroying evidence.

The idea, that Ireland has any chance to play “hardball” with threatening blatantly illegal actions, is bizarre. It would trigger immediate, perfectly legal and legitimate consequences

Just look at Cyprus last year. It was made clear with a 21/1/1 vote, that they either sign the dotted line, or will be cut off Target 2 in a matter of 4 hours. And that one abstaining vote from Luxembourg is not in office anymore.

Some information on the side:

1. A while ago, I think it was with Sarah in the Hirshman thread, I said, all these private pension plans which are not totally disconnected, have a strong tendency to be grabbed by government.

Today Poland did it too: (search the FT on it)

Although no spikes on the EURpln=X to be seen recently

2. Yesterday I watched a presentation of a Danish Insurance Risk manager, about Solvency II
Denmark, with a stellar AAA rating runs a very tight peg to the deutschmark / Euro afterwards, at 7.45
But there have been attacks, look at EURDKK=X at yahoo
And those result in a formal currency risk of 2.39%
That runs havoc on standard risk assessment models I terms of regulatory capital, at first at home, where they control /postpone stress tests, but second on the availability of Euro area buyins. The guy was a little surprised that absolutely all attendees voted for “simplified rules” a.k.a. zip the spikes out : – )

Now imagine, how Ireland (with close to junk ratings) and its financial services would fare, in a case of threatening crime against Europe. You would be pig feed a few weeks later. Nobody would sign off on “zip the spikes out”

hmm, what does the setup not like:

@ DOCM
There is no “diabolic loop”, to the contrary, interest rate spreads are falling, and these 3 are not the ones to propose any 3 options.

The only legal options are:
1. behave financially responsible and draw up plans how to repay your debt, and convince investors that 1 Euro = 1 Euro, and reduce your country risk premium
2. Go crash, and get your turnaround plan drawn up by the ESM
3. The criminal option would be to go bankrupt against all of Europe, and watch your GDP drop permanently by 30 – 50%, my gut feeling from looking at Argentina, they just come in at 8 to the dollar now

@Francis
Do you think Solvency 2 is ever going to fly? It looks like a lot of the base assumptions of the system are outmoded by now. Market consistency is an oxymoron.

@ francis

It is an article of faith in many circles in Ireland that Denmark, by a singular stroke of genius, stayed out of the euro.

By the way, with regard to Merkel and her new government, nature hates a vacuum!

http://www.allgaeuhit.de/index.php?content=worldnews&storyid=1390975383800

@ Frank Galton

The Pringle judgement, which was heard by the entire ECJ line-up of judges, seems set to enter the history books as it reconciled the conflicting requirements of Germany to have the final say in matters relating to the cash required to stabilise the euro while still leaving the ECB in full independence to actually run it.

http://europeanlawblog.eu/?p=1257

DOD,
WOW, That guy looks to have a point. Problem, though , IW is now verifiably a dodgy share out in the toilets at the expense of the taxpayer and half the guys are playing cards all day. I know that to be a fact cos Ivan the Bookie told me.

@ Hugh

It seems to me that the board is becalmed in the Euro Doldrums. Some of the crew have started to hallucinate. I blame that fella Canute sorry Draghi, holding up the course of history.

‘Day after day, day after day,We stuck, nor breath nor motion;
As idle as a painted ship
Upon a painted ocean.
Water, water, every where,And all the boards did shrink;
Water, water, every where,Nor any drop to drink.’

Last night’s post seems to have vaporised, except for the link above.

The board is in the Doldrums, just like the EZ, and some of the crew are starting to hallucinate.

‘Day after day, day after day,
We stuck, nor breath nor motion;
As idle as a painted ship
Upon a painted ocean.
Water, water, every where,
And all the boards did shrink;
Water, water, every where,
Nor any drop to drink’

@ paul quigley

I am a hard physicist, and I do enjoy your posts here.

When I look at the EU, this comes to my mind:

One must imagine Sisyphus happy

“I leave Sisyphus at the foot of the mountain! One always finds one’s burden again. But Sisyphus teaches the higher fidelity that negates the gods and raises rocks. He too concludes that all is well. This universe henceforth without a master seems to him neither sterile nor futile. Each atom of that stone, each mineral flake of that night filled mountain, in itself forms a world. The struggle itself toward the heights is enough to fill a man’s heart. One must imagine Sisyphus happy.

—Albert Camus”

@ Hugh Sheehy

Hugh,

Thanks for the link.

I had written about this issue of top-ups in 2010 when the National Pensions Reserve Fund had taken responsibility for the ‘old’ university pensions that had a deficit of more than €600m, and it’s not surprising that some of the supporting cast on the insider stage would try and drown out dissent.

This is a graphic illustration of the Irish caste system.

While profitable overseas companies and the small number of indigenous ones were shutting down defined benefit (guaranteed payout) systems; the finance minister was levying private pension funds; the social protection minister did not know what to do with a report from PwC, the Big 4 accounting firm, that showed fees ate up an average of 17% of a fund over a typical fund’s time horizon (Enda Kenny had promised Shane Ross that he would have the issue investigated when the levy was introduced in 2011 — Kenny is not Bill Clinton and with 3 public pensions, even it had later crossed his mind, it would have been hard to convince the typical SME worker that he feel’s their pain) — over 500 academics in the bankrupt country were getting pension top-ups.

The basis for these top-ups is dodgy and the Comptroller & Auditor General said in 2011 that the issue required investigation.

The property clause in the Constitution is usually worth a try.

However, the right of ‘legitimate de facto expectation’ as outlined by a university official to the C&AG a years ago is similar to the ‘droit du seigneur’ in that only people within an elite could claim it.

Why worry about inequality when it’s found mostly in places with funny names? 😯

It’s official state policy to keep employer social security low and thus the low level of employee pensions in the private sector.

Note the contrast with the racket organised by the insiders and when Brian Cowen at the outset of the Croke Park process proposed that the link with a current incumbent’s earnings be replaced by consumer prices, the unions said it would be a dealbreaker.

Why are bankers so selfish? 😳

@ Hugh Sheehy

Hugh,

Thanks for the link.

I had written about this issue of top-ups in 2010 when the National Pensions Reserve Fund had taken responsibility for the ‘old’ university pensions that had a deficit of more than €600m, and it’s not surprising that some of the supporting cast on the insider stage would try and drown out dissent.

This is a graphic illustration of the Irish caste system.

While profitable overseas companies and the small number of indigenous ones were shutting down defined benefit (guaranteed payout) systems; the finance minister was levying private pension funds; the social protection minister did not know what to do with a report from PwC, the Big 4 accounting firm, that showed fees ate up an average of 17% of a fund over a typical fund’s time horizon (Enda Kenny had promised Shane Ross that he would have the issue investigated when the levy was introduced in 2011 – Kenny is not Bill Clinton and with 3 public pensions, even it had later crossed his mind, it would have been hard to convince the typical SME worker that he feel’s their pain) – over 500 academics in the bankrupt country were getting pension top-ups.

The basis for these top-ups is dodgy and the Comptroller & Auditor General said in 2011 that the issue required investigation.

The property clause in the Constitution is usually worth a try.

However, the right of ‘legitimate de facto expectation’ as outlined by a university official to the C&AG a years ago is similar to the ‘droit du seigneur’ in that only people within an elite could claim it.

Why worry about inequality when it’s found mostly in places with funny names? 😯

It’s official state policy to keep employer social security low and thus the low level of employee pensions in the private sector.

Note the contrast with the racket organised by the insiders and when Brian Cowen at the outset of the Croke Park process proposed that the link with a current incumbent’s earnings be replaced by consumer prices, the unions said it would be a dealbreaker.

Why are bankers so selfish? 😳

@ PQ

http://en.wikipedia.org/wiki/Work_(painting)

On the embankment between the upper and the lower road a group of unemployed rural labourers are sleeping in uneasy postures. A scythe wrapped in protective rope hangs over the railing that separates the productive from the unproductive figures in the composition. The Irish couple by the tree are feeding their baby with gruel, while an older man stands by the tree looking resentful. This aspect of the painting recalls Carlyle’s discussion of unemployed Irish migrants in his book Past and Present.

@Bond. Eoin Bond

Anonymity is priceless.

The Internet never forgives. The Internet never forgets.

People should give preserve their anonymity by default.

They should be free to help, or hinder, others as they want. No private companies should be covertly profiling them. No state agencies should be spying on them. No Internet behemoth should be allowed invade their digital privacy.

Those who wish it otherwise are sleepwalking into an Orwellian nightmare.

So long and thanks for all the fish!

I’ve tried to rebut the Hugh Sheehy/Michael Henigan view with a substantive post that doesn’t show up here. Why is that, mods?

maybe it is getting better now?

feels a little bit like wiki/The_Postman_(film)

Bundesbank, Some European Union servers were also down since about 12 hours

bundesregierung up

@francis it’s a lack of “pride” by the mods,apparently it’s endemic in Ireland,I thought it was a U2 song….

Ehm where you work before…oh AIB…yeah I’m very proud my work….:)
Yeah no really,we almost singlehanded wrecked the irish economy….

” He also said that top bankers should look to take pride in their work rather than chasing bonuses, and dismissed claims that banks were struggling to keep staff because of the €500,000-a-year pay cap.”

http://www.independent.ie/business/irish/noonan-rejects-500m-offer-from-gulf-investor-for-stake-in-aib-29969646.html

Ernie/francis it was holding vaporizing anything from here with a link,looks like it’s working now.

didnt matter:

short or long ,
with or without a link

mostly disappearing, some popping up after 5 hours

Posts going missing ok. Definitely EBA!

I linked to this to show the ‘excellence’ of the EBA is drawing up a meaningful Excel spreadsheet.
https://www.eba.europa.eu/supervisory-convergence/supervisory-disclosure/aggregate-statistical-data

‘Data on National Banking Sectors’ 2012.

“To this end, the EBA will provide competent authorities (CAs) with a consistent and comparable methodology, which will allow them to undertake a rigorous assessment of banks’ resilience under stress.”

Does that excel spreadsheet presage a,
‘consistent and comparable methodology’.

I’m not Brian, but I’ll respond to the non-scam: I took up a job at UCD after spending 9 years in the US getting a PhD (which was and is a prerequisite for the job). The average time for a PhD in the US is 9.5 years. In Ireland, it’s true, it can be less but that’s one reason I’d be reluctant to hire an Irish PhD: they are undereducated.

I was 33 when I took the job at UCD meaning I could only get credit for 32 years given mandatory retirement at 65. I had other offers and wouldn’t have taken the job had I not been told repeatedly that my pension would be topped up by treating years spent earning the PhD (again: an iron prerequisite for the job) as pensionable.

The market for academics (as opposed to the market for administrators) is a global one and Ireland’s universities have to compete on it or be stuck with nothing but the mediocre products of Irish universities. You can choose the virtuous circle of international recruitment or the vicious one of provincialism. But competing on the international market for academics means not penalising them for the training you want them to have had before they take up the job. The alternative is universities where the secretaries all get credit for 40 years at retirement while some of the best qualified academics can only earn 32 or 35 years.

Now, I do agree that it is ridiculous for any administrator or non-academic to get such top ups. But there is nothing scandalous about giving them to academics, unless you’ve got something against the idea of Ireland trying to compete in the free market for academic labour.

Right now, highly qualified academics are leaving Ireland in droves and not being replaced, in no small measure thanks to the aggressive propaganda war being prosecuted in the press and by petty resentniks like Hugh Sheehy and the Sage of Kuala Lumpur. Why the latter has any standing in this debate is beyond me.

In a lot of countries pensionable credits max out at 35 years of service and 65 years of age for everybody from the receptionist to the CEO. This is partly due to the perceived need to get people to retire before they become less productive. Pay out is 2% per year of service to a maximun of 70% of best five years salary averaged. In jobs with a high rate of involuntary attrition at 55+ there is usually an arrangement where they contribute at 1.5 times the normal rate and can retire at 55 with 25 years max service at 3% per year for a max of 75%. (There are minor variations on this.).
I am talking about Defined Benefit as opposed to Defined Contribution. DB is becoming rare for new hires with DC very common in the Private Sector.

Your case fits the short work (paid) model where some attempt to negotiate a higher contribution to compensate, makes sense.

Actuarial tables help level the field so that every one receives equeal treatment. Pensions are usually subject to mutual agreement and are not subject to labour agreements (no strike) or binding arbitration particularly if the taxpayer foots the bill.

@ Mickey

“Actuarial tables help level the field so that every one receives equeal treatment”

Not really any more. Life expectancy is increasing but not at the same rate for everyone. The receptionist may not live as long in retirement as the PhD …
It’s quite complex

Big issue for State pensions. Poorer people die younger and effectively subsidise professionals, assuming the pensions are funded….
Tax breaks are flat – there are so many moving parts it’s hard to say what is fair. And the uni pension schemes are all in deficit anyway

It was the Comptroller & Auditor General who raised the issue of the lack of formal rules on pension top-ups at the universities and this is where the issue of ‘legitimate expectation’ arose.

The C&AG has estimated that the annual funding cost of an additional year for ministers and judges is about a net 62% of salary.

Wonder why it’s almost 5 years since the accrual cost of public pensions was last estimated to be €116 billion? A jump in the accrual would take the shine off claimed savings on the current pay and pensions bill.

As for the ignorant academic here questioning my right to have an opinion on the issue, I happened to have been a member of an Irish pension scheme that a profitable multinational, which sells its products in possibly every country, used the opportunity of the crisis to close it down.

Dissent on the unfairness of the pension system like the reaction to corporate tax avoidance, has been drowned out by the insiders who benefit from such arrangements, whether they are in the private or public sectors.

The shorter Sage: I got fubared on my pension by predatory capitalists, therefore everyone else should also be fubared.

“Ernie Ball”

You’ve again confirmed that the tag “ignorant academic” is merited as conflicts with your narrow world invite vitriol and apparently anger.

A few months ago when your “fact” that the Government had seized university funds because they were in surplus, was shown to be garbage when the real facts were available on Oireachtas.ie, did you acknowledge that the yarn you heard from someone in a pub was wrong? Of course not.

Your version of the facts is more reassuring.

I understand why people use aliases on the web as for example viewing Facebook profiles have become a routine for some employers when hiring.

However, you represent what is termed “deindividuation” – in web terms, a virus where losers behind the shield of anonymity, engage in bullying and abuse that most would not wish to be associated with their real public identity.

I would think that in private life at least, nasty people/ cowards cannot always conceal their nastiness.

Feeling the victim today, are we? You’ve been “bullied” and “abused”? Where exactly?

I will give you this: your arguments on this site are remarkably consistent. To every question, the answer is “reform.” And the meaning of “reform” is: make labour more compliant to the needs of the capitalist classes (also known as: the 1%). Except, of course, when you’re complaining about the effects of that very thing upon yourself.

So predatory multinational capitalism is great and should be accommodated in all of its desires. And it’d be good enough for them if workers were stripped of anything that might be a benefit for the privilege of allowing the capitalists to expropriate the surplus-value from their labour. After all, didn’t you applaud when the multinational corporation did it to you? Oh, wait, you didn’t.

Maybe you’re not so remarkably consistent after all. Resentment and begrudgery tend to have inconsistency as a feature.

As for whether the UCD’s pension fund was in surplus or deficit when it was taken over: that was in 2009, in the teeth of a worldwide depression. There’s no evidence that I’ve seen that the fund was unsustainable. If you have it, I can be sure you’ll provide along with a lot of irrelevant boilerplate advocating a race to the bottom.

@Mickey Hickey

I am paying a higher contribution only it wasn’t negotiated. It’s called the “pensions-related levy.”

Meanwhile, I’d take what you say is on offer in other countries in a heartbeat. 70% of my best 5 years! At present, I can only get a maximum of 50% and that’s only if the top-ups I was promised are paid out.

Of course, if Michael Hennigan and Hugh Sheehy have their way, that’ll be 40% with no possibility for me to work more years. Because nobody should have a good (or even acceptable) pension. Because capital demands it.

Never mind that I could’ve been buying the additional years all this time: the pensions manager told me I’d “be foolish” to buy them because I’d be getting them anyway…

@ Ernie,

you believed a promise, you did not get in writing. This is YOUR, but not a “system” problem.

Or? Then you could sue about it.

But before I give people here some perspective, providing a short description of the German pension system (“Rente”)

A stern reminder: Tonight is Super Bowl !

I read on Slate some hilarious dispatches from the north-western frontier provinces about it.

Gotta go and stack up on some chips, beer, and stuff

In the meanwhile some dispatches from the German south eastern provinces

Weilst a Herz hast wie a Bergwerk (“Your heart is like a coal mine“, as the very popular ultimate declaration of love : – )
http://www.youtube.com/watch?v=I9fFczAl4E4

And the archont Seehofer has put his arm around the lost daughter (approvingly: “migert”)
http://www.sueddeutsche.de/bayern/kratzers-wortschatz-seehofer-haelt-das-sefferl-fuer-migert-1.1677326

As promised, The german system:

Retirement age is ramped from 65 to 67 years in 2032.

10% of your gross income is taken, up a limit of about 2.3 of median income. Your employer must pay the same amount.

For this you collect “points” equivalent to your payin divided by median.

Your pre tax payout is linear to your point share of the available pay ins at the time you will collect on them. No inflation or other guarantees given.

The system is inherently stable, what comes in, goes out

In this way, if the economy develops better than expected, ergo higher payments, everybody shares equally in that.

If bad things happen, like some crazy foreign general nuking Munich, or suddenly the Chinese don’t like our fine cars anymore, we suffer together.

The system can not be cheated, like in the US by ramping public salaries up in the last years, by e.g. collecting vacancy days, or meritless promotions.

At present, the average time people collect pension is 16 years, therefore we cut early pensions, for whatever reason, by 1/16 = 6% per year.

If you want to retire early, fine. Just finance the FIRST years on your own savings, before you would fall into the lower floor of social minimum.

That makes it very difficult for agitators to pitch one social group against the other, the professor Ernie against the secretary, and so on.

All we are presently discussing here now, is whether folks who paid in for 45 years, please note 45, not the 35 Ernie is discussing, could take the option of retiring 2 years earlier. (some very limited trickery of taking 2 year small unemployment payments, just to make clear the details are a little bit more complicated)

In this 45 years, some accounting of short term unemployment times, some motherhood accounting, paid for by taxes, but not contributions, are included, and those DETAILS are discussed, here, now.

Conservative western German social democrats find this socially excessive. In fact is mostly a 4 station round trip reassignment of who pays for unnormal cases, they don’t understand.

@francis

Are all your comments about things about which you know nothing? It would explain a lot…

ernie,

do you have a shred of evidence for your claim?

Since when do you know something about Germany?

All I see from you is ideological rant like “I got fubared on my pension by predatory capitalists, ”

no numbers, no links,

“I got fubared on my pension by predatory capitalists ”

I guess reading isn’t your thing. I never said anything like that about myself.

My previous comment was addressed to your 1:35pm comment.

Oh, and by the way: having numbers and links in the internet age is, basically, worthless.

@Gavin Kostick

Er, er, do I get a prize if I can name a badly managed business that wasn’t allowed to go bust?

I have been too busy to foam at the keyboard but your response to Ninap is a thread winner and also quite important.

Why, when the private sector has failed us so very badly, is there no talk of more accountability or reform there? It can hardly have escaped anyone’s attention that much of recent activity in the west has been about trying to save a vast, inefficient and bloated private sector, a sector that has been characterised by staggering failure and obscene remuneration at the top.

@Ernie Ball

And the meaning of “reform” is: make labour more compliant to the needs of the capitalist classes (also known as: the 1%). Except, of course, when you’re complaining about the effects of that very thing upon yourself.

Nailed it. The whole shtick of modern capitalist concern trollery is that we are in an unavoidable and awful global race to the bottom characterized by growing inequality and environmental ruin, all of which they deplore. However we also have to win that race to the bottom to preserve our place in the world. And by “our” they mean “theirs”.

Spare us please.

@ Ernie.. The fact that it was “normal” to make entirely informal and hugely expensive promises with somebody else’s money is part of the problem. Somebody else’s money. A hard notion for you to grasp, apparently.

The fact that you don’t see this as a problem is indicative of the system’s pernicious reach and your own blindness to its evils, not of my (supposed, but untrue) obeisance to capital. Meantime, I still look forward to Brian Lucey having an opinion on it. At least he’s an actual person. He doesn’t engage in insults from behind a shield of anonymity.

@Hugh

I would’ve preferred to have had it spelled out formally. But the alternative in this case is:

1) Secretaries and administrators all get credit for 40 years; academics for 32
2) Ireland is unable to recruit academics internationally.

I remind you that a PhD is a prerequisite for the job. You cannot get the job without one. And the retirement age is immutably set (for my generation) at 65. If you’re insisting on a PhD, then the years spent getting it should be pensionable. Yes, it should be spelled out in a written contract. But there’s NOTHING scandalous about such payments.

I realise that education isn’t important to you (so sign’s on you, as they say), but it ought to be to the nation. If Ireland can’t recruit internationally, you might as well close up your universities. If you think that international academics are going to sign up for a regime where they cannot get more than 40% of their final salary as a pension, you’re dreaming.

Bear in mind, I had no reason to come to Ireland other than this job. If you wanted my services (and you did: there were something close to 75 applicants for my job), you were going to have to pay something like the going rate. I’m sorry you didn’t see fit to do it formally, but that’s your problem.

My salary is also “a hugely expensive promise with somebody else’s money.” I suppose you also object to that. Now, before you say “well, that’s contractual”: that contract isn’t worth the paper it’s printed on since gov’t can, apparently, change it unilaterally by fiat whenever it pleases (witness Croke Park and Haddington Road, neither of which I recall agreeing to). But you have no objection to that sort or unilateral ripping up and rewriting of contracts, now, do you?

In short, you’re all in favour of strict adherence to contracts when it suits you. But when you have a chance to stick it to the academics, it’s “contracts? what contracts?” The name for that principled view is “opportunism.”

Oh, and by the by: if the universities were privatised it wouldn’t be “other people’s money.” Then I’d be part of a lean, mean private enterprise of the sort you so admire. But your little offspring would be paying €10,000+ each to be taught by the likes of me. As it is, they’re getting taught for the bargain basement price of €2,500 per annum.

The most hilarious part of all this is that there is enormous waste of “somebody else’s money” in Irish universities: we have administrations bloated to brobdingnagian proportions spending millions (of your money) on consultants, offices with ten senior administrators and nobody working under them, millions spent refurbishing presidential manses. But none of that bothers you: that’s private-sector style management! No, you’re up in arms because of extra years payable for the years spent earning the prerequisite for an academic job. You want universities that can compete internationally (in the only realm that matters for them: academic staff)? Well, who do you think you’re competing against and what do you have to offer? You think academics from other countries are dying to come here for the abuse, the lack of respect, the constant erosion of standards of living, the piss-poor and semi-literate students, the weather, the intolerant Catholic attitudes? You think you’re going to attract them with that? Well, think again.

And if you don’t care, then that’ll be your loss: your half-wit kids (who will grow up to be just like daddy) can be trained by monkeys for all I care.

@Ernie Ball
Secretaries and Administrators get credit for 40 Academics for 32.
Surely you are a member of a Staff Association or some body resembling a Union. I had a number of discussions with a tenured Professor a couple of years ago about their under funded pension plan. The usual arguments are early retirement, Administrators waiving the guidelines to get rid of underperformers, indexing to inflation and of course the nub of the matter contributions and how they are split. My advice to her was for the Staff Association to retain Pension Plan Experts on their own or in collaboration with the Administration to examine in detail what the regular core conditions are costing and what early retirement is costing. Develop a ten year moving average plan with reviews every three years. Contributions to be adjusted every three years on a 50/50 basis. Universities have a stable personnel environment which simplifies matters enormously.

The moving average lends itself to stock market and bond market (interest) gyrations.

I do not understand why 40 yrs and 32 yrs.. Something that is happening in the developed world is that employees cannot be forced out at 65. Employers do not like this one little bit. I would be very upset about the 40/32 disparity. All employees should be treated equeally. One exception is women live longer than men but do not pay higher contributions. I have no objection to that.
I have no particular expertise on pensions other than being on negotiation teams and having access to all available data and the attitudes on both sides.

@Ernie

And as if to prove a point…you wrote all that.

Note to the admins please. If you want a decent tone on here, then having contributors talk about other contributors’ “half-wit kids” is hardly going to achieve the goal.

@Ernie

Can you provide more clarity re this 32 /40 disparity? It seems very unfair.

Is it the case that:

1) Secretaries/Administrators work 40 years to get full pension (50% of current salary for equivalent grade).

2) Academics/Lecturers have to work for 32 years to get full pension (50% of current salary for equivalent grade).

No, that is not the case.

The disparity is a result of the fact that, although those holding both jobs have to retire at 65 (or did at the time I was hired), there is no educational prerequisite for a secretarial position while there is a requirement for a PhD for an academic position. So there is nothing stopping a secretary from taking up a job in a university at 20 or 22 years of age, amassing 40 years of service and retiring at 60 or 62 with the maximum pension.

Now, although it is the case that a PhD can be done in 3 years in some countries, there are also many other countries where it is virtually impossible to do one that fast. In the US, for example, because PhD programmes are usually structured with multiple hoops (qualifying exams, etc.), the average time to completion is something like 9.5 years.

A person whose PhD takes longer due to the structure of their degree will likely find themselves unable to earn the 40 years of service, given the mandatory retirement at 65. Even for those earning the PhD in 3 years, given that mandatory retirement age, there is very little room for error. A mature student or one who took time off between the undergraduate degree and the postgraduate degree or who (as is often the case) got a series of postdocs before getting an academic job might well find it impossible to earn anything close to the 40 years. Without any top-ups, an academic with 32 years of service would get 40% of current salary and a smaller lump sum as well.

So what has traditionally been done in Irish universities (and for a long time, I gather) is to give people credit for years spent in postgraduate education and postdocs, up to a maximum of 9 years. This is an eminently sensible solution and having such a practice makes Ireland better able to compete internationally for academics.

But that doesn’t stop know-nothings (who wouldn’t mind seeing Ireland’s universities transformed into glorified trade schools) from railing on endlessly about “corruption” and taxpayer money being “wasted” when there is little evidence of either.

@Ernie. You’re still irredeemably uncouth, and you’re ignoring that the secretary probably earns less than the PhD academic. Pensions are related to salaries. They’re not counted just in years, but in €.

Similar issues happen in many industries. You invest for longer to (hopefully) achieve a higher earning potential. You may or may not be working (or earning) while making this investment. And you’re unlikely to have someone offering free and unfunded top ups. (otherwise known as somebody else’s money). It’s kinda like the charities really.

Yes, secretaries make less than lecturers. When did you become a communist?

But, take heart, comrade: the ratio is much closer to your communist ideal than are the 300 to 1 ratios you find in the lean, mean private sector that is, to your mind, the ultimate arbiter of justice, goodness and truth.

Here’s what you’re ignoring, Che: the market for academic talent is global. Until the day of the glorious revolution that you and I both fervently hope to bring forth, academics are, alas, entrepreneurs of sorts. You want talent, you’re going to have to pay for it. But you cheapskates seem to expect people to come here for the fine weather, the liberal attitudes and the friendly media environment while you pay them peanuts, renege on your agreements and, basically, treat them as if they were parasites and criminals, always trying to pull a fast one.

@Ernie. More text filled with insult and very little relevance.

If you want more of a pension – which was the point – then you could carve out some of the extra income you get as an academic and put it in a private pension. Instead, a hidden sweet deal was done with other people’s money.

And as for your anonymity, I can now safely conclude you do it just because you’re a nasty coward. You use anonymity not for any noble purpose, but to insult people’s children from behind a pseudonym.

@Hugh

Good to know you’re as principled in your opposition to insults as you are in most other things.

Since you don’t seem to be getting it, let’s try again:

Yes, lecturers make more than secretaries. That is because lecturers, unlike secretaries, do a job for which relatively few are qualified and even fewer do well. This disparity and the basis for it are quite commonplace in the system we call “capitalism,” comrade. That question of remuneration is a separate one from the conditions of public-service pensions.

Now, the pension regime at UCD, like many others in the PS, calculates pensions as a percentage of final salary based on length of service and contributions that are a percentage of current salary. Everybody pays the same percentage and the rules are the same for everyone. Well, almost everyone. There is a certain class of people–lecturers and professors foremost among them–who cannot earn the same percentage of their final salary as everyone else because of a number of commandments laid down by UCD (and other universities). To wit:

1) Thou shalt earn the maximum pension only upon 40 years of service;
2) Thou shalt retire at 65;
3) Thou shalt have received the PhD upon commencement of duties.

Together, these three commandments mean that large numbers of lecturers (and perhaps a few other classes of people in the public service), through no fault of their own, may well be denied any opportunity to earn the maximum. They will, effectively and unlike the vast majority of their colleagues, only be entitled to a maximum pension that is a smaller percentage of their final salary than that of everyone else.

Now, you say, “well, with your big salaries [not so big, by the way], you not only can afford to buy extra years but should be obligated to.” This implies that lecturers and not the employer should pay the price for the commandments that UCD insists upon (for its own benefit, it should be added). This is nothing more than discrimination: everybody pays the same and everybody gets the same but one class–unless they are willing and able to pay more than everyone else–is structurally precluded from earning the maximum. You think that’s fair. I get it: principles aren’t your bag.

You say it’s a “hidden sweet deal” with “other people’s money.” Well, first of all, until recently this pension fund wasn’t “other people’s money.” It was UCD employees’ money. And it was sustainable. Yes, it may have been in deficit in the teeth of the crisis, but I can assure you that if it were unsustainable, the government would have been in no hurry to take it over. Yet, they were. I would’ve much preferred, like most of my colleagues, to have kept the scheme as “our money.” And if the scheme proved unsustainable, to have upped our contributions on that basis (rather than just having 7-10% of our income grabbed by the government as the so-called “PS pensions levy” which I’m sure a principled guy like you approved of wholeheartedly).

Oh, and by the way, if the “PS pensions levy” is really a pensions levy, have you included the money that UCD staff pay in that levy every year when you make the claim that somehow this scheme is being paid for with “other people’s money”? Why do I even ask when I know for certain that the answer is that you never even considered the possibility…

Furthermore, I also lament that this scheme has never been made official. It should have been since, again, it is eminently sensible and entirely fair. Contrary to what you think (because, perhaps, it reflects how you would operate), there were actually rules to the thing. You had to provide documentation proving that you were in postgraduate education or a postdoc for the years in question and the maximum allowable was 9 years. And I also believe that the class of people who should be allowed to benefit from this at a place like UCD should be limited to lecturers and professors. To the best of my knowledge, it has been so limited for exactly the reasons above.

Finally, like many others here, I choose to post anonymously. I’ve given my reasons in the past. You can choose to believe them or not. But rest assured that if I were somehow de-anonymised I’d have no problem stating precisely what I thought about you directly to your face.

It’s not a rant, Hugh. It’s an explanation.

Can I take it that the fact that you apparently have nothing of substance to say on the issue that you first raised itself (rather than tangential schoolyard nonsense) means that you’re conceding the point?

This scheme cost you nothing until the government decided to take it over. Let me put it another way: it cost you nothing for almost the entirety of its existence. It was the pension scheme of UCD employees. As such, it was accountable to its contributors and nobody else.

Then the government took it over in 2010, if memory serves. They did this, I’m quite sure, not out of any sense of largesse or because they felt like giving anything at all to UCD employees but because they thought that it would benefit the exchequer rather than cost over the long term. No doubt rightly. And now that the pension scheme is folded into the government’s coffers, all manner of morons come out of the woodwork to decry its workings and insist that they are being robbed. Sorry, but it just isn’t so.

I’d be perfectly happy to have the pension scheme back at UCD and run the way it always was. If you’re so concerned about how much it is costing you and how corrupt it is, you should be campaigning for that instead of coming up with disingenuous and misleading arguments meant to inflame anyone reading them.

Again, you keep insulting people from behind anonymity and – basically – telling lies too.

If you’re brave enough to say these things to my face, let’s set it up. I’ll bring the kids out to your university and you can call them half-wits in public.

I’d be only too happy to have your colleagues and students hear what you’ve written in this thread read out in public. In a lecture theater perhaps.

But I’m guessing you’re not brave enough.

No Ernie. Not “whatever”. It’s simpler.

If you’re brave enough to stand behind your nasty and insulting and untruthful words in public, let’s set it up and see what your colleagues and students think. But you’re not.

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