Ireland: The Kindness of Strangers

The new issue of The Economist has a special report on “Companies and the State,” with Ireland featuring in this article.

99 replies on “Ireland: The Kindness of Strangers”

‘Despite the low tax rate on corporate profits, the government gets the equivalent of 2.6% of GDP from that source, the same as the EU average.’

Nicely spotted – and a broader perspective worth noting. Sarkozy is still trying to figure it out – poor dear!

A parallax view on the above:

Low Tax Economy for Slow Learners
February 20, 2014, Michael Taft

No matter what the evidence, regardless of what the data tells us, there are some who are determined to assert the opposite. Take taxation – the evidence is absolutely clear: we are a low-tax economy. Don’t forget what this debate is about: we are a low-waged and low-taxed economy and there are vested interests, politicians and commentators who are determined to keep it that way.

So let’s go through this again (it’s been discussed here and here) but this time from a different angle, avoiding the difficult comparisons using GDP, GNP, hybrid GDP, etc. Let’s look at taxation on labour (i.e. wages and salaries, excluding the self-employed).

[…] There’s Irish employers, down at the bottom – ahead of the UK and Malta (Denmark doesn’t have a social insurance system). Employers’ social insurance contributions would have to more than double to reach the EU average.”

Nicely spotted – …. and another broader perspective worth noting.

The author of this piece appeared to have got most of the material from IDA Ireland but agency supported firms do not employ 270,000 people as stated.

The number at the end of Dec 2013 was 161,000 from a workforce of 2.1m, with about 11% of the total having temporary or part-time status.

Including other enterprise agencies, the total employed in public-agency assisted FDI firms was 182,000 in 2000 when FDI jobs peaked, and 176,000 in 2013.

The annual FDI figures should also be treated with caution as a rise in retained earnings, which may include tax-related ‘trapped cash’ can distort the data.

Given the poor performance of the indigenous sector over the past half century, there is no doubt that Ireland would be closer to Belgrade than Berlin, absent FDI.

The low headline rate of 12.5% compares with a simple OECD average of 25% and the Irish authorities may have put that indirectly in peril by facilitating low single digit effective rates via Irish non-tax resident companies based in island tax havens.

2015 is not only the target date for the OECD/G-20 base erosion project but it’s when there is likely to be some tax reform in the US.
A foreign profits tax above 12.5% with an end of the current deferral system, would be bad news for Ireland

Corporate Tax 2014: White House and Congress to publish US reform proposals

fDi Intelligence, a sister firm of the Financial Times, has ranked London as the most promising FDI location in Europe with Dublin at no. 5 and Cork and Galway at 24 and 25 of the top 25 cities.

However, two recent international surveys show that both the UK and Ireland are not good/ popular locations for expats.

While personal tax is always a factor, the big companies that are well versed in avoidance would hardly find it very challenging to have part of a salary routed somewhere from a sunny island tax haven!

London and Nordrhein-Westfalen, Germany best investment locations in Europe…

“Why 17%? This is the effective marginal rate paid, on average, by corporations in advanced industrial countries (excluding the U.S.’s exorbitant 35%). A global competitiveness tax would encourage U.S. corporations to put foreign profits to use in the U.S., while removing the incentive for companies to transfer foreign profits to tax havens.

In addition, Congress should enact a one-time transitional tax on pre-2014 foreign profits. The transitional tax rate should be lower than 17% because corporate executives relied on long-standing U.S. law to defer U.S. taxes on foreign profits indefinitely. A reasonable transitional tax rate would be 12% paid over 10 years on foreign profits earned before 2014 that are held abroad in cash or in other short-term investments.

This would raise substantial revenue for the Treasury—roughly $150 billion over 10 years, assuming U.S. companies held $1.3 trillion in short-term investments. A 17% global competitiveness tax would also keep revenues flowing—to the tune of $250 billion over 10 years, according to my analysis of government data—because companies could no longer defer paying taxes on profits earned in jurisdictions with low or no corporate tax rates.”

“International Monetary Fund Chief Christine Lagarde, also in Sydney for the meeting, singled out accounting for revenues from new global digitized businesses such as Google and Apple as a “big ongoing problem”.”

@DOCM thanks for Guardian link on other tread,if you have not already..,the bit on IRL is quite interesting,apols off topic kinda but its friday and GOLD GOLD 🙂
“Finally, I have a question concerning the Bundesbank’s gold reserves. 37 tonnes, including 5 from New York, were recently brought to Germany from abroad. Wild theories have sprung up on internet forums that what we received was not the original gold but something else. What do you think about that?”

speaking off kindness and strangers..the fed just released transcripts off its 2008 crisis meetings,will read over the weekend if anything on Irl. post it,expect all the major news agencies to cover it.
eh any chance the Irish CB releasing its papers its been 5 years now,transparency my..
WSJ live blog on it.

The NZZ am Sonntag, the Swiss German elite newspaper, was very pessimistic about the vote to limit immigration on Feb 9 and said that CH would likely lose out to more flexible business friendly countries such as Ireland and Singapore.
Are the PTB in a position to capitalise on this or are they all in Twickenham already ?

@ D O D
you said “Denmark doesn’t have a social insurance system”.
I am sure you didnt mean it, but what did you want to say?

@ Rob,

the economist has a paywall for a long time, they just tightened the limits.

@ seafoid

Somehow I feel pretty confident, that the Swiss will find a solution

@ John

There is a story to the German Gold. At some point Timmie Geithner and his french/ english colleague tried to get their hands on the Gold as collateral for something, maybe the IMF loans, and europhile Wolferl actually kind of agreed, late in the night. A few hours later he allegedly got a call from the Bundesbank, that they OWN it, and that the answer is: over YOUR dead body : – )

@ jg

Interesting interview! The gold story is but an incidental.

Two extracts struck me.

“These balance sheet legacy assets are the result of undesirable developments and supervisory actions at national level. Consequently, they have to be dealt with at national level before we enter into a banking union with shared liability.”

“Nonetheless, many in the market are speculating about new liquidity support from the ECB … one possibility would be to end the sterilisation of ECB bond purchases from the Securities Markets Programme (SMP).This would mean an additional €175 million remains in the market.Is this a good idea?

Using absorption and full allotment simultaneously is not going to address the fundamental problems associated with the purchase of government bonds anyway. If a suspension of these transactions is considered helpful in the current situation in order to prevent unnecessary fluctuations in the money market and to underline the expansionary monetary policy stance, this would harbour considerably fewer side-effects than many of the other measures currently under discussion, in my view.”

The core of the agreement IMHO on banking union is in the first extract.

With regard to the second, is Weidmann giving the nod to stopping sterilisation “transactions”?

@DOCM figured you may enjoy it the bit i like and agree with is…

“But isn’t Ireland, say, being financed by the central bank?

Following the insolvency of a bad bank, the Irish central bank holds claims which the Irish government must directly or indirectly honour amounting to more than 20% of Ireland’s GDP. The Irish government can obtain funding at the policy rate of 0.25%. This example makes it clear that interest rate hikes in the future might increasingly be seen in terms of how they impact on sovereign solvency. Banking systems that are especially reliant on the Eurosystem’s refinancing operations – and not just to cover their short-term funding requirements – might also see monetary policy necessities clashing with the solvency of banks. Monetary policymakers should not allow themselves to be deterred by such matters.”

Just to add to that thing re 100m on consultants

“As somebody who has been audited many times and qualified as an accountant, I am also breathless with admiration how so many capable and intelligent people can deliver so little value to society. Most big four accountants are capable individuals but put them together and they seem incapable of delivering anything of value to companies. ”
By Andrew Wood London on Michael Skapinker: Auditors escape attempts to tame them

@ Francis

De Schwyzer have had 3 very business unfriendly votes in the last 12 months- Minder, the 1/12 on salaries and now immigration. And it is all a bit uncertain and companies don’t like that.

«Die Situation erinnert an 1992, als dem Nein zum EWR-Beitritt eine Phase der wirtschaftlichen Stagnation folgte», fürchtet gar Swissholdings-Direktor Stiefel. Sein Kollege aus der Pharmabranche, Walter Hölzle vom Verband Vips, verweist auf die Fortschritte Irlands, der Niederlande oder Singapurs im Standortwettbewerb. «Einige Länder bieten steuerlich inzwischen deutlich attraktivere Bedingungen, da kann die Schweiz nicht mithalten», sagt er.”

@ jg

I noted it but did not think it said anything that we do not already know i.e. as the sign in the china shop states “you break it, you own it!”.

If the cost of funding goes up, too bad! (Maybe the new Irish Government Economic and Evaluation Service (IGEES) will then come into its own. Not that I think it will make much difference as the entire Irish establishment, both public and private, is in thrall to the “Westminster model”. Only continued dire financial pressures will force it to accept that the concept of a monolithic public service – inherited from the days of Empire – is no longer relevant).

@ francis

The gloves are evidently off in the political debate in Germany!

@DOCM,you didn’t really expect much change now did you,it’s almost as if you would like higher interest rates in order for decent long lasting reforms…
Not sure who coined the phrase a “good crisis wasted” but it does appear to apply.

In effect he is suggesting that central bankers should not be held hostage by politicians….
“This example makes it clear that interest rate hikes in the future might increasingly be seen in terms of how they impact on sovereign solvency. ”

Here’s Fitch,gosh a sharp hike in rates could….

“The main factors that could lead to negative rating action are:
– Material divergence from the fiscal targets leading to GGGD/GDP ratio peaking higher and later.
– Additional recapitalisation needs of the financial sector by the Irish sovereign, for example in the context of the ECB’s Comprehensive Assessment.
– Weaker economic performance resulting in a substantial deterioration of banks’ existing loan portfolio.”'BBB+‘;%20Outlook%20Stable

fyi Social Europe Journal

‘Dear readers,

our partners from the S&D Group in the European Parliament are holding another key Progressive Economy event.

Progressive Economy is a new initiative pursuing a major objective: to generate a truly public and informed debate on economic policy at European and national, as well as global, levels. Its second Annual Forum, titled “Inequality: Consequences for Society, Politics and People”, will take place from 5th-6th March in the European Parliament in Brussels, and is open to the public.

Register online and join the debates with leading international experts including Nobel Prize winner Joseph Stiglitz, Kate Pickett, Jean-Paul Fitoussi, James Galbraith and Peter Bofinger, and with key politicians including Martin Schulz, President of the European Parliament, Jörg Asmussen, German Secretary of State for employment and social affairs, and Jutta Urpilainen, Finnish Vice Prime Minister and Finance Minister.

More info here:


Weidmann let Lautenschläger give the OK to incomplete sterilisation 2 weeks ago. I wrote at that time, here that with the reduction of the ECB balance sheet by 400 b in the last year, and the libor rates acting up too early this is OK also from an orthodox view, I would say. But that was at the time the blog had some technical difficulties.

grumpy is right with the “optics”.

Schröder is retired, and not part of the coalition. The speed with which he took the Gazprom board seat in 2006 was found by some a little inappropriate at that time. Tauber acting out his biting reflexes, I find also a little inappropriate, especially since Schröder had already denied a role, but this verbal glitch has no relevance for the coalition.

Let us now hope, that peace returns to the Ukraine, a classical cleft state between 2 cultural areas.

even more off-topic, but a good sign of pragmatism prevailing, Germany is providing now embassy functions for Israel:

Back to the general topic….

Pier Carlo Padoan, deputy secretary general and chief economist at the OECD, who today was appointed Italian finance minister in the new government of Matteo Renzi, warned this week that “faster job creation is unlikely to be enough to bring employment rates back to pre-crisis levels, let alone to levels that would offset the impact of population ageing in advanced economies.”

When the fragile state of several emerging economies is coupled with problems faced by Europe in particular, a little caution is required.

These are some impressions from my trip to China last week:

China’s challenges amidst stunning transformation

@ francis

“a little inappropriate”? The major issue is not the cultural divide in Ukraine – although that is clearly a major part of the problem – but the choice of the model of government that the country is allowed to follow.

For someone that is retired, Schroeder is rather active.

I doubt if Merkel is yet ready to pack her bags. That the renewed grand coalition is deeply divided can hardly be in doubt, the reason being, as Wolfgang Munchau has pointed out, that it has no real joint programme but individual party programmes which each side has agreed to tolerate; a bit like our own government, in effect.

Now that’s what I call a debt write off. About €150 million or so.

“The group, which operates about 330 petrol stations across the country and accounts for about a quarter of the market, is likely to return to profitability this year, however, following Mr O’Brien’s purchase of about €304 million of the group’s loans from Irish Bank Resolution Corporation.

Mr O’Brien, who was previously a minority shareholder in Topaz alongside Neil O’Leary’s Ion Equity group, is reported to have paid about €150 million for the loans.”

I suppose it would be naive to expect that the State now owns some equity or deferred shares in Topaz Energy, a company with a turnover of over €3 billion.

That 150 debt write-off (sorry, these people are ‘bidding’ for the debt), would wipe the slate on 1000 mortgages at 150,000 each.

It is good that the State is getting its priorities right. The Topaz owners are much more worthy candidates.

Yep still voluntary has Joan selected a uniform yet for her chain gain….

“Controversial Sheriff Joe Arpaio in Arizona’s Maricopa County, known for his tough law-and-order stance, has had male chain gangs since 1995, female chain gangs since 1996 and chain gangs for juveniles convicted as adults since 2004. Those inmates, who work eight hours a day six days a week, also are volunteers who want to get outside even if it means weeding, clearing brush or picking up litter in the hot sun.”

@JR the failure of the mergers board/committee to rule on Topaz is the much bigger “smoking gun” 🙂


maybe you find

more appropriate:

Shrek Markus Söder, as the bavarian finance minister, would be supposed to be the high priest of all high priests, capo di tutti i capi of all financial conservatives / bond vigilantes

That this grand coalition is divided at all but about petty personal profil neurosis, that I doubt in deed, but where would be any earnings potential in this for Baron Münchausen?

@ francis

A little diversion does no harm but it disproves none of the points that I am making.

The hands down winner – at this juncture – is Steinmeier as he has demonstrated that Schroeder’s assessment of the role that the EU – through the “Weimar Triangle” – could play was completely wrong. It is an issue on which the EU has to take a position, not act as a disinterested go-between (or use as an aspect of global power politics). Der Spiegel should have had the guts to put Schroeder on the spot.

Credit where it’s due to Janet Yellan for recognizing the gravity of the crisis in 2008 when some of the men on the Fed’s FOMC were at sea:

Journalists and some others love to feast on news of splits within governments and two traditional rival parties in Germany provide good material compared with the important but boring routine of governance.

What countries need is a single party with a big majority — as in France : oops :


please, what for should the Spiegel put the retired Schröder “on the spot”?

And to call Steinmeier a “winner” for having brokered an agreement, which is not worth zilch just one single day later, …. , in your eyes only.

It is people like you, who constantly need to get their fingers into other peoples business, who are responsible for most of the conflicts in the world.

I have to say not one single negative thing about Schröder, and I doubt that he spent more than 2 seconds grinning about this little Tauber, freshly baked general secretary, who has to flesh his teeth a little bit, as part of the job description : – )

And while the tone of Montebourg is not just “a little” inappropriate, the threshold of 200k is pretty unreasonable. Time to slash the commision and the brussels bureaucracy in general by a factor of 2, if they want to worry about this chicken sh*t : – )


re: Topaz debt writedown of ~150 million.

I did not see your post until now. I had gone out for a walk between the showers. Those last showers, that the Irish people came down in.

That ,at least, is what the people ie. the liquidator and the government, who gave a debt writedown of €150 million to Topaz, must believe.

A company with a 25% market share and a turnover of over €3 billion, and the Irish taxpayers and citizens write a welfare cheque for €150 million for the company.
The decision will not harm the news coverage afforded to government and it highly unlikely to get top billing on tomorrow’s Sunday Independent.

But there is no doubt that this is a terrible decision. NAMA would have been a far better home for these loans. IMHO, a receiver should have been appointed, because the government needs to sent a clear message on the distinction between can’t pay and won’t pay, and to make sure the message is heard in the right places, where there is no shortage of readies.

As for the ~1000 jobs being saved, I believe the majority could be classified as ‘fragile’ employment, and in all probability would have been ‘saved’ in any event, by a new purchaser being found for the company. ‘Saving’ 1000 jobs is a laudable objective, from a government or from a previous government, that showed little concern for 300,000 being lost in construction.
One has to wonder if policy differences and policy changes depend on which equity holders are involved in the respective enterprises, and what circle of influence those people move in.
The Anglo top brass, brass necks and all, were not and are not the only top brass, that understand the value of a game of golf with the right people.

re: The Burton scheme at €1 per hour.

I have mixed views on this. I am not entirely contra to the idea of some element of workfare, though certainly not labour gangs. The old FAS schemes were rubbished too easily for the simple reason that they did not provide a ‘path to employment’ for those involved, but that does not mean they were a waste of time, for either the individuals or the communities.

In the absence of employment growth, schemes such as Burton’s are of little value to individual or country. Their real purpose, however, may be the discovery of false, non-existent or non resident claimants.

@JR as far as I know it’s a liquidator with a mandate to achieve highest price for the loans,they have a “mark” or valuation if the offers fail hit it then the loans get transferred to NAMA.
That pretty much rules out debt/equity deals or vendor financing or joint ventures as the “entity” selling them is getting wound down.If they had ended up in NAMA then other scenarios could have been explored.
There has been some suggestions/barroom banter here in NY that the info provided was derisory to third parties giving the original borrowers an unfair advantage…..
Not sure that going with a receiver would have resulted in a higher price for the loans,receivers ain’t cheap either and extremely disruptive.

Agreed on Joan’s scheme but voluntarily would appear more appropriate,or better yet actually introduce a programme providing jobs,say for example insulating or upgrading all those awful houses/apts built by shoddy wannabe developers.NAMA has loads cash put it too work….

Ireland’s bad bank, the National Asset Management Agency, is trying to sel”l its entire €4bn Northern Irish property portfolio, nicknamed Project Eagle.
The Irish bad bank has appointed financial advisory group Lazard to seek buyers for its commercial property and development land assets in Northern Ireland. It is likely to consider a substantial discount of up to 75 per cent to the €4bn book value”


Joan Burton is Minister for ‘Social Protection’. The proposed scheme will require unemployed people in receipt of welfare to work for ~19.5 hours per week, for an extra €20 euro per week, in addition to the social welfare payment they are receiving.
Critics of the scheme translate that into a payment rate of €1 per hour.

[In addition, if applied to a person with children, it would certainly be family unfriendly, in that a candidate will have to pay for children to be minded while ‘working’ for an extra €20 per week. As child minding costs could amount to €100 per week, the person would be €80 per week worse off.]

It is a tentative programme that could be a testing ground for some type of workfare programme, but the scheme could also be constructed with elements that would weed out false or duplicate claims, or people flying in to collect payments and the flying out again, if such people exist.

One of the biggest obstacles and challenges will be to provide some kind of meaningful work for people, that will not impact on genuine employment or labour requirements. It is also difficult to see how the negative financial impact on people with children can be squared.

It is probably doomed to failure, even before it starts.

that scheme looks like a bad copy of the german 1 Euro thing 10 years ago, and that didnt work as expected either, and some said, the nordics tried something like that another 10 years earlier

@ JG

“say for example insulating or upgrading all those awful houses/apts built by shoddy wannabe developers.NAMA has loads cash put it to work…”.

Dead right. A lot of those apartments are trading well below book value (Cf NAMA).
Resource misallocation – another one for the list.

@ Joseph

Straightening out negative effects with the people with children shouldn’t be difficult. And there is always plenty of meaningful work, especially if there is nearly nothing to be paid for. That would be the least of my worries!

The German 1 Euro scheme was / is also 1 extra per hour on top, but very often up to 40 hours per week.

Yeah, and despite the polite official description it was meant mostly to harass people they suspected of moonlighting.

What I say now is mostly hearsay, stuff I heard in the local bicycle club, with some personal examples, and related.

It seemed to have turned out that the regular moonlighting was much less than expected, and there were following counterproductive effects:

a) the docile ones showed up punctually for 40 hr/w, were happy about the additional money and doing something useful, having some folks to talk to, and often then stopped looking for regular work. Eeeek. And your 2 year assignments sound even worse with respect to that.

The guy having learned some special printing technique, nobody needs anymore, 50 years, overweight, was harassed with clean room work mopping he had to do to some degree on his knees, before they had mercy with him.
We never found a way to pay for a steak and beer for him and some similar folks on the trips, without somehow insulting him in some way, so we had to go to cheap lunch places.

b) The renitent, actually often clever guys, developed significant energy and fantasy to avoid the assignments. Sick certificates from do-gooder doctors, ridiculous law suits, the government had to provide lawyers for them, and much more. These guys organized and exchanged strategies in a systematic way.

And they wore the unemployment office case workers down (verbatim: “Abnutzungskrieg” war of attrition!) until those filled most of their quotas with the docile ones, at that time. Most normal people can only take so much conflict on a given day.

I think you have to listen to such folks personally, to accept that this is real and not just some misogyn prejudice.

These guys feel, that they are entitled to some unconditional base salary, the rest of society has to provide, somehow. And they make up, my gut feeling 7% of the German vote and the remaining hard core of the pirate party voters.

One of these guys put up an impressive web site, clever programming. But I couldn’t convince him, that he has no business model, to live of it. I was close to give him some programming work, until he said, that with somebody similar he got in a payment dispute, and hit him. I certainly don’t need that.

c) So these one euro programs got cut back after about 2 years, but are still being used and now allegedly more again. And the surviving, emotionally robust, case workers in the unemployment office are taking their vengeance on the renitent now.

d) I hope that your unemployment office guys talk to ours, about what works, and what not, and what actions are not nice, when you look at them in practice. And it would be good, if some independent, “scientific” folks, like from an economics department could do some systematic studies (randomized trials?), which were, as far as I know, not done here in Germany and in the Nordics. Anybody in Irish universities? Because my anecdotal knowledge makes it very hard to judge, how prevalent the above versions are.

With respect to this kind of program, and many other, workfare or similar, I often feel, that it should be said, that German opposition to such measures is not driven by some ideological rigidity, but because we tried so many things already, from 1974 on. We paid for those experiences with our first 40% GDP debt

I bring you news of great joy;

LAST September I published a Bill to tackle the problem of upward only rents in the commercial property sector. This legislation was debated and passed at Second Stage in the Seanad and this week it will be debated at Committee Stage. The unprecedented fall in property values serves as its backdrop; and the preservation of jobs and the survival of small businesses at its heart.

The reality for many small businesses is that they are trapped in leases with rent demands which are reflective of over-inflated property prices from the economic boom. The situation is exacerbated by the fact that consumer spending and economic activity have been at an all-time low. With no way out, many businesses feel they have no option but to close down – and regrettably all too many have.

Upward only rent review clauses in pre-2010 leases are artificially propping up the rents achievable by landlords of commercial premises.

According to a report authored by economist Colm McCarthy, new lettings for commercial properties in Dublin have been commanding rents of between €30 and €35 per square foot. In spite of this, many tenants, as a result of upward only rent clauses, are stuck with leases that demand rents of €60 or more.

Upward only rent clauses have ensured that the rents payable for many properties bear absolutely no relation to the current value of those properties. The reality is that if the Government had acted to kill off the remaining upward only rent review clauses, commercial property rents would have fallen as quickly as they had in the residential sector.

My Bill will address the most significant factor which has single-handedly led to the collapse of many small businesses and the loss of thousands of jobs. The continued failure of the Government to tackle this problem head-on will result in more closures and more job losses. Those businesses that struggle to survive whilst paying exorbitant rents have little prospect of being able to expand and flourish.

If we are serious about getting this economy back on its feet, we must not only look at how we can create new jobs and how we can foster the establishment of new businesses, but crucially we must also look at how we can safeguard those jobs and businesses which we already have. And central to this is the need to look at ways in which those existing businesses can be encouraged to grow and expand.

Some steps have already been taken to tackle the problem of upward only rent. The Residential Tenancies Act 2004 has addressed the problem of upward only rent review clauses in the context of dwellings, and the Land and Conveyancing Law Reform Act 2009 dealt with upward only rent reviews in commercial leases on a prospective basis. However, the problems posed by upward only rent review clauses which are contained in commercial leases entered into before February 28, 2010 remain problematic and it is the hardship and problems posed by those pre-28 February 2010 commercial leases that my Bill seeks to address.

In the past, the Government has cited constitutional obstacles to the enactment of legislation of this kind. However, I do not agree with this view, nor indeed did the State’s leading constitutional lawyer – Dr Gerard Hogan SC (now a judge of the High Court).

Under the Constitution, property rights are protected both in Article 40.3.2 and in Article 43. It is widely understood that rights expressed in the Constitution are not absolute; those rights require to be balanced against other competing rights and interests and in several instances the Constitution provides that such rights may be delimited by legislation “with a view to reconciling their exercise with the exigencies of the common good”.

And that is precisely what my Bill seeks to achieve.

It is undeniable that the exigencies of the common good lie in favour of legislation that carefully balances the rights of small business as against the rights of banks and institutional investors so as to ease the burden on small businesses. This is a balancing exercise with the very survival of small businesses at its heart. The banks and institutional investors on the other side of the equation are not faced with the prospect of closure or collapse if this Bill becomes law.

This Bill will serve as a lifeline to small businesses that are struggling to cope with excessive rents that bear no reality to rents now sought on the open market. This Bill will give them the leeway to agree a level of rent which is reflective of the current rental values along their street – a value reflective of the economic realities of 2014, not a value which is stuck in 2006.

Since lawyers rarely agree on any issue, we can’t await their consensus on this. We need to push ahead with the Bill. In the Seanad this coming Wednesday, I will be asking Members of the House, and indeed the minister, to let me have their views on how they think my Bill can be improved and strengthened – I’m open to suggestions from all sides of the House, Government included.

In their manifestos published in the run-up to the last General Election, bothFine Gael and Labour pledged to resolve the problem of upward only rents in the commercial sector. This commitment also features in the Programme for Government. There is a clear democratic mandate for the enactment of this legislation. It now behoves the government parties to deliver upon that commitment and pledge their support for my Bill in the Seanad on Wednesday.

Feargal Quinn is a member of Seanad Eireann

@JC ah go on John how much key money you trouser over the years…apols rushing out to Mass:)
“In some locations on Grafton Street, for example, virtually all of the lettings in recent years were not on a vacant basis, new tenants approached existing tenants, often paying significant key money, reportedly up to €2 million, and the landlords saw none of that money. People who acquired such tenancies did so after advice and due consideration.”

On page 92 0f his ground breaking book ” Breakfast with Anglo” the distinguished Irish developer,columnist and author Simon Kelly states “The building was occupied by a tenant,but they were breaking their lease early and paying six years rent to get out. That seemed CRAZY to me, but it was an institutional tenant, and there’s no accounting for their logic.”

Indeed Simon Kelly is spot on –it is Crazy. Ireland has the most anti-tenant commercial property lease law in the world i.e. ratchet upward-only rent reviews tied to very long leases, some like Carrisbrook House Ballsbridge for sixty five years,but mainly for thirty five years. In all other countries lease lengths for commercial property and residential properties are similar, at say five years.l

The payment of rent is governed by the provisions of the lease. US leases are of varying lengths but rarely for longer than ten years and often for 3-year periods; Australian leases of grade A and premium office appear similar to the US. Leases in the Far East are often shorter still. The tendency in the UK is towards 5,10 or 15 year leases, but it is now not uncommon for industrial and office leases to include breaks,normally timed at 5-year review date. In continential Europe 3-10 year leases are very common.

The regularity with which rents may be increased also differs throughout the world. While in the US,Hong Kong and Singapore the 3-year lease is usually at a fixed rent and the Australian office and retail leases include annual fixed or consumer-price-index reviews, the continental European leases often have rents indexed annually. Longer North American leases may have rents tied to the rate of inflation or,more often, to tenants turnover; this is rare in the UK. Change to the UK commercial leasing regime has been one of the most important property market issues since the UK PROPERTY CRASH OF 1990

No other government in the world would sign these ruinous leases, and waste billions of it’s citizens money.

“The common thread to the various discussions is the need for good governance.”

I would start with accountability, DOCM. It would revolutionise the EZ


No luck on finding an Irish junior minister’s solution for the problem that the only EU member that experienced deflation in 2008-2012, remains among the most expensive places in Europe?

As for the German junior minister, excluding social security and other charges, the average hourly pay levels in the German and French private sectors are at a similar level.

When France implements it’s plan to cut employer social security costs, labour costs will be similar. Productivity my be different.

Apart from the agreed minimum wage rise, are you suggesting pay should rise higher than the French level?

As previously discussed, there is lots of armchair comment on the trade surplus but little real world data linked to practical solutions.

@ seafóid

An egalitarian approach and accountability are two of the foundation elements when establishing good governance in the public sector. The capacity for sanctimonious palaver about the theory in relation to both without any intention or willingness to do anything about them in practice is a hallmark of Irish society which shows no sign of changing.

My suggestion would be that we devote time first to sweeping our own doorstep before we move on to the EZ.

@ Michael Hennigan

I am not suggesting anything other than presenting material which I think supports the case that has been accepted publicly by a minister in the new German government.

What might be described as the “not an inch” position can be found in this speech by a member of the board of the Bundesbank.


“We need to keep in mind that Germany’s current account balance is the result of a market process and not of planned policy. The balance on current account reflects the investment and savings decisions of millions of households and enterprises. A high household savings ratio and a current account surplus also make good sense in macroeconomic terms in view of the future demographic challenges which Germany faces.”

Nobody outside the ranks of the CDU, and the now defunct FPD, believes the first contention and the second is in more than slight contradiction with it.

The countries of the EZ have also signed up to the excessive imbalances procedure and the open debate is only now beginning. That other countries also have to put their houses in order is not questioned by me.

Back to the Thread; Update on comment #2 above

‘Friday Stat Attack: A Simple Graph That Can be Used in the Tax Debate
February 21, 2014, Michael Taft,

OK, this follows on from yesterday’s post but whenever I hear someone on the media claiming that Ireland is a high-tax economy, I’m going to @ the programme with this graph.

View the graph/table: Debunking the ILLUSION that Ireland is a HIGH-TAX economy/society

“My suggestion would be that we devote time first to sweeping our own doorstep before we move on to the EZ.”

the tragedy of the commons

@ seafóid

I cannot see what the “tragedy of the commons” has to do with the responsibility of individual states for their own societal choices. As to whether Wolfgang Munchau is right or wrong, I have no idea.

P.S. Accusing your opponent in an argument of spin simply undermines your own position.

@ MH

You, and others, may be interested in this blog post by Gavyn Davies.

This extract hits a few nails on the head.

“Others represent changes that are not yet accepted by the policy-makers concerned, notably the shift to greater monetary expansion by the ECB, and they may only happen under duress. Still others, in the area of supply side reform, have always proven hard to implement, except in a crisis environment.

Finally, there are some recommendations mainly designed to produce desirable spill-over effects for the world as a whole, such as the boosts to domestic demand in Germany and China. These recommendations have been on the table for well over a decade, and are the least likely to be implemented.”

Against such a background, the Economist gets it right when it states the following in the original thread link.

“Ireland’s low tax rates have prompted some carping from other EU countries, but it is not easy to see what else the country could have done. As a small, open economy at the EU’s periphery, it has to work hard to attract multinational companies, whereas a big country like America will get them anyway. The main competition there is among individual states.”

On your link to the Oireachtas Committee discussion on Commercial rents on 30/3/2010 Frank O’Dwyer tells the committee who the Irish commercial property market cartel is;

Mr. Frank O’Dwyer: Deputy Ciarán Lynch asked for the numbers. Some 258 tenants sought concessions, 207 of which were retail while the others were office and industrial tenants. A total of 184 tenants provided financial information, of which 153 were retail. Of those, concessions were offered to 143, of which 118 were retail.

The Deputy also asked about the scale but I did not ask for that information. I spoke with seven institutions but it would be legally impossible under the Competition Act 2002 to gather data from a small group of people who control the market. When I asked for the information for the purposes of bringing it before the committee I asked that frivolous concessions, such as changes in the terms of rent payable from quarterly to monthly in arrears, be excluded. I was informed that the predominant concession was a reduction in rent and I can get more information for the committee if that is necessary.

@JC all best on Wensday,will let who shot the tiger or WSTT know you still fighting the good fight,NWL covered it today,best regards.


The Economist’s writer and maybe yourself miss a key aspect of the tax debate: The Irish headline tax rate is not an issue.

What is for example an issue is that Google has reported that its UK revenues in 2013 were $5.6bn and if it turns out that $5bn of that is booked in Dublin, with zero tax paid on it, then it may raise hackles.

On the global economy, there are several important factors that would rank ahead of German demand that need to get priority. Record cash levels and record low business investment levels?


The absence of accountability is an EU wide problem and big contributory factor to the current state of play.
By all means argue that Ireland needs to get its house in order but please don’t tell me that everything is tickety boo on the Continent.

Perhaps you could buy yourself this week’s copy of le Canard if it hasn’t sunk in yet.

Your other standby canard is that you can only see what is politically possible. Again linked to accountability, who calls the shots, who has the money. But Europe has a heightened risk of deflation, the economic equivalent of gout and when people contract gout they do look at things differently.

The Munch :

“With so many signs of deflationary pressures, the case for unconventional policies is overwhelming. Then again, it has been overwhelming for a while.”

Upward Only Rent(Clauses and Review) Bill 2013- Seanad Committee Stage Wednesday 26th February 2014:

On Wednesday next Senator Feargal Quinn will bring the above Bill to the Seanad to be debated at Committee Stage. Ireland has the most draconian anti-tenant commercial property lease law in the world i.e. ratchet upward only rent reviews tied to very long leases,some like Carrisbrook House,Ballsbridge for sixty five years but mainly thirty five years. In all other jurisdictions, lease lengths for commercial and residential properties are similar at an average of five years. These Irish feudal leases inflated commercial property rents and values and the commercial property bubble was a direct consequence of their malign effect. Reckless Irish banks lent tens of billions against these ruinous leases,not against the properties themselves,and created the greatest commercial property bubble in the history of mankind.

Commercial property is meant to be a service to enterprise,trade and employment but with feudal Irish lease law it devastated all three. During the years the property bubble inflated commercial property rents shot up and when the bubble burst, property prices collapsed but with these malign leases commercial rents were unable to fall to the new market reality. Commercial tenants are now trapped in these legacy leases and are been bled dry and are unable to compete against incoming new tenants who are paying a fraction of the bubble rents. The continued failure of government to tackle this issue head-on will result in more closures and more job losses. In their program for government,the current administration pledged “We will pass legislation to ban upward-only rent reviews in existing leases”. In May 2011 Justice Minister Shatter stated” There is an emergency job crisis and under article 43.2.2 of the Constitution we are banning upward only rent reviews in existing leases to facilitate the recovery of the Irish economy, this policy will not impact on NAMA’s property valuations”. Using any economic cost benefit analysis,this policy is the optimum policy to solve this problem, and Colm McCarthy has produced a report which recommends this solution. The State’s leading constitutional lawyer,Dr Gerard Hogan has stated under the FEMPI Act the proposed legislation is constitutionally valid.

It’s never too late to do the right thing. I urge all our legislators to support Senator’s Quinn’s Bill and implement this government’s stated policy. This reform will aid the retention of existing jobs,eliminate the unjust and dysfunctional two-tier commercial rental market and create a transparent/realistic commercial property investment market.

@ seafóid

“tickety boo on the Continent”? Where have I ever argued that? If you have examples of actions that go beyond the politically possible, I would be glad to have them.

As to Munchau, I said that I do not know whether he is right or wrong. Neither, it seems, does the ECB.

The only thing that is clear at this stage is that the German establishment is gingerly shifting its ground i.e. towards agreeing some forms of action constituting an element of economic stimulus. How strong these actions will be remains to be seen.


My suggestion would be that we devote time first to sweeping our own doorstep before we move on to the EZ.

No matter how many times you repeat spin it remains spin.

As always with people suggesting that we need to ignore the big picture and focus on the details it is hard to know whether they are fools or they take everyone else for fools. It could be both I suppose. Not unlikely for neoliberals at all.

On your insistence that we need to focus on avoiding the international political and institutional roots of the crisis, well, its the Eurovenn again. And again. And again. The economics can not change itself to suit the politics. Reality does not work like that. The politics have to change and that requires confrontation.

On how neoliberals never fail but to make things worse people might be interested in The Troika and financial assistance in the euro area: successes and failures.


I think it is a serious mistake to engage with any European neoliberal as if he/she/they were arguing in good faith. The aim of implementing structural reforms is to implement structural reforms, the aim of austerity is to implement austerity, the aim of debate is to delay action.

As an example of destructive neoliberal dishonesty Olli Rehn has been screeching at Italy to reduce government spending when they have a primary surplus and huge unemployment problems. It is, of course, primarily about the creditor countries reducing their exposure to the results of the policies they favour.

Dangerous, incompetent, ideologues – every one of them.

@ Shay

The politics will change. But very late and it’ll be way more costly than doing it now. Same old

“Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.” Martin Luther King Jr.

“Where you come from is gone, where you thought you were going to was never there, and where you are is no good unless you can get away from it.
Flannery O’Connor

The conventional wisdom ”gives way not so much to new ideas as to “the massive onslaught of circumstances with which it cannot contend”. John K Galbraith

@Shay you have admit this is a dreadful situation what an awful waste of resources,even a right wing lunatic like myself agrees that the govt. via NAMA should spent a few bob fixing and finishing them,well actually id prefer them sold as is but failing that…
this may be way ‘out there’ but for some people but a cautionary tale and a gripping read….how did it all go so wrong how much has it cost to date ?


The conventional wisdom ”gives way not so much to new ideas as to “the massive onslaught of circumstances with which it cannot contend”. John K Galbraith

I wish I could believe in good ole JKG but he lived in less decadent times – I doubt he could imagine institutions as dysfunctional as the one the Eurozone labours under (or increasingly idles under). Five years of failure and no change in approach.

I find it difficult to imagine a change in circumstances provoking a change in policy, partly because it has been a disaster so far and there has been no change, and partly because the policies are not a means anyway, they are an end.

No, the current Eurozone policy set (austerity, neoliberal structural reforms, monetary and fiscal hawkishness) will continue to prove damaging for the majority of citizens but so much political capital and institutional and national credibility has been staked on them that everything else will be changed to accommodate the policies (cf: the fiscal compact) until some other more pressing reason is found to change them (a global downswing, war, climate disaster, a country leaving the Eurozone that sort of thing).

Even at that time there will be no admittance of fault, no reevaluation of policy, no change in analysis and, as you mentioned, there is no mechanism for accountability in the EU anyway so the culprits will not be punished (jobs on the boards of banks and multinationals await them all).

@john gallaher

even a right wing lunatic like myself agrees that the govt. via NAMA should spent a few bob fixing and finishing them,well actually id prefer them sold as is but failing that…

A mixture would do. Propping up the housing market is insane.

I read a lovely tweet recently that I would like to paraphrase as:

“If you find yourself criticized from the extreme left and the extreme right it does not mean that you are probably right, it means that there is widespread agreement that you are wrong.”

That is where we are in Ireland and the EU is in general.

@JG, Shay

Nama is there to prop up the balance sheets of (or since it’s you John, off 😉 ) Irish banks.

AQR and stress tests will not have ‘ex-Nama risk’ built into them. Handy.

Personally, I think it might have been preferable to have allowed a much earlier market clearing followed by a much earlier bounce.

@grumpy they had ringside seats actually cat bird ones on two biggest RE deals and blew it…….chocked and sold both sites!
BPS or Battersea Power Station-restrictions due to demand from buyers.
Spire-hats off to Garret still in the game and may actually pull this off despite zero or no help nor assistance from NAMA……


I looked up the little twit Michael Roth with his “unfair edge” No hint to be found for any numerical abilities or financial knowledge, the classical “political science” apparatchik, never worked in his life.



You can see the difference.

Roth tried to get a PhD but failed, spokesperson of various “friendship groups”, minor functions with the “Young Socialist”, 3rd rate material, empty suit

Steinmeier, completed his PhD, some folks actually tried to attack it recently and got burned totally, Head of this office, head of chancellery, …… There is a clear path, responsibilities, experience, 1st rate material

This shows the continuous quality degradation of german social democrat politicians.

The only thing speaking for Roth is, that he is one of the last ones able to win direct elections, albeit by exponentially decreasing margins (wiki/Bundestagswahlkreis_Werra-Meißner_–_Hersfeld-Rotenburg). Should be the other way for the incumbent.

Sooo, I sigh and I am afraid that I have to hear more nonsense from this guy in the following years.


Nama is there to prop up the balance sheets of (or since it’s you John, off 😉 ) Irish banks.

So is it roughly “The banks have had their dodgiest assets taken on by NAMA so that the state does not end up bailing out the banks again. However the state is on the hook for the asset price difference when NAMA eventually sells and crystallizes possibly huge losses.”?

I hope they have the numbers right (and never mind the jammed property market).

@ MH

A link that may interest you (and bring this free-wheelin’ thread closer to its origin).

Another linking issue between the various topics, and of the most importance to Ireland, is IMHO the increasing demand on the treasuries of creditor countries in coping with the various crises. Now that Putin has made clear that he will not be buying any more of the designated Ukrainian bond issues (listed on the Irish stock exchange!), at least for the moment, the EU and the countries of the IMF (i.e. mainly the US) have to come up with the readies; to the likely detriment of other demands.

@ francis

Denigrating the educational qualifications of a minister making a comment does not really add to the quality of the debate. (That he is still in his job after making it is the really worthwhile indicator). You must also make up your mind with regard to Steinmeier; is he or is he not “the man of the hour”?


Clearest evidence of global warming yet – september hurling in february …

@shay begorrah

‘… the [EZ] policies are not a means anyway, they are an end.’


@Michael Hennigan

Loads of cash and v. low investment. Agree

Who has the cash? Not the lumpen citizenries …


The Tregedy of the Commons. Apparent to anyone capable of ‘looking around’.


“Nama is there to prop up the balance sheets of…… Irish banks.”

Now that the Minister and DOF fancy themselves as players at the roulette table NAMA, or more correctly the profitable parts of NAMA, would now seem to be in play.

The bust has been socialised, the bounce is to be privatised, while there is still bounce.

The Minister wants NAMA to look at ‘early’ disposal. Now that’s what I call a brief that demands a clear answer. Some people might say that if a review is to be done properly, one should also look at a ‘later’ disposal. But such people are only party poopers at the roulette table.

I recall hearing from the new government how all important decisions were going to be subject to rigorous cost benefit etc etc. Yet we have State debt write-downs and State assets being firesold, sometimes to the people who could not or would not pay the State for the assets in the first place. And being sold at yields that place their sale somewhere in the nether regions between self aggrandisment, incompetence and how shall we say it, self reward: not wanting to use the word corruption.

Friday, April 16, 2010 IT

“Enterprise can again lead the country out of recession by doing what it does best: trading Irish goods and services, providing jobs, creating wealth and ensuring a sustainable economic future.
Despite the huge public resources required, definitively addressing the banking crisis was always going to be necessary, though painful. The wider economy will remain in the doldrums without a vibrant, competitive banking sector that is able to provide an adequate flow of credit to businesses and consumers. Bank recapitalisation is a necessary step towards that end.

Danny McCoy is director general of Ibec, the employers’ representative body

The Irish Banking Federation/PwC mortage market profile shows banks advanced €2.5 billion in new mortgage loans in 2013, €141m less than in 2012.
Mortgage lending figures remain at levels not seen since the early 1970s.

So much for IBEC

Breaking Newz [h/t TheOnePercenter Press]

Over 10,000 families of Hibernian citizen-serfs are to be auctioned off. At least half a dozen hedge funds are preparing to bid. A specially commissioned gavel has been crafted from one of the old blocks in Savannah for the upcoming auction to add some authenticity to the occasion. It is unclear how these families will be farmed but a ‘junta spokesperson’ notes that “inter-generational property rights will be respected in Hibernian Law” and that “certificates of eternal indentiture will be presented to all family members and, in the FF/PD sense of the fullness of time, to their descendants.”

This is FACT.


DanOB running scared of Mercille on Vincent Browne show roight now ….

Luvly puce green tie that DanO is sporting – very dapper! Prob might not know how to put on a ‘jersey’ – must send him a pet calf!


I had put together the reasoning, why we can expect more stupid sentences from that junior minister, without that having consequences for him.

We had talked above about Steinmeier not really looking great brokering agreements which are worth zilch 24 hours later.

And then I get your response, with an abendblatt (traditionally SPD friendly) eulogy on Steinmeier, apparently written before the disaster became clear, and now also serves only as a reminder how quick things can change.

You have done better in the past.

What seems to happen, is that the Ukraine is exchanging one set of oligarchs against the other.

Timochenkov also got rich very quick, the surrender of parliament was apparently triggered by Rinat Achmetow (Coal baron, search the FAZ for article) representatives

This situation has the potential to become very ugly.

Politics, vested interests and plámás

“It should be a matter of concern at the highest levels of Government that you have refused a request which would not create an additional burden on the Exchequer, and the effect of which may well contribute to a ‘second best’ judiciary in Ireland,” the Chief Justice wrote. “This is contrary to the Government’s commitment to ensuring the recruitment of the very best persons across Ireland’s public service.”

@ seafóid

The FT had an analysis recently which showed that the earnings of the average London financial services worker in 1975 were outstripped by a sizeable proportion of other professionals.

By December 2013, when the latest salaries data were published, Britain’s professional middle class had splintered into two distinct groups.

The lawyers have a system that gives a small number of insiders big gains and it’s from them that judges are selected.

The government spends about a half billion on lawyers annually.

It’s not that they’re underpaid.

@ all

Some would have seen that several ministers attended the launch of a report on trade and tourism yesterday.

Unfortunately, it’s mainly a cocktail of spin and fantasy.

The record of multiple ministers attending launches is patchy.

This is from an Irish Independent report in 2006:

Five ministers were on hand to reveal plans for a fabulous new Dublin Metro line. On the same day, commuters witnessed the biggest traffic jam in Irish history.

Thanks to a spot of bother with a pipe, motorists were stuck in a snarl-up for up to seven hours. Lots of time to unwind.

Gilmore launches Lilliputian wish-list on trade and tourism

Re Topaz, the Sunday Times (which has a proper business section unlike other Irish newspapers), had chapter and verse more than three weeks ago. Certainly won’t be reading about it in the compromised Independent…

“What brought it on?”

“Friends,” said Mike. “I had a lot of friends. False friends. Then I had creditors, too. Probably had more creditors than anybody in England.”


YOU have here repeatedly agitated for military involvement of the EU overseas.

Here a some more detailed account from YOUR favourite, spiegel international:

You can send your sons and daughters and your money to fight in this alien struggle, but not mine.

Has any of you here served in the defense of his fatherland, maybe even in special functions? Lets hear !

All the others should stay very quiet in asking for EU involvement

@ francis

I have never advocated any such thing. What I have noted is that Steinmeier understands that the EU cannot abdicate its responsibility for promoting peaceful cooperation in Europe and on the basis of democratic principles. It is evident that a majority within the Ukraine wishes the country to develop closer relations with the EU. This need not, however, be in conflict with constructive relations with Russia which a major element in the population also desires.

Finding a middle way is the crux of the matter. Steinmeier is, at least, willing to try. He seems to have major support for his approach in Germany.

The consensus here is that the US corporate rate is 35%. There are whole office buildings around the world dedicated to solving the puzzle of US corporation taxes. The US tax code is bought on a clause by clause basis and makes the Byzantine tax code look simple.

First you have Federal tax with the headline figure being 35%, then there are State corporate taxes which range from 0 to 10%, then there are municipal taxes extremely complex but generally less than 3%. Now what do people who are paid to unravel the puzzle say when they are taxed to implement a corporate tax regime competitive with the US. They say the US tax rate all in is around 25% but that major corporations with the aid of their large legal and accounting departments can bring that down below 20%. So you have to tax your large corporations at less than 20% and your medium sized corporations at less than 25%. Small corporations can be taxed at higher rates since they have fewer avoidance options.

One should never pay attention to headline tax rates because as in Ireland 12.5% can become 2% at the stroke of a pen and taxes can be levied by up to four levels of government in some countries.

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