Ending the Sean FitzPatrick Myth

16th April 2014: Sean FitzPatrick has been found not guilty of all charges relating to the Maple 10 transaction. First the judge (for some of the charges) and then the jury (for the remaining charges) examined the evidence carefully, and declared him not guilty. The Maple 10 scheme was truly outrageous, but there is no reason to second-guess the verdicts as given.

From a broader perspective, these not-guilty verdicts might encourage a deeper understanding and better public response to the Irish credit bubble and financial collapse. It is a myth that Sean FitzPatrick caused the Irish financial collapse. Sean FitzPatrick was a major character in the Irish credit bubble, but not a fundamental cause. The collapse is better explained by the extremely “light-touch” financial regulatory system which was deliberately chosen by the democratically elected government of the Irish state, and to a lesser degree by the deeply-flawed Euro currency system chosen by member states. Over the short term, the Irish public benefitted handsomely from both the flawed Euro currency system and the very flawed light-touch Irish financial regulatory system. The Irish electorate was keenly enthusiastic for both.

The Maple Ten scheme was an outrageous transaction whose sole purpose was to unwind another outrageous transaction – the accumulation of a disguised 29% ownership of Anglo Irish Bank by Sean Quinn using contracts for difference (CFD). CFD’s are only legal in some countries, are a naturally toxic trading vehicle, and evade corporate governance rules by disguising true share ownership. Ireland during the boom was a world leader in the use of CFD’s, and Sean Quinn’s disguised 29% ownership position using CFD’s was particularly outrageous.  The Irish financial regulator was simultaneously monitoring (or not monitoring) two very large and very dubious financial transactions in a relatively tiny domestic financial system. To lose track of one large, dubious financial scandal may be regarded as a misfortune, to lose track of two looks like carelessness.

During the bubble period macro-prudential risk regulation by the Irish Central Bank was also (with hindsight) very poor.

The fundamental causes of the Irish financial collapse were two flawed systems – a flawed Euro monetary system and a very flawed Irish financial regulatory system. Both of these systems were built up in broad view and with enthusiastic public support.

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See Corbet and Twomey for a technical treatment and empirical study of CFDs, with a focus on Irish CFDs.

177 replies on “Ending the Sean FitzPatrick Myth”

“Sean FitzPatrick was a major character in the Irish credit bubble, but not the fundamental cause”

Did anyone ever think otherwise?

The myth is apparently a myth to me. I think the public ire towards Seanie was more to do with his complete lack of contrition for being a major character in the credit bubble rather than to do with him being the cause of it.

@Kerchav — I changed it to “a fundamental cause.” Many non-specialists seem to believe that it was the isolated actions of a small number of high-profile individuals which led to the Irish financial collapse. Perhaps not FitzPatrick alone but a few individuals, rather than the structure of the Irish financial regulatory regime and Euro monetary regime.

@Gregory Connor

The fundamental causes of the Irish financial collapse were two flawed systems – a flawed Euro monetary system and a very flawed Irish financial regulatory system. Both of these systems were built up in broad view and with enthusiastic public support.

So presumably all the countries that had a less “light touch” regulatory system (like Spain famously) have healthy banking sectors? There is probably no need to worry about the asset quality of the Landesbanken either. Obvously here was nothing systemically wrong with the global financial system either.

Seriously it takes a remarkable amount of chutzpah to omit mentioning the agency of the enormously powerful financial sector in the forming of the regulatory regime (in Ireland or anywhere else but its clearly easier to game the system in a smaller country). How much democratic input do you think there is in the structures of modern financial capitalism?

As far as enthusiastic public support for laissez faire usury goes I have voted in every election since 1992 and I can not recall “Light touch financial sector regulation” on any of the various party manifestos or any big public protests calling for less regulation (though it may have been a private preoocupation of the wealthy and their representatives).

The only deregulation focussed party who were ever represented in government were the Progessive Democrats and though they were certainly a malign force their tastes in deregulation were quite catholic and their public support was reassuringly low.

This really seems like trolling Gregory. You can not seriously be blaming the public for letting the market down, can you?

The Maple 10 scheme was truly outrageous, but there is no reason to second-guess the verdicts as given.

I’m not sure I agree with this. The verdict means that the jury felt unable to conclude beyond reasonable doubt that Sean FitzPatrick was guilty. Fine, they heard the evidence and I’m not going to second-guess that. But by the same token, Charles J. Haughey was found not guilty in the arms trial and O.J. Simpson was found not guilty of murder.

I am under no obligation to revise my opinion of any of them.

The collapse is better explained by the extremely “light-touch” financial regulatory system which was deliberately chosen by the democratically elected government of the Irish state, and to a lesser degree by the deeply-flawed Euro currency system chosen by member states.

Yes, of course, it was the government’s fault for adopting “light-touch” regulation in a complete and total ideological vacuum, having thought up the idea themselves one evening over a few pints. I mean, it wasn’t as if every single European (and Anglo-American) institution and virtually every economist in Ireland (including you, Gregory Connor?), along with the likes of Sean Fitzpatrick and our pal Fingers and the vast media empire of INM were relentlessly clamouring for (a captured) government to unleash the virtuous and productive forces of capitalism. Oh, no, nothing like that.

Excellent post, Greg.

@Kevin O’Donoghue

Can you offer some reasons for doubting the correctness of the verdict in SF’s case ?


I have seen SF’s express contrition on TV on more than one occasion. Given what it has meant for him personally, there seems little reason to doubt the sincerity of his regrets. Do people want him to go around wearing sackcloth and ashes, stopping passers-by to press direct apologies on them ?

Of course, he does not accept the prevailing narrative, but since this has always been nonsense, why should he ?

(I have never met SF or any of his family or close friends, and was never admirer of him when he was “in his pomp”.)

The judge played a star role in Mr. Fitzpatrick’s acquittal. He ordered the jury to “leave their prejudices outside the court room door”. An affront to the jury. However, did he leave his own prejudices outside? The way the matter was put to the jury only left them with one choice and that was to acquit. This man has been accused of A,B,C,D if you find him innocent of A or B or C or D then you must find him innocent of A, B, C, and D.

I spent a half an hour the other day trying to figure out a short paragraph, part of his ‘directions’ to the Jury, and I could not make any sense of it, because syntactically he gave his “instructions” to the jury in a way that could not be more muddy. He effectively removed every bit of discretion the jury had to give their verdict.

The Maple ten loans have now been deemed to be illegal. However, the loans advanced to Sean Quinn and family were not illegal?? Even though they were given to “unwind” his shareholding behind the backs of other legitimate shareholders. All of this is making us look like a banana republic.

a bit of Polanyi

‘Half a century later, the world looks more Marxian. The middle class is beleaguered. A global reserve army of the unemployed batters wages and marginalizes labor’s political power. Even elite professions are becoming proletarianized. Ideologically, the view that markets are good and states are bad is close to hegemonic. With finance still supreme despite the 2008 collapse, it is no longer risible to use “capital” as a collective noun. The two leading treasury secretaries during the run-up to the 2008 financial crash, Democrat Robert Rubin and Republican Henry Paulson, were both former CEOs of Goldman Sachs. If the state is not quite the executive committee of the ruling class, it is doing a pretty fair imitation.

http://prospect.org/article/karl-polanyi-explains-it-all [h/t nakedcapitalism

Hibernian Governance bears the primary responsibility for the so-called ‘krash’ which is essentially a bail-out of the financial system by dumping its losses on the Lifeworld of the ordinary Citizenry. I discern no real significant change in Hibernian Governance.

Among the questions unanswered by the case is the counterfactual: what would have happened to Anglo Irish if Sean Quinn had not gotten into such a mess on the CFDs? Clearly the bank had major balance sheet issues in any event. But the CFD issue was consuming everyone’s attention (except for Patrick Neary) during March-July 2008, when there’s a lot of other important stuff also needing attention. Yes there were flawed systems but their flaws were exacerbated by events.

another bit on Polanyi:

The European Union’s austerity follies are recapitulating the perverse policies of the 1920s and inviting the same brand of know-nothing backlash. In the upcoming elections to the European Parliament, voters disgusted with the failure of politics to remedy the prolonged recession are poised to deliver big gains to nationalist far-right parties. In Polanyi’s beloved Budapest, where he and Ilona are buried, the right already governs.

His discussion of the influence of ideas, likewise, is all too contemporary. In the 1920s, as in the 1830s, the intellectual dominance of free-market economists gave elites pseudo—scientific cover to pursue brutal and perverse policies, with a studied myopia about real-world consequences. In our own time, market fundamentalism is again the dominant ideology. The latest great transformation, from a balanced social market economy to a dictatorship of the invisible hand, has weakened the power of the polity to restore balance and undermined the confidence of the working and middle classes in the use of the democratic state to counter market excess. One must hope, with the optimistic Polanyi, that capitalism can be fixed. [link above]

Hibernian Governance; what an interesting idea!


Good question.

Another one: what would have happened if they had not tried to unwind Quinn? What were their options?

The deal was executed on July 14th, 2008. Judge Martin Nolan thanked the jury for their service and exempted them from duty for 10 years.

interesting, isn’t it. The Judge doesn’t need more of that kind of jury.

@ Gregory

‘The collapse is better explained by the extremely “light-touch” financial regulatory system which was deliberately chosen by the democratically elected government of the Irish state, and to a lesser degree by the deeply-flawed Euro currency system chosen by member states. Over the short term, the Irish public benefitted handsomely from both the flawed Euro currency system and the very flawed light-touch Irish financial regulatory system. The Irish electorate was keenly enthusiastic for both.’

We all partied.

Great post. All you need to know about our collective responsibility is contained in the election manifestos of the major parties from 1992 until 2007. And if anyone thinks we’ve learned our lesson just look at the latest opinion polls, plenty of people still believe in the money fairy.

@ francis

There is another “defence” rapidly emerging or at least “excuse”emerging and one that we may call the Vincent Browne defence. That they were only doing what they were told by a plethora of legal and financial experts, that it was inconceivable that the regulator did not know, and that they were in fact pure patriots since by taking the actions they took they managed to delay the banking collapse by another couple of months. Where have we heard this before?

VB says they were probably told, “so what if you have to break a couple of laws do whatever it takes”. This just leaves us with a simple question, which I have asked myself time and time again, since this crisis began. Is there a rule of law or is there not? And, is there one rule of law for the elite and another for ordinary people. It seems our laws are relative. There is a body of law there including a Constitution but it can be changed or rather it can be reinterpreted by politically appointed judges, to suit the circumstances of the latest government scenario’s at a moments notice.

We have already seen that prodigious note takers suddenly take no notes whatsoever at some of the most important meetings ever held in this country, Cardiff Neary and other members of the DoF guilty here. They have even said they forget whether meetings were held, forget what was discussed etc. We had prime examples of laws being changed on the fly with the routine guillotining of legislation through the Oireachtas. The emergency banking legislation, NAMA, the promissory notes, winding up of Anglo. It appears that when the elites and the systems they mismanaged are threatened any law no matter how draconian can be enacted within hours and the constitution is absolutely powerless to protect citizens. In fact, the courts in examining UORR and other related matters, informed us that the provisions of the constitution have to be read in the context of the state of the economy. So, when you read your little copy of the constitution always have the latest ESRI, CSO stats on hand.

I never knew that this document was a moveable feast, but I had already formed the opinion that it was worse than useless and needed to be completely rewritten. Property rights have been trampled underfoot in the rush to preserve banks so that those same banks can be fattened up and handed back to the private sector having been rescued by the blood, sweat, and money of ordinary people. It stinks!

In reality, the damage had been done to the whole of the Irish financial system, ever before Sean Quinn bought his 28% of Anglo Irish through cfd’s and it was going to take a lot more than the Maple ten to ‘save’ Ireland’s banking system. The late Brian Lenihan, Cowen and Cardiff decided that it was going to require nothing less than a 440bn blanket guarantee of every creditor from here to Timbuktu guaranteed or guaranteed subordinated or not and later it was going to require a 67.5bn bailout plus another 17.5bn of our own assets thrown on the table also. Gregory Connor muses that this might help Irish people to gain “a deeper understanding and better public response to the Irish credit bubble and financial collapse”. I don’t know what he means by “better public response” are they not being compliant enough on their way to bankruptcy court? I think the Irish people understand very well what and who caused the crisis. He is right it was not Sean Fitzpatrick. It was Sean to the power of, It was the finacial regulator, DoF and poor government and a deliberate failure to understand that the country was being flooded with cheap credit aka the Euro. We had totally inappropriate interest rates and a DoF that deliberately did not want to see the phenomenal, break neck(break bank), reckless expansion of loans books by CEO’s because they were rolling in the taxes and using it to expand the PS, using it also to fund benchmarking and all the other near Ponzi schemes the trade unions were engaging in compliments of a government doling out the largess as if there was no tomorrow and then tomorrow came.

One final point, our debt to GDP was well below 60% but that was because the borrowing was on the books of the banks. Those books would eventually become our books in November 2010. Nobody will be held accountable and the fact that this trial took 5 years to happen and was heard in the Circuit Court tells us all we need to know. We have deliberately failed to have a decent stab at getting to the bottom of what happened.


Bear Sterns was frozen out as a counterparty and the Fed provided about 30bn to assist JP Morgan to buy them for a nominal figure chiefly arrived at as a staff share purchase at minimum they would go along with. It was non-recourse NY Fed lending against the firms ‘assets’.

Many pundits have acquired their familiarity with markets from Sept 2008 onwards and don’t have a context for Bear. At the time it was very disruptive but if you get out a chart of the S&P500 you will get a reasonable idea of the effect it had – ie limited – it was not the Lehman / AIG combination by miles. Banks generally were not perceived to be on the brink.

The false market created by Anglo apparently wrongfully supporting its own share price – via non-recourse placing finance – prevented a significant drop in Anglo shares. This happened in mid summer 2008 with Mid July as the deal.

This was 2 months before Lehman precipitated a dramatic sell-off in stocks generally, and put every bank under the spotlight.

If Quinn had not been supporting the share price previously through CFDs, Anglo would have been exposed probably early in 2008 and there would have been lots of opportunity for focussed consideration of a government reaction, little likelihood of BOI and AIB being under pressure, and Anglo might have been defenestrated without all its, and everyone else’s liabilities being guaranteed. This can be argued about separately.

However, leaving Quinn aside, the Maple deal meant those 2 months were not available to the Irish authorities to make an un-panicked response, instead, they were flapping around in the wake of Lehman and AIG (which was going to be allowed to go bust but for an unexpected intervention from, as far as I recall, initially the New York Port Authority) – really bizarre stuff even for seasoned market watchers.

The manipulation of the Anglo share price likely contributed significantly to sub-optimal decision making later on by the Irish authorities.

In the Irish context a land of forty shades of grey I can understand why the judge and jury acquitted yer man. There they were trying to nail the poor fecker to the cross, sure girl this is 2014 not 0001, haven’t we made progress in the last 2000 plus years. Right you are, they should have rounded up the Regulator, Taoiseach, CEOs’ of all the banks and the Minister of Finance as well as all the major “campaign contributors’. Then they might have had a snowballs chance in hell.

The trial on the issue of supporting the share price wouldn’t have occurred but for the collapse of the banking system.

In contrast with a case like Guinness plc in the UK in the 1980s, where company funds were used to boost the share price during a takeover battle, here we had the Central Bank of Ireland in the information loop on the efforts to prevent a rerun of the Northern Rock bank collapse situation when Seán Quinn’s secret CFD holding of more than a quarter of the shares in Anglo Irish Bank came to light.

Besides the three defendants, how many others were involved in devising the support scheme even though they were working on the basis of legal advice that the Maple 10 arrangement was in compliance with the Companies Act 1963?

1. So while Seán FitzPatrick should have been expected to know more than his other non-executive colleagues on the board about the risks of this transaction, at least two of them were chiefs of listed companies while another was the former chief of a Big 4 accounting firm.

The jury made the right call in acquitting FitzPatrick.

2. Willie McAteer and Pat Whelan implemented the scheme that was devised by many more and apart from the financial regulator, the senior management of the Central Bank and some officials in the Department of Finance were likely aware of it.

Anglo had been advised by one of Dublin’s biggest law firms that the arrangement was compliant with the Companies Act – while that does not make what’s illegal legal, coupled with the tacit or overt imprimatur of the Central Bank, in the ordinary course of business, all that is usually sufficient for business executives who are not legal specialists .

I used to have a copy of the Companies Act 1963 and while there are for example clear cases where companies engage in fraudulent trading when a company is close to collapse, there are others in hindsight where the directors should have called in a receiver earlier but last ditch attempts to rescue the firm that drained the more funds, were fruitless.

I have worked in a company of several hundred people that had some good contracts but it had cash flow problems and was awaiting an outside investment to stave off collapse.

Staff soon realise that there are serious problems and people with fear in their eyes anxiously search for some reassurance when there maybe none.

It must have been a similar atmosphere for non-executive staff within the bank.

Making a judgement on the share support scheme and the overall management of the bank during the property bubble, are different issues.

3. It’s well to remember that there is no new dawn as compliance with company and tax laws will continue to be a much bigger risk area for Irish-owned firms and directors than for foreign-owned multinationals.

The Big 4 accounting firms are active in selling tax avoidance/ evasion shelters not only in the corporate tax area but in also cutting VAT for example.

Usually when abuse schemes are discovered by revenue authorities, a deal can be agreed.

In the past decade, there was a rare case in the US where a criminal prosecution was launched and KPMG LLP admitted to “criminal wrongdoing” and individual staff were also targeted.

The US Department of Justice said in a statement: “In the largest criminal tax case ever filed, KPMG has admitted that it engaged in a fraud that generated at least $11 billion dollars in phony tax losses … cost the United States at least $2.5 billion dollars in evaded taxes.… KPMG also admitted that its personnel took specific deliberate steps to conceal the existence of the shelters from the IRS.”

Sean Quinn’s speculation on Anglo-Irish shares was certainly breathtaking. He clearly believed that the property bust was going to be far shallower than the markets in 2007 were expecting. Anglo-Irish shares would recover and he would be awash in cash. Contracts for difference allowed him to use massive leverage to hopefully make more money than anyone in Ireland could ever imagine. Had he been right, we would have articles and books in 2014 extolling his genius.

But the little guy also fell for the same siren song — buying a house in 2004-2007 with relatively little money down, a huge mortgage, and a ridiculous price. Just another form of leverage.

Ireland badly needs a financial/political/cultural system that roots out these disasters. Something better than hindsight. Hindsight is easy, building a sound financial system is hard.

@ PQ

Lonely are the blunt!



Not forgetting the remarks of the Taoiseach in Davos that “people went mad borrowing”.

It seems to me that the passivity, or stoicism, as you will, of the Irish public is actually an expression of acceptance of the reality of the dispersed responsibility for what happened. Not that it will ever be widely admitted!

@Michael Hennigan

Michael, you say

“Anglo had been advised by one of Dublin’s biggest law firms that the arrangement was compliant with the Companies Act”

You are, of course, not stating this as your own unique view. As I understand it, this has been the P.R. message from the Anglo side since the Maple transaction came to light. I have never been able to get over my incredulity.

The judge correctly ruled that the defendants could not “run” the argument that this was a valid defence. Thus, the issue of whether they could prove that such advice was actually ever given was not addressed.

I have an open mind on the latter question, but is it not notable that no document containing the alleged advice seems to have emerged, or to have even been obliquely mentioned as existing ? On the other hand, apparently Willie McAteer is suing the lawyers for getting him into his predicament. His evidence may be only verbal, in which case he no doubt wishes now that the Anglo Tapes were more comprehensive.

If such advice was given, it seems to me that it had to have been based on the “ordinary course of business” exception. This was an issue in the trial, and the jury – in my view, correctly – appear to have rejected it as a defence.

It will be interesting to see whether, and how, the legal advice is used in argument in the sentencing hearing at the end of this month



On this: “The manipulation of the Anglo share price likely contributed significantly to sub-optimal decision making later on by the Irish authorities.

Right, but that’s my question:
I think we agree that the Regulator knew what was going on. Let’s say we take the most benign interpretation and that the CB or DoF or the cabinet didn’t realise.

*IF* Anglo had gone to Cabinet, or DoF, and said, “Quinn has crocked the bank. What can we do?” Is there anything that could have been done at that stage that wouldn’t have cost us so much money?

Do we really believe a calm, orderly [and cheap] resolution would have emerged? I’m not so sure….but willing to hear options and arguments!

@Rob Browne

I would have to disagree with you criticism of the Judge. In fact following his instructions to the jury I thought a conviction was more not less likely. Seeanies saving grace was that he was non-executive director at the time and there seems little doubt, based on the duratoin of the deliberations that he snuck past the reasonable doubt threshold by the skin of his teeth.

As for the quinn loans not being illegal there was a signficant difference between those loans and the maple 10 loans in terms of recourse. The Quinn loans were 100% recourse. The maple 10s loans were 25% recourse. I would love to see a bank come knocking on my door offering me wads of cash at 25% recourse – but I don’t expect that would happen in the normal course of business – which was the test on these loans.

…I would add that I have certain sympathy for Whelan and McAteer in terms of the advice they got from MOPS and the regulator. I would back on suspended sentences outcome based on that mitigation. I do hope there is a basis on which they can pursue MOPS too as law firms seem to be immune from accountability in this country (and perhaps elsewhere) when they get it wrong.

A Preliminary Report on the Source of Ireland’s Banking Crisis ” by Klaus Regling and Max Watson-page 6:
“This was a plain vanilla property bubble,compounded by exceptional concentrations of lending to property-and notably commercial property”

There was a total misallocation of resources by all Irish banks –they became monoline property lenders.
There was sub standard risk analysis procedures by all Irish banks.
There was inappropriate incentives to bank lending executives.
There was no/light touch regulation by the state.

@Sarah Cary
“Do we really believe a calm, orderly [and cheap] resolution would have emerged? I’m not so sure….but willing to hear options and arguments!”

The Irish don’t do orderly retreats. History tells us about the races at Castlebar, and the flight from Aughrim, where the cavalry scarpered, leaving 4000 infantry at the not so tender mercy of opposing forces.
This time too the Irish officer corps looked after themselves first. That was their first priority. It still is.

“The manipulation of the Anglo share price likely contributed significantly to sub-optimal decision making later on by the Irish authorities”

Not one your better contributions, I suggest.

The Irish ‘authorities’ could have listened to Morgan Kelly in April 2007, or at least asked for a analysis of the effect on the banks.
To argue that a minor manufactured delay in a share price collapse, in a bank focused on a property market that was stalling since early 2007, led to a sub-optimal response (in late 2008), sounds like an excuse for incompetence and irresponsibility.

The reality is that the Irish administration, political and administrative, was, and probably still is, incapable of a coherent nationally based response to a crisis.
The delay factor usually centres around which sectors are to be saved and which are to be sacrificed, while convincing the populace that ‘we are all in this together’. That takes time.

Doing the right thing in time, any time, is not a policy priority.

July 2008: I remember it well.
Most companies in construction had plans in place to make significant amount of staff redundant at the ‘builders holiday’, July 18th 2008, if I recall correctly.
The dogs in the street knew the country was goosed at that point.
The delay if any, in the Anglo share collapse, was irrelevant to anything that was to come, especially a response from the ‘authorities’.

The PTB were not ready for the tsunami. Even if they had been clued in on the Quinn deal the country was set to permagrowth rather than prudence. Entropy was relentless. Ireland bet the house on property. The scale of the breakdown was breathtaking. RBS went down too and 5 years on it is still struggling. The US is still trying to get back to normal growth. None of the solutions implemented anywhere have been effective in leaving the crisis behind. Even UK output is a good deal lower than 2010 projections. It is a long road.

AIB had flash value at risk models with analyst consensus that reserves were grand. Even in 2010 analysts were valuing ILPM at 6 euro. It is very hard to model panic and institutional ineptitude. I wonder if the Irish elite will ever be allowed manage a listed bank again.

Maple 10 was outrageous. So was the ILPM green jersey business.

Why was light touch regulation necessary in the first place?

My problem with the Maple 10 kerfuffle is not that it brought down the banking system. It is that people at Anglo engaged in serious illegal behaviour with the apparent connivance (based on evidence at the trial) of people in very responsible positions who should have known better. That it was apparently with the intention of keeping all the balls in the air in the Micawberish hope that something would turn up is not an excuse.

As a legal layperson, it’s hard for me to see how some of the apparent cheerleading for this crime reported as being described in evidence at the trial could have avoided breaching proper laws on incitement or conspiracy. I wonder if the issue here is that we desperately need new laws in this area, or alternatively that the laws we have are not being enforced equitably?

That’s a very good post on an important topic Gregory. You conclude: “The collapse is better explained by the extremely “light-touch” financial regulatory system which was deliberately chosen by the democratically elected government of the Irish state, and to a lesser degree by the deeply-flawed Euro currency system chosen by member states.”

I would invert the prioritisation of those causes. For me Irish membership of the Euro and the effect of inappropriate interest rates were the keys to our crisis. Sloppy regulation added significantly to the costs of the crisis. But those who believe that sloppy regulation was the key to the crisis need to consider two questions:

1. Ireland has probably had sloppy regulation since the foundation of the state. But why did this factor only become so toxic in recent years? In my opinion, Eurozone membership and the subversive effect of ultra-low interest rates is the answer to this question.

2. It was strongly argued – especially in 2008 and 2009 – that Spain, in contrast to Ireland, had benefited from strong central bank regulation and had therefore been able to avoid to the worst consequences of the financial crash. But it is now clear that Spain was no more able to avoid the consequences of inappropriately low interest rates than Ireland. (Nonetheless Spain does appear to have been able to temper their effects through better financial regulation).

I am unconvinced that the Central Bank, under Governor Honohan, will provide markedly better regulation than was provided in the past. Sure, there are lots of pious intentions and fine-sounding policy initiatives. But where’s the beef? Consider two keys measures of how the Central Bank deals with actual problems on its desk (as opposed to conceptual problems lying far beyond the horizon):

1. Accountability – the key Financial Regulator/Central Bank figures involved in the build-up to the crisis appear to have suffered no significant career consequences. The 2007 head of Prudential Supervision at the Financial Regulator now works with the European Banking Authority in London. The 2007 Consumer Director at the Financial Regulator is now Ireland’s representative at the International Monetary Fund in Washington DC. The 2007 Head of the Central Bank’s Financial Stability Division is now Special Advisor to Governor Honohan. Behind the scenes some of these people may have done excellent jobs. But they can hardly all have been doing excellent jobs. And where is the evidence of any formal process of examination of staff performance within the Financial Regulator/Central Bank after it presided over one of the largest (in national GNP terms) financial crises in the history of this planet?

2. Mortgage crisis – it is only now, six years into this crisis, that the Financial Regulator/Central Bank APPEARS to be forcing a resolution of the problem of delinquent loans. (I emphasis the word “appears” as I remain unconvinced of the CB’s determination to actually force a resolution of matters here. Central bankers in other countries understand that being unpopular is part of their job specification. Former Fed chairman William McChesney Martin once defined the job of his institution as being “to take away the punch bowl just as the party gets going.” But Irish central bankers seem to think that they can do their jobs effectively by always tip-toing delicately around institutional and political interests rather than sometimes having to confront them head-on).

Another point that needs emphasis in this discussion is that Article 107 of the 1992 Maastricht Treaty includes the passage: “governments of the Member States undertake . . . not to seek to influence the members of the decision-making bodies of the ECB or of the national central banks in the performance of their tasks.”

So the decisions of central banking and financial regulation are – like those of judges in court – to be free even of influence by government (never mind direction). Remarkably, in over 400 pages of combined reportage, Honohan, Regling and Nyberg failed to make even a single reference to this critical legal and institutional point. The failure by those reports to name names inevitably resulted in public debate focusing on known and elected public servants – such as former Taoisigh Bertie Ahern and Brian Cowen – rather than on little-known, unelected public officials in the Department of Finance, Central Bank and Financial Regulator. I fear that the forthcoming Oireachtas inquiry into Ireland’s banking crisis is set to repeat this error.

The net economic effect of all of this is that Ireland remains in a currency union where it is likely to get inappropriate and economically destabilising interest rates into perpetuity but our institutional interests do not wish to face up to this fact or to its implications.

The net political effect of all this is that public attention simmers as it seeks vengeance against some high-profile pantomime villains (Seanie, Bertie and Biffo to name just three) while those largely anonymous supervisory interests which severely aggravated the cost of Ireland’s crisis (despite enjoying full institutional independence) escape without any apparent accountability.

To paraphrase Ali McGraw in the movie “Love Story”, in Ireland being a central banker means never having to say you’re sorry.

@ Kerchav

Judge Nolan told the jury “In the case of Mr Fitzpatrick, they must ask did he know before it was executed that Anglo was going to provide funding to ten people to buy Anglo shares and that the purpose was to ensure share price stability.

Before they can convict him they must be able to answer that question in the affirmative beyond reasonable doubt. They must also be sure that he took no reasonable steps to stop it.

If they could not answer yes to any of those questions the prosecution must fail, he said.”

Think about the reference to “share price stability”? What if he (Fitzpatrick)said the actions taken had nothing to do with “share price stability” that they were motivated entirely by a much higher ranking objective viz. to avoid the collapse of the bank itself. This is radically different motivation from carrying out a course of action, other than to merely achieve “share price stabilty”. Could mens rea be established on the charge of “share price stability” in the face of the much more “heroic” actions of saving the bank from total collapse? I doubt it, since that charge becomes swallowed up by the more pressing reason for acting “to save the bank” and indeed they threw in the contagion to the entire Irish banking system. The Jury were led into contradictory silo’s by the judge.

Like the Tribunals of inquiry ,that started out as inquiries into this, that, the other. Invariably, inevitably, they ended up being called after the name the judge’s surname. The Smithwick tribunal, the Moriarty tribunal, the Mahon tribunal etc. Judges in Ireland always put themselves centre stage, this was supposed to be a trial by jury but, as far as I am concerned, it was carefully choreographed by the judge. For instance, at the eleventh hour or after 34 weeks of submissions, he said I am directing you to drop various charges against the accused I will tell you why later. Leaving everyone in no doubt as to who was really in charge.

I heard on Drivetime (RTE) that David Drumm is unlikely to be extradited from the the USA on the grounds that there is no law in that country forbidding a company from giving loans to buy its shares. Is this true?

@John Martin — I do not know the legal minutae, but U.S. bank executives giving half a billion worth of nonrecourse loans to favored clients to support a falling share price would certainly be prosecuted. That does not mean that there are no legal complexities; of course extradition is very tricky and many legal issues can prevent it in particular cases.

Perhaps a problem might arise from the slight distinction between the US law reference to share manipulation (see Cormac Lucey link above) versus “share support” in the Irish equivalent law? Beats me. However it seems certain that US bank executives would need to pack their toothbrush on their way to work on the morning that the FDIC, Federal Reserve, or SEC found out about such a scheme in place.

Thanks, Cormac.

I agree. Lending by a company to buy its shares could be interpreted as manipulation. However, it’s not that clear cut. I’m not a lawyer, but I think Drumm would have an arguable case that no US law was breached and therefore extradition proceedings would fail.

Surely the global situation was also relevant. RBS was not run from the Eurozone and not regulated by the Irish authorities. Neither were Bear Stearns or Merrill Lynch. Not My Fault syndrome has struck down so many people from Seanie to Greenspan. There is zero accountability.


It was strongly argued – especially in 2008 and 2009 – that Spain, in contrast to Ireland, had benefited from strong central bank regulation and had therefore been able to avoid to the worst consequences of the financial crash.

It’s important to note that the source of those strong arguments was the IMF and thus, er, Spain’s financial regulatory elite!


Terrific post Gregory,bit of a dichotomy in it,why perpetuate the Quinn one,should he have taken an ad out in the IT?

He was fully entitled to gamble away his fortune broke no laws nor was any disclosure required,the inability to cover his margin triggered many these events,it was facilated in London not Ireland.
Why was this case brought before the revolting sorry revolving loan one?

Instead of bringing charges which are required before attempting extradition,the Irish govt. has cowardly and there is no economic reason too,dicked around like a bitter x wife with his bankruptcy filling,time to put up or shut up.He filed BK due to recourse loans utilized to buy into it unlike below.

Regarding US manilupation oh probably a fine.

@John M. Cormac, Gregory

With regard to the argument that no US law was breached you should note that it was previously argued that no domestic law was breeched on the grounds that banks are excluded from the lending prohibition in ordinary course of business (and facilitating placings are banking business).

This was discussed in January on here, see link below et seq


Also, from the SEC:

Manipulation includes…..”improperly limiting the number of publicly-available shares; or rigging quotes, prices or trades to create a false or deceptive picture of the demand for a security”

The relevant word here is “improperly” imho.

This is a quote from an Irish Judge in the thread referenced above:

“What is beyond doubt is that false and misleading signals were given to the marketplace as to the value of Anglo shares.”

To whatever extent the Guinness case sets a precedent, the key element was not the purchase of shares with the effect or intention of simply propping up a share price (Rothschilds for example did this but taking the market risk) but an arrangement whereby shares would be bought and the purchaser would not carry the same downside risk that other market participants would – in the Maple arrangement this would be the substantially non-recourse financing.

Hi John,

interesting link,

wiki says Angelo Mozilo got 470 Mio in total compensation, a 67 Mio fine, of which 20 Mio had to be paid by the company, and all criminal charges dropped.

I would take such a deal any minute.

In Germany folks get 3.5 years for naivity, where nobody even claims, that he had any possible personal advantage

A question:
does somebody have any link at hand, how much the IM is presently charging Ireland, especially Greece, and Portugal on their respective loans?

Hi Greg

As ever, great post.

SEC wouldn’t have jurisdiction here, unless Angle Irish was listed as an ADR here in U.S.

In general, SEC rules with respect to market manipulation, insider trading etc are far more developed and wide ranging than in any other jurisdiction. We just have more experience dealing with this stuff.

Regarding the poor regulatory quality in Ireland — did you see this:


From reading the article, it seem to me that the Irish court does not understand the concept of opportunity cost in estimating damages. The $2.1m fine does not seem to include compensation for the estimated opportunity loss from not being invested in a properly constructed portfolio.


erm, that was supposed to be “how much the IMF is charging Ireland”

Gregory, you say

“The fundamental causes of the Irish financial collapse were two flawed systems – a flawed Euro monetary system and a very flawed Irish financial regulatory system”

your irish times link also charges some unspecific “european institutions”

Could you be a little bit more specific, what part of the system and what european institution failed in what way?

@ Gregory Connor

The fundamental causes of the Irish financial collapse were two flawed systems – a flawed Euro monetary system and a very flawed Irish financial regulatory system. Both of these systems were built up in broad view and with enthusiastic public support.

Ehhhhhhh…. how does the European Constitution/Lisbon Treaty fit into this theory?

When the Irish were eventually asked to vote on the European project they voted no.

They were then told to try again.

When the Irish saw the gobshite in charge of regulating the banks, there was a bank run.

“What happened was that everyone in Ireland had the idea that somewhere in Ireland there was a little wise old man who was in charge of the money, and this was the first time they’d ever seen this little man. And then they saw him and said, Who the f*ck was that??? Is that the f*cking guy who is in charge of the money??? That’s when everyone panicked.”

Blaming the victim of a crime for being present at it’s occurrence is a weird argument.

It is right and proper that the Irish Public let go of such myths as the Fitzpatrick Myth. They should embrace faith in the Immaculate Conception of the Irish Crisis; that there was a banking crisis, but that the bankers were without sin. That there was a regulatory crisis, but that the regulators were without sin. That there was a property crisis, but that the property magnates were without sin.

The Irish financial crisis was an Act of God, and we must Move Forward(TM). If public trust and confidence in the rule of law and authority of the state is shattered by this, then so be it, for the public must believe in their hearts that the lawmakers and lawyers bother were without sin.

Mr. Fitzpatrick’s smirks, and legal societies’ worship of the letter of the law are merely tests of our faith.

As always, when debating blame, it’s hard to find anyone who will admit to voting for Fianna Fail. Their 2002 manifesto (A lot done…) should be required reading for schoolchidren. I don’t think banking or the financial system is mentioned once. But there is a lot of guff about closing Sellafield.


There is a lot of debate on the pages of this blog over what might have been done and I don’t want to bother going into all that – don’t have a book out or anything. Once you go there the discussion gets hijacked by arguments about the effect of this or that strategy and some people then conclude that none of the 2008 stuff matters since nobody can prove, repeat, prove that the course of action taken was not the most appropriate for the country.

The point is though that the CFD support of Anglo and then the Maple share support scheme, on the balance of probability, likely cost the Irish state a lot of money – unless you know that the action the government took in Sept 2008 was the most cost effective option.

Even an official analysis suggests the decision taken was sub-optimal. Here is Patrick Hononhan’s report:

Section (8.39 in the report):

The scope of the Irish guarantee was exceptionally broad. Not only did it cover all deposits, including corporate and even interbank deposits, as well as certain asset backed bonds (covered bonds) and senior debt it also included, as noted already, certain subordinated debt. The inclusion of existing long-term bonds and some subordinated debt (which, as part of the capital structure of a bank is intended to act as a buffer against losses) was not necessary in order to protect the immediate liquidity position. These investments were in effect locked-in. Their inclusion complicated eventual loss allocation and resolution options. Arguments voiced in favour of this decision, namely, that many holders of these instruments were also holders of Irish bonds and that a guarantee in respect of them would help banks raise new bonds are open to question: after all, extending a Government guarantee to non-Government bonds has the effect of stressing the sovereign to the disadvantage of existing holders of Government bonds; besides, new bonds could have been guaranteed separately. The argument for simplicity also is weakened significantly by the fact that an actual dividing line between covered and non-covered liabilities was drawn at as least an equally arbitrary point; moreover, such instruments were held only by sophisticated investors.”

@Joseph R

See above.


after I stripped out all the vomit I have for de Grauwe and the likes : – ) ,

we don’t need the 454th repetition of the same discussion.

What he calls a bug, we carefully and deliberately designed in bright sunshine and clear words (no bail out, no money printing) as very necessary features into the treaties, or …. ?

@ Gregory Connor,

Great post and very interesting discussion, too, on RTE’s Prime Time last night!

And to add my tuppenceworth to this thread…

It’s only human nature that people look for a scapegoat when disaster strikes, but six years on the edge has gone off this particular debacle for most people. From the data on Eurobarometer and elsewhere, the trust of Irish people in our elite institutions has been in decline for some time past, but has accelerated in the wake of the crisis. Public confidence also has been rattled in most of what previously might have been considered ‘pillar’ institutions of our society, including the Catholic church, political parties, and even the media. One after another, the cracks in the foundations have been exposed. At this stage, in the ordinary course of their lives, people are aware of their own resilience and that, perhaps, is what interests them most.

So yes, it would be helpful to have a banking inquiry to get to the bottom of how we got into this mess; but do people really want some stage -managed farce designed by elite factions for the express purpose of tearing the heads off one another? And while it would be even better if those who perpetrated wrongdoing were brought to justice, to whose benefit? If arrogance and stupidity is the extent of their crime in teh days of the celtic cat, then we know about all that already and thus it has ever been with that lot anyway. Meanwhile, we try to get on with our lives. Where the opportunity arises as in the referendum on giving more powers to Oireachtas Committees who might abuse the authority so granted or, as in the case of the Seanad Referendum, dismantling our constitution, the people’s message to the political elites, though, seems clear: we might have little faith in you, but we still have faith in democracy.

What’s missing, and, in my view, may ultimately lead to political instability and electoral volatility on a scale we are not traditionally accustomed to, is
any sort of vision of what sort of country we’re going to build out of this disaster, what its values are going to be and what sort of structures and institutions we’re going to need, and processes of accountability within them, to realise that vision. There’s no debate going on about that at the elite levels of politics and no inkling that any of the political parties, especially those currently in government, have any interest in it. That’s a pity.

Alan Greenspan’s doctrine held that bubbles cannot be prevented and that government’s task is merely to clean up afterward. Greenspan practice was to foster one bubble after another,until finally came along one so vast that it destroyed the financial system on the way.
At it’s source,the global crisis was an American housing crisis,and not one of too little housing but of too much.
Likewise the source of the Irish financial crisis was a a plain vanilla property bubble, compounded by exceptional concentrations of lending to property-and notably commercial property. Below is the link to the elementary property valuation error that was the caused the global financial crisis and that bankrupted Ireland;

I haven’t read all the comments so this has probably been touched on, but to say

“The fundamental causes of the Irish financial collapse were two flawed systems – a flawed Euro monetary system and a very flawed Irish financial regulatory system. Both of these systems were built up in broad view and with enthusiastic public support.”

Obviously isnt the whole story. The public ‘supported’ an economy that was growing, creating jobs, providing access to credit. It didnt support the specifics of how financial regulation was designed and implemented. The public doesnt have an opinion on complicated policy in any meaningful way.
I’m not against the general argument in the OP (to a point) and particularly the idea of getting away from the hyperbole and polemics and to a better understanding of what happened, but part of that means seriously complicating the medium voter/responsive to publics theories of politics favoured by economists.


In the 2007 election FF/FG got 70% of first preferences. Do you not think there was enough evidence by 2007 that these parties were not to be trusted with the management of State institutions? At that point FF in particular were at the end of close to 40 years of scandal. The Beef Tribunal report came out in 1994. The McCracken report came out in 1997. The Ansbacher report was published in 2002. The Flood/Mahon tribunal had been running for 10 years. The Moriarty tribunal had been running for 10 years.

You are right that the public was not aware of the fine detail of the regulatory system but they were more than aware of the character of the people who were designing that system.

@Johnny Foreigner

If you examine closer the Beef tribunal,the McCracken report,the Ansbacher report,the Flood/Mahon tribunal and the Moriarty tribunal there is one common thread –Irish sovereign landlords.

The eurozone is a group of seventeen countries with a combined
population of three hundred and thirty million citizens. All member
countries have the same currency,the same central bank,the same
interest rates and the same commercial property lease law except one,
Ireland.Ireland has very different commercial property lease law to all other eurozonecountries. The three components of all countries commercial lease law is the length of the lease,the rent determintion process and lease exit strategies/break clauses. In all other eurozone countries lease lengths are short,say three to ten years,with break clauses, and rents are indexed annually to changes in the consumer price index. In Ireland lease lengths are long,say thirty five years,with no break clauses and rents are reviewed every five years using the ratchet upward-only rent review process. This review process used the highest rent as evidence against all tenants and was open to malpractice and corruption.

Irish commercial property lease law was a twinheaded monster which incentivised the over-renting of tenants and more damaging,it was the rocket fuel for the commercial property valuation model which created the monster commercial property bubble. When this bubble burst it destroyed the entire Irish banking sector. Reckless Irish banks lent tens of billions
against these ruinous leases,not against the properties themselves. If Ireland had had regular eurozone commercial property lease law it would have been impossible to have had a commercial property bubble.

The reason Ireland had this feudal lease law was because the corrupt
Irish politicians organised sovereign leases for their bagmen pals. The sovereign,the best covenant in the country,by signing these feudal leases legitimised them and copperfastened them for all commercial tenants . All Mr Haughey’s bagmen, and all the corrupt Irish politicians bagmen, are sovereign landlords.
It was institutionalised political corruption.


The net economic effect of all of this is that Ireland remains in a currency union where it is likely to get inappropriate and economically destabilising interest rates into perpetuity but our institutional interests do not wish to face up to this fact or to its implications.

Could not agree more, we need to get out of the euro.

But unfortunately it will never happen.

Slow grinding pain, instead of a sharp, revolutionary shock seems to be the default option in Ireland.

800 years of oppression? Post-colonialism? Rentiers/class warfare? Catholic guilt?

Maybe just economic ignorance.

Johnny F – but what other feasible political alternatives were there ? And I wouldnt buy the idea that the design of regulatory policy is related to the character of our political elites. (isnt it a more complicted process, the result of a series of bargains struck between special interests, industry elites, european requirments, domestic and international political elites etc..)

What’s the realistic counterfactual here where it doesnt take the form it ended up taking?

When in 1999,2000,2001,2002,2003,2004,2005,2006 and 2007 David McWilliams told you and Michael McDowell that there was a monster property bubble, the house is on fire — HELP HELP –what action did you take. Minister McDowell was in the cabinet from 2002 till 2007;


‘Regulatory policy’ is a bit too abstract a term to describe how things worked in Ireland in the 1970-2007 period (and probably still happens in many instances). It was not a ‘policy’ as such – you’ll find scant mention of regulation in any election manifesto. It was a culture that reflects perfectly a broader set of behaviours engaged in by Irish society as whole, from top to bottom.


Page 450 onwards will give you an insight into how regulation ‘worked’ in practice.

None of this was hidden from the public. Fintan O’Toole, Gene Kerrigan and others never stopped writing about it. Tony Gregory and Joe Higgins would not shut up about it. This and other matters were debated on the Late Late. Ansbacher and all the other scandals were on the radio all the time and the question of ‘who was supposed to be in charge of this’ was always asked.


Regarding alternatives… isn’t that the whole point? If we wanted alternatives we would have invented them and voted for them. It’s not like a bunch of German central bankers invented FF/FG back in 1922 and dumped them on us for nefarious purposes. They are what we see when we look in the mirror.

@Johnny Foreigner

The Ansbacher report details John Byrne transferring 300,000 pounds to Mr Haughey. John Byrne is one of the largest private state/sovereign landlord’s in Ireland with an income of c. ten million euros per year from the Irish taxpayer courtesy of Mr Haughey and his political connections.

Also it details Ben Dunne transferring 150,000 pounds to John Byrne’s Ansbacher account. Later Ben Dunne appears in the Moriarty tribunal attempting to obtain a substantial increase in his rent from Eircom a state company. Ben Dunne was the owner of Marlborough House, Marlborough street in which Eircom his tenant had signed a 42 year ratchet upward only rent review lease.

Johnny F – thanks for the link, Im going to check it out now.

But you’ve made my point. ‘The public’ are generally not interested/informed on the specifics of policy (used here as shorthand) so my argument leaves room for them not being aware of what O Toole, Kerrigan etc had identified.

But also, in what is effectively a two party state the public has very little choice in alternative political/ideological movements. The public has very little interest/effect on (the specifics) of institututional design, legislation etc.

The point you’re making about the complexity of Irish regulatory policy (in how it was created and how it functioned in practice) reinforces the point as well. (so i dont think Im disagreeing with a lot of what you’re saying)
On the cultural point though, I think it’s too vague and generalised to say anything substantial tbh..

My impression of the argument behind ‘the publics role driving policy’ that is the foundation for GOC’s argument is; politicians want to get elected so they have to be responsive to constituents, so they will generally converge in the middle of ‘the publics preffered policy choice.’
This is fair enough as far as it goes, I think, but leaves out a lot more. (examples of which are contained in the Ansbacher-Report you link to)

Johnny F @8.11

Im not interested in blaming german bankers either, tbh (except in specific cases where that blame is warranted)

Two questions for Gregory Connor

If a banker must give his pals large 25% recourse loans to buy shares in his bank, he too must not have had much confidence in the future of the bank. A clear admission that he was a disaster as CEO. Everyone in power seem to have know about this scheme in the summer of 2007. However, Drumm was not forced out of Anglo until December 2008. Where were the bank shareholders in the period? Why did they not call for his head?

He even remained in his CEO job for 2 months after the September 2008 blanket government guarantee. For 3 months he had the people’s full backing to cook up even more such deals.

My two questions

1. Were other insane deals cooked up by Drumm in the July 2007-December 2008 period ?

2. How did they arrive at the 25% recourse number ?. Was it just plucked from thin air or was there some formula (no matter how weird) that got them to that percentage. ?

@Johnny Foreigner

Ref Fintan O’Toole and the Irish Times the paper of record;

An important part of what happens during a property bubble is mediated by the marketplace,to which all people are attentive,and by prices that are observed there and subsequently amplified by the broadsheet media. The broadsheet media weave stories around price movements,and when these movements are upward,the broadsheet media tend to embellish and legitimize “new era” stories with extra attention and detail. Feedback loops appear, as price increases encourage belief in “new era” stories, promote the contagion of these stories, and so lead to further price increases.

Ninety five per cent of all property sold in Ireland,is sold by surveyors/estate agents and they controlled where the property advertising money was spent. Almost all of this money was spent with the broad sheet media and the Irish Times,the owner of the property portal MyHome.ie, got the largest share. During the years the bubble inflated, the Irish Times revenue from property advertising was a substantial part of their gross income,and the surveyors/estate agents were allowed free rein with their puff pieces and property propaganda. Essentially this paper became the largest property market in the state with a newspaper bolted on.

Yes, the electorate don’t care much about the specifics. But if you put an X next to a FF name then you are not exactly signalling a passion for puritanism to the political classes. What are the political classes to make of Lowry’s electoral successes?
My impression of Irish politicians (admittedly coloured by my Kerry roots) are that they have their fingers right on the pulse of public opinion and respond accordingly.


You are preaching to the converted when it comes to the property market. It’s the best evidence you could wish for that behaviour harmful to the common good was not confined to a small elite.


would you want to post the eurobarameter numbers you have in mind?

Maybe even with a comparison to german numbers in 2004, or nordic some years earlier?


Its not just about ‘policy’ when it comes to regulation, or other governance. After St Patricks Day 2008 when Anglo’s share price fell significantly, the Financial Regulator – bearing in mind all the stuff that was going on with Quinn, Anglo, CFDs, deflating property bubble and the rest – responded by announcing an investigation to identify and punish short-sellers.

That was exactly the reaction he was expected to provide. That’s why he was chosen for the job. He was ‘on side’, ‘the right sort’, ‘a safe pair of hands’, ‘knew the score’ …etc.

In 2006, if ‘a stickler for the rules’ had been appointed Financial Regulator’ and it had been covered on the radio & TV there would have been public disquiet.

Nothing to do with Policy, lots to do with Attitude.

Grumpy: Excellent points

Drumm’s 25% recourse loans to his Maple 10 pals supported an extreme form of short selling. His pals would only lose their own money if the shares dropped by 75% or more. If the shares went up, they potentially stood to gain handsomely. Unfortunately for them, the shares went to zero. But what a deal at the time.

Surely, some of them must have been suspicious — a deal too good to be true.

Two questions

1. It would be interesting to know who among the inner circle — turned and fled from Drumm’s offer.

2. Who were the bankers in London who made the original Contracts for Difference with greedy ole Sean Quinn? Smart fellows I reckon.

From where I look at it you all have valid points. Everybody is deeply embedded in Oirish culshur which means nobody can see the forest for the trees. Not alone is there the problem of seeing the world through green lenses there is the problem of selective vision or seeing only what pleases us.
We are often accused, particularly in Britain, of indulging in anti social behaviour because forgiveness is only one confession box away.
What is right and what is wrong are elastic concepts in Ireland, at times we break the elastic and 2008 was just one such occasion. I wish I could say that sometime in the next ten years we will start thinking like Germans. That is too big a stretch for me, I need a few double brandies to bring me back to normal.

@Kebin Lyda – You state “So only someone who was the fundamental cause should be held accountable? Aplogists for the elites are becoming so tiresome.” I did not mean to imply that individuals caught in illegal acts should not be held accountable (and be clear that Sean FitzPatrick was found not guilty here). Rather, that is not getting at the fundamental causes of the crash, which are a very flawed financial regulatory system (both micro- and macro- prudential) and a flawed Euro currency system.

@ What goes up .. You state:

“Ehhhhhhh…. how does the European Constitution/Lisbon Treaty fit into this theory? When the Irish were eventually asked to vote on the European project they voted no.

They were then told to try again. ….

Blaming the victim of a crime for being present at it’s occurrence is a weird argument.”

You are perhaps right – I might have been too harsh there in that the Irish electorate was not given a fair choice regarding the Euro currency system. It was rigged. So I take your point on that. However note the following contribution from Johnny Foreigner:

Yes, the electorate don’t care much about the specifics. But if you put an X next to a FF name then you are not exactly signalling a passion for puritanism to the political classes. What are the political classes to make of Lowry’s electoral successes?
My impression of Irish politicians (admittedly coloured by my Kerry roots) are that they have their fingers right on the pulse of public opinion and respond accordingly.

@OMF – a clever contribution! I hoped you might include an improvisation on my Oscar Wilde paraphrase, since most readers missed it I would think.

Lots of good contributions on this thread.

What’s a bit rich is to listen to neo-liberal cheerleaders for light-touch regulation (and a reduced state generally) like our own Johnny Foreigner, turn around as one to point the finger at the government and the Irish people for having taken that ideology on board: “it’s your fault for listening to us.”

This is Gregory Connor’s position in a nutshell.

Replace “government” with “the State” in my last post. I do blame the gov’t like all right-thinking people. But let’s not forget theideological atmosphere of the time (which, judging from the contributors to this blog, hasn’t changed at all) that held markets to be self-correcting and therefore infallible as well as the seat of all virtue.


We are often accused, particularly in Britain, of indulging in anti social behaviour because forgiveness is only one confession box away.

Oooh – you should tune into my show today- Newstalk 1pm. The topic? Forgiveness – the consequences of the disappearance of the confession box get a mention! (we had to pre-record this weekend..)

@ Gregory Connor

Replying to What Goes Up

“You are perhaps right – I might have been too harsh there in that the Irish electorate was not given a fair choice regarding the Euro currency system. It was rigged. So I take your point on that.”

This is a popular thesis and has some validity as far as the original decision to join the euro is concerned which was somewhat hidden in the ratification process of the Maastricht Treaty. It was not hidden, however, to Danish voters who initially rejected the treaty and subsequently negotiated an opt-out.


However, it cannot possibly be held as true subsequently as the Irish electorate has approved every institutional step by way of popular referendum (on two occasions voting first to reject and then to approve) and most recently, alone among member countries by way of referendum, the Fiscal Treaty.

The defence used of the Irish being victims of some outside malevolent force, that “rigged” outcomes domestically simply does not stand up to serious examination. If culprits are to be found, they will be closer to home. Indeed, the search for them simply reflects a level of political immaturity from which it is to be hoped the country is slowly but surely emerging.

It may be noted by way of postscript that Denmark is effectively using the euro is the Krona is in a narrow fixed exchange band relative to it. Where the advantage is to the country from this arrangement is difficult to discern.

Let me help you discern it my playacting friend: in time of crisis, the Danes can drop the peg overnight.

You don’t play obtuse very well and you’re fooling absolutely no one.

@John Corcoran

You ask “When in 1999,2000,2001,2002,2003,2004,2005,2006 and 2007 David McWilliams told you and Michael McDowell that there was a monster property bubble, the house is on fire — HELP HELP –what action did you take. Minister McDowell was in the cabinet from 2002 till 2007?”

There are two answers to your question.

As it happens, I was working as a banker in Frankfurt between 1995 and 1998 when the details of EMU were being conceived. I and an Irish colleague at the bank where I worked were both of the view that EMU, by offering credit at an inappropriately low interest rate, would be a disaster for Ireland.

So when I returned in 1998 I declined the well-intentioned entreaties of my mother to buy a house. And I told anyone who might listen to my views even though they tended to make me look like a crank who was refusing for some idiosyncratic reason to join a party nearly everyone else was enjoying.

When I started to work for Michael McDowell I made no secret of my views in both oral and written form. But, as a brother of Moore McDowell, that position came as no great shock to him. I also wrote publicly (under a pseudonym) about the problem in early 2005 for Magill magazine. The key passage of that article stated:

“We risk maxing out on debt and thereby making ourselves vulnerable to any short-term economic set-back. The closest parallel may prove to be the Japanese economy. They too experienced a growth miracle built on a credit bubble induced by politically-determined interest rates. Their bubble was pricked in 1991. If their experience is anything to go by, the bursting of the Irish bubble would be a nightmare. The economy would prove impervious to monetary and fiscal stimulus, as individuals and corporations sought to curtail spending in order to reduce their bank borrowings. A downward spiral of asset prices, forced liquidations and further falls in asset prices could result. Growth would prove elusive and the financial sector would be in permanent crisis. That’s the bad news.

The good news is that we may still have some distance to go before we hit our debt limit. So enjoy the party while it lasts. But don’t be taken in by it. And be wary of those economists who failed to predict this bubble, who don’t explain it and who certainly won’t dare to predict its end.”

So my first answer to your question is (i) I think I diagnosed the situation correctly, (ii) my own investment decisions reflected that diagnosis, and (iii) I articulated that diagnosis to anyone interested in listening. As a chartered accountant I am comfortable with the division between adviser and principal, where the adviser advises and the principal decides. So I made considerable efforts to articulate my views but when these were not accepted, I got on with my life while making sure to protect my own family from the Irish property bubble.

There is a tendency in Irish public discourse which refuses to play the ball, preferring to play the man instead. It is a wholly unhelpful tendency: what someone did yesterday has little bearing on the validity/invalidity of their arguments today.

I also find that personal remarks are often an implicit admission of weakness in substantive arguments. If your substantive argument is so strong, why the need to open up the “I know what you did last summer” meme?

Debates on Twitter have been quite deformed by this tendency which is little more than an up-market version of name-calling. I hope that debates in this forum don’t go the same way.

So I certainly won’t be asking you, @John, what you did in the years 1999-2007. What you did/didn’t do then is simply irrelevant to the validity/invalidity of your arguments today.

@ Ernie

Overlooking your usual ad hominem comment, can you tell me when a crisis to exceed the one the euro has, hopefully, just traversed is to be expected and which would prompt the Danes to “drop the peg”. Or am I being obtuse again?

@ Cormac Lucey

Hear! Hear!


In a democracy power comes from the ballot box.
When you are a cabinet Minister you don’t play the ball-you own the ball. The book stops at the cabinet table. You advised a cabinet Minister who presided over the greatest increase in property prices in the history of the state.

Dunno, DOCM. Do you think it would’ve been advantageous to, say, Ireland to have had (or to have now!) a currency that was only pegged to the euro rather than the euro itself?

@ francis

Follow these links for EB 2012 reports that you may find useful. Also link to Quandt (2012) article about trust in media. He’s German, by the way!


Thanks for link to FT piece. I think most people’ would agree with you that ‘accountability’ is at the root of it, and not just ‘accountability’ as a set of rules, even more so as a state of mind. All too often, I think, we confuse ‘transparency’ with ‘accountability’. The former is about effects; the latter about the values brought to bear on our actions in the first instance, which then allows us to assign responsibility for the consequences of such actions.

Blaming the people who voted for FF or the incompetent regulator isn’t particularly helpful. It’ll happen again and nothing will be done because nothing can be done about those cultural flaws. And remembering nothing.

Euro interest rates should be addressed by means of mortgage repayment adjustments – if rates are too low monthly repayments should be increased to discourage excessive excitement. The Swiss regulator is looking at such a scheme to calm things down there.

In the event of the emergence of floods of foreign cash looking for a temporary home, how can non core countries respond? Argentina has lots of experience.

Ireland has historically been weak on accountability and transparency. Loose international money doesn’t like either but property bubbles are lethal. For all of the talk about cultural failings and electorates condoning madness, I don’t see Canada, the UK or Switzerland doing much better.

I think we need a better narrative than it was the euro and the regulator wot done it. What do we need to ensure the next time isn’t a catastrophe? The state of late capitalism also needs to be integrated into the picture. Because it is so hard to generate honest growth you are going to see more of these financial bubbles. How do you deal with them?

No mention either of the absence of bank windup rules, LoLR weakness, auditor ineptitude.

So the Euro and Lite Touch Fianna Fail are the sole causes of our crisis.

Who remembers the sub prime fiasco, the credit crunch, Northern Rock, Bear Sterns, Lehmans, TARP etc. All preceded our crisis and cannot be put down to either the Euro or FF.

@ Ernie Ball



“The independence of the Danish central bank is therefore limited in practice. Its aim is to keep the krone within this exchange rate band. This policy marks a continuation of the situation that existed from 1982–1999 with regard to the Deutsche Mark, which provided a similar anchor currency for the krone. The ECB is also obliged to help protect the Danish currency in the case of speculative attacks.”

The Danes could not defend the krone against speculative attack on their own and neither could Ireland in a similar situation.


Your thesis seems to rest on the notion that ‘light touch’ regulation was in some way imposed upon us by ideologues. In fact ‘light touch’ is how we have always done financial regulation. The tools have been at the disposal of regulators all along, they have just chosen not to use them. My thesis is that the character of the relationship between regulators and bankers in Ireland is part of a broader cultural malaise and not some international conspiracy by a shadowy cabal against the noble Gael.

The key conclusions from the Ansbacher report with respect to the CB

“At all material times and even prior to the passing of the 1989 Central Bank Act, the Bank had sufficient powers available to it, be it by threat of revocation of a licence or by the attachment of conditions to the licence, to ensure that Guinness and Mahon did not involve itself in inappropriate banking activity. Had the Bank probed Mr Traynor’s representations further in the early 1980s, there is good reason to believe that the Bank could have availed of these powers to put an end to Ansbacher’s activities in Ireland. It seems certain that had the Bank seen the internal audit report in 1989, it would have availed of these powers to ensure an end to Ansbacher’s activities.

A combination of the misleading information furnished by Guinness and Mahon and in particular by Mr Traynor and a failure on the part of the Bank to test, appraise and gather the information available to it resulted in the true nature of Ansbacher’s activities going undetected for longer than ought to have been the case.”

You should read the report yourself and tell me if you think that the way the CB inspections were carried out is evidence of pressure from above by neoliberals or something much more subtle about the way business is done in this country.

See also the DIRT enquiry if you want more evidence.


did you miss something in your post, the links?

googling “eurobarometer 2012 quandt” gives me no good result.

@ Ernie

By the way, I should add that I have always been of the opinion that it was rather courageous – i.e. foolhardy in the extreme – for Ireland to sign up to the euro; not for the economic reasons usually advanced – optimum currency areas, interest rates mis-alignments etc. – but because of the central political nature of the process. Not alone was this not explained to the Irish electorate by the political class but the latter were incapable of even comprehending it. It is doubtful whether there has been any improvement in the level of its comprehension since. It is for this reason that the contrasting experience of Denmark is of such interest.

There is now, on the other hand, a clear understanding both in the political class and the electorate IMHO that there is no way back. It cannot, however, be other than a good thing that the possibility is discussed.

Predictions as to the demise of the euro due to a lack of the necessary political commitment are wide of the mark as the finalisation of the package of legislation on the “Banking Union” demonstrates. It also demonstrates that the “outs” (notably the UK and Sweden) continue to cover their bets by participating in the banking union, even if in a diluted manner.

@ veronica

I agree entirely with the point you make. It is an issue of values or, rather, how these get collective expression in the manner in which we organise our society.


the links are now there, but I am very sure that my search for “veroni” showed only 4 entries (namely not your last) , very weird.

The FT site is now running “hunt for scapegoats traps Irish in past. Bankers’ trials fixate country and stop it moving on”.

Wasn’t JPM forced to pay billions in fines relating to crisis misdemeanours last year? I seem to recall a litigation fund in excess of $20bn. Did it stop the US ” moving on ” ?


Is the neoliberal bogeyman also responsible for our complete failure to regulate the performance of civil servants, teachers, doctors, gardai, university lecturers, health service management?

@Johnny F

Typically, you miss my point, which was this: the very same people who for decades were constantly railing about how the state is nothing but a drag on the vital forces of society and who believed and still believe (to paraphrase Grover Norquist) that the state should be made small enough to drown in a bathtub are the very same ones who, once their ideology leads (predictably) to the sort of catastrophe we’ve seen, point the finger at the state: Why didn’t you do something to impede the vital forces of society?!?

And make no mistake, this crisis can be directly traced to neoliberal ideology promulgated by think-tanks and promoted by lobbyists throughout the English-speaking world: markets are self-correcting and should be left alone. From Reagan and Thatcher through Clinton and George Bush (and every FF gov’t during that time), this has been the mantra: get gov’t off the backs of the people and watch the prosperity come rolling in. That was a giant lie and it takes one gigantic pair of balls for someone who believe and still believes in such fairy tales to then turn around and claim that it’s all a failure of the state (that you created).

That you’ve now changed your tune and want “regulation” of every aspect of the public sector (an idea that will only lead to bureaucracies to make the HSE look like a lemonade stand), means only that you’ll make whatever arguments suits your ideological certainties at the moment, for they are apodictic and impervious even to events that contradict them outright.


It’s easy to prove you are wrong. The international forces you describe were not uniquely focused on Ireland. Other countries managed to survive the crisis in much better shape. We didn’t, because we don’t do regulation or accountability at any level other than the most petty. Cosy relationships and fake governance are what we do best. It’s a small homogeneous country, everyone knows everyone, and we don’t have a great love of rules.

Other countries better survived the global crisis (which was caused by your ideology) because they weren’t as given over to it. It’s as simple as that. Ireland, by contrast, had swallowed it whole.

Blaming our membership in the Eurozone for our problems reminds me of the National Rifle Association slogan “Guns do not kill people, people kill people.”. We had a functioning government by Irish standards. We also had a Central bank, a Financial Regulator see ( http://www.irishtimes.com/news/crime-and-law/courts/eye-opening-insights-into-regulator-s-role-and-lack-of-curiosity-1.1765857 ), a whole department called the DoF, two good ole boys (buachaill ban) for Taoiseachs’, a Dail full of TDs’ who bore a startling resemblance to the claque at La Scala opera house in Milan. We even went one better and elected the FF clone when we were presented with an opportunity to clean out the stables. I fully expect that we will put FF back in place at the first opportunity.

The Head Waiter and the Waiters’ model of government continues to thrive in Ireland. The concept of governing for the common good is for foreigners. We the people, surprisingly enough, get what we vote for.

@Sarah Carey
The last appearance on RTE radio that I could find was your Ash Wednesday performance. It will probably show up on their site within a week. I did not know that you were a talented performer in addition to your columnist duties.


I have seen a few lawsuits in the media, invariably brought by people with the means, against the banks for selling crap. Richard Desmond was one. The standard bank defence was the customers were sophisticated and knew what they were getting into. It doesn’t always work.
In the US the approach of the authorities seemed to be to wait until the banks had started making profits again before loading on the fines.
Reading “regulating wall st.” by Acharya it’s clear the system now is as risky as it was in 2006. Hopefully the bull run will go on forever.

grumpy and johnny F – I’m rushing at the minute so cant really say much..but Im not saying political culture isn’t important, or that the political classes/elites etc weren’t in a lot of ways reacting to the electorate, and that there arent some domestic cultural ‘norms’ (or whatever) that might explain certain aspects of the way we respond to crises, structure politics, develop insitutions etc.. Im just saying we need to go further than that

I think BW 2 is on to the right idea. It seems insane to me to look at Ireland individually outside of the larger global (or at least regionally within Europe) context. Not to look at the way regulation or policy was set in that context, or how the bubble was inflated etc
I’m not an economist, (as they say), and I know the position of Ireland in the global economy has been dealt with a lot around here (by P lane especially) .. i think you could reasonably extend the same concepts (to a point) to politics, to explain how regulatory and economic policy was developed.

(ps – the corruption angle (ie Ansbacher etc) is obviously important. But as GC (I was adding an ‘O’ earlier, sorry) mentions above they’re not causes of the crisis. The causes afaict exist in the area that BW2 is talking about (larger trends in the global economy) and so with this story things like regulatory policy are probably less important than commonly assumed.

I agree. While there were specific Irish factors at play that were not evident elsewhere, the crisis was OECD wide and Ireland got it earlier than others. Luxembourg also spent boom revenues on social welfare projects, Holland had a housing crash, India went through the wringer, Finland has no visible way out of very low growth, etc. The link is the state of late capitalism. Neoliberalism is not working.

QE in the US – 4tn printed, 14tn economic expansion, 35tn in asset inflation.

Two legal takeaways.

We now have case law that it is ok for a bank to lend for the sole purpose of supporting its share price so long as it is full recourse. Do we need to change the law?

We now know that the Maple 10 deal was illegal; in the words of the judge Drummer was the architect of that deal. How robust are our extradition treaties with the US?

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

If you examine Sean Fitzpatrick’s core philosophy if the property was worth zero he didn’t mind,because he wasn’t lending against the properties he was lending against the feudal leases i.e ratchet five yearly upward-only rent reviews tied to 35/25 year leases with no break clauses. These unique leases were only available in Ireland.The average length of a commercial property lease in the rest of the world is five years.The corrupt Irish politicians had organised these leases for their bagmen paymasters. All Mr Haughey’s bagmen are sovereign landlords.

Check out Carrisbrook House Ballsbridge Dublin 4 –an empty building which the state is the tenant on a sixty five year lease with ratchet rent reviews every seven years and no break clauses, signed in 1969. The taxpayer has twenty years to go paying this rent. No other government on this planet would sign a lease like that. Guess who was Minister for Finance in 1969?.

Brian Woods II Says:

Nail on the head. The most insightful comment on the entire trial and verdict

“We now have case law that it is ok for a bank to lend for the sole purpose of supporting its share price so long as it is full recourse. Do we need to change the law?”

“It’s the people’s fault for voting in the light touch crowd!”

This assumes that Irish democracy is a democracy. Le doute est permis.

The article concerns the US but there’s little reason to believe that a study of Ireland wouldn’t come to similar conclusions.

And this capture of democracy by economic elites has everything to do with the sort of extreme wealth inequality one finds in both the US and Ireland, as Piketty argues.

I wouldn’t expect most Irish economists, who see their role has handmaidens to the elites, would even see a problem here….

There were course several causal factors for Ireland’s economic collapse.

On a country comparison basis, in terms of population size, history and the memory of severe recessions in the previous two decades, two small countries have had a lot in common.

Ireland and Finland, both members of the euro system, ended 2007 with the same level of GDP.

Finland had surplus public funds of €130 billion while Ireland had net debt of €20 billion after offsetting cash balances and the value of the National Pensions Reserve Fund.

There were of course differences and Ireland May have had to make a bigger catch-up leap.

At its peak Nokia only accounted for 4% of Finnish GDP and in its wake as a consumer electronics giant, Finland has what could be termed a knowledge economy.

Finland won its independence after the collapse of Tsarist Russia in 1917 and then had to pay a devastating cost to retain it, in response to aggression by the Soviet Union during the Second World War.

The OECD has said:

For a nation with a population of less than 4 million, the cost of the war was devastating: 90,000 dead; 60,000 permanently injured and 50,000 children orphaned. Additionally, as part of the 1944 peace treaty with the Soviet Union, Finland was forced to cede 12% of its land, requiring the relocation of 450,000 Finnish citizens. A Soviet military base was established on a peninsula near Helsinki, and the communist party was granted legal status.

Why the heck would anyone invest in an Irish Bank, if all Irish banks are now legally able to lend to insider pals to prop up the share price.

I still don’t understand how they arrived at 25% recourse. Would 75% recourse have been legal? How about 95% ?

All our narratives of blame are suspect. For the sake of argument, let’s consider the EU and the electorate’s role, or otherwise, in giving approval to the euro project:

Reading through several of the contributions to this thread might give the impression that we, the electorate, are well-informed about the contents of European Treaties before we vote on them; that public debate on the issues and their implications for our economy and society down the line is properly focused and robust; and that the use of referendums thereby democratises our assent to European projects. Hence, we’re all to blame for voting for the euro project by agreeing to the Maastricht Treaty and by our displays of naive enthusiasm for the currency when it was eventually launched.

None of this is true.

As I recall, the political project for a single currency was framed as a means of avoiding currency volatility and a defensive mechanism against the Gordon Gekkos of the ‘markets’ picking off European national currencies one by one, including our own. In national terms it was also represented as a further stage in the completion of our own republican project – a final break from the sterling connection and achievement of economic independence. And that was aside from the main arguments for and against the Treaty, advanced on either side at the time. In the end, 43% of the electorate abstained; 39% voted in favour and 18% voted against.

Unlike single issue referendums, or housekeeping changes in respect of our own Constitution, EU Treaties are complex packages that come from ‘far away’. There is an underlying assumption that our representatives at European level will have done the job and are not asking us to vote for things which are designed to be to our detriment. Further, we have no sense of a European political centre or a European political culture: the EU is either a regulatory agency, or an ATM for development funds, or for keeping the show on the road when we’ve crashed our own economy into a ditch. The ‘democratic deficit’ is so ingrained within its institutions that, at this point, this appears an insuperable problem. The Irish electorate are far from alone across the EU in perceiving the prospect of any further EU political integration with concern, or even disdain. Besides, we have no say in appointments to key EU posts, nor are we likely to have in the future. The government selects our EU Commission representative according to such nakedly party political considerations – like the prospects of winning/retaining the seat in the constituency that the nominee has vacated, or as a ‘retirement’ gift/horse-trade for political support arrangement, or simply parking some potentially troublesome hotshot out of harms’ way – that public cynicism, rather than any sense of public confidence, is the net effect. So unless it’s a sense of abject fear of imminent catastrophe, as in the Fiscal Treaty, increasing abstentionism is the main trend in voting patterns on EU Treaty Referendums, as evidenced in Richard Sinnott’s excellent analysis of the failure of the Nice 1 Treaty. http://www.ucd.ie/dempart/workingpapers/nice1.pdf

In short, the Irish electorate tend to know as much about the details of what they’re voting for in EU Treaty referendums as the Anglo bankers knew about the Companies’ Acts.

BW2: “We now have case law that it is ok for a bank to lend for the sole purpose of supporting its share price so long as it is full recourse.”

IANAL, but my guess is that’s just false. My understanding is that a jury verdict is in no way binding on another jury. The whole notion of precedent, stare decisis and all that, relates to judges’ decisions on points of law. A class of transactions which one jury is prepared to regard as belonging to “the ordinary course of business” may be regarded by another as a scam.

From my own recollections of jury service, nobody seemed inclined to tell us how previous juries went about parsing such phrases. Indeed the law seems to prefer jurors who are blissfully ignorant of precedent, in that lawyers are precluded from serving.

But maybe I’m quite wrong. Is there a lawyer in the house?


ANALE but I take your point. All the same it has some precedent impact if not entirely a slam dunk.

@ Geronimo

Sort of cuts both ways. As a holder of shares you would be happy to know the bank would use insider pals to prop up the price. As a potential buyer you would be unsure whether the current price is being artificially propped up in this manner.

@ MH

What is your point?

Finland fought three wars, first the Winter War against an unprovoked Soviet aggression and another, allied with Nazi Germany, the Continuation War, against the same adversary and a third, the Lapland War, against a collapsing Third Reich .

Small countries caught in such situations are faced with unpalatable choices. What distinguishes Finland is the extraordinary courage with which the country faced them.


@ veronica

The is why such issues are being put directly to the Irish electorate in the first place. We live, after all, in a representative democracy. Other countries in the EU have no problem with allowing their elected representatives to come to an informed judgement on the complex issues involved.

“Over the short term, the Irish public benefitted handsomely from both the flawed Euro currency system and the very flawed light-touch Irish financial regulatory system. The Irish electorate was keenly enthusiastic for both.”#

True, but does the Irish electorate really formulate its own views on economics? Was it ever warned of the possible consequences of borrowing all that money from abroad to build estates in bogs. Was it even aware that the money borrowed for these madcap schemes was foreign money? The electoate knew the names of Colm McCarthy, John Fitzgerald and some ‘chief economists’ from the financial sector. All these said said everything was okay. Only the most contrary of voters would go against the views of these big names.

@Tim O’Halloran — I agree with you that the advice given by many prominent economists regarding the Euro system (pre-1999) was deeply flawed and showed poor judgement or professional cowardice, or some combination. The big (and eventually realized) risks were hidden while the potential benefits were trumpeted. It was a political project with badly flawed economic analysis to support it.

And that is key: voters cannot be expected to know the details of complex economic policy. This isn’t the Athenian polis. Instead, they have faith in what the experts tell them. And most of the economic “experts” here were peddling the prevailing rational choice/market infallibility/privatisation neoliberal snake oil promoted by Milton Friedman and popularised by Reagan.

The public couldn’t be expected to know the ins and outs of any of this. But we had a good thirty years of self-replicating economic groupthink. Ask yourself: hoe many left-wing economists (or even economists sceptical of free-market and private-sector fetishism) were working and teaching in Irish Economics departments in the 1990s and 2000s.

You economists want to start pointing fingers? Start by pointing them at yourselves.

@ Gregory Connor

One must surely start from the premise that the Irish voting electorate is made up of adults capable of making their own decisions, including with regard to assessing the quality of the advice they are given. Any other approach is simply not tenable.

Really? Ask a representative sample of voters a few questions about economic theory and EU structures of governance and see how informed they are. Policy options don’t come from them, they are imposed on them by the elites you represent.

@ Ernie


“Elections belong to the people. It’s their decision. If they decide to turn their back on the fire and burn their behinds, then they will just have to sit on their blisters.”

― Abraham Lincoln

@Ernie Ball

You economists want to start pointing fingers? Start by pointing them at yourselves.

Hell will freeze over first but sterling work on the counter-reactionary arguments sir. Remember, the global financial crisis was not a market failure, it was because the little people were encouraged to buy houses by the guberment.


One must surely start from the premise that the Irish voting electorate is made up of adults capable of making their own decisions, including with regard to assessing the quality of the advice they are given. Any other approach is simply not tenable.

There is a helpful canned response for this kind of neoliberal sleight of hand.

APPARENTLY someone, perhaps John Kenneth Galbraith, once said that the way to debate Milton Friedman was to wait for him to say “Let us assume…” and then immediately interrupt and say “No, let’s not assume that.”

In that spirit lets not start from the premise that the Irish voting electorate can assess the quality of the advice they are given because its not just unsupported nonsense it is contradicted by the last twenty years of history.

It is not simply that it is hard for the public to evaluate advice on alternative policy options it is that no alternative policies may even be allowed. The choices that voters are offered and make do not happen in a vacuum and these choices are restricted by the informal power of capital, the formal power of the establishment and the undue influence of other nations.

In recent history you could think of the run up to the invasion of Iraq and how the pubic in several countries were incited to bloodthirstiness by dishonest political elites and a compliant media or you could think of how working class Britain voted for powerlessness under Thatcherism, egged on by the Murdoch press. The public in Ireland never explicitly chose neoliberalism, light touch financial regulation or European Union monetarism, nor were they ever told there was even a choice.

Even when late capitalist democracies do offer voters a choice it is hard for people to pick the right advice when the structures of power mean that only one set of advisers can be clearly heard. As Iraq proved for our relatives in the UK (second cousins, twice removed) even if the people do hear and heed the right advice it may make no difference if the advice political representatives are receiving is different, elections are distant and accountability is a remote threat.

It has been acknowledged a few times here but the European component of the global financial crisis has not just shown the bad design of EMU and the malevolent uselessness of many European Union institutions it has also illustrated the terrible weakness of modern democracy in the EU.

Sheep must be led—-Vote Michael Lowry number 1—Vote Mr Haughey number 1—-sheep must be led.
War is Peace–Freedom is Slavery –Ignorance is Strength
In matters of church or state,the man with the money carries the weight.
Whoever tells the biggest lies always gets elected;


@ veronica

I agree that voters shouldn’t be expected to be versed in EU procedures and treaties.

The aspiration in a representative democracy is that people would elect competent representatives reflecting the range of public opinion that would result in a government which would make decisions not for powerful groups but in the public interest.

There is of course seldom a perfect balance between self interest and what is perceived to be the common interest.

While there is a “democratic deficit” in Brussels, there is also one in Dublin.
In 2011, Enda Kenny said in his national TV address: “You are not responsible for this crisis.”

While there are many targets to blame at an international and local level, it’s wrong in a democracy to absolve for example those who voted for parties who governed as promised in say 1977 and 1997 as if the business cycle could be abolished by cutting taxes.

One of the problems with the Irish system is that dissent from conventional wisdom can be so easily squashed.

Many TDs do not appear to be interested in policy (note the eagerness of committees to respond to a scandal du jour compared with policy issues); public officials sing the government line and a small national media selects the topics for public debate.

It should be strange for example that after a momentous property crash and a 15-year long planning tribunal, that the corrupt land-zoning/ massive stealth tax system remains intact.

In 2006, a global real estate agency compared the cost of a single-family dwelling, 2,200 square feet (approximately) — four bedrooms, two and one-half baths, family room (or equivalent) and two-car garage in neighborhoods/zip codes within a market that is typical for corporate middle-management level families – – in 384 markets including 42 outside North America. It found that for the cost in Dublin of $1.4m (€1.1m), you could buy nine similar houses in Houston, Texas, three in Amsterdam, two in Sydney and almost two in Tokyo.

It could never happen again!

To blame politicians for failures would ignore a wider context.

Before self-rule, we had run big US cities such as New York and Boston and in ‘The Americans: The Democratic Experience’ (1973), Daniel Boorstin wrote:

 “Although the Irish were quickly and spectacularly successful in politics…they did not prove masters of the arts of good government.”

Boorstin said in the third of his American history trilogy, that the Irish politician made himself into “a social service or more precisely a personal service agency.”

@ MH

Not forgetting the judiciary where the tale, at least until the recent judgement in the Pringle Case, has been equally sorry.


P.S. The Irish court system links do not seem to be working at present.

For the definitive commentary on the saga of Irish judicial activism – up until 2009 at least – cf. this contribution by Gavin Barrett.


This is one area in which Ireland can be placed, with Germany, oddly enough, in a class of its own.

@ MH

I am reminded also of this contribution by Dr. John O’Brennan of NUI Maynooth.


It identifies a real problem – that of popular disenchantment at the level of both parliaments and electorates – but does not, in my opinion, advance a credible solution because such has to be found at a concerted EU level. The outcome of the forthcoming EP elections may be to ensure a speedier approach to finding such a solution. Schaeuble, for Germany, is clearly anticipating in public statements such a development.

It may be noted that the Supreme Court saw no objection in the context of the Pringle case to ratification of another treaty, that on ESM, by the Dáil in the normal way, a decision that was overshadowed by its related watershed decision to refer aspects of the case to the ECJ.

In short, a mixed outcome, especially in the light of the wording adopted by way of referendum in respect of the fiscal treaty, of further judicial confusion at home but welcome clarity at the level of the EU through the ECJ.

This excellent note by the services of the European Parliament makes sense of a thoroughly confusing situation.


@Tim O’H

“The electoate knew the names of Colm McCarthy, John Fitzgerald and some ‘chief economists’ from the financial sector. All these said said everything was okay. Only the most contrary of voters would go against the views of these big names.”

You are being a little unfair to Colm and one or two others. However I think you are right about the media coverage and presentation of those views that were available. The problem may be the very concept that at any given time there are “big names” and “nobodies”.

I think you will find Colm was packaged for the purposes of the Euro as one of the Nobodies – so you assumed he must have been all for it.

Many highly competent financial and economic advisers were warning against, but there was no appetite either among the press or, frankly, the general public to here it.

To get that advice people would have had to either pay for it, or at least read the FT, where it was free once apart from the cover price.


Thanks for the links, pretty interesting, especially the Quandt paper.

And I think you are actually asking very important, more fundamental questions, about people’s ability to judge and how public opinion and decisions are formed.

To make that even more general and brutal, let me start with the contrast of my home turf, physics. For quite some time we replaced theology as the truth department.

Most people know that they know very little about it, and defer to (my) authority. A good thing. LOL.

Until one realizes, that a lot of people with PhD and Prof titles actually know surprisingly little of the “simple physics” in daily life, like vapor pressure / humidity, or mechanical stability of constructions.

In contrast, nearly everybody feels knowledgeable in politics, economics, and the likes. People also know that for everything there are various contradicting “expert” opinions. De Grauwe vs. the Bundesbank for example : – )

With the internet / Google it has become tremendously easier, to check who has said what when exactly. People don’t have to rely anymore on Government TV and their local newspaper, but can check for themselves, to find other standpoints, which fit their individual gusto.

Somewhat comparable to the invention of the printing press and bibles in the local language, people can and do question authority in basically everything now, medical, media, politicians, etc.

This is not entirely a good thing, because the vast majority of people vastly overestimate their own knowledge, and capabilities to retrieve information and analyze it properly.

I had quite a number of eye openers in the last few years, when I challenged statements more assertively.

To just name a few examples, where the simple, compact issue raised,(not like complex economics issues) and a solid answer can be given on half a page, with a few links, simple linear equations or statistics:

My favourite is the light bulb conspiracy,

some ARTE TV “Documentation” claimed with huge response, that people living in some India province lived a healthy live, no overweight, no cancer, somebody I met was quite enthuastic about.
I voiced doubts, and sent him later a half page email, that on 2000 $ per year and mostly manual labor, none of us would get fat, and if you don’t live long enough to develop cancer, the official rates are respectively lower, links with india government statistics, age/cancer rates. With 20 minutes of googling, I completely destroyed the whole “documentation” and his own much more elaborate own theorizing.

I could give at least half a dozen similar examples.

Most people really hate such a thing, because it fundamentally attacks their own positive self-image of competent, knowledgeable, etc., It strikes fear into their heart, to realize that their opinions are based on shallow propaganda, somebody else can so easily destroy. So, please be careful doing this yourself with people you like.

Truth is, that the vast majority of voters, journalists, and politicians do not really understand what they are really signing with such treaties. And that is no different for Germany, to avoid any misunderstandings, hubris.

We wrote our way of life with “price stability” into the Euro treaties, but not the English “sticky wages” preference for inflation/devaluation.

Who told in clear words the Irish voters, that this is a kind of regime change, where adjustments have to be made from then on by fiscal policy, taxes, wage and pension adjustments?

That is not new under the Sun , it goes back to the 1880ties, or earlier, when the first Latin monetary union was created, Goschen conversion.

Similar to the contrast of Anglo-case-law focus to continental codex-law (Codex Napoleon, German BGB)


I fail to get your “Ireland can be placed, with Germany, oddly enough, in a class of its own”. Maybe you elaborate?

@ francis

I was referring to “judicial activism” by the constitutional courts in both countries (cf. footnote 17 at page 5 of the paper by Gavin Barrett) i.e. a comparison can be made between (i) the alacrity – and ease – with which complaints can be placed before them (ii) their failure to give adequate weight to the various roles of the institutions in the system of checks and balances (which is a characteristic of all true democracies) and (iii) the impact, mostly negative, which this has on the democratic process.

In Ireland’s case, for example, on the last point, the politicians continued to run scared by announcing a referendum on the Fiscal Treaty before anyone could go before the Supreme Court to demand one. This resulted in the following additional wording being inserted – by an over 60% majority – in the section of our Constitution dealing with international relations, a section which, at this stage, is beginning to look like a ramshackle much-repaired building in serious danger of collapse.

The following subsection 10 was appended to Article 29, section 4 of the constitution:

“10° The State may ratify the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union done at Brussels on the 2nd day of March 2012. No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State that are necessitated by the obligations of the State under that Treaty or prevents laws enacted, acts done or measures adopted by bodies competent under that Treaty from having the force of law in the State.”

The possible implications of this wording, I imagine, would make the hair stand on the heads of most constitutional lawyers in other countries – and maybe even in Ireland – as it simply copies the wording in the Constitution that applies to our overall membership of the EU.

@ francis

It was the same answer, and from the same vested interests in Germany, at the time of the creation of the European Coal and Steel Community. And the US then played, and will probably also now play, the pivotal role in bringing about a change of mind.

@ francis

Not to drift too far away from the general “euro and its troubles” theme, you will have seen this Spiegel report on the increasing disenchantment with the decisions of the German constitutional court.


The article is also revelatory of a fact that is little discussed i.e. that appointments to the court are decided by the two major political groupings in Germany.


why do you think we would discuss our energy strategy with people, who continously think they could use this for control OVER us?

North stream was built around Poland.

With your animalic english imperialist instincts, ….

did you ever check, whether you are related to Ambrose Evans-Pritchard?


@ Michael Hennigan,

Just to return some civility to this thread, or perhaps leave myself open to having my own head kicked in…

We don’t have a democratic deficit in Ireland. Despite its bloodstained beginnings, what has most characterised ‘Irish democracy’ is its stability throughout the twentieth century and despite partition, and the legacy of violence which that inevitably ensured. But then again the template for our society, in just about every aspect, relied on its pre-independence mould – civil service, local government, Westminster parliamentary model, media culture, economic liberalism all bear a British imprint. Even PRSTV was approved by the British. Sinn Fein were happy enough with its introduction at the time as well because of the advantage it could confer on small parties.

The nationalist consensus was really only broken with the formation of the PDs, who went on to ‘break the mould’ in a way they themselves had, oddly enough, anticipated from the outset, by establishing coalition governments as the norm in Ireland and indeed, the most attractive possibility from the electorate’s point of view, from 1989 onwards. It was no longer a choice of FF v. ‘the rest’; any variety of combinations were possible from that point.

Our democratic deficit does not arise at the ‘point of sale’ in terms of electoral choice, it’s rather experienced in terms of executive dominance of parliament and excessive administrative centralisation, both of which are ingrained in our elite political culture which, regrettably, is change-averse. For example, the only proposals emanating from the current administration have been designed to tighten the iron grip of the executive rather than loosen it and, in my view, were rightly rejected by the electorate in two referendums. (Unfortunately, the Fiscal Treaty, and its now manifestly daft provisions, made in through on the basis of the ‘fear’ card).

Fast forward to the 1990s and the scale of change which our government, like all other EU small states, had to deal with was quite spectacular – accelerating economic globalisation, aftermath of the fall of communism, unprecedented EU expansion, the Single Market, the euro and ambitious political integration project of the EU, plus the possibility, finally, of settling the ‘old quarrel’ with the neighbour next door. Did our political class handle those challenges well? Bit like the curate’s egg, it was good in spots; wholly rancid performance in others.

We can only elect what’s put in front of us. Personally, I reckon the electorate is wiser than they’re given credit for. One interesting statistic from the 2011 poll: the three main parties went into that election with 113 seats and came out of it with 113 seats, just different distributions. Right now, when I hear people talking about wishing the Troika might come back or the airline fella should be running the country – a wish for ‘strong man’ politics – I get worried. We may be facing into a real democratic crisis. Wonder how we will deal with that?

@ Gregory Connor

Great thread. Irisheconomy has sprung to life again.

Oscar Wilde has plenty to teach us in this matter. When looking back to the actions of others we musn’t make the mistake of Gwendolen’s confirmation bias and her willingness to interpret every action as favourable to what she wants: “They have been eating muffins. That looks like repentance.”

In the matter of the Regulator surely the perfect quote is: “Ignorance is like a delicate exotic fruit; touch it and the bloom is gone.”

Nice quote from Lincoln re those who turn their ar$ses to the fire.
A counter point certainly would be that, in this crisis, the success of the financial sector in burning every ar$e, bar their own, in the fire, seems to have turned democracy on its head


Iceland must have had the same problems of EZ membership and Irish regulators…

Parochial middle brow centre-right self flagellation is the height of the analysis of the European Component of the GFC in Ireland, isn’t it?

If only there hadn’t been the 1916 Rising the New Redmondite party (elected continuously in FPTP elections since independence was granted in 1971) would have prevented Ireland from destabilizing the world economy….


Right now, when I hear people talking about wishing the Troika might come back or the airline fella should be running the country – a wish for ’strong man’ politics – I get worried. We may be facing into a real democratic crisis. Wonder how we will deal with that?

Gregory has provoked a great thread and your contributions have been particularly good.

One thing that still pains me is that no credit is given to the majority of the population who opposed previous dangerous and badly thought out Euro treaties only to have the vote thrown back in their face by a contemptuous Europhile establishment (media included). Of course the establishment turned out to have no idea what they were getting us into and no way to get out. The Fiscal Treaty was the saddest episode for Irish democracy since McDowell’s racist referendum.

@ Shay

I would have to disagree with you on your objection to second polls on EU treaty changes or indeed any other article of our basic law. One of the things we lack is a threshold for the validation of referendum polls. In many other countries that make decisions by referendum unless the turnout reaches a certain level, or the vote is lost or carried by a defined quota of the overall electorate, the result is deemed invalid. Here, as I understand it, if just ten people turned out to vote and six voted ‘yes’ the referendum would be carried. The analysis by Richard Sinnott, to which I previously posted a link, has an interesting graph on the levels of abstention in EU referendums. In the Maastricht Treaty the abstention rate was 43% of the electorate; in Nice 1 it was 66%. This was reversed in Nice 2.

Applied to social issues, we would still not have divorce in Ireland if the 1980s referendum had been taken as the ‘final word’ of the people. As for the 1983 poll on the so-called ‘right to life’ amendment, it is now abundantly clear that such an absolutist prohibition should never have been included in any basic law and that the best thing, all round, would be to hold a referendum to remove it and deal with the issue where it should have been dealt with in the first place, in parliament.

There’s much discussion in political science literature about the reasons why Irish governments resort to referendums, not least of which may be to avoid their own responsibility to legislate on contentious political matters that might cost them electorally. A further difficulty is that referendum arguments are reductionist and of the ‘sky will fall in’ variety: if you don’t vote ‘yes’ you’ll bring the house down around our ears or ditto if you don’t vote ‘no’. When it comes to wicked problems, referendums are not appropriate to dealing with them effectively.

As for the EU, if we left it in the morning, most people probably wouldn’t shed any tears for it. But Ireland, for trading purposes, would still be bound by EU law except that we’d have no direct say in its composition. But I’d go part of the way with you in agreeing that the way in which our EU relationship is managed politically, from appointments to scrutiny of proposed legislation to Treaty referendums, rump to stump, is an absolute disgrace.

And now I’d best get back to the work that got me up so early…Thanks also for the compliment on my contributions to this thread. Cheered me up no end!

@ JR

Finance is not like engineering. Structures collapse and nobody bothers investigating why. You have to move on. Insight is less important than momentum. Engineers are paid much less too.

@ veronica

One could say, tongue in cheek, that we have a surfeit of democracy in Ireland in that we have drifted into a system of direct democracy, on the basis of not one but three flawed Supreme Court decisions, without any real thought or regard to the consequences. The detailed paper by Gavin Barrett gives anyone who cares to read it chapter and verse on how this came about and has had its culmination in the wording now sitting in the Constitution on the Fiscal Treaty. There is, however, little need to worry about the wording as it is based on an erroneous reading – whether accidental or deliberate – of what the treaty contains and will remain a dead letter. An opportunity to remove it may present itself in the coming years as it is clear that the EU will embark on another round of treaty negotiation and this time not largely to help Merkel over her own problems with her constitutional court but to address the more serious institutional problems confronting the EU.

I would not be worried about democracy in Ireland one way or the other as the attachment of the people to it, with all its imperfections, is IMHO total, including their insistence on continuing to count every vote laboriously by hand; no problem of trust will arise there!

In the meantime, our big neighbour will be flailing about in a “will I stay or will I go?” bout of the near existentialist angst that has characterised her EU membership from the start, a situation brought to the boil by the return of easily recognisable historical fissures on the Continent.

The body politic in Ireland will continue in a state of blissful insular self-preoccupation until something totally predictable, but for it unexpected, forces it once again to turn its attention outwards.

Democracy is a dead business in Ireland. Whoever attends the most funerals gets elected.


I don’t envy the government who will ask the electorate to vote in any new EU Treaty. They’ll have their work cut out for them and will be drowned out by the howls of derision.

As for the UK, who’s working on the implications for Ireland, particularly economic, of the package likely to be sought from the EU by the UK, and what our own best options are likely to be in the event of a ‘we’re outta here’ vote?

@ veronica

It depends on the extent of the changes. There will be clear pressure from all countries – including the UK – to limit them to those that can be dealt with by the so-called ‘Simplified revision procedure’ (Article 47.6 TEU) where the decision can be taken effectively by the European Council acting unanimously, but the decision to be “approved by the Member States in accordance with their respective constitutional requirements”. For reasons that are incomprehensible outside the ill-informed circle of debate in Ireland, this is taken to require Ireland to – alone – go to the people for approval or, rather, successive governments have taken the view that it would be less risky to do so than have the Supreme Court load some other requirement on them.

However, as I have pointed out above, the decisions of the Supreme Court in the Pringle case have been eminently sensible and maybe whatever government is in power will finally show some backbone and lead the country rather than continue running after where they imagine a majority wishes to go; and then asking it to change its mind when they both get it wrong.

As to the UK departing the EU, this seems (a) unlikely and (b) almost impossible to plan for in terms of its consequences for Ireland until there is some idea of the likely terms governing the exit. This is a long time away.

Incidentally, I do not think that the UK has any real leverage other than in the minds of an agitated Conservative party leadership that has given too many hostages to fortune and which can now neither retreat nor go forward. For the moment, neither of the two other major parties is in this situation. Of course, UKIP may make a major breakthrough in the EP next month and developments in the Ukraine may make the overall situation even more fraught.


I would have to disagree with you on your objection to second polls on EU treaty changes or indeed any other article of our basic law.

You have me wrong there (constitional neo-originalism would be a dificult position to defend), my objection was to the speed with which the referenda were held again. There were ten years between the two divorce referenda and less than 18 months between the repeats of the Nice and Lisbon referenda.

More generally the two most significant arguments used for dismissing constitional referenda as crude unrepresentative tools are equally applicable to elections (low turn out, complexity of issues) and arguments about the undesirability of referenda lead naturally into debates about the desirability of popular democracy.

I mean given how confusing the issues are and how prone the population are to passions should we not have a more stable and manageable system where authority resides with serious, well educated, hopefully well off people , people who would instintcively know the right thing to do? Barristers and solictors would be excellent candidates. Of course we would still have elections where you could chose the “representative” whose character you trusted most, just to make people feel involved.

This might seem like a caricature of the position against referenda but in conversation it seems to be that many liberal souls sensitive about the crudeness of referenda are not particularly comfortable with the representaive or the democratic part of representative democracy either (in well off liberal circles populism is daming criticism and elitism is aspirational). The trend towards techocratic solutions in the EU is a clear result of the desire in the European establishment to avoid messy public involvement with important decisions and necessary reforms.

Incidentally I would have been on the loosing side of the eighties morality referenda but we took our hits and came back (and in the case of abortion are still coming back), the kind of religious lobbying that made those referenda so mean spirited has thankfuly waned and I do not think they are good evidence for the dangers of directly involving the people in the legislative process.

Deregulation made us rich in the 1990s, so of course people supported it. The 1970s and early 80s were heavily regulated, and not a very good time for our economy. Many want us to go back to the State intervention and high taxation of the early 1980s, which was obviously disastrous, like a much-worse version of the last five years when emigration seemed unendable. Of course, what ended it was deregulation and a reduction in state intervention in the economy. Such are the inconvenient truths of the Irish economy for left-wing economic commentators.


Of course, what ended it was deregulation and a reduction in state intervention in the economy.

Perhaps you might list out a few (let’s say four) of the significant instances of deregulation and “reduction in state intervention” that were responsible for the Irish economy emerging from the doldrums in the early nineties? I would be fascinated to read them.

“I don’t envy the government who will ask the electorate to vote in any new EU Treaty. They’ll have their work cut out for them and will be drowned out by the howls of derision.”

…we can only hope.

@ Joseph Ryan

I would not disagree cf. the thread just opened on the book “The Power of Inaction; Bank bailouts in comparison”.

@ veronica et al

The Supreme Court site is back up. Herewith the link to the Pringle judgement, including the opinion of the Chief Justice. Those of the other learned judges are also available. Only Judge Hardiman dissented.


It is heavy going. The summary prepared by the EP – see link above – gets it in a nutshell.

@ veronica

The nutshell!

“2.8. Intertwined ratifications

During the revision of the ESM treaty a recital was inserted stating: “It is acknowledged and agreed that the granting of financial assistance in the framework of new programmes under the ESM will be conditional, as of 1st March 2013, on the ratification of the Treaty on Stability, Coordination and governance by the ESM Member concerned”. Therefore several countries intended to ratify both treaties as well as the amendment of the article 136 TFEU at the same time, such as Greece already did on 19th April 2012, Germany, Italy). So far, where the country ratifies both ESM and amendment of article 136, this was often done simultaneously (France, Greece). Some other countries, due to the obvious element of conditionality enshrined in the ESM treaty, indicated their preference to ratify the TSCG first. The Irish parliament voted on the ESM treaty and on article 136(3) only after the 31st May referendum on the TSCG.”

As a postscript to this thread, the opening shots in the debate for the elections to the European Parliament as dealt with by Sean O’Rourke today will be of interest. [Click on “EU Apathy”].


At the very end, fifteen minutes in, O’Rourke takes it as read that there will have to be a referendum for any new treaty that may emerge and asks the question as to whether this might not be the moment at which Ireland would have “most leverage” to get a deal on the outstanding bank debt issue; to which Lucinda Creighton replies ‘Yes’.

In other words, irrespective, it seems, as to what the contents of the treaty will require, Ireland will once again have the opportunity to throw its toys out of the pram and will probably have to be coaxed to put them back in. It is a pattern well recognised in Europe at this stage. There are many words to describe the approach, but dignified is not one of them.

It may also be noted that it is incorrect to say, as one contributor does. that the Parliament now controls the agriculture budget and its agriculture committee will exceed in importance national ministers for agriculture. It has gained a certain degree of added power to the extent that it now decides in co-decision with the Council (of Ministers) where previously it was only consulted. That is an important change but the impact of it should not be exaggerated.

Equally, quoting the statistic that 80% of legislation approved by the Dáil is now decided by the EP is rather meaningless as what matters is the significance of the individual measures. As countries remain responsible for all spending in relation all major areas of government expenditure – health, social protection, education, justice, security – with the EU responsible for only about 2% of official spending overall, there has been no significant change with regard to the powers of national parliaments except, paradoxically, in the financial sector where, faced with the seriousness of the crisis all countries have accepted that action has to be by way of the legislative instrument of Regulations; which are directly applicable and do not require any action by national parliaments.


As a postscript to your postscript, I hate to tell you this but Ms. Creighton’s ‘Yes’ signifies the thinking of her esrtwhile colleagues in government and their coalition partners.

The ‘deal on the debt issue’ may have slipped below the radar of public opinion temporarily, but both government parties are aware of its importance to their store of political capital in the next election. It is the major undelivered promise; a commitment by Merkel et al written ‘in stone’ after that June EU Summit; the quid pro quo ‘jam-tomorrow’ frame peddled to the electorate, part threat/part promise, to incentivise approval of the Fiscal Treaty. Reputation, credibility and legacy ( esp. Michael Noonan’s) all hinge on its realisation. Failure to achieve a debt deal opens up the appalling vista of being forcibly reminded of their own declared priority mission when they first took office – by the media, the opposition, and just about everyone else who wants to draw fire in the heat of a general election campaign. Failure costs votes. Success – however limited it may be in real terms – saves votes that are currently straying elsewhere, looking for a new political home. However undignified the process may be, it’s the result that matters. But that’s politics for you.


Yes, not “dignified.” But nothing could be more dignified than having the people keep voting until they vote the right way. Or taking advantage of their abject terror to push through (via implicit threats) an unrelated and, indeed, counterproductive “fiscal treaty.”

Yes, all that was highly dignified and not at all reminiscent of, say, Putin’s dealings with Ukraine.

@ veronica

No need to tell me! What struck me, however, at this early stage, is the sheer crassness of the underlying thinking, and the question, which, with all due respect to Sean O’Rourke, shows that the Irish media are also incapable of seeing things in a wider context.

It might help them to do so, for example, by considering the legislation sitting in the UK statute book on the circumstances that would – or not – give rise to a mandatory referendum in the UK.


The current UK government, with the Lib Dems in reluctant and almost certainly electorally disastrous tow, has boxed itself into a corner on EU issues, the outcome of future treaty negotiations in all likelihood being that no referendum will be required; except, of course, in Ireland.

@ docm

Many thanks for the link to the ‘euractiv’ site. No wish to appear cynical, but is Junker strategically fishing for votes here?

My (developing) expertise, if I could in justice even call it that, is in the area of political communication. So I could give you a very theoretical response as to what the RTE journalist is doing, and why, and send anyone else reading this stuff off into a prolonged snooze that would put Rip Van Winkle to shame. So I’ll restrain myself. Suffice to say that no-one would thank Mr. O’Rourke for framing the question to Ms.Creighton any other way. Our transnational politics are ultimately bounded by our territorial preoccupations. And so it shall remain…

@Veronica, docm

I think it is possible that the “Don’t tangle with me” declaration of victory in 2012 by Enda was boastfulness which followed him and his team actually thinking they had obtained a commitment to write-off significant amounts of legacy banking debt. It was late in the early morning.

The coverage since has been almost as if they got the relevant journos in for a couple of pints and explained: “look lads, we hadn’t really looked over the actual text at the time, and, well, y’know, we might have overreacted a bit like you do sometimes after a late night, like, and y’know there’s not much point in going on about this because, as you know, its all up to Angela like, and the tangling thing probably wasn’t a great idea with hindsight (though nobody could have known that at the time, like) so its probably not going to do us any favours to keep dredging that up, and what with the economy taking off like a rocket now its probably a decent idea to k’nown, just keep our heads down on this for a while, y’know like..”.

@ veronica

“Our transnational politics are ultimately bounded by our territorial preoccupations. And so it shall remain…”

This is a comment with which I both agree and disagree, my disagreement being with your assumption that nothing can be done about it. I think grumpy has probably seized the sequence of events very well. But the fact that our corps of media political observers and commentators are as mediocre and provincial as the politicians they are covering is not an unavoidable fate. The new social media are what are most likely to end it.

By the way, I am also not sure that it has much to do with geography, rather with history. Hungary under its present leader – Victor Orbán – is a good example in the sense that it remains to be seen how membership of the EU shapes the future trajectory of the country.

In the unlikely event that Scotland votes for independence, it will be confronted with the same challenges i.e. how to behave with the needed acceptance that membership of a unique supranational organisation brings with it responsibilities as well as entitlements. It cannot be boiled down to the vulgar question; where is the money?

Brian O’ Hanlon Says:
April 21st, 2011 at 9:49 pm
John Corcoran says,

It would have been impossible to have had a commercial property bubble and crash with normal eurozone lease law. The Society of Chartered Surveyors lobbied for these toxic leases and were the mouthpiece for the landlords/speculators and their valuations were the greatest work of fiction in world property history. Please remember the banks lent tens of billions against these valuations and these toxic commercial leases.

Good paragraph. It more more less sums up the truth about Ireland. I agree with the logic as presented. What was very, very interesting to me, when my NAMA developer boss’s business crashed in late 2008, how the Chartered Surveyors all seemed to hold their jobs, as every other professional was fired abruptly. It was kind of like, we must send the kids to bed now. This is adult’s stuff. It really became clear to myself, of where the power lies in the Irish property scene. It is a lesson that I encountered the hard way, a lesson I will not forget tomorrow or the day after. BOH.

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