If only optimism was worth money....

You have to admire the Independent's sense of humour. Every now and then the publish articles that are unintentionally hilarious.

Paddy Stronge, who might just have connections with the banking industry, was unleashed on the unsuspecting readers this weekend with the balanced headline:

Our economic 'big freeze' is already starting to thaw

It's line after line of hillarity:

We should realise, however, that we are actually very close to the bottom already, and then things will start to improve. Significant government investment, falling mortgage rates, bank recapitalisations, and a stabilising of house prices, all mean that the big freeze may actually soon begin to thaw.

Really? And there was I thinking the economy was in an uncontrolled graveyard spiral while our leaders dithered. But what does he base this optimism on?

Firstly, the Government is planning to borrow €18bn this year and pump it in to our economy. That is an investment of €4,500 for every person in Ireland. Much of this money has been allocated to improving school buildings and roads, so more people will be employed. Businesses will benefit from higher sales as those working on Government projects are tempted to spend.

The government is actually planning on borrowing 18 billion to fill a huge hole in tax revenues equivalent to around 20% of the budget. Yes, we're spending on existing capital projects but only because we've already signed the contracts. And as for 'tempted to spend'? The last builder I dealt with kept running out of credit for his prepaid phone.....

For the ailing property market, there is also a break in the clouds. According to recent reports, the decline in the asking price for houses in Dalkey, Dublin, is of the order of 40 per cent and real bargains are now available.

Many are beginning to realise that now is the time to plunge into purchases, while house prices and interest rates are at such low levels.

A 'real bargain'? In Dalkey? Given that the historical average house price is 3-4 times income 'real' prices in Dublin would be around €170,000. In Dalkey even now you'd be lucky to get anything for ten times that....

It's at this point we really start to wander off into fantasy land:

Ulster Bank recently announced a scheme where builders will pay up to 15 per cent off new mortgages if house prices are up to 15 per cent lower in five years. Under this arrangement, the purchaser of the property is protected from downward price movements, so the fear of overpaying is eliminated.

The builders will pay you if the price goes down. Ah! right. I can see that working. And will Ulster Bank guarantee that the builder will pay? No, didn't think so....

The stabilising house market will encourage builders to build again to meet demand. They will need employees, and so, the increase in those joining the unemployed should begin to slow down.

Once the building industry shows signs of life, there will be an improving, albeit slight, trend in government finances too.

"stabilising house market"? 1 in 6 houses were built in the last 6 years. One in six houses is vacant - allowing for holiday homes. So 'demand' to build new houses as opposed to shift the current inventory is a long way off, especically as the banks will sooner or later have to unload them for whatever they can get. And we're still clinging to this notion that construction drives the Irish economy.

Good news should also be around the corner for share investors. The recapitalisation of the banks involves the funding of preference share issues and not the issue of new ordinary shares

...which is actually catatophic for the taxpayers. How are the government going to explain to the electorate that we've given what is it 7 billion to the banks in exchange for non voting equity and have no practical power over the banks? And that nobody only planet earth except us was stupid enough to want preference shares in an Irish bank? You do realize they now play "Road To Nowhere" in the lifts at B of I? Actually the lifts may now be silent - Muzak corporation has gone bankrupt.

At some stage, the markets will realise that this course of action will support improving bank share values. Share investors should start to see the beginnings of an upward movement taking place in bank shares. Confidence will then begin to return to the financial markets.

Anybody who invests in bank shares for any reason other than they wanted to gamble wildly and couldn't be arsed to go to Vegas deserves to lose every penny. Sorry.

Dublin Bus: Get people out of their cars? We compete against the Luas!

More Lunacy from Semi State bodies. This time John Lynch, the man in charge of Dublin's bus service, explains why having increased bus services in the past few years in line with the government's stated goal of encouraging public transport over private motor cars they are now cutting services:

These increases were delivered in a more competitive environment, including the introduction of Luas (tram) services, and the growth in private bus operators, and reflect the success of, amongst others, quality bus corridor development, enhanced commuter services in our cities and regions, and the improved quality of our fleet.

However, the economics of public transport are simple – if there are fewer people working, if there are fewer people shopping, if there are fewer people socialising and making discretionary journeys, there is less demand for public transport.

The key phrase, in case you missed it, is "a more competitive environment, including the introduction of Luas services, and the growth in private bus operators". Even though public transport is a classic example of a network effect and the Luas is in fact good for bus services Mr. Lynch appears to think that other providers are the competition he needs to worry about. And there was I thinking that his government mandated role was to compete against the automobile. Surely now, with many families realizing that they can no longer afford several thousand a year to own and operate two cars this is the time to be pushing the benefits of affordable public transport?

And don't think Dublin Bus is a customer focused organization either. For readers who aren't from Dublin and haven't alreadty encountered this Kafkaesque piece of customer service this is the procedure for getting change back when you get a bus ticket:

Q. How do I collect my change?
A. If you pay more than the exact fare on any bus, the driver will issue you with a refund ticket for the overpayment. This passenger refund ticket, together with your travel ticket, must be presented to Dublin Bus headquarters (59 Upper O’Connell Street, Dublin 1, Ireland) in order to claim refund for the overpayment. Note that we cannot refund without both tickets being presented.

The primary purpose of most semi state bodies in Ireland is self-perpetuation with occasional outbursts of empire building, and if the taxpayers somehow see a benefit then good for them.

A great of example of this is that until the music stopped a couple of months ago Irish Rail was promoting a truly lunatic scheme to build an underground railway between the capital's two main train stations. Which is a great idea if you ignore the fact that such a tunnel already exists....

Desperate Times In Dublin...

The Indo, having spent several years acting as a cheerleader for the property industry has now lurched to the opposite extreme and is promoting desperate schemes to restore national prosperity:

ADVICE on how to beat the recession has come from the unlikeliest of places.

The Naked Cowboy, now world famous for playing his guitar in Times Square wearing nothing but his hat, boots and underwear, has jetted in to offer the despondent Irish public advice on how to beat the credit crunch.

While I don't doubt Mr. Burck's entrepreneurial skills I have two major reservations about all this.

Firstly I have to wonder whether naked cowboy busking is what the business school guys call a 'Scalable Business Model' - If all of New York can support one naked singing cowboy could one scratch a living in Ireland? Could we replace the jobs Microsoft provide with people doing this?

The second problem is that the Irish have already gone beyond Mr. Burck's old fashioned play-songs-and-make-money-while-looking-silly business and moved into the high concept and very Celtic Tiger area of Human Statues, in which people stand in Grafton Street and expect to get paid for doing nothing...

Not So Stupid After All...

Imagine, for a moment that you are in a charge of a large public financial institution. Nice isn't it? Corner office, flash car, all the perks and benefits that go with being a "Titan Of Business".

But there's a problem. A fairly serious one. Actually a very serious one. And this problem has friends. And you know that when all your problems come out into the public eye things may get a bit .. legal. Not circuit court legal. We're talking about not having to worry about being housed and fed for a few years because the Minister Of Justice will be looking after that side of your life.

So what do you do? Obviously you hire really good lawyers. But then what? You could become a fugitive but that involves running away and leaving all your nice toys behind.

You could try being a visibly nice guy - visiting orphanages, hugging kittens, that sort of thing. But it's very unlikely to work.

Or you could go on national radio and do an interview in which you announce that Child Benefit and Pensions be means tested, along with pretty much every other program the government has for the less-than-very-rich. Of course doing this will make everyone, and I mean everyone, hate you.

But it will also make it really hard to find an unbiased Jury who are smart enough to understand the kind of financial shenanigans you were involved in...

Maybe that interview wasn't such a dumb thing to do after all...

Passing the Fintan O'Toole Morality Test...

In today's Irish Times Fintan O'Toole argues that George W. Bush isn't the worst president in history because all US presidents are bad and the US is an irredeemably bad society. You really have to wonder about Fintan - does he really believe this stuff? If so there's clearly hope for us all as apparently having an arm's length relationship with reality doesn't prevent you from holding down a job at the IT. I penned the letter below but then decided to put it in my Blog instead...

Madam,

Fintan O'Toole argues that the historical treatment of
Native Americans by the United States was an act of
evil that permanently disqualifies the United States
from any sort of moral leadership. But if we are to
follow his reasoning who can assert such leadership?
Britain, France, Belgium and other former colonial
powers are obviously disqualified. Russia isn't going
to pass the test. Let's not even mention Germany. Or
Austria. Sweden might be peaceful and fun loving now
but applying the O'Toole test we have to count them
out due to a long track record of military adventurism
in neighboring countries. And while we're on
Scandinavia what about those vikings? That means we
can rule out Denmark, Norway and Iceland as well. We
have to pass on Central and South America due to all
those nasty Juntas, which involved the locals
oppressing each other, albeit with outside assistance.
Since South American generals kept their money in
Switzerland we 're going to have to make them
ineligible as well. Wait! The Canadians! No, they club
baby seals to death. How about Africa? Granted the
invention of the Kalashnikov and the demented national
boundaries dreamed up by imperial mapmakers haven't
helped but the place wasn't exactly a garden of eden
before the Europeans showed up, as the slavers could
rely on the Africans to catch other Africans for them.
What about China? No, the Dali Lama just objected.
Wait! Nepal! No, they have some weird stuff with
Maoists and a Royal family. We're going to have to
pass on Japan - all that 'Co-Prosperity Sphere' stuff.
Maybe somewhere in the Middle East? No.  Drew a blank
there. How about the Pacific Islanders? No - 'Not
Being Eaten' may not be an enunciated civil right but
they used to do it and it's probably covered by the UN
somewhere.

Coming back home Ireland doesn't count, because the
Irish spent several hundred years providing the
manpower to expand the British Empire before they got
down to the real business of fighting each other. De
Valera's signing of the condolences book when Hitler
died doesn't really help either.

The bottom line is that no nation passes the "Fintan 
O'Toole Moral Superiority Test" - and if we find one 
that does it's only because they haven't been given 
the opportunity to fail it yet.

A Scene Worthy Of Father Ted

From Yesterday's Irish Times:

First unmanned service station opens

The State’s first card-operated service station for the public has opened on the Aran Islands.

The Minister for Community, Rural and Gaeltacht Affairs Éamon Ó Cuív officially unveiled the facility on Inis Mór, which has one tank earmarked for biofuels.

It is the latest landmark initiative to be rolled out on the off-shore islands after last March’s launch of an electric bus.

Mr Ó Cuív also turned the sod on the island’s €40 million new port project, the single biggest investment in the islands in the country’s history.

“We are all aware of the challenges posed by climate change, and the need to find more sustainable energy sources and practices,” said Mr Ó Cuív.

“My Department has been working closely with Sustainable Energy Ireland over the past year and Terms of Reference have been drafted for a major energy needs survey of the islands, using the Aran Islands as a pilot, aimed eventually at developing strategies that will reduce dependence on fossil fuels.

“The station provides the islanders with diesel at present and I believe that one tank has been earmarked for biofuels, for when they become commercially viable on the island.”

The station will be unmanned and members of the public will be able to refuel and pay at pumps using special cards, details of which have yet to be revealed.

It's hard to find words for the stupidity of all this:

1. There's nothing even remotely exciting about the concept of an unmanned gas station. From my own personal experience both the US and Switzerland have pumps that are credit card operated.
2. Biofuels went from being 'the next big thing' to 'bad news' in the space of a couple of months when the implications of growing fuel instead of food became apparent.
3. But that's OK, because the station doesn't actually have any Biofuels...
4. ..and if it did it couldn't sell them because the inventor of this scheme hasn't got round to doing the 'special cards' and clearly hasn't heard of Visa or Mastercard.

So what actually happened was the Minister traveled to the Aran Islands to bless a tank of Diesel that nobody can buy...

Why are the media ignoring the lack of a plan 'B'?

It's nearly a week after the referendum and it's taken until now for someone, somewhere to state the blindingly obvious - A 'No' vote was always a possible outcome and for the political classes to say they didn't anticipate it is just unacceptable.

I sent a letter to the IT on this but they didn't publish - presumably because watching the pro- and anti- sides beat each other up is much more fun than pointing out that the nations entire political and media elite failed to see this coming....

Madam,

If Mr. Cowen really doesn't know what to do in the face of this entirely predictable crisis he might want to reconsider his career as a political leader. His public pronouncement that he has no idea has made the situation much, much worse by handing the political initiative to a freak show of nineteenth century nationalists, single issue obsessives and other unelectables. If this is the quality of leadership we can expect in the face of a predictable event what can we expect when faced with a real crisis such as a flu pandemic?