Did joining the Euro cause the crash?

We appear to be seeing something of a pro-Lisbon propaganda campaign being launched. Today's IT reports that David O'Suillivan, the EU Commission's Director General For Trade made the bizarre claim that:

IF THIS country had remained outside the euro zone, the Irish punt would have “crashed through the floor” creating a far worse crisis than the present one, the European Commission’s top trade official has said

...

“The recent financial crisis and the recession it has provoked only further reinforce this argument. Without membership of the euro zone, the former Irish punt would have crashed through the floor, creating a major crisis for the economy well beyond this crisis we are currently experiencing.”

There's a slight problem with this reasoning - If we hadn't been in the Euro the retail banks wouldn't have been able to get their hands on Other Countries Euros to back their insane hundred Billion Euro lending spree. The recent property bubble couldn't have happened. In fact if we still had the Punt it might well have dropped like a stone, but it would have restored our competitiveness as it did so...

Defending Sean Russell...

It never ceases to amaze me how people are still willing to try and defend the 'Useful Idiot' Sean Russell. The latest comes from a Mr Tom Cooper:

Madam, – The latest attack on the recently re-erected statue of the late Irish republican leader Seán Russell in Fairview Park is a most sinister development. ( “Vandals deface memorial of republican leader Seán Russell”, July 9th). Graffiti proclaiming that Russell was “Nazi scum” which was sprayed on the statue, is just as inaccurate as the reported date of his death....


I've sent this to the Irish Times:

Tom Cooper is no different than other defenders of Sean Russell's reputation in that he hides behind patriotism instead of addressing the facts. The fact is that Russell was not an elected leader and had no authority to represent Ireland, yet traveled to Nazi Germany and on his own initiative invited a violant fascist state that had proven contempt for the rights of small nations to militarily intervene in Irish affairs.

In order for Russell's plan come to fruition he would have needed more help from the Nazis than a couple of boxes of rifles. Any aid he received from them would come with enough strings attached to ensure that he would be their puppet should his tiny group somehow manage to drive the British out of the North and overthrow the Irish Free State.

Sean Russell was a man who despised the Irish Free State and who actively conspired against it. It's very easy to underestimate the threat he posed to Irish society because nothing ever came of it, but then nobody in Norway took Vidkun Quisling and his two thousand followers seriously until they received the same kind of 'help' from outsiders that Russell was looking for.

Attention Dishonest Scrap Merchants: Advice On How To Steal The Sean Russell Statue

Just how stupid do the National Graves Association think people are?

Not only have they insulted and offended pretty much all of Europe by re-instating the unwanted statue of the Nazis's 'Useful Idiot' Sean Russell in Fairview Park but they expect us to believe the following:

• It's made of Solid Bronze (possible, but would they have the money?)
• It has motion sensors that will set of an alarm if it's moved (unlikely - no wiring)
• It's head has a GPS tracking device so it can be recovered if stolen (utterly ludicrous)

So if you happen to be a financially distressed scrap metal dealer who could do with a large chunk of bronze to melt down make sure you wrap it in Aluminum foil before you nick it. It should weigh about 8.5 times the weight of a person the same height of the statue, so you'll need a crane that can comfortably lift 850kg.

It's very unlikely there is a motion sensor as they'd have had to dig up half of Fairview park to run the electrical lines.

As for the GPS sensor - apparently it's one that works in Solid Bronze. And there's some guy looking at a screen right now to make sure the statue hasn't moved. Yeah, Right!....

If you do happen to find yourself stopped by the Guards while in possession of this statue say that you found it in the park and you were taking it to Dublin Corporation's lost property section. Given that the statue is owned by the National Graves Association but has been carelessly left in a public park handing it in to Lost Property is a perfectly reasonable excuse.

Blasphemous Libel

I sent a letter to the IT about this but it didn't get published:

Madam,

Fianna Fail has many of the attributes of a religion - irrational faith in its leaders, delusions of infallibility, a profound sense of entitlement, eccentric financial arrangements, unusual relationships with certain groups in society and a view of the past which is inconsistent with the historical record. Will they come 'out' as a religion when the libel proposal is made law?

David Rolfe
Leinster Road
Rathmines, Dublin 6

Lenihan rattled by McWilliams...

In today's Indo our Minister for Finance attempts to reply to David McWilliam's opinion piece from yesterday. It's fairly clear that Lenihan doesn't want to hear any criticism, constructive or otherwise of his (mis)handling of the banks:

Informed and reasoned contributions to the debate about all the options available to Government are very welcome. Unfortunately, yesterday's contribution from Mr McWilliams fails on both scores.

He then totally fails to address David's point which is that NAMA and a blanket guarantee of bank liabilities can't co-exist without creating a huge moral hazard - If NAMA makes their previous sins go away and the guarantee gives them the financial credability of Ireland when borrowing money what incentive is there for them to act rationally? Bear in mind that nobody us suggesting that the protection for retail investors be dropped - just that once NAMA is up and running the bank should be on a viable footing and aren't supposed to need government backing.

I think that given the circumstances Mr. McWilliams has been pretty mild. Sooner or later Lenihan's going to have to answer questions like:

1. Why hasn't the managment of the banks been cleared out?
2. Why did the government voluntarily take non-voting preference equity which leaves them with *no authority* at the boardroom table?
3. How will NAMA value assets?
4. Why did he hack at the income of the middle class instead of confronting the unsustainable costs of the public sector?
5. Why isn't the government forcing the ESB and Bord Gais to reduce prices? Doing so would have a bigger practical effect than restoring the Xmas bonus.

Indo's advice to B of I stockholders: Put more money in!

"Ordinary shareholders in Bank of Ireland will be happy to inject €1.5bn in fresh capital, predicts Paddy Stronge"

In last Sunday's Independent there was a wonderfully reassuring piece from banker Paddy Stronge, in which he explains that if you're one of the lucky investors in Bank of Ireland who've seen 90% of their value erased all will end up well if you put more money in. Seriously!

Apparently B of I can't sell its bad loans to Nama at a discount from what the bank thinks they are worth:

It would be unwise to rely on Peter Bacon to determine the appropriate valuations as he has not reviewed the individual loans to be transferred.

The bank's own detailed assessments, independently confirmed, are likely to be much more accurate.

However, if Nama were to somehow insist on unreasonable write downs of the loans, the bank's directors would be in an untenable position. They have a fiduciary duty to look after the interests of their shareholders.

Which means that Nama is just going to have to buy the loans at B of I's valuation, because otherwise B of I will, will, will .. do something. I wonder if they'll come with the rose-tinted crystal ball that was used to value them?

At this point, the bank will be in a strong position to raise new capital from its existing shareholders. The bank will need to raise €1.5bn from the existing shareholders before December 31, 2009, to ensure that the Government cannot exercise its option, under the recapitalisation scheme, to purchase 10 per cent of the ordinary shares of the bank at 20c a share.

The take-up by the Government of Bank of Ireland shares at such a low price would be a disastrous permanent dilution to be borne by the ordinary shareholders. Many shareholders have already lost more than 90 per cent of the monies they have invested in Bank of Ireland and there would be little chance of significant recovery in the share price if the Government were to exercise this option.

Leading to the logical conclusion that:

At that point, though it may seem difficult for shareholders who have already lost thousands, the final endgame is for them to commit further funds to the bank, thereby avoiding nationalisation and helping the share price to make solid gains in the years ahead.

ESB Creating 'Jobs' with your money

Why are the media so uncritical of the ESB? We pay some of the highest electricity rates in Europe. I now pay three times what I was paying in California, and that was with Enron on the rampage.

Today the Semi State monolith announced it was going to 'create' 3600 jobs. Bear in mind that this will be done with taxpayers money. Why couldn't they just give the money back to their long suffering customers?

In the short term the ESB is doing the government a favor but is also improving its profile with the public, who are starting to ask questions about its punitive charges of over 14c/Kwh.

In the long term the ESB also wins because it makes itself larger, thus justifying its charges and can also hold these jobs hostage when a future government sees sense and tells it to reduce its prices.

If you doubt me on this hear it from Mr McManus himself:

Padraig McManus, ESB chief executive, said job-creation needed to be a priority for companies that had the resources to invest.

I'm sorry - what did he just say? Since when has creating jobs been a priority of private enterprise? Or is this a public enterprise engaged in a turf war?

By engaging in this kind of meddling the ESB is sending a clear signal to enterpeneurs that it will muscle in on them if they set up here. If you were going to invest in alternative energy and had a choice as to where you do business would you do it in a country where semi state agencies like Dublin Bus get away with using their state-backed monopoly status to strangle competitors at birth?