Tuesday, March 30, 2010

Day of Doom

Today, 30th March, is (un)officially the day of doom for several reasons.
  • The NAMA transfers are announced
  • Quinn Insurance is put into administration
  • Some eejits in Switzerland finally make black holes


I've written various bits about NAMA in the past and have always believed that it is a rotten deal that does nothing in the long term for the tax payer. Sure, it keeps certain financial institutions running and keeps the wolves from the door of certain developers for a while but how is that really in the state's best interest. Yet again Elaine Byrne says it far better than I can in today's Irish Times where she says we have been sleepwalking into NAMA. A letter in today's paper also sums up a lot about what is wrong with the Irish mentality where thousands march about hurling and hunting and only a few hundred (one of whom was me) marched against NAMA last September.

So today we finally get to see some of the toxic loans transferred into NAMA from the banks. According to reports, after this exercise INBS, EBS and AIB will end up effectively in state ownership and the state will hold a substantial minority shareholding in BOI and we will be left needing to recapitalize them giving an overall cost of about €22,000,000,000. As Elaine Byrne puts it, that is about €6,000 per man woman and child in the country.

I still believe the fundamental flaw was the blanket guarantee of all the bank liabilities as opposed to just depositors. Bond and share holders were taking a punt, were drawing down the big returns and so when it all went wrong should not have recourse to get the state to repay them. A short nationalization of BOI and AIB to keep consumer banking functioning while the rest went to the wall would have been cheaper and quicker. Instead we're now up to our gills in debt for absolutely no gain.


This story is only just breaking, but putting the Quinn group's insurance companies to be put into administration is a major step. With the regulator saying he had very serious concerns about the companies abilities to meet liabilities the sweetheart deals between Anglo and Quinn have come around to bite everyone concerned. One wonders if the large dividends recently paid by the Quinn group will be recalled or if there is in fact any mechanism to do this.


So not actually a bad story - the LHC finally got switched on today and collisions were detected. Unless black holes behave differently than expected, by my being able to type this the universe hasn't been destroyed. Now lets go see if we can find this Higgs Boson and use the knowledge to cure cancer or feed the world or at least come up with a new version of Teflon. Science FTW!

Wednesday, March 24, 2010

All change or no change?

After several weeks of resignations and endless speculation about a mid-term Cabinet shake up, Brian Cowen yesterday announced the lamest reshuffle possible. In a way it should come as no surprise that he followed this course of action - any serious purge of deadwood would have been quickly followed by a heave against him and a May or June general election.

In terms of big cars, the shocker is putting Mary Coughlan in charge of Education. I had previously advocated moving her back to Agriculture or maybe Transport where she could cause minimal harm. But to make her responsible for the state of learning in the country is a very sick joke. The woman who thought Einstein had developed the theory of evolution should be kept as far away from learning as possible.

Mary Hanifan must really be wondering what she did in a previous life to deserve her treatment. To be initially bumped from Education to Social Welfare was bad but she did a good job of defending cut backs in allowances and changes to pensions. But now to be booted into the rejigged Tourism, Culture and Sport is pretty grim. You have to wonder with the reduction in the Dún Laoghaire constituency whether she will just pack up and go back to her teaching post in Sion Hill.

The other outrage, again involving a Mary, sees the Minister for Health stay exactly where she is. Eamon Gilmore took her to task in his speech on the reshuffle in the Dáil and I expect the heat to be turned up over the next few weeks. A motion of no confidence must be on the horizon and it will put some of the independents who are supporting the government in an awkward position if they have to vote in favour of her staying in post.

As for the Greens, their concept of rotating ministries seems to have been shelved with the senior positions staying as is. However, after campaigning hard on reducing the number of junior ministries from 18 to 15 as a token at cost saving, it is quite ironic to see them grab a second half car bumping the number back up to 16. With Ciarán Cuffe taking over Trevor Sargent's old job, Mary White gets herself the Equality and Human Rights role to occupy her time.

Monday, March 22, 2010

Radio Silence

I've been very remiss in the last couple of weeks. The lack of blog posts is almost alarming but after 6 months of a post every couple of days I have hit a wall. It's not like there hasn't been anything going on in the world. Any of the following would be good for a few posts
  • The Cardinal and the Pope's letter
  • Sean FitzPatrick
  • Healthcare Bill in the US
  • Phoenix's alleged spat in DSE
  • Political reform of Dail and Seanad
  • FG's conference and Enda's speech
but I seem to have not been able to get any coherent thoughts down on paper, so to speak. Hopefully normal service will be resumed shortly.

Wednesday, March 10, 2010

Taxi Dispute

As a socialist, I am generally meant to feel solidarity with those who engage in industrial action. This is doubly so for workers who find themselves earning not much above minimum wage at times. So why do I find it so difficult to feel any sort of sympathy for taxi drivers who have started a course of industrial action over the last few days?

The initial occupation of the regulators office, while a nice stunt, had minimal impact on the general population but should have sent a clear message to the regulator and the minister. Escalating the dispute to blocking key junctions and streets at rush hour is purely going to antagonise the key constituency the taxi drivers have to keep onside - the punters who get into their vehicles and hand over cash.

This morning's news that the drivers were not servicing Dublin Airport is another attempt to bite the hand that feeds them. Imagine being a business person from the UK, flying in to Dublin for a meeting and discovering on landing that there is no way you can make the scheduled time. So you phone in to make some apologies and get the next plane back home. How is that going to aid the national recovery?

Yes, there are probably too many drivers. But for years the superly restrictive practices that were employed in the industry were a two finger sign to the public. Now after a badly managed deregulation, there is no shortage of lifts home at 2am. There has to be a middle ground somewhere, but blocking the city centre is just going to loose whatever small amount of goodwill that is left for taxi drivers with the general public.

Sunday, March 7, 2010

Iceland referendum

Yesterday's referendum result from Iceland shows what happens when the citizens of a country have had enough of being bullied by corporate and financial interests. About 93% of the ballots cast voted against the deal to repay UK and Dutch investors in Icesave, the Icelandic online bank. This follows the Icelandic President's refusal to sign into law a repayment deal that would leave the residents of Iceland responsible for paying back Icesave's debts.

About €4Bn was lost by investors from Holland and the UK when the bank went bust towards the end of 2008. The online bank was paying high interest rates on deposits which should have been a big warning sign to investors that the risk involved in depositing money there was high. This is the same situation that has existed with Irish banks for the last few years - they have had to pay high interest rates to attract deposits due to their shaky foundations.

When Icesave went to the wall, the Dutch and UK governments stepped in and repaid the depositors from their respective countries. They then demanded that Iceland repay them and in the worst case of international bullying, the UK invoked various anti-terrorism laws to freeze assets belonging to various Icelandic institutions and people.

To my mind, if you live by the sword then you die by it. Taking the reward of high interest rates should remove any responsibility for states to repay you if the bank folds. However, it appears that Iceland has agreed to pay back this money but just not under the terms of the deal struck by the government. It is now back to the drawing board to see how the €4Bn will be raised. For a country with a population of about 320k that works out at about €12,500 each, roughly in line with what NAMA is going to cost per-capita in Ireland. No sign of a politician calling for a referendum on that any time soon though.

For more column inches than you could possibly read on Iceland have a look at the Irish Economy blog.

Thursday, March 4, 2010

Retirement date blues

Yesterday the Government announced plans to move the state pension age from 65 to 68 over the next 18 years or so. From 2014 you will need to be 66, in 2021 the age will be 67 and only those over 68 will get the state pension form 2028 onwards. The logic behind this is that with increased life expectancy, it is unreasonable for the state to be paying out from age 65. Of course this is not likely to be the last change. There will more than likely be further increases to 69 and 70 any possibly beyond as life expectancy increases.

My main objection to this proposal is that it exacerbates the problem of youth unemployment. People at the top of the system tend to be on the highest wages due to experience, promotion etc. Companies benefit from these people retiring by reducing the wage bill. You replace someone on 100k with a two graduates on 30k and still save money. If senior staff are now required to keep working, fewer places will be available for young people to get a foot on the employment ladder.

From a personal perspective I'm not sure how this affects me. My contract forces my retirement date to be the 30th September following my 65th birthday. Until last year, the university had a private funded pension scheme into which all employees were paying. As part of the finance bills, all such schemes in the public service were closed and the assets transferred to NTMA, with a promise that the state would underwrite the liabilities of the scheme. This makes my occupational pension a state one, coordinated with the social welfare one, which I may not be allowed to draw until I reach 68. So where does that leave me from 30th September 2041 until 25th September 2044? Unemployed, but not drawing a pension?

I assume that issues like this will be resolved in the fullness of time but I am sure that there are going to be hundreds if not thousands of similar problems that will crop up. Issues relating to medical cards, bus passes, TV licenses, heating allowances will all have to be resolved.

Tuesday, March 2, 2010

Dublin stays slow

I watched last night's meeting of Dublin City Council on their streaming webcast where the 30km/h zone was up for debate again. On the table was an FG motion to scrap the zone. In response to this Cllrs Montague and Lacey put down an amendment that would have changed the area of the zone as outlined in a previous post.

To say that the councillors overall behaved like a bold 2nd or 3rd class in national school would not be understating it. Personal attacks, shouting each other down, repeating the point previously made, collectively they would have been kicked out of the Irish Times debating competition for lack of courtesy. To be fair to the Lord Mayor, she did her best to control the situation but at times, if I had been her, I would have called a halt to proceedings or started ejecting people from the chamber. I wonder if that is within her power at a meeting.

At the end of the day two votes were held. The first, to amend the motion to the Labour proposed compromise was passed but did not get the 66% support required. The second vote was on the original FG proposal and was heavily defeated 28 to 12. So the upshot is that the full 30km/h zone will be left as is. It will come up for review after 6 months of operation as was agreed when initially implemented but presumably any proposed changes will have to go to public consultation and then another vote of the City Council so is unlikely to come into effect in 2010.