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Tuesday Newspaper Review - Irish Business News and International Stories - - June 25, 2013
By Finfacts Team
Jun 25, 2013 - 8:00 AM
ANGLO Irish Bank boss David Drumm laughed about "abusing" the
bank guarantee and warned his executives not to be caught abusing it, the Anglo
Drumm is also heard giggling as one of his executives sings the German national
anthem as deposits from Germany flow into Anglo as a result of the bank
It's the first time the former Anglo chief executive is brought directly into
His language and casual attitude to the crisis will be found extraordinary by
The latest revelations from the Irish Independent's 'Inside Anglo' investigation
display a casual, even reckless, attitude at the bank during the financial
Mr Drumm can be heard laughing at the financial regulator's concerns about being
seen internationally to be "abusing" the bank guarantee in late 2008.
"We won't do anything blatant, but . . . we have to get the money in . . . get
the f***in' money in, get it in," he tells his senior manager, John Bowe."
Emigration is at famine levels because Anglo bankers lied.
Workers are on the dole because Anglo bankers lied. Homeowners can't pay their
mortgages because Anglo bankers lied. Public service cutbacks, especially in
health and education, are causing suffering because Anglo bankers lied. And
Ireland lost its economic sovereignty because Anglo bankers lied.
Not just recklessness, but deception on the part of bankers protecting their
broken bank – and their own skins by extension – brought Ireland to the verge of
An independent republic was reduced to a satellite state by the world's worst
bank – and citizens are still picking their way around the crater left behind
after Anglo crashed and burned.
Recession was inevitable: job losses and shrunken services were on the way, even
if Anglo bankers had been honest about their problems. But the truth would have
prevented austerity on today's disaster scale.
ITALY is likely to need an EU rescue within six months as the country slides
into deeper economic crisis and a credit crunch spreads to large companies, a
top Italian bank has warned privately.
Mediobanca, Italy's second-biggest bank, said its "index of solvency risk" for
Italy was already flashing warning signs as the worldwide bond rout continued
into a second week, pushing up borrowing costs.
"Time is running out fast," said Mediobanca's top analyst, Antonio Guglielmi, in
a confidential client note.
"The Italian macro situation has not improved over the last quarter, rather the
contrary. Some 160 large corporates in Italy are now in special crisis
GLOBAL equities, bond prices and commodities tumbled yesterday,
entering another week of heavy selling as investors fled markets on worries
about the US central bank's plans to scale back its bond buying, combined with
tighter financial conditions in China.
Prices of US Treasuries resumed their slide, and benchmark yields climbed to a
nearly two-year high. The S&P 500 fell more than 2pc, erasing all of its
quarterly gains as Wall Street joined a global selloff after concerns about a
liquidity crunch in China sent Shanghai stocks down more than 5pc.
The shift out of assets that have benefited most from cheap money has been
sharpest in the US debt market, where yields on 10-year Treasury notes spiked to
two-year highs of 2.6pc yesterday. The 10-year note yield has risen a full
percentage point in a little more than a month.
A recorded conversation between senior officials at former Anglo
Irish Bank appears to confirm what the public has long suspected: that the
Central Bank and last government were bounced into bailing out the banking
system and lacked detailed knowledge of the extent of the crisis.
The manner in which this exercise was conducted: through obfuscation, veiled
financial threats and political pressure, exposes a clientelist system where
power and contacts are paramount and nobody is held to account.
Taoiseach Enda Kenny says he understands the “rage and anger” of those citizens
whose lives have been blighted by the banking collapse. But he is reluctant to
say anything that might prejudice ongoing investigations. Legislation
establishing a banking inquiry will be passed within months, he promises, and
the Government will then decide how to proceed. So, an inquiry may get under way
in the autumn. Or, perhaps not. Allowing time for public outrage to dissipate is
one way of protecting established interests. And few interests are as well
established or powerful as those within the financial sector.
Voluntary organisations that exist simply to perpetuate
themselves are known within the public service as the “poverazzi industry”,
according to a senior civil servant of at least 10 years’ standing.
The civil servant was one of several individuals interviewed in confidence to
find out what they really thought of the voluntary sector.
A report titled In Other Words was commissioned by the Advocacy Initiative,
which is funded by Atlantic Philanthropies. It was set up three years ago to
help such organisations lobby the Government effectively for change.
The civil servant did not name the organisations about which he was talking but
said there were some that had a vested interest in not solving the problems they
were set up to resolve.
Ireland’s low tax revenue compared to peer countries is
accounted for by relatively low levels of tax paid by those at the lower end of
the income spectrum, according to a study published today by the Economic and
Social Research Institute.
Those on higher incomes in Ireland pay proportionately similar amounts of tax to
their better-off counterparts in high-tax countries such as Germany and the
Nordics. As such, the research finds that there is “rather limited scope for tax
increases on incomes above €100,000 to contribute to a substantial upward shift
in the tax ratio”.
More specifically, it notes that a new income tax band of 48 per cent for those
earning more than €100,000 would raise just 0.3 per cent of gross national
Bundesbank president Jens Weidmann has said a European Central
Bank (ECB) programme to stabilise the euro zone by buying sovereign bonds of
crisis-hit countries is strictly limited in scope.
A year ago ECB president Mario Draghi insisted his bank would do “whatever it
takes” to defend the euro and keep the currency bloc together. To back up his
promise, he later presented a programme, dubbed Outright Monetary Transactions
(OMT), to allow indirect ECB bond buy-ups to help lower borrowing costs.
Markets interpreted Mr Draghi’s remarks as a readiness to, if necessary,
mobilise the ECB’s unlimited financial fire power to defend the single currency.
The mere announcement of the OMT instrument, which has yet to be activated,
calmed market speculation over a potential euro zone break-up.
Banking union will be thrown off-track, if EU countries cannot
agree on bank resolution later this week, Finance Minister Michael Noonan has
He intends to work through Wednesday night if necessary to get the agreement
that eluded him and his fellow finance ministers earlier this week on this
pivotal piece of legislation.
He and the Irish presidency received lots of praise from members of the European
Parliament’s budget committee as they work through the final few days of the
Getting agreement on banking recovery and resolution is one of three major
issues facing Irish negotiators, with serious problems to be overcome to get
agreement on the EU seven-year €960bn budget and on reform of the Common
Lithuania takes over the presidency from Ireland on Monday and Mr Noonan
believes it would be November before they could return to the issue: “If we
don’t get it done on Wednesday, then the time line for banking union goes out of
kilter, so it is important for the bigger project that we get agreement.”
Development loans of €260m were advanced to a
company on securities including a guarantee of one of its directors limited to
€8m, the commercial court was told yesterday.
David Kennedy, with an address in Jersey, will
argue he is not liable to repay any sum on grounds including that Bank of
Scotland had a 20% shareholding in the borrowing company, Dublin-registered
Clancy Quay Properties Ltd, counsel for Mr Kennedy, Edward Farrelly BL,
No substantial decisions on development could be taken without the bank and
actions by it had caused losses, counsel said. The bank, for example, reneged on
the building of a school and also refused to let the company proceed with €26m
worth of closed contracts, he said.
Presseurop: The Dutch coalition government said
in a memo published on June 21 that: "The Netherlands is convinced that the time
of an “ever closer union” in every possible policy area is behind us",
reports the EUobserver. According to the news website, the memo “said
the Union's slogan should be "European where necessary, national where
It also said there is a ‘strong need’ for joint EU action on big-ticket items,
such as economic governance, migration and defence. But it noted that a review
of EU powers by its foreign minister, Frans Timmermans, shows an equal need for
‘creating a European Union that is more modest, more sober.’
According to a study commissioned by the
European Union “Italy is among the countries with the
highest level of income inequality, second only to the UK in the EU, and well
above the OECD average,”
reports the Italian daily Il Sole 24 Ore.
The “Gini – Growing Inequalities’ Impacts” study, based on the Gini index and
compiled by researchers at seven European universities, analysed the income
dynamics of 30 European countries from the 1980s up to the present day, dividing
them in regional catagories. The newspaper continues:
"Continental European countries (Germany, France and Benelux) have a low Gini
index, between 0.26 and 0.30 and one which is almost stable; northern countries
show a rising inequality trend led by Sweden and Finland but starting from very
low levels; market economies like the UK have limited welfare and high
inequality; [...] eastern countries, which before 1989 had levels close to
Scandinavia, have now gone in a different direction."
Euro Topics: Edward Snowden, the whistleblower
wanted by the US, has fled from Hong Kong to Moscow. From there he
apparently plans to travel to Cuba and then on to Ecuador, where according to
the authorities he has applied for asylum. Commentators say that by fleeing to
countries with dubious democratic records Snowden is abusing international
diplomacy and betraying the very ideals he is supposedly fighting for.
Former NSA employee Edward Snowden's plans to flee from Moscow to Cuba and from
there to Ecuador is not viewed favourably by the liberal Slovenian daily Sme:
"You can hardly blame Snowden for wanting to avoid a perhaps unfair trial before
a US court. And it's clear that there are only a handful of countries that
wouldn't hand him over to the US. But Snowdon justified his act by saying that
all he is concerned about is democracy and freedom. If that is really the case,
he should risk a trial before a US court instead of becoming a hypocrite now. By
taking advantage of the offer of asylum in a Latin American dictatorship a
person calls everything he has allegedly fought for into question. Wikileaks
founder Julian Assange roused similar doubts. He too has a strange tendency to
only see problems with democracy and freedom in the West."
The rules of the Internet need to be rewritten, but dubious people like Edward
Snowden and his alleged legal consultant Baltasar Garzón have no place in this
process, the conservative Spanish daily ABC warns: "CIA agent Edward
Snowden's tour of half the world's airports in the company of ex-judge Garzón as
his supposed legal advisor is a spectacle that can't appeal to anyone with any
common sense. Because it represents an abuse of the legal and diplomatic
services available to those who know how to use them - with good or bad
intentions. ... The Internet has changed the relationship between citizens and
authorities, and it certainly needs new rules. But we must not entrust people
like Garzón or the Ecuadorian president with this task. It's extremely worrying
that people like Snowden should be granted refuge by regimes like those in Cuba
Europe should take the message of the Brazilian youths to heart, the
left-liberal French daily Libération writes with an eye to their protests:
"European democracies would be wrong to think that an ocean protects them from
the movement of anger that is rocking Brazil. They would do well to pay close
attention to the at times confused remarks of the demonstrators in Rio de
Janeiro, Brasília and São Paulo. Because above all they express the anger of a
disillusioned young generation that has been traumatised by the crisis, that is
frightened by the future and that has lost its faith in politics. And despite
the social and political realities that separate Brazil from France, Spain and
Italy, it's this very sense of helplessness that weighs down upon youths in the
large Western countries. Politicians must offer them cross-border prospects,
jobs and a future."
The Belgian artist Delphine Boël is allegedly the illegitimate daughter of
King Albert II and now plans to force him to recognise her through court
proceedings. The Belgians don't understand the silence of the royal family,
the left-liberal Belgian daily De Morgen warns: "The king seems to assume that
this 'little problem' will just disappear if he keeps quiet. But with each day
that passes the silence becomes more painful and his credibility is further
eroded. What seemed a minor blemish is turning into a festering wound. ... When
he makes his next Christmas speech half the country will shake with laughter if
he tries to play the role of its moral conscience again. ... Everyone knows that
Delphine exists, and no one is shocked about it. But for the sake of preserving
appearances King Albert neither wants to nor can officially recognise and accept
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