The Irish Independent reports that more than 50,000 householders in Cork will have to do without running water supplies until next weekend at the earliest -- and drinking water may not be restored until early next week.
The grim warning came as civic leaders, emergency services as well as Army and Navy personnel moved to co-ordinate the vast clean-up and repair effort in the wake of the city's worst floods in 800 years.
Cork City Council last night warned its main priority now was to address Cork's sanitation crisis, with 18,000 homes effectively unable to flush toilets or operate hygiene facilities.
The Naval Service yesterday moved a patrol vessel to the city quays to act as a logistic support base for the flood relief effort.
Navy engineers are now also assisting Cork hospitals to ensure they have round-the-clock water supplies.
Army personnel are supporting gardai, Cork City Council staff and volunteers in the distribution of water to the sick, elderly and disabled.
Cork City Council warned its "best-case scenario" now was a restoration of running water by next weekend, but that timetable could slip to next week.
The council confirmed water supplies were available in all county areas, but precautionary 'boil water' notices will remain in place in four west Cork areas for several days.
Taoiseach Brian Cowen toured the flood-damaged parts of Cork city centre yesterday as the city council confirmed its engineers were working round the clock to get the damaged Lee Fields water station back online.
Lord Mayor Dara Murphy said council and emergency personnel had worked "heroically" over the past four days -- but he stressed that "serious questions now needed to be answered about the precise cause of the flooding".
City council official Valerie Sullivan said engineers finally gained access to the Lee Fields Water station on Sunday evening. However, it will take up to 36 hours to properly dismantle and dry out all its machinery.
The city council said it was not yet clear if the machinery involved could be repaired or if it would have to be replaced.
Cork fireman and SIPTU official, Noel Heaney, said the service was fighting a losing battle against the floods due to their lack of equipment.
"We are lacking national standard (equipment) in terms of dealing with heavy flooding -- things like high volume pumps," he said.
Businesses, meanwhile, yesterday began counting the cost of the devastating floods with some insurance assessors indicating that Cork's flood repair bill could top €100m.
The Kingsley Hotel -- recently refurbished at a cost of €30m -- will remain closed for the immediate future while repair estimates are prepared.
The hotel staff and guests had to be evacuated early last Friday morning due to the raging flood waters. Director Seamus Heaney said the damage inflicted on the facility was "absolutely heartbreaking".
"Timber floors have buckled, marble tiles have lifted and there is huge electrical damage and to fittings and furnishings on the ground floor. It is untold damage, to be perfectly honest, and we will be closed for quite a while," he said.
However, as the flood waters receded, other premises re-opened after emergency repairs.
The Mercy University Hospital (MUH) re-opened its A&E unit, while gardai indicated that most city centre roads that were closed at the height of the flooding were likely to re-open by today.
Patients scheduled for elective operations are now being called for their procedures at MUH.
City council engineers are now conducting an emergency inspection of the Grenville Place quay wall which collapsed at 2am last Friday at the height of the flood, diverting the River Lee down one of Cork's busiest shopping areas.
All Cork schools without running water are expected to remain closed until supplies are restored.
The Irish Independent also reports that International Monetary Fund managing director Dominique Strauss-Kahn said that about half of bank losses from the global financial crisis have yet to be revealed.
"It is our view we are still in the situation where a lot of losses haven't been disclosed," Mr Strauss-Kahn said during questions at the Confederation of British Industry's conference in London yesterday. "How much is a difficult assessment, but let's say something which is close to half of it."
Banking systems "remain undercapitalised" in many advanced economies with "far from normal" financial conditions, Mr Strauss-Kahn said in a speech to the conference.
The IMF said in September that banks may have $1.5 trillion in toxic debt remaining on their books, which may hurt credit markets and stifle the global economic recovery.
"Probably a little more has been disclosed in the US and a little less in Europe, but it's almost half and half," Mr Strauss-Kahn said. "So, we still have a long way to go."
The IMF cut its projection for global writedowns on loans and investments by 15pc to $3.4 trillion in September, citing improvements in credit markets and initial signs of economic growth. Losses on bad assets will rise from July 2009 through next year by $470bn in the euro area, $420bn in the US and $140bn in the UK, the IMF said.
Financial institutions may adopt a "party now" approach of excessive risk taking if policy makers don't disclose plans for regulating the industry, Mr Strauss-Kahn said in his speech.
"Right now, regulatory uncertainty is throwing up some perverse incentives," he said. "It might be encouraging a risk-taking culture -- a Mardi Gras effect whereby financial institutions party now in expectation of lean times."
Mr Strauss-Kahn described the global economy as being "in a holding pattern -- stable, and getting better, but still highly vulnerable".
"We don't see a high probability of a double dip," in the global economy, he said during questions, though avoiding that outcome isn't "a done deal", he remarked.
The IMF's UK forecasts show a "rather bad year" in 2009, followed by a "rather strong recovery" in 2010 with economic growth of about 0.9pc, "more than what we expect for the eurozone", he said.
The Irish Times reports that the Government could end up with a stake of as high as 60 per cent of a larger mutual comprising the Educational Building Society (EBS) and Irish Nationwide Building Society, according to EBS chief executive Fergus Murphy.
Mr Murphy said that a deal may be agreed early next year and that the Government may take a stake of between 40 and 60 per cent in return for a State capital injection of up to €400 million in the enlarged building society.
Speaking to reporters at the annual conference of the Association of Compliance Officers in Ireland (ACOI) in Dublin, Mr Murphy said discussions between EBS and Irish Nationwide were likely to begin this week.
He believed that an agreement could be reached by Christmas or early next year.
“You would like to think that we could move this on quite quickly,” said Mr Murphy, adding that capital injections by the Government would have to be made as EBS and Irish Nationwide transfer a combined €9.1 billion in loans into the National Asset Management Agency (Nama) early next year.
The Minister for Finance, Brian Lenihan, also attending the conference in Dublin, said that Irish Nationwide’s board had indicated at a recent meeting with him that it had an interest in talks with EBS.
Mr Lenihan said he would await the outcome of their discussions before assessing the capital requirements of both institutions.
“It is clear from the quantity of assets which both Nationwide and EBS have to transfer to the National Asset Management Agency that the State may well end up being a substantial shareholder in any resulting building society,” he said.
Irish Nationwide chief executive Gerry McGinn told staff in an e-mail yesterday that he expected “formal discussions will get under way later this week”.
The building society’s chairman, Danny Kitchen, had written to EBS acting chairman Philip Williamson “to outline how best to proceed to formal discussions”, he said.
Irish Nationwide is transferring about 80 per cent of its loan book – €8.3 billion of loans – to Nama, while EBS is selling in the region of €800 million of its €17 billion loan book.
The Minister declined to comment on whether Permanent TSB, the banking division of Irish Life Permanent, would form a larger group with the building societies.
Mr Murphy said Permanent TSB could “certainly become part of it”, but that the initial focus would be on a transaction between EBS and Irish Nationwide.
Mr Lenihan said all deposits in any new merger would continue to be guaranteed by the Government. “We want to see a viable building society continuing to provide credit to the Irish economy to those who want to buy houses – that is important in terms of the overall banking landscape,” the Minister told reporters.
Mr Murphy said EBS would need an additional €300 million, depending on the international norms set for capital levels.
He expected €50-€100 million more would be required to cover the €2 billion in residential loans that may be transferred to EBS from Irish Nationwide.
The capital requirements would be determined by the risk weighting of Irish Nationwide’s loans to be transferred, he said, adding he believed some 30 per cent of the building society’s residential loans were buy-to-let and may be higher-risk loans.
A takeover by EBS of Irish Nationwide’s remaining €2 billion in residential loans must be carried out through a transaction known as “a transfer of engagements”.
Mr Murphy said EBS would need to hold a special general meeting to seek the approval of members to sell “a special investment share” to the Government in return for the capital investment.
EBS has retained NCB Corporate Finance and KPMG as advisers on the discussions, while Arthur Cox and AL Goodbody are advising on legal issues.
The Irish Times also reports that Minister for Finance Brian Lenihan has said the Government is seeking to maintain private ownership within the banking sector but that it may take a large stake beyond the 55 per cent of the system that it already controls.
Speaking to the annual conference of the Association of Compliance Officers in Ireland (ACOI), Mr Lenihan said that the banking system “has to be seen by the world market as belonging to the world market” and not simply managed by the Irish Government.
Mr Lenihan said that it was not as if the two biggest banks, Allied Irish Banks (AIB) and Bank of Ireland, were not being nationalised.
“It might be fairer to say that what we are doing is struggling to maintain a private presence in our banking sector,” the Minister said.
The new chief executive of State-owned Anglo Irish Bank, Mike Aynsley, plans to make imminent changes to the management team, Mr Lenihan told reporters before his speech to the conference.
Management changes had been agreed with Mr Aynsley, said the Minister. He also said legal proceedings were being issued against directors and senior managers who owe money to the bank.
“He has done a complete analysis of the monies that are owed by the different directors and executives of the bank,” said Mr Lenihan. “Some of them are paying on foot of their loans; some are not. Those who are not will now be sued in the courts.”
Mr Lenihan ruled out the immediate closure of Anglo, saying it would lead to the State paying “a huge sum of money”. “Anyone with any intuitive sense knows that if you go in and close down the bank, you immediately trigger a huge liability for the taxpayer and we are not proposing to do that.”
It was possible “to devise a plan that, over time, the taxpayer is recompensed” for the investment in the bank, the Minister said.
The Government has injected €4 billion in additional capital into the bank to cover rising loans losses. Mr Lenihan has said any further capital required by the bank will not exceed the €4 billion already invested by the State.
The Minister defended the Government-appointed directors at Anglo and praised their work. The public interest directors – Frank Daly, Alan Dukes, Donal O’Connor and Maurice Keane – “in effect had to be executive directors to salvage this bank which amounted to a systemic threat to the Irish economy”, he said.
Mr Lenihan said that taking “decisive action” on the budget deficit was a priority for the Government and it would “signal to international investors that the Irish Government possesses the ability to take the necessary action”.
Failing to do so would “mean delaying necessary action with the result that even tougher decisions would be required in the future”.
“We will ensure that our children will not inherit a mountain of public debt,” the Minister said.
AIB chief executive Eugene Sheehy, who will retire at the end of the month, and the bank’s new executive chairman Dan O’Connor – together with Bank of Ireland governor (chairman) Pat Molloy and chief executive Richie Boucher – will appear before the Oireachtas finance committee tomorrow. The bankers will discuss the interest premium over cost of funds they will charge customers to restore the two banks to profitability.
The Irish Examiner reports that the Government and trade unions will begin intensive talks tomorrow to try and avert further, more prolonged strike action than that which is grinding services across the country to a halt today.
The 24-hour strike which up to 250,000 workers began this morning, has affected almost all aspects of public service provision, including:
The closure of all schools and almost all public offices across the country.
The cancellation of 16,000 non-essential medical appointments and procedures.
A 24-hour delay in the processing of social welfare payments for 55,000 claimants.
Even gardaí, who are barred by law from striking, will avoid issuing any penalty points today. Only emergency services are guaranteed to the public for the duration of the action.
The numbers taking part in the strike would have been much higher but for the devastating floods experienced in the south and west. Health unions have asked their members in those areas to report for work as normal today and local authority staff have also been told to keep up services to those affected.
The public services committee of the Irish Congress of Trade Unions is today expected to formally confirm it will re-enter negotiations with the Government on firstly its vision for the public sector over the next four years and, more urgently, how the public service pay bill can be cut by €1.3 billion in the budget, which is now just a fortnight away.
Committee chairman Peter McLoone said the Government’s vision document on the future of the public service, delivered to unions last Friday, had not contained adequate guarantees on protecting public pay, pensions and services to warrant calling off today’s strike.
However, he said it was enough to merit further intensive discussions with the Department of Finance.
It is likely those discussions will be short – a matter of a few days – and if the unions are not happy with their progress or are not receiving the guarantees they demand from the Government, they will press ahead with more prolonged strike action than that of today.
"Unions have already indicated that if they don’t sense the Government are willing to engage in a negotiation that will lead to a fair solution, then they will have no option but to take further action," said Peter McLoone yesterday.
"If we [on the public services committee] do take a decision on further action it is likely we will make an announcement about that tomorrow [Tuesday] evening.
"We have tried throughout this year to avoid getting into conflict. We were due to have a stoppage back in March. That was deferred.
"We then lobbied public representatives, we have had protests, we have had marches and, in truth, members have felt there is no way this Government is going to listen unless we convey a very strong message."
The Financial Times reports that Gordon Brown and David Cameron clashed over plans to tackle Britain’s budget deficit on Monday, as the party leaders sought political advantage on an issue that is set to dominate next year’s election.
The prime minister and Conservative leader both claimed international backing for their approach, as each warned the annual conference of the CBI employers’ organisation that their rival’s strategy would jeopardise the economic recovery.
Mr Cameron rejected suggestions that he had switched emphasis from “austerity” measures to tackle the £175bn deficit to growth in response to fears that his party’s poll lead was under pressure.
Asserting that his message had not changed, Mr Cameron said his plans for an “emergency growth Budget” within 50 days of taking office were interlinked with his call for urgent measures to tackle the deficit.
“Dealing with this deficit is not an alternative to economic growth – the two go hand in hand,” he said.
The Tory leader asserted that a failure to address the deficit with sufficient urgency posed the “greatest single risk to sustained economic recovery”. He told delegates there was a growing consensus behind the Tory argument that “urgent action is vital to recovery”.
But the prime minister scored a coup when Dominique Strauss-Kahn, managing director of the International Monetary Fund, lauded Mr Brown’s global leadership and backed his warning that fiscal stimulus should not be withdrawn too quickly.
“We recommend erring on the side of caution, as exiting too early is costlier than exiting too late,” Mr Strauss-Kahn told the event in London.
But Mr Cameron’s approach received tacit backing from the European Central Bank, which warned that delays in unwinding exceptional measures taken to combat the economic crisis could backfire. Speaking in Madrid, Jean-Claude Trichet, ECB president, said threats to public finances posed by stimulus packages meant that “there is an increasingly pressing need for ambitious and realistic fiscal exit strategies and for fiscal consolidation”.
Lorenzo Bini Smaghi, an ECB executive board member, said on Friday history showed that the late implementation of “exit strategies” could cause future crises.
“In my view, the ‘err on the side of being late’ paradigm is potentially as dangerous as the ‘productivity growth’ paradigm of the late 1990s and the ‘fear of deflation’ paradigm of the early 2000s, which led some advanced economies to implement policy stimuli for too long, sowing the seeds of the subsequent crisis,” Mr Bini Smaghi said in Paris.
Mr Brown sought to capitalise on the IMF’s support for his stance by suggesting that the Tory growth “soundbite” was meaningless without substantive policies to support it. The prime minister criticised the Conservative call for immediate action on the deficit, warning that “choking off the recovery too soon would be fatal to world growth”.
Business reacted with bemusement to the ferocity of the debate, suggesting that the clashes were largely for political effect since – whoever wins next year’s general election – significant spending cuts were unlikely to bite until 2011-12.
“The instincts of Mr Cameron and Mr Brown are clearly different. There may not be in policy terms all that much [to separate the duo],” Richard Lambert, CBI director-general, said.
“Business is focusing on a different issue [to the rhetoric on exit from the fiscal stimulus],” said John Cridland, CBI deputy director-general. “Business knows that significant fiscal tightening has to be achieved at some point in the cycle but it’s how we do it.”
The FT also reports that the US labour market used to be whizzy. People would chop and change jobs at a furious pace, but not many stayed out of work for long. If you wanted to see countries sagging under the weight of long-term joblessness, you had to cross the Atlantic.
On the eve of the global downturn in 2007, 10 per cent of the US unemployed had been out of work for a year or more, compared with 25 per cent in the UK, 40 per cent in France and 57 per cent in Germany.
Times have changed. The sheer force of the recession has driven 8.2m out of work in the US and pushed the unemployment rate to the highest since 1983.
Long-term unemployment is already much worse than in the 1980s: in October, 5.5m – almost 40 per cent of the US jobless – had been so for at least six months, the highest on record. Twenty per cent had been unemployed for a year or more, compared with a fairly static 25 per cent in the UK.
This could have lasting reverberations both for America’s people and its economy.
“It’s a killer disease,” says Thomas Cottle at Boston University, author of Hardest Times: The Trauma of Long-Term Unemployment. “People are going to be damaged and may not recover in their lifetime.”
The longer people are jobless, the more their skills and confidence decline and the less appealing they become to employers. “There’s a lot of research showing lengthy unemployment essentially erodes the productive capacity of the economy,” says Timothy Bartik, a labour market economist at the W.E. Upjohn Institute.
The Congressional Budget Office released a report in 2007 into long-term joblessness, which was at the time something of a niche topic. After an unemployment spell of six months or more, people’s new jobs paid an average 20 per cent less than their previous ones, it found. More worryingly, the CBO discovered that about one in four of the long-term unemployed dropped out of the labour force altogether.
The US is so unused to this phenomenon that unemployment insurance only lasts for 26 weeks.
Facing the prospect of millions of people suddenly running out of benefits, lawmakers have had to patch up the system with a series of extensions, the latest of which was signed into law this month. In the hardest-hit states, the long-term unemployed can now claim for as much as 99 weeks. But even then, according to the non-profit National Employment Law Project, more than 1m people may exhaust their benefits at the turn of the year.
Lawmakers are also mulling special job-creation policies such as tax credits to persuade businesses to hire again. Professor Bartik thinks they should consider a special programme to help groups suffering unemployment for the longest periods.
Before the recession, that group was disproportionately made up of the least educated. But the “new” long-term unemployed are a more diverse bunch. A third of unemployed high-school dropouts have been out of work for six months or more, but among college graduates the figure is 37 per cent.
At least misery now has company. “More and more people are saying, I am part of a tremendous current of people being shoved down the river here, and they’re not taking it so personally,” says Prof Cottle.
The New York Times reports that a few weeks into the holiday shopping season, consumers are still not reaching for their wallets.
After a fairly robust October, retail sales slowed in November as the nation’s stores entered their critical time of year. Major sectors like apparel, luxury goods and jewelry experienced slight sales declines.
That might seem like an ominous sign about how the chains will fare this Christmas. But retailing analysts said the declines were minor and that many consumers were saving their powder for the day after Thanksgiving, the blowout shopping day known as Black Friday.
Retailing veterans expect stores to be bustling on Friday as frugal consumers hunt for bargains with newfound purpose. Retailing professionals are also cheered that stores have less inventory today than they did this time last year.
“Last year, we were in emergency nuclear discounting mode,” said Michael McNamara, vice president for research and analysis at SpendingPulse, an information service by MasterCard Advisors. “This year, it’s more strategic in nature.”
For Nov. 1 to 14, sales of women’s clothing declined 3.3 percent and sales of men’s clothing fell 1 percent compared with last year, according to SpendingPulse, which estimates sales for all forms of payment, including cash, checks and credit cards. Luxury goods posted the biggest year-over-year decline, falling 9.2 percent.
Those declines were not as bad, though, as the double-digit losses that stores experienced last year and into early 2009. For instance, the women’s clothing category had posted nine months of double-digit sales declines since October 2008.
In short, the retailing landscape does not look great, but it has stabilized. A couple of sectors even posted year-over-year sales increases for the first half of November, including electronics (up 6.1 percent) and online shopping (up 19.4 percent).
Retailers and industry analysts pay close attention to sales figures this time of year because it is when stores do the most business. The Friday after Thanksgiving is merely one day out of an entire season, of course, but it is usually one of the busiest days.
Last year, sales over Thanksgiving weekend declined 1.01 percent from the same period a year earlier, according to SpendingPulse. That was a departure from previous years, when sales rose briskly — up 4.5 percent in 2007, up 6.1 percent in 2006 and up 5.7 percent in 2005.
For several years, spending on that weekend had been a good indicator of how the rest of the holiday season would unfold. But last year, the slight decline in Black Friday sales was much better than the sharp decrease for the entire season. That was in part because of the wild discounting that was taking place.
For example, sales of luxury goods last Thanksgiving weekend rose 2.9 percent as upscale stores drastically cut prices and consumers swooped in for once-in-a-lifetime deals. But sales of luxury goods for the entire holiday shopping season sank a whopping 20.9 percent, according to SpendingPulse.
The National Retail Federation, an industry group, is optimistic about sales this coming weekend. The group said Monday that newly frugal consumers eager for discounts may drive sales up from last year. A survey conducted for the federation by BIGresearch found that as many as 134 million people will shop Friday, Saturday or Sunday — up from the 128 million people who planned to do so last year.
Mr. McNamara, of SpendingPulse, was not as sure. He said that while the economic deceleration has slowed, it may be difficult to outperform last year’s Thanksgiving weekend results, given that consumers have been more tightfisted in the months since.
A survey published on Monday by the global business advisory firm AlixPartners found that 87 percent of consumers plan to spend the same or less than they did last Christmas. Analysts at the firm said consumers were skittish about the high unemployment rate and would do most of their holiday shopping at value-priced chains. Some consumers may hold out for the deep discounts of last Christmas, but analysts and stores alike said those shoppers would be waiting in vain.
For the entire 2009 holiday shopping season, November and December, sales are expected to be about the same as last year. The National Retail Federation predicted sales would decline 1 percent, to $437.6 billion, below the 10-year average of 3.4 percent holiday season growth, though not as bad as last year’s 3.4 percent drop. Some equity analysts and market research groups say they think that figure is too low, though. The International Council of Shopping Centers, another industry group, predicted holiday sales would rise 1 to 2 percent.
While there is disagreement over the likely results for the season, the general consensus is that sales this weekend will be relatively healthy, with business tapering off on Saturday and even more so on Sunday.
The NYT also reports that the United States will propose a near-term target for reducing greenhouse gas emissions before the United Nations climate change meeting in Copenhagen next month, a senior administration official said Monday. President Obama, the official said, will announce the specific target “in coming days.”
The announcement of a target will take the current legislative stalemate over a climate bill into account, the senior official said, and thus might present a range of possible reductions rather than a single figure.
The lack of consensus in Congress puts Mr. Obama in a tricky domestic and diplomatic bind. He cannot promise more than Congress may eventually deliver when it takes up climate change legislation next year. But if he does not offer some concrete pledge, the United States will bear the brunt of the blame for the lack of an international agreement.
The official also said the president would decide shortly whether and for how long he might attend the December climate meeting, which runs from Dec. 7 to Dec. 18. He repeated the president’s assertion that he would consider attending if his presence could be a useful impetus to a deal.
The official, a member of the team of American climate change treaty negotiators, spoke at a White House briefing under the condition that he not be identified.
The Obama administration has so far resisted demands that it commit to a specific emissions reduction goal, saying that it could not pre-empt Congress, which has stalled on climate change legislation. China, the world’s largest emitter of climate-altering gases, has also refused to spell out its plans for reducing emissions, although President Hu Jintao promised in September that his country would reduce the amount of emissions per unit of economic output by a “notable margin.”
Many observers of the climate negotiations expect China to deliver a more specific pledge on this so-called carbon intensity target before the Copenhagen meeting opens.
Mr. Obama has come under criticism from leaders of dozens of countries that have already set domestic greenhouse gas reduction targets. He is also under fire from numerous environmental advocates who say the United States, the world’s second-largest emitter, must take a credible commitment to Copenhagen to ensure that the talks do not fall apart.
The House passed a measure in June that calls for a 17 percent reduction over 2005 levels of the domestic emissions of the gases that contribute to the heating of the planet. A Senate committee passed a bill last month that sets a 20 percent target, but that is likely to be weakened in future negotiations.
Paul Bledsoe of the bipartisan National Commission on Energy Policy said the president’s hands were tied by Congressional inaction. “The U.S. cannot negotiate at Copenhagen above the targets in domestic legislation without risking support for that legislation in the Senate,” Mr. Bledsoe said. “If European demands continue above the U.S. domestic targets, they set up an impossible dynamic for the administration.”
A second administration official briefing reporters on Monday said that Mr. Obama would have a stronger hand at Copenhagen if Congress had already acted on climate change legislation, but that the debate on health care had blocked it.
“We would have preferred that health care be done a long time ago, and we’d be having an energy debate today,” the official said.
Senator John Kerry, Democrat of Massachusetts, said Mr. Obama could credibly tell delegates to the climate conference that the United States intended to reduce its emissions by 17 percent to 20 percent, based on the legislation that has been approved by the House and the Senate environment committee.
“It’s important for the president to exert that leadership with consultation with Congress,” Mr. Kerry said in an interview late last week.
Mr. Obama and leaders of a number of other major countries have said that the Copenhagen talks would not yield a comprehensive and binding treaty to address global warming. Instead, the more than 190 nations represented there are expected to produce an interim agreement that addresses the major issues without requiring ratification or international enforcement.