|Source credit: www.irishnewsarchive.com |
Nyberg Report: In the aftermath of another report on Irish financial mania,
will it be as the French say: plus ça change, plus c'est la même chose (the more
things change, the more they remain the same) or can conservative Ireland manage
more than glacial change?
The omens are not good given that many still react with glazed eyes to issues
of reform and matters of process or the lack of it even though the lack of
accountability, the lack of concern for conflict of interest and the barefaced
scrounging of public funds by beggars on horseback, goes to the heart of the
Just observe the enthusiasm for debt default, bond burning and seeking
foreign scapegoats while some of the same people would fight tooth and nail to
preserve gains won on bubble income that has evaporated.
Is there any evidence of a community spirit even though tens of thousands
face a jobless future on the dole? In contrast with others, many have had no
occupational pension and basic redundancy is for people who are far from the
groups who command the public megaphone.
wrote last week that Ireland is no longer a society mainly marked by the
division between rich and poor but it is an unjust society of insiders and
The insiders can be multimillionaire lawyers and public staff with premium pay,
pensions and job security, while the outsiders, without the support of powerful
vested interests, are on their own.
The road to perdition was paved from the time, Bertie Ahern, Charles
Haughey's political consigliere, achieved power.
But as Nyberg said, the likes of him was part of an intricate tableau
and even before joining the European Monetary System in 1999, the Central Bank
had raised the white flag and publicly declared that it had no power to restrict
The Eircom floatation was the first big manifestation of tulip mania and in
September 2000, the then Sunday Business Business Post journalist Emily
lambasted Senator Shane Ross for what she termed the former stockbroker's pitching of the
shares in the public floatation of State-telco Eircom and later heading a public
crusade against the company.
O'Reilly wrote: "Ross has made a virtual third career out of board bashing.
As business editor of the Sunday Independent and part-time commentator on Today
FM's Last Word programme, he and presenter Eamon Dunphy have developed a neat
double-act. Outrage is the theme as the two handsomely paid media buddies rail
against the handsomely paid business buddies on various company boards."
O'Reilly herself showed that she was another insider like the wealthy Shane
Ross, and she hit the earnings jackpot when she was given the job of Ombudsman,
which was a patronage plum in the gift of Minister for Finance, Charlie
McCreevy. Her salary was hiked four or fivefold, to the level of a High Court
In a crucial move in early 2001, the Irish Congress of Trade Unions (ICTU)
joined the rest of the establishment in rejecting the censure by the European
Commission of the Government’s budgetary strategy. Months later, when the OECD
said Ireland’s social partnership needed to evolve towards setting general
principles and guiding pay determination rather than committing the Government
to delivering specific tax cuts, the then incoming ICTU president, Joe O’Toole,
criticised “academic bean counters” and said they speak from Paris
“with an air of authority that is utterly undeserved,”when different
governments and groups were queuing up to find out how we earned our economic
success -- a sign of the hubris that was common in the bubble years.
A year later, the benchmarking body suggested an average public pay award of 9%
but “strongly” recommended that 75% of the payment be withheld until
agreement was reached on how “real outputs” would be delivered. It also
recommended that an “appropriate validation process” be established to
ensure that agreements on issues such as adaptability, change, flexibility and
modernisation were implemented in accordance with their terms.
The Government ignored the advice; it refused to disclose the data used to
arrive at the award; it went ahead and stuffed a super-ATM full of cash to
ICTU’s acclaim, and almost a decade later, reform is still awaited.
Despite the potentially influential roles of both ICTU and IBEC, the employers’
body, both groups avoided pushing for reforms because of knee-jerk pandering to
their vested interests.
The head of ICTU, David Begg, served 15 years on the board of the Central
Bank but he plays Pontius Pilate on responsibility for displaying no responsibility.
And so the litany could go on...
RTÉ, the State broadcaster, through a spokesperson suggested, that it did not
see any conflict of interest in having journalists in the public sector
organisation, who were the highest earners in the Irish public service, being
supplied with free BMW cars. In fact the spokesperson made a distinction between
the high-paid contractors and the non-management staff: “As Pat Kenny,
Gráinne Seoige and Diarmuid Gavin are freelance contractors, it is the RTÉ
policy not to comment on their personal matters,”
she said. “We would consider the matter of transport a personal matter.”
This is Ireland of course and local councils with up to 45% of the membership
ruling on rezoning even though they had commercial property interests, was no
RTÉ has since the 1960's threatened non-payers of its mandatory TV and radio
licence with shame and embarrassment before the courts, while for much of the
period, people for whom the licence tax was chump change, were evading taxes on
a massive scale.
A clerical error in the Department of the Taoiseach resulted in tribunal
lawyers investigating corruption being overpaid €1m but in Ireland, why would
they have felt it right to repay it?
Financial Times columnist, Prof. John Kay, wrote after the collapse of Texan
energy trader: "Enron generated a lot of business for lenders, investment
banks, consultants, accountants and high-profile individuals. Don’t expect any
of these to give impartial advice to the company about its strategy or to
outsiders about the company. Their incentive was to tell the company and people
outside it what the company wanted to hear."
wrote last week on the phenomenon of confirmation bias, or the tendency to
find evidence to support what one already believes.
He said: "In politics and corporate life there is strong competition to
support the opinions of the great leader, be it the head of the International
Monetary Fund, or a major bank. Media developments also make it all-too-easy
today to find information only from sources that reflect one’s existing
opinions; think Fox News or the blogosphere."
Black swans are rare and usually it pays dividends to go with the flow and
keep the head down.
It would be foolish to expect miracles now.
Irish people would understand the culture of grabbing what you can,
while the going is good.
Ah shur $200 for breakfast for 2 on the taxpayer is only a drop in the ocean.
"I've slaved long enough for those ungrateful bastards. Charlie can you give a
few bob to those Indians?"
Financial Mania: Nyberg report says large parts of Irish society let good times
roll until last minute
Harney, McCreevy, Cowen and the other individuals/groups with responsibility for the economic crash
It will be payback
time for many years to come but most of the direct culprits can continue to live
|Finfacts does not need any report to
rationalise this sorry tale and unlike, those who went with the flow and
kept silent to get baubles from ministers or contracts, we challenged
the conventional wisdom, even though banks were among our customers.
Harney has avoided decisions on every
critical issue of deregulation and competition under the control of the
Irish Government, by requesting the Competition Authority to produce a
report. Nevertheless, she is far from shy about extolling the virtues of
deregulation such as in aviation and telecommunications, which has been
mandated by the European Union.
It says a lot about Irish public
governance, the competence of individual Ministers and the senior
bureaucrats, that everyone in a position to make what would have been
commonsense and basic business decisions, did not do so until several
hundred millions of euros disappeared down an Information Technology
sink-hole and billions were underestimated on roadbuilding projects.
Instead of putting party flunkeys on the
public payroll, has there been anyone in Government with the savvy to
propose a CIO - Chief Information Officer - with key experience in world
class IT organisations and successful project implementation experience?
A similar function with responsibility for major infrastructure projects
would surely have also been merited.
The risk for the world economy is that over
the past four years, US consumer spending and residential construction
have together accounted for 90% of the total growth in GDP. And over
two-fifths of all private-sector jobs created since 2001 have been in
housing-related sectors, such as construction, real estate and mortgage
The buck simply stops nowhere.
Ministers pass the buck to public servants who are now subject to the
regime called benchmarking, as referred to above, with phantom targets
and so on.
It's a joke of course and no matter how big the blunder may be, nobody
is accountable. This is one benefit of decision by committee.
So as the sands of globalisation, move under our feet, there is
staggering incompetence at the heart of government and certainly no
interest in contemplating how long will the good times last?
The Central Bank reported last month that
Irish residential mortgage lending continued to expand at a rapid pace
in January, when the year on-year growth rate (adjusted for
securitisations) reached a new record high of 28.8%, up from 28.5 % in
The Central Bank
has advised Finfacts that it does not require lenders to provide data on
In recent years, more than 75% of Bank of
Ireland investment customers have availed of the bank's ten-year
interest-only mortgage, according to Bank of Ireland
Mortgages Manager Olive Moran.
"It's very attractive as it enables investors to defer capital
repayments for the first ten years," Moran told the Sunday Business
Post. "They can then spread the capital
repayments over the remaining period of up to 15 years. Alternatively,
if they have access to a lump sum from a personal pension policy, they
can use these funds to repay the outstanding capital."
Last year, the US BusinessWeek magazine
obtained the first-ever measurement by metro area of the increasing
popularity of interest-only mortgages, and it showed that San Diego
rates No. 1, by number of "IOs" in 2004. In metro San Diego,
47.3% of all mortgages required interest payments only in their early
years. The survey covered the top 50 metro areas in the US and measured
by the total number of mortgages issued. Atlanta, San Francisco, Denver,
and Oakland, California, followed close behind San Diego. Milwaukee
turned in the lowest number, just 4.8% interest-only loans last year.
The Economist also noted in 2005 that interest-only mortgages are all
the rage, along with so-called “negative amortisation loans” (the
buyer pays less than the interest due and the unpaid principal and
interest is added on to the loan). After an initial period, payments
surge as principal repayment kicks in. The Economist said that in
California, over 60% of all new mortgages in 2005 were interest-only or
negative-amortisation, up from 8% in 2002. The national figure is
Interest-only mortgages accounted for less than 2% of all US loans as
recently as 2001.
Taoiseach Bertie Ahern, said
that problems in health and other public services cannot be solved
unless working practices change.
Ahern said change and modernisation in the public
service could be achieved only if staff extended their working day.
He said it would not be possible to face challenges in
the future if public sector workers wanted to work only six hours a day
and take a half-day on a Friday.
So in the tenth year in power, it's as if he had never
heard of benchmarking
In a report in The Financial Times issue of August 12th, 2006, on Irish
buyers driving up farm prices in the UK, Matt Dempsey editor of The
Farmer's Journal is quoted: "When you can now sell a piece of rezoned
farm land on the edge of a town in Ireland for €500,000 an acre, several
farmers have found themselves very rich."
A quarter of the €18.5bn of taxpayers' money being spent on new main
roads will go into the pockets of landowners and archaeologists.
The Irish Independent reports today that an astonishing €4.6bn will be
spent on compensating landowners along the routes of roads by companies
over the next 10 years.
Irish Junior Minister Tom Parlon and President of the Progressive
Democrats has warned that any change in the restrictive rezoning system
of land for development that has a 20-50 times multiplier effect on
values, would be to the "left of Stalin" even though as a big
farmer, he is a significant beneficiary of European socialism.
Patrick Honohan, Trinity College
economics professor: Nevertheless, the business sector and indirectly -
- Irish mortgage borrowers have had access to global finance. Indeed,
there has been a very rapid recent growth in foreign borrowing by banks
to finance their mortgage lending. In the past few years banks borrowing
from abroad to onlend to Irish residents has soared from 10 to 41% of
In the past, financial markets served a watchdog role, and penalized
national overborrowing with high interest rates. But now that Ireland is
in the Eurozone, Honohan notes, the watchdog is muzzled and even high
rates of borrowing can proceed without any warning sign from the