Friday, October 31, 2008

Common sense from the Guardian

Wow. I can't believe it. Martin Kettle in today's Guardian with a load of common sense about the election.

And yet when, a week from now, we reflect on the immense fact that America has elected a black president, or even if we are reflecting on the scarcely less immense fact that it has not, it will be important to remember what it feels like now - that this campaign has not fundamentally been about race at all.

Don't get this wrong. The Republicans are engaged in an "othering" of Obama into which race is inextricably woven. But the othering of 2008 is not something new and unique but something old and familiar. In 2004 they othered John Kerry as a rich liberal. In 2000 they othered Al Gore as a beltway geek. In the 1990s they othered Bill Clinton as a draft-dodging child of the 60s. Before that they othered Michael Dukakis, Jimmy Carter and George McGovern, each in his turn, right back to the othering of John Kennedy as a Catholic in 1960. Othering, in other words, is what Republicans - and sometimes even Democrats - do.
Okay, I don't agree that the Democrats are any less guilty of this than Republicans, but that's beside the point. The essence of his point, that there's nothing much new here, is true. This election isn't all that different.
That is the reason why, next Tuesday, American voters face a double choice - electing a president of a race they have not previously voted for; and, at least as important on the day, electing a president from a party that, in modern times, they rarely vote in.

Look at it this way. Obama may or may not have a problem getting white Americans to vote for him. But he is doing much better than most of his recent Democratic predecessors ever managed among such voters.
This column should be mandatory reading for everyone in the British & Irish media and anyone who feels the urge to voice an opinion.

Dream On

Sure Obama has Bruce, Billy Joel, Bon Jovi and loads of others, but McCain has Joe Perry. Perry brings with him some campaign songs that could be immediately useful: Walk This Way - obviously; Dream On - always a winner; Dude (Looks Like A Lady) - just to confuse people; And Sweet Emotion - because it's great.
Some sweat hog mama with a face like a gent
Said my get up and go musta got up & went.
You got good news but you're a real good liar
Cause backstage lover set your pants on fire.
I know time's short, but I can't see how this won't tip the scales in McCain's favor.

Thursday, October 30, 2008

Obama's infomercial

One of the great joys of traveling from Ireland to America is that before I get used to the time change I always find myself wide awake at 4am or so. When that happens I generally turn on the t.v. and switch around until I find half an hour on the Little Giant or the Vacuseal or some special mop that cleans your floor whether it's tiles, carpet or linoleum. There's great entertainment in these productions.

Unfortunately, I didn't get to see Obama's infomercial last night. I'm sure Obama didn't employ any of the traditional infomercial production values, but I'd like to imagine he did. The gross (& grotesque) overacting that is part and parcel of every infomercial would have suited Obama's purposes perfectly and it would have been more entertaining than what I'm sure was a very sincere and earnest half hour.

Just think of it.

First you'd see a shrunken, flustered McCain with hair all a mess and purple in the face in a dimly lit Oval Office trying to handle some crisis or whatever and then you'd switch to a brightly lit Oval Office where a cool Obama is soothing staff and the nation simultaneously. Next you'd see McCain stepping on the neck of some poor person while patting some Wall St. guy on the back followed by Obama cuffing the Wall St. guy as he hands over the keys to a new house to a 'typical' family.

Ah, if only.

I don't hate the Phillies

One of the strange things about living away is that the teams I hate is frozen in time. In the 1980s. I hated and still hate the St. Louis Cardinals, who were the Mets' main rivals in the 80s and who beat the Mets in 2006. And, of course, I hate the Yankees.

I don't hate the Philadelphia Phillies, although it seems that most of my fellow Met fans loathe the Phillies and their (relatively) nearby fans. Last night the Phillies won the World Series and I was rooting for them. When the series started I was uncommitted, but after the first two games I realized I was actually rooting for Philadelphia. Given the depth of feeling most Met fans seem to feel for the Phillies I feel almost traitorous.

Friday, October 24, 2008

The die is cast. (Or at least my vote is.)

I voted and mailed the ballot paper off yesterday. It's irretrievable. And who did I vote for? Okay, yes, but no extra credit for guessing correctly that I voted for McCain. It has to be said that I voted with little enthusiasm and less hope. (And the fact I vote in NY State means that I already know beyond doubt that my guy's not going to win my state.)

Back in January I said it had to be anyone but Clinton. Now Hillary seems like a distant memory. It looks like Obama will win, but I won't be joining in the celebrating.

Time to clean house in Brussels

First we had Jaime Smyth in a newspaper article and now we have RTE's Sean Whelan testifying before an Oireachtas committee that our representatives in Brussels are suffering from low morale after the Lisbon vote. Time for the government to act. Time for new people representing us in Brussels.

Circumstances have changed and the kowtowing brown noses are now useless and what we need are combative, argumentative diplomatic soldiers for Ireland. We need people who relish being disliked. Annoying, cantankerous so and so's. We need a team of Michael O'Leary types. Have we got any of those available to the Irish government?

Where Parker is wrong

I didn't have a chance earlier to finish my thoughts on Kathleen Parker's column on Sarah Palin. Near the end Parker says:
And though it isn't over yet, it seems clear that McCain made a tragic, if familiar, error under that sycamore tree. Will he join the pantheon of men who, intoxicated by a woman's power, made the wrong call?

Had Antony not fallen for Cleopatra, Octavian might not have captured the Roman Empire. Had Bill resisted Monica, Al Gore may have become president, and Hillary might be today's Democratic nominee.
There is absolutely no question but that Monica does not belong there. Bill Clinton was not "intoxicated by" Monica's "power", but rather indifferent to her vulnerability. She was an insecure, plain-looking star-struck young woman (girl, really) who was simply another play thing for Caligula. She was no Celopatra.


The New York Times has a long-ish profile of Sarah Palin today. I actually didn't find it all that interesting, but this paragraph caught my eye.
Friends say Ms. Palin’s itinerant college journey was nothing unusual, that it was routine for Alaskans without money to tour colleges in the Lower 48, uncertain about their interests and attracted to anywhere that sounded warmer. Many here ticked off their own tallies of colleges attended.
There's been a lot of noise about how Palin attended all these different colleges, but from what the Times says this is just another Alaskan quirk.

The key question about Sarah Palin is not why did she attend all those different colleges, but - "Is she up to being President"? I believe the answer to that question is 'Yes', but I'll admit that the evidence in favor is lacking. I think she's plenty smart enough and I think her judgment is sound.

If she loses next month she'll have 4 years to fine tune her political philosophy and acquire sufficient knowledge to 'appear Presidential' in 2012. She will also gain more executive experience as Governor.

So did McCain make a mistake choosing Palin? Well, maybe, but who would have been a better choice? Romney, maybe, given the economic problems, but he's such a turn-off. Really McCain didn't have a lot of good options.

Kathleen Parker thinks McCain chose Palin for 'other' reasons.
One does not have to be a psychoanalyst to reckon that McCain was smitten.

… As my husband observed early on, McCain the mortal couldn't mind having an attractive woman all but singing arias to his greatness. Cameras frequently capture McCain beaming like a gold-starred schoolboy while Palin tells crowds that he is "exactly the kind of man I want as commander in chief." This, notes Draper, "seemed to confer not only valor but virility on a 72-year-old politician who only weeks ago barely registered with the party faithful."
I'd love to dismiss this as nonsense, but I can't. I think most men - especially those who are at least 35 - find Palin attractive. She's pretty, smiley and seems so full of life. It's possible that this did - even if subconsciously - figure in McCain's own thinking, but I'm also sure the more cynical in his campaign would have known that she'd be a hit.

I also think her good looks explain why so many men on the left want to paint her as some airhead Barbie; it's safe enough to be attracted to her so long as she doesn't threaten you. I think even the NY Times's profile provides plenty of evidence that she's far from the ditz that these people say (hope?) she is. If things go against her on November 4, she'll be back and better next time.

Wednesday, October 22, 2008

Medical card fiasco

To be honest I haven't got a lot to say about the medical card and the government's handling of it since the budget last week. I don't even have a clear idea what a medical card is or what it's used for. I don't have one, which explains a lot, I suppose. I have this vague understanding that a medical card ensures free medical care for poor people, but sometime in the not-too-distant past it was extended to include anyone over 70 years of age.

All of that is a preamble to my view that I just don't know how the government didn't see that taking something away from old people - even if they've only had it a few years - was always going to be a problem. Once people get used to an entitlement, it's very hard to take it away from them. And when you're taking it away from either the very young or the very old it doesn't much matter about the rights and wrongs of it, you're on a political loser.

Defending such a move in print, even indirectly or only partially, is a brave decision. I applaud Sarah Carey for her article this morning pointing out that many of those who are opposed to the government's recent attempts to cut back on the medical card for old people were among those who opposed the granting of it in the first place. She also pointed out that the number of old people getting private insurance had increased since the free medical card was introduced. (I bet her life won't be worth living for a while after this column.)

Carey's column combined with what to me seemed unseemly behavior at the protest yesterday has almost made me sympathetic for the government. Almost.

Angela's Ashes & Hitchens

I recently read Angela's Ashes. I'd read Tis a while back so I knew what to expect as far as style and general themes were concerned.

I enjoyed the book, although I can't say I believed it. Not all of it, anyway.

Now I'm reading Love, Poverty, and War by Christopher Hitchens. The book is essentially a selection of his essays, columns and articles over a period of 15 years or so. I knew very little about Hitchens before I started reading this book other than that he was a writer for The Nation (don't know if he still is) and that he was in favor of the Iraq war.

Well, I tell ya, he can write.

It isn't just his grasp of the subject that strikes you - whether it's Kipling or Trotsky or the Kurds or Route 66 or even Malcom Muggeridge - it's how he makes you want to know even if you never really cared before (which I can say is true of many of his subjects in this book). And when he touches on a subject that's been gnawing at you (like the hipsters' worship of the Dalai Lama) it's like a lightning bolt of clarity has struck you.

I haven't finished the book yet and I know there are essays on some leading figures of the Church that might be uncomfortable. Doesn't mean I'm not looking forward to them, though.

Tuesday, October 21, 2008

Oh to be hip in London

I found myself in Notting Hill in London over the weekend. I hadn't intended to go there nor had I ever been there before. After 5 minutes walking around I realized that the chicest (is that a word?) fashion accessory was one I didn't have: an Obama badge. I saw three or four being worn by the 'coolest' people around. There weren't just wearing them, they were displaying them.

I wondered to myself how my Bush-Cheney '04 cap would have gone down?

Monday, October 20, 2008

Hockey fan?

I know it's not looking too likely, but what if McCain wins? What about all those Gore/Kerry/Obama voters now? Well, this option's still there.

Friday, October 17, 2008

If Obama wasn't black ...

I heard George Lee on Today with Pat Kenny say that while watching the debate the other night (no, I didn't watch) the thought occurred to him that if Obama weren't black (he actually said "colored", but I can't kill him for that) he'd be well in front by now (or something to that effect). If this was the only time I'd heard this, I'd ignore it, but I hear it all the time - on the radio/t.v. and in conversation. I don't buy it at all.

First of all, if Obama were a white guy he would never have won the nomination. No similarly urbane, cosmopolitan white guy would have won the black vote against Hillary as Obama did. For example, Obama won 80% of the black vote in South Carolina. There's just no way that a 'white Obama' would have had similar success among black voters. Therefore, if Hillary had run against 'white Obama' Hillary would be the nominee right now.

But, what about the general election? Would Obama be further ahead if he were white? Let's face it, the underlying assumption when people like Lee make this point is that there are a large number of racist white Americans who won't vote for Obama because he's black. Is that true? I doubt it.

First, I'm sure there are some white people who are drawn to Obama because he's black. How many? Who knows?

Second, it's obvious that Obama is inspiring greater interest among black people in this election than in any previous presidential election. And he's going to get their votes in greater numbers than a 'white Obama' would. He's currently out-polling McCain among like black voters by 91% to 3%. That's a good deal better than Kerry did against Bush in 2004, when Bush won 11% of the black vote.

And, last, you have to expect that Republicans were always going to vote for the Republican candidate. So the only possible segment of the electorate that Lee and others could be talking about are those Democrats and Independents who are voting for McCain, and McCain has an appeal for independents and some Democrats. He always has. So to pin a 'racist' tag on all non-Republican McCain voters is wrong, ugly and irresponsible.

I'm sure there are some people out there just waiting to go to the polls on Nov. 4 to vote against the black guy, but I honestly doubt they outnumber those who are equally keen to vote for Obama because he's black.

Thursday, October 16, 2008

Our cousins

I haven't got a lot to say other than this is a great article from National Geographic on the Neanderthals. Every time I think about Neanderthals I wonder to myself how different the world would be if there were two species of human beings.

Wednesday, October 15, 2008

Explaining the financial crisis

I like this from Jim Manzi at National Review Online. He uses hunters and gatherers living in caves as the example of how a banking crisis - like the one we have now - might arise. Here's a paragraph on Credit Default Swaps, which are often explained in nearly incomprehensible terms.
While this is happening a couple of sharp operators might sit together in a dark corner of the cave, and make a wager about whether Og will default on his bond. In plain English, we would call this a side bet. Though if you wanted to sell this idea to a fairly gullible person who holds Og’s bond, you might make it sound kind of gee-whiz by calling it a Credit Default Swap. If I hold one of Og’s bonds and I take a bet that pays out if Og defaults, then I’ve just hedged my risk.
Read the whole thing.

For a good article on CDS's this one from Newsweek is pretty good. Provides interesting background too.

The ballot

I got my ballot yesterday. I didn't even know Ralph Nader was in the running this time. He's listed as the candidate of the Populist Party, which I didn't know was still around. Cynthia McKinney is the Green candidate, where Nader had a home the last two elections.

Also on the ballot are Roger Calero (Socialist Workers Party), Gloria La Riva (Party for Socialism and Liberation) & Bob Barr (Libertarian). See? It's not just about the big two. (Yes it is.)

I was disappointed I didn't get one of the Osama ballots.

Harper reelected

Stephen Harper was reelected yesterday, although not with the majority he wanted. Still, he retained his job and that's not to be sneezed at during these tumultuous times.

So, if Obama wins in November, will he be the most left wing leader of any of the G-7 nations? Merkel in Germany, Sarkozy in France, Berlusconi in Italy and Harper in Canada all hail from the right in those nations. I'm not as sure of Aso in Japan, but I think he's considered to be 'right-leaning'. Then there's Gordon Brown. I guess he could be to the left of Obama, but I'm not sure. If David Cameron comes to power that will leave Obama as the only leader coming from the left.

Funny turn of events.

8c extra a liter

The budget hiked the cost of a liter (okay, litre) of gas (okay, petrol) by 8c (that's $0.41 per US gallon). That's a substantial, punishing increase on the already overtaxed motorist. Okay, it's a "tough" budget as everyone's been saying. This is just more pain, right?

Not if you're John Gormley, who's clearly happy about this measure, which only makes me angrier at the government.
Mr Gormley also pointed to what he called "Green Party gains" including: a substantially increased budget for water services; new funding for home energy efficiency and warmer homes scheme; increases in petrol prices; the bicycle initiative; and an increase in motor taxes.
Gormley is Fianna Fail's (that FAIL has rarely seemed so accurate) partner in government. Think about that: FF is sharing power with people who are today reveling in the pain being endured by millions of voters.

Even though I'm not sure if a Fine Gael-Labour government would do much differently, I'd be happy with the change in tone. On the one hand you have Fianna Fail acting as if this budget mess is a mystery to them, like they've only recently come to power. And there holding their hands in government are people who are sneering and laughing at the vast majority of Irish citizens. Time for a change?

"Long haul"? Is this a joke?

I heard the Minister for Finance on the radio last night explaining aspects of the budget. However, when I heard him explain that long haul flights will incur a tax of €10 and short haul flights will have an extra €2 added on I thought to myself, "Well, it could be worse".

It was only later I found out that "long haul" is any flight of 300km (200 miles) or more. Well that leaves a lot options open to people looking for the short haul flight. From Dublin you can go to Liverpool, Manchester, ... Wait surely there must be others? Let's check again. ... Eh, No. That's it. Although maybe they'll throw Glasgow into the mix seeing as that's listed as exactly 300km from Dublin. And, from Shannon? Well, there's always the t.v.

Wikipedia defines 'long haul' as any flight over 500 miles (800km), which would be a lot better for Irish travelers AND those who might want to visit us.

I later heard the Minister explain that he used a Netherlands law as a model. Well, excuse me Minister, but maybe had you checked a map you might have seen that the Netherlands is NOT an island off the northwest coast of Europe. They don't have to include 60+ miles of open water in their distance charts. And, they have other travel options - road, rail, etc. - that we don't have. (And, forget about the ferry. When you have to spend at least 2 hours to travel the first 60 miles that's not an option.)

Tuesday, October 14, 2008

Blaming the Central Bank

Now, I've already said I'm favorably disposed to laying a lot of blame for the financial crisis at the feet of the Federal Reserve. In America. Here the Central Bank is getting some criticism and, well, I might be willing to cut them more slack.

One of the problems that the Central Bank has is that it has no control over the currency or interest rates. We should have had much higher interest rates for a number of years, but due to the fact we foolishly joined the euro our central bank has been powerless to make the adjustments necessary. That meant we were able to borrow at rates far too low for an economy growing so rapidly.

And, on top of that, the exchange rate with the dollar for so long favored us too. The weak economies at the center of Europe meant we had a weak currency to go along with our low interest rates. Low interest rates a weak currency and a rapidly growing economy were always going to create a bubble. All that extra wealth had to go somewhere and, given Irish people's love of property, that's where the money went. Land speculation, buying houses to rent, investing in overseas property.

Now, back to the Central Bank. Should they have known we were heading towards a disaster? I think so, but I'm not sure. When you read the statement of Governor John Hurley delivered on July 10 it's hard not to conclude that something was wrong with the Central Bank's monitoring.
Accordingly, the banking sector here has not experienced the write-down of assets that has required some of their international peers to raise additional capital, thus Irish banks are well capitalised with good asset quality. In line with the results of previous exercises, the preliminary results of our latest macroeconomic stress tests on the banking sector, which are designed to test the financial position of banks in the face of a serious economic downturn suggest that the banking sector’s shock absorption capacity remains strong. This strength is an essential prerequisite for the more challenging times that have arisen.
"Good asset quality". I'd love to know how they arrived at that conclusion. Maybe they're right, but seeing as the state is now insuring the banks, why not publish the details on that assessment? Let all of us judge whether we agree with the regulators on the "quality" of the banks' assets.

Former Central Bank Chief Economist Michael Casey isn't quite ready to throw is ex-employers under the bus. Yet.
If, however, it turns out that none of the Irish banks needs to be recapitalised, then the Central Bank and the Financial Regulator may, in retrospect, be seen to have done a reasonable job.

In that eventuality it will probably be accepted that the main problem affecting Irish banks was the lack of liquidity and the seizing-up of the global inter-bank market - problems which the present State guarantee are designed to address.
It's a reasonable column. He does a good job of presenting the "what if is a capital and not liquidity problem after all" scenario too. Then he provides us (me at any rate) with this nugget.
Close relationships between regulators and banks - difficult to avoid in a small country - will have to be ended. It is not being suggested here that the Irish system suffers from "regulatory capture", but the long-standing practice of former governors and senior regulators joining the boards of banks on their retirement should be stopped. The ordinary taxpayers of this country have been placed on the hazard for an unprecedented amount of money. They deserve no less than that those already on the boards of institutions which they once regulated, should stand down, if only for symbolic reasons.
I shouldn't be surprised by this. You come across this sort of thing all the time here. It's a small country. Still, I can only say 'Amen' to that last sentiment. It's time all you ex-Central Bank big shots stand down from the banks' boards of directors.

Budget rumors

One of the rumors regarding the budget is that there will be a €10 tax on all flights out of Ireland. That will be the kiss of death for our short trips on Ryanair. It will also be a bitter pill for anyone in the tourism trade, but what's another industry tossed on the fire?

Budget day

Today's budget is going to be the toughest in "living memory", according to the Minister for Finance. Cutbacks and tax hikes. The media's so excited it's like Christmas has come early for them.

Saturday, October 11, 2008

He's not as sensible as Kermit

I don't use the expression - it doesn't sound right coming out of my mouth - but I do like it. "Ya muppet" or "He's a muppet" to describe someone who is or, at least, is behaving like an idiot.

Well, yesterday we had further proof that Enda Kenny is "a muppet". Again, I say, it's time for Fine Gael to grow up.

Friday, October 10, 2008

What's happening on Squawk Box?

The past week I can't shake Joey Ramone's song from my head. Every night I tune in for my CNBC fix and there she is, Maria Bartiromo.
What's happening on Wall Street?
What's happening at The Stock Exchange?
I want to know

I watch her at the big board every single day
While she's reporting, you best stay out of her way
I watch her everyday
I watch her every night
She's really outta sight

Don't blame deregulation

I guess because what's been gnawing at me the past few weeks is all this talk about how deregulation was at fault for the financial mess. How many times has it been said? And yet, what laws were changed that led to today's problems? The Gramm-Leach-Bliley Act of 1999 is the only one recently that I know of that may have played some role in the current crisis. (And, I know about the Commodity Futures Modernization Act of 2000, but I haven't been able to pin down what, if any, part it may have played.)

Sebastian Mallaby of the Washington Post points the finger elsewhere - to the Federal Reserve.
So the first cause of the crisis lies with the Fed, not with deregulation. If too much money was lent and borrowed, it was because Chinese savings made capital cheap and the Fed was not aggressive enough in hiking interest rates to counteract that.

… Rather, the key financiers were the ones who bought the toxic mortgage products. If they hadn't been willing to buy snake oil, nobody would have been peddling it.

Who were the purchasers? They were by no means unregulated. U.S. investment banks, regulated by the Securities and Exchange Commission, bought piles of toxic waste. U.S. commercial banks, regulated by several agencies, including the Fed, also devoured large quantities. European banks, which faced a different and supposedly more up-to-date supervisory scheme, turn out to have been just as rash. By contrast, lightly regulated hedge funds resisted buying toxic waste for the most part -- though they are now vulnerable to the broader credit crunch because they operate with borrowed money.
This gets to the crux of what's been bothering me. I kept reading/hearing about the deregulation (usually the word 'Republicans' appears near-by), but if you're going to blame deregulation, what regulations were rescinded that shouldn't have been?

If, however, the Fed is the source of this problem doesn't that make you wonder if Ben Bernanke is the right man to be leading the charge now?

Mallaby continues:
If that doesn't convince you that deregulation is the wrong scapegoat, consider this: The appetite for toxic mortgages was fueled by Fannie Mae and Freddie Mac, the super-regulated housing finance companies. Calomiris calculates that Fannie and Freddie bought more than a third of the $3 trillion in junk mortgages created during the bubble and that they did so because heavy government oversight obliged them to push money toward marginal home purchasers. There's a vigorous argument about whether Calomiris's number is too high. But everyone concedes that Fannie and Freddie poured fuel on the fire to the tune of hundreds of billions of dollars.
There was no lack of regulation, but there may have been a lack of oversight or, worse, the wrong emphasis among the regulators. You've got to identify the problem correctly before you can correct it.

Greens cause cancer?

This is for Bishop, err, Minister Gormley.
Health officials issued a warning over energy-saving lightbulbs yesterday after research showed that some types could potentially harm the skin and even raise the risk of cancer.

A study by the Health Protection Agency found that some unencapsulated fluorescent lightbulbs, which have a coil that is visible, emitted ultraviolet (UV) radiation above the recognised safety limits.
We're less than three months from the ban on selling (possessing? - does anyone know?) incandescent bulbs.

UPDATE: Just found this in today's news from RTE.
Environment Minister, John Gormley's bright idea is to phase out the sale of energy inefficient bulbs in a four stage process; the first to go, from March, will be traditional bulbs with an electrical power consumption rating of 75 Watts or more.

Thursday, October 09, 2008

The debates

Okay, okay, I'll admit it. I didn't watch the debates. Any of them. Not in their entirety or even substantially. I did watch about 10-15 minutes of the first one and I watched about 10 mintes of the VP debate, but that's it. I even promised some people that I'd watch them all, but I never did. Why? I don't know. I think it's partly because I couldn't (or wouldn't, I guess) watch them live, partly because I didn't need to watch them and partly because I didn't want to watch them once I'd seen all the press about them. And the debates always make me cringe, what with the phony smiles, platitudes and personal stories. Lecchh.

So, now that I've got that off my chest, is it all over for McCain? Probably. Hard to see how he can overcome the financial disaster. (Is Hank Paulson George W. Bush's last 'get' at John McCain?} The Republicans are taking the brunt of the blame for all this mayhem. The only possible argument that they might try - and I doubt it would work - is that it now seems that Europe is in at least as big a pickle as America and this is the socio-economic model that Obama would like to implement. So, no system, no democratic nation is immune. It's not a strong argument, but I can't think of a better one.

Friday, October 03, 2008

The banks are not chastened

British people are flocking to Irish banks, thanks to the government's commitment the other night.
Tens of thousands of savers are seeking to transfer their cash out of the UK and into Irish banks – including the Post Office accounts run by Bank of Ireland – to gain the unlimited deposit protection recently afforded them by the Irish government. The first three days of this week have seen three times the normal level of new accounts and inquiries about Irish banks, according to price comparison website
This has Gordon Brown pretty miffed, apparently. From what the Financial Times reports this morning, our Irish banks are taking our taxpayer commitment and turning it into an unbeatable marketing ploy.
Ireland’s decision to prop up its six biggest lenders by guaranteeing all their debts and deposits was passed into law on Thursday, in the face of anger across Europe about the impact that it would have on the EU’s single market.

British bankers said there were already signs that some Irish lenders were approaching corporate and private banking customers in the United Kingdom and encouraging them to move their money.
You know, I doubt a single taxpayer, well other than those who run our banks and building socieities, thought we were doing anything other than rescuing those badly run institutions. But, no. We were actually emboldening them.
“We now represent the safest place to deposit money in Europe with a AAA guarantee from a country with the lowest national debt to GDP ratio of any AAA country,” wrote Michael Fingleton, Jr, an Irish Nationwide executive, in an e-mail to employees of a large investment bank.

An Irish Nationwide employee confirmed that it was offering UK customers 6.75 per cent interest for a six-month bond with a minimum investment of £20,000.
Sickening, isn't it?

Making shopping online 'easier'

Today's Irish Times tells us that shopping online will be made easier thanks to "new measures to be announced by the EU Commission next week". Great. I like shopping online. Unfortunately, thanks to the Irish government's WEEE we can't buy a Wii (or anything electrical) online from outside Ireland. Protectionism by any other name would smell … you know where I'm going. Always the good Europeans, except when it doesn't suit us.

{And, don't tell me that non-Irish online retailers could become a registered retailer. Our market is too small for retailers to jump through all those hoops.}

Thursday, October 02, 2008

It's time to grow up, Fine Gael

Richard Bruton has been fantastic this past week or so. I can't say I ever paid much attention to him in the past, but right now I'd like to see him ascend to the leadership of the party. I can't take Enda Kenny seriously and have no faith that he'd be any improvement on the "who started this fire" crowd of pyromaniacs currently running this state.

And the first thing Richard Bruton has to do is to put Lucinda Creighton so far down the back benches that she's never heard of again. Uggh. First she blurts out nonsense about American foreign policy during the Lisbon Treaty campaign and now she blurts out a ridiculous Hitler analogy for Brian Lenihan and the bank rescue plan. Sheesh.

Come on Fine Gael. You can do it. If you wanna be the big cheese you gotta act the part.

Re-read McWilliams

It's worth going back to read David McWilliams's column from early July that I mentioned here. Read again why we are in trouble with our huge debts and no control over our currency. In July he was a fear-monger, now he's simply prescient.

Bank on the brink

Today's (London) Times claims that one of Ireland's banks was going to declare bankruptcy on Tuesday morning, which is why the government acted so fast.
The background to what has been described as the biggest blank cheque in the history of the Irish state appears to have been the fear that one of Ireland’s biggest banks would declare itself bankrupt at the opening of business on Tuesday morning.

Very senior Irish business figures said that the bank’s insolvency, in the face of a €1.5 billion (£1.2 billion) debt to a German bank that it was unable to pay, would pull down several large companies and possibly a second bank. It was this and the fear that a domino effect would begin – fuelled by the fact that a number of banks are owed billions of euros by property developers – that forced the Government to take action.
Well, clearly that's a problem if true. I'm a little skeptical because I half suspect that this rumor serves the Irish government's purposes better than that they feared that one of the banks was going to be taken over.

Regardless, it's amazing how opaque the financial standing of our financial institutions really is (this seems to be a global phenomenon, not just Ireland or America). We don't know what state the banks are in.

I'm assuming that the Irish government now has all the figures - actually I don't assume that, but I really want to believe it - and that they will publish full and truthful (I'm chuckling as I type this) numbers on the well-being of any institution asking to get under the state's big umbrella. Each and everyone of us is backing the banks now so we should all get to see the truth with regards to their commitments and capital.

Why not?

Make it the law that no bank can operate here without complete transparency. I'm sure there's a downside to such a law that I haven't considered yet, but I'm a conservative person and if I'm going to be underwriting the banks I want to know that the banks are being run prudently.

No guarantee for our commitment to the EU

THIS WEEK'S events had given a clear indication of the importance of a strong European Union and the need for Ireland to remain centrally involved by ratifying the Lisbon Treaty, Tánaiste Mary Coughlan said yesterday in Dublin.
There's no way that 'our EU partners' believe a word of that. Not now; not after the Irish government stepped in to bailout/rescue/guarantee/give a pat on the back to the Irish banks this week. I don't know if the government's action violates the letter of the (EU) law, but it sure as heck violates the spirit of the EU.

The Irish government guaranteed the Irish banks, including their operations in other EU states, but not the Irish operations of 'foreign' banks. So, you have the strange situation where those Post Office accounts with the British Post Office are guaranteed by the Irish government (those accounts are with Bank of Ireland), but not accounts in the Irish Post Office because that operation is with Fortis, a Benelux bank.

There also may have been an EU bank eying a low price takeover of one of the Irish banks and had their plans thwarted by the government's action (and the market's reaction). Preventing Ireland's banks from falling into 'foreign' hands is hardly an endorsement of the EU.

I'm not overlooking the fact that rescuing the Irish banks was in the 'national' interest, but it has completely distorted the market. The Irish government may be able to make the case that the guarantee is what should be done across the EU, but that's what they should have done - made the case to 'our EU partners'. They didn't.

They didn't because deep down, when times are tough, the Irish government's commitment to the EU is only skin deep. I'm happy to know that, but then I wish they'd stop with the hypocritical support for the deeper EU commitment that the Lisbon Treaty represents. They don't mean it.

Wednesday, October 01, 2008

Avoiding the last economic disaster

I thought this column from yesterday's Boston Globe kind of interesting.
In 1914, the world went to a war that nobody really wanted in which "miscalculations, hubris, bellicosity, fear of looking weak" led to World War I. What could have better described Bush's war of choice in Iraq? Hubris, bellicosity, and the fear of looking weak, we now know, all played roles in the decision to invade, but miscalculation trumped them all.

On the other extreme, Gates said, was Neville Chamberlains's decision in 1938 to allow Hitler to dismember Czechoslovakia because ethnic Germans predominated in one corner, the Sudetenland.

… Gates was right that those two starkly opposing examples have overshadowed decision-making ever since.
Just as generals are always "fighting the last war" politicians are always avoiding the last wrong decision.

Today I was reading this column from the (London) Times about the banking crisis when I came across this. "Mr Bernanke did his PhD thesis on the 1929-1934 Great Depression".

At first, I thought that was good. Gives him a lot of perspective. Then I started wondering if that also makes him more prone to panic when he sees conditions in the financial world that he believes are similar to those that led to the crash in October 1929.

I started wondering if he's avoiding the last economic calamity and driving us straight into something new and, possibly, worse. For example, will the bailout (or rescue plan) and all it entails absolutely kill the dollar, which might be a lot worse than letting the big banks fail. I don't know.

I then decided to see what Bernanke has written on the depression of the 1930s. I haven't had a chance to read any of this yet, but there are a number of papers here and you can read his book Essays on the Great Depression here. {And, I have no idea how much overlap there is from his academic papers and his book.}

I've said that I'm in favor of the bailout, if it's necessary. I'd love to find the time to read some of what Bernanke has said about the Great Depression and see if I agree that the current conditions are similar. Also, since Monday's vote I've been reading about other possible remedies that might be better. Here's one suggestion from George Soros, who I don't like.

I honestly wish I could come to a definite conclusion as to what is the best thing to do, but right now I'm hedging my bets and hoping Congress will too. Take a few days, a week and get it right rather than rushing into a disaster.