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 moneysupermarket.com

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.}

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.

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.

We are the center of the universe or Copernicus overturned

Wow. The things you get in an e-mail. This article was sent to me by my brother. Not only is the world economy falling apart, but now there are those questioning 450-year-old astronomical principles.

I can't say I understood all of it, but this I got.

In it [De revolutionibus orbium coelestium], Copernicus (among other things) put forth the concept that the Earth is not unique and does not occupy any sort of special position within the solar system. A generalization of this principle—the earth does not occupy a favored position within the universe—has, along with Einstein's equations, become the founding assumption of modern cosmology.

In the upcoming PRL paper, the authors postulate that we are indeed in a special location within the universe, specifically, "near the centre of a void where the local matter density is low." This isn't exactly a small void—it would need to be on the order of the size of the visible universe to get the new model to work. Still, the earth would be near its center, which is a vaguely pre-Copernican notion and, as a side effect, the model does away with dark energy.

I think it's time for me to bury my head in the sand and deny any of this is happening.

Going after Ganley

I liked Matt Cooper's column on Declan Ganley and the campaign against him. Cooper sums up why what's being done to Ganley is wrong.

First he nails the nationality slur.

It cannot be denied that Ganley was born of Irish parents, that he was schooled in Galway and that, as an adult, he has lived there for many years. He even entertained many Fianna Fail figures in his home. To attempt to deny his Irish identity is an insult to Irish people who have emigrated, and to the children of those who emigrated, especially when they came back to live in this country.

Then he got to the actual core issue – did Ganley use Yankee dollars to 'buy' the 'No' result in the Lisbon referendum?

It may well be that Ganley is at the forefront of a giant American conspiracy and has taken people for fools. But his detractors seem to have missed the point wilfully. It wasn’t Ganley’s money — or where he got it from — that won the day for the No campaign. It was the failure of the Yes campaign — in other words almost the entire political, business and media establishment — to convince the Irish electorate that the benefits of ratifying the Lisbon treaty outweighed the downsides.

Yup. It wasn't Ganley who 'won the day', but the establishment that lost it. And they lost simply because a majority of the people didn't trust them.

For this reason, the current strategy strikes me as extremely risky for the 'Yes' side. Rather than engage with Ganley as a civilized member 'of the opposition' they're going for him as if he's some form of enemy agent, a duplicitous traitor.

I don't know, maybe this will work, but if all these accusations turn out to be groundless (or never anything more than conspiracy theory) will this help overturn the 'No' vote? No, but it could convince some of those who voted 'Yes' that there is actually something dangerous to this whole process, that the forces of Europa will crush you if you dare oppose them. That's not how to win trust.

HAVE TO WIN

I know that for many people this makes no sense. I know they're right. But, I could really care less what happens between Obama & McCain on November 4 so long as I get the right result in Flushing today.

The Mets HAVE to win. It's on NASN. The last scheduled game at Shea and the Mets have to win. They have to win because after the game there's a big ceremony to mark celebrate the 44 years of baseball in Shea Statdium. They have to win because a loss will probably mean the season is over.

HAVE TO WIN.

UPDATE: It seems FAILURE was an option.

Your license fee at work

I love how RTE takes time to pat itself on the back today: "RTÉ.ie is Ireland's top media website".

You know, I bet I could have the top rated web site if I had access to all that taxpayer-funded (oh, sorry) license-payer-funded content. What I want to know is why my license fee going to build the "top media website"?

Bailout

Now, as to the bailout, well …

Who knows? I've spent hours each evening reading up on this as much as I can and tuning into the Bloomberg channel for the hearings and analysis and I'm none the wiser. Okay, not 'none the wiser', but still unsure. I guess if it's absolutely necessary then it's absolutely necessary.

It seems incredible to me that the simple home mortgage, which I and most people understand full well, was somehow transformed into a complex web of incomprehensible investment and insurance products that somehow failed to include the reality that at the root of these products were loans to individuals that had to be repaid or homes that had to be sold off where there were defaults. A whole load of houses that nobody wants, that's what the government is about to buy. And, well above the market rate for houses nobody wants.

It reminds me of the time (I can hear you - here we go again - the old guy's getting nostalgic) it reminds me of when the Space Shuttle exploded. Next day or a week or a month later (I can't recall now) I, along with my other classmates, was sitting waiting for our Physics class when in burst our teacher in an agitated state. He started ranting about the O-Ring and how "could they be so careless, so stupid". I think he promised to hunt down any of us who was ever involved in an oversight of such basic physics. (Rubber becomes brittle at low temperatures - duh!)

Anyway, that's what I was getting at. The Shuttle was a complex machine with thousands of smart people involved in its construction and maintenance, but still one basic rule of physics was ignored with catastrophic consequences. Same goes for all these mortgage-backed securities et al. Somewhere on Wall Street they forgot that if you lend money to a lot of people who are considered a poor risk you might end up with a lot of bad debts on your hands.

New Visas

It wasn't quite what I expected, but the Irish government will be issuing 5,000 visas to Americans who want to come to Ireland to work. It wasn't what I expected because I thought the working visa deal would be an equal swap, but the American government is making 20,000 visas available to Irish people.

Now before you rush off to apply for your visa you should know that the Irish economy is heading downhill fast, so you might want to defer that decision for a couple of years. Also, if you have at least one Irish grandparent you don't need to apply for one of these visas because you're automatically entitled to live here without restriction.

Not a conservative

I hope this bank bailout plan puts paid to the widespread misrepresentation of President Bush as a conservative. Bush is not a conservative. Not in foreign policy with his radical Wilsonian idealism (see the Bush Doctrine); not in fiscal matters with huge deficits and, now, the $700bn bailout (read nationalization) of the banks' bad debts; not with the prescription drug plan or the expansion of the federal government's role (& budget) in education.

Honestly, I have trouble seeing what - other than the two Supreme Court appointments - President Bush has done that fits the label "conservative".

Tough times in Brussels for the Irish

Life is uncomfortable for Irish diplomats and journalists thanks to our 'No' to Lisbon says Jamie Smyth. Many EU governments and their MEPs are annoyed, diplomats in Brussels are annoyed even apolitical friends are annoyed. Meetings and dinner parties are just not what they used to be.

You know, I don't feel bad for Smyth (and, in fairness, I don't think he's looking for our sympathy) or the Irish diplomats & MEPs in Brussels. A comfortable life for Ireland's representatives in Brussels does not figure among my concerns. I understand that there may be a price to pay; the Irish delegation may find it hard to wrangle concessions out of our EU partners thanks to the 'No'. Fair enough, that's life. The sovereign Irish people have voted and as our representatives they should stop badmouthing those who sent them there and fight our corner.

I often get the sense that life in Brussels feeds a groupthink mentality among the MEP's, diplomats and bureaucrats. Nobody questions their basic assumptions - such as 'progress' means further centralization or faster, faster, faster. The 'No' votes from the Dutch & French were answered with a slight of hand effort to override their votes. Our 'No' has been met only by anger. There doesn't seem to be any real attempt to understand what has gone wrong or how their Brussels-centered perspective may be out of kilter with the great unwashed across the EU.

Political institutions aren't that different than stock markets or banks. Trust is a big part of what makes them work. Trust and confidence. Without those the institutions are nothing more than tyrannical bureaucracies waiting to be toppled. Unless the EU finds a way to explain itself better to the people across the EU it runs the risk of being blown away through a new wave of nationalism, particularly if the economy gets very tough. The EU will be a scapegoat and all those people who damned Ireland for having the temerity to vote 'No' will find themselves unloved and unemployed at the center of an empty shell.

This was a real opportunity for Brussels to learn lessons, to scale back ambitions and amp up the efforts to be accountable. I expected we'd be flooded with people from Brussels trying to understand why the Irish voted the way they did. Didn't happen, though. Instead of trying to understand all they've done is try to browbeat us into changing our minds. That is not how to win trust and confidence.

Crisis of confidence

You think investors are jittery? You think there's unease in banking circles? You sense a little political uncertainty about the economy?

Well, those who play the market, extend credit or walk the halls of the Treasury Department are sailing on calm seas compared with Met fans today. (Don't believe me? Go to MetsBlog and read some of the comments).

Just as the Mets had fans dreaming of a redeeming October full of glory after an uplifting 2+ months during which they played great baseball and reclaimed 1st place the bottom has fallen out. The past ten days have been hell. Now they're looking into the abyss - again.

The sudden reversal of fortune combined with last year's late season meltdown has Met fans breakfasting on bowls of Diazepam after sleepless nights spent chomping Rolaids. Lunch and Dinner - if you dare to risk it - are strictly liquid at this stage.

Season ends Sunday.

Not "the house that Ruth built"

This is really annoying me. If you own an old manor house and you tear it down and rebuild it around the same basement and garden is it the same house? Seems pretty obvious that it's not, but that logic hasn't been applied to Yankee Stadium.

The New York press, actually the press across America, keeps referring to the last game ever in "the house that Ruth built". Well, "the house that Ruth built" was essentially demolished after the 1973 season and rebuilt (they like to call it a refurbishment, but there was practically nothing left of the first building). For two years the Yankees played at Shea Stadium and in '75 they went to play in what was then often called "new Yankee Stadium".

It's bad enough the American press is playing along with this Yankee propaganda, but the English press has now joined in. Uggh.

At least I'm not completely alone.

There will be no last-minute federal bailout of Yankee Stadium. The National Register of Historic Places has declined, more than once, to consider the big ballpark in the Bronx for landmark status - an honorific, it turns out, that would not have guaranteed protection from demolition.

And the New York City Landmarks Preservation Commission, which could have stopped this year's scheduled tear-down of the 85-year-old walls, repeatedly has rejected landmark designation because of the Stadium's 1974-75 "unsympathetic renovation."

… In 1999, South Bronx Congressman Jose Serrano wrote to President Clinton about NHL status for the Stadium, only to be informed by the historic-places director at the time that, "while the contribution of the New York Yankees to baseball and America is of national importance in many respects, the National Park Service is unable to conclude that Yankee Stadium retains the high degree of architectural integrity required . . . "

A 1986 landmark survey, which examined several professional baseball stadiums, already had concluded that the Stadium's mid-1970s remodeling "compromised the integrity of the Stadium."

Here's the quid. Now for the quo?

From the new year 20,000 one-year working visas will be made available to Irish people who want to work in America. This strikes me as being of no help whatsoever to those who are already working illegally, but it's a start.

What I want to know is where are the visas for Americans who want to work in Ireland? I thought this immigration deal was going to be one of those quid pro quo deals where there would be an equal number of opportunities for Americans who would like to work in Ireland. This sounds strangely like the old Ireland, not the new Ireland. Has the economic downturn caused a complete reversion in thinking and shredded all confidence in the future?

The Bogeyman

I admire Declan Ganley, but it's clear that large sections of the Irish media don't like or trust him. He's a devout Catholic teetotaler - Strike One. He's a successful businessman with some strong political views on the EU - Strike Two. And, he's the CEO of a company that sells telecom equipment to US Northern Command and the National Guard Bureau - STRIKE THREE.

I mean, good Lord, could he be any more perfect as the ultimate bogeyman for the left-leaning Irish media and the pro-Lisbon Dail parties? Oh yeah, he's married to an American - Strike Four - if a fourth strike is needed.

The government is going to change the law to help silence Ganley and yesterday European Affairs Minister Dick Roche - he's sounding more bitter each day, isn't he? - said that Declan Ganley is "class A+ hypocrite".

“Declan Ganley is calling for more openness and transparency in Europe yet the contract which was awarded to him by the US Department of Defence in September 2004 did not entail public procurement procedure whatsoever,” Mr Roche said.

“The emerging details of Declan Ganley’s business links with the US military raises the question once again as to what his motive was in opposing the Lisbon treaty with such a well-financed campaign. The Irish people have a right to know who is pulling his strings.”

Is Dick Roche always so concerned with transparency in the American public procurement procedure? Really, what issue is it for Dick Roche how the American government awards contracts?

More importantly, there's more than a hint of anti-American hysteria in Roche's comments. I fully expect to see Brian Cowen slap him down or I'm going to write to my Congressional representatives to ask them to raise the issue with the Irish government. It's bad enough that the lunatic left talks about the American government this way without the Irish government joining in. I'm sick of it, actually.

Anyway, I checked FedSpending.org and I don't see any contracts coming anywhere near the €200m that the Irish Examiner claims that Rivada Networks has secured with the "US Military". In fact, for the years 2004-2008 the total for all Federal contracts with companies called Rivada is around $40m or about €28m.

If Rivada has contracts totaling €200m most of them must be with state governments, which should ease the concerns of all those who see the "neocons" behind everything. Maybe a little light (that is, a bit of googling) can help the media and the government to see that the bogeyman's not so scary after all.

Newstalkin'

I forgot to mention that I was on the Wide Angle on Newstalk on Sunday. It was a pretty quick segment - about 8 minutes or so - so I don't have a lot to say. The other guest was Rebecca Wolfe, formerly of Democrats Abroad, was very nice and good at answering questions too. Karen Coleman was courteous and professional. She didn't really rush either of us even though she was stuck for time.

I don't know if I'll do it again. It's just too far to drive into Dublin and park on a Sunday morning/afternoon.