Domestic and foreign commentators are fond of asking  questions along these lines: “with all the hardship, increased taxes, pay cuts, loss of economic sovereignty, unemployment, emigration, greedy politicians, corruption and the general  lack of accountability, why are there not riots or even street protests in Ireland?  Are Irish people unusually passive compared to Greeks, for instance?” 

Michael Lewis, in his now-famous Vanity Fair article, notes that “There’s been no Tea Party movement, no Glenn Beck, no serious protests of any kind…… The Greeks already have taken to the streets, violently, and have been quick to find people other than themselves to blame for their problems: monks, Turks, foreign bankers. Greek anarchists now mail bombs to Angela Merkel and hurl Molotov cocktails at their own police. In Ireland the money was borrowed by a few banks, and yet the people seem not only willing to repay it but to do so without a peep of protest.”

I am puzzled as to why anybody should be puzzled about this.

The simple answer is that the Irish Government is still spewing out money (most of it borrowed) to pay social welfare benefits which remain the envy of equivalent recipients in other EU countries, while failing to tax to any real extent the owners of residential property (that is to say, most of the population), despite the inflated cost of running our highly inefficient local government.  And public sector employees are still paid extremely well, given their job security and ridiculous index-linked pensions.

In short, the Irish Government is buying peace on our streets.  And it is buying it with money that it doesn’t have.  Even after all the cuts and tax increases of the past three years, we still have a government budget deficit of about €19 billion annually – for every €100 euros the Irish Government spends, it borrows about €35.  It borrows more than €2 million every hour of the day.

Michael Lewis and other commentators should come back in two or three years’  time, when real cuts in social welfare and real tax increases will be in place.  They might see a bit more than a “peep” of protest.

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Here is a challenge for all you optimists out there.  Study the facts about Egypt set out below, and consider how likely it is that the current unrest will result in a stable, peaceful country.

  • In the past 25 years, Egypt’s population has risen by over 60%, from 50 million in 1985 to around 81 million today, with an average age of 24.   This rise places a heavy burden on housing and food production.  Population continues to grow, at 2% per annum. 
  • Based on information from the CIA World Fact Book, in 2009 government revenues were $46.82 billion and expenditures were $64.19 billion, a deficit of 27% .  For 2010, the Factbook reports government debt amounting to 80.5% of GDP.
  • Tourism normally accounts for more than 11 per cent of gross domestic profit, but is being dramatically affected by the recent unrest.
  • Egypt imports about half the food eaten by its 79 million people and is struggling with double-digit food inflation. In 2010, the oil minister stated that Egypt imports 40% of its food, and 60% of its wheat. 
  • Egypt is the world’s No. 1 wheat importer.
  • Food prices are rising steeply across the world, and recently rose to the highest levels since the UN’s Food and Agriculture Organization began indexing them in 1990.
  • A massive government subsidy program provides bread for the poor
  • Egypt  is mostly desert and depends almost entirely on the Nile River which is in decline.
  • Egypt’s total water consumption had increased by 17 per cent in the five years up to 2010.  A report by the state-run Central Agency For Public Mobilisation And Statistics (CAPMAS) predicts that annual water resources would decline by 15.2 billion cubic metres by 2017 – from a required 86.2 billion cubic metres. 
  • In 2010, several African states that share the Nile with Egypt signed a treaty without Egypt or Sudan which would allocate to them more of the Nile waters at the expense of Egypt. A 1956 treaty allocated the majority of the Nile river waters to Egypt’s needs. The new treaty, if it takes hold, is a serious threat to Egypt.  Egypt’s minister of water resources and irrigation has said That Cairo will take “whatever steps are necessary” to protect its “historic rights” to the Nile waters to ensure the nation’s survival.
  • In the past, the Nile would flood annually, expanding and then retreating, leaving behind a thick fertilized soil layer. But since the building of the Aswan dam, that flood cycle has not occurred.  As a result, the soils are depleted of all natural supply of nutrients that plants rely upon. So Egypt is dependent on fertilizer and on various other chemicals to keep their soils going, and is therefore very exposed to oil price fluctuations.
  • Half of Egyptians live on less than $2 a day.
  • H5NI avian influenza is a significant problem in Egypt.
  • 17% of adult Egyptian males cannot read or write; 41% of adult females cannot read or write.
  • According to a recent Pew Research Center poll, the Egyptian public is radical in its religious views. 82% of Egyptian Muslims want adulterers punished with stoning; 77% want robbers to be whipped and have their hands amputated; 84% favor the death penalty for any Muslim who changes his religion.

That’s quite a daunting list of challenges.  Watch this space.

“…. the dissolution of the old order should make the soul rejoice, but the frightening thing is that what the departing order leaves behind is not an heir but a pregnant widow, and that between the death of the one and the birth of the other is a long night of chaos and desolation.”  (Alexander Herzen)

So can senior bank bondholders be singled out for “burning”?  Many general election candidates are playing hairy-man politics and insisting that the new government should do just that, with or without EU/IMF agreement, while of course not touching depositors at all.

Meanwhile, in Denmark, Amerganbanken has gone bust, and depositors with assets over €100,000 (the amount guaranteed by the national deposit protection scheme) suffered a haircut alongside senior creditors, despite the bank being taken over by the state agency responsble for failed banks.

Just what are the legal arguments as to whether or not depositors can be treated differently from senior bondholders?  Does it depend on the wording of the individual bonds, or do all bonds conform to a standard set of terms and conditions?  Or is the issue governed by general legal principles which an Irish court would have to determine?  Why has nobody issued clarification on these questions?

So should somebody with (say) €200,000 on deposit with AIB be worried?  Life is never risk-free, so the question people are asking is whether the interest rate they are getting with an Irish bank is sufficiently high to compensate for default risk, when compared to the rate offered by a safer (?) non-Irish bank, or an Irish subsidiary/branch of a foreign bank.

Can somebody of an expert and trustworthy nature please throw some light on the exact position?  That is to say, can senior bank bondholders legally be singled out for “burning” without depositors having to share the pain?   Until then, I am staying away from Irish banks.

We have become used to the idea of spending limits for election candidates.  I have yet to see a serious suggestion that there should be a limit imposed on the number and size of posters that candidates erect for every election.

Consider these facts:

  • to a large extent candidates only erect posters to counteract the fact that their opponents are doing so, and failure to “front up” with thousands of posters might be seen as evidence of a lacklustre campaign; just as we had a nuclear disarmament treaty, we now need a postering decommissioning regulation
  • election posters are almost invariably uninformative as to policy, consisting only of a carefully taken (and touched up) photo of the candidate, and an exhortation to Vote No.1 for Joe Schmoe (the suggestion that a party’s second candidate should also be supported can sometimes be found, but in the smallest print size that decency allows)
  • posters are damaging to the environment, whether in their manufacture, their printing, their propensity to cause litter, or their subsequent disposal
  • erecting posters is a time-consuming and energy-intensive procedure
  • posters, as erected in Ireland, are a danger to life and limb; this is because they often cause obstruction of pathways and the covering up of, or the distraction from, road signs for motorists
  • many jurisdictions do not allow uncontrolled postering, and some go as far (in local elections at least) as to insist that all candidates limit themselves to a poster or statement which are collectively erected at one central position in the electoral area

Why not impose a limit of (say) 500 square metres of poster area per candidate in a general election?  He/she could choose whether to go for lots of small posters, or fewer but larger ones.  I suspect everybody would be relieved at such a regulation, which would allow the focus to be on more productive aspects of campaigning.

More from the Vanity Fair article by Michael Lewis  (“When Irish Eyes Are Crying”), skewering our hypocrisy on the “First (sic) National Language”.

…… The first thing you notice when you watch the Irish Parliament at work is that the politicians say everything twice, once in English and once in Gaelic. As there is no one in Ireland who does not speak English and a vast majority who do not speak Gaelic, this comes across as a forced gesture that wastes a great deal of time. I ask several Irish politicians if they speak Gaelic, and all offer the same uneasy look and hedgy reply: “Enough to get by.” The politicians in Ireland speak Gaelic the way the Real Housewives of Orange County speak French. To ask “Why bother to speak it at all?” is of course to miss the point. Everywhere you turn you see both emulation of the English and a desire, sometimes desperate, for distinction. The Irish insistence on their Irishness—their conceit that they’re more devoted to their homeland than the typical citizen of the world is—has an element of bluster about it, from top to bottom…..

I am reminded of the conceit referred to above several times  day, but no reminder is more annoying than the regular receipt of a gas bill or an electricity bill, accompanied by a bulky brochure which is 100% larger than it needs to be because it’s printed in both English and Irish.  This is nonsensical and is a shameful waste of paper, ink, fuel etc etc. I am not given the option of receiving no brochure at all (a link to an online version would do nicely), nor am I given the right to opt out of the dual language version and get a slimline, monolingual version instead.

This is but a small reminder that the price of our having submitted to the vanity of the extreme wing of the Irish language lobby is high, both socially and ecologically.

The now famous Vanity Fair article by Michael Lewis  (“When Irish Eyes Are Crying”)  is worth reading. The writing is well up to Lewis’s usual standards, as seen in The Big Short and Liar’s Poker.  Here are a few excerpts that caught my eye.

On Patrick Neary:

….. A banking system is an act of faith: it survives only for as long as people believe it will. Two weeks earlier the collapse of Lehman Brothers had cast doubt on banks everywhere. Ireland’s banks had not been managed to withstand doubt; they had been managed to exploit blind faith. Now the Irish people finally caught a glimpse of the guy meant to be safeguarding them: the crazy uncle had been sprung from the family cellar. Here he was, on their televisions, insisting that the Irish banks were “resilient” and “more than adequately capitalized” … when everyone in Ireland could see, in the vacant skyscrapers and empty housing developments around them, evidence of bank loans that were not merely bad but insane. “What happened was that everyone in Ireland had the idea that somewhere in Ireland there was a little wise old man who was in charge of the money, and this was the first time they’d ever seen this little man,” says [Colm] McCarthy. “And then they saw him and said, Who the fuck was that??? Is that the fucking guy who is in charge of the money???  That’s when everyone panicked.” ….

On our obsession with property ownership:

….. There’s no such thing as a non-recourse home mortgage in Ireland. The guy who pays too much for his house is not allowed to simply hand the keys to the bank and walk away. He’s on the hook, personally, for whatever he borrowed. Across Ireland, people are unable to extract themselves from their houses or their bank loans. Irish people will tell you that, because of their sad history of dispossession, owning a home is not just a way to avoid paying rent but a mark of freedom. In their rush to freedom, the Irish built their own prisons. And their leaders helped them to do it….

On Brian Cowen and his drinking:

…. (Four different Irish people told me, on great authority, that Cowen had faxed Ireland’s 440-billion-euro bank guarantee into the European Central Bank from a pub.) And the truth is, if you were to design a human being to maximize the likelihood that people would assume he drank too much, you’d have a hard time doing better than the Irish prime minister…..

On AIB:

…. A.I.B. even opened a unit dedicated to poaching Anglo’s biggest property-developer clients—the very people who would become the most spectacular busts in Irish history. In October 2008, the Irish Independent published a list of the five biggest real-estate deals in each of the past three years. A.I.B. lent the money for 6 of the 15, Anglo Irish for just 1, as a co-lender with A.I.B.  On Irish national radio recently, the insolvent property developer Simon Kelly, whose family’s real-estate portfolio has run up bad debts of 2 billion euros, confessed that the only time in his career a banker became upset with him was when he repaid a loan, to Anglo Irish, with money borrowed from A.I.B. The former Anglo Irish executives I interviewed (off the record, as they are all in hiding) speak of their older, more respectable imitators with a kind of amazement. “Yes, we were out of control,” they say, in so many words. “But those guys were fucking nuts.”

Vote for Eric!

3 February, 2011

I see from this morning’s paper that at least one candidate in the general election has had the good sense (?) to adopt my somewhat unusual political manifesto, which I set out in a post last September (link), and which I repeat here:

  1. I will not put purely local constituency interests before national interests.
  2. I will not help you to jump a queue for spurious reasons.
  3. I will not help you get something to which you are not in principle entitled.
  4. I will not hold “clinics” – here are my contact details – please make an appointment to see me, or send me an email,  if it’s important.
  5. If you want assistance on a purely local government matter, well here’s a list of all the local government representatives.  Don’t bother me about it…..
  6. I will not support any Government measure which will increase expenditure significantly, unless it is clear where the extra taxation will come from.
  7. I will not claim for reimbursement of any unvouched expenses.
  8. I will publish online all the expenses I have claimed.
  9. I will not go to your funeral (or that of any member of your family) unless I actually know and like you.
  10. I will not perform the opening ceremony for your shop/pub/hairdressing business/laundry/….
  11. If you break the law, I will not plead with the Minister, or with officialdom, for clemency
  12. I will not accept additional payment for serving on any Oireachtas committee.
  13. I will spend almost all my available time on legislative and parliamentary matters.

 According to The Irish Times,

Eric Coyle-Higgins, an Independent candidate in Kildare North, has made a bold election pledge.   “I promise never to attend a funeral, save where the deceased was personally known to me.”   But that’s not his only electoral promise by any means. He also pledges “never to call to constituents’ doors seeking their votes” or to hold traditional party clinics.   He continues: “I promise never to accept so much as a single cent in travel expenses . . . or to pursue the interests of Kildare North with indifference to the overall national interests . . . or to otherwise engage in political gombeenism”.

Well done, Eric.  That’s putting it up to the voters, who keep screaming that crap politicians get elected to Dáil Éireann, but who insist on electing those same crap politicians because “they are good for the constituency”. 

It should be interesting to watch –  I just wish I had a vote in Kildare North.  But I’m not holding my breath: I fear local gombeenism will continue to triumph over national issues, because it will take a change to our electoral system to make any appreciable difference.