The men bidding at the Ennis mart would have negotiated a better deal with the IMF and ECB than our inept bureaucrats did
Last Thursday morning in the freezing cold, the temperature in Ennis mart was rising. The age-old ritual of buying and selling cattle was in full swing. Fellas with woolly hats pulled down over the eyebrows, and old tweed caps of every hue, lined up around the pen as the beasts were weighed and paraded for bidding.
The ceremony is intricate, and behavioural rituals of the mart are opaque and confusing to the uninitiated. The buying farmers rest their arms over the side of the railed pen to indicate an interest in the cattle, and then move their arms around and around in circles before the auctioneer – an extraordinary market maker – finds the price where he senses bidding can start.
And we’re off. The seller sits in a box beside the auctioneer but he can’t see the buyers. The auctioneer is in control and he gropes his way to the price, by a combination of cajoling, nudging, nodding and winking. The auctioneer doesn’t so much call as sing out the prices, using a range of the scales, beginning with a deep baritone before climbing exuberantly towards a falsetto climax.
The farmers, caps over the foreheads, try to conceal their bids from each other, having eyes only for the auctioneer as he scours the throng for the faintest sign of a bid, a raised finger here, a facial tic there. Before you know it, the cow is sold, the price fixed, the deal done – and the next cow ushered into the ring.
I watched this for an hour in -4C and, believe me, I had no idea who had bought what. For an outsider, it is impossible to see who is bidding, why the bids move up so quickly and how the auctioneer concludes the price is right. Then, just when you think you have a handle on what is going on and you feel the price must be moving up – such is the speed of the auctioneer’s commentary – with the slam of an old stick, not some fancy ornate hammer, the auctioneer indicates that the deal has been done for €780 and the ritual starts all over again.
Dirty fifties and tenners are produced and away we go, until all the cattle are sold. In the canteen, lads eating plates of dinner against the background noise of ads for tractors on ‘Farm TV’ discuss whether they did well or not. You can identify the internal fuming of the fella who, in hindsight, knows he bid too much in the excitement, as much as the quiet satisfaction of the lad who knows he’ll come out ahead on the day.
At its core, the mart in Ennis is commerce, as it has been from time immemorial. The stakes are high and the combination of experience, cunning and understanding the bottom line, knowing when to deal and when to fold, are wrapped up in a split second as buyer and auctioneer negotiate in ritual. One moment of hesitation or weakness, a little bit of insider knowledge that the rest of the bidders haven’t got, is the key to leaving the mart knowing that you have done well, that you have negotiated your hand as best you can.
The key to the Ennis mart is that the farmers are negotiating, and they know what they are doing.
Although there are plenty of younger farmers there, the old fellas are doing the bidding. There is a strict hierarchy, where age, wisdom and knowledge are respected, not for themselves, but because they get the best price. They have done this before.
I couldn’t help concluding that, had one of these farmers gone to the ECB and IMF last Sunday, he would have got a better deal for Ireland than the establishment, because he knows what he is doing. These farmers would buy and sell the IMF bureaucrats and, more to the point, they would know a price where buying cattle made commercial sense and recognise the price where buying cattle would sink the farm.
The farmers know when to pull out and they know that there are plenty more cattle waiting to come into the pen and, therefore, plenty more deals on the table before the day is out.
Our negotiators had no idea what they were doing. Our hand was, and still is, extraordinarily strong. This deal should be ripped up by the next government and renegotiated in such away as to separate the Irish banks from the Irish state. The Republic is not the banks. The last time I checked, there was a harp on the front of my passport, not the logo of AIB.
Here is the information the next government needs to know to negotiate.
The ECB is in a hole of its own making, and should be squeezed. More than 90 per cent of the net money that the ECB is injecting into the eurozone on a daily basis to keep the banking system functioning goes to banks in Ireland, Greece, Portugal and Spain.
If we look at the figures, we can see how strong our hand is. Of the total €279.9 billion of net liquidity the ECB provides, €115.4 billion goes to Ireland. Now, of course there is liquidity given to Irish banks that is not covered in these numbers. This is under a category called ‘‘other assets’’ on our Central Bank’s balance sheet (with the full knowledge of the ECB).These come to a whopping €34.6 billion.
If we add this number to both sides of the equation, we get €313.6 billion total net liquidity, with €150 billion net coming to Irish banks. That means that 48 per cent of the total net exposure of central banks to the European banking sector is to Irish banks.
Remember, we only account for 1.7 per cent of the eurozone’s GDP.
So our problem has become their problem. And it is a €150 billion problem that ECB president Jean-Claude Trichet can’t walk away from. The deal to do is a debt-for-equity swap, where the ECB will have to figure out away of taking equity on to its balance sheet.
Can you imagine how different the deals at the Ennis mart would be had the farmers been aware of information like this? Can you imagine how low the price of cattle would be, had the farmers known that them art had millions of surplus cattle to mop up that day, rather than what had been advertised?
I write on the day that Brian Cowen’s poll rating slipped below the cost of borrowing for the Irish sovereign bonds. What a political epitaph!
Hopefully, the new guy will have the ‘horse sense’ to see that we can get out of this deal, and cut a deal that would earn respect from the lads at the canteen in Ennis mart on a frosty Thursday morning.
David McWilliams performs Outsiders in the Pavilion Theatre, Dun Laoghaire, on Tuesday and Wednesday
Just to clarify that it is the Sovereign Seal and not the harp that is on the front of our passports. The Sovereign Seal is a sacred symbol of our sovereignty. No matter what happens our sovereignty cannot be taken from us…
THE GREAT FINANCIAL PLAGUE Do you agree that western governments risk losing moral authority by
attacking Wikileaks? Julian Assange:
The west has fiscalised its basic power relationships through a web of contracts, loans, shareholdings, bank holdings and so on. In such an environment it is easy for speech to be “free” because a change in political will rarely leads to any change in these basic instruments. Western speech, as something that rarely has any effect on power, is, like badgers and birds, free. In states like China, there is pervasive censorship, because speech still has power and power is scared of it.… Read more »
You haven’t seen the new passports then Vincent?
http://twitpic.com/3dga2k
There to be printed as soon as the budget is passed.
That’s all very well David but if anyone out there still believes that the government are working in the interest of the majority of society they are quite simply delusional. The “European Project” takes precedence over the so called Irish Republic, its people, and resources.
How can the people get a good deal if the bidder and seller are on the same side of the table? By the way what is the punishment for treason nowadays? It’s strange how the opposition uses “economic treason” with ease now, were they not all guilty of promoting the Lisbon Treaty.
http://irishsovereignty.wordpress.com/
And the sad thing here is that we have the “Ennis farmers” aplenty in high finance to negotiate a deal for the country. The old farmer has only one loyalty and that is to his farm, family and fridge. Pure market capitalism at work. Our dealmakers, on the other hand, put the needs of the few before the common rights of the many and by doing so, breached the spirit, if not the letter, of the Constitution. For that they will pay, some at the ballot box and some by the hand of the Euro-ninja assassins they sought to curry… Read more »
When the IMF came to town there couldnt have been very much to “negotiate” as Brian Lenihan the Minister for Finance was already on the Board of Governors of the IMF, the IMF being essentially a private bank…
I think the farmers are more interested in saving themselves (hard to blame them)
Hopefully the single farm payments will be stopped or at least a maximum (like say 15k) put on them….
There are many farmers pulling in over 100k a year for owning land though the average is much lower.
When I last looked the biggest beneficiary was greencore who were taking in millions, which is scandalous.
Time for a maximum as well as a minimum.
The article is a perfect exponent of the value of common sense and experience in getting things done. Interestingly enough, circumstance and experience, (the school of hard knocks) prepares people for tight situations far better than nepotism, cronyism, cliquism, lifestyle spending, or being a regular at the K-club. In Ireland we have gone away from using common sense as a starting point, and starting from the position of pride – and the need for outward projections of significance. Coy old farmers in the West of Ireland, having learned the lessons of a lifetime about value. They seem to know that… Read more »
David is right. No mention of the “Ballsbrige-up” on my passport. And David is being braver than most – given the very effective manner in which the media have completely whitewashed the current mess under our old pals in the BankCentre.
On top of everything else the “opposition” are proposing to sell off what real wealth we have left (state companies and natural resourses) all ending up in private hands just to pay off the “debt” owed to the private hand. you couldnt write this stuff…
Love the mart analogy. I also happen to think that a panel of housewives could have done better – they’d be assessing whether any deal would leave them able to feed their children or not. David: “This deal should be ripped up by the next government and renegotiated in such away as to separate the Irish banks from the Irish state.” And if no party is willing to do this, we should call on our president to be the guardian of the constitution she is meant to be and break the unlawful and immoral link between the Irish nation and… Read more »
http://www.guardian.co.uk/commentisfree/2010/dec/05/ireland-financial-collapse-bailout
Great idea. We need to send in the boys who know how to dicker.
Literal in your fourth-last paragraph, by the way – “them art” should be “the mart”.
Great article David!
So here is an interesting take from the other side,on how the Germans do business in Ireland based on my own sojourns intyo the Weihnachtsmarkt in the Docklands [theme: seasonal, more irish than the irish themselves, economy, irish, german take on doing business]:
1. Price of a Krakuaer [spicy sausage!] on Friday 3 Dec when market setting up: €5 [Stand on upper level at Ely]
2. Price of Krakauer at 5:30pm on Friday evening when footfall increases: €5.50 [Stand on lower level]
3.
Suggestions : Next time David try an abbatoir to relate the living fear of the rostbif for the slaughter and if you are in a spice up moment visit the Salon de L’Agriculture in Paris in mid march.It should be a powerful source of information for any Irish person.
Good article. I believe last Friday week in the afternoon, correct me if I’m wrong, after 2 weeks of negotiations, just before going to the media, the interest rate of 5.8% was plonked onto the table. You, if you were buying a house/mortgage, you’d ask what the interest rate was first, then you’d figure out, could you repay it? Not these stooges, everything is on the taxpayer and Irish citizens. There was more of a chance of querying the bill at a Michelin star restaurant in Lower Manhattan on a Paddy’s Day weekend junket, for the whole of the cabinet!… Read more »
If there are big things afoot in terms of a big ECB/ IMF takeover and a covert and systematic dismantling of free speech and rights, then we are all too late. But, as I am an ardent believer of bureaucratic incompetence, I think we need fear little at a global level. The good thing so far is that the gombeen element have screwed up and are trying preserve a status quo. That is failing as well. FF are gone. With any luck, Labour and FG will follow suit. We need a new political setup. I do acknowledge the efforts of… Read more »
David Sorry to put a spanner in the works about the analogy of a cattle mart but you have to remember a few things here , Johnny from down the road is not going to bid for an cow if his friend Matty wants it and you can be sure that Johnny will ask Matty for a favour in return in time to come. If Johnny´s friends, Matty and Paddy are try to sell their cows for the best price you can be sure that Matty and Paddy will make bids for Johnny´s cows just to drive the price up… Read more »
There is one point worth thinking about though as somebody did mention here before . Critisism of the govement and TDs in general has become rampant and rightly so. But as well they have been branded as gobshites. But this crowd are by no means stupid in fact are probally the opposite. They have seen this coming if not their friends in the banking and stocking broking markets have seen it coming and now like the NAZIS and SS in Germany 1945 are planning how to protect their hides (minister for justice last week and Bertie a few years ago)… Read more »
Hang on a second we had to ask for charity from the IMF/EU/ECB and they very generously gave it to us. Why does DMcW then suggest we stab them in the back? As for the negociation it is marginal whether they could have got a better deal, maybe a slighly less penal interest rate, but we got a better deal than the greeks so that says something. DMcW is turning out to be a small minded little man with no sense of thankfulness for our fellow europeans. I love to read his blog just to see how desperate he has… Read more »
David.
Mechanical train set of *market dynamics* illustrated by a cattle mart.
Information flow is all important.
Now when it comes to the *market dynamics* the insider sociopath elites are running, operating, what do we get.
We get a mechanical train set of *market dynamics* which runs the wealth into the a chosen set of elites who never loose and always enrich ont the back of the trian set of market dynamics the elites always ensure remains in place.
I’m sure the Europeans are fretting over this huge debt to the Irish banks. Will 35 billion fix it? By the way the 35 billion might be gone into the banks before a new government comes into power. Ireland clearly cannot afford to take on any more debt if it doesn’t. What happens then. The banks are allowed to fail? I cannot imagine the european tax-payer propping up the Irish banks, just judging by comments made on articles in European papers they seem to be very scathing of the Irish peoples dullness in allowing themselves to be dupped into paying… Read more »
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A little light relief, of sorts;
http://www.zerohedge.com/article/adolf-jamie-artists-impression-jpms-ceo-hearing-silver-trading-over-500
Very good piece – Cowen and Co. have never had to enter a bear bit for a living – they’re civil srevants in in all but name – guarantee is the name of their game.
Respected Analysts: Ireland is committing economic suicide “The different adjustment paths of Ireland and Iceland are classic examples of devaluation versus deflation. “Iceland and Ireland experienced similar economic illnesses prior to their respective crises: Both economies had too much private-sector debt and the banking system was massively overleveraged. Iceland’s total external debt reached close to 1000% of its GDP in 2008. By the end of the year, Iceland’s entire banking system was crushed and the stock market dropped by more than 95% from its 2007 highs. Since then, Iceland has followed the classic adjustment path of a debt crisis-stricken economy:… Read more »
David, just to note that 100 plus billion liquidity provided by the ECB to the Irish banks is all fully collatralisewd and mark to mraket on a daily basis – the majority of this is Government bonds, covered bonds and bank debt. So if the Irish banks default on the cash owed to the ECB they lose the collateral – and the ECB gets made whole. There is no impetus for the ECB to swap this high value for collateral for equity in the Irish banking system.
To Colin: You are right about farmers. On a well run farm the farmers – and in many cases their farm workers – do not work very hard. When my brother and his wife visited Ireland and stayed with farm relatives they were surprised at three things — at how the relatives did not work very long (hard work, but short hours), at how modern and well managed the the farms were, and at the really nice deal the farm workers had, with a nice house thrown in and a good salary without the need to work all that much.… Read more »
Farmers could not have saved anything. The rationale for survival is that of the preservation of the current body politic. Just watch the budget today, the cuts will hit the least incendary issues with the rest of the mess to be deployed by the next in power – who by the way are not that different from the current lot. The role of the farmers can be seen in the last minute horse trading of Lowry and Healy Rae- screw the country for local parish pump nonsense. The only reason the banks are being protected is to prevent crystallizing of… Read more »
We should be praying for this budget to get defeated today. Then hopefully the whole House of Cards will collapse.
I suppose we should expect an Irish version of this story coming down the road at some stage. Flash Gordon now admits he had no idea what he was doing. When in charge of a nation’s finance’s, and later when in charge of his government. Well, figure this out…
http://blogs.telegraph.co.uk/news/davidhughes/100067022/gordon-brown-finally-admits-he-is-not-an-economics-expert/
TIME IS SHORT CROOKS!
GOT OUT THERE SLAVE TDS!
TIME TO WORK THE LITTLE PEOPLE ASSET!!!
LOWRY & DENIS THE MENACE ON OVERDRIVE
THE TIP OF THE CRONY ICEBERG EXPOSED
HMMMMM WONDER WHERE YOUR TAXES GO????!
MAKE NO MISTAKE.
Yeah, that’s a grand story David, but here is what really happened at the mart (for legal reasons my version is based on a different mart). “That auld cow looks a bit dowdy”, says the buyer. “Ah, no, not at all, sure didn’t it just walk o’er tens miles from mea farm to the mart this very morning”, says the seller. Now the auctioneer over heard this conversation and started to worry about the mart’s reputation. So he appoints a certified vet with the highest credentials and gives him a fat wage. He pays the vet very well because he… Read more »
On a slightly different topic, but related to the polls quoted in the piece above, is it just me, or are RTE giving FF free reign to spout all types of shite. I saw week in politics, and the frontline and over two days the most biased political reporting I’ve seen in a long while. Frontline was a party political broadcast for FF last night, while not a single question about “why” this deal was negotiated seems to be asked.. aka like its a fait accompli (Mary coughlan “where are we going to get the 400 million needed to run… Read more »
Irish banks are the fifth largest investors in Italy, the signs are ominous regarding their exposure to Portugal and Spain.Tony Grimes, a head honcho @ the Central Bank has craftily avoided getting the bullet, how come? Iceland only borrowed E 4.5 billion from the Imf !!!
RTE SUFFER FROM BATTERED SPOUSE SYNDROME.
DONT EXPECT THEM TO ANSWER BACK!
THEY DARE NOT mention THE “BROWN ENVELOPE CRONY sCAMMER NETWORK”
SEE YOU NEXT WEEK ON “TREASONOUS **** ROB YOU BLIND”
Call from Michael Taft for a New Deal, quoting a 1944 address by Roosevelt:
http://notesonthefront.typepad.com/politicaleconomy/2010/12/a-new-deal-moment-the-budget-will-be-nasty-brutal-but-unfortunately-not-short-its-effects-will-last-unless-people-t.html
All attention on Anglo while AIB has used stealth to hide under the radar. Report by Nick Webb, Business, Sunday Independent, http://bit.ly/fQ1Nmd “AIB tapped up the scheme 18 times with more than $3bn borrowed on six occasions.” The scale of AIB’s borrowing from the scheme is enormous given its relatively small size in the US. Barclays Bank, which bought Lehman’s US operations out of bankruptcy, borrowed $232bn (€174 bn) from the Fed scheme. AIB’s biggest single loan — $3.3bn (€2.48bn) — was borrowed from the Fed on July 2, 2009. Banks were on the verge of collapse as international money… Read more »
At the moment this is a Republic only in name. In this Country corruption has been institutionalised, and we have the top section of the Civil Servants and most of the Politicians of the three main Political Parties going around in circles doing only cosmetic changes, and abusing their position as bureaucrats to keep for themselves a series of privileges that mainly has to do with jobs, salaries, pensions, and holidays, for themselves their families and cronies. The elite easily controls them, because they are not there to govern for the well being of society, they are there to see… Read more »
It seems that we could well be headed for another global financial crisis. This time caused by soverign debt default in combination with Bank default. Ireland would be involved in this as both our country and banks eventually default, with other European banks defaulting and probably countries. As I mentioned a while ago on this site the property/finance mess has been covered up by soverign debt. I asked the question, what is going to cover the soverign debt default? The IMF don’t have enough money to bail out everything. The only answer I can see is 1. The ECB get… Read more »
Watching the budget? pure theatre that’s all!
Marts Minds : David did not mention if he got his wellies wet at the mart or mucked up.It would be interesting to know. In France the word beef ‘boef’ actually means cattle . The reason is that cattle dead or alive is food in France .The same goes for other live animals and the original French name.In English we only see it as cooked and dead meat. It is important to understand this because in France the cattle producer or sheep producer takes the marketing of their products much further and do eventually reach the plate of the consumer… Read more »
Farmers my arse . Even if they had of gone in and made a amazing deal where by the IMF pay us for the cash . What then ?
More government by schoolteachers and people with no business experience .
I note that in the budget they have reduced Stanp Duty to 1 % . People ,the IMF are running the country . That is a sign of complete and utter failure . If i lived in Ireland I would be afraid to even buy a can of Coke .
PRSI is supposed to be ‘insurance’ see http://definitions.uslegal.com/s/social-security-numbers/ But now its just a tax on top of other taxes and levies. Lennie that failed bluffer in the IMF/ECB/Bank bond holder Casino, has dumped on Irish taxpayers. Its time to emigrate because this Government is gormless and shamless in their individual and collective inadequacy. The Irish Government want to tax its citizens to oblivion to encourage them ‘to do more for themselves’, WTF? What are we paying these gobsh1tes the biggest salaries and expenses in Europe for??? Lennie bottled all the real opportunities for reform in this budget on top of… Read more »
You should ban foreign media from the country . It is embarressing for me in Oz to be linked to Ireland . I do business here and I am conforted with ” hey the Irish prime Minister is drunk on the radio ” or ” hey the IMF is now running the country ” I was making a deal last week . A renewal of a big contract worth over 10 million . I had to endure some jokes about Ireland / The IMF and the famine . Makes it really hard to come accross as serious and trying to… Read more »
English has two words the meat we eat because of the Norman conquest of England. The table word was French, the language of the conquering lords, the farmyard word was Saxon, the language of the underclass.
He(Lenihan)actually had the gall to state on Vincent Browne’s interview earlier that what we are borrowing is ‘a stimulus’! It’s to pay for the bloody dole that’s all, otherwise those people would starve. Nobody has raised the issue of how we are going to pay the interest on this debt, we can’t. Two years from now is ‘D’ day when we will default anyway so why not do it now?
Sorry for going off topic a bit. Some people have relatives in Australia, and Canada trying to further their careers. To those thinking of going, I would advise against it. These economies are highly correlated to the Chinese economy, and assumptions about demand from China – a country where everybody is saving, and putting off consumption. End result the state and speculator sectors are the source of demand in the economy. There is something unreal about all of this. On top of all of this you have a regime that needs to run an economy in a manner to soften… Read more »
The Tyranny of ineptitude and disingenuous language ZAP!!!! A personal analysis of the budget day, December 8th, 2010 – FISCAL CLUSTER BOMBING Yesterday afternoon, around 3:30PM already on my third mug of strong coffee, I sat at my laptop and started typing, on my main computer the Internet live broadcast from the Dail was tuned in, the television had Constantin on TV3. It was a beautiful day in Donegal, still very cold, but no storm, no rain or sleet, blue sky with some cumulus clouds over the bay, when six UPS’s, uninterruptible power supply units, kicked in at the same… Read more »