I woke up on Friday thinking we must be back to the good times. Morning Ireland was gushing about rising property prices, the ruling party is back to blatant cronyism and there was a mega cocaine bust off the south coast.

If anything sums up 2006, it’s property porn, cronyism and cocaine! It feels like it again, but this time it’s different.

This time, we have a kind of boom, but Irish people aren’t allowed to play. We are having an Irish boom without the Irish, and the best qualification for entry into the Irish recovery is not to be Irish.

The banks that are exiting Ireland are offering up their portfolios of loans to foreign vulture funds that have no interest in staying in this country.

Here’s what’s happening. European interest rates are going to zero because Europe’s economy is a mess. I know this isn’t a technical term, but bear with me. This slumping EU economy is causing the euro to plummet against the dollar.

Meanwhile, the American economy grew by 4.6 per cent in the second quarter, so the dollar is going upwards. I was in California last week and the place is flying, the dollar is going to keep going up.

So if you are an American vulture fund what do you do?

You borrow in euro, even though you are American, and you watch your borrowing cost fall as the euro exchange rate falls. Then you take this “free” money and you go to Ireland, where the locals have no credit and you buy up bundles of loans from their government – the very people who are supposed to be protecting the financial interest of the Irish people.

Remember Nama – an agent of the state – was supposed to get credit going? Well, it is getting credit going all right – but it is foreign credit! And Nama is pleased about how funds are “positioned” in Ireland. Nice word “positioned”, it conjures up an image doesn’t it?

We are pawns in the global credit cycle. The vulture capitalists know this but are too clever to admit it and the Irish political class don’t see it. We should be lamenting, but we are expected to celebrate the fact that Irish-based banks are selling their assets to foreigners at a discount that will be sold back to Paddies at a premium. Great craic, isn’t it?

Most vulture funds have a rule called the three-thirty rule.

This means they buy and hold for a maximum of three years and once they make 30 per cent they are out. This is their twist and this is why properties in Greenwich, Connecticut are a wee bit on the pricey side.

Listen, I don’t blame the funds. This is what they are mandated to do. They have to make as much lucre as they can for themselves and their shareholders. The global system is rigged, they are on the top, they fund the political campaigns and they get the codes written to suit their interests. If the “hopey-changey” Obama couldn’t change this, who can?

So the vultures, having bought up the glittering swanky office prizes in Dublin – and with various geniuses heralding their brilliance even though it was nothing more than having the access to capital at a time when our country was on the canvas – are now delving deeper into the economic carcass.

Deep inside the financial entrails are the loans of small and medium-sized businesses, the property loans of petrol station owners, publicans and undertakers. The vultures love this type of soft tissue.

As revealed in this paper today, the loans of more than 4,000 small and medium sized businesses are set to be sold to vulture funds in the coming weeks, following the decision by Danske Bank to sell its entire SME loan book.

The sale, the largest of its kind ever in Ireland, will effectively mean that thousands of small businesses will come under the control of vulture funds.

The strategy of the funds is to buy as cheaply as possible and sweat the asset until the yield on the property rises. Once the yield or the income of the property rises, they can re-rate the price of the property upwards. In finance this is almost formulaic. But in reality it is far from a formula.

Re-rating the property value upwards at a time of low inflation will involve putting up rents, squeezing the owners – who are pretty much bust and may have one business (a pub, say) which is throwing off just enough cash to pay the interest on the property. The notion of forbearance might not be something the vultures are entirely comfortable with.

However difficult the plight of the individual owners may be, the concerning issue for all of us is what happens to the national balance sheet when this process is over?

The first thing to accept is that the natural owners of Irish property are Irish people, not people who summer on Long Island.

Who will buy these assets from the three-thirty vulture funds? We will, of course. We will sell Ireland to foreigners at a discount and buy Ireland back at a premium!

And who will finance the purchases at 30 per cent above where we are now?

The newly operational Irish banks, of course! And the vultures will fly off, having sold up to Paddy.

A crisis that began with the Irish banks leveraged on expensive Irish property will end with more or less the same Irish banks leveraged to expensive Irish property.

How does that make you feel?

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