Yer man never stands his round.
He does normally.
But he’s not doing it now.
‘Cause he is broke.
I don’t care; a man has got to stand his round.
What are ye havin? I’m buyin’.
Good Man. I knew you’d always cough up.
Never let it be said I wasn’t good for me round.
Why is it that even when a fella hasn’t the arse in his trousers, he will never hide on his round?
We’ve all been there. In the bar, in a round, you know you won’t have a bean when you get home but tomorrow can look after itself; you won’t be seen not to pay your round. In contrast, we all know of the lad who will disappear out for a fag when his round is imminent. Such evasions are noted, especially among friends.
But, no matter how broke we are, we in Ireland will always dig deep. It is all about the shame of not having enough to pay our way, so we find the cash even when there mightn’t be a sausage at home. The poorer the man, the more he pays his way.
Normally, a rich guy is much more nonchalant about not having cash on him and is not fazed by the idea that he will get you back tomorrow. But the poor lad, the one who is financially insecure, will always be the first man with his hand in his pocket. No round is too large, no double brandy too extravagant.
Sure why not make it a Remy Martin, while you’re there?
He just wants to be one of the lads and if he has to scrounge the money in secret he will. The poor guy who can’t afford it gets further into debt just to keep up appearances, because keeping up appearances is important.
Paying his way becomes a form of perverted personal pride.
Rather than leave the bar, he stays to pay so as no one will whisper behind his back. He is the small guy trying to act like the big lad.
Small countries that are broke often act the same way before going bust.
By pretending that we can afford the bailout, Ireland is now behaving like the poor guy at the bar, digging deep for the last few cents to keep up with a round system that he can’t afford. We know that we can’t afford the IMF/EU deal, even if the interest rates were half the 5.7pc, and the reason we can’t afford it is that we are the poorest country in Europe. Yes the poorest. You read right — poorer than Albania, poorer than Serbia, poorer than Bulgaria.
If the definition of wealth is the difference between your liabilities and your assets then the definition of poverty is how much greater your liabilities are than your assets.
We are the most indebted nation in Europe and although it doesn’t seem like it now, we are among the poorest. Granted, our capacity to earn is higher than traditionally poor countries, but our balance sheet is wrecked. It is being kept afloat by more and more loans from foreigners.
Let’s look at the figures to see just how broke is the lad buying the round.
The Central Bank of Ireland released some interesting data on Monday. In its monthly ‘Money and Banking Statistics’ for the first time it released a consolidated balance sheet of the guaranteed banks. It does not make for pleasant reading.
At the end of December 2010, our banks were borrowing a (net) â‚¬153.5bn from the ECB and Central Bank of Ireland. Meanwhile, guarantees extended by our government now cover â‚¬196.4bn worth of bank liabilities.
For any of us who imagined what the guarantee might look like in the crisis of September 2008 and were adamant that a timeframe be put on it and that time be used to sort the banks out, the fact that the guarantee is still in place and these banks are still open is a sick joke.
The â‚¬196.4bn does not include the â‚¬31bn of promissory notes we have issued or the â‚¬7bn of preference/ordinary shares we own in AIB and BoI or even the â‚¬4.7bn of cash we put into Anglo, Irish Nationwide and EBS.
Looking at those huge numbers, you’d nearly think for a minute that we are a rich country. But we are anything but. In fact, we are broke.
This, of course, puts Ireland in a rather ridiculous position. We cannot afford to pay our day-to-day bills, yet we are saying that we can afford to pay billions to our banks.
There is some kind of reality failure going on here. We are the lad at the bar shouting out a round he can’t afford but far too proud to tell anyone of the real financial position. But deep down everyone knows.
There is a chance that our new government will face reality and admit that we are on the road to national bankruptcy.
Like many lads at the bar, penury was caused by incompetence, arrogance or a blunt refusal to face the facts.
Let there be no doubt about that. Cutting interest rates on the EU/IMF package that exists only to save the banks is not going to make any difference. Proper negotiation is needed, and if that fails, unilateral action will be required. To make that unilateral action more palatable and more democratic, it would be a good move for the new government to call a referendum on the banking stitch-up. This would ease their position and make it more difficult for the EU to actively crush Ireland.
We voted on Friday last and by today we know almost every TD who is going to be in the next Dail. During those six short days, more than 850 people will have emigrated from Ireland. This is the human face of this economic tragedy.
But maybe the people leaving now are those who can get out. There are plenty living in Ireland who cannot escape, or feel they cannot. This is the case for owners of the one in 10 mortgages that are in arrears.
In 2007, I published a book called ‘The Generation Game’ which focused on this generation who would have to default on their mortgages and explained that these would be the people who really paid for the boom. At the time, the usual suspects sneered and laughed at such a prophecy. Today it’s a reality.
It is time to tell the ECB they are not getting their money back because, after all, this is what a Central Bank does, it is the lender of last resort. It is time to walk away from the subordinated debt holders. It is time to force a debt for equity swap for the remaining bondholders and it is time, armed with an overwhelming referendum-based mandate, to stand up for the people.
We need to stop buying rounds we can’t afford. We need to stop desperately trying to be one of the lads. We lost face years ago when the clowns ridiculed the sceptics and drove this economy over the cliff. But there is always time to change and no time like right now.
The metaphorical loan shark is also still out there, the question is how to deal with him. Do we talk nice to him or tell him to **** off. Will we get beaten up on the way home? get our teeth kicked in? Maybe we should send over the Irish cricket team to deal with the EU/IMF using their bats, now they know how to play ball.
Great article David. You’ve summed it all up very well. We have as a people (although there are some exceptions) some awful habits, pride being chief amongst them which Deco here has been banging on about for quite some time and being bang on the money too. Pride needs to be reined in. The word should be banned from all advertising and branding, starting with that loaf of bread….I mean, what’s particularly proud about baking a loaf of bread? I’ve yet to see French Pride Baguettes on the Supermarket shelves in France or Italian Pride Pizza in Italian Supermarkets for… Read more »
The new government doesn’t even need a referendum to reject the EU/IMF deal. It already has a mandate to reject it if it wishes to do so. This mandate doesn’t come so much from the number of people who voted for them as from the number who voted against the previous government that agreed to the deal. The previous FF/Green coalition and their independent supporters are now left with only about 15% of the seats after getting about 20% of the votes. The only vote that is now needed is a repeat of December’s Dail vote on the deal. The… Read more »
The Quiet Man We are quiet and the EU know we are too .There is no confidence from the EU for the Irish now and they know its a foregone conclusion that Ireland will DEFAULT sooner rather than later and as far as they are concerned thats a Bad Apple gone from the decaying carcass . The Vultures will devour the remaining meat just by doing nothing and they will have a feast day from it . I have no confidence anymore in anything Irish and money and law; The only flicker of light that might be there is Pat… Read more »
YEah, we are bankrupt. And the leadership has been bankrupt for quite some time. Maybe DeValera had a premonition when he ensured that there should be a clause in the Constitution banning bankrupt people from being in the Oireachtas. Because we had CJH, who was in hock to AIB. We had BCF and she was in serious debt. And of course we had the Grand Master of Fiscal Incompetence, the Drumcondra Ditherer, who was looking for a “digout” from his mates. But hey, I bet they were all the sorts of pretenders who bought ordered rounds of booze for everybody… Read more »
Looking at the numbers in the middle of the article leaves a very uneasy feeling in the stomach. We are in a predicament. Those that are conservative with their finances are reluctant to put money in Irish banks, because they reckon they are not telling the full story. We are literally a country with a massive overdraft from the ECB. Sitting on a mountain of “print-baby-print” money. Or maybe that should be “Drucken-kleiner-Drucken” seeing as Gunther is paying for this. Two things need to fixed immediately. 1. Our dysfunctional labour market. (getting people to leave does not generate the cash… Read more »
David. Who is broke ? The rich who own Ireland are not broke. The rich can afford not only to buy another round but can also buy the pub and the brewery and the law and keep serving the beer 24/7. The money flows are controlled in the way the article above outlines in order for the rich to secure their future income streams. And it is apparently clear that the rich and the powerful are prepared to use the non rich and the non powerful in any way of necessity in order to maintain their order over the confluence… Read more »
Great article reviewing 4 books criticising the banking crisis in the states. Applies to us too.
He concludes with a quote from the authors of one of the books
“Johnson and Kwak conclude by invoking Teddy Roosevelt, who dismantled the mighty Standard Oil in the public interest. Today, they insist, we must “take a stand against concentrated financial power just as he took a stand against concentrated industrial power.” Otherwise, next time will indeed be different. It will be even worse.”
Sorry link is http://www.bostonreview.net/BR36.1/kirshner.php
I have an awful feeling that the shit hasnt hit the fan yet regarding our debts, the IMF/EU bailout will allow us to carry on for another while. But the end game is nearly here. I agree with the Sinn Fein view that we should not take it because it “kicks the can down the road” . If the deficit was 19 billion last year and we made a 6 billion adjustment that means in theory we will have a 13 billion deficit for 2011. This can be financed by current amounts in the NTMA. The following year make a… Read more »
What are the consequences of a default on the ECB loans?
A country is not the same as as a company. Does the rule and protection of law does really apply in the same fashion?
e.g. Is there anything to prevent this: We tell the ECB, “ok here’s a 50% stake in our crappy banks”. The EU tell us, “ok, here’s a 50% tariff on all Irish goods, good luck with that export economy thing”.
I think that the government has no moral standing with Europe until the deficit is sorted out. Europe clearly also regards tax rates as something that puts on the naughty step. What’s clear anyway is that we ain’t seen nothin’ yet.
I think it is worth making the point that “Europe” is behaving in a very hostile manner towards Ireland. Consider the facts – The debt that is killing this country was private banking debt which was made sovereign through a process involving FF corruption/incompetence and pressure from Europe Any money received by Irish banks went to pay off the creditors of those banks namely French German interests. Our austerity measures are refinancing French and German banks. We are paying a punitive rate on the loan (not a bailout) as a disincentive to other countries not to follow our path. We… Read more »
David, they are not listening!!!
This site used to be months/years ahead of events with great analysis and predictions.
Where do posters see us heading over the course of the next three years?
OT Here’s another post from a link I gave in the last thread. It’s the last bit I find interesting: 29. The Alchemist Says: “February 25th, 2011 at 10:43 pm @Colm Brazel “Hats off to President Olafur Grimsson referendum just announced for April 9 on â‚¬5 bn Icesave bill to UK and Netherlands. Could we have a referendum on April 9 and include all options, default, leave EZ, join sterling, etc, or support the deal:” And one on the Croke Park deal too? Competitiveness and the minimum came to mind today as I cast my vote. Those folk who sit… Read more »
David has referred to this Irish urge for respectability before on a few occasions. I’m not really convinced – I’d take the advice from the title of his last book and “Follow the Money” instead. If there were a referendum on the banks tomorrow I wonder if it would be defeated? In about 2 months time it might be a different result, once money has been offshored? Just a guess. What do I know? However David is probably right at a personal level among our govt elite who don’t want to lose face in front of their peers on the… Read more »
“is being kept afloat by more and more loans from foreigners.”
I find it stange, that DMcW keeps on referring to foreigners money. Is it more acceptable to default on foreign money than native money?
We need a new constitution which limits the government, the powers the elected have and the amount of debt they are allowed to sign off on in our name. I’d love to make Lenihan and Cowen personally responsible for the current bank debt because they acted recklessly in assuming the debt, same goes for all deputies who agreed to these bills. Laws like this would also get rid of the party whip support bull, if you make a call or support a decision you should be made pay if you f**k the whole thing up! It might help empty the… Read more »
Speaking of rounds we can’t afford, are departing Anglo staff going to get bonuses? Anyone know?
I reckon on the fact that politics left right paradigm is a charade and meaningless when it comes to where the bottom line power resides.
And from what I can deduce the real power rests within the fold of an insider elite culture.
This is where David be best focusing his energies upon and deciphering their agenda and where they think they are driving the bus next.
David, I’m for selling the place off to pay the debts and I wrote to JosÃ© Manuel Barrosa recently to propose the sale. Here’s my letter. He sent an acknowledgement, so if Enda springs it on him he will already know. Dear President Barroso (JosÃ©), I’ve realized that there is no point in swimming against the tide. As the EU will later today own Ireland let it own us entirely. As a vassal state we can provide important services. I’ve thought of a plan. Ireland can become the European Capital Territory, the ECT. Move all the EC functions from Brussels… Read more »
Minister for Energy Pat Carey signs off to key consents for the last section of Corrib gas pipeline on the day of the general election… http://www.irishtimes.com/newspaper/ireland/2011/0301/1224291080638.html
David after reading your article it comes to my mind something Albert Einstein said once: “You cannot find a solution to a problem with the same mentally it was created”. . Garret Fitzgerald said in Vincent Browne’s program, that in Finland the government had to meet to approve a new rate for GPs from 24 euro to 27 euro. Here while we are bankrupted, the State pays the civil servants and professionals in the public sector, salaries and conditions nobody else in Europe can afford. Some of them have three months holidays in the year, and the first opportunity they… Read more »
Listen to Mr Lucy on Morning Ireland this morning. The poor guy sounded depressed and perplexed. This nonsense cannot go on no matter what we do. The nation is utterly disempowered. People carry on as though nothing has happened. It is easy to turn a blind eye if you are OK for the next little while…soldier on! I do hope someone does something soon. That someone would be a Germany or France just telling Trichet to pull the plug. Not more drinks lads! Ask you to leave. That would probably send shockwaves to those lending to Greece and Portugal and… Read more »
There seems to be a need to blame the foreigners. As has been said by many, the Germans, French, and British were at fault lending to the Irish, as they should have known that they wouldn’t be able to handle it.
Apparently 200,000 people were ‘forced’ abroad. ‘Forced’? They were unemployed. Unemployment happens in every country, and in very few countries do people just leave. The 200,000 will no doubt come back when someone else has sorted out the mess.
What does all this say about Ireland?
Well put. All true. But you might as well preach temperance and teatottling to a pubful of roaring drunks.
Trichet et al are thoroughly modern vampires. No one big suck. Slow steady sucking and then, with regrets, dumping the corpse of Ireland, with Trichet et al owning all Irish assets worth owning. There ain’t no Being Human repenters at the ECB.
Oil. The price of oil. It will shoot up, permanently, making the ECB even more predatory about seizing the assets of sucker countries.
….In the context of current global affairs, and I said that more than a year ago already, this blog has to up the ante or remain in the insignificant fog of Irish local politics…
We need somebody like this to speak on our behalf.
Too close to the bone?
The money supply in ireland is approx 200 bill Euro,all created through the process of fractional reserve banking. When money is borrowed it is either someone elses money ie it already exists and therby represents a legitimate debt, or it is CREATED there and then by a bank and ‘lent out’, and collateralized by the assets backing the loan in order to remove the inflationary potential of creating and issuing new money. My question would be this. How much of the total debt in ireland is comprised of legitimate debt, ie borrowing a another persons hard capital, and how much… Read more »
OK, I’ll answer my own question. The reason that the foreigners are blamed for everything that goes wrong, and 200,000 leave, and everyone happily says that they were ‘forced’ is quite simple: The Irish don’t care about Ireland. Not really. The Irish are simply children; Whenever anything goes wrong, the parent is there to sort it out; If the child overspends, the parent takes responsibility; if there child has social problems, the parent is there to sort it out. If the child runs into a shop, breaks some glassware and hurts their knee, the parent swoops in, pays the bill,… Read more »
The capital stock of the nation not including land is approx 400-500 billion, thats tangible stuff, hard assets, and we have a positive trade balance, albeit with some repatriation by the multinationals. Are we as a nation so really indebted to the rest of the world?. Seems to me all we’ve really borrowed is paper, that’s right paper. If the Germans really want their paper back then give it to them because its not that hard to print our own with the credabilty (i.e credit) of a serious goverment and 400 billion in hard assets and positive trade balance to… Read more »
Prime Time I just saw Prof Honohan Chairman on replay rte and I am shocked that he lacks confidence in both himself and the policies of the Central Bank to be successful regarding the Irish Banks. He is clearly a person in a job he would clearly prefer not to have . His professionalism is exemplary nevertheless his mindset clearly displays his DEEP SECRETS in Irish Banking he does not want to report directly to the Public for fear of an immediate implosion to decimate the complete order of banking in Ireland. He clearly is FED UP as he has… Read more »
Was reading about Gene Sharp (IT today) on non-violent revolutions. http://www.youtube.com/watch?v=Vk1XbyFv51k&NR=1 Seems Tunisia and Egypt may have used his techniques. Not saying that we are in a dictatorship. But clearly, there is a level of oppression going on that needs to be called and needs to be resisted. I call it the financial oppression of ordinary people and I believe some of the techniques should be looked at. It seems complex, but the heart of it suggests a need for people to overcome fear and work in a planned way together. Maybe our independants could start putting their heads together… Read more »
“WE’VE just seen an election campaign that was virtually politics-free. It was all about polls and constituency profiles, the ‘Gilmore Gale’ and rehearsed soundbites, phoney ‘plans’ and meaningless slogans like ‘Get Ireland back to work’. Yet, we are drowning as a result of politics. Bad politics.” Gene Kerrigan
Interesting piece and worth a read.
The Irish Times’s Paul Gillespie as usual is spot on in his analysis of our relationship to Germany, EU and the banking stratus. Today’s article is on page 13 of today’s paper. I recommend everyone reads it, puts it down and think about why we are paying our taxes.
two words: normalcy bias
****SOLUTION TO OUR CRISIS****
1. Hire Max Keiser
2. Send him to Europe to negotiate on our behalf.
“You now have an alignment between senior managers in the public service, senior managers in the private sector, senior politicians, senior civil servants and senior media figures….
They will warn us of the dangers of radical thinking. And do so with straight faces, standing in the wasteland they have made.
Meltdown-The Secret History of the Global Financial Collapse.2010. http://www.youtube.com/watch?v=ZWU65Zbka4E
We are now seeing details of the new government program. It is a stitch up between IBEC and ICTU. FG + ILP trying to prove that they can deliver for IBEC and ICTU, what FF + GP were struggling to deliver. And nobody will touch the quangoes. Interest rates are going up. Trichet has been muttering that it will happen. More critically, inflation is creeping upwards. If interest rates are going up, the Merkel will not give the Irish government an interest rate reduction. Merkel lost a regional election three weeks ago. Also the Centre Right government in the Netherlands… Read more »
[…] exodus Renegotiation and the Bailout Black Hole Renegotiating the bailout : reality bites We?re broke but still buying rounds 10% of owners struggle to pay mortgage Mortgage repayments set to rise Mortgage Arrears: […]
“We need to stop buying rounds we can’t afford.” In fact we need to stop going to the pub full stop. The values of being drug free need to be instilled in our culture. Its time for us to grow up and become less dependent and more independent. Its a good analogy used by DmcW. We have this dependent ‘partners’ drinking buddy relationship to our colleagues in Europe: ‘Enda and Angela are on the best of terms’, ‘we’ll pay our way’, ‘our buddies will take care of us’, ‘if we can’t pay, they’ll take care of us’. This is ridiculous… Read more »
Sad. People are saying Ireland is a good place to be from,” with the emphasis on from
The problem in the UK and Ireland is placing a big bet on FIRE – Finance, insurance,r real estate – as the backbone of a growth economy. This is supposed to be wonderful for these reasons: … 1. The work is too sophisticated to entrust to places like China … 2. The jobs require a college degree, so everyone will be eager to get a degree. … 3. These sectors are endlessly expandable, great job engines. … 4. The work is clean. …5. The nature of the work keeps the “best and the brightest” at home. Etc. Blah. The reality… Read more »