Last Wednesday morning, the dole queue on High Road in Letterkenny extended for about half a mile, out past the social welfare office, up past the Mace supermarket and on up towards the roundabout and De Valera Road. Up to the right is the ghost estate of empty houses which will never sell and will be used to house welfare recipients – locals and immigrants.
This is Letterkenny, or ‘‘Letterkenya’’ as one person described it tome, formerly the commercial hub of north Donegal; now, judging from the traffic, the gateway to Strabane.
Walking through ‘Little Britain’ – the retail park in the town which is home to M&S, Top Shop, Tesco, River Island, B&Q, Currys and Oasis – I wondered what the Long Fella, Eamon de Valera himself, would make of this ‘big box’ imitation of Middle England, populated by lads in Celtic jerseys, located at the bottom of Padraic Pearse Road.
The background noise is the roaring rev of pimped-up, third-hand Honda Civics bought in the North. The boy racers – fondly referred to locally as ‘shams’ – cruise with their ‘shamettes’ up and down Main Street. They proudly display their latest spoilers.
Initially, you think there’s no one driving the car, until you see the reflection of the white Diadora hoodie and the gelled hair brushed furiously forward, peering out just over the steering wheel.
This is the way they like to drive, sunk low into the customised driver’s seat, accelerator revving, Jay-Z blasting out of the boot’s massive sub-woofer, which makes the vehicle look like a cross between a Provo car bomb and the 2FM roadcaster. The Tango’d shamette in her ‘going out’ pyjamas is oblivious to the racket as she focuses on her quick-dry French manicure.
At the overwhelmed dole office, the staff stare out of the cubicles like petrified sentries. People in the queue look lost. They examine the countless forms, puzzled. These folk have never been here before; they are shell-shocked. These are Ireland’s ‘welfare virgins’. Like all first timers, they are a bit flummoxed by the experience. Young men and women who, up until Christmas, had good jobs, good prospects and good lives, are now faced with losing their homes – and, possibly, losing their hope.
Across from the dole office, the local credit union- the only financial institution to come out of this mess with any credibility – is self-consciously open for business.
This is our country. This is Ireland: a fragile nation of unemployed young people, clinging on to existence in ghost estates, driving cars bought in the North for half the price and competing with immigrants in British retail colonies, which are positioned like garrisons on the outskirts of our provincial towns.
Unlike the banks, these people are not being bailed out. They are fending for themselves. There is no Nama that is going to ask the taxpayer to pay for their mistakes. Their businesses were not considered systemically important. They are the ‘outsiders’ and, unlike the ‘insiders’, they will not be rescued.
This brings me to the question of the banks. I listened to Michael Somers’s frank and honest account of the situation last Thursday. If he doesn’t know how the bank bailout will work, who does?
Let’s pose the big question: why are we bailing out insolvent banks? What economic model tells us that we should tax people who are struggling to pay for the mistakes of bankers who are now prevaricating? Could we not just let the banks go – guarantee the depositors and let the rest of the banks’ creditors experience the market? After all, these investors were very happy to take profits in the good times. This is what they did in South Korea, Thailand and Taiwan in the late 1990s.
This market-based approach was also the logic of the guarantee. Last September, the idea was that these banks would raise capital from the market. But they can’t do that because they are insolvent. If they are insolvent, they will recover only if we taxpayers pay for their mistakes. But why should we?
Banking, after all, is a simple business. If these are not good banks, then we will put our deposits in the new banks which will emerge. When you think about it, the issue with our banks is an institutional problem, not a systemic one. No institution, no problem.
Allowing the banks to go would mean limiting the scope of the state guarantee.
This is not only possible but advisable because, despite the guarantee and the state’s injection of capital, the banks are still broken. There is no convincing reason why we should keep insolvent banks afloat. But that’s not to say there would be no problems in re-ordering our financial system.
The bondholders of the banks would have to take a haircut. They might have to settle for 15 cent in the euro, or wherever the defaulted bonds fall to. But if they hold on, the price of this debt is likely to rise as the economy turns around in the next five years. Equity holders would be wiped out, but here again, a debt/equity swap might give them some hope.
I realise that this sounds radical, but think about the alternative. The alternative is to turn the nation into a large ‘debt servicing machine’ in order to bail out banks that we don’t need and which made basic commercial mistakes. The market will solve the problem, and the banks could work through their debts themselves. They lent the money, after all.
Unless you think that a new bank with a clean balance sheet would not emerge, then there is no reason to believe that a new Bank of Dublin, Bank of Cork or Bank of Galway will not replace the old banks in double-quick time. Credit would begin to flow through these banks with their clean balance sheets and new depositors.
The upshot of the Nama approach will be huge bank fees for years as the banks try to raise the money to pay for their bad loans. This alone will hamper the recovery. And government injection of capital means higher taxes. Madness.
At the moment, all political opinion believes that we should breastfeed the banks in some shape or form Fianna Fáil and Fine Gael believe that the weak child should be fed from one breast, half private, half public. The Labour Party believes that both breasts should nourish the child through full nationalisation.
So the right wing believe that the market’s not up to the job and should be supplanted by the state, and the left wing believe that it is right that the poor should subsidise the rich. Either way, we have the same outcome.
Confused? I’m not surprised. But when you see Sinn Féin voters in Celtic shirts with ‘Saor Eire’ tattoos, feeding the British exchequer by popping over the border to evade Irish taxes by shopping in Asda, Strabane, you know we live in a confusing world.
Why?
Because the real power in this world is not from the citizen up.
It starts with the financial system or keepers of the system and permeates from there.
David – its time you looked at the way the world works. If you don’t want to admit that its non fiction then I would recommend fiction in the form of Neal Stephensons “The System of the World”
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Let the baks go bust. Take the whole residential mortgage book off them first. Have a no repossession order. Say to international markets we are not going to kick our residents out on street.
The taxpayer is being asked to bail out the banks and then the banks are repossessing houses of those very taxpayers.
Something is rotten to the core in this country and it is a disgrace that the government are allowing this to happen. It will be the end of Fianna Fail as we know it. At least one good thing will come from it all.
Why bail out the banks? A very good question. Why is our government bailing out the banks? Incompetence and arrogance, they cannot fathom the scale of the problem. I think those running the country are like the 3’rd generation running an inherited family business into the ground…. A lot of such businesses fail in the 3’rd generation because of the people running them are spoiled gobshites. Look at Cowen, Lenihan and Coughlan. If they were sons of small farmers or factory workers, would they be where they are today? Do they not remind you of spoiled talentless kids who, because… Read more »
David – the above you wrote has been the current best graphic example of facts and evidence and your choice of language allows all to connect to the reality we now face as a nation on this isle .The truth you show is frightening in every sense of the word.
Within the last week at least one qualified professional has commited suicide and already buried.
David: With you all the way regarding all point’s in article. Can i suggest the following……………………………………….. Now that it’s clear as the sparkle in julie christies eyes in Dr.zhivago that their is something rotten in the NAMA Rep. it is imperative you and the rest of us who are concerned for the future find out why it is that the banks are been saved to the sacrifice of all else on this island. We are now morally obliged to find out the truth. And find it out speedily it is clear this is on a precipice now. When the man… Read more »
Frank McNally for one would reply that the reason we should bail out insolvent banks is because that’s what God would have us do: …”But in all other respects, the plan had uncanny echoes of the Bible’s Parable of the Talents. As a child in church, I used to be vaguely troubled by that story. Not by its failure to address the question of ethical investment; or at least to explain how the servants who got the five and two talents, respectively, achieved such suspiciously high returns. And such neat returns too: precisely 100 per cent each. No, my conscience… Read more »
Zombie Banker Blues
Bankers and friends eating their children? In Ireland? Absolutely.
http://vimeo.com/4292136
David: This is one of your best pieces of descriptive journalism in months. Instead of gallivanting all over the globe, you went into the more remote parts of Ireland and produced a very evocative word picture of the effects of the downturn on your own countrymen. Well done.
RTE could make a South Park episode out of your experience as Fianna Fail used to be popular in that part of the county.
Tim: “Oh my god!– they’ve killed (Letter)Kenny!!
Deco: “You Bastards!”
goinghome, weel said! I have also been confused by the anomaly between the parable of Luke you cite and the story of the “Anger in the Temple” at the moneychangers. I think that both teachings are about fidelity, but in different contexts: the talents one is about fidelity to God himself, in doing the best you can, through actual effort and is a metaphor; the second shows the usury of the moneychangers willingness to exploit even the temple to make profit for themselves. It is the second one that we are dealing with here. The bankers had a “no holes… Read more »
Why is the goverment bailing out the Banks ? The answer is very simple. The bankers and the govermement and solicitors and the property developers and other vested interests form “the Boys Club” This is the power wielding section of the Irish nation and the law is on its side. Does anybody think that Bertie or any of his henchmen or that gobshite from offlay make or made any decisions that reflect common sense in this country for the good of the people ?. They make decisions which help their own kind so the members of the boys club do… Read more »
A couple of things are apparent aboutt eh current rationale for keeping the banks (AIB and BOI) private. One is the fact that one third of the bonds that were sold since the beginning of the year (to raise the necessary shortfall in taxes) have been bought by the very same banks. Now why, if they have no money to lend, would they do that? Well those same banks can then walk into the ECB and use the collateral of those bonds to secure cash. Now to square the circle I can’t see why I would borrow from someone to… Read more »
QUESTION:
Anyone have any idea on Irish banks involvement in CDO’s….?????
http://www.economist.com/world/unitedstates/displayStory.cfm?story_id=13649050&source=hptextfeature
Some interesting parallels between ROI and California here. The kick off solution would seem to be constitutional reform thus enabling people of adequate competency to accede to Government.
this site is interesting, if utterly depressing. why, you may ask? well here’s why. i would guess that 98% of contributers here are male. i think that is pretty certain. the type of instant in joke culture in the posts and the almost messianic and hierarchical adoration of the ‘leader’ gives it away. it’s the very very same bozzo culture that wrecked the country but u guys don’t see it. the ‘dun aengus’ ‘moon wobble’ nonsense you go on with. you’ve obviously all gone to the same fee paying schools. god help us. go for a walk you idiots.
Robert, I cannot believe that you are still hung-up on that…… let it go. If I admit freely that I am in FF I am an embarrassment; if I hide it, I am a coward? Whaddyawant mate? I am NEVER an embarrassment to the teaching profession, by the way. I always stand up for teachers – even though it is my other profession that sustains my family because my teaching salary could not. I spent my Saturday at my teachers’ CEC meeting in Dublin, trying (in vain) to fight for the rights of our students to the free books scheme……… Read more »
David: “Let’s pose the big question: why are we bailing out insolvent banks?” Because to not bail them out would admit to lots more than just that the banks are in trouble. It would be to admit that the entire system has broken down. Bust banks are not a cause of a broken system, they are a symptom of one. If the system still worked, the banks would not be in this much trouble. So, what to do in a broken system? Here’s where I contradict myself, but allow me to explain. We should bail out the banks. In fact… Read more »
Furrylugs, I think it is simpler than what you proposed; and even Robert (who is here a good while) did not pick up my “Liverpool” reference. He chose to attack me, instead of figuring it out. And he is intelligent. What will we do? We cannot, the liable laws being what they are, talk straight here.
Did you know that a sitting member of Dail Eireann cannot retain their seat if they become “Bankrupt”?
Furrylugs, please “join the dots”.
I think that you are the only one here that can. (I have been hinting for too long and must finish, soon).
So we have 95 customers in total….50 in AIB,15 in Anglo and 30 in Nationwide and between them they owe the affore mentioned 32 BILLION EURO’S….Still not impressed by my leg work on these matters well then take this little gem.AIB were owed 18.5 billion by the famous 50 in 2007 and after making no further advances to this motley crew in 2008 now find that they are owed 19 billion by same in 2009.So hands up the class of 50 and admit who among ye have not been repaying yer Capital plus Interest,ok all hands still up, so I’LL… Read more »
I bet that none of the bankers is just finished hanging up their children’s clothes over the only heater in the house that is still running.
“The Banks are well cannibalised” is what John Hurley should have said in 2008.Just imagine ,there are 95 customers out there tonight who owe 32 billion Euro.s….Jebus how much security did they have to stump up to secure them loans…10% …anybody care to have a guess? 3.2 billion in security on a 90% LTV.loan.I know 95 people all working in Ireland on reasonable pay and they would struggle to come up with 40k apiece.Of course all these loans could have been 100% LTV plus stamp duty plus legals plus what ever your having yourself Ted.OH and can you make that… Read more »
Folks, just posting this ’cause I like it and it might stir things up ‘ cause it’s true and you may have missed it on the last article thread: DarraghD | 17 May 2009 2:04 pm Just listening to a discussion on the NAMA here on RTE1: (1) The proposed head of NAMA is apparently saying he doesn’t have the expertise, the HR resources or it would appear, any ingredient necessary to get this NAMA project off the ground. If this is what the proposed head of NAMA thinks, I can’t understand what he expects to achieve in his role… Read more »
There is a crisis unfolding in our once beautiful country. Whether you believe in the free market or strict government regulation, the banks should be allowed to fall. If you believe that this crisis is the direct result of the free market comprised of greedy people and greedy bankers, then let the greedy market sort it out. Let the banks collapse. If you believe that the government should be regulating and that the lack of said government regulation is what caused this crisis, well then why should we believe that the government is either willing or able of looking after… Read more »
This is all just outrageous. I am not replying to anyone in particluar although I could. How can you just all take this. I realise that the reason I’m not living in Ireland is because I couldn’t. I would be out on the streets doing something but the Irish are not. I’m in the USA doing what I want, travelling from the Caribbean where I do what I want as well. There are differences between the places but you have to make your own life anyway wherever you are. These guys are robbing you of your past, present and future,… Read more »
This is a bigger calamity than the Potato Famine. At that time, (allegedly) the solution could have been the rivers but apparently the English (for some perverse reason) were guarding them. No one had the guts or guile to get around that, and I don’t blame them – those were different times. But now there is no excuse, we know who the criminals are (apart from the bank robbers and drug importers/dealers) and it’s time to put aside all the impotent fighting talk of the Irish and actually follow through on our ‘threats’. These things are not to be taken… Read more »
Crest – I think I can answer that question.During the coming Bank Holiday ( excuse the pun) Week End people will finally be obsessed with the negativity from the Dail and the days following to the following sunday will break the ice .
One of your best articles, written with an acute eye, and finely honed insight into the political culture. At last, you are calling for the market forces to take the banks down, the inevitable conclusion for any person with regard to the masses, the little people. You misrepresent the Labour Party position, which would put aside the bad loans, as the Germans are now doing, for an indeterminate period, and allow time to heal these losses, rather than having a fire sale when there is no credit, except vulture funds, waiting patiently, the FF solution. The Greens are further into… Read more »
A good article, but I do think a huge part of the problem is that the real impact on taxpayers hasn’t yet been felt. I know of one lady, with an awful credit history, and quite frankly, a lifetime of reckless spending and borrowing, who already having lost one house, was given a year to get her affairs into order. That was last August. I spotted her in Gran Canaria waltzing away over a week ago, yet I am fairly sure she is probably even worse off than she was this time last year, completely oblivious to the serious of… Read more »
David’s article captures the essence of our dilemma as a society and as an economy. We only have limited resources. The state is running out of money. (Nothing new there – every state finds ways of using up every available penny it gets in taxes.). We do not have the institutional rigour of the Swedes. We cannot do Quantitative Easing like the Brits. We do not even have the savings reserves of the Japanese. And we do not have the efficient state sector of Singapore. Basically for some reason or another we are incapable of paying for the strategy that… Read more »
Ronan Callely is standing for FF in Dublin North Central and his election poster contains the empty slogan “Time for change”.Seeing as his father has been representing FF for 20 years in the same constituency, this shows the contempt politicans have for the public.Ditto the two clowns standing for the same party in the two by-elections.Emigration (as always), is the only way for Ireland and the political morons to save themselves.What happens to the banks is a sideshow.
David, It is difficult to fathom that we are still debating do we ‘bail out’ the banks or not. Working in the sector (not in the Irish banks) I would make the following points: (1) you use the word ‘bail out’ this can also imply that the owners and management are somehow excused for past mistakes – this should not be the case. It is not the case for the shareholders and increasingly not the case for senior management, thankfully; (2) if we allow any of our banks fail or default on any of the senior debt and T2 hybrid… Read more »
Furrylugs: Much thanks on links.
I am astonished, there it is right under my nose. The links provide the evidence the two main comm banks are in the derivatives business,. now it’s digging to find if these same banks entered into the derivatives casino gambling business and if so the question emerges on the loss incurred by their holdings of derivatives and it’s size due to downturn 2 years and i’m beginning to suspect the banks toxic debts and losses on property loans goes further than property asset price dropping.
David I listened with interest to your talk here in Letterkenny last week and you did make a few strange comments about letterkenny, however the start of your article in yesterday’s business post does nothing for the image of letterkenny or indeed adds nothing to your article. Social Welfare queues are lengthening all over Ireland not just letterkenny, boy racers exist everywhere and your comment about the retali parks is certainly not accepted here in Letterkenny. Over the years letterkenny accepted development and it has grwon hugely as a result, yes it will suffer because of the recession and the… Read more »
What amazes me is how such a small country with such a terrible history allow themselves to be used and abused by a party that are simply a bunch of chancers. Donnie Cassidy and his 200 grand a year form the Dublin Airport Bars without any investment or responsibility (Capitalism Irish style – really something for nothing) – is it just because he’s such great craic or what? that a franchisee gives him 20% off the top. The same Donnie topped the list with his senate expenses of 90+ grand. With FF in power 20 out of the last 23… Read more »
I think Davids article is a signing off on any hope he has on banks been nationalized, let go bankrupt or been purchased by a bigger bank. Thus, it seems he is going in deeper with the shovel to dig up why it is the banks can command such power over the political process. This is a step forward. A forensic examination is crucial to have effect on thing’s. This forum is a perfect meeting place to carry this forensic examination out. A deep multi faceted forensic examination on the facts. No media in Ireland is carrying this out. All… Read more »
furrylugs: on radio rte , TD’s removed need for receipts for expense claims, 10 years ago. Also, on average it’s reported each TD claims 65,000 per year. 680 euro expense slate a week t attend Dail i think if i heard it right this morning.
It is very possible the TD’s may have this expense bonanza in the trough malarky explode in their faces just as it did for their cousins in the UK.
Wills, are you a FF noise generator? are you employed by them to create clutter ?- a modern form of jamming
Here’s a little beacon from a man that had a track record in achieving change-
7 DEADLY SINS
Wealth without work
Pleasure without conscience
Science without humanity
Knowledge without character
Politics without principle
Commerce without morality
Worship without sacrifice.
– Mahatma Gandhi
Letterkenny is the Republic’s most northerly town .Trumso is Norways most northerly town and within the Artic Circle.There is no comparrison between the two.Tromso has very very expensive homes, fabulous infrastructure and undersea motorways between the various islands nearby , low unemployment and lots of untility services . Why ?
Thought provoking comments here from the NYT.
http://travel.nytimes.com/2008/05/18/travel/18ireland.html?pagewanted=1&sq=ireland&st=cse&scp=3
If we can get away from the “Bubble”, there’s still a lot of positives going for Ireland but they’ll have to be driven from a local, community based level. Dublin centered policies have failed the West, North West and South West for years.
Maybe some form of regional business councils would work?
The political philosopher John Gray, in “Enlightenment’s Wake” (1995), has plenty of insights. The following has some relevance to what Lorcan (among others) is saying above. (Warning: long quote) “… It was left to the conservatives of the late twentieth century to yoke conservatism, perhaps for the first time in its history to an Enlightenment utopia… It is …deeply ironic that conservatism should have surrendered its scepticism in regard to the Enlightenment at just the historical moment at which the Enlightenment project should everywhere be in evident disarray or actual collapse. “The kinship of market fundamentalism with classical Marxism is… Read more »
This notion that banks who operate in the upper echelons of the capitalist system have to be protected from failure, makes me want to throw up. All capitalism depends upon failure or the fear thereof. I started up a business a good few years back and I made a balls of it. So I failed and I had to pick myself up, dust myself off and get back into the saddle and do it smarter and better the next time. Now I run a successful business and I’ve learned through my failures, how to run a business along basic fundamental… Read more »
I have watched this nonsense unravel since 1996 when I first saw manufacturing taking a walk over to Poland. The process was well underway before that. It was just an MNC trying to stay ahead in a competitive market and us paddies were kept happy with the prospect of snapping up another job after this one bellied up. The rest you all know so well. Well, there’s no where for the paddies to skip to. I can only wonder what happens when the redundancy cheque starts to run out. Then what? This is happening today and it is accelerating. People… Read more »
From The Examiner- “BT Ireland wins €10m emergency call centre contract Monday, May 18, 2009 – 04:52 PM Up to 100 jobs are being created at Ireland’s new emergency call-out system which will automatically pinpoint the location of mobile callers, it was revealed today. The revamped 999 service is designed to cut response times with exact details on the geographic whereabouts of distressed callers using their mobile phones. It is the first time the technology, which is widely used in the rest of Europe, UK and the US, will be used for Garda, fire service, ambulance and Coast Guard call… Read more »
http://www.examiner.ie/ireland/property-developers-were-largest-donors-to-parties-92044.html
Dum De Dum………
Folks,
“Furrylugs – I agree. The real problem is the corporate control of the society”.
That’s it.
I “lurked” on this forum for a very long time; then, tentatively, posted the odd comment for months with only one or two comments per month, before I plucked-up the courage to engage fully and often. It was Deco that drew me out (in late December, I think, with certain comments on education), and I have been a plague to many on this forum, since. Deco has the answer to our collective problem, right here. Though I began posting-in-earnest on this forum in opposition to the views he then held on education, I am 100% behind Deco today: He is,… Read more »
Tim – bring lots of mars bars with you.