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Archive for January 23rd, 2011

Ex-Fianna Fail leader (and current Taoiseach) Brian Cowen didn’t tell us yesterday the reaction of Green party (and junior coalition partner) leader John Gormley,  when Brian rang him to inform John of his decision to resign as party leader. Maybe, as on the night of the banking guarantee, the battery of John’s mobile was dead and Brian just left a voicemail. Maybe he just sent him a text – “Outtahere. Don’t worry – just as party leader! LOL! BC”. But in whatever way the communication took place, the events of the past week demonstrate the critical importance of clear communication – witness the almost diagonally opposite views of Fianna Fail (Brian Cowen, John Curran, Tony Killeen) and the Greens (John Gormley, Dan Boyle, Eamon Ryan) of the exchanges that took place on Wednesday morning regarding the announcements of replacements for resigning ministers. And later today we will find out if the Greens will walk from government, something they’ve presumably been threatening for much of the last two months since their announcement (without pre-consultation) that they would be walking from government in January. And then there’s the small matter of an emerging leadership battle between the Dublin Lenihan/O’Rourke dynasty and the frontrunner from Cork. All amidst sniping from the Opposition whose constant and predictable refrain for the past two years has been “Go now to the Aras and call an election” (remember Irish political life is particularly bleak in Opposition so the object of the game always is to get into government and stay there).

Stepping back from it all, you’d have to say we’re getting terrific entertainment value from this circus (though I’m not sure it’s worth €300,000-a-pop for departing ministers). All the better because it seems to be hastening an election which is now widely desired. Though be careful what you wish for. And I am particularly looking forward to manifestos that will describe in detail how bondholders will be burned, the IMF/EU bailout will be re-negotiated, NAMA will be reversed and scrapped and a new investment bank will be created – yes it’s sometimes easier being in opposition where your policy positions are to a large extent left unexamined, and certainly untested.

But stepping back even further, the country is still in the eye of a storm with deposit flight at our banks, challenging capital raising targets for banks (particularly Bank of Ireland) in 36 days, our lenders at the IMF/EU seeking weekly updates on our condition and particularly seeking the legislating of the measures agreed in the Memorandum of Understanding and reassurance that we will abide by the broad terms of the 4-year plan. As NAMA is a key interest on here, there is talk of an amendment to the NAMA Act which is not a little confusing because when asked what the amendment will contain, the government response is that it will allow NAMA absorb €0-20m loan exposures at AIB and Bank of Ireland – this is confusing because the existing legislation doesn’t specify thresholds and no legislation was needed last September 2010 when the Minister for Finance announced that the threshold for AIB and BoI was to rise from €5m to €20m. This confusion instils suspicion that major changes to NAMA are afoot. And remember yesterday the Taoiseach referred to two key pieces of legislation that needed be enacted – the Finance Bill which was published on Friday last and an amendment to the NAMA Act. Yes indeed, there may well be some important changes afoot at NAMA.

So as entertaining as the present circus is, it should be remembered that we are being viewed by outsiders on whom we depend for finance (deposits, ECB liquidity assistance, IMF/EU/bilateral aid) and these present performances are undermining credibility and specifically perceived political stability. It is to be hoped that these present tricks by political animals can be drawn to a speedy conclusion and the desperate needs of our economy can take centre stage again.

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