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Archive for January 25th, 2012

Extract from a blogpost earlier this week – who would have thought that all three distractions would happily occur today

I stand to be corrected on this but the last politically-connected arrest in the State was on 9th December 2011 when former Anglo chairman, Sean Fitzpatrick was re-arrested. By “politically-connected”, I mean Anglo is 100% owned by the State and its activities which led to a €29bn bailout from the State, certainly give the State a particular involvement with the bank. The previous politically-connected arrest was on 1st November 2011 when former Anglo finance director, Willie McAteer was re-arrested. That was on the eve of the controversial payment of USD 1bn (€730m) to unsecured, unguaranteed bondholders. Back in 2010, there were remarks at how convenient it was that Sean Fitzpatrick was arrested on 18th March, during then-Taoiseach Brian Cowen’s trip to Washington for St Patrick’s Day where it was coincidentally helpful to be able to show that Ireland was being tough in investigating its disastrous banking collapse. It’s not as if there are politically-connected arrests every week or month in Ireland, so there might be eyebrows raised today at the arrest of former Fianna Fail TD, and subsequently senator, Ivor Callely in connection with claims for mobile phone expenses whilst he was in office. I think it fair to say the public did not appreciate reports of the senator’s expenses in 2010 and his fighting his disciplinary hearing at the Oireachtas.  So politically-connected and involving a member of the Opposition, and dare I say popular – killing three birds with the one stone, wags might suggest this evening over a pint.

Promissory notes were also firmly back in the spotlight earlier today when An Taoiseach Enda Kenny told the Dail that not only were there ongoing technical discussions but it had been the initiative of the Troika to draft a joint set of proposals on dealing with IBRC’s (IBRC is the Irish Bank Resolution Corporation and is the merged entity representing what was Anglo and Irish Nationwide Building Society) €30bn-odd of promissory notes. This proactivity on the part of the Troika is curious because when asked about the promissory notes at the press conference inDublinlast week, the IMF said the Government had merely “requested discussions”. Also it seems obvious that nothing tangible arose yesterday in the meeting between Minister for Finance, Michael Noonan and ECB president Mario Draghi, otherwise Minister Noonan would be broadcasting it from the rooftops.

And as for bread and circuses, this afternoon the embattled – following a farcical stymieing of the commercial property market in 2011 and defeat of a poorly drafted referendum proposal – Minister for Justice, Equality and Defence, Alan Shatter published the draft heads of a new bill aimed at “addressing the financial difficulties of  general insolvency; mortgage debt and negative equity” The heads of the bill are here and the ministerial press release is here. The heads are 164 pages long and are still being studied, but it is difficult to avoid the perception at present that the bill offers “debt relief for all”.

And lastly, we had a couple of political interventions today criticising opposition to paying the Anglo bond. Junior minister at the Department of Finance, Brian Hayes accused critics of living in “la-la land” and indeed he managed to resurrect the j’accuse of the last Government of saying critics whose opposed Government strategy were “talking down Ireland” An Taoiseach told the Dail that “to say you don’t pay is nonsensical” This comes on the back of transport minister Leo Varadkar accusing critics of being “misinformed or mischievous” though there is some evidence that the minister himself is “misinformed”. As for “mischievous”, that would be a scurrilous suggestion to level at the Minister. And no doubt it is no more than happy coincidence that the above took place on the same day that insolventIreland paid €1,250m (1% of GNP) to bondholders in a defunct bank.

I leave you with a view of what IBRC’s debts are doing to Ireland.

(Graphic above produced by Japlandic.com, contact here)

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“Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!”
Part of the inscription on the Statue of Liberty

“Approved participants in the Investor Programmes and their immediate family members will be allowed enter the State on multi-entry visas and to remain here for a defined period. Ordinarily this will be for a period of 5 years – reviewable after 2 years. The sort of investments envisaged will include a specially created low interest Government Bond, capital investment in an Irish business – which may need it for the protection or creation of jobs, or in some cases the purchase of property – including that held by NAMA.”

Minister Shatter’s press release announcing details of two Irish visa schemes

Yesterday, the embattled Minister for Justice, Equality and Defence, Alan Shatter published details of two new visa schemes aimed at those outside the EU. In essence, the visas are for five years and in return, an investment is required. And whilst the above quotations might poke fun at the idealistic notion of theUSA, in practice it too tries to attract individual investment and provides rewards including visas. So nothing unusual about that at all, and many, perhaps most, will support the new schemes.

What was of note was that investment needn’t necessarily be in productive industry. If my interpretation of “endowment” is correct, then a gift to sporting, cultural, health and educational organizations might be sufficient to earn an Irish visa. Again, nothing untoward about that at all – give a large financial gift that benefits these institutions and come to live here; what was curious was that investment might also be in property, and NAMA’s property is specifically referenced.

Now investing in non-productive property might also be welcomed. It will lead to more transactions, more stamp duty and the simple economics would indicate more demand with existing supply, would tend to raise prices, all other factors remaining constant. And there are strong economic arguments to stabilize house prices, as long as the stabilization is at sustainable levels. Of course if the visa is for five years, then it might mean the stimulus is temporary, and there will be a disposal when the visitor leaves. So there might be concerns of an artificial, temporary stimulus for property.

Of particular note was the reference to NAMA. Despite the official protestations, NAMA is intrinsically tied to the State, but it does compete with non-State companies eg Ulster Bank, Certus, both of which are actively disposing of property loans and foreclosed property. To see NAMA promoted in this way is good news for NAMA – if you’re in the target audience for these visa schemes and you read the press release yesterday, you might be getting in touch with NAMA today; it might mean more money comes a-knocking at NAMA’s door for assets which ultimately we all own as a nation, but competition concerns should mean NAMA and its competitors are on an even playing field.

The Department of Justice has not commented on the reference to property or NAMA in the Minister’s press release.

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