Archive for April 7th, 2012

At this stage in our financial crisis, we can be forgiven for overlooking the €100m loaned to this country by Denmark in March. This followed the signing of the bilateral loan agreement on 21st March 2012 which provides for a total of €400m to be lent by Denmark to Ireland. Efforts thus far to get hold of a copy of the agreement haven’t been successful, but it is hoped to have it in due course but at this stage there is no reason to believe it will be any different to the €4bn bilateral agreement which we have with the UK, and which is detailed here. However it would be nice to know the interest rate, the term of the loan and any special conditions. We are also set to sign a €598m agreement with Sweden – this is all part of the €67.5bn external element to our €85bn bailout.

We have some common history with the Danes of course, who along with their fellow Norsemen they gave us surnames like Doyle and towns like Waterford and the occasion of one of our few military victories at Clontarf in 1014.

Denmark has a similar population to our own 5.5m versus 4.6m here. Denmark used to have the equivalent of a Dail and Seanad. In 1953 they did away with their Seanad and today just have one chamber which they call the Folketing. Their Folketing has 179 members, not dissimilar to our own 166 and it’s worth saying that Denmark has control of the far-flung FaroeIslands and Greenland from where 4 of the 179 members come. The Danes have helpfully put together an English-language website which describes the workings of their parliament which is here.Denmark has a far healthier GDP compared with Ireland – €240bn versus €160bn here, and is altogether a richer country.

So I know what you’re thinking – if Danish members of parliament represent more people than Ireland – 31,000 versus 28,000 here – if they don’t have a second chamber or Seanad, if Denmark is a far more prosperous country than Ireland and if Denmark is loaning this country €400m, then it should naturally follow that Danish politicians get paid more than their Irish counterparts. That would be logical, after all would Ireland extend a loan to say,Ugandato help pay for their administration if Ugandan politicians were paid more than Irish ones?

Here is the English-language factsheet from January 2012 showing the rewards on offer for the 179 Danish deputies. They get a basic of €87,000 per annum if they are based in Denmark, €90,000 if they are based in the Faroe Islands/Greenland. That’s in the same ballpark as the €92,672 paid here as a basic salary.

In addition their deputies can claim a maximum of just over €13,000 for housing costs – €9,611 for documented housing expenses and €3,844 as an allowance if their homes are not in Zealand where the parliament is located.

What would they think of our travel and accommodation allowances of up to €37,850 per annum per deputy? What would they think of a minister claiming €31,867 for mileage allowances in one year for a car which presumably is used for both official and personal use? What would they think of a system which provides €15,000 a year to deputies for official expenses which need not be vouched – up to €25,700 vouched. What would they think of hiring family members on expenses? What would they think of paying a junior minister a €30,000 termination payment when that minister was in post for six months?

Who knows. Perhaps we should ask them. Their email addresses are here. You might get most mileage from the Danish People’s Party who tend to be more sceptical of the European project. Most will understand English but it might be courteous to provide a basic translation which Google translate will help you with.

There is a three-part series of blogposts on here which detail the rewards paid to Irish politicians.


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The catalogue for the next Allsop Space auction is now available. The auction itself will be held on 3rd May 2012, again at the Shelbourne hotel on St Stephen’s Green in central Dublin. This time around, there will be 106 lots with reserves of €12.5m and there seems to be a commercial property emphasis this time round. Yet again (!), there are apartments in Liam Carroll’s Castleforbes Square development in Dublin 1 on offer – you’d almost think Allsop Space was trying to establish a standard by which price changes could be tracked. Some of the sales are on behalf of receivers, but it seems the vast majority of sales are by the owners, something Space has been keen to point out in recent times.

As with previous auctions, the lots appear to be distributed throughout the country from Donegal to Cork, from Dublin to Galway.  The auction again makes use of maximum reserves which are prices above which the winning bid is guaranteed to get the property. I see that Allsop Space is not accepting bids before the auction which distinguishes it from some large-lot auctions in Belfast – truly, have we ever seen such transparency in the sales process in Ireland before this venture started auctioning just one year ago?

The highlights this time

(1) Three houses on four acres of land with planning permission for further development in Cavan, with a maximum reserve of €40,000

(2) A 43-room hotel on two acres in Killarney with a maximum reserve of €515,000 – reminiscent of the 55-room hotel in Donegal sold for €650,000 in March.

(3) A 27,000-sq ft industrial unit in Bluebell with a maximum reserve of €590,000. Jones Lang LaSalle say replacement cost for industrial property is from €59 psf.

(4) A 26,000-sq ft former car showroom on the Cookstown Industrial estate in Tallaght with a reserve of €500,000

(5) A filling station in Westport generating €45,000 in rent annually with a reserve of €325,000.

(6) “The Bank” pub onO’Connell Street inLimerick city with a reserve of €395,000.

(7) Weirs Pub in Dun Laoghaire  with a reserve of €450,000

(8) Shorts Bar and Crystal Nightclub inWaterford with a reserve of €495,000

In terms of yields on offer by reference to maximum reserves, they appeared generally pitched in the mid teens, but there are exceptions. With the House Price Database now apparently pushed back to the last quarter of 2012, this auction will again be looked to, to provide guidance on present cash transaction levels.

UPDATE: 2nd May, 2012. Interest in the latest Allsop Space auction which takes place tomorrow in Dublin has been strong. Statistics released by the joint venture between the British auctioning specialist, Allsop and Dublin estate agency, Space show that their website has had 112,660 visitors since the catalogue was launched at the start of April, with 95% of visitors from Ireland, the UK, the US, Canada and Australia though it seems practically every country in the world has dipped in at some point. Visitors have spent an average of 7 minutes 54 seconds perusing the lots. This time around, there is more of an emphasis on non-Dublin property with 63% of the 106 lots outside the capital. One lot that will be of particular interest to many institutions in Ireland will be Lot 74 – three houses on four acres of land with planning permission for further development in Cavan, with a maximum reserve of €40,000 – this is the closest we might get to openly gauge interest in small incomplete estates which litter Ireland after the collapse of the property bubble. The Allsop Space auctions remain the most transparent record of actual property prices in Ireland today, though auctioning may not be representative of the whole market with its emphasis on cash transactions and more limited inspection of the property than might be the case with a private tender sale. There will be a roundup of results here tomorrow but I recommend you follow Carol Tallon from Buyers Broker Limited on Twitter for live commentary from the floor tomorrow including prices of unsold lots.


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Publication of the Week

This week saw the publication of the 2011 Dail register of members’ interests which is supposed to show what TDs get up to financially, beyond their occupations as public representatives with €93,000 per annum salaries plus gold-plated pensions, plus travel and accommodation, plus expenses, plus party allowances etc. The above is an extract from Kerry Independent TD Michael Healy-Rae’s – pictured below at the last General Election in 2011 when Michael won the seat previously occupied by his father, Jackie – register. In Northern Ireland, these registers are updated monthly, not annually. Crucially the Northern Ireland registers show the quantum of other income received. They also show in Northern Ireland if relatives benefit from a representative’s largesse. So although the Register published by the Oireachtas this week is informative, it really just emphasises how opaque the conduct of our public life still is on this side of the Border.

We can’t let this week go by without mentioning a major new book which was launched mid-week, “What if Ireland defaults” which sets out in over 200 pages essays from different corners of Ireland with facts, arguments and opinions on the greatest economic challenge facing this country – the 120% debt:GDP of which 20% has yet to be spent in honouring Anglo’s promissory notes. The latest news is that the book is number one in Amazon’s economic research best-seller list and is available from Amazon here. This probably counts as a plug but the authors have pedigree and the subject is vitally important. Recommended!

Quote of the Week

“I don’t see any of these things as a second bailout. I just think this is unfinished work from the first bailout” Minister for Finance, Michael Noonan on 6th April, 2012

Minister Noonan was talking to the Irish Times this week about the recent Anglo promissory note arrangement, and he also raised the prospect of transferring loss-making tracker mortgages – they’re loss-making because borrowers are paying 2-3% to banks whose cost of funding is more like 4-5% – from AIB and Permanent TSB to the zombiest of zombie banks, IBRC. What is presently being proposed with Anglo’s promissory notes is that Irelandgets an additional – “not a second” – bailout from the EU to pay off the promissory notes because the bond market is still not willing to lend to us at sustainable rates. And with respect to the €34bn of tracker mortgages at AIB and PTSB, Minister Noonan didn’t say how IBRC would pay for these but that money will somehow have to be borrowed as well, and as we own 100% of IBRC and because the market won’t lend, that means the Govt will have to borrow from the Troika. But none of this is a second bailout, the notion of which is, according to Michael previously, “ludicrous”; instead, according to the Minister, it’s just “unfinished work from the first bailout”!

Some might claim Michael was getting Jesuitical with the truth. And speaking of the religious, do you remember this excerpt from the episode of Father Ted when the stolen whistle was found in Ted’s jacket?

”Well, there’s an obvious explanation.  – Is there, Father? – Yes, of course there is. What is it, Ted?   I have to leave the room for a couple of minutes.  When I return, I’ll have a full explanation.  – It had better be a good one. – It’ll be perfectly satisfactory. Excuse me for a couple of minutes”

In real life, last week, a priest is reported by the BBC to have been giving a Powerpoint presentation in County Tyrone to a group of parents whose children were about to take their First Communion. The priest stuck his USB stick in the back of the laptop and, lo and behold, what the BBC describes as “16 indecent images of men” popped up. The BBC continues “He [the priest] gave no explanation or apology to the group and bolted out of the room. The co-ordinator and the teachers then continued with the presentation” and best of all “Twenty minutes later he [the priest] returned, he continued with the meeting and wrapped up by saying that the children get lots of money for their Holy Communion and should consider giving some of it to the church”

Which of them has more chutzpah – the Minister for Finance or the priest from Pomeroy?


Picture of the Week

This is the “town” of Buford in Wyoming which was in the news this week on account of it being auctioned by its owner, the “mayor” of Buford who is the town’s last inhabitant. The town now consists of a petrol station, shop, a house and outbuildings, all on 10 acres of land, and its last resident was selling up to retire. It was auctioned with a starting price of USD 100,000 and in the end was bought for USD 900,000. It did have a population of 2,000 in the 19th century but when the train company closed the station at Buford, the population, eventually to just the one person today. Interestingly the real Butch Cassidypictured here with the Sundance Kid – who until this week, I had thought was a Hollywood creation was in fact a real man and is said to have robbed a train in Buford. What has all of this to do with us? I wonder if Ireland again faces the prospect of villages being depopulated as businesses dry up, people emigrate or move to larger towns in search of a livelihood.

Word of the Week

“Sprezzatura”, pronounced spratz-a-toura. Originally an Italian word from the Renaissance to help define how Ladies and courtiers should behave, and now adopted into English. The word was describes the quality of people who put a lot of effort into something but modestly disguised whatever effort was made. So Ladies were expected to look beautiful but never admit to the care and effort that went into their appearance. And courtiers were supposed to accomplish difficult tasks but make it appear as if no effort was required on their part. Sprezzatura was a valued quality because no-one likes bigheadedness but it also bred confidence in your looks or ability.

Over the last week we have seen the exact opposite of sprezzatura here with rotten results which undermine confidence in the abilities of politicians. After the smoke cleared, it turns out the Anglo promissory note arrangement is disowned by the ECB who merely “note” the “completely Irish operation”. The “completely Irish operation” is set to cost us €90m extra this year and the “operation” depends on Bank of Ireland shareholders approving it. Meantime, NAMA is still in shock at being raided and didn’t even issue a press release to mark what is likely to be its largest financial transaction during its 10-year lifetime. And the opposite of sprezzatura also manifested itself in the Household Charge debacle where it seems that there are 2m homes in the State, according to the Census 2011 and 1.8m eligible for the charge and less than half paying. And we have an emerging opposite of sprezzatura with the House Price Database which was supposed to be available by June 2012 but now seems to have slipped to Sep-Dec 2012 despite the fact that this is one of the longest awaited developments in the State’s 90 year history – recommended in the Kenny Report in 1974 and supported by all parties in power since – and the Property Services Regulatory Authority has been established for some time.

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