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Archive for May 17th, 2012

France’s new administration is set to cause a major headache for the Irish government. Not only have the announced a 30% pay cut to the salary of their head of state and ministers, but they are insisting that the Fiscal Compact be redrafted to include a “chapter” on growth and growth strategy. This morning, the new French finance minister, Pierre Moscovici said the new French government would not ratify the existing Fiscal Compact. Of course the German position seems to remain a stubborn resistance to any change to the Fiscal Compact but you would have to say there is a good chance of some Entente between the two countries. Where will that leave Ireland?

We have a referendum on 31st May 2012 where we are being asked to vote “yes” or “no” to the following being inserted into our Constitution

“The State may ratify the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union done at Brussels on the 2nd day of March 2012. No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State that are necessitated by the obligations of the State under that Treaty or prevents laws enacted, acts done or measures adopted by bodies competent under that Treaty from having the force of law in the State.”

So if the Treaty “done at Brussels on the 2nd day of March 2012” is modified in any way, then we need have another referendum, it would seem. So wouldn’t the smart move be to defer the referendum until the current negotiations between France and Germany are concluded? Indeed given the turmoil in Greece and Spain, might it not be sensible to defer the referendum anyway? Apparently we can’t according to the Referendum Commissioner, unless the Government calls a general election, which is not likely!

This morning in the Dail, Independent TD Shane Ross attempted to attract support for an emergency Bill which would allow the Government to defer the referendum but his suggestions were flatly rejected by the Government. Somehow, this looks probable that the Government will be left with egg on its face…

As for the announcement of 30% reductions in the salary of the French president and ministers, that should mean the French presidential salary falls from €253,000 to €177,000 and the French ministerial salary falls from €170,400 to €119,280 . By comparison, our own Taoiseach Enda Kenny earns €200,000 and ministers earn €169,275. The following is a table of world leaders salaries examined in more detail here.

UPDATE: 18th May, 2012. With the meeting of the G8 group of countries in Camp David today, here’s a table of the salaries of the heads of the traditionally most economically advanced countries in the world. It should be said that the Italian technocrat prime minister has waived his salary. Enda Kenny earns €200,000 a year and President Michael Higgins earns €310,000 a year though it is believed he has committed to accepting the reduced €250,000 a year accepted by his predecessor, Mary McAleese.

 

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“BB [Barclay Brothers] have now been told that the bank has chosen a path to work consensually with you rather than to deal with them, I understand they are not happy.” and “Please keep that confidential I cant have board positions like this leaking out” Two text messages reportedly sent by the chief executive of IBRC, Mike Aynsley to developer Paddy McKillen in January 2012

If you don’t have the chance to experience at the High Court this morning the spectacle of two state-owned agencies, NAMA and the Information Commissioner, battling over the issue of transparency at NAMA, then you can always ponder the contradiction in having two state-owned agencies, NAMA and IBRC in competition with each other, and the delicious paradoxes that this throws up from time to time.

Take the developer Paddy McKillen who largely escaped NAMA’s clutches after a Supreme Court ruling in 2011. Paddy is one of Anglo’s – or IBRC as it is known these days – largest scale borrowers. Paddy is also suing a raft of people in London’s High Court, and NAMA is one of the parties being sued after NAMA decided to sell loans in a company connected to Paddy, to Paddy’s rivals, the Barclay brothers. If Paddy wins his case against NAMA in London, then NAMA will face substantial legal costs and potentially substantial damages. It came as a surprise therefore to find another state agency, Anglo offering support to Paddy – in the ongoing court case in London it was revealed that Anglo’s CEO, Mike Aynsley texted Paddy in January 2012 both assuring Paddy that Anglo would not undermine Paddy by siding with the Barclay brothers and, in an unsettling display of closeness between Mike and Paddy, asking that the communication be kept confidential as Mike “can’t have board positions like this leaking out”.

If NAMA and IBRC were to be merged, then presumably NAMA would consider calling in Paddy’s outstanding loans and/or selling those loans to the Barclays, so as to undermine Paddy in his legal proceedings. Yet because NAMA and IBRC are not presently merged, despite having an almost identical remit in the run-off of legacy lending, we have a situation where NAMA is being sued by Paddy on one hand, and is being offered support by IBRC on the other.

On Tuesday, Minister for Finance Michael Noonan responded to a question from the Sinn Fein leader Gerry Adams on the potential for dysfunctional competition between NAMA and IBRC, and the Minister said

“IBRC is a separately regulated State entity with a specific mandate to ensure the maximum return to the Irish taxpayer in the management of its business. The bank’s decisions are based on its total client exposure and the optimum re-structuring of its loans to secure maximum recovery for the State. IBRC therefore does not and should not, in normal course business, make decisions based on independent courses of action chosen by NAMA.”

The Minister distanced himself from the actions of IBRC and claimed those actions had the support of the IBRC board.

The Sinn Fein leader asked Minister Noonan to “confirm the reason NAMA and IBRC are adopting competing positions when both institutions are in wind down and the sole objective of both institutions is to sell assets and minimise losses for the taxpayer”

Minister Noonan didn’t have any answer.

There is a blogpost on here on the potential to merge NAMA with IBRC.

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