Table of the Week
Good news for a change with Ireland’s ranking in the World Economic Forum’s annual competitiveness survey, increasing from 29th to 27th. The banks are still holding us back, and it’s no surprise that we still don’t have normal lending conditions in this country. But aside from the banks, you might want to cast your mind back to an interview An Taoiseach Enda Kenny’s interview with the Wall Street Journal last October where he identified a range of reforms, none of which have been enacted yet. So, some good news this week, but we still have work to do, and remember that our neighbours in the UK are ranked 8th in the world.
Parade of the Week
Tomorrow, they will marching in Ballyhea, for the 80th week of the “Ballyhea/Charleville bank bailout protest” – 15 minutes a week which in a very modest way keeps in the public mind the fact that the people of this country continue to hand over billions of euros to bondholders who had lent money to what became totally bust banks. But if the communities of Ballyhea and Charleville were holding a march on the other side of the Border, there would be considerable official paperwork and approval before anyone could set foot on the public highway. In Northern Ireland, they have a special body called the Parades Commission to which plans for a parade – any parade – must be submitted well in advance in order that the Commission can consider objections and put in place any restrictions so as to prevent public disorder. Take a look at a contentious parade like this one to see the restrictions on both the parade and accompanying protest – it’s eye-opening stuff for folks on this side of the Border.
Above is the list of parades planned in Northern Ireland for the rest of September. It’s a diverse bag with the Mazda MX5 parade alongside what are mostly LOL parades. “LOL” in this context, doesn’t stand for “Laugh Out Loud” or “Lots of Love” but for “Loyal Orange Lodge”, these parades dominate the September schedule but if you looked at the April schedule around Easter, it would probably be Republican parades which dominated. And parade of the week is the last parade on the last above list, the parade scheduled for 29th September 2012 where up to 20,000 people are expected to march from Belfast city centre to government buildings at Stormont. It is an Orange parade to commemorate the signing of the Ulster Covenant 100 years ago in 1912 when 460,000 Ulster men and women signed petitions to protest at plans by the British government to incorporate Ulster into any new Irish state, protest with force if needed. The commemoration later this month is one of the first of a number of centenaries to be marked during this decade. Like many commemorations, it will feature winners and losers, whose descendants will be unhappy one way or the other at individual commemorations.
In the past week, over 60 police officers were hurt – bleeding, burned, bruised and concussed – at riots in Belfast. It just about reached the lower echelons of reporting in the British media. If, on this side of the Border, we have riots which saw 60 or proportional to our population, 150 Gardai injured, there would be Oireachtas committee hearings or even a tribunal. Police blamed one tradition for starting the riots during the week, but the other one chimed in, and the other one was spotted seemingly throwing golf balls and hurling abuse at an Orange Hall in another parade during the week. It takes two to tango, as leaders on both sides work to calm and resolve the situation. The giant parade planned for 29th September hasn’t yet been approved by the Parades Commission, whose decision is due by 18th September.
By the way, the very first parade on the above list is for Oscar Knox who was himself in the news this week. Oscar is the little man from Belfast who has been hit with a very nasty cancer. There was a benefit held for the 3-year old last weekend in Omagh where over €2,000 was raised, but half of it was stolen soon afterwards at what looked like a planned burglary. An anonymous donor replenished the funds raised with a €1,000 donation, and then an envelope turned up in the local church with what looks like the money stolen in the burglary. If you want to contribute to an appeal for Oscar, the details are here.
Irate Teutons of the Week
“Mr Draghi, you repeated that the euro is irreversible. What gives you the democratic legitimation, the authority to say that? Because I have looked it up in the Treaty. It does not say anywhere that it is the role of the ECB to decide what kind of currency the European countries have. Thank you.”
“The FAZ warned the other day about what they have called – pardon me – the “liraisation” of the euro, moving away from a Deutschmark culture to a lira culture. The FDP wants to protest the decisions you have taken today, because they say they are in breach of Article 123 of the EU Treaty of financing governments. Can you explain to us why they are wrong?”
Two questions from German media at the ECB press conference on Thursday, giving a flavour of the German reaction to the new ECB plan to buy sovereign bonds of countries that have agreed to “conditionality” – the gathered press might as well have pronounced “you” when addressing Mario Draghi (pictured above) in the Homer Simpsonesque style “YEUUUW!” such was the tone of the questioning. Back in Germany itself, speculation about the future of their boss at their own central bank, the Bundesbank, continues with the betting that Jens Weidmann wanted to quit in protest at the ECB’s bond-buying plans. The market reaction to the announcements however was ecstatic with bonds fallings to levels not seen for two or more years. Except for Greece’s bonds which still point to an imminent default there. The market reaction is remarkable given the lack of detail available on the new plan, and whether or not Europe’s largest economy Germany is agreeable to it. Some questions that weren’t asked of Super Mario on Thursday
(1) How will the ECB ensure equality of treatment in its bond buying? Will it buy Irish bonds if they go over 6%, Spanish bonds if they go over 7%, Italian bonds at 5%? Who decides what the appropriate cost of funding for an individual EuroZone member is, and on what basis.
(2) What will happen to the ECB’s €3tn balance sheet with “unlimited” “as much as it takes” funding for Spain, Italy and perhaps France and Belgium too? Will it rise to €4tn, €6tn or €10tn?
(3) What ever happened to the ECB primary objective of price stability – an objective which is even greater than “primary” in Germany? Substituting one borrower for another may not increase money supply, but increasing a country’s borrowing and bailing out countries with dangerous deficits might.
Broken promise of the Week
“I’m a hard grafter and, as some of them found out, they shouldn’t tangle with me too often” An Taoiseach Enda Kenny speaking after the Thursday night/Friday morning EU summit on 29th June, 2012 which resulted in a summit communique which said “The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme.”
Immediately following the EU summit in June, Government ministers did victory laps of radio studios boasting about “game changers” and a debt deal for Ireland by October 2012, and lambasting the nay-sayers who campaigned against the Fiscal Compact referendum. The view on here was that the Government was cynically giving the nation the impression that there was a Santa Claus in Europe who would gift a refund to Ireland for the bank bailout. And the view on here also was that Ireland tossed away a key negotiation tool by approving the Fiscal Compact much earlier than it needed to.
Last weekend’s leak of the ECB letters to former Minister for Finance Brian Lenihan in October and November 2010 on the eve of the bailout, may well have signalled an escalation in the battle between Ireland’s Department of Finance and our partners in Europe over the bank debt deal that was announced in June 2012. It seems as if negotiations over Ireland’s €70bn bailout – including €6bn of state aid given to the banks by NAMA which we, the people, have guaranteed – are going nowhere and the leaking may well have been aimed at upping the ante and pressure on the ECB in particular to make concessions. Extortionate behaviour, I know – where might we have picked that trait up?!
On Thursday we found out that there has been little progress on the debt negotiations:
“Question : I have a question relating to Ireland. Are you in any way concerned about the tensions and infighting in the Irish coalition over the forthcoming budget? And secondly, what remains to be done in order for Ireland to secure a debt relief deal?
Draghi: I think you are asking me too much. I think the Irish government has so far been a model of compliance with the macroeconomic adjustment programme. And I am confident that whatever the tensions, this will continue to be the case. On the second question, I have no real news to give you.” Question and answer at the ECB press conference on Thursday
It seems that a campaign is now underway to lower expectations for a debt deal by October, with both junior minister Brian Hayes and Governor of the Central Bank of Ireland, Patrick Honohan making statements this week which seemed designed to deflect the Government being held to account for its statements in June. It seems that a “tangle” with Enda Kenny is not something serious leaders have any concern about.
NAMA Wine Lake 
It’s worse than the ridiculous Kenny spin. Nobody in the media is mentioning the issue of “sterilisation”, which effectively means that the ECB bond purchase will be offset by sales of other assets, so there’s no net difference to the balance sheet.
The quantitative easing that the U.S. Federal Reserve has done twice recently (and is likely to do a third time) is nonsterilised, which makes the balance sheet of the US federal government larger. The sterilisation concession was a nod to Germany, which as everyone knows opposed the bond-buying program.
@WSTT, you are right to say that the ECB has committed to a “sterilised” bond buying programme, but in the recent past eg with the €1tn three year liquidity provision earlier this year, this has resulted in an increase in the ECB balance sheet, or more accurately the assets and liabilities. “Sterilisation” is supposed to mean that
(a) the ECB creates money today to buy bonds
(b) at some future date, the ECB sells the bonds or the bonds are redeemed by the countries and the ECB destroys the money received
So, considering (a) and (b) together, there is no new money created. But the balance sheet will increase at (a) and between (a) and (b) there is the potential for inflation above 2%. And of course there is the risk that the ECB will lose money on the bonds it is buying.
No wonder the Teutons are unhappy!
A blueprint is not the same as a done deal and the history of rescue efforts by the powers that be in the euro zone have been exercises in futility. Hopefully, this is not yet more of the same.
September 12th is his next big day. It’s the day he gets to play with his brand new cheque book…… Quantitive easing here we come.
But under the most benign circumstances, Mario’s proposals face some tough hurdles and they will take months if not longer to put into play. We shall see, but write-offs for Ireland – forget it.
German investors are rushing to buy residential investment properties at sub 4% yields in order to remove their cash from exposure to the euro…… and they are very angry Huns at present. Mr Draghi is not at all popular in Germany. Nostalgia for the is at an all time high.
That should read “Nostalgia for the Deutschmark is at an all time high.”
This may have focused some minds,but good news for NAMA as property prices in London should hold up,prime yields may even fall.
“In July, Spaniards withdrew a record 75 billion euros, or $94 billion, from their banks — an amount equal to 7 percent of the country’s overall economic output — as doubts grew about the durability of Spain’s financial system.
The deposit outflow in Spain reflects a broader capital flight problem that is by far the most serious in the euro zone. According to a recent research note from Nomura, capital departing the country equaled a startling 50 percent of gross domestic product over the past three months — driven largely by foreigners unloading stocks and bonds but also by Spaniards transferring their savings to foreign banks.”
http://www.nytimes.com/2012/09/04/business/global/money-and-people-leave-spain-as-economic-gloom-deepens.html?pagewanted=all
Schmuck of the week,if not the year has to be Ciaran Hancock,at the IT,tut,tut.
The paper of record,fawning grovelling reporting until this,then swift change in direction.
One the most famous headlines is “headless woman found in topless bar” Hancocks disinformation ranks up there,regurgitating complete nonsense about confi. agreements btw. AC’s this can be waived at clients request!
“Barrett has ‘nothing to hide’ over purchase of Treasury subsidiaries”
“Mr Barrett, a Treasury director, has told The Irish Times that he paid €2.263 million in cash to buy the two businesses – Treasury Holdings Real Estate Pte Ltd, and Treasury Holdings (Shanghai) Property Management Co Ltd.”IT
So he paid cash right Ciaran,despite numerous reports including concerns raised on here,Ciaran made NO attempt to contact the recently sacked independent directors.Who were publicly grumbling and distancing themselves.
The media relations department at TCT,wishes Ciaran a happy birthday.
Correction this week…..so basically Hancock got properly ……
“TCT added that the €2.263 million consideration would be paid in tranches, believed to be over a two-year period.”IT
“Media reports released late last week revealed that subsidiaries of embattled real estate investment firm Treasury Holdings which were suddenly sold off for 2.263 million euros to a company controlled by one of its directors are believed to have been valued at more than 31.8 million euros earlier this year in a report by Goldman Sachs.”
http://www.mingtiandi.com/real-estate/cre-news/20120909/did-treasury-holdings-directors-sell-themselves-china-assets-at-93-discount/
The “vol” number is very important,6 times normal.
http://www.reuters.com/finance/stocks/overview?symbol=TRCT.SI
Abridged and amended version of a fairy tale involving some fat pigs.
Once upon a time there were two little pigs and the time came for them to leave home and seek their fortunes.
Before they left, their mother told them ” Whatever you do , do it the best that you can because that’s the way to get along in the world.
The first little pig built his house out of straw because it was the easiest thing to do.
The second little pig built his house out of sticks. This was a little bit stronger
One night the big bad wolf, who dearly loved to eat fat little piggies, came along and saw the first little pig in his house of straw. He said “Let me in, Let me in, little pig or I’ll huff and I’ll puff and I’ll blow your house in!”
“Not by the hair of my chinny chin chin”, said the little pig.
But of course the wolf did blow the house in and ate the first little pig.
The wolf then came to the house of sticks.
“Let me in ,Let me in little pig or I’ll huff and I’ll puff and I’ll blow your house in” “Not by the hair of my chinny chin chin”, said the little pig. But the wolf blew that house in too, and ate the second little pig.
We are missing the third little pig,that’s the problem with this story…but here comes the big bad wolf !
Today’s TCT announcement is a threat or attempt to shut up the sacked directors,let’s hope the “house” is built of stone…..
“It has come to the attention of the Board of Directors (the “Board”) of Treasury Holdings Real Estate Pte. Ltd (“THRE”) that there are media reports in Ireland which quoted statements allegedly made by certain former independent non-executive directors of THRE, alleging among other things, various matters about THRE and Treasury China Trust.
Unitholders are advised to exercise caution when trading based on media reports which may not contain accurate or complete information.
In addition, the Board takes a serious view of any breach of confidentiality, even if made by former directors, and will review if any such breach has occurred. The Board reserves all rights in this regard.”
http://ir.treasurychinatrust.com/phoenix.zhtml?c=237568&p=irol-IRHome