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Archive for September 22nd, 2012

NAMA sues John McCabe (again!)

Not content with its five previous applications against John McCabe and family, NAMA yesterday launched a sixth action in Dublin’s High Court. The application reference is 2012/3603 S and as with the previous five applications, the plaintiff is National Asset Loan Management Limited represented by Dublin top-tier solicitors McCann Fitzgerald. The sole respondent is John McCabe senior and as is usual with recently-filed applications, there is no solicitor-on-record for the respondent shown on the Courts Service website.

It was reported by the Irish Independent during the week that NAMA was “fuming” after John McCabe is said to have claimed to have paid €6m to a Bahraini company, Western Gulf Advisory, as a fee to help secure €360m of funding for his company, McCabe Builders. Word on the street is that John has recently been in Bahrain seeking the return of the fees, without success, and a story was doing the rounds that John was “imprisoned” at the Ritz-Carlton hotel in Bahrain when he was unable to pay his bills when NAMA froze his assets, though eventually through the help of friends the bill was paid and John was liberated to return home. The NAMA cases against the McCabes are set to return to the High Court in October 2012.

In the past, NAMA has taken legal action against individuals to enforce personal guarantees or to secure personal judgments, but it should be stressed that we do not know if either of these objectives lies behind the current application. NAMA generally doesn’t comment on individual legal cases.

So far this year, NAMA has launched 28 separate actions in Dublin’s High Court and has been on the receiving end of six.

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Of the Week…

Uneasy meeting of the Week

Yesterday one €200,000-a-year prime minister was in Rome meeting a €0 a year prime minister. The borrowing rate for long-term bonds issued by the €200,000 prime minister’s country is currently 4.8% compared with 4.99% for long term bonds issued by the €0 prime minister’s country. The debt:GDP for the €200,000 prime minister’s country is 106%, for the €0 prime minister’s country it’s 121%. In 2013 the €200,000 prime minister’s country expects its real GDP to grow by 2.2% whilst the €0 prime minister’s country expects to contract by 0.2%.  .The €200,000 prime minister was in Rome seeking support for a write-down in his country’s debt.

Okay, Italian prime minister Mario Monti might be a special case. He is a so-called “technocratic” leader installed to lead his country through an economic crisis and he has waived any salary in solidarity with his nation which must undergo painful austerity. So Mario Monti might be an exception, but the fact is that An Taoiseach Enda Kenny earns more than the prime ministers of the UK, Sweden and Denmark who provide bilateral loans to Ireland, as well as many prime ministers of far bigger EU countries including France.

Poor Enda, who, after his meeting with Mario, had to mosey on down to Castel Gandolfo south of Rome, to meet with Pope Benedict 16th. What was said during the meeting? It was private and we can only imagine if Pope Benedict asked Enda about his speech in the Dail last year which was highly critical of the Catholic Church and its leadership. Perhaps some harsh words were exchanged but as Enda himself said last year “Roma locuta est: causa finita est, [Rome has spoken, the matter is closed]”

Table of the Week

The latest European Commission report on Ireland was published this week. It painted a bleak picture of the immediate future, even though the report was complimentary about Ireland’s compliance with the bailout programme to date. One good news snippet was the Commission’s belief that our deficit in 2012 would be 8.4% of GDP compared with a target in the Troika Memorandum of Understanding of 8.6%. But even that is under threat if the poor Exchequer results in August 2012 continue to the end of this year.Beyond that though, the GDP outlook was lowered again – previously it was 0.5% in 2012, 1.9% in 2013, 2.6% in 2014 and 2.9% in 2015 – and the unemployment forecast was raised – previously it was 14.4% in 2012, 13.7% in 2013, 13.0% in 2014 and 12.4% in 2015. The Government is still forecasting – see below the extract from the latest April 2012 Stability Programme Update – GDP growth of 2.2% in 2013, and whilst forecasts come and go, if the EC is on the money, then Budget 2013 will not be the worst budget in 2012-2015 if we are to reach our target of a sub-3% deficit in 2015.

Quotes of the Week

 “The Taoiseach: The only reason the Deputy wants to take the course he is now taking is that he is terrified of the party on his right-hand side and his opportunism know no bounds.

Deputy Micheál Martin: I think the Taoiseach is terrified of some of those on his left-hand side.” Leaders’ Questions, 18th September 2012

Yes, the 166 deputies in the Dail put away their buckets and spades for another year and returned to the Dail this week to start what might be a make-or-break term for the Coalition. Despite its reputation for rhetoric, debate and exchanges in the Dail are generally mundane and often illiterate, but Fianna Fail leader Micheal Martin scored an uncharacteristically elegant attaque au fer on Enda Kenny’s observation on the rise of Sinn Fein. Labour coalition deputies on both the political and seating left of Fine Fael subsequently obliged by attacking or withholding support for embattled Fine Gael health minister James Reilly.

“Deputy Anne Ferris: The Minister referred to engagement rings worth €100 or €200, but I think most women would expect a ring worth more than €100 when they are being proposed to.

Deputy Pádraig Mac Lochlainn: They might not make it to the marriage.

Deputy Anne Ferris: Perhaps the Minister was simply expressing a male point of view but from a female point of view, engagement rings would cost a lot more than that. Indeed, many very expensive engagement rings were bought during the Celtic tiger times. I have sympathy for Deputy Collins’s point about having to hand back a ring. While I know we are talking about debts in the range of €20,000, it would break many people’s hearts if they had to hand over their engagement rings.” Debate on the Personal Insolvency Bill at the Justice, Defence and Equality committee on 13th September, 2012.

The view on here is that the most pressing matter for this administration to deal with is the issue of personal debt in Ireland. The European Commission this week said that the Personal Insolvency Bill (PIB) meet some of its concerns, implying that it did not meet all of them.As presently drafted the PIB protects banks whose mortgage borrowers are insolvent and in financial distress. We own many of the banks, so the issue isn’t simple, but the metric by which this Bill will be judged a failure is that we will not see any significant number of bankruptcies in this country despite the enormous negative equity and household indebtedness. Sadly the committee stage debate from which the above is extracted focussed on the value of jewellery and cars, rather than the core failing of placing banks as gatekeepers who decide who can pursue bankruptcy.

Transparency Villain of the Week

This week saw the demise of the KildareStreet.com website, a free website created and updated by volunteers, which has been invaluable in providing a record of the business in the Oireachtas. Of couse it was really duplicating what the Oireachtas’s own website should be doing, but unlike the Oireachtas website, it provided links which didn’t arbitrarily change – you will often find on links from this blog that a couple of weeks after they have been created, they no longer work or they point to a different subject, not so with KildareStreet.com. The reason for KildareStreet.com’s demise? Here is its own statement.

But not only has the Oireachtas put an end to a fine and useful website, but changes made this month mean that debates disappear and reappear from the website, there are now multiple pages of debate in a committee hearing which makes searching difficult, you now can’t link to a specific parliamentary question. Apparently the changes are to save money, but the end result does not work or meet anything like the standard expected from a national parliament.

Idiom of the Week

Ministers close ranks behind Reilly in row with Shortall” – Irish Times front page headline

“Close ranks” comes from the military and specifically from soldiers advancing on an enemy, where “closing ranks” involves sticking close together in a row, so that you can protect your comrades better. If you close ranks *around* someone then you are protecting the person encircled from attack. If you just close ranks, then you protect those within the row of soldiers. But if you close ranks “behind* someone then you are, in a military sense, abandoning that person to the enemy ahead or at least making them more vulnerable.

Minister Roisin Shortall will be pleased!

Image of the Week

At this stage, there is only €190m of unsecured unguaranteed bondholders in IBRC, the basket case institution which houses Anglo and Irish Nationwide Building Society. Over the past 18 months we have paid about €3bn to bondholders in that organisation, and of course the last government also paid unguaranteed bonds when the guarantee expired in September 2010. However there are still substantial bonds outstanding at AIB which we own 99.8% and Bank of Ireland which we nominally own just 15% though with our preference shares we really have de facto control of the bank.

On 1st October 2012, AIB is set to repay €1bn of senior unsecured unguaranteed bonds. AIB with its EBS component have received €20.7bn directly from the taxpayer so far, plus NAMA has paid it about €1bn in state aid in when it acquired its loans.

And so the communities of Ballyhea and Charleville continue each week with their march. Last Sunday was the 81st week of the march and they brought their protest to towns across Munster and Leinster and on Tuesday marched from the Garden Of Remembrance at the top of O’Connell Street to the Dail where they handed in a letter to An Taoiseach. Their progress is captured in the photograph above. Along the way they were joined by politicians including Dominic Hannigan, Stephen Donnelly, Pearse Doherty and Luke “Ming” Flanagan. There was no response from Government and lest we forget, in December 2010 after the Greens had signalled their withdrawal from government with Fianna Fail, then-Opposition leader Enda Kenny gave us an estimate of €12-17bn as the sum which he would save on senior bonds if he was in government. To date all senior bondholders have been 100% repaid (with interest).

The 82nd Ballyhea/Charleville march takes place tomorrow at 11.30am in Charleville. You will find details of their march together with photographs and video of all their marches including the 3-day ”Crusade” to the Dail last week, here.

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