Archive for March 22nd, 2013

It that shall not be named of the week

The “R” word

Ireland slipped back into recession this week, when the Central Statistics Office released the national accounts for 2012. Quarter 3 2012 and Q4, 2012 both recorded declines compared to the preceding quarter, the technical definition of recession. It should be said the decline in Q4 2012 was a marginal 0.047% which the CSO rounded to -0.0% but it was still a decline. But amazingly not one of our old media, RTE, TV3, the Irish Times, Independent or Examiner mentioned the “r” word in its reporting. An Taoiseach Enda Kenny has been touring the US this week trying to drum up investment in the State, and he has been assuring punters that Ireland has recorded two successive years of GDP growth. Which is true. But if he were to say “we’re back in recession”, it would have taken the gloss off his presentation. So the omission on his part is understandable, the omission by the national public service broadcaster is less so.

Nobel prize winning economist Paul Krugman was a little sarky when he reported that “Ireland Recovers, and Recovers, and Recovers” but his graph above illustrates the recent history of Ireland’s economy. We now in a quadruple dip recession.

Image of the Week


We learned from the accounts of RTE radio presenter, Marian Finucane’s company, Montrose Services Limited which has just filed its accounts for the year ended 31st October 2012, that Marian’s “image rights” are valued at €600,000. The 62-year RTE veteran’s company only needs file abbreviated accounts so we can’t see what her revenue is, but her RTE income might be expected to make up the lion-share of that revenue. She was paid €570,000 by RTE in 2008 and in 2009, the last figures released by RTE, she was paid €513,270. She may have taken subsequent pay-cuts but more recent figures haven’t been published. She also apparently earns money on top of her RTE earnings, eg from this book “Marian Finuncane Interviews 2005-2011” published by Wolfhound Press in November 2011.

Lyrics of the Week


Carla Bruni, wife of former French president Nicolas Sarkozy is out of sorts and has penned a song to vent her feelings towards current French president Francois Hollande. There’s been simmering personal animus since Francois snubbed Nicolas at an inauguration ceremony last year. Her latest oeuvre features a song “The Penguin” in which she calls Francois a chav and also has a pop at his nickname in the French press – Mr-Neither-One-Thing-Or-The-Other. It’s not exactly Swiftean satire and hardly rises above the level of “Francois is a poopy-head” and it’s certainly not going to reignite Carla’s flagging singing career.

Le Pingouin

Il prend son petit air souverain,
mais j’le connais moi,
l’pingouin, n’a pas de manière de chatelaine
Hé le pingouin!

Si un jour tu recroises mon chemin,
je t’apprendrai,
le pingouin,

je t’apprendrai à me faire le baise-main
Ni laid ni beau,

ni haut ni bas,
ni froid ni chaud,

ni oui ni non
Tiens l’pingouin,
t’as l’air tout seul dans ton jardin

[translated The penguin. He adopts the pose of an overlord. But I know him. The penguin hasn’t the demeanour of a minor lord. Hey the Penguin. If one day, you come across my path, I’ll tell you about the penguin, how he kisses my hand, neither ugly nor beautiful, the penguin. Neither tall ror small, Neither hot nor cold, the penguin. Neither yes nor no, take the Penguin, which has a demeanor all alone in your garden, the penguin]

Chart of the Week


We all know about the woes of the old media where circulation and advertising have collapsed as audiences migrate online where they can access commoditised news for free, and where advertisers are unwilling to pony up the same wonga to woo online audiences.  This week, a study by a media research group, Pew reported in the Atlantic Magazine, showed what we all know, that traditional advertising has collapsed, but what was striking was that new media advertising, although growing and growing from a low base, is not replacing lost old media advertising. It seems marketing budgets are being trimmed in total terms with a small reallocation to new media.

“Closed” sign of the Week


The view on here is that the Cypriot euro and banking system are both dead, and that in the next week, we will see a fresh Cypriot currency and an independent Cypriot central bank. All because a bunch of bozos at the Eurogroup of EuroZone finance ministers, chaired by our own Minister for Finance, Michael Noonan, approved a debt deal for Cyprus which would have seen ordinary depositors with less than €100,000 losing 6.75% of their deposits. Someone with a  modest €1,000 balance would have lost €67.50, someone with €10,000 would have lost €675. And even though the proposals were roundly rejected by the Cypriot parliament, the mask had slipped, the genie was out of the bottle, the cat out of the bag and the Rubicon had been crossed. Confidence has left the house. Above was the message shown on the Laiki bank website this week, Laiki being the Cypriot Number 2 bank, and the one most likely to topple.

Quote of the Week

“The Cypriot case is a complex and difficult case and it was a significant achievement to reach an agreement between all parties. This agreement provides a sustainable solution, which deals with Cyprus’s financial system and its funding requirements” A spokesman for the Irish Department of Finance on 17th March 2013, adding that the agreement was a “positive development for Cyprus, the euro zone as a whole, and Ireland”

Although the now notorious meeting which finished up at 4am last Saturday morning, of the Eurogroup of EuroZone finance ministers was chaired by Jorg Amussen, a lowly member of the 5-man ECB executive council, our own Minister for Finance Michael Noonan was present in body. It was Minister Noonan who supported the Cypriot bailout whereby depositors with less than €100,000 would see 6.75% of their cash confiscated despite having a guarantee of €100,000. It was Minister Noonan who allowed the Cypriot corporate tax rate to be raised from 10% to 12.5%, thereby cutting the moral high ground from any future Irish administration facing demands from our partners in Germany and France. It was an “omnishambles”, as they say, and our finance minister was central to it.

Pay bonanza of the Week

Apologies to the Bank of Ireland CEO Richie Boucher who was revealed this week to have waived €67,000 of his €690,000 basic salary in 2012. He received a pension contribution of €186,000 and other perks of €34,000. His overall package came to €843,000, a €12,000 increase on 2011. Previously he was categorized on here as one of the band of banking blow-ins who had not waived part of their salary. Richie still incurred the wrath of politicians but it seems that the North American investors in Bank of Ireland have faith in the Zimbabwean and, despite being in a position of relevant authority during the subsequently-disastrous boom years, it seems Richie is to remain boss at Bank of Ireland with his existing salary.


On the other side of the Border, politicians are getting pay-rises. Yes, the 108 Members of the Legislative Assembly (MLAs) are unbelievably about to receive 16% pay increases. Ordinary MLAs are to get GBP 4,899 (€5,748) extra per annum with effect from 1st April 2013. Ministers and the First and Deputy First ministers will get just over GBP 5,000 extra. And no, it’s not an April Fool’s joke. Sinn Fein MLAs will continue to take home the average wage and return the rest to party coffers and the SDLP is refusing to accept the pay increase. With a public sector pay freeze, a dysfunctional executive and a deteriorating economy, there has been remarkably little in the way of outrage across the Border.

Bad Landlord of the Week


I see that John Corcoran continues to advertise the cause of the Irish Commercial Tenants Association in The Phoenix magazine; the Government might have abandoned its commitment to reform Upward Only Rent Review terms in existing leases but the persistent John continues with the crusade. Down in Clare, there is a different complaint about commercial landlords – apparently unscrupulous landlords are charging prostitutes a premium on normal rents so as to turn a blind eye to their activities, or at least that is what Gardai are claiming. Don’t we have an offence of living off immoral earnings? The image above is from Lorcan Roche Kelly on Twitter here.


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NAMA continues to provide a living to many in our legal profession and yesterday launched two separate but apparently related applications in Dublin’s High Court. In both cases, the applicant is National Asset Loan Management Limited represented by top-tier solicitors, Byrne Wallace.

In the first case, reference 2013/882 S, the respondents are Valerie Craughwell, Des FitzGerald/Desmond FitzGerald. In the second case, reference 2013/184 SP, there are four respondents, Valerie Craughwell, Des FitzGerald/Desmond FitzGerald (again!) and two limited companies Superplant Limited and JJ Smith Builders Limited. The two companies are shown as dissolved on duedil.com but the former directors of both were Bernard Smith (57) and Norbert Fitzpatrick (63) and are part of the Smith Group on the Naas Road in Dublin. As is usual with recently-filed applications, there is no solicitor on record for the respondents.

As this is Ireland and we have medieval levels of transparency in our court system, we don’t know the basis for the applications or remedies sought. NAMA doesn’t generally comment on individual cases, not even to confirm the identity of respondents.

So far this year, NAMA has launched 11 applications in Dublin’s High Court and has been on the receiving end of 14, though 12 of these relate to depositors suing for the return of deposits relating to a Portugese golf resort.

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We have more evidence today of the ad-hoc way in which NAMA is treating its developers with the accounts of a Donegal property company, McGettigan Construction Limited whose accounts for the year ended October 2011, were published in February 2013 and filed with the Company Registration Office last week. Like most developers, McGettigan has a pretty unhealthy balance sheet which is insolvent to the tune of €11.5m, and it turned in a loss of €1.8m in 2011. There are loans outstanding of €25m. The auditors, Donaldson and Thompson of (London)Derry note the difficulties in ascribing valuations to property stock.

McGettigan has loans from NAMA and a non-NAMA bank, and although it notes “agreement in principle” has been reached with the non-NAMA bank, the accounts state “the company awaits approval from NAMA before entering into formal agreement”. Like many other developers, McGettigan is a developer which is living month-to-month under NAMA’s auspices not knowing what support will be there in the short to medium term.

The abridged accounts don’t show us very much on director rewards though Brendan McGettigan was provided with a €66,130 “interest-free” loan during the year.

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Human instincts and behavior now have primacy in Cyprus – politics and economics have taken a back seat. So, whatever Plan B was introduced in the Cypriot parliament will fail, but the numpty politicians and economists still cling to the belief that they can trump human instinct, and that the scenes played out over 10 days when ordinary people have been confronted with shuttered banks, ATMs providing limited or no service, a suspension of electronic transfers, credit and debit cards and cheques refused in shops, discretionary trade down 50%, bank employees without a job to go to – that after ALL this – that there is a belief all of this can be made right with Plan B is laughable. But here goes anyway.

Nine bills – seven according to some sources, eight according to others including a 61-page banking bill — were presented to the Cypriot parliament yesterday evening which are together designed to give effect to Plan B.

(1) Laiki Bank is to be split into a “good” and “bad” bank.  Sound familiar? It’s actually a huge departure from other countries’ good and bad banks. In the Laiki case, the bad bank will not have toxic loans but instead will have deposits of over €100,000, and the split is aimed at clearly delineating larger depositors who will now face much greater than 9.9% levies to make Laiki solvent again. Bank jobs would be safeguarded. Sub €100,000 deposits would be guaranteed, like most people believed they were anyway, up until last Saturday. Russians are likely to be deeply unhappy with this move – although it remains unclear exactly how much Russian cash is swilling around the Cypriot banking system with estimates ranging from €5-10bn according to the finance minister to the Russian business magazine Vidimosti yesterday to €15-20bn according to other sources, it seems that the Russians are still in line to make a big contribution to the Cypriot bailout.

(2) The Central Bank and finance minister have been given broad powers to introduce capital controls. Although the controls have not yet been specified, they will likely place limits on withdrawals from banks or movement of cash from Cyprus to other countries. Cheques may be restricted.

(3) There will be a “solidarity fund” where citizens and businesses can invest spare cash or repatriate cash and assets in other countries to invest in a bond to help Cyprus recover.

(4) There is a menu of state assets that may be pledged as security for loans or bond issuance. There is still talk about the menu including private pension funds which would have to be expropriated, church property and assets,  and the disputed gas assets in the east Mediterranean. However all such assets will require extensive due diligence before they can be practically packaged for sale or security.

The bills are set to be debated on Friday. If it weren’t so serious for the Cypriot people and its economy, you’d be tempted to get the popcorn in as the sophistry is played out in parliament and no doubt the politicians and bankers will convince themselves they have done enough to restore confidence in the Cypriot banking system. But unless they’ve discovered one of those Men-in-Black memory thingies, their labours are for nought, and it should be no later than Sunday when they realize that their banks are doomed in the context of the euro system, and the only thing that will practically restore confidence is a Cypriot currency and independent central bank.

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