Saturday, 21 April 2012

Abortion Icons, Tweet Crime & Herding

Last night I committed tweet crime, became briefly a bĂȘte noir for a small chattering class & went to bed happy.

There are few reasons to watch anything on RTE, the home grown output is invariable appalling, the journalism unreliable & the imported dramas widely available elsewhere. There is even less reason to watch RTE's Late Late Show where the near talent-free Ryan Tubridy seems engaged in an a futile exercise to re-capture the show's glory days under the young Gay Byrne.


This is not 1970 & Tubridy is is trapped both by his inability to see beyond the groupthink of Socially Acceptable Ideas & the fact that other media have the issues well aired long before he gets to them. In Tubridy's case it appears that very airing is necessary for him to soak up what he should talk about from the Irish Times & a small group of its Dublin readers. He is a poor purveyor of second hand liberal consensus.

Last night the show featured an extended interview with three women who during the week had been touted on the front page by the Irish Times for talking about their abortions. It is important to note that lots of women in Ireland have talked about their abortions in the last year but did not make the front page of the Irish Times because they were not talking the way the Irish Times editors wanted them to talk about abortion. Those women & their stories can be found here http://www.womenhurt.ie.

The women the paper (& Tubridy by that second hand osmotic process that makes him such a whimpering bore) featured believed their abortions were a positive move & that Irish State was much remiss in not providing for abortion here. The reasons for the abortions were that in all three cases the women had been given the horrible news after a scan that the babies they carried suffered terrible deformities.

In all cases this meant the child, even if carried to term would die soon after birth.

There was an absolute acceptance of the false claim that such deaths would be agonising for the child: it was a if modern medicine was devoid of effective analgesia. Not once, given the women's stated desire to avoid a painful death for their children was there reference to the real horror of death by burning saline or by surgical dismemberment. Abortion was presumed to be be painless but natural death in a modern hospital surrounded by caring professionals with the best modern medicine could offer, presumed to be an agony.

One of the women, who wept during the interview had her labour induced at thirty weeks. No question was asked as to the alternative to what must have been a nasty ordeal.

The near meaningless phrase "incompatable with life" was used over and over again as a mantra of justification. That any human will die is a poor excuse to hasten their end let alone inflict on them the death babies suffer under saline or D & C.

Tubridy had no intention of  questioning the women on the issues, their word was taken as truth even when,as in the case of the allegations that babies would be left to die in agony, they were patently peddling porkies. There were other areas where the truth was at least bent to fit the narrative of children living lives not fit to be lived. The accuracy of the claim that child suffering from trisomy 13 could only live five minutes, a dubious statement however short the brief lives of children born with that condition that kills 80% in the first year (Trisomy 13 information)  or that more fundamentally that brevity of life was a argument for abortion, was ignored entirely. This was, behind all the emotion, a piece of unashamedly campaigning television. Tubridy no more wanted to come to the truth than he wanted some woman in the audience to interrupt the propaganda with a story of regretting her abortion.


Only a stone hearted sociopath would be unable to sympathise with with a couple told that their child is too deformed to live, that the end result of the pregnancy will be a tiny child whose very minutes are numbered. If told that this information means the couple have decided to have the child killed (the real meaning of pregnancy termination) no matter what our beliefs we could still sympathise for their pain loss & suffering & the extremity that drove them to such action. When the experience is used to to justify baby killing on a wider scale & the story is accompanied by lies about babies dying in agony after birth that sympathy is much harder to maintain & we need to put our sympathy where it really belongs, with those who are & will be killed. 

There was no medical reason for the women interviewed to have abortions: there are never medical reasons for abortion. The children they clearly loved did not need or benefit from the killings & would have had better, kinder deaths born in an Irish Hospital. Elevating the women involved to the status of secular saints, pretending that they have been wronged by a state that will not legalise abortion is an effort to make abortion as Socially Acceptable Idea. Having lost every argument, with the tide of public opinion  turning in strongholds like Britain, abortion advocates have hit on the tactic of not arguing but creating icons.

Little psychological insight is needed to see why why the women involved in last nights interview seek to justify their decision & to normalise abortion by seeking to change the law. By doing so they have entered the political arena & no tears or sentimentality can or should protect them from questioning. They are not icons but campaigners.

In the promotion of Socially Acceptable Ideas the social media are essential. There is a tendency to regard Twitter as the real world or even a subset of real opinion when it is neither of those It is, on many issues, merely a reinforcing tool of groupthink divided into armed, hostile camps. SAI proponents must police its tiny landmass in the hope of occupying the wider reality later.

Last night Twitter lit up with pro-choice advocates praising the women's courage, describing them as heroines & warning that the could not, must not be judged. There only proper response to such outrageous censorious propaganda is outrage: tweet crime. I tweeted that the women were murderesses, not heroines. It was neither polite nor  politic nor was it intended to be.

The policing action leaped in to action with commendable speed & thoroughness. Much of the tweets in reply were merely childish obscenities strung together, vulgar abuse, name calling,  & recommendations about my mothers pregnancy. None of it was original or interesting but I re-tweeted the more startlingly extreme pieces. Almost all of such abuse from the self styled policers of ideas follows a simple pattern of faux out rage masquerading as concern, the stock-in-trade of the left's politicians. The pattern of name calling, even the names called have an invariable sameness. Bigot is always a starter followed by the de rigeur charges of utter stupidity but as the faux outrage works it self-up streams of obscenity are used. This abuse is intended to distress, it is a slap on the face so that we remember not to cross the boundaries set by the Thought Police again. In my case it is wholly useless, even counter-productive as a policing action.

In Gene Wolfe's "Citadel of The Autarch" Severian of the Guild of Torturers is given a graphic account of the horrors in store for him by his enemy, Agia. His reaction to her threats is one of honest boredom, he had spent most of his life assisting at tortures much worse. He advises her to get professional torturing assistance. I went to St Kieran's College when it was less an educational establishment than a poorly run borstal. I've been bullied by professional bullies with an intensity & application that left me immune to such terror tactics. That personal immunity was hard won in the prefabs of 3A but few were privileged with that particular rite of passage.

The tactic of mass insult, may be seen as a kind of digital biological reaction with some tweeters, unable because of their position on a moral high ground to participate directly, re-tweeting the offending text to their followers to increase the the hive activity.The tide of abuse, triggered as if by pheromones, is magnificently effective as a censoring device since few can come unshaken from a page of insults designed to hurt.

In the past two days I have seen a a wonderful, deeply thoughtful, intellectual gay friend reduced to self doubt by a bout of such vile abuse that included the stupidity & Nazi charge from an academic economist (in this particular economists case it is academic whether he is an economist given the level of inaccuracy he has shown on the subject) for my friend's uttering of secular blasphemy by opposing Same Sex Marriage. On the same subject of SSM an intelligent, gentle Catholic blogger friend almost gave up using the 'net after threats of a disturbingly sexual nature involving cement left her paralysed by disgust & fear.

The social media are thus used to herd thought & its expression into forms acceptable to the hive. That is why very poor & even vicious ideas now go unchallenged. Without the rite of passage of St Kieran's 3A too many flinch, doubt themselves, or give up. Many more internalise the bullying & become effective self censorers.

We have a choice whether we are now tame lemmings being herded over a cliff by ignorant activists or a people concerned about our lives & our country. The cost of even making some arguments may be a bath in vileness we would rather not experience but the cost of losing the culture war is death.

Thursday, 19 April 2012

An open letter to Catherine Byrne TD

Dear Catherine,

At the Fine Gael Ard Fheis, when the motion on Same Sex Marriage was not debated as those of us who wished to speak against the motion were studiously excluded, you congratulated the young man who spoke for the motion on his courage. Leaving aside my disagreement with a debate that refuses an opposition or the manifest unfairness of a platform that congratulates one gay man on his courage while refusing another the right to speak, I resort to this vehicle of an open letter for a more immediate reason.

As an openly gay Fine Gael activist this congratulations gave me cause for concern, even for worry. What are the dangers, for surely there is no courage in safety, that exist for being openly gay in Fine Gael?

I have confidently been a branch & constituency officer, a campaign manager at all electoral levels (bar the Presidency) & a County Director of elections and have clearly been lulled into a false and perilous sense of my own security. My exposure to Fine Gael has been as widespread as it has been trusting. Now I am horrified at the risks I have run & haunted by the fear of peril.

I badly need to know where these dangers lie so that I may avoid them. Is it solely at Ard Fheiseanna that I risk death & disablement at the hands of a group of militant middle aged homophobes with membership cards? Are some constituencies worse or better than others? I appear to have been particularly blessed with Carlow Kilkenny but maybe Fine Gael gatherings of Dublin South Central teem with skin-headed yobs carrying baseball bats marked "This Bat Kills Queers"?

This worry for my personal safety will naturally impinge on my ability to organise & canvass for the party, after all one cannot give one's best if momentarily expecting to be battered by some recidivist County Councillor and his cronies in the name of God, Eoin O Duffy & the dead generations.

This worry goes beyond the personal selfishness of liking my features in their current un-baseball battted alignment. I am not alone in being openly gay in Fine Gael though for obvious safety reasons as you can well understand, I cannot name names in the climate of fear engendered by your congratulations.

I can only beg you to allay my worries, help all of us stay safe & out of the clutches the stoners & bashers by having the courage to publicly delineate the areas of danger. If this involves naming & shaming some violent homophobes remember that the party is better off without them.

Yours Most Sincerely,
Paddy Manning






Sunday, 26 February 2012

Which Arab Season?

When the founding fathers of America  brought forth a new nation, conceived in liberty, and dedicated to the proposition that all men are created equal they changed the world forever. Many believed that such a country could not long endure, that such a nation was neither possible,plausible or permissible. How wrong they were.

"Conceived in liberty" that men might own themselves, be their own masters was a shattering blow whose effects are still rattling dictators & enslavers.

 "The proposition that all men are created equal" gave each a stake in a nation of free men, a radical idea that would make men and women from all over the world patriotic citizen's.


That noble experiment in liberty worked, worked beyond the dreams of those founding fathers. America became a magnet for millions & a beacon of hope in some of the darkest days of humanity. Freedom made America rich & and those countries who followed that template of economic freedom also found prosperity.


 When vile men slaughtered the innocent on 9/11 in the name of Islam America & American's showed the tolerance of liberty: how many countries would see their people react so well? We mourned in Ireland, 3/4 of the first responders that died were Irish or of Irish descent. What is less well known is that the attacks left 30 Muslim children orphaned. America's strength from her founding principles was her ability to bind people from all faiths & countries as one free people. Osama Bin laden could kill civilians & knock the towers but he could not change that & the Armageddon of Islam versus the West was a creature of his perverted mind.

This is not to say that America was perfect, slavery darkens the past but the nation paid in blood, nor that those freedoms that made America great & rich are not being now radically undermined, but it is worth reminding ourselves of why & how the United States inspires.


In kleptocracies in North Africa, countries where business cannot be done without bribing some government official, where the army picks off the best business opportunities & the presidential family amasses billions that radical message of liberty is inspiring again. 


It is not Islamacists nor some terrorist factions that are behind the Arab Spring. That season is the child of ordinary freedom loving men & women, men created equal with us in their desire to live free,decent lives. They are inspired, not by Che Guevara or Lenin but by Steve Jobs & Larry Page. This is a capitalist revolution, much more Tea Party than Occupy Wall St.  


They may yet be betrayed as the partially have been in Egypt with the army retaining control. They may yet fail, as in Syria where the price of their failure will be slaughter, barbaric torture & even worse repression. As I write 100,000 civilians in Homs are cold, hungry & being slaughtered by Russian artillery. Sadly Israel, the one country that could stop the slaughter of Homs cannot intervene.


Powerful elites & kleptocrats do not give up their privileges easily & even if the protesters do succeed with free elections, the best organised & funded political parties in all these countries will be the Muslim brotherhood or its equivalent. That is a call to all free nations' civil society, not an excuse to repress.


I have seen it argued that America should have helped crush the movement in Egypt, for Israel's sake. That would have been a terrible betrayal of the founders, of the very idea of nation, conceived in liberty, and dedicated to the proposition that all men are created equal. If Israel can only be kept safe by keeping the people of Egypt in slavery then Israel  will never be safe. America has always been a friend to freedom: that policy has made the world a freer, safer place and made every free nation America's ally. Repression not only would betray Americas most profound ideals but would store up hatred & resentment for centuries.  

I have talked to men and women involved in the struggle to own themselves as free people in countries not run to enrich an elite. They want the right to work, open businesses & get on with their lives. For this, like the men of Valley Forge, they are willing to die. Many already have. Does it matter that they are Muslim? That they follow a different faith than I? 

When the riots in the British cities were at there height last summer 21 year old Muslim,, Haroon Jahan was one of three men murdered. Hours after holding his son as he died on the street his father Tariq Jahan was appealing for calm, for no further deaths or revenge attacks. On the worst night of his life Tariq's faith inspired him to save other families the grief he was enduring.  He succeeded & prevented a certain race riot breaking out in Birmingham.

As in Scott Fitzgerald said, the fundamental decencies of life are unequally divided. Just as the creeps from Westboro find justification in the Bible for picketing the funerals of fallen heroes, bad men will find justification for terror in the Koran. It may even be there but the men & women that that protest & hope for a better future are not those men. It would be Osama Bin-laden's greatest victory & a posthumous revenge if he succeeded blinding us to that.













ECB grennmailing Ireland- A La Kermit

What do you have if you hold a green ball in one hand and a green ball in the other hand? The bawdy riddle, current the last time the Muppets were in the cinema brings to mind the European Central Bank , the ignored institution in the story of Ireland's financial crash.

The answer was Kermit the Frog's undivided attention & the ECB has not just the Irish Government's undivided attention but near total control over that Government. The green balls are the short term funds of the Irish banks. Without this funding none of the still existing Irish banks could function. Troubled banks are forced to rely on one of their main destroyers for funding lifeline.

The ECB is a Franco-German institution: describing it a "European" despite the fact it now has a token Italian , albeit a fairly brilliant token Italian, as its head, is a lie. Draghi was appointed because the Germans had lost their candidate & the French just had their turn, in the person of the startlingly incompetent Trichet. The French, in the kind of corrupt back-room deal in which they specialise, still got one up by having the Italian on the six person board to resign to make way for a French candidate: it is hardly likely he brings as little to the party as Trichet but one is not sanguine.

The ECB has used our Kermit The Frog position stifle any official criticism of it's own role in the disaster & to ensure our government does not break ranks on debt payback, both to bondholders & to the moneypit that is the ELA. This is blackmail.

Under the Maastricht treaty the ECB has a duty of to ensure the stability of banks in the Eurozone. Trichet ignored this to the point of deliberate negligence.

Short-term paper (bonds) are heroin to banks, providing funds that need to be repaid in relatively short order. Commit to much of those funds to loans & a bank is dependent on rolling the bonds over rather than repaying them. That is financial addiction: cold turkey of a bond market withdrawal leads to disastrous results.

Irish banks were allowed create just such an addiction trap between 1999 & 2007: the first 8 years of the Euro. As low interest rates encouraged more borrowers & property asset prices increased, the amount of collateral and loans increased, the vicious circle meant that deposits could not fund loans. (Some of those deposits were themselves the direct result of loans: fractional reserve banking is magic)

This growth in lending out paced the ability of deposits to fund it so the banks were relying more & more on short term Eurobonds. The Euro had gotten the banks over the exchange rate issues of borrowing abroad.

Lending grew from €120b in 2000 to €400b in 2006 and by 2006 Eurobonds accounted for €129b of the funding for that credit. Why was the ECB NOT warning the Irish Government about this massive inflow of credit? Why were no steps taken to to regulate this Amazon of euro's flowing into Irish banks. Did a compound annual growth of over 28% in lending in the final 3 years of the boom not ring alarm bells in Frankfurt?

If the answer is No, then Trichet was a fool, if yes, a knave. Either way the collapse of the Irish banks happened due to ECB negligence and we need to make this very clear to Europe. Then we need to stop paying the ELA debt to our own Central Bank.

We can compromise on that, we are a reasonable people. We will pay the money in, but instead of electronically burning it, the Central Bank will credit the government with the funds. We still pay our debt, but costlessly to ourselves, not to as a holocaust to the German Gods of Moral Hazard & Hard Money.

Perhaps it is time to consider what charges might be brought against Mr Trichet for his dereliction of duty. An arrest warrant might concentrate minds.

   









The Koch brothers are oil billionaires regularly attacked by the left in America for donating to free-market & conservative think-tanks. Shamelessly the Obama election campaign has cranked up those attacks. This letter, a response to that demonisation, is both a wonderfully elegant riposte & a clear defence of a free society. I got it on the web & think it is worth keeping.




Mr. Jim Messina
Campaign Manager
Obama for America



Dear Mr. Messina:


Because every American has the right to take part in the public discourse on matters that affect the future of our country, I feel compelled to respond directly about a fundraising letter you sent out on February 24 denouncing Koch. It is both surprising and disappointing that the President would allow his re-election team to send such an irresponsible and misleading letter to his supporters.


For example, it is false that our “business model is to make millions by jacking up prices at the pump.” Our business vision begins and ends with value creation — real, long-term value for customers and for society. We own no gasoline stations and the part of our business you allude to, oil and gas refining, actually lowers the price of gasoline by increasing supply. Either you simply misunderstand the way commodities markets work or you are misleading your supporters and the rest of the American people.


Contrary to your assertion that we have “committed $200 million to try to destroy President Obama,” we have stated publicly and repeatedly since last November that we have never made any such claim or pledge. It is hard to imagine that the campaign is unaware of our publicly stated position on that point. Similarly, Americans for Prosperity is not simply “funded by the Koch brothers,” as you state — rather it has tens of thousands of members and contributors from across the country and from all walks of life. Further, our opposition to this President’s policies is not based on partisan politics but on principles. Charles Koch and David Koch have been outspoken advocates of the free-market for over 50 years and they have consistently opposed policies that frustrate or subvert free markets, regardless of whether a Democrat or a Republican was President.


If the President’s campaign has some principled disagreement with the arguments we are making publicly about the staggering debt the President and previous administrations have imposed on the country, the regulations that are stifling business growth and innovation, the increasing intrusion of government into nearly every aspect of American life, we would be eager to hear them. But it is an abuse of the President’s position and does a disservice to our nation for the President and his campaign to criticize private citizens simply for the act of engaging in their constitutional right of free speech about important matters of public policy. The implication in that sort of attack is obvious: dare to criticize the President’s policies and you will be singled out and personally maligned by the President and his campaign in an effort to chill free speech and squelch dissent.


This is not the first time that the President and his Administration have engaged in this sort of disturbing behavior. As far back as August, 2010, Austan Goolsbee, then the President’s chief economic advisor, made public comments concerning Koch’s tax status and falsely stated that the company did not pay income tax, which triggered a federal investigation into Mr. Goolsbee’s conduct that potentially implicated federal law against improper disclosure of taxpayer information. Last June, your colleagues sent fundraising letters disparaging us as “plotting oil men” bent on “misleading people” with “disinformation” in order to “smear” the President’s record. Those accusations were baseless and were made at the very same time the president was publicly calling for a more “civil conversation” in the country.


It is understandable that the President and his campaign may be “tired of hearing” that many Americans would rather not see the president re-elected. However, the inference is that you would prefer that citizens who disagree with the President and his policies refrain from voicing their own viewpoint.Clearly, that’s not the way a free society should operate.


We agree with the President that civil discourse is an American strength. That is why it is troubling to see a national political campaign apparently target individual citizens and private companies for some perceived political advantage. I also hope the President will reflect on how the approach the campaign is using is at odds with our national values and the constitutional right to free speech.


Sincerely,
Philip Ellender
President, Government & Public Affairs
Koch Companies Public Sector, LLC

Tuesday, 31 January 2012

It's not the Economy, it's the Economics - How all our Politicians don't understand the Problem

No one should be surprised that Enda Kenny has now blamed a collective psychosis for our economic crash. Since 2008 politicians have wrestled with an explanation of what happened to Ireland with all the intellectual alacrity of brain dead rabbits and the explanation has defeated them.

Cowen blamed Lehman Brothers, the Greens (remember them, stupid, smug & out of touch?) blamed too much planning permission, and now for Kenny it is greed and madness. This is the level of analysis at which our politicians operate: wilfully ignorant & woefully uninformed. Terrifyingly there are citizens who should know better agreeing with these various hare-brained explanations.

"Greedy capitalists get money by trade. Good liberals steal it." David Friedman

"Greed" has been used over & over as both an explanation & a denunciation by statist clowns who believe that building houses is properly the business of the government: men who risked ,money, employed others, paid massive taxes (stamp, capital, vat & paye) were just evil. Now it has become fashionable to heap any abuse on them. Such contumely has taken the place of analysis & knowledge.

Neither Cowen's defence of his destructive tenure at Finance nor Gormley & Co's sheer ignorance of basic economics now matter: they have left the stage. It does matter that Enda Kenny is still parroting the tripe that socialist adolescents tell each other in the dark: he is Taoiseach.

Kenny's statement is a direct repudiation of intelligible human action, of knowledge itself. If what happened was a collective out break of madness then it could happen anywhere, at any time, no country would ever be safe. Policy,interest rates, taxation, currency  have nothing to do with what happens in the economy. Economies are thus mere random collection of events powered by uninfluenceable factors over which we have no control. Anyone silly enough to be studying economics should switch to psychology or psychiatry, disciplines which might have some chance of shedding light on the crash mystery. They might even, if we were to pay heed to politicians, try a course at Hogwarts.

The mystery is why there is a mystery. What happened was economics, economics as a branch of human behaviour. Analyse the boom if you want to know the bust.

Dr Patrick Honohan, now the Governor of The Central Bank, did this succinctly in May 2009 publication "What Went Wrong":
"An unsustainable decade-long property price and construction boom, which began before that of the US and UK and went further than these both in price and quantity, had taken over from exports as the main driver of Irish growth. Initially prompted by the increased household formation (related to unprecedented levels of net immigration) and by the sharp fall in interest rates that accompanied the transition to EMU membership, the property boom was increasingly financed after 2003 with foreign borrowing by the banks."

Dr Honahan of course pulled his punches on the Euro: it would not do to have a Central Bank Governor diss the Holy Project. Despite that punch-pulling it is clear NONE of what he outlined could have gone on for as long or been as damaging if not for the Ireland joining the Euro/EMU. The Central Bank was deprived of the only weapon it had, interest rate changes, & the lack of exchange rate risks made Ireland an easy haven for vast amounts of (mainly German?) euro bonds.

"Among the triggers for the property bubble was the sharp fall in interest rates following euro membership: within the euro zone also the disciplines of the market which had traditionally served as warning signs of excess were muted. Lacking these prompts, Irish policymakers neglected the basics of public finance, wage policy and bank regulation." (Honohan p1)

There is nothing mad or greedy in investing in the highest yield products: the flooding of the Irish market with credit made housing just that. This bubble was not driven by Greenspan's "irrational exuberance" ( a remark betraying such imbecilic ignorance should have seen him sacked instead of deified) but by monetary inflation provided by the Irish banks. Flooding the market with cheap money confuses the price signals and makes correct investment decisions impossible. In an inflating market this impossibillity applies as much to the lender as the borrower.(Austrian economists have been pointing out the form, shape & causes of bubbles for at least a century.)

Anglo Irish Bank was central to this inflation. Operating (effectively) without regulation, with interest rates set by the ECB to revive a German economy suffering the hangover effects of the crazy decisions taken during unification (one to one parity between Ost & Deutsche Mark for instance), Anglo was not growing but exploding during that period and that explosive growth was based on property loans. Between 1998 & 2007 Anglo grew its book assets by over 2200% & its profits by over 2700%.(AB Annual reports 98-07) These figures ( a year on year growth of 45%) should have rattled regulators. Instead, in a classic case of "regulatory capture" when the emerging rumours about Anglo's huge exposure to the collapsing property market caused a massive collapse in the banks share price on St Patricks Day 2008, the regulator, Patrick Neary instigated an investigation into stockbrokers.

In the Words of Peter Nyberg:
"Anglo in particular was widely admired domestically and abroad and lauded (by many investors,consultants, analysts, rating agencies and the media) as a role model for other Irish banks to emulate." From consultants Oliver Wyeman to stock broker (now TD) Shane Ross Anglo were seen as the shining light of the new paradigm. Under pressure from such cheerleaders & shareholders concerned about comparative profitability, where Anglo led, the other Irish banks followed.

Lending for property became the business of all Irish banks

Bank lending was growing at a tremendous pace:
"...rising from a stock of €120bn in 2000 to almost €400bn by 2007. The three years ending in 2006 marked the highest sub-period of sustained growth, with loan assets more than doubling overall, growing at a compound rate of almost 28% per annum. This rate of growth significantly outpaced growth
in Gross Domestic Product (GDP). By the end of 2007, total loans and advances to customers
stood at over twice GDP, up from 1.1 times GDP in 2000." (Nyberg Commission p.28) but a shocking 80% of new lending between 2002 &2008 was domestic property related lending .

Banks were loaning money for property with property as collateral: as prices rose more could be borrowed creating a vicious circle of borrowing & asset inflation. The rate of growth in lending out paced deposits so the banks were relying more & more on euro bonds, much of it short term, under the misguided belief that such funds would be permanently available. The rate of growth also outpaced the available sound opportunities for credit leading to a relaxing of standards as banks struggled to for volume in the face of margin-cutting competition.

"This was a plain vanilla property bubble, compounded by exceptional concentrations of lending for purposes related to property – and notably commercial property." (Regling & Watson)

Not only were developers borrowing to build more houses but the very availability of so much credit meant that those buying the houses were paying more every year, despite the huge supply.
 "Amongst the OECD, Irish house price growth between 1995 and 2007, the largest. In real terms, Irish prices grew by 9 per cent per annum over this period, next highest growth rate was 7.6 per cent." (Decomposing Irish house price movements: 2000 - 2010 McCarthy & McQuinn)

The credit bubble was inflating more than asset prices. Average wage increases in Ireland between 1997 & 2008 were two to three times euro-zone averages. The erosion of Ireland's competitiveness should have resulted in a slowdown & unemployment but the inflating credit bubble masked and deferred that eventuality. These economy destroying wage rises were happening both within & without the context of Government sponsored Social Partnership.
Relative unit labour costs (OECD via Regling & Watson p22)



If the banks were bad, the Government was worse. Not content with failing to regulate the banks the Government decided to spend the tax proceeds of the property bubble with the abandon of men who had discovered a Money Tree. In a septic nexus between the Social Partnership Agreements & Bertie Ahern's need to purchase popularity the Government set about cutting taxes while spending more money. Property was paying for everything.

Personal taxes came down as the government became more & more reliant on cyclically sensitive taxes. "There has been more and more dependence on corporation tax, stamp duties and capital gains tax (in that order). These three saw their share in total tax revenues rise steadily from about 8 per cent in 1987 to 30 per cent in 2006 before falling to 27 per cent in 2007 and just 20 per cent as soon as the economy turned down in 2008." (Honohan "What Went Wrong" Page 3)

"In addition, the pattern of tax cuts left revenues increasingly fragile, since they were dependent on taxes driven by the property sector and by high consumer spending." (Regling & Watson)

Between 2001 & 2006 Public sector pay rose by 59% and payroll numbers by 18,000 and between 1996 & 2006 the total bill for public sector pay trebled. During the same ten year period, despite "essentially
full employment for the first time in modern history" (ibid) the Social Welfare bill also trebled.

By 2006 domestic construction accounted for 1 in 5 Irish workers and nearly one quarter of the countries GDP. In that year the price of houses, being built at a rate of twice what could be sold, peaked. Then the credit from the Euro bonds dried up the next year as the US property boom bust.

So the explanation is simple, so simple that it might be learned by heart to prevent more outbreaks of foot-in -mouth:
  • We joined the Euro
  • Interest rates were very low for a long time
  • Awareness of risk was dulled
  • One bank led & the others followed into property funding massive lending not from deposits but euro-bonds
  • A Property Bubble, long, big  & disastrous happened
  • Government spent the proceeds of the bubble property taxes as normal annual income
  • The bubble ended leaving the Government short tax revenue, the banks bankrupt & hundreds of thousands unemployed.

We might well ask, given the appalling failures, what the hell were Government & regulators doing? It was not as if Irish banking was either complicated or innovative:
"Moreover, bank supervisors in Ireland were not called upon to deal with technically complex
problems. Ireland’s banking exuberance indulged in few of the exotic constructs that caused
problems elsewhere."(Regling & Watson) No one was bundling mortgages or playing with complex derivatives.

Everything that happened, the insane asset collateral backed lending, the vast over building, the dependence tax dependence on an unsustainable bubble, all happened in plain sight. Dr Morgan Kelly googled the information that underpinned his horribly accurate 2006 article. There are no excuses for Cowen, Ahern, McCreevy, Neary or Hurley.

For professional, highly paid regulators to have missed what was going on is too shocking.
"Developments in Scandinavia during the early parts of the 1990’s as well as in South-East Asia during the latter half (..of that decade..) should have been well within the professional memory of decision-makers in both banks and public institutions in Ireland during the 2000’s."(Regling & Watson)

We could add to those bank disasters the Savings & Loan debacle in the US which, in its asset-loan-collateral-loan circle the Irish Banking Disaster resembles. None of the reports adequately explains how so much bad banking happened in full view of those paid huge money to make sure it did not.

Thursday, 26 January 2012

I am as smugly pleased with my self as a Labour minister with a little bossing to do.

Robert Nozick's "Anarchy, The State & Utopia" is a major work of libertarian philosophy, possibly the major work. It is available as a free e-book: Nozick, like most libertarians, opposed the idea of intellectual property.

 Available it might be but finding it and persuading the PHP Downloader on www.edmundburkeinstitute.ie that it was a valid file for down-load proved a bit trickier than my limited grasp of PHP & web protocols until this morning.  So now you can have Nozick's master work for free at the Edmund Burke Institute website.

Hence my extreme pleasure with myself.....  

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