Month: November 2010

The foreign ‘media’ has gone a bit wild on our story… check out below. I like the use of signage throughout in this one via IELB…

Oh, and this one is fun-fun-fun! too…

Michael Somers, one of the most powerful civil servants in the State through the boom years;

“… I think we need to be careful that we don’t go in for over-regulation, over-control. I think we need to ease up a  bit in terms of political correctness and such likes, I think we’re being unduly politically correct at the moment.”

He also mentioned the possibilities for expanding the financial sector, how banks only came here after the IFSC was set up because the likes of himself “twisted their arms” (offered tax incentives?) and about how great we are that high-tech foreign companies, like Google base themselves here… Google employees how many engineers/coders in Ireland versus administrative workers? Saves how much money by routing its taxes through Ireland?

All in the final interview on The Week in Politics, about 42 minutes in at this link.

The Bureau of Investigative Journalism in London, a Potter Foundation-funded investigation unit, has partnered with the Financial Times to shine some light on how the €347bn of European structural funds is distributed. For eight months the Bureau and the FT have systematically sought details of how EFSF and ESF monies are used in all 27 member states of the European Union, including Ireland.

It came to light in September that Ireland had failed to apply for ESF monies for FAS for over 10 months as a result of investigations into fraud at the agency. The European Commission is reviewing some of the €600m given to Fas over the past 10 years. We might expect more revelations in relation to the investigations from the stories in the FT.

We met Cynthia O’Murchu, the FT’s lead journalist for the story, in Amsterdam at the Data Driven Journalism event organised by the European Journalism Centre over the summer. You can watch Cynthia’s talk at the conference here.

Myself and Mark were happy to provide some assistance to the Bureau of Investigative Journalism in relation to the Irish component of the investigation over the past number of months.

Press release here:

The Bureau of Investigative Journalism in collaboration with The Financial Times, has for the first time traced how the European Union distributes billions through its structural funds, revealing a trail of undetected waste, missed opportunity and even fraud.

As Europeans face the uncertainty of swingeing government cuts, the European Union continues to spend. Its structural fund programme distributes a colossal €347bn of European tax payers’ money across 271 regions in 27 countries. Yet a web of bureaucracy makes it almost impossible to track how the EU’s second largest budget is being spent. Even MEPs have not had a truly transparent view of the data.

Over eight months the Bureau of Investigative Journalism and the Financial Times have created a unique database that traces every penny distributed under the EU’s structural funds programme to date. The research collates information on 646,929 beneficiaries across all 27 member states, to provide a clear view of the EU’s second largest budget.

The research shows how big businesses are accessing grants, despite the fact that the structural funds are intended to provide a helping hand to Europe’s weakest members and smallest businesses. It also shows how EU funds have poured cash into the hands of the Italian mafia.

The key findings will be revealed in the Financial Times over five days from November 30 at www.ft.com/eu-funds and on the Bureau’s website www.thebureauinvestigates.com.

Iain Overton, Editor at the Bureau of Investigative Journalism, based at City University, explains the importance of the database: “In an age of austerity we need to ensure that every penny counts. The EU hands out nearly €350bn, and yet the distribution of these funds has remained opaque. Even MEPs haven’t had access to the detail. Our database shines new light on how the money is spent.”

Lionel Barber, editor of the Financial Times, said: “Our joint investigation raises some serious questions about the way the EU allocates development funds. The European Commission and the EU’s 27 member states need to ensure more transparency and greater accountability over how billions of euros of European taxpayers’ money are spent.”

It’s 2am. I just checked the news for the first time in 24 hours. Forgive the following poorly-written mind-dump. Comments and abuse though are of course still most welcome.

The figure won’t be 6.7%, but it will be too much.

6.7% is a senseless and idiotic figure. You’ve got to think the announced rate will be lower, perhaps so it can be claimed that the negotiations were ‘successful’.

If the figure does turn out to be 6%+ it will have been designed to scare other teetering PIIGS into line in the short term.

Clearly, Ireland cannot afford anything close to such a rate. If the rate turns out anything above about 4.5% it’ll be to make an example of Ireland to ensure Portugal, Spain, Belguim and others stay the course. It’ll be the ECB and Irish government kicking our default date two or three years down the line, while heaping an extra €xbn (who cares what X is anymore? Any number is too big) onto the bill, in a desperate and transparent attempt to stop further defaults in the eurozone. We’re the gangrenous arm and the high rate will be a tourniquet.

Our default is coming, the question is when it’ll arrive. Right now, the answer to that question lies in Irish hands. The question for them is what they’re more concerned about protecting; the Irish taxpayer or Ireland’s relationships with other Eurozone members. The Germans have big exposure to our debt… jus’ sayin’.

Admittedly these are not mutually exclusive options but with the euro looking decidedly shaky, well, it can’t be all fun-and-games in Brussels forever… big-decision time looms.

Slight aside; Read Paul Krugman today…

Before the bank bust, Ireland had little public debt. But with taxpayers suddenly on the hook for gigantic bank losses, even as revenues plunged, the nation’s creditworthiness was put in doubt. So Ireland tried to reassure the markets with a harsh program of spending cuts.

Step back for a minute and think about that. These debts were incurred, not to pay for public programs, but by private wheeler-dealers seeking nothing but their own profit. Yet ordinary Irish citizens are now bearing the burden of those debts.

Or to be more accurate, they’re bearing a burden much larger than the debt — because those spending cuts have caused a severe recession so that in addition to taking on the banks’ debts, the Irish are suffering from plunging incomes and high unemployment.

But there is no alternative, say the serious people: all of this is necessary to restore confidence.

And Simon Johnson…

So why not restructure some of this debt, particularly as much of what the government will owe is actually debt taken on by overgrown and careless Irish banks?

The government has indicated that it will force a restructuring of some subordinated, relatively junior debt. For at least for one prominent bank, Anglo Irish, this may amount to paying 20 cents in the euro. This debt by itself is too small to make a difference, but why not apply the same principle to other categories of borrowings?

The most obvious answer is: Ireland’s European partners do not want this to happen, because it would expose the really bad decisions made by pan-European banks and their regulators over the last decade and create potential fiscal risks in other euro-zone countries.

FOOTNOTE: Blogging about default being the best option; as Bunk said to Omar, “it makes me sick, motherfucker, how far we done fell.”

The two videos below have started doing the rounds on Facebuke and The Twitter. So if you haven’t seen them…

First up, an RTE report from March 2000 on an ERSI quarterly that was dismissed by Bertie Ahern and Charlie McCreevy. Brian Cowen also features in it; foreign affairs minister at the time, I think?

Secondly, LastTV, a programme on RTE back in 1998. They broadcast the hilarious – and pertinent – piece below on fractional reserve banking. It ends with “this could never happen here would it?” and a few lines on the default of… err… Asia. “Our banks are a lot more civilised though, aren’t they?”

I’m taking credit for finding that one first! Neh neh neh-neh nerrr.

Notable comments in international blogosphere in reaction to four year plan. FYI; Bond spreads still rising.

Krugman…

What’s going on here? In a nutshell, Ireland has been orthodox and responsible — guaranteeing all debts, engaging in savage austerity to try to pay for the cost of those guarantees, and, of course, staying on the euro. Iceland has been heterodox: capital controls, large devaluation, and a lot of debt restructuring — notice that wonderful line from the IMF, above, about how “private sector bankruptcies have led to a marked decline in external debt”. Bankrupting yourself to recovery! Seriously.

Also, Alphaville.

Instead of talk of bailout, now talk has turned to default. Ireland simply cannot afford to repay its debts. S&P has again cut our sovereign debt rating. This is going to be an interesting few weeks.

And to remind our readers (and welcome new ones) here’s what our Financial Regulator said in October 2008:

May we live in interesting times.

Scannal (the excellent sub-titled part-As Gaelige documentary show on RTE One) was – in an amazingly perfect event of ironic timing – about the Insurance Corporation of Ireland last night.

ICI was a significant subsidiary of AIB which collapsed in 1985. The taxpayer bailed out AIB. It eventually cost us IR£400m, a massive figure at the time.

Find last night’s programme in the archive here.

It was a story of lax regulation and greedy banking policies which led to a massive hit on the taxpayer that threatened to pull down “the sovereign”. It’s one of the major events in AIB’s “colourful history” referred to earlier on this blog.

Now, time for some Shirley Bassey…

“They say the next big thing is here,
That the revolution’s near,
But to me it seems quite clear,
That it’s all just a little bit of history repeating”

… he has been in bailout talks with Irish for “several weeks”. Here. Guardian liveblog on our bailout here.