Revolution – First shots fired?

An AIB branch in Cork was attacked by a man in a suit who threw dozens of eggs at the building. Here’s the full report from RTE.

AIB bank in Cork egged by man in suit

Tuesday, 17 February 2009 13:13

An AIB branch in Cork literally has egg on its face after it was hit by a man in a suit.

AIB has said it does not know the identity of the man who threw dozens of eggs at its regional offices and branch on the South Mall in Cork city around 11.30 today.

The well-dressed man stood on the street and brought traffic to a halt for a number of minutes as he threw eggs from a cardboard box at the building.

He disappeared shortly afterwards, leaving the empty box behind him.

An AIB spokeswoman confirmed the incident, but said the man did not come into the building.

The spokeswoman said AIB did not know who the man was or why he threw the eggs at the building.

She said the bank would not be making a complaint to the gardaí.

Financial Regulator – A 'captured regulator'

Gavin has just informed me that there is an official description for regulatory agencies like the Irish Financial Regulator who act in favour of special interest groups rather than the public good (my emphasis)

Regulatory capture is a term used to refer to situations in which a government regulatory agency created to act in the public interest instead acts in favor of the commercial or special interests that dominate in the industry or sector it is charged with regulating (This is an exact description of how the Irish Financial Regulator operates).

For public choice theorists, regulatory capture occurs because groups or individuals with a high-stakes interest in the outcome of policy or regulatory decisions can be expected to focus their resources and energies in attempting to gain the policy outcomes they prefer, while members of the public, each with only a tiny individual stake in the outcome, will ignore it altogether.

When this imbalance of focused resources devoted to a particular policy outcome is successful at “capturing” influence with the staff or commission members of a regulatory agency so that the preferred policy outcomes of the special interest are implemented, then regulatory capture has occurred.

Regulatory capture theory is a core focus of the branch of public choice referred to as the economics of regulation, economists in this specialty are critical of conceptualizations of regulatory intervention by governments as being motivated to protect public goods. Two often cited articles are Laffont & Tirole (1991) and Levine & Forrence (1990).

The theory of regulatory capture is associated with Nobel laureate economist George Stigler, one of its main developers. Two other cited references are Bernstein (1955) and Huntington (1952).

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Financial Regulator

ESB – Ripping off customers?

There’s something very rotten in the ESB. On Liveline last week (Mon, Tue, Wed) there was an endless line of callers expressing shock at the massive increase in their bills. Here are some examples.

Previous bill €250 – Latest – €323
Previous bill €243 – Latest – €424
Previous bill €140 – Latest – €280
Previous bill €408 – Latest – €667
Previous bill €180 – Latest – €485

A Dublin woman living in a one bed-roomed apartment saw her bill increase from €265 to €453. She has two Dimplex and one storage heater, no washing machine, no dishwasher, only uses the sink immersion and all her bulbs are energy saving. She’s taking out a credit union loan to pay her bill.

A man in Roscommon opened a petrol station in 2002 when the price of a litre of petrol was 95c and his electricity bill was €800. Today, a litre of petrol is still 95c but his electricity bill has increased to €3,000

As Joe Duffy said, the ESB is ripping off its customers. The recent price increases do not explain these massive increases. Isn’t it curious that when such scandals are exposed in Ireland, nothing happens?

Everybody has a pretty good idea of what’s going on but no state authority will act unless the media dig deeper and expose the full truth.

See here for an excellent article by Senator Shane Ross which gives a good idea of how rotten things are in the ESB.

Medical consultants and strip clubs

Liveline (Friday) had some interesting calls last week regarding the fees charged by medical consultants. Here’s an example.

Margaret noticed some lumps on her arm. Her GP had no idea what they were but charged €55 before referring her to a consultant. The consultant had no idea what the lumps were but charged her €230 before referring her to a surgeon who would be charging €150 just to have a chat. So, €435 and Margaret is none the wiser about the lumps on her arm.

It reminds me of the old strip club scam (I, er, read about this someplace).

The customer arrives at the club and is charged, say, €20 before being led into a small bar where he is encouraged to buy some very expensive drinks. Where’s the action he pipes up? Oh, that’s in the club proper, it’s just an extra €50.

He’s then led into an even bigger bar where the expensive drinks become very, very expensive. By this time the customer is drunk and becoming impatient and very angry. The bouncers arrive, give him a good thrashing, rob his wallet and throw him out the back door.

Yes, I think that’s a pretty accurate description of how certain parts of the Irish health system operates.

Politicians – All the same?

Recently, during a discussion on the imposition of the levy on civil servants, Ivan Yates made a curious comment.

“I sent a text to Brian Lenihan saying – good days work, keep it up.”

Yates is a former Fine Gael politician; he left politics nine years ago. What’s he doing with the Minister for Finance’s mobile phone number?

I know Irish politicians are great buddies behind the charade of opposition but are they ‘that’ close?

A million here, a million there – Who cares?

A typographical error by a government official in 2002 resulted in two barristers employed by the Moriarty tribunal earning an extra €1m over the past six years.

The “typo” seven years ago added €250 per day to the agreed €2,250 “per diem” fee paid to John Coughlan and Jerry Healy, the two highest-earning barristers in all the recent tribunals.

Despite being spotted shortly after it occurred, the mistake was not corrected by the Department of Finance. After legal advice the higher payment of €2,500 was sanctioned, so Coughlan and Healy were paid a higher per diem than any barrister in any tribunal.

The mistake was revealed in the Comptroller and Auditor General’s report published last Thursday.

The Sunday Times

My comments:

What’s to stop civil servants arranging such ‘errors’ across a wide range of departments and splitting the spoils with confederates? Citizens can be forgiven for assuming that such ‘deals’ are common.

Has the senior official in the Department of Finance, who make the mistake, been sacked or promoted?

If senior counsel had been underpaid by a million would the legal advice have been – ‘Tough, you have to suffer the loss?’

If somebody on social welfare was over paid by, let’s say, €50, could they, like the learned gentlemen, (legally) refuse to give it back or would the full force of the State come down on them like a ton of bricks?

Someone to watch over us

From Times Online

G7 ministers ‘must help struggling Ireland’

Simon Johnson, former IMF chief economist, says country must not be next Iceland

Simon Johnson, the former chief economist of the International Monetary Fund (IMF), called for this weekend’s meeting of G7 finance ministers to put Ireland’s troubles at the top of the agenda.

His comments come as the cost of buying insurance against Irish government bonds soared to a new record high on Friday, having almost tripled in the space of a week. Debt market investors now rank Ireland as the most troubled economy in Europe.

Johnson said: “A key warning sign just moved from orange to red. The G7 ministers of finance and central bank governors need to focus on this problem during their discussions (this weekend). What is the strategy for Ireland? Does the European Union come in to help? Is this a job for the IMF?

“Just don’t, please, tell me more about the ‘basic principles’ of financial reform unless and until you have addressed the ‘Irish problem’. And don’t tell me, ‘the Irish have to sort this out for themselves’. Eventually, the world always comes to help; check your notes on Iceland. It’s much better and much cheaper to come in early and decisively.

“We need a plan of action for Ireland, and we need it now. What we don’t need is another Iceland-type situation.”

Following the scandal at Anglo Irish Bank over undisclosed loans, the market fears there are more hidden problems which could ultimately fall to the state to resolve.

The Irish government has stated that it needs to borrow €20 billion this year. Gross debt as a percentage of the country’s gross domestic product, which was just 24.8% in 2007, will increase to 53% this year and 62% in 2010. These figures assume no worsening in the country’s finances.

The cost of insuring Irish debt hit 350 basis points on Friday, meaning that for every €100 of debt it would cost €3.50 to insure against default. A year ago it would have cost 10c to insure every €100 of Irish debt.
Insuring Greek debt against default costs about 250 basis points, while Italian debt insurance costs about 170 basis points. UK debt insurance, which has also spiked considerably, costs about 150 basis points.

Debt-market experts said any potential debt default in Ireland was still considered to be a long way off, but the problem would have to be addressed at some point.

One strategy being discussed by analysts as a possible solution would see Germany buy billions of euros of Irish government debt through a fund set up by the European Central Bank.

“I don’t expect Ireland to default, but it’s clear that something has to happen,” said one credit strategist at a large investment bank.

Fears of sovereign default are rising around the world. The IMF has warned that its pot of emergency funds to bail out troubled economies could run dry within months.

The organisation, funded primarily with contributions from the US and Europe, is thought to be in talks with China about securing a $50 billion (€38.8 billion) loan to shore up its coffers. However, talks could stumble over conditions attached to the deal.

A further $50 billion is expected to come from a Middle Eastern consortium, led by Saudi Arabia. The members of the G7 would also be expected to pledge about a further $100 billion as part of any refinancing deal.

Johnson worked at the IMF from March 2007 until August 2008 on leave from the Sloan School of Management at the Massachusetts Institute of Technology. He is considered an expert on economic crises. He has worked on crisis prevention and economic growth.

Ignoring that sinking feeling

Ok, the movie plot is a bit fantastic, a bit over the top, but still, very entertaining.

Editor of the Sunday Independent, Aengus Fanning, plays a powerful but gullible passenger on the Titanic. He’s fawning over the captain, played by AIB boss, Eugene Sheehy, during dinner.

Both men are so engrossed in their own realities they fail to notice that the ship is sinking, that the trapped steerage passengers are panicking as the rich and powerful take to the lifeboats.

See here for an exclusive Public Inquiry preview.

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Aengus Fanning

The slide into oblivion continues

Enda Kenny has called on (invited?) the board of the Financial Regulator to resign.

John Gormley has promised that the bankers will go to jail and that Ireland will have the most comprehensive regulatory system in the world.

IBEC Director General Turlough O’Sullivan said he believed bankers were guilty of greed and criminality and should be made to face the consequences.

Brian Cowen has also said that justice will be done, that rogue bankers will be brought to account.

It’s all about sending messages to the international community to convince them that Ireland is not the corrupt banana republic it really is.

But methinks the gentlemen are a mite too late – about 50 years too late. The game is up; the international community can see exactly what we are.

But maybe, just maybe, there’s hope. If these gentlemen, somehow, miraculously, managed to see the reality of the situation they might realise that the absolute minimum action required is as follows.

The immediate sacking and arrest of the entire board of the Financial Regulator (Even if only for the optics).

The immediate arrest of former Financial Regulator, Patrick Neary, and the cancellation of his grotesque pay off.

The immediate arrest of Sean Fitzpatrick, Gillian Bowler and Denis Casey on suspicion of fraud (Economic treason could be added later).

This is the absolute minimum signal required if Ireland is to have any hope of convincing the international community that we are serious about rooting out the rot that has infected our country for decades.

There is, of course, no hope of this happening because these gentlemen live in a fantasy world where they genuinely believe that Ireland is a normal democratically accountable state.

The slide into oblivion continues.