What is truth?

Archive for January, 2011

Broadband update from Wicklow

Since Last Thursday I am without broadband apparently it was fixed on Saturday evening next door  but Eircon were still telling me (their answering service that is) there were aware of a fault in my area and that they were fixing it.

In any case I hope to be back on line perhaps later on in the afternoon tomorrow.

What chance have got when services like this are the norm .The broadband sucks and is expensive and promises from Labour are just that promises that will be broken !

Senator point-blank refuses to provide details of alleged NAMA wrong-doing in Seanad debate


BY NAMAWINELAKE   http://wp.me/pNlCf-ZG

I must say that for myself, I am beginning to seriously doubt Senator Mark Daly’s claims of wrong-doing at NAMA, something covered extensively on here last week (part 1 detailed the interview on the Pat Kenny show and part 2 examined the issues) following claims made by the Senator reported in the press and which formed the basis of a 20-minute interview on the Pat Kenny radio show. Over the weekend, the Senator was present in the Seanad for the debate on the Finance Bill and again raised his claims that NAMA was selling property below value and not following its own code of practice.
The reason I doubt the Senator’s claims is that he was challenged on at least three occasions to provide details of the transaction. Three times –  by Minister for Finance, Brian Lenihan who was present in the Seanad to guide the vital Bill on its way and by senators David Norris and Jerry Buttimer. Yet Senator Daly demurred and made the laughable claim that  he was not a Garda and that he hadn’t evidence of “wrong-doing”, just bad commercial practice. He said he would provide details of the alleged transactions to NAMA but didn’t explain why he hadn’t already done this (though he plainly had time for self-promotion last week including a 20-minute stint on the Pat Kenny show). It is beyond me why he did not respond to the challenges and provide details of the transactions under privilege. It seems that with the dissolution of the Oireachtas tomorrow that the opportunity to provide details using privilege might have passed.
Below is the transcript of the exchange in the Seanad, it ends abruptly and the Senator did not speak again, but as you can see he made the allegations again and refused point-blank to divulge details to the Seanad under privilege which could then be verified. You can draw your own conclusions – personally I think it is irresponsible for those in positions of authority (even if they might be out on their ears in 30 days) to make claims which undermine trust in public institutions and then refuse to pursue the claims. Senator Mark Daly is a 34-year old Fianna Fail senator who was an auctioneer “in a former life”.
Senator Mark Daly: As Senator Leyden said, we should make declarations about this and I, as an auctioneer, was involved in selling section 23 properties.
Senator Shane Ross: Shame.
Senator Mark Daly: I felt at the time that some of these tax exemption sections were quite good, such as the section dealing with nursing homes, but the holiday home exemptions went on for too long. Senator Ross is right about that. They should have been closed off in many areas.
In my home town there were a number of planned developments and we were lucky they did not go ahead. If, however, the section was taken out, people who rented out a business such as a shop using section 23 relief to shelter the income from the shop would now be in a situation where the rent from the shop would no longer be sheltered and they would have to use what was left from the after tax income from the shop to pay off the section 23 mortgage because none of the section 23 properties would provide any income, not even enough to pay off management fees. We would then be left with a situation, especially for section 23 holiday homes, where the estates would not be managed properly because there was no income and they would deteriorate.
I agree with the thrust of the recommendation but it is a shame the Labour Party did not allow for more time, perhaps three months. The idea is good and the Minister is looking at the situation. I raised concerns previously about the selling off of these estates. There was a case in Kenmare where the auctioneers were involved in a fire sale. The Irish Examiner property supplement published a headline reading “Fire sale in Kenmare”. The auctioneers were telling their friends they should buy these because they are bargains. Auctioneers are supposed to achieve the maximum price, not sell bargains. The loans were held by Anglo Irish Bank – the taxpayer – which told the receiver to maximise the value of the properties, who then told the auctioneer to sell the property and the auctioneer told his friends they were bargains. They were selling them below the market rate. We told those auctioneers they were selling below the market rate, that we had sold six similar properties in the last six months and we estimated that the price being asked would cost the taxpayer €1 million.
Senator Paddy Burke: How does Senator Daly know the market value?
Senator Mark Daly: If that loss were extended to cover other fire sales in similar properties, including section 23 properties, the cost to the taxpayer would be in the hundreds of millions, if not billions, of euro. If section 23 relief is withdrawn unilaterally, there will be a double crash.
I raised a related point during the week that NAMA was not following the legislative provisions in the selling of properties under its control. It is not even following the code of conduct for State bodies. When it comes to the sale of section 23 properties and other properties by liquidators, we need transparency. Legislation provides for that but NAMA, in the case of numerous properties being sold on its behalf by the banks, is not following the provisions laid down. People have come to me disgusted that the guys who had borrowed the money originally are buying back their own debt for 50% or 75% less, knowing well that the properties were undervalued. I will speak against my profession in this regard. The valuers undervalued the property initially, because most of their valuations were desktop valuations. They undervalued it and the banks took a haircut of 40%. In the case I came across the original loan was €12 million and the haircut was €6 million, while the actual value of the property was €9 million. The developer went back and arranged for a buddy to buy the property at the haircut price of €6 million and sold it on for €9 million, costing the taxpayer.
An Cathaoirleach: We will be debating this until 12.30 with the way Senators are making speeches.
Minister for Finance (Deputy Brian Lenihan): The Senator should supply the details of that transaction to NAMA.
Senator Mark Daly: I will.
Deputy Brian Lenihan: The Senator has not done so to date.
Senator Mark Daly: I have not. I am not an investigator, but NAMA is not following the code of conduct. It says it does do not have to. Transparency is the key factor in this matter, but NAMA is not following the code of conduct.
Deputy Brian Lenihan: The Senator is under privilege in this House, but he should provide whatever information he has.
Senators:  Hear, hear.
Senator David Norris: The Senator is a public representative. He should name and shame.
Senator Jerry Buttimer: The Senator should give the Minister the information.
Senator Mark Daly: As I am not a member of the Garda, I cannot do that. When I have information of wrongdoing, I will put it before somebody.
Deputy Brian Lenihan: The Senator has not suggested wrongdoing, just bad commercial practice.
An Cathaoirleach: We are on recommendation No. 1. The Senator has made his point well.
Senator Mark Daly: NAMA has turned around and said it does not have to follow the code of conduct for the sale of State assets. I maintain these are State assets because we provided the money. NAMA owes us the money. I do not care whether NAMA follows the code or not, but there is no transparency and there are bad practices going on. I do not want to be doing a post mortem here in a year’s time when it has cost the taxpayer hundreds of millions of euro.
Deputy Brian Lenihan: We would all agree with that, so please give me the information
And that’s where this exchange ended. The transcript and context is available from the Oireachtas website here.

namawinelake http://wp.me/pNlCf-ZG

PwC & Anglo Irish Bank

sent in to-day

Dear Sir, Mr.McGarry, in his last column, quoted Feargal O’Rourke, head of PricewaterhouseCooper’s tax and legal division in Dublin. Mr.O’Rourke opined on the recovery of the Irish economy. I don’t think Mr.O’Rourke, or anyone at PwC, is in a position to comment on anything to do with the Irish economy. They lost that right when they failed to honour their legal and moral obligation as auditors of Anglo Irish. What were they doing during all those annual audits? How could they not have seen and subsequently reported the shady accounting practised by Anglo? Was it insuportcompetence or collusion? Either way, I hold PwC responsible for dereliction of duty and negligence in its performance. Since Anglo was the catalyst and voracious black hole in our financial debacle, I can’t understand how PwC has not been held to account for their part in Irelands financial meltdown. Sincerely, Paul Maher, Castle Street, Roscrea, Co.Tipperary


As a citizen going up as an independent in Wicklow. I can assure you I will  support any measure to bring to justice  any and all who were involved with the Anglo meltdown  and I am just as concerned as yourself. I would hope these people would be removed from all government contracts  until their time at Anglo can be  investigated in Full and any losses incurred by the Irish taxpayers will have to be paid back in full.

Received today 02.03.2011

according to Mr.Feargal O Rourke

Feargal O’Rourke says:

This has just been brought to my attention. There is a major factual error is this post.
PwC neither is, or never was, auditors to Anglo Irish Bank. I hope you will make the appropriate correction

“Ireland could have defaulted two years ago”

Ireland “officially” entered recession over two years ago – September 2008. In the interim period, the country and its citizenry have witnessed one of the most spectacular collapses in modern history. While a series of bailout packages have been introduced over the last two years, it is instructive to see what has been gained, if anything, by such emergency measures.

Two years ago, one of the first early warnings that the bailout funds would not be beneficial occurred on this site. Canny warned that the bailouts would not be effective and could very well exacerbate the very problems to be solved.

Two years later the costs of banking rescues have spiraled, and large public sector borrowing has left the country’s finances in tatters. External debt now runs at 1,305% of Ireland’s GDP, which represents some $535,000 per person. These figures make it the second-most indebted country in the world. With the effectiveness of the past bailouts and loans increasingly scrutinized, one may ask why we keep continuing to throw good after seemingly bad.

At the same time, one may also ask what bailout, if any Ireland has just received. €85 billion is not small change. It is also not without its own costs. The terms of the bailout loans impose a 5.8% rate on this sum of money. Some observers, note it would have to be a strange definition of the word “bailout” to think that making a loan at an interest rate that the distressed Celtic borrower was incurring not even 3 months prior amounts to easing Ireland’s difficulties.

Indeed, some of the more astute point out that this loan actually increases the chances that Ireland will eventually default. This seemingly low interest rate of 5.8% is almost assuredly above the growth rate that one can expect to occur in Ireland’s immediate future. As Ireland’s debt service payments rise faster than their ability to pay, odds (and probably the market’s money) are on Ireland facing increasing difficulties servicing this debt. To conceptualize the fractional problem at hand – Ireland’s odds of default are analogous to a fraction where the numerator (the debt service of 5.8%) rises significantly faster than the denominator (GNP, or ability to repay this loan, perhaps 1-2% maximum). Ireland’s schooling system is still sufficiently effective, I believe, that most school-aged children can read this bailout as a recipe for disaster.

All of this could have been avoided by pursuing the traditional method for dealing with insolvencies – bankruptcy. Ireland could have defaulted two years ago, exited the Eurozone, and tried to rebuild from its evidently collapsed financial and social model. Instead, years of bailouts have prolonged the pain, and worsened the imbalances now all too apparent in the economy. Nobody likes to take their lumps, but getting the inevitable out of the way early allows for an entrepreneurial learning process – the errors of the past are identified, and an unsustainable situation is avoided for the future.

In the comment section to Canny’s 2008 article, one skeptical observer comments: “There were two countries in dire straits at the time the guarantee was brought in, ourselves and Iceland. One government intervened in the market, one didn’t. Which country would you rather be living in right now?” Two years provide an enormous amount of insight to this question.

Two years ago the UK got upset when Iceland decided to let its banking sector default on its obligations (of course, only after it was nationalized – better too late to realize it than never). Icelandic banking debt was 12 times its GDP, an impossible sum for such a small country to repay. Ireland, in contrast, decided to “save” its banking sector by taking on massive public debts. The Fianna Fail party has been willing to stake its reelection on propping up such an unsustainable system with ever-increasing debt levels.

By the end of 2008, Iceland’s entire banking system was decimated and its stock market had fallen more than 95% from its all-time highs of just one year earlier. By allowing its currency, the krona, to devalue (60% again the euro) the government was forced to take austerity measures that other European countries talk loosely about, but lack the moral strength and courage to enact. The decline in the exchange rate opened Icelandic exporters to increasing cost advantages as the crisis worsened.

Ireland, by being tied to the euro and not enacting meaningful fiscal cuts, continued shouldering ever higher amounts of public sector debt. Banking imbalances worsened and innocent Irish citizens – powerless to stop the rush to the abyss – stood helplessly by as Ireland’s downward spiral intensified.

What a difference two years make. While Ireland’s GDP continues to freefall, Iceland’s has stabilized and is showing signs of growth. Real wages have been negative in Ireland since the middle of 2008. After falling sharply over 2008, Icelandic wages have recovered and started showing positive signs of growth in the middle of this year. Inflation in Iceland is also stabilizing, as the devalued krona allows for increased exports and growth in the economy. By taking its lumps early, and severely, Iceland has been able to quickly regain its composure and start the trek back to prosperity. Lord only knows how long Irish people will wait for a similar result.

This is not to say that it is too late for Ireland to following the Icelandic path. A default and exit from the Eurozone and a return to the punt would involve some painful short-term adjustments. It would also allow for two significant beneficial results. First, as trust in the Irish sovereign debt market is negatively affected by such a default the Taoiseach would finally be forced to make austerity cuts that are more than mere lip-service to cutting expenses. Public sector debt would be largely eliminated, and the culprit deficit would be curtailed through the difficulties inherent in borrowing after a default – the Irish government would have to learn to live responsibly within its means. Second, an exit from the Eurozone would allow an exchange rate revaluation (or more correctly, devaluation) which would allow a stagnant economy a chance to recover. If one thinks that relying on IMF/EU/ECB et al. bailout funds (and there ensuing regulations and demands on the Irish citizenry) are more preferable to enticing a business-fueled recovery, I invite you to welcome the European technocrats with open arms. If I had to bet which horse to back in this recovery – the Irish businessperson or a Brussels-based bureaucrat – I think it is clear who offers a sounder plan for recovery.

And so, to revisit the mocking question: “Which country would you want to be living in right now?” I leave that to the Irish people still searching for safe footing as their once proud economy continues falling from grace.



27/01/2011: Retail sales for December 2010

27/01/2011: Retail sales for December 2010

Posted by Dr. Constantin Gurdgiev

Retail sales stats are in. Given the weather conditions in December, the Budget 2011 pillaging the pockets of consumers, remaining uncertainty in the economy, and tanking consumer confidence (see here) it was not surprising to see the end results for the sales in December 2010.

Per CSO: “The volume of retail sales (i.e. excluding price effects) decreased by 3.1% in December 2010 when compared with December 2009 and there was a monthly decrease of 1.1%.” Worse than that: ex-Motor Trades, the volume of retail sales fell by 3.6% yoy in December 2010, and 2.5%mom.

  • Motor Trades (-8.0%)
  • Fuel (-21.7%)
  • Furniture and Lighting (-21.5)
  • Bars (-9.9%)

were “amongst the ten categories that showed year-on-year decreases in the volume of retail of retail sales this month”.

The value of retail sales has suffered even more than the volumes (and remember – it’s the value, not the volume that supports jobs in the sector) contracting by 4.1% yoy in December 2010 and falling 0.9% mom. Ex-Motor Trades annual decrease was 3.3% in the value and a monthly decrease of 1.3%.

Further per CSO: “Provisional estimates are now available for the final quarter of 2010… the volume of retail sales decreased by 0.6% year on year in Q4, with the value decreasing by 2.1%. If Motor Trades are excluded the volume of retail sales decreased by 1.8% year on year in the final quarter of 2010 and the value of retail sales decreased by 2.4%.”

Let’s add to that the following observation: since 2007 through the end of 2010 Irish retail sales fell 23.3% in value and 18.6% in volume.

Weather effects, that undoubtedly contributed to the declines in retail activity in December should not give us comfort going into 2011. The trends in both RSI and Consumer Confidence are less than encouraging. But one does need to take into perspective that, for example, a massive decline in fuel (due to transport disruptions during the snow periods) and declines in ‘Other’ categories – mobiles, toys, jewelery etc – and clothing, footware & textiles clearly inidcate the disruptive nature of December weather.


An excellent report and a must read for every candidate in the upcoming election
a lot of promises will be broken and a new budget cannot be ruled out after the next government takes office  and the it wont be nice !

Dow Theory Update and Values

 by Tim W Wood CPA on Fri, 28 Jan 2011

At present, we have a Dow theory non-confirmation in place that began in mid-January. According to Dow theory, we must operate under the assumption that the previously established trend is still intact until it is reversed with a move above or below the previous secondary high or low point. In this case, a downside trend reversal would require a move below the previous secondary low point. Until such time, the primary trend change that occurred in conjunction with the March 2009 low still remains intact. Now, as for non-confirmations, they serve as warnings of a possible trend change. Non-confirmations do not mean that a trend change is inevitable, because it is possible that the non-confirmation can be corrected. It is also possible that the previous secondary high or low point will not be penetrated. The current non-confirmation can be seen on the chart below. If this non-confirmation is not corrected then I know from my trend quantification work that there are statistical guides that can be used to help us gauge the meaning of this non-confirmation as well as the expected outcome. I will cover that all in the research letters and updates if it continues to develop. For now, this is a warning that must simply be watched and measured against the statistical and other implications. Don’t confuse non-confirmations to automatically be a “sell signal” because in accordance with Dow theory, that is a misconception. There is much more to the story that just a non-confirmation. Rather, it is a process in which statistical and other structural evidence must be understood, weighed and considered.


In the last post here on January 14th I talked about bull and bear market relationships. In that post I explained some of the big picture reasons that the rally out of the March 2009 low must still be viewed as a longer-term bear market rally. One of the items that I did not cover there was value. Value is another historical marker of secular bear markets. Historically, the dividend yield will be roughly equal to the price earnings ratio at secular bear market bottoms. I have used the S&P data here because I did not have this data as far back on the Industrials. At the 1932 bear market bottom the yield was 10.50% and the P/E was just under 10. At the 1942 bear market bottom the yield was 8.71% and the P/E was 7.3. At the next great bear market bottom in 1974 the yield was 5.9% and with a P/E of 7.24. If we take this same reading at the 1982 low the yield was 6.2% and the P/E was 6.9. For the record, these P/E ratios are based on Generally Accepted Accounting Principles and not the bogus George Orwellian methods of today. At the 2009 low, the P/E was 26 with a dividend yield of 3.2, which is hardly at par. Therefore, based on this historical measure, there is also no indication that the 2009 low marked the bear market bottom. It is for this reason along with the historical bull and bear market relationship issues covered in the last post here that I continue to believe the rally out of the March 2009 low is a longer-term bear market rally much like was seen between 1966 and 1974. I have also included a chart of that period below.


I told my subscribers before the anticipated rally out of the 2009 low even began that it would be a rally of a higher degree and that the longer it lasted the more dangerous it would become. What I meant was, the longer this rally lasts, the more convinced people will become that the bear market bottom has been seen. In looking at this chart of the 1966 to 1974 period above, don’t you think that it would have been pretty convincing that the worst was over as the market moved up during the 26 month rally into the 1968 high? As is the case now, it was the Dow theory phasing, bull and bear market relationships and values that warned of the pending phase II decline that finally did follow and that carried the market down to another new bear market low. But, then came the rally separating phase II from phase III. In this case it was a 32 month rally. Stop and think about it. After another leg down into the 1970 low don’t you think it would have been an even harder sell to convince people that the low had not been seen? Yet, Dow theory phasing, bull and bear market relationships and values warned that the bottom had not been seen and once again they proved correct. In January 1973 the Industrials turned back down and plunged to yet another new bear market low in December of 1974. It was then, only weeks after that low was made, that Richard Russell was able to identify the bear market bottom and he did so because he understood Dow theory. Based on the bull and bear market relationships, we should be operating within a little larger version of the 1966 to 1974 bear market period. I realize that this is probably a hard concept for most to understand. But, if we stand back and look at the historical relationships we see that this bear market has likely not run its course. I have found specific DNA Markers that have occurred at all major tops since 1896 and it is these markers that can be used to identify the top of this counter-trend bear market advance. I sincerely hope that people are listening and that they understand the context in which this rally is unfolding.

source: http://www.financialsense.com/contributors/tim-wood/dow-theory-update-and-values

Affordability and Irish residential property

 Affordability and Irish residential property
namawinelake | January 28, 2011 at 3:20 pm | Categories: Irish Property | URL: http://wp.me/pNlCf-Zq

There are two surveys out this week that, on first glance, paint a contradictory picture of prices of residential property in the State. This morning saw the publication of the long-running EBS/DKM survey on affordability (with press release here) which concluded that we are today spending a smaller proportion of our net income on new property purchases than any time previously (at least since 1988). And earlier in the week, we had the latest Demographia International Housing Affordability Survey for Q3, 2010 which ranked Ireland (Dublin) as “seriously unaffordable”. So what are we, more affordable than ever or seriously unaffordable?
The DKM study examines the percentage of net income (that is income after tax and statutory deductions) that is needed to fund a new property purchase. They concluded that the amount now needed by an average First Time Buyer (FTB) couple each month to fund a 90% mortgage paying 3.87% interest over 25 years buying a property for €159,500 “has more than halved to monthly repayments of €639 or 12.6% of a couple’s net income”  12.6% average monthly income at €639 infers net €60,857 annual income. This is for a FTB couple. Although there may be some tax variations between couples, a net annual income of €60,857 (that is after tax, PRSI and Universal Social Charge) would infer gross annual income of €82,000. (using the PwC tax calculator for 2011). DKM don’t show the “affordability” over the past few decades but they do confirm that at the peak of the property boom in late 2006 the equivalent monthly % needed to fund a new purchase was 26.4% and DKM claims that the present % is lower than any time in the past 25 years including previous lows of 13.8% in Q1, 1995 and 13.4% in Q2, 1988.
The Demographia survey examines the median house price divided by gross
annual median household income. Anything below 3.0 indicates affordability, 3-4 indicates moderate unaffordability, 4-5 serious unaffordability and above 5 severely unaffordable. Ireland (Dublin) was at 4.8, that is the average house price divided by the annual gross salary was 4.8. Where does the magic number 3.0 come from as the borderline between affordability and unaffordability? From pre-1990s experience of what folk back then paid. Is that a decent measure today of affordability? That’s a difficult question. The report states “Ireland: Housing in Ireland was moderately unaffordable with a Median Multiple of 4.0. Housing was generally affordable in Ireland as late as the middle 1990s. Dublin was the least affordable market with a Median Multiple of 4.8 and along with Cork (4.1) was seriously unaffordable. Three of Ireland’s five markets were moderately unaffordable, Waterford (3.2), Galway (3.6) and Limerick (4.0). Ireland had no severely unaffordable markets and had no affordable markets.”
So what are we, affordable or unaffordable? Both it seems. Demographia believe that a return to long term multiples of three times gross median income is “correct” whereas DKM examine proportions of income over a period of time for new purchases and conclude we are today at a low-point.
Of course, none of this really helps purchasers in a market where prices are still apparently declining according to the latest Permanent TSB/ERSRI house price series with declines accelerating in Q4, 2010. Affordability might be less a consideration than availability of credit or views on prices in the short term or wider economic considerations such as weak growth, increased taxation, reduced state spending and interest rate.

Call for the Resignation of the Governor of the Central Bank

Brian Cowen on Morning Ireland.

Image via Wikipedia

Ireland’s Bailout Scandal EFSF Funds to Cost Irish Taxpayer 9% Per Annum


Call for the Resignation of the Governor of the Central Bank

European Wire service: 26th. January 2011:

Frankfurt – European Financial Stability Facility (EFSF) today placed its inaugural bond for an amount of €5 billion as part of the EU/IMF financial support package agreed for Ireland. The issuance spread was fixed at mid-swap plus 6 basis points. This implies borrowing costs for EFSF of 2.89%. Investor interest was exceptionally strong, a record breaking order book of €44.5 billion from more than 500 investors. Investor demand came from around the world and from all types of institutions. Very strong demand came from Asia. The Government of Japan purchased over 20% of the issue, reflecting its early commitment with the intention of contributing to European financial stability.

Klaus Regling, EFSF’s CEO commented “I am delighted with the outcome of our inaugural issue. The huge investor interest confirms confidence in the strategy adopted to restore financial stability in the euro area”. Citi, HSBC and Société Générale acted as lead managers for this first EFSF issue and Deutsche Finanzagentur, the German Debt Management Office, acted as Issuance Agent. Klaus Regling expressed his gratitude to all participants for the successful placement of EFSF’s first issue.

The funds will be disbursed to Ireland on 1 February (5 business days settlement). This will match Ireland’s request for a loan of €3.3 billion. The difference between the amount raised on the markets and the amount disbursed to Ireland is due to EFSF’s credit enhancements using a cash reserve and loan-specific cash buffer to secure a triple A rating. The cash reserve comprises a margin rate and a one-off service fee. It is also explained by EFSF’s structure which requires both the principal and interest to be covered by guarantees. The final cost charged to Ireland and the exact loan amount will only be known once the cash reserve and the loan specific cash buffer, which are retained by EFSF, have been reinvested.

The scandal surrounding Ireland’s IMF/EU bailout continues to gather momentum following the collapse of Brian Cowen’s position as Taoiseach (Prime Minister) of Ireland.

There are now growing calls for the resignation of Mr. Paddy Honohan, the embattled Governor of the Irish Central bank, due to the fact that he was the lead negotiator during the disastrous bailout talks.

It turns out that even though the EFSF is borrowing funds at 2.89%, Ireland is in effect being charge nearly 9%. This is a higher rate charged on come credit cards in mainland Luxemburg where the private EFSF is based (it is a structured investment vehicle a la Enron fame).

Ostensibly Ireland is paying approximately 6% but in fact the Emerald Isle will receive only 66% of funds raised, though taxpayers  must fully guarantee 100% of the principal and interest. Thus when you add fees and funds withheld the real rate, according to my math, is 9% approx.

Clearly something went wrong and it looks like heads are set to roll.

It is expected that Brian Cowen will dissolve the Irish Parliament before next Wednesday February 2nd.  The election campaign that will follow is set to be one of the most contentious in living memory with implications for the future of the Irish parliamentary system and the stability of the  wider Euro project.

Watch this space folks it’s going to be a wild ride.


something stinks ,this is sheer robbery!

Why is this not on the national air waves instead of waffling on about Martin talking to Edna or Eamon! Who gives a damn “where are these billions going”? Who is responsible?

Who agreed to this scam? So we the taxpayers are been fleeced all over again!

 What are the politicians talking about while this scandal is unfolding under their noses?

The people who have been involved in the setting up of this so called bailout are in fact earning a fortune on our misery and our officials, we expected to look after our interests are just as incompetent as the politicians who caused this travesty in the first place it would seem!

The fraud squad should be immieadetely be brought in and prosecutions should follow .The Central Bank Governor should be brought in for questioning and until the outcome of this enquire, he  should be relieved of this post.

we are supposed to be getting 5 billion but end up with 3.5 billion and the rest goes to persons unknown as fees  this is the last straw we must not let this go unanswered the guilty are having a laugh ?

Related Articles


 The Internet services for most of Wicklow and the south east of the country is down since last Thursday evening approx 21.00 hrs
I have no access to the website and I have been waiting for Eircon to get back to me a customer to tell me when the service will be back up and running .I have up until to-day received no information as to when this will be I called Eircon broadband services only to be told by a gentleman speaking from India  that Eircon can withhold services for up to 5 days without been obliged to compensate any of its domestic customers .
This is just one of the reasons I am standing for election as the service industry herein Ireland is just crap and we the public seem to be shafted and expected to put up with ever higher prices and ever diminishing services .Just look at the private health insurance market continuing price hikes and ever decreasing services ,local business rates again less local services but higher taxes we must brake the political mold and bring back cost effective local services, accountability, and competence along with the proper cost base for such services
wake up the the real challenges that face this country and for God sake stop putting up with crap coming from the politicians.
I am now off to see if I can buy a new phone that can accesss the net and take decent video clips so I can post them on the website and keep up to date! 
Thomas Clarke

FF senator accuses NAMA of selling loans back to the original developers at below market values.

by Namawinelake  http://wp.me/pNlCf-Z8

 on RTE radio, a 34-year old Fianna Fail senator, Mark Daly, an auctioneer (Irish term for a profession that frequently encompasses the roles of valuer and estate agent) alleged that he was aware of shenanigans involving loans (that is, more than one) acquired by NAMA. The one he outlined related to a property in the UK. The loan, he claimed, had a par value of €12m. NAMA paid €6m for it. A party related to the developer (“friends” according to the senator) acquired the loan for €6m from NAMA. The underlying property is today worth €9m. These were the facts relayed by the senator which, on the face of it, give rise to two concerns
(1) NAMA is selling loans for substantially less than they’re worth
(2) NAMA is selling loans to parties associated with the original borrower with the implication that the borrower is profiting from the bank crisis to the tune of €3m on this one transaction alone
A further concern was that NAMA was acquiring loans from the banks for less than they were worth, thereby imposing increased losses on the banks which are giving rise to capital holes being filled by the taxpayer. This is less of a concern on here because NAMA is valuing loans at a specified valuation date -30th November, 2009. And although property values have plummeted more than 10% in Ireland since that date, in the UK commercial values are up 10% and indeed in some micro-markets eg London West End and City there is evidence to suggest commercial values are up 20%+. There is still a difference between €7.2m and €9m but it would not be a huge concern. The other two concerns enumerated above would remain however. Here is the transcript of the interview and the ball would appear to be in Senator Daly’s court to provide details using his privilege in the Oireachtas so that the claims can be verified. If the claims are correct then NAMA will have some serious questions to answer. There will be a further commentary on the claim that NAMA is not following its own rules tomorrow.
Pat Kenny: Good morning and welcome, today is it possible that NAMA, wittingly or unwittingly, is selling assets back to the former owners at a discount (PK then introduces other stories in his radio programme). It has been claimed that people that owe hundreds of millions of euros to the banks are buying back their debt at rock-bottom prices through third parties and offshore companies. Fianna Fail senator Mark Daly whose family is in the auctioneer business claims some property is being sold back at virtually nothing to the original owners and that NAMA is not following legislation enacted by the Oireachtas. Mark daly joins me now along with the deputy Business Editor of the Irish Independent, Emmet Oliver, good morning to you both. Emmet is on the phone and Senator Mark Daly is with me in the studio. Mark Daly, exactly what are you alleging?
Mark Daly:  Well it’s not so much an allegation as a fact, that under the NAMA legislation under section 23 or 25 of the Act, NAMA had to prepare a code of conduct for the disposal of bank assets within three months of the passing of the Act which it did. And within three months it did this and said that sale of properties and assets including bank loans would be governed by the Code of Conduct for the Governance of of State Bodies which was passed in 2009 and in that, section 18 said that any asset that might be sold, so all the bank loans would have to be sold by public auction or competitive tendering process.
PK: So we don’t know about it?
MD: So we don’t know about it but the competitive tendering or public auction would obviously involve a huge amount of advertising that we would see in all the property supplements but this doesn’t appear to be happening either. And what appears to be happening is that people in the know, the same people who were in the know who got us into all of this trouble are aware through the banks, through the receivers what these assets can now be bought at, the haircuts. In one particular case that I have come across in the UK the original loan was €12m, the haircut was €6m, but the asset itself was undervalued and was worth €9m really and the guy, the original borrower of the loan said to his friends “you pay the banks €6m, they’ll be happy and we’ll sell it for €9m” and they made a nice €3m profit. And that type of thing is happening wholesale because the problem is that there is no transparency –
PK: But why would NAMA want to do that, if the thing was worth €9m why wouldn’t they sell it for something approaching that?
MD: Because no-one is trying to maximise the value because once the bank get the haircut that NAMA imposed on them, the €6m –
PK: But of course if NAMA imposed a haircut and said that this asset is effectively only worth €6m but it’s actually worth €9m. If they’ve done that then they are exposing themselves to having undervalued the property which means that they’re not being very professional in what they are doing.
MD: Well there’s a lot of shady behaviour going on here and if they followed their own rules as set out in the NAMA legislation and had a competitive tendering process or public auctions then it maximises values but what is actually happening here is and the banks and receivers have admitted this to me that the banks say that “once we get what we paid for it, the haircut from NAMA, we are happy”
PK: This is utterly, utterly dishonest if that’s what NAMA are it, if NAMA  and I’m only saying “if”, is applying a haircut that is greater than the haircut that the market would suggest it should have then NAMA is not doing its job properly.
MD: Well, I’ll actually blame my own profession, the auctioneers and the receivers, the banks as well. All they want to do is pay back NAMA the money that is owed. Maximising the values is not really their concern –
PK: As a tax payer it is –
MD: As a taxpayer it is our concern which is why the transparency that I am looking for. First of all the rules would be followed, the law would be followed –
PK: It would by public tender or public auction
MD: Exactly. And all the banks and the receivers would go through this process but they’re not even doing that. As you can see you are not looking at papers full of advertising saying “NAMA property for sale”.
PK: What interests me more and that is some and that is something they should be doing now that you have pointed this out and I’ll get to that in a moment or two. What is more sinister is that if they applied a haircut that is too severe rather than the medium term or long term economic value of the asset which they would be in a position to hang onto because that was the idea, they could hold it in a way which the banks couldn’t because of their balance sheets, NAMA could hold it longer but if they’re just dispatching stuff to get the cash in to show how well they’re doing for instance, how well they’re doing. But they applied too severe a haircut which means that the taxpayer had to put more money into the banks which we didn’t need to do and that is the obscenity, if it’s true?
MD: Well the obscenity of it is that on top of this is that the banks are once they’re quite happy to get the money they owe NAMA, aren’t going to go after the borrowers, the original borrowers for the balance of the money. They’re just not going to do it. And receivers talking to the banks have admitted that to me. Now the problem with this Pat is that I’m not an investigator, I’m not the Guards but then again we know of plenty of cases where it’s taken two years to take people to court for very obvious corporate governance issues –
PK: Let’s point this out carefully. NAMA, we expected to turn a profit. That’s part of the whole thing that at the end of the day, it might turn a small profit. That’s at THE END OF THE DAY. It was not expected to turn a profit in the short term. It was supposed to hang onto assets and realise their value. If it’s selling them at below market value disp[osing of them just to get cash in. then it’s not doing the job it was supposed to hang onto assets and realise their value. If it’s selling them at under the market value, disposing of them, just to get …
MD: Lets be clear on this. When the banks are appointing auctioneers and the receivers to realise the money, the fault lies with them in that they’re not advertising the property at a very minimum the property for saleand saying that this is what is available and this is the current bid on it . The transparency is required because first of all the citizens and the taxpayer are entitled to know that the assets that at a minimum advertising the property for sale, the assets which they currently own through NAMA are being maximised in value and that is not happening.
PK: And NAMA if it wants to, like in any commercial auction or tender, they can have a reserve. If it doesn’t meet the reserve, in other words, if they feel that they are being scammed in some way, if they think people are trying to get it for nothing, for example all potential bidders have a chat and decide to keep the tenders low –
MD: What is actually happening is the guy the original borrowers in these cases is that the original boorowers that hve been brought to my attention are arranging for their friends to put in the bids. Nobody else is aware that this place is for sale because no-one else knows that this asset is in trouble,is for sale. This is a scam of monumental proportions
PK: Before I go to Emmet Oliver, NAMA has responded to you, to the claims that you made. It  says that NAMA had responded that it had addressed this extensively at the Public Accounts Committee. Wwe would ask anty other person to advise of incidents where this might be happening. A spokesman for the Agency said for our part, NAMA is keen to avoid such developments insofar as it can within the law as passed by the Oireachtas. So what’s your message to them?
MD: Now that’s not exactly encouraging is it? “please come to us with a file that we can pass to the DPP”. What we’re talking about here is the transparency that is required and they’re not even following section 25 or section 35 of the NAMA Act to say this must be open, this must be transparent but the concerning part of all of this is in the next six months the cherrypicks, the best property is going to be bought up by the scavengers and the vultures.
PK: Now you have not gone public with the particular deals that you are aware of . Have you gone to the Gardai with it?
MD: Now the problem here is that you need smoking guns you need evidence of emails, phones, cheques, money going. This is all quietly, quietly little chats in a corner over a pint. And the guy who came to me on this one was approached at a dinner party to be the third party to buy a property in the UK and he would then be given a cut. And he came to me because he was so disgusted, that the same people who got us into this trouble in the first place are now doing the same thing again.
PK: Emmet Oliver, what do you make of this contention?
EO: Well I have great misgivings for the transparency of NAMA myself but in a different way and I’ll come to that in a second. It’s actually on the other side of the operation where they’re actually lending out money rather than what they’re doing in relation to property that are being disposed of. Two things that come to mind based on what the senator is saying – first of all, just because you auction off property at an auction which is what he seems to be advocating doesn’t necessarily mean that you are going to get the highest price. I mean the largest office block developments in the world generally don’t get sold by auction, they get sold by private treaty sale. If someone comes along to you like a private equity  company and let’s say that that’s who buys the largest property holdings they want to do that in private. They don’t want to disclose what they’re buying. They’re buying hundred, possibly thousands of properties. If they say to you “ I’ll give you €200m and you go to public auction they’re only willing to give you €150m, I don’t see what the problem is, you know, solely because you hold a public auction doesn’t necessarily mean you’re maximising the price – that’s the first thing I would say. Secondly, the problem is where are these people going to get the money to buy these assets… I don’t know what bank is going . Let’s say that developer A comes on the scene, goes to an auction and sets up a shell company or acts as a shadow director which is what the senator is trying to suggest there. I don’t know what bank is going to lend the money to these people because they’re already in massive negative equity, they’re already massively indebted and they’re breaching their loan covenants all over the place. So people are not going to advance credit to these people. So I don’t know where that happens. But there is a danger, there is a vulnerability that we’re heading into a world where  smaller loans are going to start moving into NAMA. You’ll see a story that I had myself this morning that 20,000 smaller loans are going to move so I would be I ould be worried then that at the local level where you would get the kinda carved-up deals that he’s talking about. So there is a vulnerability there, there’s absolutely no doubt about that. I don’t have any evidence and unlike Mark there I don’t have the benefit of privilege in the Oireachtas to say these things. So he does have in the dying days of the Oireachtas the opportunity to put names into the pubic domain.
PK: Isn’t the whole business of NAMA somewhat flawed that the bigger the haircut applied to the loans at the banks, the smaller amount of money that they gave the banks in terms of the bonds underwritten by the ECB which means that the taxpayer has to find more cash to put in. I mean it’s a mad system really?
EO: As we said at the time the money has to put in at one end of the pipe or the other, but it has to go in. In other words, if they over-do the haircut the banks have a bigger capital hole which has to be filled . Equally if they pay too much for them, we have to pay because they won’t make a profit either. So essentially the money was going to have to be found somewhere so yes, you’re absolutely right but this debate was had extensively back last year in the Dail and this was the system decided on. That horse has unfortunately bolted.
PK: But the principle that you have to hang onto assets, that’s what they [NAMA] were told to do. Now some assets will never have a value, certainly not in this decade or even the next. But other assets would eventually, as markets improve, have significant uplifts in their value and that was the whole idea, that NAMA would hang on. And work those assets if they could and do what the banks couldn’t afford to do. But which banks do normally in better times. They don’t necessarily foreclose on everybody on their books because it would cause chaos.
EO: Yes but the problem here is that the assets here are not performing. They’re not covering the interest bill so there’s accounting rules which won’t let you sit on them and let the compound interest effect take hold. You’ll have to takle an impairment on your books. So you can’t do that.
PK: But that’s what NAMA was told it was supposed to do –
EO: No but what I mean was it was the banks that were told that they couldn’t do that. And the only other way for relieving those assets from the banks balance sheets was to put them into another vehicle which isn’t as governed by those accounting rules which make you take the write-down. That’s why the banks weren’t left to sit on them until they recovered their values. If the interest isn’t coming in, the actual asset has to be written down in value.
PK: Look, if this scandal as Mark Daly seems to believe is there. If that’s real, the people who are culpable, if these things are being sold to private equity funds or whatever, the valuers are the corrupt people because they’re saying this thing is worth €6m to NAMA and it’s being sold on at €9m?
EO: Well the problem is, I mean. Two valuers won’t agree. No valuers will agree. So I’ll go out and view an asset Pat and so will you. You’ll say “who is the tenant, how much is he paying a month, will he last, will he survive, could we get him another rent review through, and increase the rent, what is the depreciation of the property et cetera”. I don’t necessarily agree with you. So this isn’t –
PK: So it’s not an exact science?
EO: You can be out in some cases hundred of millions of euros on the larger properties. So you know there is a problem there. But the real transparency problem is actually money that’s being lent out by NAMA. People don’t think of NAMA as a bank but it does operate like a bank. It does lend out millions and millions of euro in working capital to finish off projects which it says is a better way because better finished than not finished. But we don’t know who has received what is effectively public money. And we don’t really know what the criteria are to advance that money. So I think that –
PK: Are you saying that developers who owned particular assets which are then, those loans are NAMAised, that those self-same developers are getting loans from NAMA to finish off the assets so that it will actually be worth something rather than worth nothing half-finished?
EO: Yes that’s what is happening but the problem is we need to know who is getting the money because (1) there’s a large amount of it and (2) we need to know was one case more deserving than another –
PK: In other words the criteria that they apply. I mean you can take personalities into account but that shouldn’t be the criterion. The criterion should be about maximising value for the taxpayer irrespective of whether it appears to be doing some developer or other some sort of favour. That’s not the point – the point is to maximise value for the taxpayer.
EO: Well what’s happening is Mark and myself come together if they reveal the auction results and who bought the property, guys like myself can go off and research the company who purchased the property. Equally if they revealed and published a list of who got working capital, again the company name that would be sufficient to iron out a lot of these problems and I don’t understand why they don’t do that.
MD: Yes, I agree with Emmet there but like, what he is talking about there is, and being a valuer myself in a former life, I realise that in some situations sales by private treaty would be a better way to go but that’s not the point. The legislation says that you can’t do that. You must have an auction, you must have a tendering process. And therefore it is now illegal to now be selling any asset, the disposal of all these assets, the €2bn that have been disposed so far hasn’t been done properly. That’s the first issue. And like, this practice is apparently so widespread that when I was talking with a member of an embassy staff, I had mentioned the possibility that this was going on and THEY had heard it. So I mean it is in the dinner-party circuit around Dublin and elsewhere. It is quite well known that there are developers who are cutting deals –
PK: Well that’s not good enough to stand up in court, in law. It’s not good enough for Emmet to print in his newspaper. We talk about this but we cannot really point the finger until we have chapter and verse.
MD: But the issue here is transparency and how do you get it? First of all, the rules that are there, the laws that are there, should be followed, [sales] should be done by tendering or by public auction. And secondly as Emmet has suggested, a website, the NAMA website should have all the assets and the loans that are up for sale, what they were originally bought for, what the current bid is and no asset should be sold within four weeks of it going on the website. That way, even if a guy gets the greatest bargain ever, no-one can turn around and say there was a scam, there was a deal done.
PK: So a bit like Amazon [ Ebay, Pat?] , on you go and you can see exactly what the current bid is and the closing date is the 4th March or whatever it is –
MD: And then, I agree we mightn’t maximise the price because private funds would prefer a sale by private treaty but that’s not what the law says. We can change the law if we think that’s better but at the moment, we’re not even following the law that’s there.
PK: Finally Emmet on that, irrespective of what is wise – private treaty versus public auction, to get big investors involved in these things, they don’t want to necessarily go public. But the law is the law and they’re not adhering to the law at the moment according to Senator Mark Daly –
EO: Well, I think that maximising is the key thing. If the current legislation has to be amended, so be it. All I’m interested in as a taxpayer is that we get the best price, whatever they need to do to do that. I think that the idea of a website and disclosure would be a great idea. I mean this is public money. What NAMA is saying is “oh well this is the property market and none of these things are publicised” but we’re not talking about a normal property market, we’re not talking about a normal structure. NAMA is an asset management vehicle funded by the Irish state and guaranteed by the Irish government. I think in that context it’s perfectly possible to set up NAMAbay or Ebay-type service to find out who is getting the credit because in that situation NAMA is holding all the trump cards. Because they say to Johnny Ronan or Derek Quinlan or whoever is looking to finish a project, “if it doesn’t go public you don’t get the money” and I think that would pretty rapidly solve that problem.
MD: I mean it’s public confidence is the important thing in this and if people can see what an asset was worth originally and what is being paid for it now, there can be no quibbles about it. The next six months, knowing how the property market works, they’re going to be cherry-picking and deals done and the taxpayer ultimately will be picking up the [indistinct] bill [?]
PK: In an Oireachtas Finance Committee after an election, Emmet, it might be worth a look at what exactly NAMA sold and what it turned for the third party that sold it on because I am concerned obviously that NAMA paid too little for stuff, you know that the haircut was too extreme and if that’s the case it has cost the taxpayer money and not the way that the business should have been done.
EO: No, I mean there is a danger because NAMA, Brendan McDonagh is a director of the company, he is going to be judged on the success or failure of NAMA in its own isolated way. He’s not going to be judged by how much the banks have to be recapitalised. You have a reasonable point there. He’s going to give himself a good head-start by applying a very deep discount. Having said that they do have the Comptroller and Auditor General on premises. They are an organisation that make public quarterly reports and very few other state bodies do so. So this is only going to be all revealed in time. It will be years before we know if NAMA has made a profit or not. It’s also as I said earlier a lot of argument about what the value of assets are – you’re never going to get two valuers to agree. So it is going to be difficult but I do think that NAMA could deal with the transparency point at very little cost which would give disclosures about the working capital advances and also as Mark says the sales that went on.
PK: Final word, Mark.
MD: I mean the problem with the Comptroller and Auditor General is that’s like the post mortem, this is how it went wrong. What we need to look at now is how we make sure that it doesn’t go wrong. And in the next six months the guys who caused all the trouble are still going out there and they’re going to make billions, millions, hundreds of millions, billions off the taxpayer because they’re buying property at less than the asset because they’re arranging for their buddies to put in false bids and thereby buying it for less than the market value –
PK: A number of people would say “where would they get the money, they’re supposed to be broke”
MD: Their friends, the third parties, are arranging the loans.
PK: [reading texts] they drifted the money offshore before the bust so of course they can buy back for a song, they’re not going cap-in-hand to the banks. Mark Daly should read the list of NAMA sales into the Seanad record, a windfall tax would claw back the gains made by quick buck merchants in this country, why is there  a reluctance to introduce this tax? A lot of stuff wondering how the could actually afford to do it. Fair parties, pals, whatever, it may be happening. BUT we do need chapter and verse, so if there is anybody out there that can give us that we’d love to hear from you.

source: http://namawinelake.wordpress.com/author/namawinelake/

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