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European bank stress test scam!

European bank stress test – official estimates signify NAMA is unintentionally overpaying for loans and undermine DoF’s claims about the Bottom

namawinelake | July 24, 2010 at 6:28 am

The Committee of European Banking Supervisors (CEBS) together with the EC and ECB has published its eagerly awaited results of stress-testing 91 European banks. The two Irish banks included in the exercise, Bank of Ireland and Allied Irish Banks passed the stress-test which set out to examine the capital base of banks in two scenarios – a benchmark scenario and an adverse scenario. Good news for BoI and AIB – seven other European banks didn’t pass the test.

As stated in the report “the benchmark scenario was based on the EU Commission Autumn 2009 forecast and the European Commission Interim Forecast in February 2010, with several adaptations to reflect recent macro-economic developments in a number of countries. The adverse macro-economic scenario was based on ECB estimates”. The assumptions for Ireland are summarized below together with the calculation by the CEBS of the effect on commercial and residential property prices

For information, here is a round up of recent predictions/projections for the Irish residential market:

For information, the ESRI published this week recovery scenarios for the State  – the high growth scenario and the low growth scenario. Both scenarios forecast 2010 GDP to contract by 0.4% and unemployment in 2010 to reach 14%.

What makes the stress test fascinating from the point of view of NAMA is its forecasts for commercial and residential property prices. It’s benchmark scenario is for a 15% compound decline in residential in 2010 and 2011 with drops in both years, a 19% compound decline in commercial in 2010 and 2011 with drops in both years. There is no projection beyond 2011. NAMA has chosen a Valuation Date of 30th November, 2009 pursuant to section 73 of the NAMA Act by reference to which NAMA is valuing the loans being transferred from the financial institutions.

How much does property need recover by 2020 assuming

1. Prices stop falling at the end of 2011

2. All property is sold in December 2020

3. 67% of property is located in Ireland

4. 33% of property is located in the UK

5. Property in the Ireland and the UK is split 50:50 between commercial and residential

The table below what recovery needs happen if NAMA is forced to rely on the recovery of the property market to break even – remember in the draft Business Plan is that the recovery was a flat 10% over 10 years. With the CEBS benchmark scenario, the recovery would be 24.7% and in the adverse scenario 41%. Both of these represent significant changes to NAMA’s draft Business Plan. To emphasise, assuming prices stop falling after 2011, the compound rate of growth needed would be 2.5% per annum for each of the nine years in the benchmark scenario and 4% in the adverse scenario.  These compound percentages might be rendered meaningless if there is significant default and NAMA’s interest receivable falls below its interest payable.

Perhaps a more interesting implication from the benchmark scenario is related to the question of whether NAMA is overpaying for loans now by paying for loans according to the 30th November, 2009. The answer is a resounding yes and if you compare forecast prices at the end of 2010 with the 30th November, 2010, there is an implication that NAMA is overpaying by something in the order of €3-6bn again based on the following assumptions:

1. NAMA acquires the loans by reference to a valuation date of 31st December 2010

2. Price changes in the month of December 2009 have been ignored

3. The LEV remains at a constant 11% above CMV

4. 67% of assets are in Ireland

5. 33% of assets are in the UK

6. The split of assets between commercial and residential is 50:50

Now of course the above is very much a simplification. NAMA’s assets may not correspond to general commercial and residential forecasts – where is development land for example? NAMA will have 7% or so of assets in the Rest of World. NAMA’s LEV as a percentage of CMV may change. So far this year in Ireland residential is off 5% (to the end of Q1) and commercial 8% (to the end of Q2) and the UK is broadly positive, so we have some way to drop before we get to the EU benchmark scenario. There are other assumptions but it is a fair representation, I believe, to say that we are overpaying by billions for NAMA loans by reference to current values – some overpayment was planned via the Long Term Economic Value device but the overpayment being referred to here is on top of that.

Lastly this stress test report comes on the heels of the publication of the EU’s Decision in respect of the first Anglo restructuring plan which was submitted with the DoF’s imprimatur, to the EC in November 2009. The Decision (paragraph 41) revealed that Anglo was planning for property prices were seen to drop in 2009 by 15-19% [actual according to Permanent TSB/ESRI was 18.5%] and continue falling in 2010 and 2011 before starting to rise in 2012. The average decline in property prices in the plan is estimated at 47% peak to trough but in the worst case is 62%. And now with this stress test we have the official EC/ECB estimates that property will continue to drop this year and next. Of course a finance minister has a responsibility to instil confidence but Brian Lenihan’s Bottom statements in September 2009 and April 2010 are now looking distinctly disingenuous and more importantly damaging because the Bottom will come at some point but may overshoot because of a lack of confidence in advice from the government.

source http://namawinelake.wordpress.com/2010/07/24/european-bank-stress-test-%e2%80%93-official-estimates-signify-nama-is-unintentionally-overpaying-for-loans-and-undermine-dof%e2%80%99s-claims-about-the-bottom/

comment

Needless to say this whole stress test episode is just a political stage show for the benefit of Joe public  in Euro land .The sad fact is that this test has absolutely no value whatsoever as it does not take into consideration the real dodgy bonds and loans that are the cause of the banking crises in Europe 

The various European politicians have jumped on this and are telling us and the markets that there is no financial crises with our banks and the  European Banks and it’s all a bad dream  that we are all collectively having!.

Cowen and Lenihans assurances that we have turned the corner in 2009 and again in April of this year were lies and dam lies!

How anybody will ever believe a word out of their lying mouths again I will never know!

We now need to wake up and start spending again and where are we going to get the money to spend when we are out of work, when the gangsters in the same “sound banks” are hiking interest rates and pushing people out of their homes as a result of their gambling

The government having poured billions into these same Toxic Banks, are desperately trying to get those of us that still have a little money to invest in these bankrupt banks so they can again start the whole rotten pyramid cycle all over again.Now that the country  is practically bankrupt, they are now about to sell off the last vestiges’ of silver ware the country has left, along with proposed new toll, s on the National roads network, along with home rates and water charges where can we go from here?

500,000 people are out of work and for the last two years none of the politicians in power or the crony independent TD, s that are propping them have done anything for the unemployed

The current government’s unemployment policy is to” let them eat cake “and waffle on about the smart economy

That’s smart all right 60,000 young people left the country last year and the ESRI believes at least 200,000 more will have left by 2014

Clearly the unemployed are only receiving lip service and are way down in the pecking order!

We need a complete change of the political system

Help get rid of the gombeen, s running this country,

Get active on the ground in your own neighbourhoods and do not vote the same leaches back into office

it’s time to change  the system!

we need reform now!

The current Irish Government are responsible for the financial disaster the country is in,
With the establishment of NAMA the Government is trying to socialize the enormous losses that the Banks and their Developer buddies have encored.
Corruption is rife and now a new monster burocratic system is being created, where X politicians will have jobs for life and the same corrupt developers will be able to manipulate the housing market all over again
While the people are being robbed of their homes, savings, pensions, and education for their children, that same gangsters are running the country
This has to stop!
Join the CAB to-day and get things moving
Come on! Get active in your own area now!
We as a country need new faces and not the same old tired faces that have being around using the system to suite themselves.

God save Ireland from these Gangsters!

Ombusdman Emily O’Reilly claimed today the work of her office was being undermined by what she described as “deficits in our parliamentary and government arrangements”.

In an address to the Institute of Public Administration in Dublin today, Ms O’Reilly criticised the Government’s decision last month to vote against a proposal to have her report on a grant aid scheme for commercial fishermen referred to an Oireachtas committee.

She said the handling of the controversial Lost to Sea report illustrated how the Oireachtas was being side-lined. Ms O’Reilly published the report last December after its findings were rejected by the Department of Agriculture, only the second time this has happened since the office of ombudsman was founded in the 1980s.

“Unfortunately, the model of government set out in the Irish Constitution has become more of a fiction than a reality,” Ms O’Reilly said. “In practice the Dáil, and to a slightly lesser extent the Seanad, is controlled very firmly by the Government parties through the operation of the whip system.

“For all practical purposes, and I very much regret having to say this so bluntly, parliament in Ireland has been sidelined and is no longer in a position to hold the executive to account,” she said. “With the exception of the election of a Taoiseach, almost all decisions of importance are taken by the executive and are rubber-stamped by parliament.”

The Lost at Sea scheme was established in 2001 by then minister for the marine Frank Fahey. Under the scheme, owners of fishing boats lost at sea could apply for grant aid for replacement capacity.

The Byrne family from Donegal later complained to the ombudsman after its application was rejected, on the grounds it was made after the deadline.

Ms O’Reilly’s report criticised several aspects of the scheme, including the advertising process, which she found was not comprehensive enough. She recommended compensation of €245,000 for the Byrnes.

Ms O’Reilly said last month the Dáil and Seanad had the task of deciding who is right and wrong in her dispute with the Department of Agriculture and Fisheries.

But following a heat Dáil debate on the matter last month, the Government voted against referring the report to the Joint Oireachtas Committee on Agriculture, Fisheries and Food.

In her speech today, Ms O’Reilly claimed the Government had stopped the Oireachtas adjudicating on her dispute with the Department of Agriculture by voting “along party political lines”.

She said this illustrated “how deficits in our parliamentary and government arrangements can adversely affect” the work of her office.

Ms O’Reilly said she would have expected a parliamentary committee, following appropriate scrutiny, to reach the conclusion that her recommendation in the report that financial compensation be paid to the complainant.

She said her office “had done, in its area of responsibility, precisely what the Financial Regulator was accused of not doing, in terms of failing to serve the public interest and rooting out maladministration in the banking system”.

Ms O’Reilly said she hoped the Oireachtas may yet find a mechanism to allow the report to be dealt with “calmly and reasonably”.

In a wide-ranging speech, the Ombudsman said poor governance in a number of our key private and public institutions lies at the heart of our economic downturn.

source http://www.google.com/hostednews/ukpress/article/ALeqM5i_wcQYTrQYYRoOefflmoB6QCHtgg

see also http://breakingnews.iol.ie/news/ireland/ombudsman-blames-tds-for-economic-downturn-449298.html

and  http://www.irishtimes.com/newspaper/breaking/2010/0309/breaking38.html
 

comment

This is just the latest example of how our constitution does not meet the challenges from our own government with the self-interests now blatantly using the executive power to promote the interests of the chosen few

The political system in now was used and abused by a totally corrupt political elite and their lackeys.

The Dail is no longer listening to the voice of the Irish people.

Wrangling over the plum jobs and positions of power are the order of the day, sqandering billions down toxic Bank holes under the guise of the Con NAMA , and robbing ordinary people of their dignity in sickness

By putting them on trolleys in hallways, along hospitals corridors

Forcing the unemployed to work for nothing is programs (WPP) from discredited FAS

Allowing Bank Directors to be rewarded, who have supervised the systematic destruction of our national banking system to continue in place while the public loses their pensions and the shareholder loses 95% of their holdings!

Our political masters are so interconnected with these gangsters they have put the interests of International bond holders (NAMA)over the interests of the Irish people. We are no longer a free and independent nation our freedom has being given away and we and our children and the next generation are now financial slaves to foreign vested interests

This is treachery and it seems the constitutional rights of the of the people of Ireland are been ignored .This Dail no longer represents the people and any amount of shuffling the chairs around a corrupt cabinet will change nothing!

Traitors are still traitors it doesn’t matter where they sit

We the people want those responsible removed from their plum jobs and brought before the people’s justice. We also demand the a new government renegotiate the huge debts that were incurred by their corrupt bankers and the said Bank directors made pay from their own funds

Those responsible must not benefit in any way from their crimes.

These people at the top are the problem and until they all go Ireland hasn’t got any hope of retrieving its once cherished independence.

God save Ireland from NAMA and these Gangsters!

calamity Mary takes a vow

according to the press association Tanaiste Mary Coughlan (calamity Mary )has vowed to deliver on plans to create more than 100,000 new jobs from foreign investors. IDA Ireland aims to lure hundreds of overseas firms over the next four years, with more than half to be based outside Dublin and Cork. The target was included in an estimate by Fas and the Economic and Social Research Institute (ESRI) that 250,000 extra jobs would be generated by 2015.

Now that is 20,000 jobs a year for the next 5 years right? Calamity wants to deliver, wrong!

What will happens is this, 65,000people will emigrate

Plus we already have 500,000 now unemployed and in 5 years time we will have a minimum of another 250,000 jobs going from these shores

Of 50,000 new workers coming from the various educational instustions every year with no jobs to go to and with the economy contracting because of the credit crunch that will have to continue at least for the next 10 years.

 I can’t see what difference this promise will make. When the last time a politician’s promise was was actually delivered on?

Never baring in mind this minster sat back and allowed 800 jobs disappear that we know of!

Cuts at the national training budget at FAS, (and I have personally experienced this).

Ever since she became minster two and a half years ago, we still have no jobs stimulus and the unemployed are thrown on the scrapheap

This is the last person we should rely on to kick start the jobs market!

we want action on Jobs now and not empty promises!

it’s time for the unemployed to unite under one banner and create  a union for the unemployed

get up and take action to-day!

The Irish New Poor

Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.

Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.

Here in Southern California, Jean Eisen has been without work since she lost her job selling beauty salon equipment more than two years ago. In the several months she has endured with neither a pay check nor an unemployment check, she has relied on local food banks for her groceries.

“I pray for healing,” says Ms. Eisen, 57. “When you’ve got nothing, you’ve got to go with what you know.”

Warm, outgoing and prone to the positive, Ms. Eisen has worked much of her life. Now, she is one of 6.3 million Americans who have been unemployed for six months or longer, the largest number since the government began keeping track in 1948. That is more than double the toll in the next-worst period, in the early 1980s.

Men have suffered the largest numbers of job losses in this recession. But Ms. Eisen has the unfortunate distinction of being among a group — women from 45 to 64 years of age — whose long-term unemployment rate has grown rapidly.

source http://www.nytimes.com/2010/02/21/business/economy/21unemployed.html?em

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The problem is that we could easily be talking about the Irish unemployed
Anybody of that age group (40 to 65) here in Ireland is effectively consigned to the scrapheap!

There is a lot of talk from the politicians about “The Unemployed” but nothing else is happening

FAS is a joke and the likes of Bill Cullen telling us on the Frontline last night to get up and find a job is adding insult to over 500,000 honest people who would love to get the money the taxpayers have just given him

Cullen is just one of a string of well healed individuals who from time to time come on our screens and tell us we got to help ourselves at the same time they are getting bailed out themselves from taxpayer’s funds

Another example of this is yesterday the central bank governor said that wages must come down

What was his salary again?????

Bet it’s not the minimum wage!

Sooner or later the New Poor will not take anymore platitudes from the real leaches sponging off the taxpayers .the well paid spin doctors, the overpaid top civil servants and top government Minsters

And what about top presenters in the public owned media

Beware of the ides of March I say to you all

FAS Gravy Train

Comptroller and Auditor General Special Report on FAS

 



 

Internal Summary of Findings

 

The examination reported below focused on the processing of transactions at FÁS Head Office and governance arrangements for the organisation. It also reviewed the management of the Competency Development Programme and the administration of foreign travel and business expenses.

Overall Examination Findings

The examination found that FÁS had a governance structure that is consistent with its governing legislation and with the Code of Practice for the Governance of State Bodies. It had also a plan of internal control, which, if fully implemented, would have provided sufficient assurance that its transactions were processed in a safe and regular manner.

However, failure to fully implement elements of the plan of control exposed FÁS to the risk of losses as well as the risk of failing to achieve best value for money. The exposures arose from the fact that

authorisation limits were breached when certain transactions were being initiated

there were deficiencies in the conduct of tender processes when goods and services were being acquired

payments were made in the absence of supporting documentation

confirmation orders for purchases already effected were issued in many instances

the system of risk management adopted by the Board in 2005 did not function effectively.

Key units failed to detect or react appropriately to non-compliance with internal procedures.

Notwithstanding these procedural deficiencies, the examination found, based on substantive testing of 2008 transactions initiated by Head Office sections, that payments for the transactions sampled were properly chargeable in the FÁS financial statements.

FÁS has begun taking steps to address the control deficiencies identified and, in particular

the Board has approved a revised set of procurement procedures that include a requirement for managers to make annual declarations of compliance

training workshops have been held to increase the level of awareness of those procurement procedures

policies relating to the use of credit cards and revised procedures governing foreign travel were adopted by the Board during 2009 and the use of credit cards curtailed.

The examination also found that considerable scope exists to improve the depth and quality of reporting both in regard to rule compliance and business performance.

In one relatively new programme – the Competency Development Programme – the examination found that

in its administration, monitoring visits to external training providers were not as frequent as envisaged under FÁS’s own procedures

programme output was not recorded in terms of results such as persons achieving certification

there was no evaluation of the extent to which the training objectives of the programme were achieved.

Specific Findings

The findings of this examination would suggest the need for adjustments to systems, procedures and practices employed by FÁS. These arise in the following areas:

Risk Management

Ongoing identification and mitigation of risk based on an analysis of the control systems and experience derived from transaction processing is key to safe administration of public money.

Responsibility for drawing up individual risk registers lies with the divisions in FÁS while responsibility for compiling and maintaining a consolidated register lies with the Risk Management Committee (the Executive Board). Coordination of the risk management function is the responsibility of Internal Audit. Risk management in FÁS has not operated as envisaged when the Board approved the current risk policy in 2005 – risk registers and action plans were not kept up-to-date, reporting procedures approved by the Board have not operated as envisaged and there has not been any annual review of the effectiveness of the risk management system.

 

Full report can be seen at following link http://www.rte.ie/news/2010/0128/fasreport.pdf

Forget the minimum wage and work for nothing!

Work Placement Program (WPP)

Languishing on the Dole for the last 12 months and not in receipt of any payments (because I was self-employed) I heard about this program, and thought I would go down to the local FAS office here in Wicklow Town and enquire about this possibility for myself!

As usual I was met with the usual courtesy .The FAS officer reminded me that they were always available, no appointment was necessary and we got down to business

I wanted to know if there was a possibility I could take advantage of this program.

Cheerfully she informed me I would be eligible for this program (now we are getting places I thought!)

Then out of the blue I was told that whilst I could theoretically get a placing for up to nine months in a company, I would be working without pay for those nine months.

As I am not in receipt of any payments from the department of social welfare or FAS itself.

I would not receive any funds from these state bodies nor would I receive any payment from the company I was working for!

So we have now reached the bottom in the Irish labour market, forget the minimum wage, with the new changes to the FAS rules at the last budget in December.

Brian Lenihian now expects the unemployed to work for nothing!

The sense of injustice is just sickening, as I have worked all my life and paid my taxes and yet I see people who have not contributed to the state collect payments!

It’s almost a crime to be Irish in Ireland now! FAS may not have any more money to pay

For the training and up skilling of the unemployed as a result of their incompetence

And questionable financial practices.

I appeal to the minster concerned to ratify this obvious abuse of the Unemployed and I call on all TD’s to demand that this practice be immediately revoked

I particularly call on the local TD’s for my area, to publicly show their support for the unemployed of Wicklow and support this petition.

Liz McManus TD liz.mcmanus@oireachtas.ie,

Joe Behan TD joe.behan@oireachtas.ie

Andrew Doyle andrew.doyle@finegael.ie

Billy Timmins billy.timmins@oireachtas.ie

Dick Roche dick.roche@oireachtas.ie


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