Irish Government to pursue religious orders for €250 million in unpaid compensation to abuse victims

The Cabinet of the Irish Government agreed this week to pursue religious orders for payment of the remaining €250 million needed to make up their half of the cost of €1.46 billion compensation promised to victims of horrific ill-treatment in orphanages, schools, borstals and other institutions run by Catholic monks and nuns. The amount was revised upwards from €1.36 billion after more victims came forward.

Education Minister Ruairi Quinn has been given the task of extracting the money from the orders.

The congregations of priests and nuns initially offered just €128 million in cash, property and counselling services as part of a controversial indemnity deal dating back to 2002. Only €106 million of this was ever realised.

Four of the eighteen orders named in the Ryan Commission that investigated the decades of abuse that was perpetrated have said they are willing to consider transferring more school buildings and other educational infrastructure on top of what has been offered.

Mr Quinn said: “The Government is obviously disappointed that the congregations have not agreed to a 50:50 share of the very considerable cost for redress. This decision represents the most pragmatic way to maximise the level of contributions to be made by the congregations and the management bodies so that the taxpayer does not bear an unreasonable burden of the costs.”

via National Secular Society – Irish Government to pursue religious orders for €250 million in unpaid compensation to abuse victims.

Never-Ending Austerity Amidst the Ruins

Ministers are fond of telling us that we are 80 percent through the dark austerity forest. Soon, maybe within a couple of years, we will enter into the light where all will be well and normal fiscal policy can be resumed. Just one more push and austerity will be no more. Should we put a lot of faith in this? I would recommend caution – extreme caution.

The Government has published a long-term scenario – stretching out to 2019. This builds on the projections up to 2016 in the recent Stability Programme Update. The Government is at pains to state that this is an illustration:

‘Again it must be stressed that this is purely an illustrative scenario.’

They even underlined it. Yet, it is consistent with the Government’s SPU projections and it is certainly consistent with reports of a new plan being developed by the Minister for Finance.

‘The State’s anticipated exit from the bailout this year will not mean a relaxing of austerity targets as Mr Noonan hopes Government will approve a fresh regime with firm timelines similar to the EU-IMF-ECB programme.’

Minister Richard Bruton was also giving a warning

‘Mr Bruton rejected the accusation that the public had expected the end of the bailout term would signal an easing of austerity by saying no “crock of gold” was available to the Government.’

Mr Bruton suggested that this situation would continue for some time.

So it is worthwhile to look at the Government’s ‘purely illustrative scenario’ as there is a very good chance it will morph into the ‘only scenario’ (TINA will become TIOOS – There is Only One Scenario). Let’s look at primary public expenditure – that is, public expenditure excluding interest. This identifies how much money will be spent on public services, social protection and investment. I have used ‘real’ expenditure – that is, expenditure after inflation using the GDP deflator (the economy wide inflation indicator).

As seen, primary expenditure is expected to fall by nearly 9 percent over the next two years. From 2015 on, primary spending still continues to fall – by 2.6 percent in real terms up to 2019 despite the Government pencilling in GDP growth of approximately 12 percent during this same period.

But it gets worse. In many areas public spending will rise automatically due to demographic pressures. For instance, the number of pensioners will increase so that even if pension payments remain frozen, expenditure will rise. We should also allow for a rise in demand on health services with this aging demographic. And in education, we will have to spend more just to accommodate the continuing rise in our student numbers.

In other words, we will have to spend more on pensions, health and education just to stand still. When this is factored in, there will need to be additional cuts in other expenditure – in other public services, social protection programmes and investment projects.

We are heading into a period of semi-permanent austerity. Why, if by 2015 we have reached the Maastricht target and when employment and economic growth will continue to reduce deficit and debt levels? The Government gives two clues. First:

‘Ireland is on track to correct its excessive deficit by 2015. Thereafter, the public finances in Ireland will no longer be subject to the corrective arm of the Stability and Growth Pact (i.e. the Maastricht guidelines) but subject to the requirements of the preventive arm and the Treaty on Stability, Co-ordination and Governance (the ‘fiscal compact’).’

Ah, the Fiscal Treaty; remember those debates – how Government ministers insisted that compliance with the pact would not necessitate further austerity? We climb one hill only to find there are more hills to climb.

Second, the Government seems determined to drive the budget balance down to zero and then into surplus. In other words, we will be taking in more money than we are spending by 2019. Now there’s nothing wrong with a balanced budget at the appropriate time. But the Government’s scenario estimates (and to be clear, this is not a projection) that unemployment will be 11 percent. How could anyone imagine any scenario where you run a budget surplus with double-digit unemployment?

Is a balanced budget necessary to reduce debt per the fiscal treaty? No – this is an issue we will revisit in a subsequent post.

This is the future that some Government Ministers are planning. After destroying our social and economic infrastructure with irrational austerity policies, what is next? Continuing austerity amidst the ruins.

That’s the current scenario – unless we work for something different; different than what has happened in the past, and different than what is being planned for us in the future.

via Irish Left Review | Never-Ending Austerity Amidst the Ruins.

Here’s how to protect your bank deposits in this unsettled economy

IF THERE IS one topic that I get asked questions on more than any other it is in the area of bank deposits, the Deposit Protection Guarantee Scheme (DGS) and Deposit Interest Rates. The first answer I always give is that we should worry about the areas we can control, and ignore things that we cannot control.

Reading and discussing economic and investment updates seems to have replaced past discussions on property values and everyone seems to have an opinion on the Bank Guarantee, Euro Stability, Yen Devaluation and German Government Bond Yield. In reality, the investment world is very simple, but investment managers, stockbrokers and economists make their living from selling fear, greed and excitement in equal doses!

€150 million is on deposit in Irish banks

To set the scene, there is over €150 billion on deposit in customer deposit accounts in Irish Banks as of February 2013. This figure has been steadily falling ever since the banking crisis began in the summer of 2008, but is still a significant figure.

At that time, the Irish Government introduced the Eligible Liabilities Guarantee (ELG) which covered all deposits and some bonds in Irish covered institutions, in their entirety. I won’t cover the merits or otherwise of this blanket guarantee, or whether they were forced into it by higher powers. However, the ELG did give Irish depositors some comfort that all of their hard earned savings were fully guaranteed by the Government, and at the end of the day, the European institutions.

This comfort was taken away at the end of March when the ELG expired and we reverted to the historic guarantee. This guarantees €100,000 per institution. Therefore any individual who has a deposit with a covered institution with a balance under €100,000 can take some amount of comfort in a government guarantee.

If you’re lucky to have over €100,000, you should protect it

This does cause some confusion for individuals with multiple accounts, as the guarantee is per ‘institution’ not per account. For example, if an individual is lucky enough to have a savings deposit with AIB for €100,000, and also a portion of their pension on deposit with AIB for another €150,000, these accounts are taken in aggregate and only €100,000 of the combined balance (€250,000) is guaranteed)

Most sensible individuals are now rightly worried about the security of their cash and how to mitigate all the risks associated with savings and investments at the moment.

While I don’t personally believe the European Institutions or the Irish Government will default on their guarantee, recent news in Cyprus has, at least partially, brought this possibility into focus. It is clear that spreading deposits around the guaranteed banks and keeping exposure to any one bank below €100,000 is the obvious way to reduce this risk to a minimum

The threat to people’s deposits

Since banks have had some success with recent bond issues and seem to be stabilising, deposit rates have fallen significantly. There were wide spread offers during the summer of 2012 for 5 Year Fixed Deposits earning over 5 per cent. The best rate on the market as of the time of writing is now 2.75 per cent (excluding specialist accounts with Danske Bank).

This return, after DIRT is deducted, will only just beat inflation and I see this as being a larger threat to people’s deposits over the long term than any short term default risk. However, inflation never gets the headlines and is an invidious threat which is hard to understand in the short term.

The only true way to protect you from risks is to be widely diversified across a whole range of asset classes. €150 billion on deposit in Ireland would indicate to me that we are over-invested in cash at the moment, just as we were over-invested in property and Irish Equities in 2007.

Diversifying is the only way to protect your cash

In the long run, well managed and well protected portfolios never have too much in any one asset class. I would recommend assistance from a professional (ideally from a Fee Based Financial Advisor) before deciding exactly how to invest in a widely diversified portfolio but it’s the only way to truly protect against all the threats to our wealth and wellbeing in the current economic environment.

My biggest fear for Irish Investors and any of those individuals sitting on large deposits is that as the interest rates keep falling, they will become more and more restless. Equity markets have been on a fairly steady bull run since the market bottom in March 2009. The US indices are at or above all-time highs and this strong short term past performance might tempt some of these depositors to finally leap back into the markets.

I don’t know what is going to happen, but I would be nervous about equity markets at their current valuations and can easily see a correction in the second half of 2013. As markets keep going up, the risks of this correction keep getting larger and I just hope Irish depositors don’t’ get caught out by the markets again.

In summary then, the only way to reduce risk is to diversify. At a minimum this diversification should be across all the guaranteed banks, and for funds with a long term focus, diversification into other asset classes is ideal.

David Quinn is the Managing Director of Investwise.ie. Established in 1988, Investwise is the trading name of Fitzpatrick Morris Financial Services Limited. With years of experience in the financial industry, they offer independent services and advice on a range of financial matters.

via Column: Here’s how to protect your bank deposits in this unsettled economy.

via Column: Here’s how to protect your bank deposits in this unsettled economy.

The Future for Irish Politics

 

Where we are now

We are entering the sixth year of recession which is being managed by a coalition of Fianna Gael and Labour who were elected on policies they have now reneged on. Prior to the election that put them in power Fianna Fail had been in Government for over a decade and managed to turn the Celtic Tiger economy into an economy that has been so badly managed that it has bankrupted the country for decades to come.

The only national party left is Sinn Fein who have a tainted past and no experience of government in the Republic.

We are now at the point where there is no suitable party to elect….

and even if there was, there is 3 years to go before the next election..

We have exhausted all current political options.

The Irish people voted and gave a clear and strong mandate to the Government and the Government has deliberately turned its back on  the will of the people.

The Future

suggest we rethink politics in Ireland and I have a suggestion of what the way forward should be. We are now moving into an era when technology can transform the way people are governed and can offer an avenue for the government of the day to connect directly with the people they govern.

Dispense with full time politicians and parliaments except for those who make up the Government of the day.

Introduce a Peoples Assembly that is a forum for the debate of policies before we, the people vote. Those attending will be people with interest in the policies being voted on that week. The assembly is televised and streamed live on the internet. Anyone can attend with a weeks notice. The Assembly can move around the country. I envisage that it will be a continuously changing population that will attend as the topics being voted on will vary wildly week from week.

Place policy decision making in the direct hands of the people who will vote via unique electronic voting cards (similar to bank cards) once a week on matters of policy only. People may vote online, by phone or via email/ post. For better or worse the people will decide if they wish to have abortion in Ireland, property tax without regard to ability to pay, water taxes, stay in the EU, stiffing the bondholders, cancelling public service giant pensions etc.

Policy details are worked out by the Civil Servants who meet with interested parties to thrash the finer details.

The Government will be a suite of ministers appointed annually by the people to carry out the policies passed in the People Assembly. It is largely a position of honour and ministers will be modestly remunerated for that year and will return to being ordinary citizens at the end of their term of office. These minister’s employers will have undertaken to keep their jobs open for them to return to at the end of their year in office.

Action:

Dismiss the present political parties and politicians

We can ask the politicians to resign or present the Government with a petition signed by a million Irish residents demanding them all to resign.

The petition must be of a size that cannot ignored.

via The Future for Irish Politics | Markjrice’s Blog.

via The Future for Irish Politics | Markjrice’s Blog.

New Food Scandal

The Government advised today that it has come to light that Fish Fingers contain no fingers.

Minister Simon Coveney on release of this news stated this revelation came as a bolt out of the blue to him.

The minister stated that his department had looked at many photos of fish and that they have yet to find a fish with fingers.

He then rather oddly stated this investigation had been on going for a number of years and that the total cost for the investigation came up just short of a hundred million. Due to the fact that the figure was under the hundred million mark the Minister felt the taxpayer had got good value for money.

The Minister has ordered an immediate withdrawal of all bogus fish fingers from retail outlets. He went on to state no horse meat or beef was found in the bogus fingers 

Is Politics dead in Ireland?

Politics is dead in the Irish Republic. The Irish parliament, the Dail, is now little more than a rubber stamp for the Troika, the generic name for the European Central Bank, the International Monetary Fund, and the European Union, the three powers to which the country is in hock.

Things are bad. Ireland’s debt to GDP ratio is set to reach 122 percent in 2013, above the 120 percent threshold the IMF considers unsustainable. The total debt of the country, according to an Irish Times report, is €192 billion, four times what it was in 2007, with a projected need to borrow a further €34 billion before 2015.

The fact is that Ireland is technically cash-flow insolvent. The country simply doesn’t have the revenue to fund the day to day running of the state. And the projections are for continued borrowing for years to come, with a hope – it can be little more than a hope –that somehow, miraculously, the economy will return to growth.

But with little or no sign of that desperately needed economic growth, emigration of graduates and the unemployed is about the only welfare relief the country has – and at a terrible economic and demographic cost to the future of the state.

Over the past year, 87,000 people left Ireland for countries far afield such as Australia, Canada, and the UK, countries that are now reaping the benefits of Ireland’s expensive-to-educate graduates and tradesmen.

Yet fascinatingly, as those 87,000 people leave the country to find work abroad, the number of immigrants entering the country was steady at 52,700, with 12,400 of these from non-EU countries.

This glaring anomaly of educated and skilled people leaving because of unemployment, being replaced by typically low-skilled immigrants, is not mentioned by the political class. It is mentioned on the streets of Dublin, often in great anger, but no politician will touch it. Political correctness along with the Troika now rule the Irish state.

So even in the midst of financial Armageddon, the numbers entering the country continue at Celtic Tiger levels. Ireland’s welfare entitlements are still very generous, and on any common-sense view of human nature would attract takers. And that seems to be what’s happening.

In north Dublin, for example, over half the applicants for social housing are from immigrants, with over 43 percent of the total being lone parents. While waiting to be housed, all social housing applicants receive rent allowance, with the result that over half of all residential rents in the country are now paid for by the state, or more accurately by the few remaining tax payers.

This socialist policy of state housing support is a lucrative business. One Dublin landlord received €620,000 last year in rent subsidies. On the back of socialist welfare policies, landlords are building wealthy property portfolios – all paid for by the Irish tax payer.

One local councillor from north Dublin broke the rigidly enforced political correctness by talking about ‘welfare tourism’, but quickly back-pedalled and qualified his remark by repeating the well established liberal mantra of how Ireland ‘needs immigrants.’

So what, if anything, is the Irish government doing about this unsustainable mess, apart from drawing lucrative salaries and gold-plated pensions? The Taoiseach (Prime Minister) Enda Kenny is paid more than David Cameron.

Economically the Troika is in charge, and the recent austerity budget – which imposed a swingeing property tax on householders, many of whom are in negative equity – was designed largely to facilitate repaying the country’s debt. The government doesn’t have much option here. It simply has to do what it is told by the Brussels apparatchiks.

The Irish political class, in effect, are reduced to being managers working for the Troika, and there’s virtually no serious political debate in the country about any alternative, such as leaving the euro and devaluing. All political parties, both left and right, give absolute and unconditional support to the euro project.

As Nigel Farage said on Irish radio a few months ago, Irish politicians are “the good boys of Europe. Brussels says jump and the Irish say how high.”

Such Brussels worship is unique in the EU. In the UK for example, as in France and other EU states, there is some degree of rational opposition to the EU and to the euro single currency, and these issues often split along left and right lines. There’s no such split in the Irish body politic.

But there is one, highly contentious issue where the Irish political class has dug in and taken a stand – Irish corporation tax rate.

Ireland has one of the lowest corporation tax rates in the EU, at 12.5 percent. This makes the Irish Republic a major corporate tax haven, competing with places such as the Cayman Islands. Many large corporations, including Mit Romney’s Bain Capital Private Equity, use Ireland as a corporate base for tax purposes.

There is unanimous support for this beggar-thy-neighbour policy right across the Irish political spectrum – and for good reason. Thanks to its much resented tax haven status, Ireland pulls in large tax revenues that account for an Irish share of global profits hugely disproportionate to the size of the economy.

But the country risks becoming a pariah state over the issue. Many countries in the EU, particularly the French, are furious at Ireland’s tax haven status. They claim companies such as Google use transfer pricing – routing profits from high tax to low tax jurisdictions – that benefits Ireland and takes from the French exchequer.

With such fierce opposition, it’s difficult to see how the Irish can, in the long run, hold out against French demands for change. So even on the issue of setting its own corporation tax rate, it looks like the Irish political class will eventually have to concede to the power of Brussels. When that happens, along with closer political union, many argue there will be little need for an independent Irish parliament.

Vincent Cooper is a freelance writer

via A redundant political class in Ireland – The Commentator.

via A redundant political class in Ireland – The Commentator.

Paying €3.1bn for Anglo note ‘difficult’ – Noonan

 

Any bets on what is going to happen in this situation. I have a bad feeling this is leading in the direction of Johnny Citizen.

Will we have a special tax to pay off this installment? 

Minister for Finance Michael Noonan has told the Dáil it would be “difficult” for Ireland to pay the next €3.1 billion installment of the promissory notes due at the end of March.

However Mr Noonan said he was “still confident of a positive outcome” to negotiations with the ECB.

He was responded to a question from Sinn Féin‘s Pearse Doherty, who said the State was not in a position to pay the €3.1bn and the Government should tell the ECB that.

He referred to the negotiations as “pussyfooting” and said Ireland should be seeking a write-down of debt, not an extension of the term for paying it back.

Mr Doherty also asked for details of whether the ECB had rejected a proposal, if an alternative proposal would be ready for the next meeting of the ECB board; and what the Government would regard as a satisfactory outcome.

Mr Noonan said it would not be helpful to go into detail, and accused Sinn Féin of positioning itself to reject whatever deal was agreed.

He reiterated his expectation of a deal on the note in the coming weeks and said it was his belief that the Government will get a satisfactory arrangement by the 31 March deadline.

via Paying €3.1bn for Anglo note ‘difficult’ – Noonan – RTÉ News.

Ireland’s economic chickens come home to roost

This article looks at the failure of successive governments to make full use of the natural resources of Ireland leading to the current strategy of heaping more and more new taxation upon the Irish people to make up for their loss of income

Since the formation of the Irish State in 1922, financial sources for the maintenance and development of the state as an independent entity have been in decline. This has arisen through Ireland’s joining the EEC in 1973 and subsequent Treaties of the EU, to successive governments’ neo-liberal economic policies that gradually reduced the role and income of the state. Contributing to these problems was the loss of fiscal autonomy when Ireland joined the eurozone in 2002.

Sources of income such as customs duties and charges, fisheries, agriculture, oil and gas, and minerals were all affected in different ways, leaving the increasing taxation of the people as the main plank of the government’s policy to extricate itself from the economic crisis. Since the banking crisis of 2008, government borrowing [1] has increased the national debt [2] from € 50.4 billion to € 119.1 billion in 2011, more than doubling it in a few short years.

Fisheries

The establishment of a customs union (a free trade area with a common external tariff) was one of the main aims of the EEC. On joining the EEC in 1973, the Irish government lost import duties as a source of income from its main trading partners. Three years later, in 1976, the EEC extended its fishing waters from 12 miles to 200 miles under the Common Fisheries Policy [3] when it was agreed that fishermen from any state should have access to all waters. Thus, while Ireland owns 23% of the fishing waters [4] in Europe, it is only allowed 3% of the European fish trade quota. [5]

Agriculture

Since joining the EEC there has been ongoing change in Irish farming [6] but “with fewer and larger farms, less employment, more specialisation and concentration of production and growth in part-time farming” yet “agricultural output remains at about the level of 20 years ago”. As a source of employment farming has been in decline for a long time, about 24 per cent in the period from 1980 to 1991 and a further 17 per cent between 1991 and 2000. Recent demonstrations by farming families in Dublin have shown the negative effect of government cutbacks, increased costs and taxes. According to a recent Irish Times [7] article, “the protest was called to highlight concerns about planned reforms to the Common Agricultural Policy and the upcoming budget. It also highlighted the margins being taken by supermarket chains at the expense of farmers. Placard messages included ‘No Cap cuts; no farm cuts; no extra costs; regulate the retailers.’”

Forestry

More short-sighted policies can be seen in reports [8] that the State is “also considering selling off some assets of the forestry body Coillte (The Irish Forestry Board)” to private investors. Coillte [9] was established under the Forestry Act 1988, and the company is a private limited company registered under and subject to the Companies Acts 1963-86. All of the shares in the company are held by the Minister for Agriculture, Fisheries and Food and the Minister for Finance on behalf of the Irish State. Profits have increased from a loss of €438K (1989) to profits of €4.2 million (2009). Moreover, the company [10] employs approx 1,100 people and owns over 445,000 hectares of land, about 7% of the land cover of Ireland.

More state assets

In the same article, [11] plans to sell off other state assets such as parts of Bord Gáis (Gas Board) and ESB (Electricity Supply Board) and “its 25 per cent shareholding in Aer Lingus” were also being considered.

According to Sinn Féin’s deputy leader and spokesperson for public expenditure and reform, Mary Lou McDonald, [12] “Both the ESB and Bord Gáis are wealth generating self-financing companies that have invested heavily in first world energy infrastructure across the island and created thousands of good jobs benefiting hundreds of thousands of families over the decades”. She added, ““Fine Gael and Labour’s decision to treat the profitable elements of these companies as a cash cow for bank debt reduction makes no economic sense and reflects the kind of short term policy and political decision making that got us into this economic mess in the first place.”

Mining

The extent to which the Irish Government has bent over backwards to attract foreign investment in mining – and in the process delimit its share of potential income – can be seen in an extract from a Government Report [13] titled ‘Land of Mineral Opportunities’, [14] published in May 2006. “Tax incentives relevant to exploration and mining in Ireland include:

*No State Shareholding in the Project and No Royalties are Payable to the State.

*Immediate write-off of development and exploration expenditure

*Corporation Tax of 25 percent (reducing to 12.5% for downstream manufacturing)

*Capital Allowance of up to 120 percent

*Expenditure on rehabilitation of mine sites after closure is tax-deductible

*There are no restrictions on foreign investment in Ireland,

*There are no restrictions with capital repatriation from the State.”

Oil and Natural Gas

Over the past 15 years gas and oil [15] have been discovered under Irish waters in the Atlantic [16] Ocean. However, the government’s “Minister Ray Burke (later jailed for corruption) changed the law in 1987, reducing the State’s share in our offshore oil and gas from 50% to zero and abolishing royalties. In 1992, Minister Bertie Ahern reduced the tax rate for the profits made from the sale of these resources from 50% to 25%.” In May of this year [2012], an article [17] by economist Colm Rapple stated that a committee that included 12 TDs [MPs] and senators from Government parties and nine from the opposition thought that “the terms at which we give away rights to potential offshore oil and gas reserves are far too generous. […] They want far tougher terms applied to all new licences.”

2016

So how will the government square this dismal history of giveaways with the upcoming centenary of the 1916 Rising in 2016, an attempted revolution which was initiated with a proclamation [18] read out in the centre of Dublin declaring “the right of the people of Ireland to the ownership of Ireland, and to the unfettered control of Irish destinies, to be sovereign and indefeasible. The long usurpation of that right by a foreign people and government has not extinguished the right, nor can it ever be extinguished except by the destruction of the Irish people.”

This declaration was followed up in 1922 with The Constitution [19] of the Irish Free State (Saorstát Eireann) Act, 1922 which stated in Article 11 that “All the lands and waters, mines and minerals, within the territory of the Irish Free State hitherto vested in the State, or any department thereof, or held for the public use or benefit, and also all the natural resources of the same territory (including the air and all forms of potential energy), and also all royalties and franchises within that territory shall, from and after the date of the coming into operation of this constitution, belong to the Irish Free State”.

The future?

There seems to be no limit to the government’s sticky fingers. The National Pensions Reserve Fund [20] has seen its total value reduce from €24.4 billion in 2010 [21] to € 15.1 billion in 2012 with €20.7 billion of the fund [22] spent on preference shares and ordinary shares in Allied Irish Banks and Bank of Ireland since 2009. As the government props up the banks and pays off unsecured bondholders, it is likely that the forthcoming significant national commemorations will refocus the Irish people on past conceptions of national democracy. Chicken, anybody?

via Ireland’s economic chickens come home to roost – Indymedia Ireland.

via Ireland’s economic chickens come home to roost – Indymedia Ireland.

Is Michael Noonan the Supreme Master of Waffle?

The most brilliant response to a parliamentary question ever!

Remember the €1.1bn that AIB shoveled into its pension scheme to plug a deficit that prompted all those headlines two weeks ago? A simple question – when the banks were stress-tested in 2011, was this €1.1bn deficit identified in an exercise that cost us about €30m in consultancy fees? The short answer is no, this €1.1bn deficit wasn’t specifically identified in the final report for the stress testing but it remains unclear if a deficit of this magnitude was considered or included in either the base or adverse scenario.

But when asked* in the Dail yesterday, this is Minister Noonan’s response (I’ve read this carefully several times, and it’s still hilarious how it manages to avoid answering the question*):

Minister for Finance, Michael Noonan : The Central Bank has informed me that the Capital Requirements Directive and the Central Bank set the rules around the calculation of the applicable capital base for credit institutions. These rules include reference to defined benefit pension deficits as these can affect the capital base of regulated entities.

In a letter from the Financial Regulator to industry in 2005, banks were informed that those applying IAS 19/FRS 17 are allowed to add back to Tier 1 Capital the amount of the defined benefit pension liability that has accrued in relation to Irish pension schemes in their financial statements and to deduct an amount equal to the sum of (i) the Deficit under the Minimum Funding Requirement plus (ii) three years Supplementary Contributions. A subsequent letter issued by the Financial Regulator in 2009 amended the treatment of the Deficit under the Minimum Funding Requirement element such that credit institutions were required to include at least the Minimum Funding Requirement in its calculation of pension risk under Pillar 2 capital calculations.

The draft Capital Requirements Regulation (CRR) requires the removal of most prudential filters, including the Irish DB scheme pension filter detailed above. Article 461 of the draft CRR, relating to transitional provisions, provides for regulated entities to apply a phased approach to filters and deductions “required under national transposition measures for Articles 57, 61, 63, 63a and 66 of Directive 2006/48/EC” with a five year implementation period. The transitional provisions are the subject of on-going negotiation between the European Parliament (EP) and Council.

The capital base and capital requirements of the PCAR banks were assessed under PCAR and included in this assessment was forecast deductions for defined benefit pension deficits and subsequent capital filters under base and stress scenarios. The FMP report did not disclose details of the assumed levels of deduction for pension deficits. The focus on the PCAR was the forecast income, capital requirements and losses (particularly loan losses) in the three-year period.

The Central Bank included in the PCAR the forecast deduction for defined benefit pension deficits and subsequent capital filters under base and stress scenarios. In addition the Central Bank considered the implications of Basel III (namely CRD IV/ CRR). The PCAR tolerance levels and capital basis were set in accordance with the Central Bank’s definition of Core Tier 1 under the prevailing Capital Requirements Directive rules as at end-March 2011.

It is important to note, that the quality of capital in the Irish banking system has increased significantly as a result of lower tier capital buy backs and Government equity contributions. Whilst it is clear that the Basel III rules impose more conservative deductions than is currently the case, following a recapitalisation to levels determined by the 2011 PCAR, the FMP report stated that all four banks should comfortably meet Basel III Common Equity Tier 1 ratio on a phase-in basis under both the base case and stress case scenarios. The combined surplus to the minimum phase-in Common Equity Tier 1 under the PCAR base case under PCAR was estimated at the time as circa 13.3bn and 3.7bn under the stress case. Three of the banks would also meet the full 2019 minimum standard in the 2013 base case scenario.

*Deputy Pearse Doherty: To ask the Minister for Finance in respect of the €1.1billion top-up made by Allied Irish Banks to the group pension scheme in August 2012, if he will identify in the stress testing undertaken by the Central Bank of Ireland with Barclays Capital, BlackRock and the Boston Consulting Group in early 2011 which resulted in the publication of the Financial Measures Programme on 31st March 2011, where, in this work was the €1.1billion shortfall in the AIB pension fund examined or identified.

via NAMA Wine Lake.

via NAMA Wine Lake.

Mise Éire (I am Ireland)

The Republic of Decay, a place now so dire that even the monkeys decline offers of bananas.

The three pillars of the Establishment, the financial institutions, the political organizations and the Church stagger on unwittingly oblivious to the realities of life. Their epicurean menu is corruption, lies, arrogance, greed, sleaze, sodomy, deceit, nepotism, distortion of the truth, gross incompetence. The list can go on and on forever.

When can they learn to tell their Citizens something that resembles the truth?

Observe them.

The Financial Institutions: The Dracula’s of nowhere sucking the nation’s blood dry- The crutch of capitalism-that an inherently unstable system which periodically falls off the rails and when it does who pays? Well, the 2% who control the wealth do not. The payees are as always the inevitable underclass.

Their level of incompetence defies belief.

Take, for example, simple basic maths, Division, addition, multiplication, subtraction, for short DAMS. Well, the boys from Dams appear to have come up with a “constant” that allows their cash shortfall figures to spiral upwards on a never-ending charge of woe. Right now, it is not in their interest to stick a finger in the dam to restrain the flow. Do we take it; they do not understand simple maths or are they pulling the wool over our eyes? D.A.M.S is an acronym for a shadowy group known as the as the drawee artistic math’s society? This group of people is found in the highest echelons of business and normally operate at a level above that of the Golden circle. Figuratively speaking these people can paint any picture they wish but primarily their drawings are to their own advantage. These avaricious bastards would skim cash off the bones of a dead rat, but they will never get their fingers dirty.

The Church: This Frankenstein Monster lends solace to the fiends of banking, shares its virgin but sexually satisfied bed with both government and Bourgeoisie and in the meantime buggers the children of the poor and expects the state to pay for their criminal enjoyment and the state duly obliges.

The Political Organizations have become a collective of brain-dead zombies. Their place of residence is a mausoleum called Sinisterhouse house, which serves as the Rotten Island Parliament building.

The primary function of these humourless dead beats is looking after their own self-interest, which takes up seventy-five percent of their time.

Taking care of the interests of the financial institutions takes another twenty percent of their time.

Performing minor functions- like proposing bills to erect streetlights in the two-horse village of Ballysilly and to fill potholes in marginal electoral areas, this takes up a tiresome 5% of their time.

To be a member of this collective, no qualifications are required, but it does help if you understand the term the gravy train. Those currently in Government amply illustrate this where few ministers have any credentials whatsoever for doing there jobs.

Le Grand Dame, The sex symbol of the parliament  is the leader of this group.

This entity makes bullish attempts to explain that the country’s economy is on the road to recovery, this notion relates to nothing more than his careful consideration. His only notable achievement is impoverished thinking based on the mantra; all will be well?

The entity prays fervently every day for economic miracles.

He has visions of the Sherkels and Dragi flapping their wings over the skies of Rotten Island where they shower the country with a deluge of monetary bills that astonishingly transform the country into a fictionally, financially viable sensation. He will proclaim these events to be a miracle of his own making, he will ask us to admire the quality and wonderment of his efforts. This entity has disturbed fantasies of success, which are always just around the corner.

This leader of our illustrious small nation bestows on himself the honour of being the highest paid Prime Ministers in the world with a take home check greater than any other leader. To augment his Government, he has a drone army of civil servants, who are the most highly paid in the world and ironically turn out to be the least productive. A talent that his compatible to that of their leader

He has huffed and he has puffed, but he still does not comprehend that the house is already a busted flush.

That dear citizen is Rotten Island today a golden triangle of cognasty, a three-headed dog of darkness. No figurehead to rally behind, no Orpheus to lead us out of this triangulated underworld, no Che Guevara to kick-start a revolution, no rising star to guide us into the future.

Part 2

JOHNNY CITIZEN

Johnny Citizen: Where does he fit in, well he is the lamb who is there to be fleeced?

He pays the bankers bills.

He pays the church bills.

He pays the Government bills.

Moreover, he will pay for anything else the ghouls will screw up now and in the future.

Why is Johnny citizen so sheepish? Short and simple, he abandoned his protectors the trade unions. His living standards improved. He suffered the illusion of getting fat and rich on an enduring monetary upward rocket. He played golf, and he had his overseas holidays to exotic places. He inflated himself with notions of self-importance.

He drinks XO brandy in his local bar and guffaws with his friends, sure wasn’t it far away from this we were raised, whilst a glow of self-satisfaction crosses his face. When foreign workers came to fill low paid jobs, he developed a xenophobic state of mind, something he understands well. Why as an immigrant youth did he not suffer xenophobia from the hands of the foreigner? Even so, he will maintain he was a worker. The assortment coming to our beloved shores nowadays is nothing but a bunch of scroungers and malingers. He will assert that the Government must put a halt to this inward flow of migrant spongers. As things fell apart in his esteemed homeland, he failed to notice that the hard-working idlers were first to leave to seek work elsewhere, which contributes to a reduced tax, take which in turn Johnny will have to make up.

What are the prospects for his children? They are in the stew pot; they are the future fodder for the controllers of capital to devour and spit out at will.

What hope can he have, not much?

However, what happens if Johnny citizen wakes up from his slumbers? If he is sharp, he will link chains of events together, he will have questions, he will want answers, and of course, he will request down to earth solutions to uncomplicated problems.

He will question why he is paying the outlandish bankers debt.

He will swiftly conclude, that the notion he should do so is preposterous.

Moreover, he will state in a loud voice.

The bankers lent money, which they did not have in the first place, to people who did not have the resources to pay it back.

This is reckless trading, which is an offence-Off to jail with them.

Better, still off with their heads

He will question how the Government of his dearly beloved fatherland could make a deal with the church of pederasts who cruelly and callously buggered the children of his native land.

He will conclude, that the concept that he should pay, is unbelievable.

In addition, he will state in a loud voice. The full rigor of the law must apply to these fiends.

The crimes of the Frankenstein church are hideous. Off to Jail with them, better still off with their heads. He will question how our Politicians and civil servants contrived to make such a mess of our cherished Republic that became the envy of many. A nation held up as a shinning example to emerging states now derided and cruelly laughed at by the nations of the world.

He has observed former double-dealing Prime ministers questioned in the dock over misdeeds, which they strenuously denied, but were even the mongrel dogs in the street knew they were lying through their teeth. He will have seen friends and cohorts of these people questioned by the law.

He will conclude, self-interest coupled with corruption was the name of their game.

He will holler –

These people failed in their duty to represent us, corruption and self-interest were rife.

Off to jail with them all, better still off with their heads.

Johnny citizen will have noticed that those who controlled the money represented less than two percent of the population. He will comprehend that the gap between those with capital and those with limited money had not narrowed at all. For the money the statues quo remains, control of capital is God.

Our citizen friend now realizes his lot is to be nothing more than to be the bonded serf of capitalism.

He comprehends with a heaviness of mind that the free market reduces everything to matters of money and thus exploitation, Direct, brutal, blatant. Our citizen is now a commodified extinction to the machines of capitalism. He is the disposable part of the equation. He will deduce, construe that once we learn how to control the monarchy of capital and production, we are then on our way to a better life. He will postulate there must be a greater division of wealth; it can no longer be the preserve of a tiny minority. Governments must control this; it must be for the benefit of the citizens? Pervasive social corruption must cease. As he reads and researchers, he begins to understand the injustices of the system as applied to the working person.

He will learn that of the world’s top 100 economies based on GDP That fifty-one of them are corporations and are not countries. He will see and understand quite quickly the dangers these people pose to the illusion of his freedom.

He will learn that corruption is rife in these companies.

He will learn that business is not ethical and decent.

He will learn that industry does not care for its workers.

He will learn that the well-being of the people is secondary to monetary gain.

He will learn that much of industry out source’s production to the cheapest labour point. He will realize his job is no more than a movable commodity.

He will learn that the result of all of this is wealth consolidation, communal stratification, labour abuse and exploitation, Tactical corruption. He will realize that he is witnessing a form of covert dictatorship by the rich.

He will learn not to trust people in the system.

He will learn that the number of poor people in the world increases daily.

He will learn that the worker’s lot is a miserable lot.

He will learn that as each day passes the national depth of our sovereign country increases, and he knows and expects further tax demands on his income. He speculates on the percentage of the nation’s resources spent on servicing the nation’s debt. He foresees disaster.

He will learn that if we get out of the current predicament that the cycle of bust and boom is likely to intensify due to the mechanisms of the banking system.

Our good friend Johnny citizen compiles endless lists, which he uses as conversation pieces when he discusses the affairs of the nation. He converses with his friends in the pubs, hotel lobbies, eateries and the fun palaces of the land. Each conversation inevitably ends with the expression, well fuck the lot of them, what can we do about it?

Our friend has at least verbally expressed himself. He is most likely fated never to play a part in altering the system but perhaps; just maybe he did plant a few acorns in heads that someday, might grow.

What happens to Johnny Citizen? Does he disappear into foggy shadows will he survive? Does anyone care?

Copyright John Foley