Tag Archives: Tony Groves

Tony Groves

In a land far, far away and in a time long, long ago there was a financial liquidity crisis. Now, the Banks, who were the pillars of this land, knew there was a problem. But they didn’t want to scare the All Powerful Boss, Mr Market.

No matter what, they had to retain his confidence.

Now the Banks had given out loans to people in what were called Tracker Mortgages. Theses, while things were good, were the engine of the bubble factory. But, when things went bad, these all burst leaving liquidity stains all over the balance sheets.

Luckily a White Knight, in the shape of (their equivalent of the ECB) Interest Rate Increases, rode into rescue our Pillars of Stability.

The Banks, quick as you like, seized on this opportunity and advised holders of Tracker Mortgages to protect themselves against the Rate Increases by signing what they called Fixed Rate Appendices. These were typically of between 3 and 5 years.

The holders availed of these more secure rates in their thousands. Wasn’t it the best advice and sure, didn’t the original loan offer that they had signed say that the Tracker Rate was “the underlying rate for the full term of the mortgage”?

Anyway, the White Knight of Rate Increases turned out to be a fraud. He was blindsided by a Dark Knight who gave himself the ungainly name The Global Financial Crisis, GFC for short.

The GFC went through the Bank’s Balance Sheets faster than Rating Agencies could downgrade Sovereign States. It was carnage. Interest Rates hit historic lows that would make a Trump approval rating seem good.

But remember those Fixed Rate people, with the underlying Tracker Rate?

What to do about them. The Banks were losing money hand over fist. They couldn’t afford to give people the Rates they’d agreed and the State sure didn’t want to have to put more money into the Banks.

I mean, these tens of thousands of people were on an average Rate of 4.75% and the Rate they were entitled to was about 1.15%; the Banks had a problem. Or did they…

You see, some clever clogs devised a way of removing the underlying rate issue. They came up with the “Suite of Options” letter.

This was a letter that went out to people about 30 days BEFORE their Fixed Rate expired. In the “Suite of Options” was a very basic offering:

Dear Sir or Madam,

You’re fixed rate is due to expire on date x

Please see our current rate options:
1yr Fixed at X%
2yr Fixed at X.X%
3yr yada yada
5yr jazz hands
Standard Variable at a little less than the fixed X.X%’s

Please tick the box you like, sign the bottom of the page and send it back to us in the prepaid envelope.

Many Thanks

Mr/Ms Pillar Bank

PS terms and conditions apply and there’s a brochure full of them and small print jargon etc etc. You look great, by the way. Have you lost weight?

So the letter went out and the Tracker Rate never even got included as an option. In fact, the Tracker Rate WAS the Do Nothing Option. If the customer didn’t complete the form their mortgage would automatically revert to the Tracker. This wasn’t in the Suite of Options.

Clever, no? It gets better, in the small print was a condition that allowed the bank to remove the original loan offers Tracker Rate “for the life of the mortgage” condition.

Now we had people, badly advised, voluntarily giving up their Tracker Mortgages, without ever knowing they’d volunteered. Genius, you can’t be up with them Bankers, I tells ya.

I’m not sure what happened next. I’d guess that everybody lived happily ever after.

I did read something about some people losing homes, having heart attacks and committing suicide over something to do with our Banks. But that’s not related to my fictional story. Not even a bit.

Besides, our stuff was just an administrative error? And sure, isn’t a 2 Bed portacabin in Ranelagh going for €600k nowadays. So, we are all sweet.

Aren’t we?

Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly aTrickstersworld

Tony Groves

Tony Groves, financial consultant, noted tweeter and Broadsheeet columnist, is taking part in the Dublin City Marathon at the end of the month in aid of Inner City Helping Homeless (ICHH).

And YOU can sponsor him.

Tony writes:

There’s over 8,000 people homeless, 3,000 of whom are children. Campaigns like #MyNameIs and the work of the volunteers at Inner City Helping Homeless have helped so many.
Please give whatever you can (at link below). It’s really needed and appreciated.

Marathon fundraiser for ICHH (Gofundme)

Tony Groves

I’ve got Man Flu; proper light sensitivity, aches and pains Man Flu. It’s the type of lethal virus that would slay lesser mortals; but not your brave Monday afternoon crank.

I will, perhaps deliriously, snot and splutter my way through this tirade for you, my loyal readers. If I don’t finish this piece remember me fondly.

Many people don’t believe in Man Flu. In fact, several think it’s a male construct designed to deflect from that other rumoured male trait of Mondayitis. As if men, like me, would do something like that.

I assure you that Man Flu is very real, and that the best way to treat it is to moan about it until it relents. It is said that the Witch Doctors and various healers in ancient cultures gained their prominence by complaining about the Man Flu of their people, and driving out the evil spirits.

It is in incoherent state that my mind drifts to tomorrow; Budget Day. Paschal Donohoe will fulfill his life’s ambition by commending his budget to the house and Leo will walk even taller than his 6ft 3” frame allows.

We will all be better off and we will all be worse of. A little bit of everything budget that was supposed to be a €300 million give away is to be a €1 billion a la carte, sure whatever your having yourself, breakfast buffet budget.

As concerning as these budgetary sleights of hand are – not to mention the Celtic Tiger similarities – I’m too fuzzy headed to breakdown numbers at the moment. No, I’m looking at the way this budget is to be delivered.

There’s a media trick, popularised by Fox News, that allows for the placation of people by getting people very riled up. You offer up to the viewers a “fair and balanced” debate, sprinkle in passionate contributors WHILE carefully controling the parameters of the debate.

Think having a panel debate show on Irish TV hosted by 2 people, who work for the same media company, share similar political views and calling it a unique take on events of the day…

This is New Politics and never has that been more clear than this week in the run up to the Budget. The Oppostion, in this case the unofficial Coalition Partner, Fianna Fáil, didn’t even bother putting forward an alternative budget.

Nope, no alternative vision for Ireland from the supposed alternative party of government. Instead, Fianna Fail published a 22 page brochure, 4 were its priorities, 11 were their thoughts on the fiscal environment and 7 (yes 7) were just a reprint of the Confidence and Supply arrangement that they have with Fine Gael.

Think about it, folks. A lively debate hosted by 2 parties with similar views is been pitched as New Politics.

Things don’t get much better on the Left. We had Sinn Féin produce an Alternative Budget. It was derided as Populist and a threat to (the old chestnut of the well paid) attracting talent.
Labour (who speaks of Labour now?) produced an Alternative Budget, borrowing largely from the Sinn Féin proposal and numbers.

Luckily for them, as the acceptable face of the Left, theirs wasn’t greeted with the same scorn as the Shinners, merely ignored.

The Social Democrats went so far as to produce a range of alternatives across the spectrum of economic and social needs. Sadly, as they are but a pebble in the shoe that is kicking our democracy in the arse, they were also widely ignored.

Nope, the only game in town is the Fine Gael/ Fianna Fáil one. The game is no more than a children’s nursery rhyme; the Grand Old Duke of York. There is sure to be marching to the top of the hill; perhaps even up to the precipice.

But don’t be fooled by this brinkmanship, our leaders will be marching back down the hill as quickly as you can say “budgetary concessions”.

A few months back Paschal Donohoe and Leo Varadkar advocated for tax breaks for developers at a industry meeting. Then, when the public got annoyed at the Fianna Fáil suggestion of the very same thing, both men ruled it out and accused Barry Cowen of building a new Galway Tent. New Politics.

To give Fianna Fáil and Fine Gael credit, they’ve done a remarkable job of maintaining the pretense of oppostional democracy. They have also, largely supported by our media, marginalised the voices of real political opposition.

That does not absolve the smaller parties of blame. They’ve had months to get their sh1t together. They’ve failed to make any inroads and have, if polls are to be believed, lost ground.

But we are where we are. Stuck in a TV Studio where 2 men, of similar political views, engage in a lively debate about the topics that don’t matter. They are working assidously to compel us into believing that this is democracy in action; rather than democratic inaction.

As phoney wars go, this Fianna Fáil vs. Fine Gael one is as blatant a fallacy as Man Flu.

Pray for me.

Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly aTrickstersworld

From top: Protest in Catalonia; Tony Groves

The little girl was not impressed. I couldn’t understand what she was saying, but I knew she was annoyed. Why wouldn’t she be, no one likes to be the impromptu party piece at a party you don’t want to be at.

Her parents, and her uncle, were cajoling her. Her father explained to me that she had just returned from two weeks in London and that she had really good English. The girl’s face was half pride, half outrage.

“Talk to our guests” said her mother. Finally, and not with a little defiance, she stepped forward; a tiny little thing, all brown hair and big brown eyes.

“Hello”, I said, with a big eejit grin on my face, thinking that might de-escalate the situation. She didn’t reply. Her parents commanded her “Talk!”

“I know one sentence in English” she said, almost tentatively. Everyone went quiet, a mix of relief and interest. A room of about ten adults turned to watch the little girl. She looked me straight in the eye and seemed to grow about six inches.

“Catalunya Is Not Spain”, she declared.

That was nearly 15 years ago and I couldn’t help thinking of that trip to L’Escala yesterday as I watched the scenes unfold on the streets of the city that I love and think of as my second home.

I have made many friends in the region of Catalunya over the last two decades. Many of them have different views on the secessionist question. All of them agreed that they had the right to vote and express those views.

The Spanish Constitution deemed them criminals. Prime Minister Rajoy hid behind lawyers and legalese. Our leaders, here in Ireland and across the EU, fell silent.

We have a Taoiseach who comments on LCD Soundsystem, but not on the violent suppression of the democratic will of a nascent nation. The EU has limped from the financial crisis, to force feeding austerity, to Brexit and now to looking the other way when stuff, that we criticise Middle Eastern dictators for, happens on the streets of one of the great cities of our Union.

Yesterday, whatever your views, shames us all.

Catalonia has many justifiable reasons to be aggrieved, culturally and economically. Their symbol, in the land of the Bull (Torro), is that of of the Ass (Catalan Donkey). Their sense of oppression is both historic and contemporary.

I am not in favour of Catalonia seceding from Spain, much to the chagrin of my friends. But I fully support their right to decide. Yesterday, friends of mine tried 3 times to vote. They did so eventually, defiantly. I cannot say how many were dissuaded by the brutal acts of police violence.

A friend of mine, who felt fearful of posting some of the images that she was witnessing, WhatsApp’d me throughout the day. I posted many of these to twitter. Some of them have gone across the world; one has been viewed 500k times from my tweet alone.

People saw what happened on the 1st of October 2017. My friend did that.

Another group of friends stood in front of a voting station until the early hours of the morning, afraid that if they left, the police would take the ballot boxes and the votes cast by those who braved the gauntlet would be lost to an Authoritarian Crackdown.

Another story came back to me as well, yesterday. When my Catalan friends were in Dublin a few years back, we all drove up to Glendalough for a day’s hiking. In typical fashion, they were freezing, wrapped in jackets and scarves, while I was basking shorts and a t-shirt. The glorious Irish summer.

As we climbed towards the Poulanass Waterfall we heard a group of Spanish people making their way down. The familiar buzz of voices, a backing track to so many Dublin Bus journeys in the summer months.

As the groups met a few words were politely exchanged. My understanding, a bit better by then, was that pleasantries were exchanged and generalities mentioned. Then, among the Spanish group, a young man asked “Madridista?” – a blunt inquiry as to if you are from Madrid?

“No”, came the reply. “I am a Catalan.” The groups went quiet. The young Spanish man (instinctively?) spat on the ground and we all walked off our separate ways.

I am a Catalan; the very same reply went back to the Madridistas yesterday. It was proclaimed from Figueres down to Tortosa. There’s no putting this toothpaste back in the tube. Madrid can pretend it didn’t happen. But the world saw. On the 1st of October 2017, the world heard the same thing Pablo Casals told the UN in October, 1971, “I am a Catalan”.

And I’m proud to be their friend.

Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly aTrickstersworld

Yesterday: Autonomy

Dublin Half-Marathon medal; Tony Groves

 

Standing on the crowded start line of the Dublin Half Marathon, among the people who get up early in the morning, on Saturday was an interesting experience.

Thousands of people, with all manner of motivations and goals crammed together to run 13.1 miles. It was, to my mind, the very opposite of the echo chamber.

It was a true Republic of Opportunity.

The distance was the same for every participant, the hill at mile 5 treated everyone with the same contempt and the pockmarked roads of North County Dublin had no care for variance of stride or stumble. Real free market capitalism.

The Republic of Opportunity that Taoiseach Leo Varadkar speaks of is very different, his vision is based on the American Dream of Big Business and Foreign Direct Investment. There’s no point going on about how the cyclical path of this journey leads to disaster.

The majority of people are aware that the Republic of Opportunity is a two tier society. They know that government allowed Ireland, 1% of the EU population, to carry the burden of 40% of the Financial Bailout Cost.

Most of us know that our Democratic Representatives chose not to represent us when austerity was the EU medicine on offer and we know they stood up for Apple when they were paying an effective tax rate of 0.05%.

Most of us know about the 8,000 homeless people, the 675,000 on hospital waiting lists and most of us, based on the latest opinion polls, don’t really care.

The unpalatable fact for those of us on the liberal left is that the majority are happy enough with the boom and bust cycle we are trapped in.

Most of us are happy to pretend capitalism didn’t flame out in 2008.

Most of us, and this is the kick in the balls, think the way to avoid the mistakes of the past is to double down on the practises that caused it.

We like the Republic of Opportunity guff because it plays to our ego. It let’s us perpetuate the myth of the self made man. It is both the wealth effect and, what economists call, Subjective Expected Utility Theory in one.

Those with wealth, capital or on the property ladder feel better off; they spend more money and take more risks. Unfortunately, their sense of wealth is subjective to the underlying asset; in Ireland that’s mainly land. Land, as an unproductive asset, is the number one driver of inequality.

The homeless crisis, the rental crisis, the increase of property prices by €500 per week are all related how land is treated in the Republic of Opportunity.

The majority of those with capital must know that the price of their current economic good fortune is paid with the misery of those locked out of the market.

Nor is the Republic of Opportunity solely for the landed class. It is also for the Foreign Direct Investment that drives our ‘Leprechaun Economics’ economy.

Ireland is a great place for FDI and FDI capital. Before, during and after the recession FDI was increasing here.

But this good news story is also a driver of inequality in it’s own way. When you have workers, many of whom get up early in the morning, paying marginal tax rates of 50% and huge Multinational Corporations paying a blended average rate of 2.8% then you have a recipe for conflict.

When you factor in that these FDI companies employ little in the way of indigenous workers and most of the labour is in sales, marketing and legal & accountancy then you’re faced with another problem.

While there’s no official data, it is estimated that almost 80% of Google’s Irish Workforce are from outside of Ireland. As an open borders advocate, this represents a conundrum. Ireland needs more diversity, not less.

But how can the average paid, non FDI, worker compete against a high paid Facebook accountant for the 1 Bed Apartment in the IFSC?

They can’t. But, rather than follow the linkage between a Multinational Company paying 3% in tax and poorly funded social housing issues, it is easier for the fella priced out of the rental market to blame Johnny Foreigner.

There’s a very real risk, at least in Dublin, that a wealthy sector of foreign workers become targets of the anger of inequality. Anger, that should be directed at the establishment, might give rise to the ugliness of racism. You can already see it fraying at the edges, in the comments sections and social media posts.

This is not a kick at the Republic of Opportunity. This is a funeral dirge for the optimism that we’d learn the lessons of the previous crash.

Someone recently pointed out that there’s no point deriding the political figurehead or any political slogan WITHOUT first looking at the electorate.

The outsourcing of democracy via a vote every five years doesn’t absolve the public from responsibility. Sitting in our armchairs, feeling shocked by the latest RTÉ Prime Investigation is not social activism.

Moaning that someone should do something isn’t going to move the Republic of Opportunity mantra closer to an opportunity for all.

The very transient nature of our “democracy”, when viewed through a generational lens, absolves, at least in my eyes, the politicians more than the citizenry.There’s a cheap refrain: “There’s no point voting, sure whoever you vote for don’t the government always get elected?”

The counter (and more truthful response) to that is: “The people get the government they deserve.” Increasing inequality, housing crises and health crises are the responsibility of us all.

You can’t just tick a box every five years and then point fingers for the next 1,824 days. The wasted decade will be truly lost if, as we seem so keen to do, we forget the lessons of the past.

If we want to keep running around in a feudal system, based on haves and have nots, then cry ‘keep the recovery going’ and walk onwards to the looping circuit of the Republic of Opportunity.

Maybe to walk a mile in Leo’s shoes we should all be forced to run 13.1 miles. And just end up where we started from again.

At least I got a medal for my idiocy.

Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly aTrickstersworld

From top: Taoiseach Leo Varadkar at the National Ploughing Championships yesterday; Tony Groves

We are just over the one hundred day mark into the reign of Taoiseach Leo Varadkar and the only substantial change is that the lack of substance is now communicated as a virtue.

Of the core challenges facing the government, we can only say with certainty, that there are certain plans with less than certain outcomes.

There are also more kites floating around than on Dollymount Strand during a Kite Surfing Contest.

One such kite, that flew from the Taoiseach’s lips, was the proposal to convert NAMA into a Housing Development Agency to help tackle the housing crisis.

That this is considered new and innovative, as part of the new and innovative government, is disappointing.

This is, in fact, old news. NAMA has always had the ability to help in tackling the burden of homelessness. NAMA was created, on day one, with the powers to do just that.

Section 2 (iv) and (viii) of the NAMA Act state that the purposes of the establishment of NAMA are:

‘to protect the interests of taxpayers and to contribute to the social and economic development of the state.’

There it is in black and white. NAMA doesn’t need any new powers, it simply needs to be directed to carry out the task for which it was created. NAMA should already be working to “contribute to the social and economic development of the state”.

The kite of getting them to do so now is not new and innovative. The question, that sadly is not being asked, of this government is, Why Haven’t You Done This Already?

Fine Gael are in power since 2011, for them to not have even suggested this before can only be negligence and/or an ideological choice.

There is nothing new in putting markets before people. There is nothing innovative in falling asleep at the wheel.

The argument that they couldn’t have seen this crisis coming doesn’t hold up either. As early as 2013, the then Minister for Housing Jan O’Sullivan said:

“Homelessness is an affront to every value that we assign to the concept of citizenship. In a real republic there is an onus on us all to ensure that all citizens have a place they can call home”.

Sadly, there’s not much room for optimism. When Leo spoke of the NAMA possibility he was quickly shut down by his ‘handlers’ and further explorations were closed to questioning.

NAMA is part, and have been part, of discussions on the housing crisis for years now. Foisting it on them now isn’t a solution. NAMA ha shown no desire to enter the “contributing to the social development” stage of their remit.

Leo, who has a history of saying “it was like that when I got here”, needs to step away from the PR for a few hours.

He has said funding isn’t an issue, great. Issue the funds Taoiseach.

Give the Local Authorities the responsibility to get on with building. Make the Department of Housing, and your good friend Minister Eoghan Murphy, responsible for removing roadblocks and expediting building.

Support the Non Governmental Organisations who are on the front line, taking the flack that six years of Fine Gael government has had a hand in creating.

Make the Local Authorities, the Department and the Minister accountable. Do what Section 2 (viii) of the NAMA act says: contribute to the social development of the state; not just the social media side of things.

Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly aTrickstersworld

From top: 1 Taoiseach Leo Varadkar at a final press conference on Day 2 of the Fine Gael Autumn Think-In in Clonmel in County Tipperary.; Tony Groves

Democracy; a small Greek start up, weaponised by the Romans, Exported by Britain, Commodified in the United States of America, Mis-sold in the Middle East and downgraded to a Global Corporatocracy via an iOS update.

So this is where we are.

In the early part of the 20th Century the West sent out armies and proxy armies to stop the spread of democracy in countries whose natural resources they were hollowing out.

Nowadays, the West is promoting democracy into these places. Not because the West has changed, but rather that democracy itself has.

For months a quote, attributed to Wolfgang Schäuble, has been pissing me off. It goes “Democracy is fine, as long as it doesn’t change anything”.

You see, it is this single line that succinctly sums up the health of what once meant People (Demos) Power (Kratos). Democracy is now the term for the unaccountable and the unaccounted.

In the West it disempowers national governments; forcing murderous austerity on people in order to protect markets.

Whereas in the developing world (a horrible term) it is used to tap into cheap labour forces and devour what natural resources are left.

Rent-Seeking is the economic process of increasing your wealth without creating new wealth. This is done via corporate and national hegemony. Wars are fought to “install democracies”. Just reading that sentence should stress how far removed from the democratic origins we have moved.

Leo Varadkar has had, as ever, an interesting few days. He told the Fine Gael think-in that “Fine Gael will never talk down to people”.

Less than 24 hours later he condescendingly told the Irish people that they weren’t ready to vote based on the recommendations around the 8th Amendment, of the Citizen’s Assembly.

Not finished with his myopic proclamations, he then warned public service chiefs to perform or to step down.

This from a man who failed in portfolio after portfolio.

When Churchill famously described success as “going from failure to failure, with no discernible loss of enthusiasm”, he couldn’t have known Leo Varadkar would ride that mantra to the top office in Irish Politics.

Leo, like our political representatives, has some accountability. They must go in front of the people every five years and seek their vote. But this isn’t real accountability; democratically or professionally.

Roman Consuls had one year terms. In many industries annual Fitness and Probity assessments are required along with Continuous Professional Development learning. Performance Reviews are monthly, quarterly and annual in thousands of workplaces.

Politicians, chosen to represent our democratic voices, tell us that “the practicalities of doing the job” got in the way of holding them to pre election promises.

In no other workplace is the excuse “Isn’t that what you tend to do in elections?” acceptable. But in politics, it is a quip.

The brilliant Arundhati Roy calls modern democracy a Lifestyle War.

She said:

“A war whose whole purpose is to expand the War, increase the Terror and obfuscate the fact that the wars of today are not aberrations but systemic, logical exercises to preserve a way of life whose delicate pleasures and exquisite comforts can only be delivered to the chosen few by a continuous, protracted war for hegemony.

The anything Schauble was referring to was the uninhibited ability of hegemonic countries and companies to move around the globe freely, while restricting the freedom of the people they are ‘democratising’.

The anything Schäuble was referring to is the Rent-Seeking methodology of using wealth and power to expand wealth and power, in the name of thee ‘free market’ hegemony. Wolfgang Schäuble knows democracy, beyond parish pump politics, is, if not dead, on life support.

But there is hope. When car insurance premiums fell recently it was on the back of officers of the EU raiding Dublin based insurance companies and discovering oligopoly price fixing practices.

Interestingly, not once did the current Housing Minister, Eoghan Murphy, tackle (or mention) this behaviour when he conducted his 2016 investigation into rising premiums.

The EU Commissioner for Competition, Margrethe Vestager, not content with telling Apple to pay Ireland €13bn in back taxes has thrown down the gauntlet to the hegemony of the biggest multi-national corporations.

She also took a swipe at the politicians who allow such Rent-Seeking free market practises to pass.

When she recently said that “the market is not the society. For a long time we have been told that is all it is”, she was aiming a not so subtle kick at the Schaubles, the Varadkars and the Tim Cooks.

Arundhati Roy (whose brilliance I can’t stress enough) thinks democracy isn’t beyond saving.

She, like Vestager, knows toppling the corporate hegemony will require corporate revolution.

But as she says herself;

 “Another world is not only possible, she is on her way. On a quiet day I can hear her breathing”.

Are you listening?

Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly aTrickstersworld

Rollingnews

From top: Minister for Finance and Public Expenditure and Reform, Paschal Donohoe at the publication of the review of Ireland’s Corporation Tax Code (Coffey Report) this week; Tony Groves

There’s a lot of kites in the Republic of Opportunity airspace at the moment. It can be difficult to keep up with which ones are up and which ones are dive bombing back to the earth.

Even when some are flying higher than others it can be unclear as to what it might mean for us back on terra firma.

One such kite, that has been floating for years now, is the EU’s Common Consolidated Corporate Tax Base. After many years of ignoring it we are going to have to deal with it, Jean Cluade Junker says so!

The CCCTB is, like all tax laws, easy to understand, while impossible to navigate safely. The main aims are to:

Tackle loopholes currently associated with profit-shifting for tax purposes.
Encourage companies to finance their activities through equity and by tapping into markets rather than turning to debt.
Support innovation through tax incentives for Research and Development (R&D) activities which are linked to real economic activity.

Corporate tax rates are not covered by the CCCTB, as these remain an area of national sovereignty. Our 12.5% rate is not up for discussion.

There’s a lot to be said for a CCCTB that stops huge Multinational Companies avoiding paying tax. The issue, from an Irish perspective, is that there won’t be any profits in the pot for us to tax by the time the “transfer pricing trick” receives the cash.

That is a worry.

When Seamus Coffey, Chairperson of the Fiscal Council, reported on our Corporation Tax system this week the media reported a clean bill of health.

Minister for Finance, Paschal Donohoe was triumphant, describing the report as “very positive”. RTÉ and the rest went along for the ride.

I’m not sure many of them read the report, or some of its more interesting conclusions. I’ve linked to it here for those of you as boring as I am.

For the rest of you the main points, at least to my mind, are:

That Ireland’s transfer pricing scheme needs “updating and expanding”

Revenue require “enhancement of resources to deal with international dispute resolution”

That we introduce “a cap on allowances as a way of smoothing corporation tax revenues over time”

In layman’s terms, this means Ireland is not offering our (dodgy?) transfer pricing scheme to all firms. That’s something the EU Commission might call “preferential treatment”.

The Revenue Commissioners are currently, and through no fault of their own, unable to deal with the mess that is sheltering profits from all over the world in Ireland.

The ‘smoothing over time’ simply means we close our loopholes slowly, so as not to spoke the MNC horses.

I’m not advocating for Ireland to drop the “transparent tax haven” Unique Selling Point, far from it. We don’t have German Manufacturing, Scandinavian Natural Resources or Mediterranean Sunshine. We have low tax. That’s our thing.

The CCCTB and the Seamus Coffey report aren’t things we should worry about. They are things we should tackle. The Coffey report tells us to make our scheme more widely available, do it.

And the CCCTB has an angle for us as well.

There’s a reason the word innovation is in bold above. The CCCTB has an out for Ireland if we can get in on Innovation. One of the key proposals of the new Tax Reforms is based on Innovation.

What the EU are saying is that start-ups AND Large Corporations who “support innovation” will be rewarded “through tax incentives for Research and Development (R&D) activities which are linked to real economic activity.”

These Large Established Corporations are defined as companies who earn more than €750m per year. Not the type of young dynamic company that needs a break. But the type that frequent the Irish economy.

While these tax breaks are misdirected; the established high-tech innovation sector is not a big employer in the EU. In fact, it’s a small player.

As Eurostat reported:

“in 2014, about 34m people were employed in the manufacturing sector across the EU, representing 15.4 % of total employment. Among these workers, 2.3m were employed in high-tech manufacturing, corresponding to 1.1 % of total employment.”

That’s employers of only 1.1% of total EU jobs are to receive tax incentives the 98.9% won’t. But Ireland needs this loophole.

Ireland doesn’t fare much better, job wise. While we lead the EU with 3% of our workforce in the high-tech sector, it’s estimated nearly 50% are not in high-tech jobs, but in administration roles.

At most 2% of our workforce are employed in these Innovation, Research and Development roles. 2%, it’s hardly worth giving such huge tax breaks to, or is it?

 

The Big MNCs aren’t really innovating anymore. They don’t need to. They are sitting on huge pots of money.

What they do is wait to see which start up (genuine innovator) is doing well, or has promise and they buy them out. Bang, the market shrinks, they consolidate their position and the Innovation becomes theirs, along with the tax break.

Between 2011 and 2015 the Big Players spent nine times more money in acquiring (buying up) innovation than on innovation itself. Yet the CCCTB gives tax break to the Big Guys, already earning over €750m per year.

These Behemoths are not really innovators. Some of them are not even big employers. In 2015 Facebook’s global workforce was less than 13,000. Poke that on your wall beside your Insta Snap.

But we need the Corporation Tax. So Ireland needs to Innovate the Hell out of the CCCTB.

Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly aTrickstersworld

From top: Minister for Housing, Planning and Local Government Eoghan Murphy Taoiseach Leo Varadkar and Damien English TD at today’s the Housing Summit in the Custom House, Dublin; Tony Groves

There was an interesting development in how the Government has decided to handle (spin) the housing crisis this week.

Following a raw and at times brutal Morning Ireland interview with a homeless Secondary School student named ‘Amanda’, the Minister for Housing, Eoghan Murphy, rather than feel ashamed decided he’d side with the poor girl.

Mr Murphy said:

“The piece that was broadcast this morning on Morning Ireland is probably one of the most important contributions to this debate that we’ve heard in the past number of months.

The bravery that they had this morning to come out and tell the country about their particular circumstance was very brave but very important for people to understand what these families are facing.”

The family tragedy compounded by a Minister who is calling this crisis a debate. The time for debating is long gone. It is time for action, real decisive action.

Campaigns like #MyNameIs have raised the consciousness of the general public and the sense that more must be done is palpable.

In reality we have the means to take much more ambitious steps than the planned 23,000 social housing homes by 2021.

More importantly, even with this limited plan, who will be held accountable should this target not be met? Given that only 22 of the 1,500 promised by next year have been completed to date, can we believe in any new plan? Where is the accountability?

The lack of accountability in Ireland undermines many facets of our society. But to just focus on housing we can identify the problem quite quickly.

Unlike many other European countries, including Belgium, France and the UK, housing is not a right in Ireland.

In Ireland, under the 1988 Housing Act, our citizens run into a verbal wall.

10.—(1) A housing authority may, subject to such regulations as may be made by the Minister under this section –
make arrangements, including financial arrangements, with a body approved of by the Minister for the purposes of section 5 for the provision by that body of accommodation for a homeless person,
provide a homeless person with such assistance, including financial assistance, as the authority consider appropriate, or
rent accommodation, arrange lodgings or contribute to the cost of such accommodation or lodgings for a homeless person.

2. A request for accommodation may be made to a housing authority by or on behalf of a homeless person.

The blocker in the system is a small word that covers all manner of excuses. The word is ‘may’; as in the housing authority may or it may not do a,b,c or d.

It is not compulsory, and if it is not compulsory then there is no accountability. If there’s no accountability then there’s no repercussions for missing targets. Until may becomes must and the power to act become a duty to act then nothing will change.

This crisis didn’t sneak up on us either. It is the result of decades of bad planning and even worse policy making. We have gone, progressively since the 1970’s, from State provision to a combination of NGO and Market provision.

Both are failing – for different reasons. The NGO solution is common – the UK for example has a similar situation, with the important distinction that the State in UK decanted housing stock progressively to the NGOs, thereby providing a balance sheet base from which the NGO’s could leverage collateral to fund future housing stock.

The NGO model is endemic in Irish Social policy – the same approach applies in Health, Disability Services and in the past in areas such as industrial schools.

Whatever about its origins – a pauper State seeking access to property and services from institutions such as the Church, it now represents either an abdication of responsibility or, worse, an adherence to Victorian attitudes to relative poverty and provision, in one of the wealthiest countries in the world.

Without diverting from the current crisis, this needs to be reassessed in all areas of Social policy.

Given the intolerable crisis we have today – 8,160 people homeless and nearly 3,000 children – anything less than “The State Will Provide” response from the Government will not suffice. Even if we are to only do so on a temporary basis until the crisis has abated.

There’s nothing in EU Law that forbids a country from acting to protect its citizens. Therefore it follows that there is nothing in EU Law (including the Debt to GDP rules) that can prevent the government from raising money to build social housing.

The “off balance sheet” argument is a red herring. They raised over €5bn to pay off the IMF. To not do the same for our citizens is an indictment of Right Wing slaves to the “free” market ideology. It is an indictment of us as a society and a country.

It is within our powers, as the 14th wealthiest country in the world, to build 10,000 social houses in the next 12-18 months. Any legislative roadblocks can and must be given the NAMA treatment.

Exceptional times call for exceptional measures.

If we can create NAMA overnight, ignoring legislative processes, to stop a Bank crisis and we refuse to do the same for our citizens then any plans from the Third Emergency Housing Summit are only window dressing.

The pressure is on, Fine Gael are rattled by claims that their ideological blindness to the less well off in our country have exacerbated this crisis.

Campaigns like #MyNameIs have embarrassed them and stung a Taoiseach obsessed with his image into action. This action must happen now and it must be on a scale that dwarfs the current 2021 plan.

Time is of the essence here. While things are bad they are about to get much worse. There’s 14,367 Buy To Let Mortgages at repossession stage.

There is no incentive or reason for the Vulture Funds that own these properties to rent them to the social housing/homeless part of the market. This will be like throwing petrol on a bonfire unless our government turns “may” into Must.

We have the means, the finance is available and the solutions are simple:

Make the provision of housing a right, at least until the crisis has abated.

Use the NAMA exceptionalist model to protect the citizens.

Commit to building 10,000 social houses in the next 12-18 months.

Make the Departments accountable and have repercussions for failure.

Incentivise/Legislate that the Vultures make their properties available to the Social Housing schemes.

Deliver.

Fine Gael are 84 years old today. The Taoiseach used this occasion to remind people that he wants “to build a Republic of Opportunity”.

Well Leo, it’s no good waiting for opportunity to knock when you don’t have a front door.

Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly aTrickstersworld

Belong

Just like the air max on the teenagers feet,
And like the broken glass on the city street,
And like the backpack on the empty bus seat, belong

Just like the joyful air in the kids football,
And like the communion picture on the living room wall,
And like the contact lens on the bloodshot eyeball, belong

Everything should belong somewhere,
Just like commuter stuck in traffic, and the kid in full time childcare,
Everyone MUST belong somewhere,
So why are we okay leaving them there?

Just like the floral print on the tablecloth,
And like the cappuccino with the extra froth,
And like the boiled ribs in your nanny’s broth, belong

Just like the dark thoughts in my troubled head,
And like the nightshift worker in her daytime bed,
And like quoted tweet that just says thread, belong

Just like the shit stir words on the Op-Ed page,
And like the evicted tenant filled with rage,
And like an empty promise on a political stage, belong

Everything wants to belong somewhere,
Just like the kid stuck in a hotel, and the patient stuck on a chair,
Everyone must belong SOMEWHERE,
So why are we okay leaving them there?
I’m not okay just letting them rot there.

Tony Groves