KellyPT1

Kelly2

We were so young.

The Prime Time exchange between Brendan Keenan,of Independent newspapers, and UCD professor of economics, Morgan Kelly, just hours after the banking guarantee on the night of September 29/morning of September 30, 2008 was revealed.

Go to 1.30

Miriam O’Callaghan: “Morgan Kelly, professor of economics at UCD, what’s your reaction to this guarantee?”

Morgan Kelly: “My reaction is very negative. Initially, when (late former Minister for Finance Brian) Lenihan announced the €100,000 deposit guarantee, I was very optimistic. Had we not had that we would have had queues outside banks yesterday. However what we need to ask is, what the problem here, as Brendan (Keenan) said, is foreign banks are afraid to lend to Irish banks. They’re not afraid to lend to banks in other parts of Europe. We need to ask ourselves ‘what’s going on here?’ The underlying reason is that Irish banks have made very big loans to developers and, above all, the builders. They’re losing money on these, they’ve a lot of bad debts. They’re covering them up. But international institutions know they’re there. That’s why they’ve stopped borrowing.”

O’Callaghan: “But what would the alternative have been Morgan Kelly? Like, if they hadn’t done this today. I suppose they could have done a form of nationalisation. Are you saying they shouldn’t do anything?”

Kelly: “No. They need to do what has been done everywhere else as individual banks run into problems. The government goes in and, first of all, sees if they need to survive. A lot of the banks in the US have just been let go. And we obviously need to keep our retail banks going. There are some non-retail banks that could have been let go, nobody would have missed them. But what you need is, for Government to come in, offer new capital to the banks, in return for a share of ownership and recapitalise them. That is a real big problem here. Irish banks have made big losses on their loans. They’re short of capital…

Brendan Keenan: “We don’t quite know if that is the real problem. Banks insist that they don’t need capital from the Government, they don’t want capital from the Government. They can trade their way through this, if they can access the normal funding. And that’s where all of the discussions have been, for the last three or four weeks.”

Kelly: “The banks of the world disagree with them.”

Keenan: “The other banks have gone to their governments saying ‘give us money or we go bust’ The Irish banks are not saying that. They’re not asking for money.”

Kelly: “No, we have to ask them, if this was simply the problem of liquidity, what we would have seen is that Irish banks’ share price today would have exploded. Instead what we have is that Irish banks’ share price, this evening, is slightly lower that it was yesterday morning for the three main retail banks – AIB, Bank of Ireland, Permanent TSB. It’s not liquidity is a problem for these guys, they’ve bad loans. They’re huffing and puffing and pretending it’s not going on. The example for us should be what happened in Sweden. Nearly 20 years ago, they had a big property bubble, just like ours. At the end of it, banks lent a lot to developers and builders, they went under. The Swedish government moved in decisively, made these banks realise bad debts, took them over and ended up not losing money. And that’s what we need to do here. The alternative, the Finns did the same thing. Like here, they said ‘oh we know what’s going on here, things are fundamentally sound’, they ended up losing about 10% of their national income, bailing out their banks.”

O’Callaghan: “So you don’t view it as a pre-emptive strike by our government?”

Kelly: “Well it was basically they didn’t  really know what to do and they decided an Irish solution for an Irish problem. Effectively, the situation is, it’s like you have a stupid kid who keeps going out and smashing up his car.”

Keenan: “I think the difficulty is, we know what the Irish banks’ bad loans are, they’re going to be about 1% of their loan books.”

Kelly: “No, that’s complete nonsense. What we, we have a situation. Irish banks lent…

Keenan: “You disagree with Deutsche Bank…”

Kelly: “Yes.”

Keenan: “…you disagree with…”

Kelly: “I disagree entirely yes. They have €25billion in loans to builders. All the ghost estates you can see around the place, that is the capital of the Irish banks right now. They’re going to make horrific losses on these.”

 

Previously: To Cut A Long Story Short

motley
http://www.youtube.com/watch?v=K49BrGVR9zE

Kieran Murphy, editor of UCC student mag Motley, writes:

Today we’re launching a drive for contributors for the website. Normally it’s only been UCC students who contributed to it but I believe that with our new website we’ve the scope to cater to more readers and writers, so anyone and everyone can sign up and write for the website!

G’wan.

They don’t care, like. They love it.

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Jason Allemann’s wonderfully bonkers LEGO walking (or, more accurately, scuttling) machine, inspired by Theo Jansen’s giant kinetic Strandbeest sculptures.

You can build your own, if you’re so inclined.

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ve_200613_02-940x578 ve_200613_11-940x1329 ve_200613_09-940x626A pleasingly shaped, utterly indulgent carbon fibre hammock tub created by design company Splinter Works in the UK, what sez:

The peaceful experience of kicking-back in a hammock has been further enhanced by combining it with the immersive comfort of soaking in a hot bath. By literally elevating the experience of bathing into a suspended sculpture the bathroom has been reinvented as a contemplative sanctuary for artful relaxation. Designed for use in a wet room, Vessel is suspended from the walls and does not touch the floor. It is fixed with stainless steel brackets that can be covered over, or left revealed. The bath is filled using a floor standing tap and the waste water released through the base into a floor drain. A downpipe drain can also be installed if a wet room setting is not possible.

thisisnthappiness/contemporist

 István Székely?

adtruism(The Adtruism troop, from left: Hannah McCarthy,  Brian McCormick, Tim Delany and  Gabriel Corcoran)

One of those oxymoron whatsits?

NO.

Hannah McCarthy (above left) writes:

In a nutshell, Adtruism is a social tech initiative that lets bloggers and website owners raise money for the causes they care about without spending any of their own money.

They can go on to the Adtruism website, select a cause they’d like to help such as the Make-A-Wish Foundation or UNICEF, then select a widget, place it on their website and then advertisers pay to display their advert through the widget. All the revenue then goes to the cause they’ve selected.

But who are you?

All of us working on the project have just graduated or are still in college so we really are all doing it because we think it’s important that our generation isn’t just a bunch of slacktivists mindlessly liking things like Kony2012 and that if they are able to do something about a cause, even if it’s just something small, that they do it.

Jaykers.

Do you have a promotional video?

Yes, here.

A fancy infographic?

adtruismgraphicThank you.

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A plane full of thirsty journalists flying from Moscow to Cuba teetotal while their quarry heads for Ecuador.

Edward Snowden due to quit Moscow in Ecuador asylum bid (BBC)

Via Matthew Molehouse

McCarthyEconomist Colm McCarthy spoke with Myles Dungan on Today with Pat Kenny on RTE R1 earlier in relation to this morning’s Anglo tapes story in the Irish Independent.

Things have certainly moved up a gear, in fairness like.

Colm McCarthy: “It’s remarkable that almost five years on, from these events now we still haven’t had a proper inquiry.

Myles Dungan: “And should this material now form the basis of an inquiry by the BAC for example?”

McCarthy: ‘Well there was a referendum run and lost by the Government about 18 months ago which would have re-empowered parliamentary committees to conduct proper inquiries. There powers had been circumscribed by the Abbeylara judgement as you may recall, it was about something completely different, but the courts decided that there were limits to the power of parliamentary inquiries. Limits that do not apply to parliaments in other countries, I might add. And the Government ran a referendum to restore those powers and they were kind of ambushed at the end of a poor campaign by a group of barristers and the referendum was narrowly defeated. There’s a very interesting piece on page 25 of today’s (Irish) Independent by John Downing , one of their regular columnists, in which he makes the point that it might be best now to actually rerun that  referendum and win it this time.”

Dungan: Talk to us a little bit about the mentality of those involved in this conversation, because the tone is very strange. I was suggesting to Fionnan Sheahan this morning that it does not appear that those involved felt particularly stressed by the circumstances or by the enormity of the situation that faced their institution?”

 

McCarthy: “Well, you know banks, when they begin to face a run on liquidity,  react in a manner which says ‘let’s, let’s find the fingers to stick in the dyke’ and that might be the finger of the Central Bank and that comes across a bit from the tapes. It’s worth recalling that for a couple of months after the guarantee, I mean these tapes relate to the middle of September, the guarantee was at the end of September 2008, but for a month or two after that, public officials were still pretending that the Irish banks were sound, that they had adequate capital buffers and so on. And, one of the implications of today’s revelations is that they may have been better informed than that.”

Dungan: “Now this conversation took place just a couple of days after Lehman Brothers had been allowed to collapse. A huge institution.”

McCarthy: “Yeah.”

Dungan: “It had been allowed to collapse by the US Government. The Anglo officials didn’t seem to think that that was going to happen in their case or they didn’t seem to be concerned.”

McCarthy: “Well I’m sure they must have been concerned but at that stage the Irish Government had not prepared bank resolution legislation and they had ample time to have done that because Northern Rock, in the United Kingdom, got into trouble 12 months earlier. The Bear Stearns bank in  New York had been rescued by  the Federal Government in March of 2008. The Feds obviously decided they’d had enough of that and they decided to let Lehman’s go. So one of the unexplained mysteries of the whole affair is why the Irish Government had not equipped itself for some broader options by the time the decision was taken to guarantee all its liabilities, or virtually all its liabilities of the Irish banking system.”

Dungan: “Would you agree that one of the other things that comes across from this transcript is that there was scant respect in Anglo Irish Bank for the Financial Regulator?”

McCarthy: “It has that air to it but I, I don’t think one should draw broad conclusions like that until there’s been a full inquiry. What this shows to me again is that journalists have written books about Anglo, they’ve written books about Irish Nationwide, it has been left to journalists to try and dig up as much as they can about what really happened. Nobody who was directly involved is saying anything, they’re all getting advice from lawyers, and so on. This is a classic example of a situation that needs a well-resourced, patient public inquiry and inquiries of that kind have been conducted and long since completed in various other jurisdictions.”

Dungan: “But this underscores the need for a properly constructed inquiry in this jurisdiction?”

McCarthy: “Yes, and it needs to be properly resourced. And if it requires a rerun of the referendum that was rather carelessly lost by the Government then so be it. But the public I think must now begin to realise that the country has been bankrupted and we still don’t really know why.”

Tapes make overwhelming case for full inquiry into banks (John Downing, Irish Independent)

Eamonn Farrell/Photocall Ireland

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