Irish House Prices back at 2004 Levels

The latest index from the Irish Economic & Social Research Institute (ESRI) and permanent tsb bank reveals that house prices in Ireland have fallen by almost 2% last month.
This brings the prices for residential property back to levels not seen here since the summer of 2004.

On national average house prices have fallen by almost 5% in the first four months of this year.

According to this index, the average price paid for a house in April 2009 was € 248,640, compared with € 261,573 in December and € 311,078 at the peak of the property bubble in February 2007.

Prices for the (usually least expensive) houses in the 'first-time buyer category' are falling at the fastest rate and are down 7.9% already this year.

"This is the fastest rate of decline in national prices that we have seen to date since the index started in 1996," says Niall O'Grady of the permanent tsb bank, one of Ireland's major mortgage lenders.
"The particularly dramatic reduction in prices for first-time buyers reflects their reluctance to buy in a market that is still declining and where unsold properties are being reduced further."

Meanwhile several leading economists and independent analysts are predicting that property prices in Ireland will continue to fall "for at least another 12-18 months".

The Emerald Islander

Well done, Leinster!

The Leinster 'Blues' have kept the coveted European Rugby Cup - also known (for its sponsors) as the Heineken Cup - in Ireland by beating the English club Leicester 'Tigers' at the Murrayfield stadium in Edinburgh 19-16.
(People who believe in numerology might well see a special significance in this result, as the scores of both teams written in succession give us 1916, the year of the Easter Rising in Dublin, which is the capital of Leinster as well as the capital of Ireland.)

Leinster had reached the final of this prestigious annual European competition for the first time after they beat - for many rather surprisingly - their permanent national rivals Munster (which are usually seen as the stronger team and won the European Rugby Cup in 2006 and last year) in the semi-final at Croke Park in Dublin 25-6.

I am not a follower of Rugby, and certainly no expert on this sport. So, for an opinion I have to rely on the knowledge of a friend who played Union Rugby for many years. From what he tells me, Leinster "had generally the better of the game at Murrayfield, but were forced to stage a strong fightback after falling 16-9 behind early in the second half". Obviously they fought back successfully, scored 10 more points (while Leicester scored none) and won the match 19-16.

From an outside position as a complete Rugby layman - and even though I live in Munster - I like nevertheless to take this opportunity to say "Well done, Leinster!" and wish them good luck for the future.

Leinster's success is the fourth time an Irish team has won this Cup. The first to bring home the silver trophy were Ulster in 1999, followed by Munster in 2006 and 2008.
And if the recent form of Irish Rugby is anything to go by, we might well see more of the same in years to come.

The Emerald Islander

Once every sixty Years...

In contrast to our Western (originally Babylonian) system of Astrology, which uses a cycle of 12 Zodiac signs over 12 months, the even older Chinese Astrology uses a cycle of 12 signs over a time span of 60 years.

While we acknowledge four elements (Fire, Water, Air and Earth) in addition to the principal signs, the Chinese have five (Metal, Wood, Water, Fire and Earth). And since in China each sign reigns for a full year - instead of a month in our system - that makes five sub-cycles of 12 years each, which form a full cycle of 60 years. This means that during the lifetime of an average human being each year offers a different condition, and only the very old will experience a repeat of some astrological years.

Even here in the West, where longevity has increased steadily since the end of World War II, six decades is a very long time. Even more so when it is the time someone has to wait for a certain and much desired achievement, while making a fresh attempt at it every year. And when it does happen eventually, the joy and emotions are enormous.

A couple of hours ago the Irish Rugby team (which is an all-Ireland team with players from both jurisdictions on the Emerald Isle) achieved the highest possible honours available to any team in the Northern hemisphere. They not only won the 'Triple Crown' (which means they have beaten all of the other three 'home nations' England, Scotland and Wales), they also finished this year's series with the rarely achieved 'Grand Slam' (which means that they have won every match they played and thus beaten all other teams in the annual Six Nations Championship).

In fact, in the 107 championship series that took place since 1883 (first among the four 'home nations', then as the Five Nations including France and - after Italy was admitted in 2000 - as the Six Nations Championship) a 'Grand Slam' was achieved only 35 times.
And for Ireland today's total success on the Rugby field is only the second 'Grand Slam' ever in the history of the sport.* The first time they did it was 61 years ago, in 1948!

Every year, during the weeks when late Winter turns into early Spring, this contest grips the full attention of Irish people. As regular readers of this weblog will know, I am neither a sports fan of any kind, nor particularly interested in Rugby. But even I could not help myself but listen to the live coverage of the match today, my ears pricked to attention while the commentators on RTÉ Radio 1 were carried away with free-flowing Celtic emotions.

That this - the last match of the 2009 Six Nations Championship - took place at the magnificent Millennium Stadium in the Welsh capital Cardiff gave it a particularly high tension and special sporting importance. Rugby is - and has been for generations - the main sport in Wales and the Welsh are pretty good at it, too. So it was not just any match that both teams played there today, it was a true clash of the giants. Had Wales won, they would have deprived Ireland of both titles. And during the first half it looked as if they would do exactly that. The half-time score of Wales 6 - Ireland 0 was not received well on the Emerald Isle. Hearts of fans and spectators began slowly to sink, giving rise to this terrible thought again that we Irish are "simply not good enough"...
How often have we heard this during the past six months? Or even thought it ourselves? There are times when one wonders if the Irish can do anything right and proper at all.
We not only missed all the signs of the imminent world economic crisis throughout 2007 & 2008, we had to make things a lot worse by creating our own crisis on top of that, a crisis much more serious than anything that Wall Street and the City of London can throw at us.

We began to get rich during the early 1990s, quite suddenly and totally unexpected. But instead of good housekeeping, prudent behaviour and reluctant pride which would have been in order, we went completely over the top. We got drunk on the sudden wealth, just as we get drunk so often in our pubs on beer and whiskey. Then we staggered out into the night and made mischief, plenty of mischief.
For the past six months we are beginning to wake up from it all, not sure where we actually are, how much we have blown and how much - any - we have left in our pockets. Our banks, which are controlled by a bunch of selfish, greedy and immoral crooks, have behaved even worse than the rest of us and expect in a matter of fact way to be rescued by the government and massively recapitalised with taxpayers' - which means our - money. At the same time they turn nasty on their normal customers, the ordinary people and especially small businesses who have done not a thing wrong. To crown this ecstasy of failure and disaster, we also have the most incompetent government in the history of the state.
Meanwhile wages are reduced and taxes rise and rise, while consumer prices remain high. This is the truly bleak background in front of which one has to see today's great and amazing sporting achievement.

Being six points behind after the first half and having not scored a single point yet, Ireland came back onto the pitch for the second half with a lot of extra ambition. Soon the team showed what they are capable of. In a complete change to the way they played in the first half, now the Irish dominated and within a few minutes their captain Brian O'Driscoll (left) scored the first try. This gave the team a huge emotional boost, and a little later Tommy Bowe scored the second try for Ireland (see large photo below).
Wales, although strong and playing with great skills and energy, did not manage to score any tries at all. Their points came from field goals and penalties.

By the time the match went into its final phase, Ireland was leading 14-12 and many people here started already celebrating. Then Wales scored 3 points with another goal, giving them a narrow one-point lead with the score standing now at 15-14. And time was running out.

Was it all going to end in tears for Ireland? Had their fight-back come too late? Or were they just not meant to win this match, to fail once again and fall at the final hurdle of the contest?
These were the thoughts going through the minds of thousands of Irish people, Rugby fans and ordinary folk alike.
But then - with less than three minutes left to play - the Irish were in the lead again. The team's top goal kicker Ronan O'Gara (right) sent the oval ball straight down the line between the Welsh posts, which meant the score changed to Wales 15 - Ireland 17. And at that it remained until the referee blew the final whistle.

Within seconds Ireland was transformed into 'Happyland' and everywhere the celebrations and cheering began.

Nobody expects the Irish economy to be saved by Rugby, and everyone knows that our deep sorrows and serious problems will be there tomorrow morning unchanged, as they were here yesterday. But for a few hours tonight and tomorrow the whole of Ireland will be in a state of great joy, happiness and celebration. It's the way we are, and we so desperately need something to cheer us up during this period of political and economical depression...

The nation has waited 61 years for this day, longer than a complete cycle of Chinese Astrology, and only the most senior of senior citizen will have experienced this before.

For the victorious Irish team, which has played very well now for several years, it is a truly great and historic achievement. And as it happens, today's match was the last for Ireland's steadfast and magnificent team captain Brian O'Driscoll. What a way to say good-bye, what a way to enter the annals of history!

Today's success is of course also an enormous achievement for the team manager Declan Kidney (left), who took charge of the Irish Rugby team less than a year ago. For him 2009 was the first Six Nations Championship and he achieved the absolute maximum possible right away.

But of course Kidney is not a novice. The 48-year-old Corkman was coach of Munster, the most successful of the Irish provincial teams, for many years and is now bringing all the experience he gathered there to the national side.

I like to take this opportunity to congratulate our team, the Irish Rugby Football Union (IRFU) and the whole nation on this special day that saw even me cheering for a sports team.

The Emerald Islander

* England won 12 'Grand Slams', Wales 10, France 8 and Scotland 3. Ireland - with now 2 - is the second last in that ranking list, as Italy (which only joined the competition in the year 2000 and has clearly the weakest of the six teams) has not won any (yet).

Doctors and Patients concerned over HSE Cuts

Health unions and patient campaign groups in Ireland have raised concerns about plans by the Health Service Executive (HSE) to review full-time Accident & Emergency (A&E) services at eight Dublin hospitals and three in Cork.

The details are contained in the executive's 2009 service plan, which has yet to be published, but has been seen by RTÉ News.

The Irish Hospital Consultants Association (IHCA) says that while 24-hour accident and emergency services can not be provided at every hospital, any replacement services must be "at least as good as what currently exists".

IHCA deputy head Donal Duffy said that given the population of Dublin and the large number of patients on trolleys in A&E each day, more services rather than less were needed.
He accepted that some rationalisation of services was needed and predicted that next year would be a "very difficult one for patients".

Meanwhile the Irish Patients Association says it hopes the HSE's plan is not a resurrection of the 2003 Hanly Report. On its behalf Stephen McMahon said all those affected should be involved in consultation on such a major development.

The Labour Party has called for an immediate publication of the plan. Its health spokesperson Jan O' Sullivan said that closing full-time A&E units, particularly without providing additional resources to other units, would simply "make a bad situation worse".

The 90-page-long HSE service plan for 2009 is already approved by the Minister for Health Mary Harney (left).

Part of its projection for 2009 is the plan to "cut inpatient admissions, the average length of hospital stay, and outpatient numbers", while "increasing day case procedures".
The measures also envisage rationalising A&E services in the mid- west and the provision of 24/7 emergency services by three paediatric hospitals in Dublin.

Around € 530 million in savings is being sought in the Health Service throughout next year.

The plan will see the HSE cutting the number of management and administration grades by 3% and it must stay within a staff ceiling of 111,575 people.

Irish Farmers "won't go away quietly"

Padraig Walshe (left), the President of the Irish Farmers Association (IFA), is warning the Irish government that "farmers won't go away quietly and accept the Budget cuts".

He was speaking yesterday evening in Ennis, Co. Clare, where more than 7000 IFA members from counties Clare, Cork, Galway, Kerry, Limerick, Offaly, Roscommon, Tipperary and Wexford had gathered for a mass demonstration to vent their anger.

Since October more than 20,000 Irish farmers have now expressed their anger over the 2009 Budget cuts at various IFA meetings all over the country. (see also my entries of November 2nd & 16th)

The IFA says that the recent cutbacks will mean a € 20 million loss to farmers in the region every year and is urging the government to think again.
It also accuses the Minister for Agriculture Brendan Smith to be "in denial over the impact of the government cuts on farmers".

Padraig Walshe says that Minister Smith is "disingenuous by referring to 2008 payments, which have nothing to do with the government's farm cuts for 2009".

"The way farmers have been hit is totally unacceptable", Walshe declared in an interview with RTÉ.
"The cuts are a direct attack on the viability of low-income farmers, especially in the West. Many farmers will not be able to make a living from farming under these conditions."

In reply, Brendan Smith (right) said that he did "not accept claims about the impact of the cuts on farm incomes".

This is another example of a Cabinet Minister closing his eyes and ignoring the facts, hoping that the problems will somehow 'go away'.

Smith, who was only appointed to his current position in May of this year when Brian Cowen became Taoiseach , seems to be quite a fast learner when it comes to collective ignorance and - as Padraig Walshe pointed out - denial.

He makes a fine addition to a Cabinet that is meanwhile so far removed from reality and from the Irish people that no argument, no matter how valid, can get through the ring of political cotton wool it surrounds itself with.

There are two ways to deal with this: Either the government removes the cotton wool, or the people have to remove the government. Personally I think the latter is the more desirable and more effective solution to improve our lives, our country and our economy.
As the IFA would be a welcome ally in such an operation, I hope that this time the farmers will indeed "not go away quietly" and remain strong and steadfast in their protest.

The Emerald Islander

The West awakes and rejects Budget Cuts

It appears that the Irish government has very few friends and supporters left for its outrageous policies and in particular for the shambolic 2009 Budget it presented more than a month ago.

Ireland's farmers, who have in the past always been a strong bulwark for Fianna Fáil and were subsequently awarded with generous - and often even over-generous - grants, subsidies and compensations, are turning now in droves against their former champions as well.

This is quite a change from the last minute change of mind they had earlier this year, when they joined the YES camp for the Lisbon Treaty shortly before the referendum, after having been against the treaty for months before.
But things have changed since June, and we are living under quite different conditions now. The farmers - like almost everyone else - are feeling the pinch of economic recession and financial instability. And - with all respect - Ireland's farmers have always known on which side their bread is buttered. So now they are joining in ever larger numbers the majority and call a spade a spade, or - in this case - the government for what it is: incompetent, arrogant and not up to the job of leading the country.

The growing anger in the farming community is especially strong in the west of Ireland, which is still an agricultural area with very little industry and infrastructure. Having lived in the west myself for some time, I know these farmers. They are very sturdy, conservative people, slow to anger and mainly interested in getting on with their own business.
But once they begin to grumble, pick up placards and go to demonstrations, they really mean it and will not sit down quietly again until their grievances are addressed and their problems are solved.

Today more than 5000 of them gathered in Carrick-on-Shannon, Co. Leitrim, outnumbering the local population of this small county town.
They are concerned and annoyed, feel betrayed and were sending the government a clear and unmistakeable message. "The West rejects 25% cuts" was written on thousands of placards they carried. It was in fact like a sea of messages, but they all said the same and showed a unity seldom seen in that part of the country.

Addressing the gathering, Padraig Walshe (right), the outspoken president of the Irish Farmers' Association (IFA) accused Fianna Fáil of "forgetting their roots and letting down the west of Ireland".

The IFA estimates that the 2009 Budget measures will cost farmers in the west and north-west of Ireland nearly € 40 million.

Since the Budget was announced on October 14th (see my entry of that day), farmers have been holding meetings all over the country to voice their anger over cuts in investment programmes and in retirement and some livestock schemes.

The IFA is accusing the government of taking the easy option by cutting the income of farmers on marginal land, mainly in the west of Ireland.

Padraig Walshe said that "cuts in the suckler welfare and the disadvantaged areas schemes are a direct attack on the viability of low-income farmers".

As things are, we can expect more meetings like this and more demonstrations - by farmers and many other people - in Dublin. One wonders how long it will take for the government to realise that they have really messed up everything and that it is time to go and let better people govern the country.

The Emerald Islander

Vendée Globe Race 2008/2009 started

Today, at precisely 13.02 h local time (12.02 pm GMT), the 2008/2009 Vendée Globe Race was started in the port of Les Sables d'Olonne on the French Atlantic coast.

Despite severe weather conditions about 300,000 people had gathered at the port to see the 30 competing yachts off. Many of the spectators were lined up tight on the seawalls, ignoring the rain, storm and high waves, to bid the skippers a cheerful farewell.

The Vendée Globe is a non-stop sailing event for single-handed yachts, covering an average of 27,000 miles, and regarded as the toughest challenge a sailor can face on this planet.
Unlike the Velux Oceans Race, which breaks the event up into three legs, the Vendée Globe goes non-stop across some very inhospitable stretches of ocean. It is the ultimate test of both skipper and equipment.
More than a third of the boats that entered the 2004/05 race were forced to retire, and there were even fatalities in the 1992/93 and 1996/97 events.

From the start at the French coast the race goes south through the Atlantic, passing Madeira, the Canaries and the Cape Verdes, and then along the eastern coast of South America around the feared Cape Horn into the Pacific. The course continues then across the southern Pacific and - leaving Australia to the north - into the southern Indian Ocean, sailing through the infamous and dangerous 'roaring forties' past the Kerguelen Islands towards the Cape of Good Hope on the southern tip of Africa, but bypassing it in a fair distance. Halfway between Africa and South America then the course will be changed to straight north, and the final stretch - known among the competitors as 'the home run' - begins, leading all the way back to Les Sables d'Olonne

The Vendée Globe is also essentially a French event, created and developed by tough French yachtsmen, who have so far always won the race, which is very strongly supported by the French public and media. (Some commentators even call it "the Tour de France of the Sea".)
Even though there are more foreign sailors competing in recent races, 17 - more than half - of the skippers in this year's event are French.
With seven competitors - including the only two women - the UK has the second-largest national contingent in the race. There are also two Swiss skippers, and one each from Austria, Canada, Spain and the USA.

Although the skippers are alone in their boat and can never sleep longer than 20 minutes at one time, they now have quite considerable assistance from many different gadgets. This technology makes sailing the yacht easier and it also means that the skippers can be in contact with their onshore support team around the clock.
Demands to update blogs, video diaries, and calls to do live interviews with the media mean that some of the equipment has to be very advanced. It also has to be robust. Boats are frequently battered by the waves and salt spray will wreck any exposed electrical equipment.

One of the seven British yachts that entered the race this year - the Aviva (right) - is skippered by 35-year-old Dee Caffari (below left) from Fareham in Hampshire, the first woman who sailed single-handed the "wrong way" (against the prevailing winds) around the world two years ago.
On board her 72-foot boat, designed for a crew, she struggled for six months to complete this long and dangerous voyage around the planet in 178 days, 3 hours and 5 minutes. She thus entered the history books and earned herself great respect and admiration in the sailing community.

The second female skipper in this year's event is 34-year-old Samantha Davies (right), originally from Portsmouth, but now living in Concarneau in France.
"I'm really excited and relieved the race is finally here. I've been preparing for nearly two years and everything is pretty much ready," she said before the start.
"The most important thing for me is to finish. There are 20 new yachts in this race and Roxy - my boat - is quite an old lady. Realistically it will be really hard to win, and I'm very humble about being in this race."

The Roxy (right) might be "an old lady", but she is a yacht with a very serious pedigree. She won the last two Vendée Globe races under previous skippers and having a different name then.

It remains to be seen if her good luck continues and if she can win a third time in a row, which would be not only the first victory for a female skipper, but also the first time a non-French competitor in the Vendée Globe wins the race. But until then a lot can happen, and the approximately three months at sea will be hard for all 30 particpants, in particular the two English women, who are both first-time competitors in this challenging event.

They hope to follow in the footsteps of the now famous Ellen MacArthur, who - then aged 25 - came second in the 2001/02 Vendée Globe race and broke in 2005 the world record for the fastest solo circumnavigation of the globe.

The Emerald Islander

UPDATE

One of the two Swiss sailors - Bernard Stamm - had already some bad luck. His yacht Cheminées Poujoulat collided with a French fishing boat 72 miles after the start and had to return to port with a broken bowsprit. Stamm is however optimistic that repairs can be carried out fast and has declared he will not give up and sail on again as soon as possible. I wish him the best of luck.

Shock and Awe - Part 2: An Taoiseach

Taoiseach Brian Cowen has made a rather strange statement yesterday. He said that "we are battling the most severe global economic and financial conditions for 100 years".

How does he know that? Did he commission a study into this matter? Perhaps like the one he commissioned into the reasons for the rejection of the Lisbon Treaty by Ireland's voters?

I think not. And no-one else has heard of it either. So how can Brian Cowen have such amazing insight and defining knowledge about economic history? He is no historian, and no economist. Just a humble country solicitor from Offaly with very little practical experience, as he entered professional party politics aged 24 and has not done any normal work since.

So, I ask again: How can the Taoiseach make such a fundamental statement - one for which usually a hundred historians and economists would have to meet over several conferences to agree on research and findings - just by himself and almost off the cuff?

The answer is actually quite simple: Because he is making things up as he goes along.
He does not have a clue about economic history, or economics in general, but he has the bucolic shrewdness often found in people with a rural background. It is the kind of skill one needs when dealing in cattle or horses, or when trying to buy seeds at a bargain price. (There are quite a few of our TDs - across the party lines - who have this trait. After all, Ireland is still predominantly a rural country, and even most of our city dwellers are only one generation removed from farming the land.)

This shrewdness tells Brian Cowen that the Irish people have been successfully hoodwinked into voting for Fianna Fáil for many years, and especially in the last three general elections. So he thinks that he can carry on with more of the same now, except that this time it is not the prep talk of the "great Irish success" and the "we never had it so good".
This time it is pure scaremongering in order to frighten the living daylight out of us. (Maybe someone has told him that it is Halloween...)

And what is all this patronising lesson in homespun economic history in aid of? Only one thing: to promote a very bad Budget and tell us "that government cutbacks cannot be avoided".

This is the second stage of the 'Shock and Awe' concept, originally invented by the Pentagon for the US invasion of Iraq, but now applied by the Irish government to force a half-baked and counter-productive Budget on the nation. (for a detailed analysis - item by item - see my entry 'Shock and Awe - The 2009 Budget' of October 14th)

Cowen lectures us that "we have to change the economic paradigm and policies, but this cannot be done if people oppose every cut that is proposed".

Interesting. Unless he mutated over night into his evil alter ego, I presume this is the same Brian Cowen who told us only a few months ago that all was fine with Ireland. The same Brian Cowen who boasted about the strength of the Irish economy and our "secure finances" before last year's general election. And perhaps even the same Brian Cowen who is now a Fianna Fáil TD for two dozen years, a member of the Cabinet for 16 and Taoiseach for nearly six months.
The very same Brian Cowen who was - as Minister for Finance - responsible for the last four Budgets, and thus responsible for imprudent overspending and generous tax breaks for property developers. This financial policy of Fianna Fáil, supported by the PDs, created the crisis we find ourselves in now.

The very man who created the virus and helped spreading the disease is now presenting himself as the wise and concerned doctor, while he tries to sell us useless medicine at inflated prices.

No, Mr. Cowen, this will not wash! Your deliberate scaremongering does not impress Irish people who have retained their brain over eleven years of Fianna Fáil rule. You have brought this crisis not only on yourself, but on all of us. It did not just appear out of the blue and fall onto this island like an asteroid from outer space.

True, there is a global crisis. No-one denies that. And it certainly has some affect on Ireland and our economy, as these days much business is interlinked across the globe.
But the crisis we are in now is 90% made in Ireland. The way Fianna Fáil - which controls the Department of Finance since 1997 - has wasted and squandered billions while the money was aplenty, was a major factor in the creation of the current situation. Analysts have warned for years that things are going wrong, that concentration on the construction industry and hyped-up property prices are a recipe for disaster.
No-one listened, and least of all the then Minister for Finance: Brian Cowen.

We might well be living through the most serious financial - but not economic - crisis the world has seen since 1929. But that - in my Maths book - makes 80 years and not 100. And, as I have stated here and in many other articles, Ireland needs not to be affected by that in a big way.

Had we had a prudent Minister for Finance and a competent government, we would now have a nice nest egg in form of a sovereign wealth fund, created by the State and accumulated over the years of plenty. Norway has one, and so has Singapore (to mention only two other countries with a population similar to Ireland).
Many countries - large and small - have established sovereign wealth funds when they took in more money than they needed at the time. This is a sensible and prudent way of government.

Only Ireland - under Taoiseach Bertie Ahern and Finance Minister Brian Cowen - decided that the unexpected extra money could only be spent and spent, as the Irish are supposed to be feckless and don't save money.
And not enough with that, the Irish people were heavily encouraged by their banks and by the government to borrow, and borrow more. This went on until a few months ago, and in some ways it is still going on now.

So if Brian Cowen is looking for a reason we are running out of money, a look into a mirror would give him the desired answer.
If he had any guts, he would call an early general election and give the people a chance to decide their future destination. But Cowen is a bully, and - like all bullies - a coward. He will try to hang on to the sinking ship until the water is reaching his ears. In the process he will take many of us down with him.
And - in all fairness - many deserve nothing else, as they kept voting for Fianna Fáil even when their lies and incompetence were clear and obvious, for everyone to see.

The government we have is only there because we elected it. So some "mea culpa (1997), mea culpa (2002), mea maxima culpa (2007)..." is well in order for those who voted for Fianna Fáil and for the Green Party.

But a Brian Cowen lecture on the world's economic history is not. There are plenty of ways to get out of the crisis with dignity and a maximum of fairness. It is time for the government to abandon bullying and scaremongering and turn to these decent methods. (And if they feel not able to do so on their own, they can drop me a line. I would be happy to offer my services as a political consultant and can be contacted by e-mail...)

The Emerald Islander

Shock and Awe - The 2009 Budget

There have been many speculations over the past few weeks regarding the 2009 Budget and what it - or more precisely Brian Lenihan - might do to us. The fact that the budget date was brought forward to deal with the recession and the major crisis in the financial sector has hyped-up expectations even more.

For days the rumour mills were rattling in Dublin, and along the Liffey many political kites were seen flying about. But no-one knew for sure what to expect in detail, in particular since the new Minister for Finance only took over the department in May, and this is his very first budget. He is also a lawyer - like his predecessor - and thus not necessarily best qualified to deal with finances and the economy.

This afternoon at 3.48 p.m. the waiting was over when Brian Lenihan rose in the Dáil and read out the 2009 Budget. Before I go into details, let me just say one thing about the delivery of the speech as such. We can deduce from the way Lenihan spoke that he is not a natural orator. He sounded tense and uneasy, and one could hear it clearly that he was reading a text someone else had written for him, a conglomerate of information he did not completely understand himself. (To be fair on him, he is a lot better - and more believable - when he speaks freely and without notes, like he usually does on RTÉ Radio.)

Well, the cat is out of the bag now, and we have heard how bad our financial condition is, and that the economy is not only not growing any longer, it is actually shrinking.
I have often wondered - and asked publicly in writing - why Ireland did not create a sovereign wealth fund when we had all those billions in tax surplus lying around. Had we done that - like Norway, for example - we would now have a very nice and welcome nest egg, which could help to restore economic growth and confidence in the banks and financial markets.

But for the past decade our government decided to spend and squander the immense and unexpected wealth that came upon us. It's gone now, and we are left with the begging bowl. (Maybe we should rename it the Bertie bowl..., as he is the main culprit for the dilemma, but now that he has jumped ship - as rats do when a ship is sinking - he is hardly ever mentioned.)

I am no economist or accountant, so I will leave the number-crunching to those who are better qualified for it. They will soon tell you exactly how much worse you will be off next year if your income is this or your situation is that. There will be few people better off, if any at all.

What I want to focus on here are the main political directions of the 2009 Budget. Because as much as a budget is always about money, it also tells a lot about the general political direction the government has in mind for the coming year - and way beyond.

Let's start with the positive elements. I am quite happy with the 1% extra levy on income tax for everyone. Compared with many other European countries we are still paying income tax at very low rates, and that in itself is part of the 'Irish problem'. If you pay peanuts, you get monkeys...
I also warmly welcome the doubling of betting tax from 1% to 2%, which I myself suggested in the discussion with David McWilliams. (see my entry of October 12th) In fact, I think that this is not quite enough. If I had written the budget, betting tax would have gone up to 5%.

Further I applaud Brian Lenihan for introducing another flying tax of € 10 per person and flight, as we are flying way too much and thus ruining the environment in a serious way. So all those who believe that they can destroy the planet in pursuit of their private pleasure should at least pay some compensation for that. Again, I would charge even more, perhaps € 20 or € 25. (The only wrong element in this new tax is that it does not apply to aeroplanes with less than 20 seats, which means that all the rich and super-rich people who own or use private jets will never pay a single cent for their frequent flights.)

The reduction of excise duty on low alcohol beer and cider - "to encourage the safer use of alcohol and to make a contribution over time to reducing death and injury on our roads" - is also a step in the right direction.

Halving stamp duty on ATM cards from € 10 to € 5 is sensible, and so are the proposed increases to mortgage interest relief.

But here end the positive elements of the 2009 Budget.

Unfortunately the negative elements are much more numerous and will have serious impacts on our economy and society. Let us look at those in some detail:
As much as I applaud the 1% income tax levy for all, the levy of only 2% for higher earners with an annual income above € 100,000 is not enough. There should be a system of gradual increase in that levy, with those earning above € 250,000 paying 3%, those above € 400,000 paying 4% and the real fat cats who pocket more than € 500,000 per annum should pay 5% extra. They could well afford this, without feeling any pinches, and the Treasury would receive a lot more money to balance the budget.

The increase of the Standard Rate of VAT by ½% to 21.5% from December 1st is a move in the wrong direction and will only lead to further price rises across the board. Ireland has already the highest and most unfair consumer prices in the EU, and another increase in VAT will make this situation worse. It is clear that shops will not only increase their retail prices by the extra ½%, but will take this golden opportunity to adjust their prices upwards by a lot more, under the excuse of higher VAT.

The additional excise duties of 50 cents on a packet of 20 cigarettes, 50 cents on a standard bottle of wine, and 8 cent on a litre of petrol are certainly bad news and a big mistake.
They also show that the government - and in particular the Department of Finance - have very little imagination. For decades the people of Ireland have paid extremely unfair prices for tobacco products, alcoholic drinks and fuel. It is the ever tighter turned screw that provides the State with money from these three sectors, which is in fact a punishment for all who smoke, drink wine and have to use a car.

It is interesting to notice that only Britain follows the same pattern, while the majority of EU countries manage to balance their budgets without flogging the same long dead horse of the "old reliables", as they are called in Ireland.
I also notice that this year's increases are especially unfair. Brian Lenihan puts 50 cents extra on each bottle of wine, while he leaves beer, cider and spirits untouched. This is a scandalous and very stupid decision, which can only be explained with the strong influence the vintners' and publicans' lobby has over Fianna Fáil. (And the current Taoiseach is the son of a publican.)

Most of the alcohol-related problems we have in Ireland - from health problems over domestic violence and drink-driving to vandalism and serious crimes - originate not from overindulgence in wine, but from drinking too much beer, cider and strong spirits.
So where is the logic in Lenihan's thinking here? He leaves all the really dangerous drinks, which are used for binge drinking in pubs and clubs, untouched and punishes instead ordinary decent citizens who enjoy a glass of wine with their meal.
In fact, one glass of red wine is highly recommended by medical researchers as a means to decrease the chance of heart diseases. (No such benefit is recorded for beer, cider and spirits.)

Another big mistake is the increase of DIRT (a most befitting name for a tax if there ever was one) to 23% on ordinary deposit accounts and 26% on certain other savings products.
This is in fact another slap in the face of the decent and prudent people of Ireland. A tax on normal savings is a very stupid thing in the first place. (There should be taxes on savings above a certain threshold, but not for normal amounts of money ordinary people put away for their old age or for a rainy day.)
Taxing people for saving will reduce saving activity. If one is punished by the State for saving money, especially when the interest rates offered by banks are extremely low, then people will save less, and many will not bother saving at all. It is no surprise that Ireland has the lowest rate of private savings in the whole of Europe!
In many other countries saving is encouraged by the State, with extra tax incentives and tax relief for savers, as well as decent interest rates from the banks. We had this only once and for a limited time in Ireland, when Charlie McCreevy introduced the SSIA scheme. This was the best thing any government has done for the Irish people. It should be re-introduced, and this time as a permanent feature, without a time limit. Similar schemes exist in several European countries for decades and have created huge financial cushions, as well as a reduced need for government spending in certain areas of social welfare.
In the current time of financial crisis and recession the Irish government should reduce or better even abolish DIRT, to stimulate saving and encourage people to be prudent. By increasing DIRT Brian Lenihan does exactly the opposite, and of all the measures announced in the 2009 Budget, this one is in my opinion the most stupid, ignorant and counter-productive of them all.

I also think that the increase of stamp duty for cheques from 30 cents to 50 cents per cheque is a bad and unnecessary move. Lenihan said this was to "pay for the reduction of stamp duty on ATM cards". That argument does not wash. ATM cards are used by almost everyone these days. But cheques are not. Their use has already decreased massively over recent years, and that will continue naturally with ever more payments being made electronically. But there is a certain amount of areas, especially in business, where cheques still play an important role and are used frequently. These are mostly small and medium-size businesses in certain industries, and they are now punished and made to pay extra for what is after all a very normal and very safe transaction (in fact a lot safer than many forms of the new electronic transfers). Once again Brian Lenihan hits a group of people he should be supporting.

Another area where the wrong people are asked to come up with ever more money is Lenihans new tax for rented accommodation and company car parks. € 200 will be charged per annum for every house or flat, as well as for each parking space.
This sort of taxation is Dickensian and makes no sense in the 21st century. Furthermore, the bureaucracy needed to collect these new taxes - and make sure that they are paid by the right people - will be so cumbersome that its costs probably outweigh the extra revenue gained from them. (It is the same daft concept that is also responsible for the idiotic fact that we still have 'TV licence inspectors' in this country.)
So, who will pay the extra € 200 per year and flat? The landlords? You must be joking. They will pass it on straight away and raise the weekly rent by € 5, or perhaps even more, using the tax as a very convenient excuse. Thus the most vulnerable and least well-off are targeted, while the minister makes it look like a tax on the rich. Pull the other one, Brian. It still has a bell or two left on it...
With regards to car parks, the new tax is a punishment for caring employers who provide decent facilities for their staff. Those who don't give a hoot where their employees park their car while they are at work will be laughing their faces off.

In a country that still has not enough public transport and a widely 19th century infrastructure, the use of a car is often the only way to get from home to work, or from point A to point B. It is thus another onslaught on the ordinary people to increase motor taxes by 4% and 5% respectively (depending on the size and classification of the car). Government ministers will of course not be affected by this, as they enjoy the luxury of chauffeur-driven limousines, paid for by you and me, the taxpayers.

Not surprisingly, all the tax relief and supplementary payments for the farmers have remained untouched and are even partly extended. This is Fianna Fáil's pay-back to the Irish Farmers' Union (IFA), which earlier this year - during the debate on the Lisbon Treaty - defected from the NO camp and joined the government in the eleventh hour. The very generous treatment of farmers also reflects the fact that the present Taoiseach comes from a rural constituency. Brian Cowen (above) is only the third Prime Minister (out of 12) in the history of the State who represents a rural area, and that count includes Eamon de Valera, who was really a Dubliner and spent most of his time in the capital, although in the Dáil he represented the constituency of Clare in the west of Ireland. While de Valera's career lasted for many decades, the other countryside man at the top - Albert Reynolds from Longford - was Taoiseach for only two years (1992-94).

The most outrageous measure announced in the budget speech is the decision to revoke the right of all citizens over the age of 70 to a full medical card. This welcome gift for the elderly was introduced by the government - apparently without proper planning and costing - seven years ago, in order to win over the votes of the old-age pensioners. The ploy worked and Fianna Fáil is still in government, but now - in the face of the greatest crisis in living memory - they are turning around and taking the valuable card away again from the people who are most in need of it.
This is not just cruel and shows no signs of care and concern, it is an outright scandal and probably even illegal, as medical cards have an expiry date and most of those given to the elderly are valid until 2010 or even later.

It appears that the government is preparing for an all-out war against the elderly people of Ireland. The withdrawal of the medical cards that Brian Lenihan defended with "savings of about € 100 million a year" is only the latest attack against those of us who are no longer 20 or 30 years old.
Only recently it came to light that the Health Service Executive (HSE) plans to exclude all people aged between 50 and 65 from the national flu vaccination. (see my entry of September 27th "HSE endangers the Lives of 200,000 People")

Some might think I am exaggerating, but for many people who are affected by these cruel measures it seems as if the government wants them to die quickly and quietly, in order to relief the pressure on pension payments, hospitals and care homes.

And for what? € 100 million a year? Any reckless banker or gambling stock broker could win or lose more than that in an hour! It is about time that the government wakes up to the realities. This country might be full of ignorant and complacent people, not least thanks to our education system, but even the most lazy and docile citizens have a pain threshold. Over the past ten years the government has crossed the borderline of tolerance many times, but always got away with it. This time it is a question of survival for all, and I anticipate very angry reactions from all sides, reactions the cosy slobs in Fianna Fáil are not used to.

Overall the 2009 Budget is a great disappointment. Brian Lenihan (left) had the chance to make a difference, to inspire and motivate the people, and to stimulate the shrinking economy. Unfortunately he did none of that and carries on where Brian Cowen left off. Just like every Irish Minister for Finance in living memory he is wielding a big stick and hitting the most vulnerable in the country, while making sure that the rich and powerful are not inconvenienced in their cosy lives of corruption and luxury.

Brian Lenihan and Brian Cowen - who is after all the Taoiseach and was Minister for Finance until May of this year - could have given us a budget of hope and encouragement. Instead they took a leaf out of the book of the Bush administration in the USA and presented us with a budget of 'Shock and Awe'. I expect that the shock part of it will be outweighing the element of awe, and that people will have rather long memories this time. Well, they better have, if they want to survive in this cruel country of ours, governed by a weird bunch of self-serving, arrogant and ignorant gombeenmen (and gombeenwomen).

The Emerald Islander