Current Account

• Wishing you the worst of luck in your new role: who have been the least popular job appointees?

  February 26, 2009 @ 9:33 pm | by Laura Slattery

  Richie Boucher must have been feeling pretty happy to have landed the top job at Bank of Ireland - but you can’t please everyone. Labour Party deputy leader Joan Burton and Fine Gael’s Kieran O’Donnell were not breaking out the champagne to congratulate Mr Boucher, viewing his internal candidate status as a missed opportunity to bring some fresh blood into Irish banking. But who qualifies as the most unpopular appointees to plum jobs? This list is all we could think of right now… suggestions welcome.

  1. Avram Grant: Grant’s elevation to manager of Chelsea football club in September 2007 after the sacking of “Special One” Jose Mourinho was the definition of poisoned chalice. Former Chelsea player Pat Nevin summed up the challenge when he told BBC 5Live that Grant would be “as welcome as Camilla at Diana’s memorial” at Stamford Bridge. The surly Grant eclipsed Mourinho’s achievements at Chelsea by taking them to the Champion’s League final, but ultimately confirmed Mourinho’s jibe that he was a “loser” by failing to win the title on penalties. Just one little slip up meant Grant swiftly followed Mourinho out the revolving Chelsea managerial door.

   2. Guy Hands: The head honcho of private equity group Terra Firma endeared himself to no one when he took control of faltering music label EMI and promptly signalled the death knell for music industry hedonism, questioning what all the “fruit and flowers” were on the expense accounts (it’s code for what we will politely call partying). Dubbed a “confused bull in a china shop” by Radiohead singer Thom Yorke, the arrival of Hands and his fellow “suits” was followed by a voluntary, revenue-slashing exodus of its roster’s biggest stars, while a sulking Robbie Williams declared that he was “on strike”. Hands is currently trying to work out how to make money out of Internet downloads. (more…)

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• Confessions of a Shopaholic

  February 19, 2009 @ 8:00 pm | by Laura Slattery

  When is a film about the perils of being a financially dimwitted, emotionally blinkered shopaholic not really a film about the perils of being a financially dimwitted, emotionally blinkered shopaholic? Answer: when said film goes to the trouble of hiring Pat “Sex and the City” Field to be its costume designer and is then promoted by Cineworld with a competition giving away “limited edition” Gucci handbags.

  Confessions of a Shopaholic, a film based on the books by chick lit author Sophie Kinsella (aka former financial journalist Madeleine Wickham), opens at cinemas nationwide tomorrow, with its star Isla Fisher spotted gamely denying at its London premiere earlier this week that, in these days of rising repossessions and evaporating retail sales, it might not be such wonderful timing to release a film that documents the joys of unrestrained, credit-fuelled oniomania (the quasi-medical term for shopaholicism). (more…)

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• Near-death experience? Whatever. Where’s our money?

  February 18, 2009 @ 12:01 pm | by Laura Slattery

  It is always a little disconcerting when air travel results in wet feet, but for the 23 Bank of America employees on board the plane that crashed into New York’s Hudson river last month, there was further indignity to come. No sooner had they finished giving the television networks interviews about their miraculous survival than Bank of America was sending them emails demanding that they pay back the air fare on the grounds that their business trip had been cancelled - a concern that was no doubt to the forefront of their minds when they were scrambling onto the semi-submerged wing and waiting for passing boats to come rescue them.

  Is cashflow in the banking sector really that bad? Compared to, say, Citigroup’s cancellation of a $50 million new corporate jet, this Bank of America clampdown on corporate expenses can best be described as stringent. Surely it is polite to at least let your employees’ post-traumatic stress pass before auditing their expense accounts?

  Ah, but of course like so much in the banking sector, “standard operating procedures” were to blame for the error. Bank of America has apologised and told the 23 employees that they can keep the air fares refunded to them by the airline, US Airways. Let’s hope the money is enough to cover the cost of the Xanax pills next time they have to take a business flight.

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• Mortgage memos

  February 11, 2009 @ 12:13 pm | by Laura Slattery

  The phone rings. It’s not “private number calling”, so it can’t be NTL. But I recognise it as the same number that I’ve missed calls from twice over the last few days. It’s the mortgage broker I took a loan out with three years ago, Simply Mortgages.

  I usually wouldn’t bother answering - if it was something important they would write - but I’m working from home this week and have an irrational urge to talk to another human being for a few minutes, so I press the green button. “It’s X from Simply Mortgages, can you talk?” she says. “Hang on a minute,” I say, hoping to convey the impression I’m just excusing myself from an important business meeting when really I’m in my pyjamas, reluctantly turning down the volume on a fascinating BBC News segment with Michelle Mone, founder of Ultimo lingerie, about how to use the recession to start your own business and then get Julia Roberts to endorse your product.

  Simply girl wants to offer me a financial review - the chance to sit down with my original mortgage “consultant” for half an hour to discuss my outgoings. That would take more than half an hour, I think. Specifically, they want to talk about how I could save money on my mortgage, my life assurance and my home insurance. “Is that something you would be interested in?”

  “No,” I say. “Sorry, no.” I remember my original mortgage consultant: she was very professional, not at all like those Simply Mortgages employees who had a starring role on Prime Time Investigates in 2006. More importantly, she had the same monochrome Topshop skirt as me, so I felt I could trust her with my finances. Perhaps it would be fun to sit down and indulge in some nostalgia for the peak-era property market. But this phone call is raising my personal finance writer hackles. (more…)

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• The 2009 tax form

  February 10, 2009 @ 3:30 pm | by John McManus

  

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• Ireland can easily see off the euro-bullies

  February 9, 2009 @ 6:39 pm | by John McManus

  Interesting note on Ireland by  Charles Dumas of Lombard Street Reseach who suggests that the large spread on Irish Government bonds is a buying opportunity:

  “Ireland can absorb any losses in its financial system, and a major
  recession, and remain enviably richer than Britain, Germany and France, with
  good long-term growth prospects. In the worst economic and financial scenario
  its net government debt will be far lower. Commentariat hysteria is a buying
  opportunity.

  To read the full article follow this link

  dumas-on-ireland.pdf

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• Ireland’s Mr China on the Beeb

  @ 12:14 pm | by John Collins

  Peter Day’s World of Business show on BBC Radio 4 featured 2007 Irish Times/Ernst & Young entrepreneur of the year Liam Casey who gave a fascinating overview of his operations in China and what his firm PCH does for the global consumer electronics business.

  You can find an audio link here or subscribe to the podcast here.

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• Could Anglo Irish Bank debtors be moving money offshore?

  February 5, 2009 @ 7:02 pm | by Colm Keena

  Arguably the changes introduced into Irish banking by Anglo Irish Bank were not necessarily a positive development, according to one source spoken to with a long time involvement in banking.

  Anglo specialised in lending to property developers and property investors, and increased competition in that particular market. It upped the ante, and put pressure on its competitor banks to respond. This was a particularly unfortunate development in the context of a property boom, and is likely to have been a contributor to the development of a property bubble. Anglo had little effect in other areas of banking, such as lending to non-property related commercial activity.

  One of Anglo’s trademarks was that it would react quickly to its clients’ requests for funding. This may have played against it in the later period of the bubble, according to the source, as the bank was still quickly processing new loans right up to the moment when the bubble showed clear signs it was about to, and then did, burst. (more…)

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• Is the Government to blame for weak regulation?

  @ 6:56 pm | by Colm Keena

  One source spoken to during the week said the culture of the regulatory side of the Central Bank has always been an insular and slightly hostile one. Furthermore, the source, who has a professional interest in the area, said the culture is one of deference to the bankers whom the office is supposedly regulating.

  The issue is a bit more complicated than that in this reporter’s view. The DIRT inquiry in particular indicated that the attitude you get in a government agency can reflect the wishes, stated or otherwise, of its political masters. It appears successive Ministers for Finance were disinclined to encourage the Revenue and the Central Bank to clamp down on bogus non-resident accounts. That said, the Revenue has changed hugely in recent years, while banking regulation, it would appear, is still cowed and afraid to use its powers. Education levels, the tax scandals, and the attitude of the Government over the boom years, probably provide some of the answers for this.

  Another source had a more theoretical view on the matter: In common law jurisdictions, regulation doesn’t work. By this he meant that in common law jurisdictions, a term almost coterminous with the English speaking world, the view is that what is not proscribed is therefore permitted. It is for this reason that an obviously wrong act, such as former chairman Sean FitzPatrick’s treatment of his loans, could be viewed by the regulator’s office, and FitzPatrick, as not being wrong. In their view, presumably, it was not wrong because it was not specifically outlawed (though the view that what FitzPatrick did was not illegal is questioned by many with a professional knowledge of accountancy rules). This is in contrast, according to the source, to the civil law jurisdictions where something is not done unless it is specifically permitted. This view explains why risky investment/betting structures, such as contracts for difference, became such a feature in the US and UK investment worlds, not to mention Ireland.

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• Anglo controversy has echoes of Ansbacher and DIRT

  @ 6:50 pm | by Colm Keena

  A number of interesting points have arisen in discussions over recent days with contacts with an interest in the banking crisis that have not found their way into the newspaper. In the main they involve regulation and Anglo Irish Bank.

  One concerns the striking similarities that are emerging between what it appears transpired at Anglo Irish Bank and what transpired with the Ansbacher Deposits in the 1970s and 1980s and bogus non-resident accounts a decade later.

  In the case of Ansbacher, Central Bank officials became aware at an early stage that the architect of that system, the late Des Traynor, was running a secretive banking service that was being used for tax evasion, yet nothing was done. Regulators have the power to removed people from senior positions in regulated institutions if those people are not deemed to pass a fitness and probity test. The reason for having a test is because of the damage that can be done when inappropriate people hold power in financial institutions.

  Despite its discovery concerning Traynor, however, Central Bank officials did not have him removed from his position. He moved his secretive operation deeper underground, and carried on helping some senior business figures, and the former Taoiseach the late Charles Haughey, evade tax. (more…)

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• Frankfurt fudge

  @ 5:37 pm | by Laura Slattery

  Moving swiftly on… or not, if you’re the European Central Bank (ECB). Jean-Claude Trichet and his pals surprised no one today by sticking to their plan to respond to the swiftly deteriorating euro zone economy and rapidly falling consumer prices by making a dramatic intervention in interest rate policy… leaving rates completely unchanged. Public sector workers weighed down by pension levies will have to wait another month for some financial relief via an interest rate cut, not that Trichet was making any “pre-commitments” at this meeting of the ECB governing council in Frankfurt.

  While the Bank of England slashes and burns its interest rates - to the point where monetary policy no longer becomes effective, according to some critics - the ECB has chosen to sit back and see what next month’s round of purchasing managers’ indices (PMIs) and services sector sentiment data has to say about the exact degree to which the euro zone is lingering in economic malaise. January’s data was just that little bit too inconclusive for some, with the odd glimmer of hope that the euro zone economy may have found a way to stabilise itself through the unwinding of a commodities prices spike and a softening in labour costs.

  Governments and “authorities”, which presumably includes the ECB, have not been “slow” or “shy” or “timid” to deal with this unprecedented financial crisis, Trichet told reporters at the interest rate decision press conference. But many of the journalists present wanted to know why the ECB was bothering to stall what they felt was an inevitable cut in rates. Such a move, which would take euro zone rates down to a level they have never been before in their history, clearly does not come easily. Having told a Reuters reporter that if a cut happens next month it was likely to be a borrower-pleasing half rather than a quarter of a per cent, Trichet later attempted to backtrack, saying he had said “absolutely nothing” about the size of any future cuts.

  Too late… the “hint” had already been dispatched to the newsdesks via the twitchy wire services.

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• The only Economist who got it right - and he’s been dead for over 120 years!

  February 3, 2009 @ 5:47 pm | by John McManus

  

  “Owners of capital will stimulate the working class to buy more and more expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism”   Karl Marx, Das Kapital, 1867 

  Yes..yes we know its a fake!!!!  But you may enjoy the comments so we shall leave it up

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• Will the economy collapse if I take a duvet day?

  @ 9:52 am | by Laura Slattery

  When Garda spokesmen, road agencies and Met offices warn people against all but essential travel, pretty much everyone save nurses, doctors and the unwaveringly egotistic are bound to be sent hurtling into a bout of existential pondering about just how essential it is to show up to work - indeed, just how necessary is their job at all?

  “Snow Show” declares the Irish Daily Mirror this morning, predicting that vast numbers will take one look at the snow showers outside the window - now uncannily reminiscent of old-school cathode ray televisions when the aerial went (it used to be the other way around) - and settle back into bed for a duvet day. Up to one in five British workers - 6 million people - were estimated to have missed work yesterday as the worst snow storms in 18 years hit the south-east, a fact that inevitably generated these great but completely unprovable statistics like how the weather had cost the British economy £1 billion in one day.

  Contracts went unsigned, deadlines were gleefully abandoned, invoices were left lingering in in-trays nationwide: teleworking just isn’t the same, it was claimed, and anyway all those people who should have been working from home were really in their back gardens making snowmen (with or without the help of children) and sending in the pictures to the BBC.

  It follows that the Irish economy will lose unspecified “millions” with every white powdery outpour. But I don’t imagine when we look back on this turbulent economic era, we’ll be talking about how first there was the property bubble, then the credit crunch and Northern Rock and Lehman’s, followed by mass layoffs, global recesssion, stop-start pay talks and empty public coffers, and then in February 2009 it snowed for a few days and that’s when the entire economy finally got sick of getting its feet wet and went into a deep slumber. That said, it wasn’t called the “winter” of discontent for nothing.

   With employers all too trigger-happy with redundancy notices right now, insecure workers will probably be better off not succumbing to the idea that their job is worth less than the effort of finding a bus that’s bussing - or breaking apart some furniture into two long planks, tying them to your feet and skiing into work, if that’s what it takes. At least open the front door and take a peak outside, even if the only reason you brave the ice is because you’re so broke you can’t afford to whack your home heaters on full blast and would be better off in the office feeding off the body heat of any colleagues still left on the payroll.

  P.S. It actually looks like a bona fide shake-it-up-and-down snow globe outside now. Pretty from the inside.

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