This week John Collins talks to Barry Dixon of Davy Stockbrokers about reporting season, Simon Carswell explains how the state took a stake in Bank of Ireland, while John Power of the Irish Hotels Federation talks about the problems facing the sector.
Twenty years after he made Roger & Me about the decline of his home town of Flint, Michael Moore’s new film Capitalism: A Love Story is an early contender for horror movie of the decade. Any film featuring full-time pilots forced to rely on food stamps to survive, privately run prisons profiting off the incarceration of innocent teenagers, blue chip companies that take out something known (amongst themselves) as “dead peasants” insurance and an army of aptly named “condo vultures” is always going to be pretty spine-chilling.
Capitalism… has got all that and a brief history of Reaganomics. Moore’s film documents how the financial crisis turned cities across the US into Flint-like pockets of desolation, with boarded-up windows and a grim proliferation of ripped-up furniture amassing on the roadsides. Shown at the Jameson Dublin International Film Festival at the weekend, Capitalism… picks up where Roger & Me ended. Moore’s deeply sarcastic conclusion in 1989 that General Motors’ gutting of the Michigan town (laying off tens of thousands of workers at a time when it was massively profitable) was “truly the dawn of a new era” has turned out to be even more accurate and damning a prophecy that he could have imagined. Its days as the proud production centre for Cadillacs long behind it, this time Moore found that Flint had the honour of providing the PO Box for a company that processes hundreds of thousands of foreclosure notices to defrauded customers of predatory lenders.
During Moore’s childhood in Flint’s 1950s heyday, the marginal rate of tax was more than 90 per cent, he notes, and yet the rich still led a good life. In the decades that followed, the rate more than halved. Washington became synonymous with Wall Street, the rulebooks for financial institutions were burned and real incomes for workers flatlined. In March 2006, Citigroup – then the world’s largest bank – wrote triumphantly in a (now notorious) memo entitled “Revisiting Plutonomy: The Rich Getting Richer” that 1 per cent of the wealth was safely in the hands of 95 per cent of the population. An even greater concentration of wealth was possible, Citigroup speculated: the only threat to this glorious state of being was the risk that voters might suddenly demand a more “equitable” share of the loot.
Thankfully, the plutonomists were in place to maintain control of the peasants via an increasingly well-trodden path from the Goldman Sachs boardroom to the White House. Nobody wanted rid of capitalism, because everyone thought it possible that they too could someday be the ones with the corporate jet. For all this villainy and despair, Capitalism… is casually hilarious. All the trademark Moore-isms are deployed: the purposefully gormless attempts to doorstep CEOs; the archive footage of Stalinist marches to mock capitalist propaganda; the faux-incredulity as he asks a succession of bankers to explain the equations that purported to prove how financial derivatives work.
On that subject, however, nothing in the film made me quite as incredulous as the passage in John Lanchester’s book Whoops! (reviewed here) on how the financial institutions’ resident mathematicians (the “quants”) peddled to the world models of risk calculation so impossibly wrong that they confidently asserted that the risk of a meltdown in the US property market was such that it would only happen in a time-frame many, many trillions of years longer than the history of the universe. I’d have liked to have seen Moore’s bad-actor face as someone told him that piece of delusional pseudo-science.
For an entertaining summary of Wall Street’s dubious grasp of maths, read this 2008 paper by a group of UCD economists. For a definitive account of the event lovingly known as the GFC (global financial crisis) by those who caused it, buy Whoops! And in the meantime, Capitalism: A Love Story is on general release from Friday.
This week John Collins talks to David McNeill from Japan on Toyota’s problems, Barry O’Halloran on the Ryanair jobs, Anne Connolly, organiser of the Business of Ageing conference and Ciara O’Brien at Mobile World Congress in Barcelona.
This week the retail sales figures for 2009, whether Nama will free up bank lending, bank overcharging, a good week for Vancouver and a bad one for the euro.
The people’s favourites, the New Orleans Saints, may have won the Super Bowl in Miami last night but for many the real action doesn’t take place on the pitch but during the ad breaks. (more…)
This week we take the retail pulse on Grafton St, hear about Greece’s economic troubles, discuss Apple’s success with apps, and find out how Irish business is helping re-build Haiti.
So it’s one down, 11 to go, quicker than you can say “detoxing is stupid”. But what the hell was January all about? Current Account will kick off the first of its monthly reviews in what seems like appropriate fashion: with some ever-so-slightly-dodgy statistics. And no, I’m not talking about Ireland’s GDP.
The year began with almost as many guesstimates about how much the snow was costing the economy as there were news articles about whether or not Brian Lenihan was doing the right thing staying on as Minister for Finance. The Dublin Chamber of Commerce reckoned the mini ice-age was costing €40 million for each hour of lost productivity in the capital, which seemed like a lot when the UK’s business sector reckoned the standstill there cost its entire economy £600 million for a full day. Manufacturing slumped, but plumbing became a hot business to be in: Minister for Snow John Gormley couldn’t unfreeze all those pipes single-handedly.
When is insider trading not insider trading? When it’s an honest mistake. Story of the month in the Irish business world was the publication of the final report of High Court Inspector Bill Shipsey SC into contentious share dealings by DCC and its erstwhile chief executive Jim Flavin – a story now so old that it predates not only the banking crisis but the bursting of the dotcom bubble too. Flavin’s sale of shares in Fyffes worth €106 million in February 2000 was an “error in judgment“, Shipsey said, because Flavin “genuinely believed he was not in possession of price-sensitive information” when he dealt the shares – a defence that will no doubt be very popular in the years ahead.
The prescience of Flavin’s assessment of Fyffes’ doomed involvement in a venture known as worldoffruit.com – not a domain name that has rocked the world - suggests he should really be sitting on one if not all of the Government’s many technology and innovation boards. I’m sure they could squeeze him in if a few people just shift up a bit.
“Once City boys make up their mind there’s not a lot you can do,” was how Unite officer Jennie Formby summed up the sale of Cadbury to the American cheesemaker Kraft, a transaction that seemed to offer many short-term cash benefits for the bankers, solicitors and executives involved, but very few for Cadbury’s workers, consumers and the long-term health of the British economy, which eventually emerged from recession. The most common what-if (or counterfactual as what-ifs are known in jargonland) was what if, you know, the government had legislation to prevent such potentially damaging international takeovers – such as France’s “Danone Law”?
And, so, to personal finance. Want to SELL YOUR UNWANTED GOLD by sticking it in an envelope and posting it off to CASH-4-GOLD et al? Good luck with that – the UK’s Office of Fair Trading, headed by the Ryanair-baiting John Fingleton – began an investigation into whether such services are as consumer-friendly that they claim to be, or simply a spur for more home burglaries.
And finally… what a turnaround for the global motor industry. It began last year by gifting the world with seas of unnecessarily wheeled metal cuboids, which fanned out from the globe’s seaports in colourful testament to the tragic fluctuations of supply and demand. The last thing anybody wanted was a new car. This year, however, the industry has made a delightful U-turn from over-producing unwanted vehicles to recalling wanted ones. Toyota led the charge by recalling almost 8 million cars due to faulty accelerator pedals and ill-fitting floor mats, Honda chipped in by asking for more than half a million cars back due to a fire risk and Peugeot completed the trinity by recalling around 100,000 vehicles made in a plant co-owned by Toyota.
Ireland is, of course, technically out of recession - although for some reason I can’t quite put my finger on, I keep forgetting that. In any case, I doubt I’m alone in wanting to step on 2010’s faulty accelerator pedal and speed headlong into less perilous times. Until next month…
