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  • Shakespeare’s thoughts on Budget 2012

    December 5, 2011 @ 2:29 pm | by John Collins

    For a little light relief before the brutal cuts, a reader emailed us with an amusing re-write of one of the most famous speeches in Hamlet. “Shakespeare can be a fruitful source for reflection, even on budgetry issues, as my above adaptation offers,” she wrote. Here it is in full:

    Hamlet’s Pre-budget reflection:

    To spend or not to spend, that is the question

    Whether its prudent in hindsight to accept the

    Guarantees from Bankers for outrageous fortune;

    Or to take cash, avoiding dodgy credit troubles,

    And by debiting, end them. To spend to save

    No more, and by that saving, say we end

    The headache and the thousand fiscal shocks

    That cash is heir to. Is it a consumerism

    Devoutly to be wished? To spend, to save

    To save, nay, e’er give alms – Ay there’s the rub!

    For in that act of faith what value may accrue

    When we have shuffled off this mortal coil

    Must give us pause. There’s one aspect

    That makes calamity of an inner life.

    For who would hear insider tips- a source of crime:

    The investors wronged, the profit margin’s increase;

    The pain of repossession, the Creditor’s repay,

    The insolence of office of one who earns

    More than is merit yet unworthily takes,

    While another might his fortunes make?

    With a mere mouse click!

    Who would such bad faith bear,

    To grind an sweat under a weary life;

    But that dread of something beyond debt;

    The pre-determined debt-ratio, from whose burden

    No Government dares retrieve, sweetens the pill,

    And makes us rather pay those debts we have

    Than buy in others that we know not of.

    Thus indebtedness makes vassals of us all.

    And thus the natural mode of self-determination

    Is ensnared o’er with the dark clouds of debt.

    And enterprises of great pith and moment

    With interest their currency turn awry,

    And lose the name of action.

  • Some traditions the same for Budget 2012

    @ 2:16 pm | by John Collins

    It’s long been an Irish political tradition that the main points of the Budget are leaked to the Evening Herald. Despite the move to a two day Budget speech, that tradition has been maintained and the Herald has splashed the details on the front page under the headline “Budget 2012 Revealed”.

    The main points are:

    • Child benefit cut to the standard rate of €140 across the board (a family with four children looses €768 a year)
    • The €200 back to school allowance scrapped
    • 40 Garda stations to be closed, mostly in Dublin area
    • €500-600 million in social welfare cuts
    • College registration fees rising €250 to €2,250
    • Fuel allowance only available for 26 weeks
    • A household charge of €100 will be introduced raising €160 million
    • Standard unemployment and pension payments unchanged
    • Cuts to education budgets of €200 million
  • Budget 2012 – the view from the analysts

    @ 12:23 pm | by John Collins

    The mood music set by Taoiseach Enda Kenny’s televised address to the nation last night suggests that Budget 2012, which is being revealed over the next two days, is likely to be brutal.

    “I wish I could tell you that the Budget won’t impact on every citizen in need, but I can’t,” Mr Kenny said.

    While there is plenty of speculation about what may or not be under threat from the Budget, here’s a round up of what various analysts around town are predicting. (more…)

  • Our coverage of Budget 2012

    December 1, 2011 @ 7:02 pm | by John Collins

    Next week’s Budget 2012 will be historic in many ways – not least that the traditional budget speech by the Minister for Finance detailing the spending cuts or increases and how they will be funded will be delivered over two days.

    In this game of two halves Minister for Public Expenditure & Reform Brendan Howlin will announce the budgets or votes for different Departments in a speech in the Dail beginning at 2.30 next Monday. The following day Minister for Finance Michael Noonan will unveil the various tax measures to support the spending announced the previous day.

    While the logic of spreading the pain over two days remains unclear, we do know for certain that Fine Gael and Labour are going to unveil the fifth austerity budget in a row which aims to make savings of close to €4 billion. We also know that VAT at the top rate will go up 2 percentage points to 23 per cent, a flat rate €100 “property tax” or household charge will be introduced, capital gains tax, motor tax, carbon taxes and Dirt look set to be increased significantly, while the axe will likely fall heavily on education and health.

    Despite the number of kites that have been flown in advance of Budget Day(s) there are still going to be a lot of surprises as the Government attempts to meet the targets imposed by the troika. The Irish Times will have a full package of online and offline coverage to help you assess the impact on your pocket or your business.

    We’ll be live blogging both speeches with the main points as well as commentary, while we’ll also have a video feed from the Oireachtas. On Twitter you can follow @IrishTimesBiz for the most comprehensive coverage of the speeches and reaction to them. Followes of @the_irish_times will get the main measures introduced.

    On Tuesday and Wednesday morning, we’ll be running Ask the Expert sessions between 10am and noon, where personal finance experts from The Irish Times and PricewaterhouseCoopers will answer your questions on how the budget affects you. Irish Times reporters will also contribute video analysis on the measures introduced after the speeches have been delivered. You can find out how the budget will hit your pocket with our budget calculator.

    In print we’ll be producing the definitive Budget 2012 coverage with special supplements in the newspaper on Tuesday and Wednesday featuring our team of expert writers including Miriam Lord, Dan O’Brien, Stephen Collins, Conor Pope and Ciaran Hancock.

  • Out-foxing new media: telly tales from the US

    November 18, 2011 @ 2:25 pm | by Simon Carswell

    On a visit to New York last week, I had an interesting conversation with Dennis Swanson, a 50-year veteran of the US television industry who is president of operations at Fox Television Stations. He manages 27 US stations and about 4,000 staff across the Fox network, part of Rupert Murdoch’s News Corporation. (He only agreed to an interview on the basis that I wouldn’t ask him about the phone hacking in the UK – not ideal, I know, but he was an interesting bloke.)

    A man who is very proud of his Irish roots and the fact that his ancestors hail from Co Mayo in particular, Swanson is president of the Ireland-US Council, the business association which held its annual dinner in Manhattan last week.

    He told me a great story of how he gave an up-and-coming host her first television show in Chicago in 1983.

    At the time, Swanson had been working for ABC television in Los Angeles and was asked to take control at the network’s flagging station in Chicago. The station’s morning show was bottom in the ratings. A producer showed him a tape of a young woman from Baltimore named Oprah Winfrey. (more…)

  • Can Ireland beat Chile (on bank bailout costs)?

    November 17, 2011 @ 4:11 pm | by Simon Carswell

    Alan Ahearne, the former economic adviser to the late Minister for Finance Brian Lenihan, produced some interesting figures at a conference in Dublin yesterday morning that are worth reproducing here.

    Ahearne, who is back teaching and researching at NUI Galway after his stint in the “war-room” in the Department of Finance, listed the costs of the worst banking crises as a proportion of GDP and compared the gross costs (what Ireland and other countries spent bailing out banks) and the net costs (after what the other countries recovered from the sale of bank stakes and assets). Here’s the table he produced from a research paper that he is working on.

    The figures show that the Irish banking crisis has been the most costly on record based on gross costs.

    “We want to do a Chile on it, not an Indonesia,” Ahearne told the Irish Association of Corporate Treasurers conference in a Dublin hotel.

    Asked later how much of the upfront (gross) bailout cost he thought the Irish State would recover, Ahearne said: “I have no idea – it depends on how the economy goes and what happens to the property market.”

    A “good chunk” of the €29.3 billion injected into Anglo Irish Bank would never be recovered, he said, and that it was “unknowable” how much of the €20.7 billion pumped into Allied Irish Banks would be recouped.

    Looking at the overall figures again, the Government has injected/committed €62 billion of public money (so far) to the Irish banks.  It remains to be seen whether further cash is required at Irish Life and Permanent, depending on how much the State can save from the sale of Irish Life. Of the €24 billion required under the latest recapitalisation bill, a saving of €7 billion was made from burning more junior/subordinated bondholders. This saving also includes the €1.1 billion injected by the Canadian-led group of  private investors for a 35 per cent of Bank of Ireland (compared with the €4.2 billion invested by the Government for a 15 per cent stake).

    So clearly the Irish banking rescue has come a long way since October 2008 when it was described by Lenihan as “the cheapest bailout in the world so far”.

  • Night of the long knives for quangos

    @ 10:52 am | by John Collins

    The big story today will be the publication at noon of the Public Service Reform document at an event in Government Buildings with Taoiseach Enda Kenny, Tánaiste Eamon Gilmore, Minister for Public Expenditure and Reform Brendan Howlin and Minister of State with special responsibility for Public Service Reform and the OPW, Brian Hayes.

    Doesn’t sound that exciting when you put it like that, but what in fact you can expect is an end to decentralisation, the merger or closure of several quangos and state agencies, and the loss of several thousand public sector jobs. Ciaran Hancock revealed this morning that the Irish Aviation Authority and the Commission for Aviation Regulation are likely to be merged. Merging the regulator into the body it regulates is an interesting challenge and gives you some sense of the difficult choices on the table. Here’s a full preview of what we expect.

    Elsewhere this morning the European boss of the IMF has quit, citing personal reasons, media group UTV has seen 2 per cent revenue growth in the first 10 months of the year, and make sure your sitting down for this one, Ryanair boss Michael O’Leary and BA boss Willie Walsh have come together to ask the British government to axe air passenger duty.

    In the newspaper today Simon Carswell got hold of David Drumm’s defence documents in his US bankruptcy case. Drumm is claiming that the Anglo Irish Bank board and Financial Regulator knew all about Sean Fitzpatrrick’s warehousing of his directors loans as well as the Maple 10 loans to customers to buy shares, both of which are the subject of investigations.

  • Were the banks trying to tell us something?

    November 15, 2011 @ 4:45 pm | by John Collins

    Three years on from the Irish banking crisis coming to a head with the Government’s blanker guarantee much has been written about how the authorities failed to see what was coming down the tracks.

    But maybe the signs were there all along for all of us to see? This picture which was sent in by a reader suggests they were.

    A betting office sign in the window of a Bank of Ireland branch

    As our correspondent explains:

    “Took the attached photo  way back in the early seventies, in a town in the Midlands. Thought you might be interested in this photo and find it amusing.
    Was the bank trying to tell their Customers and Share holders something?”

  • Mourning over the Anglo $1bn bond “tombstone”

    November 7, 2011 @ 5:46 pm | by Simon Carswell

    You gotta love the language used by financial hotshots. This is a good and timely example. It is a photograph of the “tombstone” of the controversial $1 billion (€720 million) senior Anglo Irish Bank bond that was repaid last week to the mostly risk-taking hedge funds and investors in distressed debt. Many made a killing, buying in at a deep discount earlier this year and netting a windfall when the debt was repaid in full by the State-owned bank. The trophy is nicely placed between a bull and a bear to reflect how markets move. (It’s certainly difficult for the public to bear this bull.)

    In investment banking, a client is presented with “tombstone” – also known as a “deal toy” – to mark the closing of a business deal. They are often customised for the client. In this case, the trophy was designed around Anglo’s arrowhead logo.  It’s worth noting from the trophy that the institutions which sold this five-year bond – the so-called “book-runners” – when it was issued in November 2006 were US bank Citigroup and Japanese bank Nomura.

    There is no better item than a “tombstone” to commemorate last week’s transaction. This dead bank Anglo (being run down as  Irish Bank Resolution Corporation) is bequeathing cash to senior unsecured unguaranteed bondholders at 100 cent in the euro.  Now that is something to mourn.

  • Are we set for a “grand bargain” or a “grand fudge”?

    October 25, 2011 @ 1:02 pm | by John Collins

    Crunch time for the euro, European economies and even the global economy tomorrow when the continents leaders resume their talks in Brussels at 6pm on Wednesday. While there’s a real sense of deja vu about this big set piece, it is the thirteenth crisis summit in two years, this is increasingly looking like the last chance saloon if Europe doesn’t want to slip into a lost decade of stagflation.

    So what are the options on the table and what are the complications of each? (more…)

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