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  • The National Pensions Reserve Fund: an obituary

    November 30, 2010 @ 12:30 am | by Laura Slattery

    The National Pensions Reserve Fund (NPRF), which has died aged nine from infanticide caused by multiple stab wounds, was born under the premise that it would prepare the Irish State for a pensions “time-bomb” due to explode in the decades ahead as Ireland’s population ages inexorably into an impoverished abyss.

    It was the best of what would prove to be a series of generally good times for its creator, then Minister for Finance Charlie McCreevy, who legislated that at least 1 per cent of gross national product would be committed to its coffers each year, on top of the proceeds from the flotation of the much-loved Eircom. This, he said, would pre-fund a rising public sector and State pension bill from 2025 and beyond. There were to be no drawdowns until that date.

    From its official launch in April 2001, when the fund had £5 billion (€6.35 billion) in good old Irish punts to play with, McCreevy proudly declared that he had “no power to give directions to it or to seek to influence its investment mandate in any way”. The academic Patrick Honohan, who would later become governor of the Central Bank, called it “the most important initiative in economic policy for the past decade”. From its birth, however, there were fears that the fund would flirt with potentially disastrous investments, such as dotcoms, which were fashionable at that time. Indeed, the decision to require the fund’s managers to engage in stock-picking rather than simply acting as a passive “index fund” tracking the whole investment market served to push up costs (while making a lot of market types a lot of money).

    Recommendations by Honohan and others that the fund be precluded by law from holding Irish assets in order to prevent “pressure from promoters for the fund to finance worthy-sounding but unviable projects” were not followed. Critics of the fund’s overseers, the National Treasury Management Agency (NTMA), would later point to potential conflicts of interest. One branch of the NTMA, the National Development Finance Agency, was in the business of advising public-private partnerships (PPPs) on how to secure the lowest-cost financing, while the other branch, the NPRF, was figuring out how to maximise the commercial returns.

    The rationale for the “rainy day” fund was consistently questioned. Economists from across the ideological spectrum wondered why McCreevy was intent on setting aside money for the pension fund while at the same time cutting back on infrastructure spending. Its surplus evaporated, the Government was borrowing in order to both save and spend – an economic strategy described as “unique”. In a 2002 election pledge, the Labour Party advocated using billions from the fund to build schools, hospitals and roads, for which it was accused of not taking public and State pensions seriously. But it lost the election and Ireland’s sovereign wealth fund was instead kept for a higher purpose.

    As far as investment performance was concerned, the fund enjoyed some early luck. The time devoted to the recruitment of fund managers in 2001 meant the initial investment was held safely on deposit during that disastrous year for equities. Entirely coincidentally, once the fund managers got their mitts on the money, the fund’s value began to slip back and it lost €763 million by the end of 2002. The State’s distinct lack of an ethical investment policy also proved controversial – tobacco vendors Philip Morris, Imperial Tobacco and British American Tobacco; cluster bomb makers such as Lockheed Martin, Raytheon and Thales; and Iraq war profiteer Halliburton were among its hottest stock picks.

    In 2003, the NPRF pulled itself back into the black. A year later, the fund value crossed the €10 billion mark, while 2005 was stellar all round as it pocketed returns of almost 20 per cent. By 2006, it was busy getting stuck into the burgeoning bubble in private equity. In July 2006, then Minister for Finance Brian Cowen denied suggestions that the Irish economy was a “headless chicken”, citing the NPRF as one of “the hallmarks of an economy which is prudentially and well managed”. All had changed utterly by 2008, when Minister for Finance Brian Lenihan signalled that he was reviewing payments to the fund due to the State’s mounting deficit. But the fund would not be “raided” to prop up public finances, he pledged. “I don’t succumb to temptations like that.” Michael Somers, the NTMA chief executive at that time, added “future generations will thank us” for the foresight of maintaining “a big kitty”.

    As Ireland’s banks lurched from crisis to crisis, the NPRF’s status as the sole evidence of Irish economic prudence began to look in even greater jeopardy. In March 2009, the Government used emergency legislation to give €3.5 billion each to AIB and Bank of Ireland from the fund in exchange for preference shares. The bank recapitalisation project was in full, cash-devouring swing. In 2010, an additional State investment of €3.7 billion was assigned to AIB, while on November 28th, in a fatal blow, the fund was further drained of “approximately” €10 billion in order to prop up Ireland’s ”black hole” banks. There would be no schools, hospitals and roads, no NPRF-funded stimulus and pretty much no pre-funding of State pensions. The liquidation was set to begin.

    From a total fund of almost €25 billion, just €4.2 billion remained in the “discretionary” part of the pension pot, with no new influx of money on the heavily indebted horizon. The fund’s passing was nevertheless marred by the insistence in official quarters that the monies invested in the banks would one day secure an investment return for the fund and maybe even allow it to fulfil its original purpose. The demographic pensions “time-bomb”, which will see the ratio of workers to pensioners shift from five-to-one to two-to-one by the middle of the century, continues to tick down as before.

    National Pensions Reserve Fund, born April 2001, died November 28th, 2010; survived by a sister, Nama.

  • Freezing to death? The Government has its ear muffs on

    November 28, 2010 @ 9:00 am | by Laura Slattery

    You may have noticed it’s a little cold outside. And in. Sub-zero temperatures are sending the country into a blue freeze as severe as our economic stasis. But if you’re feeling it, then you are, by comparison, lucky. In the advanced stages of hypothermia, its victims become unaware of how cold their bodies are. The shivering stops.

    Age Action, which has made a special plea to people to look out for their elderly neighbours during this wintry spell, estimates that 2,000 older people die each winter from cold-related illnesses. These are deaths that could be avoided were they not living in fuel poverty – typically defined as spending more than 10 per cent of your income on fuel needs (including a satisfactory heating regime). It’s three years now since an Institute of Public Health report found that Ireland has one of the highest rates of excess winter mortality in Europe. Fuel poverty, the institute said, was “unacceptably high” in Ireland, with no systematic monitoring.

    Age Action’s Eamon Timmins, who calls Ireland’s chilling record in this area “a matter of national shame”, was duly unimpressed by the Four-Year Plan’s announcement of increased carbon taxes on fuel. “The Government cannot add to [the] suffering by further intervening to increase the price of energy, without taking some action to protect these people,” he said. But it seems they can. In fact, Government policy whenever anyone raises the issue of fuel poverty is to put its ear muffs on and disappear somewhere snug.

    When carbon taxes were first introduced in the 2010 budget, Minister for Finance Brian Lenihan and Minister for the Environment John Gormley claimed the funds would be used in part to alleviate fuel poverty through a compensation voucher scheme. Now, as of last Wednesday, the carbon tax is officially designed to contribute €330 million to the “overall correction”. Earlier this month, Minister for Social Protection Eamon Ó Cuív ruled out introducing the voucher scheme, giving the excuse that “insulation, insulation, insulation” was the more efficient long-term approach. He also lamented that there was too much of an administrative burden associated with such a scheme.

    Indeed, keeping people alive can be such a chore.

    The least administratively burdensome way to provide what the Commission on Taxation called “adequate safeguards” to prevent fuel poverty would be to increase the fuel allowance. But even if this were to happen in next week’s Budget, it wouldn’t immediately heat up the nation. As Labour spokeswoman Róisín Shortall has pointed out, “working poor” families don’t qualify for the payment because they’re not in the social welfare loop. As a result, they’re also left out of the warmer homes’ scheme favoured by Ó Cuív, unless they make a special case. Meanwhile, Minister for Energy Eamon Ryan told the Dáil in October that this scheme is due to make structural improvements to 22,500 low-income homes by the end of 2010. Unfortunately, it’s estimated that the number of households living in persistent fuel poverty is almost three times that amount at 60,000, with a further 160,000 suffering from it intermittently.

    Two years ago, the boss of British energy giant Centrica made a mask-slipping gaffe when he advised customers struggling with rising heating bills to lower their thermostats and endure a “two jumpers instead of one” winter. That now seems like a relatively sensible plan, given this Government’s approach is to say one jumper will be just fine, because we’ll be along with a lagging jacket later.

  • Dial D-A-I-L for economic carnage

    November 24, 2010 @ 2:02 pm | by Laura Slattery

    “What can the Government do to boost growth?” it asks on a fold-it-and-keep wallet-sized summary of “the National Recovery Plan, 2011-2014″. There will be plenty of room for it in our wallets anyway after it’s finished mopping up its mess.

    Well, it’s going to start by hacking 24,750 jobs out of the public sector and cutting the minimum wage by €1 an hour to €7.65 (which will inevitably have the knock-on effect of deflating the salaries of all low- and middle-income earners). Not permanently employed but have managed to scrape together enough hours to get by? The point at which you will start paying tax will drop to €15,300, a fall of €3,000, by 2014. All tax credits and bands will drop by an aggregate 16.5 per cent by the end of the “recovery” period.

    It’s going to follow this up by “reform[ing the] welfare system to incentivise work and eliminate unemployment traps”, which is fantastic, as we all know it’s merely the lack of incentive to get out of bed in the morning, not the jobless economic deep-freeze, that’s causing all our woes. Social welfare expenditure will be €3 billion lower a year by 2014 – the details of this particular misery have not yet been spelled out.

    Thinking of waiting out the recession with, I don’t know, a decade’s worth of education? That’s going to cost you €2,000 a year, as annual student fees increase 33 per cent.

    But if salaries and welfare payments plummet, then that’s okay, right, because we’ll be more “competitive” and things in the shops with be a lot cheaper? Hmm. Not so fast. From 2013, there will be an increase in the standard rate of VAT – the tax that hits poorest people most – from 21 per cent to 22 per cent, with a further increase to 23 per cent in 2014.

    There’s lots of insulting guff inspiring words in here about “a blueprint for a return to sustainable growth” and “identifying the areas of economic activity” that will allegedly provide employment. There’s also mention of confidence… vitality… dynamism… proportionate adjustment. The Business Expansion Scheme will be replaced by something called the Business Investments Targeting Employment Scheme, aka BITES. I’m not sure they’ve thought that one through.

    And then: “We must all accept our share of the burden so that we can collectively share in the fruits that will undoubtedly flow from solving our current problems.” So, what do you think? Do you have confidence that one day you will get to share in these magical, future fruits? Or has the Irish economy already rotted away in the stale IMF air?

  • Still waiting for “new faces” in Government, S&P downgrades Ireland

    @ 7:00 am | by Laura Slattery

    Poor Frank Gill. The Standard & Poor’s sovereign debt analyst was one of the first people to set our democracy alarm bells ringing when in March 2009 he surmised there was a need for “new faces” in government. This rare example of simultaneous perceptiveness and gall outraged the Dáil, which can usually only muster up the latter. In any case, that was way back when S&P’s best brains were cutting Ireland’s credit rating to a now covetable ”AA+”. Things have moved on, in the markets’ eyes at least. Shortly before midnight last night, the ratings agency downgraded Ireland from “AA-” to “A”, outlook very much negative.

    And, no, an A is not good, as I wrote here, back when it was still possible to be glib about these things.

    The statement by Standard & Poor’s makes little mention of political instability, with just a quick, throwaway blackmail about Ireland’s credit ratings coming under “renewed pressure in the short term should the domestic policy consensus weaken”. You will be shocked to discover that neither the sensitivities of Dermot Ahern and Noel Dempsey, nor Paul Gogarty and his unpredictable childcare arrangements, nor Brian Cowen’s sexist remark about Joan Burton, make the cut. Instead, Frank Gill emphasises that the lower ratings “reflect our view that the Irish government will have to shoulder additional costs associated with further capital injections into Ireland’s troubled banking system”. By Irish government, he means us.

    The statement says lots of other nasty things too, although none of this will surprise anyone at this late stage of the game, what with Bank of Ireland set to join Anglo Irish Bank, AIB et al on the roster of failed, nationalised institutions that we will desperately try to offload on anyone rich enough and brave enough.

    Despite the speed at which events are unravelling, this may not happen overnight. ”In our view, Ireland’s banking system will take several years to downsize,” says Gill. “The outlook for future costs to the government from financial retrenchment remains uncertain.” (Some commentators are talking about a quarter of a trillion, all in.) Meanwhile, ”the high overhang of private debt, fiscal austerity and the uneven outlook for external demand in Europe” means that S&P now expects “close to zero nominal GDP growth for 2011 and 2012″.

    Frank’s still waiting for his “new faces”, as are we. In some ways, it’s comforting that an organisation whose clients are the power-crazed, plutocratic institutions we know as “bondholders” has been even more naive than local democracy fans when it comes to the office-clinging abilities of Fianna Fáil. On the other hand, a general election or no general election – pffft. Worryingly, it now seems that bit more irrelevant to the credit ratings agencies and their institutional investor paymasters.

    Standard & Poor’s will hold a teleconference on its downgrade decision at 3.30 pm today, although frankly I’m planning on training the full leaden weight of my gloom in the direction of the gothic horror that is the four-year austerity plan – upon which you will find news updates and commentary at, here at The Index blog and on

  • Who’s got a complaint about the banks?

    November 23, 2010 @ 12:01 pm | by Laura Slattery

    With every Irish citizen and half the euro zone suffering as a result of the activities of cash-devouring, nest-feathering bankers, it might be a more sensible question to ask who hasn’t got a complaint about the banks? This morning saw the release of the latest update from the Financial Services Ombudsman, Bill Prasifka, which reveals that disputes with financial institutions remain close to record levels. Some 3,631 complaints were received in the first six months of 2010, with a third of them originating from the big bad banks as opposed to insurance, investment or pension companies.

    Of course, taxpayers pretty much own the entire banking sector now. Are they being any nicer to us? Not according to Prasifka, who notes that his office, now operating on a lower budget, ordered almost €1.3 million in compensation to be paid to customers during the period. “This is an indication that some financial institutions are not making sufficient effort to resolve complaints at an earlier stage,” he said.

    So that’s €1.3 million recouped as a result of financial sector gall and misdemeanour. A shame that getting the rest of the billions back is going to prove a bit trickier.

    But let’s look at one of the more delightful practices that the banks inflicted upon their struggling customers. The ombudsman said today he has 40 cases on his books of mortgage borrowers who were persuaded and/or forced to abandon their favourable tracker mortgages in favour of fixed- or variable-rate loans. Such a manoeuvre had the effect of lessening (by a fraction) the margin-draining effect of trackers on the banks – given the dismal state of their margins today, it was/is a generally futile exercise. But such policies have had a much more profound effect on those who were convinced to switch, as it typically costs them hundreds of euro a month in higher interest payments.

    The ombudsman’s office is now wrestling with the idea of whether such decisions were “informed choices” on the part of consumers (some of whom may have reckoned they could save money in the short term by fixing). It’s pretty clear, however, that it was a swindle. Consumers could not have been “informed”, as the lenders were, that tracker mortgages would be withdrawn, leaving them locked into endless rounds of interest rate hikes while tracker customers continue to enjoy historically low European Central Bank (ECB) rates.

    Since then, the Financial Regulator has continued to warn – as late as last August - that lenders were convincing borrowers to “remortgage” onto far pricier loans. It cited “poor levels of disclosure”, which is still about as close a euphemism to “lies” that consumers can expect from their watchdogs.

  • Prescient political commentary from Westlife

    November 22, 2010 @ 3:50 pm | by Laura Slattery

    In case you missed this vital economic analysis, the multi-millionaires Westlife on Saturday called for Irish “positivity”, despite the looming multi-billion bailout and mooted slashing of social welfare, the minimum wage and front line services.

    “The international media and even the homegrown media sometimes say everything is down and gloomy,” Nicky Byrne told the BBC’s World Service. “But there is a lot of positivity still in Ireland. Irish people as a whole are good people. We’ve done it before and we’ll do it again,” he opined.

    The ability to be upbeat in the face of adversity is certainly a quality that’s bound to come in handy during Westlife’s continuing round of album promotion media appearances. Last night, the boy/man band’s single Safe made its debut in the official UK charts at number 10 – crushed, in other words, by the popularity of their personal IMF bogeymen, JLS. Never mind, eh, lads. They can’t all go to number one. Although there was a time when they did, wasn’t there?

    But though it seemed yesterday that for the rest of us – to paraphrase Byrne’s father-in-law, Bertie Ahern – the doom was getting doomier, it turns out that Westlife were right, but just two days early. With the Greens greenlighting an imminent general election, soon the nation’s canvassers will be stocking up on cable-knits, Yeti hats and legwarmers as they “try and dig deep and fix” whatever political patches are still fixable. Meanwhile, rumours that Westlife are releasing a remix entitled (Your Deposits Are) Safe (Bailout Version) could not be confirmed at the time of posting.

  • Cowen accepts the bailout but not the responsibility

    November 21, 2010 @ 9:46 pm | by Laura Slattery

    As a result of an ill-judged edit, viewers of the national broadcaster missed the liveliest and most telling part of the press conference held tonight at Government Buildings by the current Taoiseach Brian Cowen and the current Minister for Finance Brian Lenihan. TV3 host and Irish Times columnist Vincent Browne asked Cowen if he accepted that he was to blame for “screwing up the country”; that he more than anyone else was responsible for Ireland’s economic catastrophe and that his continued presence in office was “a liability” to the nation.

    “I don’t accept that at all,” replied Cowen, grumpily. “I don’t accept your contention [or] the premise to your question that I’m the bogeyman you’re looking for.”

    Minutes earlier, a Bloomberg television journalist who asked if Cowen had ever thought of packing it in was told that the process of electing a Taoiseach was a parliamentary matter… mumble, jargon, mumble. As for whether or not he would lead Fianna Fáil into the next election, “obviously that is my intention”.  All of this enraged Browne who temporarily became the voice of a nation’s anger about the bizarre lack of contrition on the part of a Taoiseach who insisted there was a rationale for every decision (that he would explain to Browne on another occasion if he wanted) and that every decision the Government had made was “in the national interest”. “I have always taken full responsibility for my actions,” said Cowen, lost in doublethink and seeming almost resentful of the television cameras.

    He was also unable to answer Browne’s inquiry about the estimated level of Irish citizens’ future debt burden. This, he explained, would depend on the size of the drawdown on the assistance offered, which in turn would hang on further stress-testing of the black-hole-banks. Something to look forward to, then.

    There is at this point no confirmation on the total size of the bailout from the European Commission, the International Monetary Fund (IMF) and the European Central Bank (plus some bilateral loans from the UK and Sweden thrown in for good measure). Lenihan earlier in the day said it would not be “a three-figure sum”, by which he really meant it would not be a 12-figure sum of €100,000,000,000 or more. In other words, it will be less than €100 billion, according to the Government. EU sources and UK banking analysts say something similar, in case the Government’s best guesses are no longer enough.

    The only thing the press conference confirmed tonight, amid a blaze of obfuscation, was that Ireland will be taking the money. As a result, Irish public finances, for the next three years at least, will be subject to “regular reviews” by the external monitors that control the purse-strings. Whether the Government will be taking responsibility – as the concept of responsibility is understood by the (mostly livid) Irish viewers of the BBC and Sky (which kindly broadcast the press conference in full) – is as yet uncertain.

    It’s an infinitesimally small comfort, but Browne’s series of questions, transmitted live to millions across Europe, will at least have shown internationally that Irish people are not okay with incompetence, not sanguine about fecklessness, not calmly accepting of economic negligence. This, in the long run, can only improve our reputation. Shortly after Browne’s indignant contribution, the two Brians exited stage left. TV3, for its part, is broadcasting a special edition of Tonight with Vincent Browne at 10.30 pm, where the rational apoplexy will continue.

  • The export factor

    November 19, 2010 @ 5:12 pm | by Laura Slattery

    Another press release reaches us from the Department of Enterprise, Trade and Innovation. Is it just the thing to brighten up our afternoons? According to Minister of State for Trade and Commerce Billy Kelleher, “Ireland’s enterprise economy is now in a strong growth trend”, with figures (from the CSO) showing a 4 per cent year-on-year rise in exports in September. “The recovery in our economy over recent months has been maintained,” Kelleher declares.

    IMF? Here? Someone should have said, we could have given the place a bit of a dust and got some fancy biscuits in.

    The figures show that “the Government’s strategy in investing in an export-led economic recovery is the right one”, continues Kelleher, taking the credit. Maybe Frank Ryan, Enterprise Ireland’s chief executive, is right when he says Ireland will be the “comeback kid” of western economies – although that was, admittedly, a few weeks ago, and a few weeks, as the saying goes, is a long time in nationally humiliating sovereign debt crises.

    Now for some more export-related analysis. New research from PMCA Economic Consulting crunches the numbers on a “statistically stable, long run and meaningful relationship” between export performance and the creation of new employment. Based on the period from 1997 to 2010, a 10 per cent increase in the value of exports from Ireland is associated with a 4.1 per cent increase in employment, or potentially 76,000-plus new jobs, says PMCA’s Pat McCloughan. Good news, especially as “economists have traditionally tended to view exports as having a limited impact on job creation”, he adds.

    However, exports are only any use if we have someone at the other end who’s prepared to pay for the stuff. Here, the mood darkens. “The effects of deficit cuts are likely to be even more painful if they occur simultaneously across many countries,” says McCloughan. “This is precisely the international environment in which Ireland currently finds itself.”

  • The red line in corporate communications

    November 18, 2010 @ 11:16 pm | by Laura Slattery

    After two years of cuts and cut-threats; after a week of high-level Government stuttering, evasiveness and alleged ”pejorative terms”; after days of being left in the dark, finally the nation’s parents, pensioners, students and long-term sick have the reasurrance that they and their fellow citizens have been crying out for. Yes, the Government has promised us that the 12.5 per cent corporation tax rate will remain intact.

    Batt O’Keeffe sent out a press release saying the Government was “not for turning”. (This instantly made me think that it will be.) Mary Coughlan told the Dáil it was non-negotiable. (I don’t know about you, but I’m starting to think it is.) And Brian Lenihan told RTÉ that the sacred corporation tax rate was an “absolute red line” (that’s beginning to blur).

    Notwithstanding all this collective defiance, the front page of The Financial Times tomorrow asserts that “Ireland faces tax showdown”. And despite the complaint by the former editor of The Sun, Kelvin MacKenzie, on the BBC’s Question Time that Ireland is “undercutting” the UK corporate tax rate – “I want them to be a good neighbour to us and stop trying to nick companies out of this country” – it is, of course, the Germans and the French, and not the British, who would like Ireland’s corporation tax to kowtow less to transatlantic business interests.

    The American Chamber of Commerce, which next Thursday will feed Brian Lenihan a Thanksgiving lunch in exchange for more supportive words, was quick to reiterate its belief that any increase in the corporation tax rate would damage the economy and result in an exodus of job-providing US entities, some of which are quite adept at utilising tax avoidance schemes to bypass the 12.5 per cent rate anyway. But not everyone agrees that this precise rate is an economic saviour to be protected at all costs. Last month, Don DeGrazia, the US-based former chairman of global accountancy network Integra International, helpfully quantified matters by noting if Ireland’s corporate tax rate was increased to 15 or 16 per cent, “Ireland would still be competitive and thus attractive” to inward investors.

    Never mind all that for the moment. The 12.5 per cent rate, despite its sharp ideological edge, has become a sticking point – a symbol of our sovereignty, behind which Ireland’s ministers will unite, on-message, for the day, as it plays what The Guardian dubs “geo-political hardball”. Its posturing is also, presumably, aimed at any multinationals that, right at this exact moment, happen to be deciding where they should plump a job-spinning factory.

    But regardless of how vital the 12.5 per cent rate is, or isn’t, to employment, it is curious that the Government is less willing and able to make a similarly concerted, Cabinet-wide attempt to soothe the fears and anger of Irish citizens worried about the safety of their deposits, the status of their mortgage arrears, the future level of their pensions and the state of their schools and hospitals. On balance, I think I preferred it when it was still considered worth the Government’s while to make (even obviously empty) promises to the Irish people. The alternative is that we’re no longer worth lying to, as it, the IMF and European officials just thrash it out amongst themselves.

  • The Beatles fix a hole for iTunes and EMI

    November 16, 2010 @ 6:31 pm | by Laura Slattery

    After a long and winding road (ouch), the Beatles, EMI and Apple have come together (sorry) to bring us… digital versions of melodies that most people over a certain age have had burned into their musical memories since birth.

    Sure, as this official announcement from Apple makes clear, the Beatles’ back catalogue was a major gap for the iTunes store that has now been filled. I’m off to download For No One for €1.29 to get me through the melancholy day that’s in it. But frankly, the only way it’s possible for me to get excited about anything connected to the Beatles – whose cultural supremacy has long been supported by the economic weight of the baby boomer generation – would be if Steve Jobs invented a time machine and transported us back to a time when A Hard Day’s Night sounded fresh again.

    Still, despite my personal Fab Four ennui, the assertion of EMI chief executive Roger Faxon that “the Beatles and iTunes have both been true innovators in their fields” does rather stick in the craw. I’m not sure anyone who screamed their way through Beatlemania could ever have imagined their artistic contribution would be reinterpreted as the business jargon of “innovation” and placed in the same sentence as a logistics company like Apple (notwithstanding the many nerdgasms Jobs may have generated over the years).

    For EMI, the Beatles-iTunes deal comes at a critical time for the debt-saddled music label, which as of now is owned by the private equity group Terra Firma. It bought EMI at the peak of the market in 2007 in a move it now regards as a big mistake. Guy Hands, Terra Firma’s chief executive, recently lost a court case he took against Citigroup in which he claimed his long-term Citi banker duped him into buying the label (by pretending, estate agent-style, that there was another bidder on line two). Having breached the terms of its debt agreement with Citi, Hands – who was never much loved by EMI’s artist roster – is now fighting to keep control of the label.

    Flogging a few Beatles tracks on iTunes will probably come too late for Terra Firma. But it’s feasible that the licensing deal will eventually clock up the cents for EMI and the Beatles alike – there may indeed be a HMV-shy generation out there who will be moved to find out who this “Ringo” is that their grandparents start banging on about whenever they indulge in a little arrhythmic Rock Band drumming.

    Now: which Beatles song for the Christmas number one?

  • The euro zone’s contagion calendar

    November 15, 2010 @ 7:48 pm | by Laura Slattery

    Today (Nov 15th): Is the bailout on or off? Well, that depends on what you mean by “bailout” – according to Brian Cowen, it’s a “pejorative term”. He prefers to say that the Government is “engaging constructively with partners”. Fine Gael finance spokesman Michael Noonan, however, believes the Government is “fighting a rearguard action for appearances purposes”. Bond markets chipped in by taking the pressure off Irish bond yields – not, however, a sign that the crisis has been averted, but instead likely to reflect investor expectations of a rescue as early as…

    Tomorrow (Nov 16th): Could Ireland run out of its metaphorical road? European finance ministers including Brian Lenihan will meet in Brussels in what is set to be a critical meeting for Ireland – the market speculation is that Cowen’s constructive engagement could turn into something a little more concrete once this meeting wraps up. The Cabinet is also due to meet “very early” tomorrow morning to discuss the four-year plan. Meanwhile, Greece is due to hold a debt auction of 26-week bills.

    Wednesday (Nov 17th):  The EU finance ministers’ shindig continues, mindful perhaps of the words of German chancellor Angela Merkel. “If the euro fails, then Europe fails.”

     Thursday (Nov 18th): Spain, which fears contagion from the Irish and Portuguese debt crises, is due to hold a debt auction of 10-year and 30-year bonds, while Greece, which has been there and bought the bailout T-shirt, will announce its 2011 budget.

    Early next week (Nov 22nd-24th): According to comments today by Minister for Justice Dermot Ahern, this is when the Government will set out its four-year budget plan, which bailout or no bailout, is on track to take €15 billion out of the economy through spending cuts and tax increases.

    Nov 25th: Voters get a chance to vent their feelings through the long-lost therapy of democracy in the Donegal South West byelection.

    Nov 26th: Portugal takes its final vote in parliament on its 2011 austerity budget. Portuguese finance minister Fernando Teixeira dos Santos, who was quoted in the Financial Times saying there was a high risk Lisbon would have to seek aid, yesterday clarified that such a request was “not imminent”, while at the same time he not-so-subtly urged Ireland to get the hint and dip into the European Financial Stability Facility. (There’s plenty to go round.)

    Dec 7th: Brian Lenihan is scheduled to stand up in the Dáil to announce details of Budget 2011, for which he has pencilled in €6 billion worth of cuts. The standard smiling budget briefcase photo op seems doubtful at this stage.

    July 2011: Government ministers have repeatedly said that Ireland is funded up until mid-2011. If by some strange turn of events no bailout (sorry, Brian) occurs before this month, the National Treasury Management Agency (NTMA) will have to return to capital markets in an attempt to raise fresh funds if it wants to keep the lights on.

  • Pictures of trainees shame newspapers more than PwC

    November 11, 2010 @ 10:10 am | by Laura Slattery

    The text goes something like this: “We’re OUTRAGED by this SEXIST behaviour.” The subtext? “Oh yeah and here, why not take a gander at the lovely ladies. Our favourite in the newsroom is the blonde. We’re so sorry they’re just company headshots, but people might notice if we reprint images from Ryanair’s annual charity bikini calendar every day.”

    “Rated like prize cattle,” announces today’s Irish Daily Mail headline above the staff photographs of the female PricewaterhouseCoopers trainees whose attractiveness was rated – complete with a slang reference to female anatomy – by a group of male employees at PwC’s Dublin office. The bovine imagery is the Daily Mail‘s own.

    Presumably, the women college graduates were not so long ago delighted to have secured a place at one of the Big Four accountancy firms and excited to be gaining three years’ worth of professional experience. Of course, even without this shivering display of workplace chauvinism, as women they would have already been up against the statistics. The accountancy profession is no bastion of equality: while women now represent 50 per cent of the student intake, according to a study by Prof Patricia Barker, just 16 per cent of people who make it to partner level in the Big Four boardrooms of the English-speaking world are women.

    However, the male PwC employee who originally circulated the offensive email is not, it is understood, a senior partner in the company or anything like it.  What makes him and the other men involved so pathetic was their belief that compiling a “shortlist for the top 10” in an email and confidently forwarding it around was anything other than spectacularly dumb. There will be an inquiry into what the US gossip site Gawker labelled the “frat boy behaviour”, and the PwC partner in charge of HR, Carmel O’Connor, says the company is “taking the matter extremely seriously”.

    The same attitude has not been replicated by the media (led yesterday by the Evening Herald) that reprinted the women’s photographs, thereby inviting readers to play the very same “hot or not” game that they claim brings PwC into disrepute.

    Last night’s Tonight with Vincent Browne saw Browne question Irish Independent columnist David McWilliams about whether he was “embarrassed to be associated with a newspaper that does this”. McWilliams at first noted that the pictures were “all over the Internet already” before conceding that if he was editor, he wouldn’t have printed them, as he agreed with Browne’s view that publishing the photographs was “compounding” the insult the young women had received. That they had not asked for the spotlight is not a difficult concept to grasp.  

    Thanks to PwC’s colossal size, the story has now gone international. Gawker, which has more readers than all Irish newspapers and online media put together, is the kind of website that publishes stories that make even bitter political opponents of the US Tea Party’s Christine O’Donnell feel sorry for her. Repeated publication of the email would be negative for the company, Gawker observed: “Once it hits the British tabloids, it’ll certainly be a PR nightmare for PwC.”

    I don’t imagine the women involved are having much fun at the moment either. Again, just think what it must have felt like, starting out in a new job, buoyed by their fresh academic achievement, proud to pose for their company ID mugshots and eager to prove how capable they are. It must have been beyond their imagination to think that their faces would be collated en masse to be judged, compared and criticised not only by their male colleagues, but millions.

  • Nokia’s market share slips back to the last century

    November 10, 2010 @ 12:11 pm | by Laura Slattery

    Nokia’s share of the global mobile phone market has fallen to its lowest level since 1999 – back when “1 message received” was still a thrill and playing Snake was the height of handset gaming pleasure. According to new figures from research firm Gartner, Nokia’s market share shrank to 28.2 per cent in the third quarter, down from 36.7 per cent a year ago.

    This time, it’s not Nokia’s disadvantage relative to smartphone specialists like Apple that’s primarily to blame, but a push by unbranded Chinese vendors into emerging markets, according to Gartner. Nokia and other established handset makers like Samsung and LG are all losing out to these so-called “white-box” manufacturers, which are mostly small Chinese firms using chipsets from Mediatek or Spreadtrum Communications.

    As Nokia controls most of the low-end of the market, it’s been the most affected. Maybe not for long, however, as the focus of the white-box manufacturers is upshifting to the faster growing smartphone end of the market – the phrase “iPhone clone” is currently doing rather well in the Google search term charts. Overall, thanks to both the popularity of smartphones and a surge in white-box sales in Africa, India, South America and Russia, Gartner forecasts that the mobile phone market will grow by more than 30 per cent this year.

    Nokia’s still the biggest handset manufacturer (Apple has now claimed the number five spot), and its catch-up efforts in the smartphone markets mean its margins are improving. So it’s not time for the Finnish company to go back to pulping wood and selling snazzy rubber boots, just yet. And, who knows, maybe some day there will be a revival for a time when, if you wanted to, you could hurl your handset repeatedly against a wall and it would emerge with just a tiny scratch and no hurt feelings.

  • Marks & Spencer sends Portfolio to wardrobe heaven

    November 9, 2010 @ 5:33 pm | by Laura Slattery

    By now, it is pretty much standard for Ireland to get mentioned in the same sentence as Greece – it’s not just the facepalming bond junkies, but the mid-market retailers as well. Publishing interim results today, Marks & Spencer noted that while many of its overseas businesses were achieving good growth, some “continue to be impacted by the economic downturn, particularly the Republic of Ireland and Greece”.

    That’s polite investor relations-speak for “oh dear god, no one’s buying our workwear wardrobe staples anymore and if we’re not careful, we’ll end up with a Cumberland sausage mountain just in time for the January diet season”. Of course, that is paraphrasing, and if there’s one thing all major retailers have been doing in Ireland over the past two years, it’s managing their inventories with recession-esque caution.

    The M&S statement, which reported an overall 5.4 per cent rise in sales, revealed that new chief executive Marc Bolland is taking a hard line on the proliferation of clothing brands at the store. He’s zapped the Portfolio range, which was introduced last year but left consumers cold and confused. Indeed, the differences between Portfolio and its Autograph collection (more tailored) or its Per Una range (more tassels) were never especially pronounced, while the knowledge (from my bad habit of reading retailer press releases) that Portfolio was aimed at women over 45 always made me feel that even browsing its racks was instantly ageing. Older customers, those in the demographic that Portfolio was supposed to cater for, also failed to be impressed.

    Mind you, obliterating Portfolio is the type of sensible-but-kind-of-obvious manoeuvre that makes Bolland (not to be confused with the late glam-rocker Marc Bolan) one of the best paid chief executives in the UK.

  • Noel Curran a shoo-in for Montrose, says Paddy Power

    November 8, 2010 @ 12:13 pm | by Laura Slattery

    Paddy Power has suspended betting on the identity of the next director general of RTÉ, following an apparent surge of bets taking a not-so-risky punt on Noel Curran for the top job. Paddy Power says that several bets were placed at odds of 5/1 this morning on the ex-managing director of RTÉ television following a similar career path to the retiring director general, Cathal Goan (who also previously held the television MD job).

    Having narrowed the odds to 1/3 favourite, Paddy Power has been “forced to suspend all betting”, which raises the question as to who exactly, other than industry insiders, bets on the rearranging of executive deckchairs in Ireland’s semi-states in the first place. According to Paddy Power’s Ken Robertson “the cat is well and truly out of the bag”, that Curran, a former business journalist who left his post as television MD in March to pursue private sector interests, is to make a return to Montrose faster than you can say “can you turn on TV3, I want to watch Take Me Out”.

    Senior RTÉ executives Clare Duignan (radio) and Conor Hayes (finance) recently ruled themselves out of the running for the position, which last time round paid a salary of €326,000 a year. Curran’s CV, meanwhile, includes the launch of the Prime Time Investigates strand and executive producing of the 1997 Eurovision Song Contest. Public service broadcasting at its most eclectic, then.

  • Have yourself an even cheesier Christmas

    November 5, 2010 @ 11:38 am | by Laura Slattery

    I was expecting The Index, my new daily* business/current affairs blog, to have its cheesy moments, but I admit, like the rest of the country, I was taken by surprise this morning when it emerged that the Government is to distribute that well-known ingredient in Christmas dinner – a great slab of cheddar - under an EU-funded free cheese scheme.

    Minister for Agriculture, Fisheries and Food Brendan Smith announced on RTÉ’s Morning Ireland that a large stock of cheese (at least several cows’ worth), will be available for distribution by voluntary organisations in Dublin, Laois, Waterford and Cork from Monday, November 15th, “in time for Christmas”. The scheme is aimed at people “who are in living in poor circumstances and are under pressure”, which presumably means those same people whose welfare payments are under threat from the Government’s not-so-cunning plan to suck €6 billion out of the economy and try to plug the holes with some leftover bits of brie.

    Needless to say #freecheese is now trending on Twitter**, where the hashtag has become an instant symbol for the general economic chaos enveloping Ireland. Luckily, there was a recent #cheesesongs Twitter thread – Gouda Vibrations, Hit the Road Monterey Jack, Edam I Wish I Was Your Lover, that kind of thing – which meant everyone was well-primed on which cheeses are good for punning. Many more comments were along the more serious “no byelections, but they’re giving us EasiSingles” variety, as well as the despairing “how has it come to this”.

    What it’s come to, of course, is a full-fat circle. Butter vouchers funded by the Department of Agriculture were actually part of Ireland’s social assistance programme until as late as 1999, although the value of the vouchers decreased steadily from the early 1990s. A study by the ESRI’s Brian Nolan and Helen Russell on non-cash payments and poverty notes that in 1997, for example, recipients were entitled to one voucher for themselves and one for each dependant per month. At this point, the vouchers paid 48 pence towards the cost of butter.

    “Government cheese”, distributed to US food stamp recipients, was also a plank of early Reagan policy – indeed, “living off government cheese” became synonymous in the US with receiving government aid in general. As the programme started out as a subsidy to dairy producers, the phrase was used in connection with both assistance for poor families and “corporate welfare”. In a sentence: “Stop hoarding all the government cheese, AIB, and lend us some cash.”

    * When I say daily

    ** Follow me at, but only if you’re desperate to know my thoughts about #xfactor.

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