Financial crisis widens gap between north and south

Wars , famine and internal government crises were meat and drink to my generation of journalists as we were growing up. Sure enough, we vaguely registered ” the gnomes of Zurich ” who had to be appeased moments before yet another devolution of sterling crashed over us. But the end of “Bretton Woods” and the birth of ” the snake” were all arcana from the pink pages we could safely leave to the better-dressed money people as we coped with the real life effects like strikes and inflation. Globalisation has changed all that.

In the poor Republic today, the average guy in Davy Byrne’s is now hanging on every digit of the – what is it called? – the bond rate?”- now tipping over 9% from yesterday’s 8.7%. Somebody says it’s Armageddon when it hits double digits. I watched slack jawed yesterday as some bloke on RTE news solemnly recommended a new property tax (rates to you and me, which Jack Lynch abolished in an election bribe in the late 70s.). Just the ticket to cheer them all up as fears rise of a wave of mortgage defaults.

One parochial thought occurs. In Ireland, the gap between the southern and northern experience has never been wider since the partition, or maybe even the Plantation. This is neither misplaced complacency over the ripple effects north of the border nor a coded piece of unionist glee, just an unintended outcome of what Dublin did with its brief moment of economic sovereignty by joining a currency without the underpinning of a common tax and spend policy. We hear that a mysterious Hungarian (not a German apparently) is now stationed in Dublin as the EU’s latter day lord lieutenant.

In  the midst of this crisis,  the UK, British banks and the North barely rate a mention. But be thankful for small mercies.  Just imagine the political fallout if this had been a sterling crisis in the old days up to the 1980s and an officer of the Bank of England had been stationed in the Irish Central Bank.

 But this could be old school, northern stuff. In the eye of the storm down there, postcolonial thoughts like these barely enter their heads any more. And anyway, in those days Dublin wasn’t even consulted. Today the pain and suffering are sovereign.

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  • fin

    except Brian, they did yesterday
    “”Worries about Ireland, that’s what’s hitting (RBS) now,” a London-based trader said.

    By 9:05 a.m., RBS shares were down 4 percent, while the UK bank sector .FTNMX8350 was down 0.8 percent.

    Royal Bank of Scotland’s Irish business, Ulster Bank, made a loss of 176 million pounds in the third quarter, hit by 286 million pounds of bad loans, in line with the second quarter.

    Its Irish impairments this year total 785 million pounds, more than double a year ago.”

    And if you put Bloomberg on this morning you’ll get some idea of how the fallout from Ireland is predicted to affect the UK and EU. One immediate effect will be to weaken the Euro.

    But you’ve already missed the big story today, namely the Chinese selloff which will/is affecting everyone

  • drumlins rock

    just a wee side issue, the Irish statistics office has said over 400 million euro has been spent on cross border shopping in the last year, about the same as last year, a bit of a boost to border towns on this side.
    http://www.cso.ie/releasespublications/documents/labour_market/2010/qnhs_xborder0210.pdf

  • Ulick

    “now tipping over 9% from yesterday’s 8.7%.”

    Actually it’s 8.25% now.

  • GoldenFleece

    its 8.25 because it is rumoured that the EU and UK are organising a bailout for Ireland in the region of 80 billion euro.

  • another

    8.25% – well yes, that’s really going to save the state.

    Ulick, do you have some vested interest in talking up the future of the bankrupt and clientelist state, and if so, could you declare it?

    On measures such as health, whilst the North is bad compared with the rest of the UK, the South is worse. Accodingly, nobody in their right mind, that lives in the sic counties, would want to have anything to do with the twenty six county statelet. Romance and emotion does not the bills pay.

    I would have thought that the story of the morning, was not the return of the Chinese tightening story, but rather the news that Gerry is considering standing in Louth, presumably as a means of showing the local dissident leaders who is boss.

  • Ulick

    I know, just pointing it out in the interests of accuracy.

  • Ulick

    “Ulick, do you have some vested interest in talking up the future of the bankrupt and clientelist state, and if so, could you declare it?”

    I fail to see where I talked anything up but since you ask, no I don’t. It does irritate me though when ill-informed unionists pick up on a headline and use it to further their myopic attitude towards issues they wouldn’t normally give a flying f**k about.

  • Alan Maskey

    Brian: What is your point?
    Ireland is a tiny, sometimes annoying but largely inconsequential part of the EU and of the euro system. That being so, Irish civil servants are stationed in Prague and Czechs are in Dublin just as Scousers are in London and Cockneys are in Liverpool. That is the nature of the beast.
    The Irish government decided to join the euro; that means they surrendered monetary policy as did the Germans, French and Dutch. You agree with the Little England philosophy of a sovereign currency and concomitant currency wars which caused the 1929 crash and which is fair enough. The Irish government which, probably for populist reasons, hitched its star to the Germans and Dutch, must live with the consequences, one of which is the luxury to shop in the subsidised basket case which is the North of Ireland.
    Davy Byrne’s, made famous in Ulysses, is, last I heard, a kind of gay joint. Who cares what the piss pots there think?

    The Irish problem is they must bite the bullet, This will entail the mass deportation of economic migrants, telling Anglo Irish to f off, merging or selling the main banks, overhauling the political governance system (sccrapping the Presidency and Senate for starters) and bringing the judicary to heel.

    On this latter point, you may have seen that the sister of a notorious now deceased Dublin criminal was awarded £10,000 with costs after she drove in front of a bus. She is the victim. The judiciary certainly are not. Off with their heads.

    You could also do a compare and contrast regarding the student (sc) riots in Dublin and London. The gardai sent the Sinn Fein rat bags scurrying away; the Irish know they are in a hole. The English, by contrast, have the rioters on chat shows. There is much more ahead.
    We could be on the road to an0other 1916, when the job will be done properly once and for all.

  • fin

    Reading the direction of some of the comments is akin to listening to a 40 year old unemployed person who still lives with his/her parents laughing at a 20 year old who is struggling to pay his/her mortgage, can’t help but smile at their naivety at their own failure.

  • JR

    hit the nail on the head

  • John Ó Néill

    It is widely believed that the bond dealers are taking a run on the Republic of Ireland’s sovereign (sic) debt to test Angela Merkel’s resolve over making those that lend to the banks share the risk (in reference to the 2013 activation of the EU bailout fund). They don’t like the idea that somehow they are taking a risk in lending (capitalism should only work, apparently, if capitalists are guaranteed profits). The Republic is being hit because it is easier to buy or sell Irish debt (in terms of scale) than the real targets (Italy, Spain, Portugal, Greece). The Germans, French and UK apparently met at the G20 to discuss this yesterday.
    Largely this is a phoney war (in comparison – look at Obama’s swipe at the Chinese over currency exchange) – the Republic won’t be looking to the markets for another 4-6 months, with the rates now being so volatile, there is no reason to believe anyone can second guess the bond rate next March or May.
    I’m not sure how the gap between North and South is being perceived as so great now – social disadvantage is unhealthily large on both sides of the border and wealth conveniently concentrated among a tiny proportion of the population. The economy on neither side of the border is currently self-financing with fiscal sovereignty devolved to the bond markets (via Berlin) or London.
    One difference here, though, Brian, is that the Republic is being held accountable to produce a plan through which it will be spending within it’s revenues. Do you think, though, would there not be an irony in Unionists sneering at the current difficulties in the Republic without having any sense of NI (and its living standards) as a complete financial dependency with no inclination towards fiscal responsibility of any kind?

  • HeinzGuderian

    I take no solice in the economic basket case that is Eire……….The peverbial brewery piss up,Berties bank balance,and politicians that make the Italians look good,sure,meboyo,who could find that remotely funny ?? 🙂

    The Cronic Tigger was trotted out on every occasion possible,to wave in the faces of Unionists…………so excuse me if I ignore the pleas for sympathy………but I do have a solution………..come and join us again,here,in the United Kingdom……….and truly be,A Nation Once Again !! 😉

  • Brian Walker

    I’ve just been giving a few outside reflections on the whole experience of going through the crisis which I daresay frightens and bewilders most people. Not commenters of course, who are knowledgeable and full of answers.

    The two Irish Times sketches capture the flavour. I’m careful not to suggest that effects on UK and NI will be nil but I’m still struck by how different the experiences are,north and south and the post, post-colonial era we’re now in. That’s all.

  • Alias

    Now would be a good time to hold a poll on unity. You’d find that 80%+ of Catholics in NI are actually unionists. That would put this unity nonsense to rest once and for all, allowing the British state to progress its engineering of the Northern Irish nation without objection.

  • drumlins rock

    but the 20 yr old didnt need to buy a 5 bedroomed mansion with a triple garage, swimming pool, and room for a pony.

  • James

    Most modern browsers have integrated spell check functionality, usually invoked by pressing the F7 key.

  • another

    A further insight into the scale of the problem:

    http://url.ie/84tv

  • Alias

    “They don’t like the idea that somehow they are taking a risk in lending (capitalism should only work, apparently, if capitalists are guaranteed profits).”

    That’s part of it, and the EU’s promotion of the concept of systemic risk as a reason for member states to underwrite the debts of eurosystem lenders confirms that they’ll be bailed-out at the expense of taxpayers and so continue to enjoy the enviable practice of risk-free capitalism. A hair-cut isn’t the same thing as a guillotine, and is just a token but futile incentive for eurosystem lenders to be more prudent in their lending decisions in future. Moral hazard and all that…

    The problem with a europhile bog-trotter like Cowen is that he thinks he can please the markets by appeasing them. This surrender monkey attitude is part-and-parcel of the unmitigated sycophancy to our EU masters that has become the lamentable hallmark of Irish ‘diplomacy’ in that chamber.

    He makes the mistake of seeing bondholders and markets as a single entity when in actuality they are comprised of a multiplicity of private, public, state-owned corporations, and EU institutions. In that regard he fails to differentiate between those lenders that have lent money to Irish eurosystem banks and those who haven’t. Those who have will naturally try to blackmail the state by not lending again to Irish eurosystem banks unless the state underwrites their debts, whereas those who are not indebted will simply look at the ability of the borrower to repay.

    In guaranteeing past debts and in demanding that every previous bondholder is repaid in full, the state is ensuring that no new bondholders will lend money to it or its banks, so that it producing an outcome that is the opposite of the intended outcome.

    In reality, of course, no one in the markets is lending to either the state or its banks. The ECB has used the Irish Central Bank to monetise these new debts, since 100% of all Irish bonds have flopped, e.g. the 24 billion that Irish eurosystem banks borrowed in September ‘coincided’ with the Central Bank borrowing 24 billion from the ECB. That isn’t an ECB bail-out of Ireland since it is all adds up to sovereign debt.

  • Alan Maskey

    Brian Walker: The Irish Times, which you and others seem to regard as some kind of bible (paper of record, my Royal proletarian arse) is part of the problem. Just how many jobs does their hot air produce? They got a clean run after the collapse of the Press Group and they made a mess of it. F— them.

    Ireland’s problems are an indolent Unionist work shy group of spongers and a lack of real leaders on the ethnic Catholic side. The Unionists are like hookers: more loyal to the half crown than the Crown and they will sell themsoeves to the deepest pockets. No spark of innovation will ever come from their grey and vgrubby drabness.

    As for the Micks: Lack of leadership is not unique to the Irish. Look at recent British leaders: Thatcher, a leader but not everyone’s cuppa, and Blair, whose popularity star has fallen as his bank balance has soared.
    Ireland needs leaders. It does not have any. Its current system will only throw up the Irish non entity equivalents of the Balls.

  • JoeJoe

    I agree with Alias somewhat in that the South is in massive trouble,& a united Ireland is off the agenda.

    The South was way way-way-behind the north at independence, and yet finally caught up and surpased the north on most economic measures. That’s heavy lifting even compared with the work now needed to get it out of this mess.

    See EU statistics below (2006 is the most recent year so the South probably grew a litte bit in 07 08 & than moved back significantly since. The EU stats by region appear to show the extreme south of Ireland, south east, & Dublin to have the greatest GDP per person, followed surprisingly, by the rest of the republic, and then the North. (GDP figures do flatter the south somewhat mind you.)

    http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:GDP_per_inhabitant,_in_PPS,_by_NUTS_2_regions,_2006.PNG&filetimestamp=20090922135805

    While Alias may rejoice at the Republic’s current very serious setback, it would be unrealistic to presume that the long-term future will give the economic advantage to the North.

  • JR

    Agreed

  • barnshee

    I”reland’s problems are an indolent Unionist work shy group of spongers ”

    I think you will find that the “spongers” on the RC side are the equal or ( if the refusal of govt departments to respond to FOI requests for breakdowns of “dole” payments by postcode is anything to go on) the better

  • DC

    The Irish collapse is so insidious because of the fact there was a good decade worth of real growth – proper growth export-led – between 1990 and 2000.

    It was because of this proper growth that confused people thinking it was really an extension of it into the noughties; whenever it was false economic growth being amplified and distorted by Ireland’s very own bankers. The bankers turned it into turbo capitalism through releasing *debt* not wealth into the Irish housing market, fuelling the boom.

    The rest of the macro-structure was in a brace thanks to monetary control run by EU and ECB; Ireland should initially blame its bankers for hooking the nation up to global credit markets and releasing it nationally – which the national economy couldn’t afford. And blame secondly the politicians for the policy of non-intervention – allowing the bubble to grow and grow. Europe was a problem in so far as it actually made it easier for the Irish government to become incosiderate over the other financial areas that still remained within its control. It could have been managed tighter. Instead the punch bowl was kept in place.

    But today we can see there are limits beyond which the Irish state ceases to be effective and trying to pay off global debts using territorial taxpayers could well be it.

  • drumlins rock

    but do agree we need to get our act together up here, you see the Ch4 programme last night? NI is 81% dependant on government, crazy.

  • Mack

    Alias is an anti-EU southerner. He’s mostly rejoicing at the setback to the Euro system this represents..

  • Mack

    Unless I’m missing something it seems it’s more like a clarification that the bond holders won’t be forced to take a hit this time.

    Convenient seeing as they (the Bond holders of Irish bank debt) are / were mostly British and German..

  • tacapall

    Well if the British Government wish to pull out, brilliant, if not then I suppose they will have to pay Irish people through the nose. You call it sponging I would call it rent.

  • Glencoppagagh

    “The South was way way-way-behind the north at independence, and yet finally caught up and surpased the north on most economic measures. That’s heavy lifting”

    That’s heavy lifting? Over 75 years? The truth of the matter is that the RoI was a complete failure economically for more than 50 years. Even when the rest of the world was booming in the 1950s it was stagnating.

  • Alan Maskey

    Ah, so the Unionists are collectng rent. That was one of the problems the Spanish had and why the Dutch rang rings around them
    Barnshee: Given the border, no ethnic Catholic real leadership can happen north of it. Joe Joe has rightly said the South can be proud of some of its post 1922 achievements, due to the first C na nG government, the Dev lot, Lemass/Whitaker etc. The South might very well pass the North permanently, the way South Korea has passed the North. This will not hapen until the Southern system allows leaders to emerge, who wil lbring the banks and the judiciary to heel.

  • Alanbrooke

    Your level of understanding of Prods is about the same as a TUV voter’s understanding of Catholics.

  • DC

    *inconsiderate of controls over

  • Alias

    I don’t think it’s a setback to EU federalism at all. In fact, many have pointed out that the euro was a political agenda aimed at promoting “ever-closer union” by making member states interdependent on each other and that it had nothing to do with economics at all. And given that the flaws now blatantly apparent in a single currency without a single country were apparent before they were blatantly so, only a fool would argue otherwise. While not a fan of Keynes, his observation that whomever controls the currency controls the country was spot-on.

  • pippakin

    tacapall

    Be careful what you wish for, only a romantic idiot would think now is a good time for a UI and before you start thinking the Brits would pay for it, why should they? they would be far more likely to grab their money and run, except for pensions, which presumably would continue to be paid.

  • tacapall

    Pippakin please please please stop pretending your Irish. The majority of the Irish people want Britain out of Ireland I dont think those that fought and died ever thought about pensions.

  • pippakin

    tacapall

    I get it, I cant be Irish because I don’t hate the country I lived in for years, I don’t want to kill any Irish people. I respect the rights of the British to commemorate their fallen as they please, and most importantly, I think the crisis this generation is facing is more important in today’s world than anything that happened generations ago. How unforgivably un Irish of me.

    Get real. People are going to lose their homes, thousands have lost jobs, many more almost certainly will lose their jobs and benefits will be cut to the bone. You can’t eat the flag, and emigration is not recommended as a method of uniting any country.

    What planet are you on. Here in the south there is real pain and its going to get worse. It is not about dying for Ireland. Its about living for Ireland.

    Sure we can all eat cheese in mud huts and be happy because we are independent. Oh sorry I forgot The Germans own us now.

  • George

    “That’s heavy lifting? Over 75 years? The truth of the matter is that the RoI was a complete failure economically for more than 50 years. Even when the rest of the world was booming in the 1950s it was stagnating.”

    There was the post-war boom of the UK in the 1950s to offer endless employment.

    Ireland did outgrow (albeit from a lower base) the UK from the 1960s. that’s 40 years after independence with WWII and the Civil War thrown in. This greater growth continued to the end of the noughties. That’s over 40 years…..

    I find the schadenfreude at the Republic’s misfortune as bemusing as the earlier crowing from the other side at its perceived success.

    It’s as if independence is somehow judged on GDP.

  • Wilde Rover

    Alias,

    “While not a fan of Keynes, his observation that whomever controls the currency controls the country was spot-on”

    It is entirely possible that Keynes was making a reference to a much earlier quote, that by Mayer Amschel Rothschild who said “Give me control of a nation’s money and I care not who makes her laws.”

    It would be interesting to peel back the onion and see if any of his descendants were at the end of this money maze.

  • Alias

    Keynes had his own plan, which was backed by the British government, to create a global currency called the ‘Bancor.’ Nothing came of it because the Americans wanted the dollar to serve as the global currency, and as the example of Iraq changing its oil trade from dollars to euros shows (or, rather, as the hanging of Hussein shows), America usually got what it wanted. Usually, however, doesn’t apply anymore now that the world’s new superpower, China, via the chairman of its central bank, is praising the concept of the Bancor. Germany and France control the euro and so control the EU, but China aims to control the ‘new’ global currency and thereby control the world. A supranational currency is usually talked about by those promoting it as a reserve currency but the agenda isn’t that benign since globalisation requires global government, and that will lowly citizens at the mercy of a wealthy elite who don’t attach any value to them beyond a monetary value. Given that the bankruptcy of Ireland and other countries was predicted as a consequence of surrendering its sovereignty over its monetary policy to a supranational agency, the fanatical europhiles that promoted it were not concerned about the human consequences of furthering their creation of a single European state. You have to break a few eggs to make an omelette. Don’t expect the consequences globally to be any better when the globalists get their way.

  • congal claen

    Hi Brian,

    What colony do you know of that elects members of the “mother” parliament?