IN THIS ISSUE: Irish Earthquake; Spanish Tsunami; The Turn of the Tide???; Mick Wallace Metaphors; Housing – The Higher Math Exam; Flipping Property; Never Give Away Your Curtains; Irish Banks Stink; You’ll Never Beat the Irish; Life Goes On; Blackberries
The month began with a magnitude 4 earthquake off the west coast of Ireland. It was powerful enough to rattle windows and cause undulations in cups of tea along the Atlantic seaboard. Scientists calculated that the quake generated enough energy to create a tsunami almost a full inch tall. You can imagine the destruction as the ocean surged inland drowning half a dozen ant colonies.
Back in 1984, there was a 5.5 quake off the east coast of Ireland. That last one was strong enough to provoke my mother-in-law to call us in shake prone California and boast about the experience.
If the schedule holds, we’re due another in 2040, by which time perhaps the Euro crisis may be sorted. Thanks to links sent by helpful newsletter subscribers, I’ve been reading detailed cautions about Spain’s problems for more than a year. With this kind of early warning system available to its central bankers, the Eurozone has prepared feverishly, erecting financial safety walls that could safely contain a one inch financial tsunami.
The photo shows an Irish Tsunami in full spate.
This one’s a mite higher, the fiscal equivalent of a hundred foot wave.
After years of botched and uselessly gentle stress tests, no one’s really sure how much uncollectable debt sits on the books of Spanish banks. The government says 64 billion and has requested one hundred billion euro for good measure. But, exactly how high this Spanish Tsunami really reaches is anybody’s guess. Perhaps it’s tall enough to inundate Italy with its additional trillions of debt.
With monetary law and order submerged, looters – also known as ‘The Markets’ – have run amok. The interest rates on Spanish bonds doubled in a mere fortnight. A pledge of 100 billion in aid from the EU and ECB actually made the situation worse!
The Spanish government recognised the utter futility of turning bad bank loans into sovereign debt. Unlike our stupids, Spain balked at the prospect of inflicting bankster debt on ordinary citizens and further ruining its national credit rating. But, banks can drown more easily than nations and Spain’s bankers loaded up on so much dead weight in the last decade that no one wants to bet on them without a strong incentive. That incentive, of course, is extortionate interest rates.
Toward the end of the month, Cyprus also requested a bailout for their banks. Greek Cypriot banks invested heavily in Greek bonds. Big mistake! The country needs between 6 and 10 billion euro out of a total annual economy worth 17.3 billion. These days 10 billion in debt seems to be the equivalent of a day’s lark at Disney World, what the Irish call ‘pin money’.
THE TURN OF THE TIDE???
Totally unexpectedly, the leaders of the EU – meaning Angela Merkel of Germany – finally did something at their sheduled summit meeting during the last days of the month. So low were expectations that the surprise agreement reached by this lackluster crew caused markets to react with a euphoric jump in the value of the Euro. We’ll have to wait to see how long this optimism lasts, but at last reality seems to have seeped into EU discussions.
Specific details will be thrashed out in the coming months, but crucially there was an agreement that sovereign debt MUST be separated from bank debt. Money can be lent to banks directly and Ireland is specifically included in any retroactive adjustments. The Irish Foreign Minister promises that this agrement will make the load on Irish taxpayers easier. And the unsustainably high national debt will fall. The EU leaders also agreed to several measures designed to stimulate Europe’s moribund economies.
The media’s analysis: Germany and France have always been the key drivers of the European Union. But, France’s newly elected President joined with Spain and Italy and basically put it to Angela – change direction or the Euro is finished. The interpretation in Germany is that it took till 4am in the morning for the rest of Europe’s leaders to wear her down. A more complimentary alternative is that Germany’s remarkable leader recognised that the time for dramatic action was at hand.
Since well before Christmas last, economists have been using the term ‘end game’ to describe the Euro’s state of play. The latest phrase, as the Euro boat drifted and the roar of the incoming tidal wave grew louder, became ‘moment of truth.’ So far, the currency has been amazingly resilient. Maybe, just maybe, we’ll avoid the messy breakup that seemed inevitable.
Finally, a positive note. Germany has moved. Now there is some hope for the currency and the Union.
THE METAPHOR CONTINUES
Ireland’s most colourful parliamentary deputy also turned out to be, forgive me, fiscally underwater. Mick Wallace, he of the long, curly blond hair and pink shirts, was elected to the Dail/Parliament as an independent last year. Mick was a builder of much renown because of his unstinting generosity with kids’ sports and local soccer teams.
Mick admitted that he knowingly submitted a false tax return when his company ran into difficulty back when the construction industry took a nose dive. Subsequently, his firm went bust. So, Mick’s 2.1 million dollar settlement with the Revenue Commissioners won’t be repaid any time soon. The delinquent Deputy agreed to dock his Dail salary by 50pc to repay this debt. If the people of his constituency re-elect him for the next 45 years, he’ll have cleared the lot.
What’s breathtaking to me is that the man would run for public office knowing that this might come to light. What is it with grandiose chancers? And why do such characters so often gravitate to politics?
The Irish have always had a soft spot for the lovable rogue, the character whose heart is in the right place even if his pocketbook or unmentionable bits are not. I guess it’s a sign of my 37 years of association with the island that I still think kindly of Mick. But vote for him?
HIGHER MATHS EXAM
Educational reformers are always calling for the curriculum to be "relevant". Here’s a relevant sample from this year’s high school graduation Leaving Certificate Higher Math paper.
" A property is said to be in “negative equity” if the person owes more on the mortgage than the property is worth. A report about mortgaged properties in Ireland in December 2010 has the following information:
Of the 475,136 properties examined, 145,414 of them were in negative equity. Of the ones in negative equity, 11,644 were in arrears. There were 317,355 properties that were neither in arrears nor in negative equity.
(i) What is the probability that a property selected at random (from all those examined) will be in negative equity?"
The problem with this question, besides the tricky little fact that the numbers in arrears are total smoke screen and should be ignored, is that it’s seriously out of date. Irrelevant.
The number of mortgage holders in arrears now tops 107,000 – some 14pc of the market and nearly a ten-fold increase since the Maths paper numbers were relevant. The nation’s largest bank, AIB, puts their own arrears at 16pc.The credit agency Moody’s used these figures to argue that Irish house prices, down 50pc since their height, will fall another 20pc.
But, another study noted that the pent up demand is so great among thirty-somethings that there could be a rapid upward spurt in prices if the banks ever start being banks again. And, for the first time in five years, house prices rose last month. Caveats – so few houses are exchanging hands that this statistic is suspect and statistically insignificant. It may signify bottom, or like so many other so-called turning points, merely a lull in the fall.
Another positive note: Independent newspaper examined the Central Bank’s figures and concluded that "the number of borrowers unable to pay their mortgages is far lower than the official figures suggest." http://www.independent.ie/national-news/central-bank-figures-overstating-number-in-mortgage-crisis-3147111.html
If you’re thinking of buying a house, there are really two markets. Dublin and Cork – and everywhere else. In the two cities, vacancy rates are down but the rest of the nation lags. Outside the main cities, there are a quarter million vacant houses currently unsold and there are at least a quarter million more that will hit the market immediately if prices take an upward tick. By some estimates, Ireland has a forty year surplus of housing stock.
Prognosticators’ advice remains the same: buy if you get a very good deal and plan to stay put for the next decade or two and, big if, if you can find a bank willing to lend you the money. If you’re planning to ‘flip’ your housing investment in the next few years, then you’ve probably flipped out.
NEVER GIVE AWAY YOUR CURTAINS
With the banks such a mess, where should you put your money? Under the mattress is so obvious a target for thieves that some people have turned ingenious. For instance, there is the woman who sewed thousands of Euro into her curtains.
Unfortunately, the drapes were given to a local charity shop. Now there’s a great argument for buying "vintage".
Lucky woman. Observant staff found the stash and put out a call over the public airwaves. The woman was reunited with her curtains. But, it raises the issue, yet again, of exactly where to hide your nest egg. Here’s an article that examines the options under the zippy title " Where will your nest egg be safe as euro teeters on edge of meltdown?" http://www.independent.ie/opinion/analysis/stephen-kinsella-where-will-your-nest-egg-be-safe-as-euro-teeters-on-edge-of-meltdown-3143806.html
Here’s a clue: US bonds. But, read the article.
"IRISH BANKS STINK"
Ulster Bank, part of the spectacularly loss making Royal Bank of Scotland, gave lots of people the chance to practice for a total shut-down of financial institutions. Thanks to a computer glitch, the firm stopped processing transactions for the better part of two weeks – and it’s not fixed completely as I send this out.
Anyone living from check to check now had to add several weeks to their wait. The other banks offered short-term, interest free overdraft facilities for Ulster Bank customers and Ulster branches throughout the country stayed open right through the weekend. The bank assures everyone that no customers will lose out from the snafu.
One columnist summed everything up in one pithy line: "Irish banks stink."
Let me repeat my bank closure – and earthquake! – survival advice. Put some extra money in the cookie jar, lay in extra bags of pasta or rice and some canned goods, keep a car tank at least half full, and try to keep a few days extra supply of key medicines and heating fuel around the place. Some bottled water is essential and there’s no doubt that if it all goes blooey, you’ll appreciate an extra few rolls of toilet paper.
YOU’LL NEVER BEAT THE IRISH
Them’s the words of the soccer chant: "You’ll never beat the Irish!" Unfortunately, in the Euro Football Championships, everyone did.
Croatia vs. the boys in green: 3 to 1. Spain versus the unbeatable Irish: 4 to 0. Italy against the Irish team which had racked up 14 unbeaten games to get into the tournament: 2 to 0.
Heading into the games, the nation was longing for victory. Tens of thousands of fans headed to Poland for the qualifiers and everyone was hoping for a great series of bashes. And, in the end, it was the fans who did the country proud with everyone agreeing that when it comes to party time, absolutely no one beats the Irish.
When all hope was gone in the last minutes against the must-win game against Spain, the tens of thousands of Irish fans who’d headed off to Poland burst into song. The Fields of Athenry was never more affecting. http://www.youtube.com/watch?v=jVE3CEeoLl0
LIFE GOES ON
Hey, no one’s starving. Tens of thousands of fans can manage a vacation in Poland. The kids still go to school, sports games fill the airwaves and local hurling pitches, the shops are still open, the tea still strong. Of more immediate day to day concern than economics – this was the wettest June on record. There was widespread flooding – no metaphor intended.
Life goes on – quite literally. Ireland continues to have the highest birth rate in the European Union. Not only that, there were 17,000 more births in 2010 than a decade earlier. The Irish can boast that they’re the "best fans in Europe" but that’s not all they’re good at.
Irish Language Summer Schools are Ireland’s summer camps. Mornings are spent in study, the afternoons and evenings involve recreational activities – all in the Irish language. But, sometimes… http://thedailyedge.thejournal.ie/video-500-gaeltacht-students-in-a-giant-festival-of-colour-500405-Jun2012/
Clonakilty, County Cork – a river runs down Main Street. http://www.youtube.com/watch?v=Sdg71hEhT2s
Number 31 – a very special Dublin Bed and Breakfast – http://number31.ie
Gold Coast Golf Resort – A County Waterford hotel and self catering accommodations – http://www.goldcoastgolfresort.com
I’m getting as bad as the banksters. Last issue I reported that a stock broker went bankrupt when it turned out that the 2.6 billion euro they’d put on the plus side of the ledger really belonged on the debit side. No, it was only a 2.6 million error, not billions. Sure, that changes everything. Now we can understand why this fundamental error occurred. How could anyone expect them to keep track of such a small sum? A few million? Pheh. Mailroom salaries.
An official correction: The last government bought 55 million Euro worth of electronic voting machines which were promptly shown to be totally, devastatingly unreliable and easily hackable. Millions more were spent storing these election stealers until finally, at last, they’ve been sold for scrap. Value – 70 thousand.
Some gardeners insist on weeding or digging in mulch and other such nonsense. I have even observed neighbours working so hard in their gardens that moisture has risen upon their foreheads. Clearly, these folks are raising the wrong crop.
My advice is to grow prodigious amounts of ‘rubus fruticosis’, the gentleman farmer’s friend. Luckily, the species thrives in Ireland and grows in all types of Irish soils, in hedgerows, woods, wasteland, in fact anywhere it gets half a chance. The plant is vigorous and annual growth of over 9 metres has been recorded.
The diligent fruticosis farmer should begin each season by ensuring that a favourite seating apparatus is fully functional. If necessary, clean it thoroughly and add fresh padding. Then fill a tall glass with a favourite beverage. Sit. Drink. For a bumper crop, repeat this procedure daily.
In particular, there’s no need to dig in new specimens. Fruticosis reproduces primarily by extending offshoots and these, after taking root, extend further still. Each newly established plant is genetically identical to the parent so a single ‘individual’ can spread over miles of countryside. Such a unique strain of fruticosis must compete with its neighbours and it will succeed only if it can outgrow them or if it is superbly adapted to its own small niche.
If you closely inspect a thriving copse of fruticosis, you will note much variation – some plants feature thick cables, others delicate leaves and thin stems. These are not just older and younger versions of the same plant but genetically separate subspecies. The whole mass thrives precisely because each plant is intimately customised to its own wee cranny.
However, you don’t want to inspect these robust masses of fruticosis too closely because they have noticeably sharp barbs. Non-botanists often refer to these spiny points as thorns. This is incorrect – they are ‘prickles’. Similar errors are made by non-specialists when they label the fruiting body of fruticosis as a berry. Botanically, it is termed an "aggregate fruit", composed of "small drupelets." Drupelets each contain their own seed, so the plant exponentially increases its chances of successful reproduction because the fruit contains so many seedlets.
These ‘aggregate fruits’ grow only from secondary buds, never from the primary stem. This is why the wise fruticosis farmer does not interfere with the plant’s growth patterns. Cut back a stem and you risk losing that year’s crop. No, the best way to encourage a bountiful harvest is to grow fruticosis along hedges with a fine southern exposure and leave them alone till cropping time.
They reach full flavour in late August and early September and can be gathered then by farm labourers. Mature drupelets have a shine of ripe perfection much sought by veteran pickers. It should be noted that young fruticosis pickers are not averse to sampling the tangy product and total yield often suffers thereby.
Some areas are particularly noted for their fruitage. The Irish word for berry is smear – as in jam thickly spread on toast. In my own area, we have the township of Coolnasmear named for its famous ‘smeara dubha’. But, ‘rubus fruticosis’ grows just about everywhere in Ireland. Aspiring farmers take note – here is the perfect crop.