Monthly Archives: November 2012

Bank of Ireland – wasting your money hand over fist

So this Am I got a text message from BoI – you know, the best looking horse in the glue factor that is the Irish banking system, the entity of which we own 1/3 

“Our records indicate that you have not activated your new Visa Debit
card. Your ATM/Laser card will be cancelled 2 mths after your new cardissued. If you have activated your card please ignore this. For
queries contact us on 0818365365 or NEVER
disclose personal details via email”


Now, I know my VD card is working as of this AM so I got concerned. I know of some recent screwups with family and friends on the switchover  and didnt want to be caught out. 

So I rang… and waited online for 9 minutes before “John” answered. This, he said, is being sent to everyone. As in all customers.

Now, as I suggested to a bemused John, changing this from “Our records indicate that you have not activated your new Visa Debit card” to “Dear Customer, a reminder that if you have not already ...” would show a) competence (that the bank could identify customers that had/hadnt), b) customer sensitivity, c) customer courtsey. This seemed to flummox him and he kept reiterating that while he understood i had activated the card this was the message. 

 I dont know and cant be bothered finding out how many BoI customers this is being sent to but its got to be in the hundreds of thousands. So hundreds of thousands of texts are being sent needlessly. Which is a waste of money. Your money and mine. 

Score one for boneheadedness BoI. 

the makeup of the Irish economy 2002-9

Following on from the CSO value added by sector, a brief blogpost on the sectoral composition of the economy

In tabular form – oh, look, public administration is sooooo large…

Sector 2002 2009
 agriculture, forestry and fishing 2% 2%
 arts, entertainment and recreation activities and other services 2% 2%
 financial and insurance activities 8% 11%
 information and communication 9% 11%
 manufacturing industries 34% 28%
 professional, scientific and technical activities; administrative and support service activities 7% 8%
 transportation and storage 3% 4%
 wholesale and retail trade; repair of motor vehicles and motorcycles 7% 8%
Accommodation; food and beverage service activities 3% 2%
Construction 10% 6%
Education 2% 3%
Human health activities; Social work activities 5% 6%
Mining and quarrying 0% 0%
Public administration and defence; compulsory social security 3% 2%
Real estate activities 5% 4%
other 1% 3%


and in pretty picture format

What sectors have contracted most in the crash?

The CSO produced a very good set of tables on value added by sector 2002-9

The data tables contained in this release can be downloaded in excel from this link.

Summary : in terms of output the economy was 13% smaller in 2009 than 2002.  Service industries and agri have been hit hard, as with construction. Below are falls from peak.


Agriculture, forestry and fishing
Crop and animal production, hunting and related service activities -18%
Forestry and logging -25%
Fishing and aquaculture -20%
Total agriculture, forestry and fishing -18%
Production industries
Mining and quarrying -34%
Manufacturing industries
Manufacture of food products, beverages and tobacco products -8%
Manufacture of textiles, wearing apparel and leather products -38%
Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials -58%
Manufacture of paper and paper products -42%
Printing and reproduction of recorded media -29%
Manufacture of coke and refined petroleum products; Chemical industry -43%
Manufacture of pharmaceutical products 0%
Manufacture of rubber and plastic products -25%
Manufacture of other non-metallic mineral products -49%
Manufacture of basic metals -50%
Manufacture of fabricated metal products, except machinery and equipment -31%
Manufacture of computer, electronic and optical products -18%
Manufacture of electrical equipment -44%
Manufacture of machinery and equipment n.e.c. -15%
Manufacture of motor vehicles, trailers and semi-trailers -40%
Manufacture of other transport equipment -26%
Manufacture of furniture; Other manufacturing 0%
Repair and installation of machinery and equipment -40%
Total manufacturing industries -5%
Electricity, gas, steam and air-conditioning supply -10%
Water supply; sewerage, waste management and remediation activities
Water collection, treatment and supply 0%
Sewerage, waste management and remediation activities -15%
Total water supply; sewerage, waste management and remediation activities -13%
Total production industries -5%
Construction -57%
Service industries
Wholesale and retail trade; repair of motor vehicles and motorcycles
Wholesale and retail trade and repair of motor vehicles and motorcycles -32%
Wholesale trade, except of motor vehicles and motorcycles -17%
Retail trade, except of motor vehicles and motorcycles -8%
Total wholesale and retail trade; repair of motor vehicles and motorcycles -11%
Transportation and storage
Land transport and transport via pipelines -15%
Water transport -32%
Air transport -6%
Warehousing and support activities for transportation -17%
Postal and courier activities -12%
Total transportation and storage -12%
Accommodation; food and beverage service activities -13%
Information and communication
Publishing, audiovisual and broadcasting activities -14%
Telecommunications -32%
Computer programming, consultancy and related activities; information service activities 0%
Total information and communication -3%
Financial and insurance activities
Financial service activities, except insurance and pension funding -17%
Insurance, reinsurance and pension funding, except compulsory social security -23%
Activities auxiliary to financial services and insurance activities -25%
Total financial and insurance activities -20%
Real estate activities -18%
Professional, scientific and technical activities; administrative and support service activities
Legal and accounting activities; activities of head offices; management consultancy activities -28%
Architectural and engineering services; technical testing and analysis -21%
Scientific research and development -5%
Advertising and market research -36%
Other professional, scientific and technical activities; veterinary activities -17%
Rental and leasing activities -5%
Employment activities -33%
Travel agency, tour operator and other reservation services and related activities -38%
Security and investigation activities; services to buildings and landscape activities; office administrative, office support and other business support activities -11%
Total professional, scientific and technical activities; administrative and support service activities -14%
Public administration and defence; compulsory social security -10%
Education 0%
Human health activities; Social work activities 0%
Arts, entertainment and recreation activities and other services
Creative, arts and entertainment activities; libraries, archives, museums and other cultural activities; gambling and betting activities -9%
Sports activities and amusement and recreation activities -26%
Activities of membership organisations -4%
Repair of computers and personal and household goods -67%
Other personal service activities -4%
Activities of households as employers of domestic personnel; undifferentiated goods- and services-producing activities of households for own use -43%
Activities of extraterritorial organisations and bodies 0%
Total arts, entertainment and recreation activities and other services -10%
Total service industries -7%
All NACE economic sectors -12%



Green Jerseys, False Colours and the Irish Bond Market

There is a most interesting letter (of the Green jersey type) in the Irish Times this morning. It is from a Donal O’Mahony of Shankill and is on the wonderful performance of Irish government bonds. Ireland is truly lucky to have this sage, and also to have his namesake Donal O’Mahony the head of debt research at Davy stockbrokers (prime dealers in Irish debt). After all, they couldn’t be the same person, as who fly under false colours and not declare in a letter their interest and affiliation…. Anyhow, Shankill Donal states that we are addicted to “failure porn”,  in looking backwards, which tells me that the mindset that in the 1970s cut out of the biology syllabi the parts on the human reproductive system (durty filthy durty shameful durty stuff) still lives. Dont look back as then you might see stuff you dont like…

Anyhow Shankill Donal (not I guess to be confused with Davy Donal) says

” a stunning 88 per cent return in Irish government bonds since July, 2011 has gone largely unheeded by the Irish media, politicians and, most disturbingly, an insolvent Irish pensions fund industry . . . unheeded by all, perhaps, except those clear-headed international investors who see the improving creditworthiness that we ourselves discredit. “

okkkaay. Lets look at that.

First, and presumably because Shankill Donal is not Dawson Street Donal, he might not be aware of the (from my ivory tower view anyhow) significant debate on the bond performance. Shankill Donal must be a bond trader somewhere though as he focuses on the price of bonds, when most people focus on the interest rate on bonds. Shankill Donal and Davy Donal should get together and talk….Even a casual perusal of the interwebs will throw up dozens and dozens of articles on the irish bond market. But maybe Times Letters Page Donal doesnt use the intergoogler. anyhow, here is the most recent article I could find, to assuage him that yes, this ignorance is all in his mind.

Second, the underlying assumption is that the fall in yields is down to improved creditworthiness. Hmm.. Maybe he is a trader but he is no economist.  Bond investors care about creditworthiness only over the holding period. As nobody serious ever has to my knowledge suggested default on the actual NTMA issued government debt, as they were backed by the IMF and ECB for a period of years, as the strong likelihood is that some sort of (dont call it a bailout) deal will be in place from 2014 onwards, the strange thing is that irish bonds were ever so low (interest rates so high). Proof that he isnt really Dawson Street Donal is that he seems to think the fall in interest rates  / rally in bond prices is down to ourselves alone. Maybe hes a member of Sinn Fein? The fall in interest rates is of course down to a mild increase in risk appetite  a change in government from bumbling to fumbling, a realisation that the Euro is here to stay and the euro members seem willing to inflict and bear any pain to make that so, the continued efforts to stabilise the irish budget deficit, the apparent end (apart from clouds on mortgage debt and court cases on subbie toasting  to bank bailouts and a carry trade. The carry trade is of course the irish banks taking cheap ECB money and buying higher yielding irish debt. This has boosted the irish banks holdings of Govt debt to 10% or more, from 5% of a much smaller number in 2011. Victor Duggans blog on this is a must read. In essence, as Business Insider says s

“Simply put, Irish banks have dramatically increased their holdings of Irish government bonds, from a very low base.  This reflects the recapitalization efforts and tightens rather than loosens the linkages between the sovereign and domestic banks. The largely nationalized banks are funding a large share of the government’s deficit”

And those steely eyed wonderful international bond buyers that Shankill Donal loves? Well, theres one of em anyhow, Franklin Templeton, but that seems to be it. In fact, the NTMA said, and who can object

He welcomed the attention of US investor Michael Hasenstab’s Franklin Templeton Investments, which has become Ireland’s biggest private sector creditor over the past year-and-a-half by investing in bonds.Mr Corrigan said: “As an investor, Franklin Templeton are clearly very welcome in the positive view they have taken on the Irish market.”We would prefer if we had 10 Franklin Templetons, rather than one.”

In fact it seems that things might be the opposite of what Shankill Donal thinks. The NTMA very kindly publish a summary geographical holdings of Irish Bonds : the holdings of irish government bonds by non residents have FALLEN over teh last year, from 66b to 60b, from 78% to 74% of total. And this is with Franklin Templeton ploughing in. Dawson Davy Donal knows this of course, which is why he would never laud “clear-headed international investors” without caveat.

Finally of course there is the utter ignorance by Shankill Donal of diversification. No reputable or serious economist, such as Dawson Street Donal,  would urge increased home bias, or the use of domestic pension funds to purchase and buoy up government bonds (a form of financial repression). Irish pension funds should of course have some assets in all forms . And they havent done badly over the 2001-11 period – a survey showed a return per annum of 8.5%, well over the 6% global average. So whatever they are doing its not too bad.  Irish investors, including pension funds, need to be more, not less, diversified globally.

So, while its great that Shankill Donal is taking an interest and holding up a mirror to the facts, he should look up his namesake Dawson Street Dave and have a chat about whats really going on. Its not all bad news, but its not all good news, not by a long chalk….

(no doubt this will be classified as an unfair) question to the cabinet about cystic fibrosis

So once again we see the provision of isolated (read, appropriate) beds for Cystic Fybrosis patients coming to the fore. The indefatiguable Orla Tinsley, CF patient, writer and social media exponent, has been hospitalised, and is telling her story.

In  nutshell, Ireland has the highest incidence of CF in the world. I have had family members (and friends) die from this so I dont pretend to be neutral on this one. Anyone who wants to know the appaling mess that is CF inpatient care in Ireland should follow her on twitter @orlatinsley The crux of the problem is that despite this highest incidence there are not enough, not nearly enough, appropriate inpatient beds for these patients. And now it seems that some of the isolation beds for CF are being appropriated for other, no doubt equally ill, patients, with CF patients being placed in mixed wards or sharing facilities. A feature of CF is appalling vulnerability to infection during an acute phase so shared facilities are not a good idea. Patients, desperately ill, are actually better off at home they feel, where at least they have built some immunity to the local environment.  

here are some of Orlas tweets 

  • The shared toilet with no disinfectant or wipes :
  • bleeding lungs but no beds available
  • a quadruple room (for a patient with compromised immune responses and infection vulnerability)
  • CF patients in A&E (emergency room) as no beds available

and so on. And this in a country which has a medical doctor as its minister for health

So, here is my question. Jim Reilly (health) and Leo Varadkar (minister for transport) are medical doctors and cabinet ministers. Medically, do they think this is acceptable? Would they be happy with their patients being so treated? Would they think it appropriate?

  If as one hopes the answer is no then we should never have to see this happening again and the full complement of CF beds will be opened and made available. Conversely, if we do so see it happening, then we need to think hard about the quality of our cabinet, medically, morally and politically. No doubt thats going to be cast as unfair. I’ll live with it. 


Ireland should give one (1) cheer for the Greek debt deal.

So, once again (what is it now, the fourth time?) we have a greek debt deal. Great. Except, its not. The essence of this deal (which has delayed funds since may..) is a maturity extension and a rate reduction on existing and new Greek debt. This will reduce the present value of greek debt and make it easier to repay. There will also be a bond buyback from private investors, which might or might not succeed. It is all useful stuff, if a little hopeful, and might well give a breathing space to greece.


In the Irish context there is however little to cheer. Recall that the only significant chunk of debt which we hold which is in play is the wretched promissory note for the whirlpool of debt that is IBRC (the zombiestein that is Anglo and INBS). This is 30b euro which is structured in a complex way to ensure that each year for a decade more we pay over 3.1b (the total amount of the budget austerity package to be unveiled 5/12/12) to the Central Bank of Ireland and they ….destroy it.

No interest relief is relevant here: this has been well parsed by among others Karl Whelan. An extension of the repayment schedule would help, in that instead of the CBank destroying 3.1b each year it might destroy 1.5, or .75b. This of course is to accept the lunacy of the whole project. From the greek debt deal, and greece is in  a much worse place than we, it seems that maturity extensions and interest relief is the only game in town for official creditors.

Expect little relief for the Anglo promissory notes, the most toxic legacy of the FF/GP folie de grandeur. Expect what little relief we get to be spun like a top. Expect the media to swallow said top with glee. Expect all that but dont expect any meaningful relief.

Plan B needed, times three, for the dangers ahead

This is an extended and linked version of an Irish Examiner oped published 24 November 2012

Irish governments over the years , and especially in the last few, have not exactly shown themselves to be shining examples when it comes to contingency planning. Time and again we have seen plans advanced which when they fall apart reveal that little or no obvious alternatives were in place, or if in place paid any heed to. The most egregious example is of course the creation of that vortex of wealth destruction that is IBRC, where despite alternatives being presented to cabinet a bullheaded politicized decision was taken which shot the economy in the head although the full damage took time to be realized.

In planning one plans for the worst and hope for the best. And some things that are planned for, or should be planned for, are what one might call grey swans – low probability high impact events. It is unlikely for example that we will see a tsunami hit Ireland but if it did we would be best advised to have plans in place. Mind you, in a country where the effect of releasing millions of gallons of water from a dam into a flooded river already bursting at its banks downstream seemed not to be planned in an integrated fashion one wonders…

Three major events, none of which one hopes will happen, are now beginning to make themselves felt on the economic stage. It is probably too much to hope that the system which gave us the so far abysmal performance on legacy bank debt can plan for these but at least the public at large might want to think on them. The three main possibilities are the effective removal of our tax shelter for MNC profits, the sundering of the EU via Britain huffing off, and a hard landing in china.

Take the latter : one of the safety valves which we have relied on for a long time is the ability of friendly countries not economically screwed up to take our surplus labour, either legally or to turn an effective blind eye. With over 80 thousand persons per annum emigrating not all are going to the UK, many (possibly as many as 20k) going to Australia and upwards of 6k to Canada. Both Australia and Canada are very dependent on the worldwide commodity boom fostered in large part by the expansion in the Chinese economy. And as the Chinese economy is faltering so too is business sentiment in these countries turning. With uncertainty about the future path of the chinese economy and the knock-on effects on these importers of Irish labor, what is the contingency plan should we have to absorb tens of thousands additional jobseekers?

A further blow could come from the deepening rift emerging between an increasingly euro skeptical UK and a Europe/Eurozone that sees greater integration (sometime, on the cheap ideally) as the only hope of longterm survival. Although not nearly as dominant as in the 1950s and 1960s the reality is that the UK is our largest market – our economies are intertwined. 11% of UK exports go to Ireland, and they source about 7% of their imports from us. Meanwhile. 33% of our imports and 16% of our exports go to the UK. When one looks at the situation excluding chemicals the export dominance of the UK is even starker. There seems to be in the UK a belief that they can selectively withdraw from large parts of the EU, ditching what is known as the Acquis, the body of laws that govern conduct and ensure harmonization. Faced with an intransigent UK and an exasperated EU, the prospects for a nasty split are while low growing. A UK out of the EU would pose massive challenges to Ireland – it would be fundamental decisions to either follow them, and forever accept that we are economically a region of the UK, or to stay with the EU (and be a region thereof). A UK out of the EU would one suspects be treated quite vindictively by the EU and in the shortterm face massive trade barriers. How we would deal with that scenario is no doubt the subject of a detailed think-tank in government…no doubt…

Allied to that and doubled down from the US we see a ratcheting up of the pressure on the tax front. Irish based MNCs are on the face of it the most productive entities in the world making profit per employee four times the EU average. It strains credulity to imagine that at least some of this booked profit does not arise from creative tax inspired planning. MNC’s can plan in such a way that the dell PC’s manufactured in Poland appear as Irish exports…There is a worldwide revolt against corporations and high net worth individuals engaging in legal but costly tax planning. We have seen companies grilled in the UK parliament; the French have simply taken the situation into their own hands and sent tax bills to MNC’s; and the issue of tax harmonization vi the common consolidated tax base has not gone away Meanwhile the US Senate has described Ireland as a tax haven and Microsoft has been used an example of aggressive tax planning in the US debate on clamping down on same. With global scrutiny now on Ireland, with the EU determined to srive forward on tax harmonization, what plans are in place, if any, to determine the fallout were our MNC friendly tax system to come under threat

These issues may never come to fruition. But a mature open debate on them, without calls for green jersey wearing or not talking down the economy or other such guff is required. We were illserved keeping our heads in the sand in the boom years and should learn the lesson that open debate is vital.