Archive for February, 2009

Anglo revelations

Sunday, February 22nd, 2009

The crash just got crashier. From today’s Tribune:

* At a meeting in September Willie McAteer, Anglo finance director, told the head of the Financial Regulator Patrick Neary the bank would be “managing” its balance sheet, to which Neary is recorded as replying, “Fair play to you, Willie.”

* A phone call records officials from Anglo Irish Bank telling staff at the Financial Regulator in October that the bank is “manipulating” its balance sheet. “It is not a real number,” the Anglo staff member is recorded as telling the regulator.

* Anglo auditors Ernst & Young told the bank there was no need to include reference to the transactions in documents sent to shareholders in December, saying only information already in the public domain should be included.

* Anglo assisted Irish Life & Permanent (IL&P) coming up to the building society’s half-year ending 30 June by engaging in transactions that reduced IL&P’s reliance on emergency funds from the European Central Bank.

* Anglo has entered into “reciprocal arrangements” to bolster balance sheets with a range of international financial institutions in the past, including Royal Bank of Scotland, AIG and Hypo Real Estate.

* Anglo received requests in the last six months for “balance sheet management” transactions from Lehman Brothers, ABN and
West LB.

* AIB and Bank of Ireland provided Anglo Irish with €6bn of funding on 23 January at the “behest” of the Central Bank

* In September, Anglo was hit by major deposit withdrawals by State Street and AIB Investment Managers.

* At a meeting between officials from IL&P, the Central Bank and the Financial Regulator (FR) in January, Mary O’Dea, consumer director of the FR, “rounded” on IL&P and in an aggressive manner asked, “Why did you do this?” IL&P were concerned about O’Dea’s reaction and raised it at the Department of Finance

Ireland will need an EU bailout by the summer. What strikes me about the Tribune coverage today is that there is so much of it. In other words, it’s a newsdump of stories, all of them as bad as each other. If these stories were dripfed over a week it would have made page one on every single day.

Anglo Irish Bank report and PwC report

Friday, February 20th, 2009

The report is out. Download it here. (Hover, or right click and save as..)

Update: The PwC report was published at 9.20pm. Here it is.

First impressions: It’s 44 pages long. Wasn’t this report over 700 pages? Seems as though they were busy cutting the best bits.

On Page 26 we get this:

The Bank has a number of very large exposures with approximately 15 relationships in excess of €500 million. The size of these exposures increases the risk profile of the Bank. However, the Bank considers that in all cases they are supported by diverse portfolios of assets underpinned by material contractual cashflows and with significant personal/corporate recourse.

The explanation of the lack of pages:

The vast bulk of the PwC Reports was a description of customers’ loan exposures, none of which is included in this Summary Report. The descriptions of customers included a summary of various loans, partnerships, underlying assets, security etc.

Another interesting new bit, I was not aware of:

Banking Book Assets (Available-for-sale financial assets) includes RMBS’s, ABS’s, CDO’s totalling €1.9 billion which are difficult to value and probably illiquid in the current market.

So they have CDO-type assets worth next to nothing?

It seems there was a run on the bank:

As of 27 September 2008, Anglo was forecasting net negative cash of €12.0 billion by 17 October 2008. The principal reason is a €10 billion reduction in corporate and retail deposits consistent with recent deterioration. There has been a €5 billion deterioration in corporate deposits and €440 million deterioration in retail deposits in the last week. The projections assume completion of a securitisation of part of the loan book for €2.2 billion and successful bidding for ECB funds.

This juicy bit:

In our Phase II report we commented that there were large exposures to a number of developers with residential land banks and development sites which are geographically close in South Dublin and Wicklow. Our work on Phase III has highlighted the fact that this concentration of exposure also applies in the next 50 largest land and development loans.

Taking both phases of our work into account there is currently a large over-hang of unsold higher density residential units in these areas accounting for a number of years supply and on top of this there are sites without planning permission in relation to which developers are hoping applications will be processed when local authority infrastructure and planning issues are resolved. Successful disposal of the current and ‘pipeline’ stock will take many years and appear unlikely to occur at current unit price levels. There are likely to be significant losses for individual developers and in turn the Bank as a result.

In other words, all of the money that was spent on buying the land and building the houses is gone, and will never return. The developers will never make a profit on it. The developers involved will be bankrupted by this. Anglo lended recklessly.

Ulick McEvaddy has no idea

Friday, February 20th, 2009

Or maybe he does, but has started spinning. His interview on Pat Kenny amounts to an opening salvo in what might be a PR campaign to prepare the ground for the eventual naming of the Anglo 10 (or 20).

There may have been a realisation that the names will have to be released, and now certain persons will be rolled out to try and create some positive sentiment. Unfortunately for Ulick, and the Anglo gamblers, the public are not to be fooled. And judging by the reaction to Ulick, we could be in for a hell of a ride.

As for the views expressed by Ulick about the property market and the golden circle, he is clearly vested in this. His views amount to denial about what exactly the Celtic Tiger was (not what we thought), and therefore his solutions amount to utter nonsense. I really don’t know what planet Ulick is on, but to express to views he has, he either has an agenda, is an idiot, or is insane. Or all three.

So outlandish are his suggestions that they do not merit reaction.

The Anglo Irish 10

Wednesday, February 18th, 2009

Update: The confirmed so far list is:

Paddy McKillen
Gerry Gannon
Jerry Conlan
Joe O’Reilly
Seamus Ross
John McCabe, builder.
Patrick Kearney, developer.
Paddy Mc Killen, investor.
Brian O’Farrell, developer and auctioneer.
Gerry Maguire, developer.
Sean Reilly, builder.

If I were inclined to discover who the people behind the €300m loan and investment in Anglo Irish shares were, I would take a close look at the books.

It is highly likely that anyone involved in this tight inner circle were well connected, and would have perhaps been approached by Sean FitzPatrick himself, that is, people he knew or was friends with. The Independent articles from a few weeks ago points to a who’s who of Irish developers, any number of whom could be on the list, emphasis mine:

A cursory examination of the names held in the filing cabinets at Anglo’s headquarters in Dublin’s St Stephen’s Green reads like a who’s who of the heroes of Ireland’s boom years. Many of the individuals with whom Sean FitzPatrick built business and personal relationships will be well known to the Minister for Finance already — and to his predecessor in the office, Taoiseach Brian Cowen, given the close ties between the building industry and Fianna Fail over the years.

Sean Mulryan, Bernard McNamara, Johnny Ronan, Gerry Gannon and Seamus Ross represent just five heavyweight developers — and acknowledged Fianna Fail supporters — on Anglo’s loan books.

Other big names less readily associated with the Governing political party include former Revenue official turned property dealmaker, Derek Quinlan, developer Paddy Kelly, aviation entrepreneur Ulick McEvaddy, and Riverdance creators, John McColgan and Moya Doherty.

Scattered among this streak of Celtic tigers are billions of euro loaned by Anglo Irish Bank over the past decade in a calculated play for lucrative returns.

Indeed, in the case of Sean Mulryan alone, Anglo is understood to have extended loan facilities to the tune of €1bn to finance the Ballymore Properties chief’s ventures in Ireland and in the East End of London.

Bernard McNamara is another major developer with hundreds of millions of euro in borrowings through Anglo on developments both here and in the UK.

Arguably the most high profile of the Clare-born builder’s plans, where Anglo Irish Bank money is involved, is the former Irish Glass Bottles site in Dublin’s Ringsend.

Here, McNamara has a 41 per cent stake in a tri-party consortium along with Derek Quinlan’s Quinlan Private and the Dublin Docklands Development Authority (DDDA).

Of course I don’t know if any of these people were involved, but at least some of them would have likely been approached given their relationship with FitzPatrick.

There was more indications today (February 19). The Indo ran with a story about a dinner held in April with Anglo execs, including this nugget:

Mr Cowen was Finance Minister at the time and was told only weeks before about problems at the bank with the shareholding of multi-millionaire businessman, Sean Quinn.

He met the Anglo bankers on the night of April 24 last when he was already Taoiseach-in-waiting and when his close friend, Fintan Drury, was a member of Anglo’s board, chairing its risks and compliance committee.

The plot thickens. The Government is making a massive error by not going public with all the names as soon as possible. From a PR point of view it is almost suicidal. The truth will out eventually, and the way things are being handled it could easily bring down the Government.

Update: The confirmed so far list is:

Paddy McKillen
Gerry Gannon
Jerry Conlan
Joe O’Reilly
Seamus Ross


Wednesday, February 18th, 2009

Two milestones this week.

Firstly the blog I started in mid 2005, originally named Irish Corruption and later renamed Public Inquiry, is a finalist in the Best Political Blog category at the Irish Blog awards. I blogged on there consistently for the first year or so before handing the reins over to my uncle Anthony. He has over the past 2 years stepped up his blogging and deserves full credit for getting on the shortlist. To say I am immensely proud of him is an understatement. He certainly deserves credit for the work he puts in.

Secondly, my own blog passed the 1.5 million visitor mark yesterday, a significant milestone for any blog. I obviously thank all of my readers over the years, those who drifted in and indeed drifted out, and those who for some reason have kept coming back over the years. Understandably I did not make the short list for the blog awards, probably mainly due to my consistent lack of writing over the past year. The lazy way out is always to post photos and videos!

But here is to the next 1.5 million!

Update: A big thank you to Steve Clemons for the shout out. If you are not subscribing to his excellent blog already then head on over there. It is one of the best.

Facebook moves the goalposts

Monday, February 16th, 2009

For all the Facebook users out there:

You hereby grant Facebook an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to (a) use, copy, publish, stream, store, retain, publicly perform or display, transmit, scan, reformat, modify, edit, frame, translate, excerpt, adapt, create derivative works and distribute (through multiple tiers), any User Content you (i) Post on or in connection with the Facebook Service or the promotion thereof subject only to your privacy settings or (ii) enable a user to Post, including by offering a Share Link on your website and (b) to use your name, likeness and image for any purpose, including commercial or advertising, each of (a) and (b) on or in connection with the Facebook Service or the promotion thereof.

In other words, even if you delete your account, all the content you uploaded remains the property of Facebook. Careful now.

Prieur du Plessis on Ireland

Wednesday, February 11th, 2009

Prieur du Plessis on Ireland:

I am spending the next few days in Europe on a short business trip. First stop is Dublin where the temperature is icy, the mood is dour, property prices are plunging, the queues for jobless claims are five hours long, the soon-to-be-unemployed are holding protest strikes, and the banks are on the edge of a financial precipice. Yes, it may be a movie with different actors, but the plot is the same as in many other countries.

Lately I feel like we are all on a train, about to hit a brick wall, and we are going in slow motion. The latest stuff on IL&P and Anglo is par for the course, and tip of the iceberg.

Correction: Mistake on name of the poster

Walking the Gap of Dunloe

Wednesday, February 11th, 2009

I went with some colleagues to walk the Gap of Dunloe and Black Valley in Co Kerry last Saturday. I did tweet some of it, but we were soon out of coverage. I took my trusty 20D along too, here are some of the results:



More below the fold:


What Would Google Do?

Wednesday, February 11th, 2009

I just got my hands on a review copy of Jeff‘s new book. I am still in the middle of reading Cyburbia and Here Comes Everybody, so Jarvis comes after.

I have been reading Jeff regularly since 2001, so I’m looking forward to reading the book.

Saving Soweto

Sunday, February 8th, 2009

It made for harrowing al Jazeera viewing on a Sunday afternoon. Harrowing, but real. I include the two clips below. I should warn that some of the scenes are graphic and disturbing.

This episode deals with the Burns Unit at Chris Hani Baragwanath Hospital in Soweto, the largest hospital in the world. It also, and interestingly from an Irish perspective, deals with the last days of a nine month secondment of an Irish doctor, Patrick MacGoey, at the Trauma Unit. He celebrates his final day at the hospital at the end of the second part. He is being posted to the Afghan-Pakistan border by Medecins San Frontiers.

In one particularly emotional scene, a child, Sunishka, is brought by her mother to the Trauma Unit with serious head injuries following a car accident. I was not at all used to the idea of watching a private moment, as Dr MacGoey explained to Sunishka’s mother that her daughter was unlikely to survive, but they would do their best.

As Sunishka’s heart stopped, attempts were made to revive her via heart massage and then a defibrillator. Dr MacGoey asked that Suniskha’s mother watch as attempts were made to revive her. Sunishka was pronounced dead by Dr MacGoey shortly after her mother left. The entirety was filmed. As was Sunishka’s mother and father being brought in to see their daughter’s body.

Harrowing, but real. The part depicting the death of Sunishka begins about 7mins into the first clip, and continues in the second. I can’t help but wonder if this sort of documentary surrounding road traffic accidents would have a positive effect on the numbers killed and injured on our roads each year. Where do you strike the balance?

The Burns Unit parts are equally hard to watch, with one patient showing severe burns following a racist attack, amid the general race violence last year.

You can watch more episodes at the Al Jazeera website.

The cat’s bed

Sunday, February 8th, 2009

Bella returned from a walk today a little the worse for wear, as you can see. On being told to get into bed, she decided to collapse in a heap on Pudding’s bed. Clearly, Bella does not fit into the bed of a cat, but she didn’t seem to mind. I think Puds might.

Bella in Puds's bed

Brian Cowen’s speech February 5 (audio)

Friday, February 6th, 2009

Everyone is abuzz and I don’t know why.

Here is the audio.

h/t Maman

Brian Cowen’s speech in Wordle

Thursday, February 5th, 2009

The audio of his now infamous Dublin Chamber speech is here.

I meant to upload this yesterday:


Interesting how Lenihan’s own Budget speech also used “Government” so often.

The audio of his now infamous Dublin Chamber speech is here.

How your brain creates God

Wednesday, February 4th, 2009

Related to the post below on the intuitiveness or innateness of religious belief is this article from New Scientist. Some interesting notes:

The origin of religious belief is something of a mystery, but in recent years scientists have started to make suggestions. One leading idea is that religion is an evolutionary adaptation that makes people more likely to survive and pass their genes onto the next generation. In this view, shared religious belief helped our ancestors form tightly knit groups that cooperated in hunting, foraging and childcare, enabling these groups to outcompete others. In this way, the theory goes, religion was selected for by evolution, and eventually permeated every human society (New Scientist, 28 January 2006, p 30)

The religion-as-an-adaptation theory doesn’t wash with everybody, however. As anthropologist Scott Atran of the University of Michigan in Ann Arbor points out, the benefits of holding such unfounded beliefs are questionable, in terms of evolutionary fitness. “I don’t think the idea makes much sense, given the kinds of things you find in religion,” he says. A belief in life after death, for example, is hardly compatible with surviving in the here-and-now and propagating your genes. Moreover, if there are adaptive advantages of religion, they do not explain its origin, but simply how it spread.

It’s quite a lengthy piece and it is worth reading all of it.

The ability to conceive of gods, however, is not sufficient to give rise to religion. The mind has another essential attribute: an overdeveloped sense of cause and effect which primes us to see purpose and design everywhere, even where there is none. “You see bushes rustle, you assume there’s somebody or something there,” Bloom says.

This over-attribution of cause and effect probably evolved for survival. If there are predators around, it is no good spotting them 9 times out of 10. Running away when you don’t have to is a small price to pay for avoiding danger when the threat is real.

Again, experiments on young children reveal this default state of the mind. Children as young as three readily attribute design and purpose to inanimate objects. When Deborah Kelemen of the University of Arizona in Tucson asked 7 and 8-year-old children questions about inanimate objects and animals, she found that most believed they were created for a specific purpose. Pointy rocks are there for animals to scratch themselves on. Birds exist “to make nice music”, while rivers exist so boats have something to float on. “It was extraordinary to hear children saying that things like mountains and clouds were ‘for’ a purpose and appearing highly resistant to any counter-suggestion,” says Kelemen.

In similar experiments, Olivera Petrovich of the University of Oxford asked pre-school children about the origins of natural things such as plants and animals. She found they were seven times as likely to answer that they were made by god than made by people.

These cognitive biases are so strong, says Petrovich, that children tend to spontaneously invent the concept of god without adult intervention: “They rely on their everyday experience of the physical world and construct the concept of god on the basis of this experience.” Because of this, when children hear the claims of religion they seem to make perfect sense.

Our predisposition to believe in a supernatural world stays with us as we get older. Kelemen has found that adults are just as inclined to see design and intention where there is none. Put under pressure to explain natural phenomena, adults often fall back on teleological arguments, such as “trees produce oxygen so that animals can breathe” or “the sun is hot because warmth nurtures life”. Though she doesn’t yet have evidence that this tendency is linked to belief in god, Kelemen does have results showing that most adults tacitly believe they have souls.

It concludes:

So if religion is a natural consequence of how our brains work, where does that leave god? All the researchers involved stress that none of this says anything about the existence or otherwise of gods: as Barratt points out, whether or not a belief is true is independent of why people believe it.

It does, however, suggests that god isn’t going away, and that atheism will always be a hard sell. Religious belief is the “path of least resistance”, says Boyer, while disbelief requires effort.

These findings also challenge the idea that religion is an adaptation. “Yes, religion helps create large societies – and once you have large societies you can outcompete groups that don’t,” Atran says. “But it arises as an artefact of the ability to build fictive worlds. I don’t think there’s an adaptation for religion any more than there’s an adaptation to make airplanes.”

Further to this, is another interesting New Scientist piece:

Scott Wiltermuth of Stanford University in California and colleagues have found that activities performed in unison, such as marching or dancing, increase loyalty to the group. “It makes us feel as though we’re part of a larger entity, so we see the group’s welfare as being as important as our own,” he says.

Wiltermuth’s team separated 96 people into four groups who performed these tasks together: listening to a song while silently mouthing the words, singing along, singing and dancing, or listening to different versions of the song so that they sang and danced out of sync. In a later game, when asked to decide whether to stick with the group or strive for personal gain, those in the non-synchronised group behaved less loyally than the rest (Psychological Science, vol 20, p 1).

Psychologist Jonathan Haidt at the University of Virginia in Charlottesville thinks this research helps explain why fascist leaders, amongst others, use organised marching and chanting to whip crowds into a frenzy of devotion to their cause, though these tactics can be used just as well for peace, he stresses. Community dances and group singing can ease local tension, for example – a theory he plans to test experimentally (Journal of Legal Studies, DOI: 10.1086/529447).

On a personal level I find similar things related to religion. When a large group of people are involved in almost any activity, the results are powerfully emotional. For example, my recent visit to the National Mall for the inauguration of Barack Obama was an emotional experience, among a crowd of up to 2m people. But it was not a religious one.

But I can imagine that a religious person attending an event of similar scale (for example the Pope’s visit to Ireland in 1979) would have felt similarly emotional, but have attributed it to other reasons, like the spiritual nature of the event, or the personality (god’s representative on Earth) of the speaker. They might describe it as a religious or spiritual experience, when really it was the emotion of the crowd mixed with a religious subject.

Teapots and spaghetti monsters

Wednesday, February 4th, 2009

My philosophical interest in religion has been revived in recent weeks thanks to the writing of Ross Douthat over at the Atlantic.

First the quote from the Pope, and then a reference to Bertrand Russell’s teapot analogy.

It is a curious debate. But I am also struck by Douthat’s language:

I see the genesis of religion rather differently: An intuitive belief in some sort of presiding Agent seems to be an extremely common, albeit hardly universal, feature of human nature; this intuition has intersected, historically, with an enormous amount of subjective religious experience; and this intersection (along with, yes, the force of custom and tradition) has produced and sustained the religious traditions that seem to Richard Dawkins and company like so much teapot-worship.

Or in other words: Humans believe in god. Belief in god intersects with… belief in god. Custom and tradition have led to… custom and tradition. What?

Why not just say: Humans have an apparent tendency to believe in god or gods.

Or: The intersection of apparent intuitive belief with subjective experience has led to religious traditions in human societies.

He goes on:

The story of our civilization, in particular, is a story in which an extremely large circle of non-insane human beings have perceived themselves to be experiencing an interaction with a being who seems recognizable as the Judeo-Christian God (here I do feel comfortable using the term), rather than merely being taught about Him in Sunday School

I feel like Ross is missing the point of the teapot analogy. What exactly does it mean to say “perceived themselves to be experiencing an interaction with a being who seems recognizable as the Judeo-Christian God”? Recognisable? To whom? In what form? Experiencing what? Interacting with what?

But it is one thing to disbelieve in God; it is quite another to never feel a twinge of doubt about one’s own disbelief.

It might be more accurate to take the word belief out of this. Lack of belief implies existence of the entity in question. I would rather say instead:

It is one thing to doubt the existence of x; it is quite another to never feel a twinge of doubt about not believing in the existence of x.

Or: It is one thing to disbelieve in Zeus; it is quite another to never feel a twinge of doubt about one’s own beliefs.

I doubt the existence of Zeus. Like I doubt the existence of the god Douthat describes. Millions may have believed in Zeus in the past. Billions may believe in a Judeo-Christian god now.

But belief does not imply existence. Just as belief in teapots in orbit does not imply their existence. Nor does the existence of religious tradition imply the existence of anything. Nor does a supposed innate belief (if it’s intuitive then where’s mine?) in a presiding agent imply the existence of anything.