€132 billion.

That’s how much Ireland Inc. owes in mortgages.

€32 Billion.

That’s how much Ireland Inc. has ‘invested’ in buy-to-rent properties, around €23 billion of that taken out in the past five years.

Thing is, this figure contains mortgages that were taken out on vastly-overpriced properties, and as such, any move to re-capitalize the banks must go with a parallel move to re-negotiate this mortgage debt.

Traditionally, the national average price for a family home (three-bed) moved between two-and-a-half and four times the annual average industrial wage.

Thanks in no small part to the vast amounts of credit floating around the system over the past fifteen years, we have seen that relationship completely smashed - to such an extent that, even today, the average price for a three-bed house is eight to ten times the annual average industrial wage.

The cheap credit is gone, and is gone for the foreseeable future, which means that we have to go back to prices based on what banks can loan from their deposits, which is based on what people earn, and which is based on what people can afford.

some figures, and let’s be generous. The annual average industrial wage for a man is €32,000, for a woman it’s €28,000, but let’s say the average is €32,000. That means, based on pre-cheap credit rules, we’re looking at an average house price of between €82,000-€128,000. Now, there’ll be houses worth €40,000, and there’ll be houses worth €400,000, but the average price should be around those figures.

That means that, at the moment, the majority of people who bought a house in the past seven years, have paid over the top for their house.

The idea that we can re-capitalize the banks and not tackle the mortgage debt - based as it is on fantasy prices - is insane. In effect, a re-capitalization without a re-negotiation of the national mortgage debt would lead to a situation where we would have a devalued banking system claiming premium rates off unreconstructed loans. Sheer brass neck folly.

We have to introduce a mortgage readjustment agency, where people can apply to have their mortgage reduced to an acceptable level.

It means that, in a lot of cases, the cost of a mortgage will be reduced by anything up to 50%, taking huge pressure off the business sector with regard to wage demands as the reduction in mortgage debt is, effectively, a reduction in the cost of living.

Such a move would mean that the Irish banking industry is left with sustainable mortgage loans - loans that they can use as collateral - of around €70-80 billion.

Such a move would be in itself a form of recapitalization, as it sends out the message that Ireland’s mortgage debt is sustainable - that it is “bankable”.

Coupled with a government move to recapitalize, and thereby taking a shareholder role in the banks, we would be laying the basis for a recovery.

It will not lead to a recovery in itself, but it puts Ireland Inc. in a more secure, and realistic, position, instead of the one now where fantasy is running riot. The twin moves of re-capitalization and re-negotiation of mortgage debt are merely aspects of a wider stimulus package - but essential aspects, nonetheless.

Just in case anyone thinks that what I’m proposing is fantasy, it should be pointed out that Irish banks are doing EXACTLY the same thing for their property developer customers as we speak - but not, it needs to be pointed out, for their mortgage customers.

We have to have a re-capitalization plan which deals with the €132 billion mortgage fantasy value as well - to bring it down to a more realistic figure of around €70-80 billion. Once that happens, rent control and land reform has to be introduced to ensure we do not have this problem, on this scale, again. €32 billion spent on property rent business schemes, €23 billion of this in the past five years. Picture if that money had been invested in real businesses instead of passing over into the collective hands of property developers, estate agents, banks, and solicitors. House price speculation has to killed, once and for all, before it’s allowed to kill us.

Then, and only then, can we even think about talking about a recovery for the Irish economy.

That was then…

Ireland’s decision to guarantee Irish banks’ deposits and debts for two years to calm investor concern could be followed by other countries. This may be a template for rescues elsewhere if Irish banks can replenish their capital base,” Harvinder Sian, a fixed-income strategist at Royal Bank of Scotland Group Plc in London said in a note today.” (Irish Independent, 30 Sept 2008)

”This is a massive step by the government to alleviate financial stress in the domestic system,” Eamonn Hughes, head of research with Goodbody Stockbrokers, wrote in a note today. ”This presumably puts the Irish banks in better shape to seek funding compared with other non-guaranteed banks in international capital markets”. (30 Sept 2008)

”This is an unbelievably positive move for the Irish banking sector,” said Kevin McConnell, head of research at Bloxham Stockbrokers in Dublin, in a phone interview. ”It’s really exceptional.” (30 Sept 2008)

“Brian Lenihan, the Minister for Finance, could have chosen to nationalise the failing banks, but instead they opted for a more imaginative solution. By guaranteeing all the deposits in the Irish banks, and by also guaranteeing all inter-bank lending, they prevented a run on the banks and they made it possible for them to borrow money on the international markets.” (Editorial, Sunday Independent, 5 Oct 2008)

And this is now…

The Government is under intense pressure to pump billions of taxpayers’ money into the banks, amid fears that any further delay could lead to the collapse of hundreds of companies.

Businesses all over the country are finding it impossible to borrow any cash and many face going to the wall soon.

Opposition parties demanded urgent action yesterday as stocks in Irish banks continued to crash.

Shares in Bank of Ireland plunged 23.5pc — below the key psychological €1 level — to 83c as speculators gambled on the State injecting fresh funds into banks.

Allied Irish Banks slid 10.2pc and Anglo Irish Bank tumbled 13.9pc.

The Department of Finance last night sought to dampen speculation about an imminent move. A spokesman said: “We don’t intend making any announcement in relation to the banking sector this week.” (Irish Independent, 18 Nov 2008)

It’s no secret that we’re big fans of Michael Zweig here on Dublin Opinion. Below is a two-part interview with Zweig, conducted with Bill Moyers. It took place in October, around the time of the American bail-out - now under review as the American Treasury wakes up to the fact that it’s going to have to recapitalize rather than simply buy up toxic debts.

Zweig has co-written a plan which calls for an economic stimulus, costing around $220 billion, which would involve spending on health, housing, and education for the economically distressed as a way of pump-priming the American economy.

A pdf of the plan is available here.

More information on the Center for the Study of Working Class Life, of which Zweig is the director, is available from its website here.

There’s a great line at the start of the second clip where Moyers asks Zweig whether any of this plan is achievable, and Zweig cuts hims off a little and says,

“First of all, it’s what needs to happen. Let’s start with that.”

Zweig, Professor of Economics at Stony brook University, works in a country where 12% of the workforce is unionised, and where there is no national left-wing party. In Ireland, around 36% of the workforce is unionized, and there are two left-wing parties with branches in every constituency and with senior members with national legislative experience, as well as two smaller left-wing parties with more local, but nonetheless solid, political support.

And yet, Zweig’s focus is “what needs to happen. Let’s start with that”, while all too frequently in Ireland, the focus is not on what needs to be done, but on self-serving asurances that the left will never do anything, so why bother.

You would think that it was Zweig who lived in a country with 36% union membership, and a solid left/liberal political base, and it was the Irish who were stuck with the 12% membership and no national voice, such is the wringing of the hands with a grin of “it’s useless” that would make even Peig Sayers blush.

“First of all, it’s what needs to happen. Let’s start with that.”

As we look to our own situation, I cannot think of a better focus. Let’s start with what needs to happen.

Enjoy.

The would-be repair men are already at work, hoping to restore it, plaster over the cracks, give it a fresh coat of paint, all ready to commit yet another offence against society. The wiseacres who now pretend to be disgusted with the reckless results of liberalism are the very ones who provided all the incentives – budgetary, regulatory, fiscal and ideological – for the ensuing spending spree. They should feel disqualified, but they know an army of politicians and journalists are eager to do a whitewash job.

So says Serge Halimi, in Le Monde Diplomatique, which is a far better introduction than I could have mustered to this:

Which I thought provided some vital information.

But then, I couldn’t forget this recent This American Life podcast that fairly blew my mind, especially the excerpts from Studs Terkel’s radio show where he talks to people about their experiences of the Great Depression. It illustrates brilliantly why it’s important to keep oral histories.

This is a case of “great bands” eating itself here, as the Sewing Room was comprised of members of two bands already covered by the series, Hey Paulette, and The Stars of Heaven - while Sean already talked about the Sewing Room in another post. Oh well. No matter. I picked up their album “And Nico” off Amazon last week, and so thought I’d throw up a couple of the songs.

The blurb is taken from the band’s myspace profile

In 1995 The Sewing Room’s first album “And Nico” was released on Dead Elvis Records. It was well received by the critics in Ireland, the UK and further afield in Europe. The band then recorded Radio sessions for John Peel at the BBC and also Dave Fanning at RTE. They made their first and only video for the Track “Mobile”; this track received good airplay on radio and also the RTE TV show “No Disco”. Further releases followed in the form of a 6 track E.P in 1996 entitled “Drugfree”, the title track also receiving good reviews and Airplay. The band’s last release for the Dead Elvis label was “Sympathy for the Dishevelled”, their second album. It was released 1997, the album had good reviews, but the band had lost its momentum and eventually broke up in 1998.

Enjoy.

Being a music luuuver myself I jumped in between the two a little too aggressively, perhaps, and asked what the album was.

My friend was dismissive. He didn’t want to tell me and made a gesture, from what I remember, that suggested that it’s not my thing. Now, I found this mildly offensive.

In the moment that I was considering bashing him around the head with my Norton Anthology, however, I spotted that the album was by Dead Can Dance.

Because he had offended me I asked him that most awkward of questions one can ask with regard to music: “oh, I’ve been meaning to listen to them, what are they like?’

“Well, ur, they’re like, em….well, you wouldn’t like them.”

Which almost made me biff him on the underside of his chin with my Riverside Chaucer.

I didn’t, of course. I just stored up the bitter little memory, and since then have always thought of the moment whenever I came across the name ‘Dead Can Dance’. But I also never bothered to listen to them, knowing only that they’re music is a kind of art goth, new world music, ethereal, willowy tunefulness that I probably wouldn’t like.

Until today when I listened to this:

And I thought, hey, I quite like this.

Apologies to Red Mum for the delay on this, but there is still time to let you know that if you want to make your outrage at the dropping of the free provision of the cervical cancer vaccine for 12 year olds known, get yourself over to the Spire on O’Connell Street this Saturday at 2pm.

From Red Mum:

Defend Women’s Health Rally:

Join the Facebook group

I’m hoping to have a retrospective of Barry McCormack’s work soon for Dublin Opinion. In the meantime I just want to highlight his gig tonight in Crawdaddy, on the occasion of the launch of his new album, Night Visiting.

Songs from the new album are available for listening on his myspace profile.

Barry’s older work is available to order on his website here.

In the meantime, here’s Barry singing “After this Low” in The Cobblestone.

As I said, keep an eye out for the retrospective, as well as what we hope will be a podcast documentary on the music of the Jubilee Allstars.

Enjoy.

Crime and consequences of crime as well as the suitability of the punishment that is meted out to criminals is a subject that is rarely out of the news. The tragic death of Shane Geoghegan at the weekend and the response that it has generated is the most recent example of how both the media and politicians react in order to appear to be empathizing with the revulsion and horror ordinary people feel when they find out that someone like them has been killed accidentally by those who use murder as integral part of their business model.

If Shane Geoghegan had been flattened by an articulated lorry driven by a man out of his head on crystal meth and vodka the revulsion in the local community would have been the same, but the call for action, which plays with the popular sentiment of revenge would not be.

The RTE news talks to people who live in the area where the murder occured or who knew the victim, and broadcasts their anxious calls for legislation to be brought in to ensure that we ‘get the killers’. The Irish Times writes an editorial contextualizing the crime, mentioning the drugs trade, the complicity of ‘white collar professionals’ and calls for greater powers for the Gardai and more legislation.

The supply of drugs invariably involves a growing number of sophisticated weapons. And the eruption of gangland violence becomes inevitable as individuals attempt to dominate the lucrative trade. Recent police activity in Limerick has had a moderating impact on the situation. But 14 deaths in eight years is unacceptable. Official delays in providing for the use of wire-taps in criminal prosecution cases and for the modernisation of Garda interview practices can no longer be tolerated. Such measures are balanced and reasonable. Minister for Justice Dermot Ahern should bring forward legislation as a matter of urgency.

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Which brings me to Mother Africa. News filters through to my morbid monday-morning brain of the passing away of Miriam Makeba at the age of 76 BBC Report
Here she was over 20 years ago, onstage in Harare with Paul Simon :

She died yesterday of a heart failure after a concert near Caserta in Southern Italy, but, minuto ragazzi, what’s this :

The concert was on behalf of Roberto Saviano, the author of an expose of the Camorra mafia whose life has subsequently been threatened.

Saviano being the author of the book adopted to film by director Matteo GARRONE Gomorra Trailer
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