Ireland’s home mortgage crisis persists

Though the property market in Ireland is showing signs of an uptick, 
ghost housing estates are still prevalent in many parts of the country. 

A few weeks ago in this column we were looking at the signs of an end at last to the five-year downward spiral in the Irish property market.

In some areas and for some homes, mainly family size houses in good areas in Dublin, there has been a slight recovery in prices this year, although they are still around half what they were at the peak of the bubble.

That's good news, of course.  For those with money to buy or those with secure state-paid jobs who can get mortgages, the signs that the bottom of the market has been reached are prompting them to act now and not to put off buying a home any longer.

Such activity will help the wheels of the economy to start turning again.  There is even talk that a few new housing estates will be built in Dublin in the coming year to meet demand.

Good news, as I said, but it's important to remember that this is only half the story.
The other half of the story concerns the tens of thousands of people here whose lives have been destroyed by the property crash.

These are the people who bought during the boom and who are in negative equity – their homes are worth far less now than they paid for them a few years ago.  So they can’t sell to pay off their mortgage loan.

Unlike in the U.S., here you still owe the bank even if you give them back the keys.  If you do sell at a loss and give the bank the proceeds, you still owe the bank the difference between the sale price and the loan.  
The property price collapse over the past five years also triggered the crash in the wider economy which means that many people in this situation have also lost their jobs, or their businesses have gone to the wall.  That means they can no longer meet the payments on the huge loans they took out to buy their boom time homes.


The latest figures released two months ago showed that the number of homeowners unable to pay their loans has increased to close to 100,000 mortgage holders who are now 90 days or more behind in their payments.

That is nearly 13 percent of all residential mortgage holders in the country and it’s a huge problem for the banks.   Over half of these are more than a year behind in their payments.

The overhang of bad mortgages means that the banks are effectively bust again despite more than €60 billion having been pumped into them, for which the Irish taxpayer is now on the hook.

Instead of using a big chunk of this €60 billion bailout loan from the IMF/EU to write down the debts of Irish homeowners who simply can’t pay, the banks used most of the money to pay off their bondholders, and what was left was used to start rebuilding their capital reserves.


Part of the €60 billion was supposed to be used to allow solutions for distressed mortgage holders like loan restructuring and partial debt forgiveness.  But that never happened.  Instead, the banks continued to avoid the growing crisis and have continued to threaten and squeeze mortgage holders.


The problem for the banks is that once they accept that someone cannot repay the full amount of their loan, they have to show the loss on their books.  And if they have to do that for half of the 100,000 domestic mortgage holders now in trouble they will have a big problem.


For young families who bought their homes to live in themselves, the situation is an absolute nightmare.  They did not cause the property crash and now they have become the victims of it.  Although everyone has sympathy for them, nothing much has been done to help them.


It’s also hard not to have sympathy for many of the older buy-to-let investors who took out loans to buy a second property as a pension investment and now face the possibility of losing both homes.

Around half of the buy-to-let buyers were on interest only payments for the first few years and now cannot cope as full repayments begin.  It’s estimated that at least 15,000 buy-to-let homes are in this situation and could be repossessed by the banks.


The banks don’t want to repossess homes for two reasons.  In the case of owner-occupier homes such cases are highly emotional and attract very bad publicity for the banks.

Even in the case of buy-to-lets, repossessing so many homes and then putting them on the market could make things worse rather than better for the banks by driving prices downwards again.   And that would mean revaluing their entire mortgage loan books downwards.


The government has been struggling to find a way to sort out this mess.  They tackled the  problem of the billions in bad loans owed by the big property developers by setting up Nama, the state bad bank which bought in the loans from the banks at a discount.

Now they have put a structure in place to try to deal with the domestic mortgage crisis.  But it’s far from clear yet whether it’s going to be much help to the tens of thousands of ordinary people who are in trouble.

The government is tackling the problem in several ways.   Firstly, it ordered the banks to begin offering their customers who are in arrears a long-term solution, and they said they wanted at least 20 percent of cases dealt with by the end of June.


It also brought in new legislation that returned to banks the power to repossess properties, something which had been stopped by a court decision in 2011.

The boss of the country’s biggest bank, AIB, claimed recently that one in five of those in arrears on the bank's books were strategically defaulting and that repossessions were inevitable.  He didn’t produce any evidence for this claim, and he was heavily criticized as a result.

But there is no doubt that at least some people were playing this game, and the government's move on the legislation reflects this.


Various solutions are possible, like split mortgages with part of the loan being parked for 10 years or even much longer, like arrears being capitalized (added to the loan) and the slate wiped clean giving the homeowner another chance, or like the loan reverting to interest only payments.

Or even a system where the bank takes part ownership of the home which will be cashed in at some distant point in the future if the home is sold, but in the meantime the family stays on.  Or where the bank takes full ownership and the family becomes a renter of the home they once owned.

These and other possible solutions are all designed to do one thing -- allow the family to stay in the home.


To help people who are in difficulty the government also set up the new Personal Insolvency Service, a new body licensing debt experts to act as Personal Insolvency Practitioners (PIPs) and Approved Intermediaries (AIs).

These advisers will analyze an individual’s financial circumstances and draw up a debt deal and negotiate with the banks on the homeowner’s behalf.


The new law effectively means that a homeowner threatened with repossession can have the case adjourned so that a PIP can negotiate a personal insolvency arrangement with the bank.

The weakness in this is that the bank does not have to accept a proposed arrangement.  However, it then faces the prospect that the homeowner could decide on bankruptcy, and our law means that does not necessarily mean the person loses their home to the bank.  Plus the time to emerge from bankruptcy here has now been reduced from 12 years to three.


All of this has led to situation that is as chaotic as it is tragic, because no one knows how the government's new structure is going to work in practice, how quickly it will get going and how effective it will be.


For example, the new PIPs have to be approved and qualified, and we don’t know yet where they are suddenly going to spring from.  They will also be charging fees, and there is some concern that the system may develop into another quango which costs a lot of money and does not actually solve the problem.


It’s all supposed to be kicking off next week when the legislation says homeowners will be entitled to send in PIPs to their banks to look for a deal.  But no one here is expecting very much other than more confusion.

Meanwhile, the banks continue to harass frightened homeowners who cannot pay their mortgages.

Let the budget cutbacks begin, Ireland’s economy is flatlining

Caroline Dunphy, who cares for her 21-year-old daughter, joined a
 group in July protesting against possible budget cuts against carers this year.

Here we are in the dog days of August when most of our politicians and top officials are on holidays and Ireland is half asleep.   They call it the silly season here because there is so little news that the papers print all kinds of inane stories to fill space.

This year is somewhat different, however.  The reason is that this year, under the new timetable introduced by the European Union, we have to produce our annual budget in mid-October, two months earlier than usual.

And the budget for 2014 is going to be another savage one which will be critical in our getting back control of our economy and turning things around.

Behind those lazy days of summer when not much happens this year, there is frenetic activity going on behind closed doors as ministerial staff struggle to find ways of making the huge savings that our IMF program demands we make again this year.

We're supposed to be near the end of the austerity program.   Indeed, if you read some of the positive commentary on Ireland you might think that our problem is solved already and we are on the brink of economic recovery and normality.

But the reality is the Irish economy is still flatlining and the state is still spending much more than we raise in tax, with the result that we are still borrowing €1 billion a month from the EU/IMF to pay for welfare, health and all the other government services that stop us from turning into Greece.

The budget this October is critical because although we have made progress in closing the tax/spending gap, we still have a distance to go and time is not on our side.

By next January Ireland is supposed to be out of the EU/IMF program that has been propping us up for the past few years.  Over the past three years we have borrowed over €60 billion under the program to avoid national bankruptcy and collapsing as a failed state which can't pay its bills and its debts.

The problem we face now is that the spending cuts and tax hikes we have endured in every budget over the past five years have made it progressively harder to find ways of narrowing our budget gap.

There is very little budgetary fat left.  It's now down to hard choices.   And this year, with another €3.1 billion reduction due in cuts and/or tax hikes under the program, it's going to be harder than ever.

A ferocious debate is going on behind the scenes in the civil service and between the two parties in government, Labour and Fine Gael.   The Labor view is that further cuts and tax hikes of this magnitude will mean our economy will continue to flatline and any chance of growth will be snuffed out.

Taking that much out of the economy at this time is counter-productive, they say, and they are supported by some Fine Gael backbenchers who are feeling the pressure from their voters.  This view is even supported by a former IMF senior executive who was involved in our bailout.

Another factor in the debate is the fact that the state promissory note deal, which greatly lengthened the repayment period for about half of our total borrowing, means that our repayments for this year will be about €1 billion less than we had expected.

So we have a choice. We can use this to get further ahead on our debt repayments or we can use it to make the budget this year softer by modifying cuts in spending.

The strong view of the EU/IMF is that we should stick to the agreed program and use the money to reduce debt (by having to borrow less).

The official Fine Gael view is in agreement with this tough line. We need to press on and "finish the job" even though it's painful.   When we emerge from the IMF/EU program next year we have to be able to borrow on the international money markets, and any backsliding now could send out a wrong signal that could put this in jeopardy.

On balance, the Fine Gael view is probably correct. Yes, it's true that taking even more money out of our economy now is going to depress things even more.   But using more borrowed money for welfare payments to prop up the domestic economy is not the answer either and will make things worse in the long run.

Much more important for our recovery are the signs of a slight recovery in Europe.  Higher demand in Europe will stimulate real growth here in exporting businesses.  And that's real money and jobs that last.

There is general agreement here that tax rates are now at a level that means any further hikes will have a seriously depressing effect on business activity and job creation.   That does not mean there won't be any tax hikes in the budget.  But it does mean that most of the adjustment in the October budget will have to come from cuts in state spending.

Let's say that some kind of compromise is worked out between Labor and Fine Gael to hold the government together, and that instead of making a €3.1 billion adjustment in the budget, they use a third of the €1 billion promissory note “saving” to reduce the adjustment to €2.6 or €2.7 billion.

That may be risky.  But it will reduce the pain somewhat, although major spending cuts in big state departments like welfare, health and education are unavoidable.

Already leaks from official sources have been revealing what may be coming down the tracks.   A cut in unemployment payments, in child payments and in old age pensions have all been floated and have generated outrage from those who would be affected.

What this ignores is that all these welfare payments are much higher than in most other countries in Europe and particularly in comparison with our nearest neighbor, Britain.

Let's take the old age pension as an example.  For a person who has worked and paid taxes all their lives, the state pension here is €230 a week or just under €12,000 a year.  In Britain, it is £110 a week, which is equivalent to around €128 a week or €6,700 a year.  

So pensions here are almost TWICE the level of pensions in the U.K. -- and this after years of Labor governments in Britain!  

This huge gap is replicated across other main welfare areas like payments to people who are out of work and payments to families with children, with Irish rates much higher.  For a country that is effectively bankrupt it is a remarkable situation.

All kinds of reasons are advanced for why welfare payments need to be higher here (the cost of living, etc.), but the reality is that most of these arguments are less than convincing.   Is living here really all that different from living in the U.K.?

The real reason why welfare payments here are much higher is that a boom time overhang still exists, both in pay (try hiring a plumber at less than €25 an hour) and in welfare payments which got big rises in rates during the boom as the government splurged on spending.

Of course you won't get many people here to admit this, and such statements of reality even provoke outrage.

There was fury two weeks ago when word got out that one of the options being discussed behind closed doors is a €10 cut in the old age pension. That would still leave pensions here more than a third higher than in the U.K.   But there is such a fear of a grey voter backlash that ministers were lining up to deny that this was an option.

The fact is, however, that Ireland is no longer a rich country and we need to accept that in both welfare and pay levels.

International commentary on the Irish bust frequently wonders why Irish people have accepted the austerity program without reacting like the Greeks with street demonstrations and so on.  The answer is that our welfare levels and state services still provide a standard of living and even comfort that protect us from reality.  And if this changes we might well see a much more aggressive Athens-style response.

That is one reason why the government is proceeding with caution.   But the reality is unavoidable.

At the end of 2013 Ireland's net debt will be well over 120 percent of national income, a level regarded as unsustainable.   And we will be adding to our debt pile for at least another five years (and possibly longer) until we can get the state finances into some kind of balance again.  

As one senior economist here observed recently, "It is bizarre that continued borrowing, which will add to this debt mountain, is routinely described as austerity."

But routine borrowing will be the norm for Ireland for years to come, some economists say until at least 2020.   And that borrowing will have to come from the money markets at reasonable interest rates.

To get reasonable rates we will have to be able to show that our budget deficits are continuing to come down and that we are keeping up with out debt repayments.   The first step in convincing them will be to stick to the program in the coming budget.

Of course there are other ways of trimming the deficit instead of cutting welfare and health and education services.  But these involve chopping state spending on a wide array of untouchable state institutions and civil service elites and state supported quangos, all of whom claim to be "essential."

That's a whole other story which we will be exploring here when the axe starts to fall.

Has the Irish real estate market finally bottomed out?

Property signs in Dublin city center earlier this year.

It's an obsession that bankrupted the country, but it seems there is no end to the Irish love affair with property.

Despite all we have been through since our property bubble burst and destroyed the state finances and the economy, some people here are starting to believe that it's time once again to get back in the property game.

There is a growing feeling that the worst is over, that prices have reached the bottom and that from here on the only way is up.  

Now, where have I heard that before?

Oh yes, now I remember.  It was when I went to see a two-bedroom apartment in the south Dublin suburbs back in 2006 with a friend of mine who was thinking of buying.  It was a snip at €425,000, the estate agent told us, predicting that it would be worth half a million within a year.  The only way is up, he said. 

Although it had a designer kitchen and cool minimalist furniture, the rooms were small. Plus it was at the very end of the commuter line from the city.

“I’m not sure about this,” I told my friend, who was desperate to get on the property ladder.   I thought he should be able to do better for that kind of money.  He agreed and decided not to buy. 

The following year, 2007, prices peaked and the market started to implode, with overpriced apartments in the outer suburbs losing their value fastest in the following years.  Last year I saw an identical apartment in the same block for sale for €195,000.  In my view, it's still overpriced.  

It's now over five years into the property crash in Ireland, the worst ever in Europe and one of the worst ever in world history. Prices have gone down and down, year after year.  There appeared to be no end in sight.

Nationally prices have fallen by over 50 percent since the peak in 2007.   That's an average figure, so although the fall in some parts of Dublin has been slightly less, in other areas and other sectors (apartments rather than houses) the fall has been higher, over 60 percent.

After five years of falling prices it seemed like the collapse was going to continue forever.  But this year, at last, there have been signs that we may have reached the bottom.

At the end of last month, the Central Statistics Office (CSO) made headlines when its analysis of the country's property market showed that prices had risen by 1.2 percent over the preceding 12 months.
The CSO's Residential Property Price Index is a monthly survey, and this was the first one to show an increase rather than a decrease since the crash began back in 2007.

The news confirmed what most people were sensing, that the market was bottoming out and that prices -- particularly for houses in good areas for family homes -- are unlikely to slip any further.  

In the better areas, agents are claiming that prices are up at least five percent this year. With no building since the crash, demand for family homes is strong and the supply is limited because sellers have been waiting for the crash to end and for prices to recover.

In some select areas like the Southside suburb of Dalkey/Killiney (where Bono lives) or the Northside suburb of Howth (where U2 drummer Larry Mullen lives) agents are claiming that family homes are up at least 10 percent since the start of this year. And the strongest demand is not for the kind of mansions where the U2 boys live, but the average three or four bedroom family home.

Typical of this kind of home is the small Evora Park estate of ordinary sized houses in Howth.  A house there which had been on the market for just two or three weeks was snapped up 10 days ago.

The asking price for the modest four-bedroom semi-detached house was €495,000 and the speed of the sale would indicate that somebody agreed to buy at the full amount.

Which is interesting, because the last house to sell on this road was in January 2010 (three years back) and it made €420,000.  It was identical, apart from having a slightly smaller back garden.

Since then, prices have fallen by at least 20 percent, even in the better areas like Howth. So even if you factor in a five to 10 percent gain since the start of this year and allow a bit extra for the extra garden space, the house which sold in the past couple of weeks should have been around €400,000, not €495,000.  

That indicates a significant strengthening of the market.  But it's for a particular kind of house and it's not at all clear yet how solid this is.

Since we're talking about Howth, the story of another house on a much more expensive road in the same seaside village on Dublin's Northside is a cautionary tale.

Claremont Road in Howth is about as exclusive as you can get; it's the road where Mullen lives. With direct access from the back gardens to the beach, the mansions on the leafy road have always been in demand among those with a million or more to splurge on a dream home.  

But the story of one house on the road shows how all the excitement about the "return" of the property market should be treated with caution, especially if we're talking about big houses.

Back in 2007, as the boom reached its peak, a local developer demolished an existing house on the road and in its place he built a substantial modern home with big reception rooms and bedrooms and a light-filled kitchen/breakfast room with floor to ceiling windows overlooking the beach.

The mansion was featured heavily in the press and the developer told reporters that he reckoned the house could fetch as much as €7 million.

But by the time he had it finished the market had peaked, and when he put it up for sale in late 2008 prices were starting to turn downwards.  So he pitched the price at €4.8 million.

Despite extensive media coverage it did not sell and the following year (2009) the developer reduced his asking price again to €3.75 million, saying that if he went any lower he would lose money.

But still the house did not sell. In fact, despite further price reductions over the next three years, it did not sell until this year when a few weeks ago it was bought quietly for €1.15 million.

That's a long way off the original €7 million. Or even the "reduced" price in 2009 of €3.7 million.
It's an example of how uneven the much-hyped “recovery” in the Irish property market is.  Modest houses, in better areas, which make good family homes, are selling quickly at prices that are up slightly on last year.  But there are still many apartments in outlying areas and houses in ghost estates in rural areas that nobody wants.

The other big unknown at the moment is what is going to happen when the banks start releasing repossessed homes on the market.  As we reported in detail in this column recently, there are tens of thousands of people here who are way behind in their mortgages and have little hope of catching up.

Most of them bought during the boom and they are now in negative equity, with their houses worth half what they paid for them.  

During the boom, tens of thousands of people here also got into property as an investment, the so-called buy-to-let market. As the economy has slid, many of these are also in deep trouble, and estimates indicate that at least one-third of these homes are likely to end up back on the market.  

Two weeks ago one of the main banks said that their figures were showing that up to 20 percent of those behind in their mortgages are “strategic defaulters,” people who are deliberately not paying because they reckon that by going deep into debt they will be able to cut a deal to reduce the amount they owe.  No doubt there are such cases in the present uncertain climate.

But the reality is more likely that in most cases, the people are simply choosing to pay their credit card bills and other loans and expenses first and are putting the mortgage on the long finger.    
The accusation of “strategic defaulting” has led to a furious dispute here with the banks, with people saying they don't understand the pressure home owners and even investors are under.

Whatever the truth, the reality is that many people here are going to lose their homes and those apartments and houses will be back on the market.    

A court judgment here in 2009 prevented banks from repossessing houses, but new legislation has now changed that situation and in the coming year or two the banks will be taking back houses from people who can't pay their mortgages and selling  them again.  That will keep considerable downward pressure on house prices.

So is it a good time to buy here?   Yes, if you're a young couple who want a family home to live in for the next 20 or 30 years.

Such houses are not going to get much cheaper and the sooner you get in the better. But there won't be any doubling of house prices in five to 10 years as happened during the boom.

Those days are gone forever.  And good riddance.

The young leave as new residents arrive, Ireland needs immigration reform too

Immigrations becoming naturalized citizens in Dublin during a ceremony in May.

The debate that's going on right now in the U.S. over comprehensive immigration reform is of some interest to us here, not just because it would help many of the Irish who are illegally there. 

It's also interesting because of the recognition it gives that greater control of immigration is necessary even in a "melting pot" country as large as the U.S.

If a vast country like the U.S. recognizes the need for greater immigration control, then a tiny country like Ireland, which on a proportional basis has had a far higher immigration rate over the past decade than the U.S., should at least be considering its policies.   

The issues involved and the context obviously are different in the U.S.  But immigration is a growing issue in Ireland, and there is widespread  dissatisfaction among people here with the way it is has been handled over the last 10 years. 

Last month, for example, the Economic and Social Research Institute (ESRI), the leading research organization in Ireland, produced a report that showed that when our banks and our economy took a nose dive in recent years attitudes here became much harder on immigration.  

Well, hello? We hardly needed a roomful of academics and statisticians to tell us that. 

But even so, since the ESRI is the leading think tank in the country with the brightest brains working there and it's supported by the state, its reports deserve careful attention.

Its reports are not the kind of anecdotal stuff you read in newspapers. They are based on extensive fact finding, polling and analysis.     

The new report revealed that the number of people here who are opposed to immigration from other European countries (which would be mainly Eastern European countries like Poland, Lithuania, Latvia, and so on) has risen from four percent in 2002 to 15 percent in 2010.  

There may also a slight racial factor in our changing attitudes because when people were asked about immigrants with non-European ethnic backgrounds (Africans, Asians etc.) the number opposing such immigration went up from five percent in 2002 to 20 percent in 2010.    

There are a few points to note about this.  First, people being surveyed on this topic frequently moderate their views because they don't want to appear racist. 

Second, the figures are out of date and, given the trend, the number opposing immigration is likely to be considerably higher now.

Third, a national figure like this is an average that dilutes the number of those opposing immigration in the areas where the concentration of immigrants is highest.  

So it's pretty safe to assume that the ESRI figure is an understatement of the current position nationally, and probably a gross understatement of the number that oppose immigration in an area like north county Dublin where so many immigrants live.    

It's not surprising that the change in attitude mirrors the collapse in the economy here and the climb in unemployment.  That indicates that at heart we are not a racist nation, but we do believe in putting our own people first.  

The immigration aspect of the ESRI report got wide coverage in the Irish papers a few weeks ago. But most of the papers missed something. 

The report was about integration instead of immigration and, in fact, is an annual report done by the ESRI for the Integration Center here (another state sponsored body).  

And when you read the report itself you find that the poll on attitudes to immigration was actually part of the European Social Survey, a bi-annual survey carried out by researchers for the EU.  

The ESRI team took that poll data and analyzed it for a chapter on immigration in their report.  We're so politically correct and paranoid on subjects like race and immigration that we did not even do our own research (in case we get an embarrassing answer).  So for this study the ESRI relied on stuff from Europe that is more than two years old.  

What we do know from our own census data is that the number of non-Irish living here is now well over half a million (a huge change in a very short time in a total population now at 4.7 million.) 

We also know that since the recession began the total number of immigrants here has not declined and, in fact, immigrants are continuing to come here, although in lower numbers.  

The reason for this is straightforward.  Welfare rates in Ireland are much higher than those in Eastern European countries, so even those who are out of work are better off here.  Why go home to Eastern Europe where welfare is a pittance and quickly runs out? 

For non-Europeans, mainly "asylum seekers," the application process and the subsequent appeals process, supported by free legal aid, can be stretched out over years.  Which makes it attractive to stay because the longer you are here the greater the chance of getting rights here.  

What all this means is that Ireland now has a large number of immigrants (about 17 percent of the population) and they appear to be here to stay. 

Most of them are here by right since they are EU citizens -- the enlargement of the EU in 2004 brought in the former communist states in Eastern Europe.   

At that time, Ireland became one of only three EU countries to allow people from these new EU member countries an automatic right of entry to live and work. 

When fears were raised here about this at the time they were brushed off, and we were told that maybe 8,000 to 10,000 Eastern Europeans would come here and that we needed more workers to feed our growing economy.  We were also told that they would be very likely to go home again if they were out of work.  

This turned out to be a farcically inaccurate estimate of the numbers involved and how long they would stay, as we now know.  

As immigration soared during the boom, the politically correct among us then shifted the argument to one about the positive aspects of a "multicultural society," and we were encouraged to embrace "the new Ireland."   Anyone failing to do so or raising doubts was ridiculed as a quasi-racist or some kind of retard. 

A whole industry grew up around making immigration work (support groups, lawyers, extra language teachers in schools etc., all funded by the taxpayer).  

The only problem was that no one had asked the Irish people whether they wanted this high-speed immigration and multicultural society in the first place. 

Now at least five years into the crash, the chickens are coming home to roost.   

There's no money to pay for any of it.  The extra language support teachers have gone, leaving junior school teachers in some areas facing large classes where many of the kids can't speak English. 

The multicultural "new Ireland" turns out to be the same as the old Ireland, but with the addition of particular areas where there are high concentrations of immigrants and where different national groups band together.  

There is huge pressure on the health service and other state services due to the increased numbers.  And as unemployment has climbed among the new arrivals, the welfare bill has gone through the roof. (Unemployment among immigrants is 18.5 percent, among locals it is 14.7 percent.) 

And all of this is now paid for by borrowing.  We don't actually know what the total bill resulting from our high immigration is because official Ireland does not compile such figures because it might be racist and would definitely be unsupportive of the new multicultural Ireland and therefore unacceptable.  

One unofficial estimate I have seen puts the direct costs (welfare, housing, etc.) at close to €200 million a year now and up to €300 million or more if you add in all the extra costs to the state in medical, educational, legal and other services. 

As I said, all of this has to be borrowed right now and will eventually have to be paid back by the taxpayer here.   

Meanwhile, of course, emigration of the young Irish out of Ireland has soared as jobs have dried up. The stresses that this situation is causing are now starting to emerge more frequently, and they are not all that different from what we have seen over the years in British cities with large immigrant communities which are still not integrated after decades.  

In the small towns in north county Dublin where so many immigrants ended up, fights between locals and immigrants are common outside the pubs after closing time.  And the current heatwave here is not helping, with a battle on one of the beaches recently between "locals" and immigrants. 

Some of the heavy East European and African immigrants, reflecting where they have come from, are on the fringes of crime here and are not interested in working.  But the courts find it very hard to remove them.  

Like north county Dublin, the sprawling suburb of Tallaght on the west side of Dublin (a place as big as Limerick), now has streets where African or Arab or Romanian families form their own communities.  In Tallaght as a whole, around 12 percent of the population is immigrant.   

And it's not just in greater Dublin.  Some of the big provincial towns around the country are also experiencing the problem. 

One newspaper here recently highlighted the situation in the town of Monaghan, where 30 percent of the people are immigrant.  Some other big towns in the midlands have numbers that are almost as high.    

All of this is breeding deep resentment among many Irish people who are conscious as the economic downturn has continued that many immigrants are getting welfare and state housing while their own sons and daughters are emigrating to the U.S. and elsewhere to find work.  

Of course official Ireland and those who are fortunate enough to have jobs and live in "nice" areas with expensive housing and good schools, still support the idea of a multicultural Ireland.  

Which is fine for them since their daily lives are unaffected by the stresses of high immigration in other areas.  (And being able to hire a Polish plumber in the black economy is always handy.)

But even among these more liberal people there is a very slight, but detectable, shift in attitude lately, with more questioning of overall policy as their tax burden grows to close the budget deficit.  

Even many of the very idealistic (students and so on) now admit that the situation is not sustainable.   Others would put it more strongly and say that unless we wake up fast we're going to have a major problem here without the resources to tackle it in the future. 

The irony is that it is a self-made problem, one that we created over the past 20 years without really thinking about it.  Mind you, we got more than a little help from the dreamers in the European Union.   

Immigration reform is not just needed in the U.S.

Abortion debate was a sham, nothing has changed for Irish women

Anti-abortion protesters pictured outside Leinster House last Thursday evening.

Last week was abortion week in Ireland.  A shameful 30 years after the X-Case (involving a pregnant and suicidal 14-year-old rape victim who the Irish state attempted to stop having an abortion in the U.K.), the Dail (Irish Parliament) passed the first law ever to allow abortion in Ireland, albeit within extremely restrictive limitations.

In practical terms, there will be no change for Irish women.  The thousands of Irish women who go to the U.K. for abortions every year will continue to do so since abortion here will only be available in extreme medical cases in which the life of the mother is at substantial risk.  

The circumstances under which such abortions will be carried out have already been laid out in detail in this column and elsewhere in recent months.  They are so restrictive that some medical experts have predicted that only a handful of abortions will take place here every year.

This is more or less the situation at present in Irish hospitals when abortions or "early deliveries" sometimes happen during the treatment of a mother whose life is in danger.

Abortion in cases of rape, including child rape, incest, fatal fetal abnormality (where the fetus is so compromised that it will be unable to live outside the womb) and in some other extreme circumstances, will not be allowed under the new legislation. 

All this legislation does is put into law the situation decided years ago by national referendums and a Supreme Court decision giving the mother and the fetus an equal right to life. 

Not that you would think that from the week of high drama we have been through here. It was a week of marches, protests, all night vigils outside the Dail, extended TV coverage that went on around the clock as the Dail sat through the night to 5 a.m., politicians (including a junior minister) being expelled from their party for refusing to vote in favor of the bill. 

In the end the bill went through, taking up more hours on live TV and acres of space in newspapers, with lengthy interviews with troubled members of the Dail wrestling with their consciences and words like historic and ground-breaking being thrown around.  

The bill was nothing of the sort. It was pathetic and cowardly, failing in any meaningful way to face up to the fact that Irish women, like women everywhere, have abortions. 

The only difference is they don't have them here. They have them in the U.K.

The situation here is crying out for a more sympathetic abortion regime, in particular to deal with rape, incest and the other difficult cases mentioned above.

The new legislation should have been concerned with that and with the detailed regulation of a slightly wider abortion regime that would have given more weight to a woman who stated that she was suicidal because of the pregnancy.   In cases of rape, incest and fetal abnormality that would not have been too much to expect from a government with any courage, particularly since recent national opinion polls have shown majority support for such changes. 

But it was not to be.  Instead, Taoiseach (Prime Minister) Enda Kenny and his government played safe, ducked the issues and introduced a new law that is so minimalist it is almost meaningless. It will certainly mean nothing to thousands of women here who have abortions in the U.K. every year.  

The level of debate in the Dail, particularly during the all night sitting, was very poor, with members making repetitive and sometimes contradictory speeches, some of which were barely coherent, even infantile.  

Maybe it was the heatwave here, or maybe it was something to do with the Member's Bar in the Dail staying open all night, but the debate was ridiculous at times and the Dail chamber was a sorry sight. 

The worst moment came when one male member grabbed a passing female member and pulled her onto his lap for a few seconds, an incident that was captured by the Dail cameras and has now gone viral.  It was a very stupid thing to do, not least because of the subject being debated.  

Another member was so addled by what was going on that he voted the wrong way "by accident." The night was almost comical, except that it was so tiresome -- and so tragic since it affects the lives of thousands of Irish women.  

The most contentious point in the bill for the troubled members of the house was, of course, the proposal to allow a suicide threat as grounds for an abortion.  But as we pointed out here already, this is circumscribed by an extremely tight framework. 

There will be no question of a woman simply declaring that she is feeling suicidal and then being allowed an abortion.  Her declaration will be tested in interviews by a panel of two psychiatrists and one obstetrician in a process that will be very demanding for her.

The assessment may continue for hours or even days.  If the panel decision is not unanimous she will not be allowed an abortion.  

In no circumstances is the law that passed in the Dail last week supportive of a woman's right to choose. 

In all cases, whether it is a woman who is seriously suicidal or a woman facing difficult cancer treatment, the decision on whether an abortion is permissible under this law will be taken by the medical professionals.  They will listen to the woman.   But they will decide. 

Savita Halappanavar, the young woman who died of septic shock last October in Galway after being refused an abortion, was mentioned several times during the debate.  It was claimed by those opposing the bill that if this law had been in place it would not have made any difference to her.  

Those supporting the bill said repeatedly that the new legislation would bring "clarity" for medical practitioners and this might have saved her because it might have given her doctors the confidence to act earlier.

But despite all of the guff about "clarity," the fact is that the situation for women in Irish hospitals who face such difficult medical situations is still as clear as muddy water.  As in the Savita case, knowing when the risk to a mother's life becomes substantial enough to allow an abortion is far from easy.

Some doctors may tolerate a higher level of risk than others.  Even though it is the woman's body and the woman's life, the decision will remain out of her hands.

And unless the situation is an extreme and immediate life-threatening crisis for the woman the decision will be taken by two senior doctors, not one.

In the case of a woman who is suicidal, again there is no right for the woman to be in on decision. She will put her case and be assessed. 

But the doctors (three of them) will decide.  If they say no she can appeal to another panel of three doctors which is likely to take days.

This very restrictive regime does not sit well with the decision taken years ago by the Irish people in a referendum to uphold a woman's right to travel.  This decision was taken by the Irish people so that women could continue to travel to the U.K. and elsewhere to procure abortions.  

In many such cases abortion is allowed on the basis of a possible suicide risk declared by the woman.   When the Irish people passed the referendum in question they were well aware of this. 

It seems clear that the Irish people then were saying that a woman who says she is suicidal has the right not only to travel but also has the right to be at least a major part of a decision to allow her to have an abortion because of the suicide risk.  Yet the legislation fails completely to recognize that.

It is yet another Irish solution to an Irish problem, that problem being our inability to deal with reality, the reality that thousands of Irish women have abortions every year.     

Ireland’s anger over Anglo tapes shifts in the right direction to Irish government’s Department of Finance and Central Bank

The Anglo Irish Bank office sign being taken down from its main Stephen’s Green location in Dublin in 2011.

Public anger here at the Anglo Irish Bank tapes revelations is beginning to shift in the right direction at last.

As we hear more and more of the leaked tapes, it's becoming more and more obvious that the main villains of the banking collapse which led to the bankrupting of the country are not the frazzled, foul-mouthed executives at the top of Anglo Irish Bank.     

As we pointed out here last week, the Anglo Irish boss David Drumm and his top two executives who feature on the tapes were simply trying to save their imploding bank.  They were so desperate they were bending the rules and misleading the financial authorities -- and discussing it all in frat boy language that showed their contempt for the politicians, the civil servants, the Central Bank and the Financial Regulator who were all completely out of their depth.

The new tapes published last weekend showed just how clueless these public servants were, particularly in the Department of Finance and the Central Bank.

The Anglo boys were able to wrap them around their fingers, to the point where the authorities who should have been looking out for the country's interests were commiserating with the bankers about how awful the situation was, and how much pressure they were all under.  

There was an air of "we're all in this together."  Instead of probing and threatening, the public servants were pleading and cajoling.  None of them appeared to understand the scale and speed of the crisis that was engulfing Ireland or what to do about it.

The whole posture of the authorities was polite to the point of subservience to the bankers, even as the country headed towards the cliff.

So yes, the attitude, the behavior, and of course the language of the Anglo executives was appalling.  But the incompetence of those they were dealing with was far worse.  It was that failure at official level that eventually brought the country to its knees. 

At least the Anglo boys knew what was happening, and that is clear from the tapes.  In fact you could argue that if Anglo CEO David Drumm and his top execs had been running the Central Bank they would have tackled the crisis much more effectively. 

Even more shocking than the language of the Anglo boys and their cavalier talk of forcing billions out of the Central Bank which they would never be able to pay back, was the  "muddle through" attitude of the authorities. 

The people at the top who were supposed to be looking out for us taxpayers were either asleep at the wheel or overwhelmed by a situation they were not qualified to handle or not smart enough to understand.   

So public anger here which so far has been directed at the Anglo boys and their cowboy banking culture is now shifting as the wider picture of what was happening at the time starts to emerge. 

The realization that the Anglo boys were not the main villains is starting to dawn on people.  And those in the firing line are the top public servants who were supposed to be dealing with the situation at the time.

We already know that the Financial Regulator at the time, Patrick Neary, now in retirement on a huge pension, was a joke who was still telling the government and the Irish people that the Irish banks were robustly capitalized even when we were already up to our necks in the crisis.   

Just as bad were the people at the top of the Central Bank who the Anglo boys refer to as "clowns" on the latest tapes published last weekend in the Sunday Independent.

In particular, the performance of the former governor of the Central Bank, John Hurley, also now in retirement on a huge pension, was hopeless (he and Neary both "retired" in 2009, a few months after the state had to give the blanket guarantee to the banks).

Probably worst of all, however, were the top civil servants in the Department of Finance, the people who were advising the Taoiseach (Prime Minister) Brian Cowen and his Minister for Finance Brian Lenihan on what to do. 

The chief clown among those was the then secretary general at the Department of Finance (the boss of the department), David Doyle, now also safely in retirement on a fat pension, who was in charge for most of the boom. 

His right hand man was a guy called Kevin Cardiff, then assistant secretary and head of the Financial Services division in the Department.  He went on to take over as secretary in 2010.    

You may remember that Cardiff was the guy who was in charge when there was a €3.6 billion error in the figures computed for the Irish national debt a couple of years ago, an achievement that gained him considerable notoriety.  

Despite this, the present government shifted him into a cozy job in Europe as Ireland's representative on the European Court of Auditors, the body that checks up on EU spending!  This happened at the start of last year and came with a salary of €276,000 which of course will be in addition to his big Irish civil service pension. 

So Cardiff is now out of the spotlight even though he was a key player in the financial catastrophe in Ireland.  He was there at the marathon meeting in Government Buildings on the night of September 28, 2008 when Cowen and Lenihan took the decision to give the banks the blanket guarantee that eventually bankrupted the country. 

And he was there two years later when the decision was taken to take the bailout from the IMF.   But he's not on the tapes (so far anyway), and he's singing dumb on what went on at the time. 

Someone who is on the tapes which were published last weekend is Ann Nolan, who was Cardiff's right hand woman as second secretary in the department and ran the Financial Services division responsible for the banks. 

On the tapes she can be heard laughing and commiserating with the Anglo executive John Bowe about the dire situation facing Anglo at the end of 2008.  The clear implication is that she was out of her depth and being played along by Anglo.  Yet she is now said to be the favorite to take over as the new Financial Regulator in Ireland! 

Another person to emerge on the tapes published last weekend was Con Horan, who was the point man in supervising Anglo for the Financial Regulator at the time.   What is most revealing about what he says on the tape is the tone, rather than the content. 

His questioning of Anglo executive Bowe about the way Anglo was overusing the blanket guarantee to get funds in the markets was almost apologetic.   Horan, by the way, is now on secondment from the Central Bank and is working at the European Banking Authority.  

So these three civil servants, all of who were up to their necks in the banking collapse and failed to perform adequately, are all still active in senior financial supervisory roles.

Nolan went on to play a lead role in the bailout and looks after the National Asset Management Agency (the bad bank for property) for the department.  

You couldn't make this stuff up.  Don't laugh, it's the Irish way of doing things!

Of course, as Drumm has said, we also need to hear the tapes from the other banks, and we now know that these tapes exist.  

The two main banks here, AIlied Irish and Bank of Ireland, were major players in the property lending madness, and both had to be rescued by the Irish taxpayer.  Their role in the catastrophe was at least as big as that of Anglo, yet their top executives at the time are not being held up to public ridicule like Drumm.  It's not surprising that he feels he is being turned into the fall guy. 

But it's hard to have any sympathy for him when you hear the bravado and bull that he talks on the tapes ("Another day, another billion!") as his bank played fast and loose with the rules and risked not just its own future, but that of the Irish economy and the country. 

Those billions he so casually joked about are part of the reason now why Irish people are emigrating, losing their jobs, being squeezed by taxes, waiting for months for hospital treatment and so on. 

Yes, the Anglo boys (and the other Irish bankers) have a lot to feel guilty about.  But much more guilty are the clowns (to use Drumm's description) who were in charge here at the time, particularly in the Central Bank and the Department of Finance. 

The Anglo tapes - Irish need to hear similar conversations from AIB and Bank of Ireland too

Angry protesters gather at Anglo Buildings in Galway (Photo: Galway Indo)

The Anglo Irish tapes has been the biggest story here for ages, an Irish Independent exclusive that has enraged the country and led to calls for a public inquiry and prosecutions.

But when you strip away the bad language and the macho talk, what the tapes reveal was not really that surprising. 

Anglo was going down the plughole at the time in 2008, with a billion euro a day being withdrawn from the bank by big depositors and institutions that were nervous about the bank's exposure to the Irish property market which was then in the early stage of its steep decline.

Anglo had about a week or two left before it would be completely bust.  So naturally "the lads" at the top were desperately trying to save themselves and the bank.    

The macho language and posturing was bravado covering rising panic as they realized the situation was slipping away from them unless they could get emergency funding in fast from the Irish or European Central Bank, or somewhere else.

For example, they knew the €7 billion they were asking the Irish authorities for -- a figure one of them says on the tape he pulled out of his arse -- was unlikely to be enough.  But it's also clear that none of them really knew how big the hole in the bank was going to get.   

The truth is that at the time no one did, because everything depended on how far the Irish property market was going to fall.  It was a moving train, and getting a fix on it was not easy.

Property prices in 2008 up to September that year (when the tapes were made) fell by around eight percent; the market had peaked and turned the previous year, 2007.   

Clearly international investors believed Irish property was seriously over-valued and were pulling their money out of Irish banks, but how far would prices fall?  Was it possible to know then that the whole thing was a bubble and that by 2012 property prices would have fallen by well over 50 percent?   

Anglo Irish was exposed on a massive scale to the property market.  But in 2008 it was still possible to claim that the problem it and the bigger Irish banks were facing was temporary liquidity rather than solvency.  We're all geniuses in hindsight, but that needs to be remembered.

What really enraged the Irish public last week was the revelation on the tapes that the Anglo lads had apparently tried to con the Irish authorities.  They asked for €7 billion, knowing it was not going to be enough, so that the Irish Central Bank would have "skin in the game."

In other words, when the lads would come back looking for more the Irish authorities would feel they had to keep giving.  Which is exactly what happened.        
  
That and the cavalier attitude, the macho language and the contempt for the Irish authorities, is easy to characterize as outrageous or criminal.

But a lot of it is merely the Irish version of the way the banking Masters of the Universe talk to each other.  And as far as the language is concerned, if the private phone conversations between other senior bankers -- or politicians or editors -- were recorded at times of high stress they might not be very different in tone. 

Of course that did not stop many politicians and newspaper columnists here getting all sanctimonious last week, trying to outdo each other in outrage. 

Forget about the language and the macho banter about billions.  What is involved here is much bigger than the phone chatter between the senior Anglo executives as the pressure mounted.

The bigger picture which still remains hidden is not what was going on in Anglo, it was what was happening in the Big Two Irish banks and at official level at that time. 

It wasn't just Anglo that bankrupted the Irish state (although it played a major part). The property gambling of the other Irish banks was also to blame, as well as the vast overspending by the Irish state (all based on property taxes) during the boom.   

The main reason Ireland went down was the insistence by the European Central Bank, heavily influenced by the Germans, that the cost of the banking catastrophe here had to be borne entirely by the Irish taxpayer.

The overriding concern of the ECB, the Germans, even Timothy Geithner in the U.S., was that no investors or bondholders were to be burned, because this might start a run on banks in other weak European countries.    

Even though these bondholders and investors had essentially gambled by putting their money in here during the boom, they were not to be touched.  Every last cent of the cost of saving the Irish banks and repaying all the foreign banks and bondholders was to be carried by the Irish taxpayer.  And that is exactly what has happened. 

Last week Irish politicians from the taoiseach (prime minister) on down were declaring themselves to be shocked and disgusted by what was on the Anglo tapes.  German Chancellor Angela Merkel said she had nothing but "contempt" for the Anglo bankers.   

But what was done to ordinary Irish taxpayers -- and is still being done -- is what is really shocking, disgusting and contemptible, and much of that is down to German policy.  So we can consider Merkel's outrage with that in mind. 

That's the real scandal. Not what a few Anglo execs were saying to each other when the testosterone and adrenaline were flowing and they were almost hysterical about the failure of the Irish authorities to act fast enough to save them.     

It's a fair bet that the same thing was going on in the two big players in Irish banking, Bank of Ireland and Allied Irish Banks, as their cash situations also started to crumble.  We have been told that the recording of phone conversations in Anglo was normal and that the same may well be true of the Big Two banks.

Are there tapes there as well?  If so, we need to hear them. 

We have been told repeatedly that no records exist of the conversations that took place on the night of the infamous blanket guarantee given to the Irish banks by the last government at the end of September 2008, the decision that ended up bankrupting the country.  We have even been told that no notes were taken.

This is both outrageous and incredible.  If no notes were taken by the senior civil servants, the senior politicians and the bank bosses who were at that all night meeting, that is disgraceful.  (And by the way, the Anglo Irish executives were not at that critical meeting.)   

We are told also that there are no tapes of what happened that fateful night in Government Buildings.   But even if there are no tapes of what AIB and Bank of Ireland bosses were saying that night, it may not matter because in the days and hours before that critical meeting you can be certain that their most senior executives were discussing what was evolving.   

And even more important, you can be sure that in the hours and days after that fateful night when the blanket bank guarantee decision had been taken, the senior bank executives would have been discussing what had happened that night, who had said what, and so on.   

So phone recordings or written records from the Big Two banks for those crucial days before and after the night of the bank guarantee are gold dust.  They would show exactly what the former Taoiseach Brian Cowen and his Minister for Finance Brian Lenihan were told by the bank bosses.  They would also reveal what the top civil servants from the Department of Finance who were in the room were saying. 

All of this is vital in assessing the basis on which the blanket guarantee was issued.  That guarantee bankrupted Ireland and forced us into an IMF/EU bailout a couple of years later. 

And we were given the bailout money on condition that the Irish state -- in other words the ordinary Irish taxpayer -- pays it all back. 

Which is how the cost of the bank collapse here was transferred from investors and bondholders to the Irish taxpayer, and why we are now in a killer austerity regime of higher taxes and lower spending that has suffocated our economy and caused mass emigration. 

That's the real scandal.  Not just what a few Anglo execs said to each other when the testosterone and adrenaline were flowing.