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Life should be full of strangeness, like a rich painting
Notes for a Book on Money and the Irish State - The Marshall Aid Program 15:10 Sat Apr 02, 2016
The Financial Crisis:What Have We Learnt? 19:58 Sat Aug 29, 2015
Money in 35,000 Words or Less 21:34 Sat Aug 22, 2015
THE WRATH OF KANE: BANKING CRISES AND POLITICAL POWER 09:32 Fri Jan 30, 2015
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Conor McCabe - 15:10 Sat Apr 02, 2016
Ireland?s Economy: Radio Eireann talks on Ireland?s part in the Marshall Plan. Dublin: Stationery Office, 1949 [official/government publication] NLI: OPIE X 26.A Forward by the Taoiseach Mr. John A. Costello S.C., T.D. (pp.1-2) Since its inception European Economic Co-operation has done much towards restoring European economic solvency and has challenged the forces which have been attempting [...]
Ireland?s Economy: Radio Eireann talks on Ireland?s part in the Marshall Plan. Dublin: Stationery Office, 1949 [official/government publication] NLI: OPIE X 26.A
Forward by the Taoiseach Mr. John A. Costello S.C., T.D. (pp.1-2)
Since its inception European Economic Co-operation has done much towards restoring European economic solvency and has challenged the forces which have been attempting to undermine the traditional civilisation and culture of Europe. Today, however, economic uncertainties beset many countries and the international trading system still requires to be lubricated in a way that will ensure that world production will be better distributed and used for the benefit of the people of the world generally. (p.1)
The future prosperity of Ireland, however, is dependent to a considerable extent on the success of attempts now being made to restore the international economy. Because of our small size as a nation we may not be a determining influence in the success of these attempts, but through our participation in the plan for European Economic Co-operation we are enabled to play a not inconsiderable part in assisting them. (p.1)
The basic difficulty in this country?s economy has for long been chronic under-investment. We have had resources idle in land, labour and capital. The most urgent economic problem in Ireland has been under-employment - a condition in which men, money and land are frequently not employed in the manner or in the combination which would produce the most efficient and profitable results. These conditions, the result of under-investment in the past, may have been partly caused by the fact that the Irish farmer, unaided by State assistance, has been incapable of providing himself with the capital necessary to improve substantially the productivity of his lad. It is in a great campaign for the elimination of these conditions of under-employment that the Irish government needs the aid which the bold and generous policy of the American Republic has lent us. (p.2)
To explain in a simple yet comprehensive manner Ireland?s economic problems and the use of American aid to help towards their solution, Radio Éireann broadcast in March and April of this year  a series of talks on the Plan for European Economic Co-operation - the Marshall Plan - and Ireland?s part in it. The first three talks were given by Mr. Seán MacBride, who, as Minister for External Affairs, has special responsibility for the working out of Ireland?s part in the plan. The remaining four talks were given by our American advisers, Mr. J.E. Carrigan, Chief of the ECA Mission to Ireland, and Mr. W.H. Taft III, his special assistant. (p.2)
?The Fourth Talk: Mr. Carrigan Reviews Progress? (pp.16-20)
Now let us look at Ireland. Ireland?s soil, her most important resource, suffered from lack of fertilisers, unobtainable during the war; her poultry and livestock numbers were reduced; her industrial plant deteriorated for lack of replacement parts and equipment; and her stock piles of consumption goods were lowered almost to the vanishing point. In other words her productive plant was in bad condition. (p.17)
The only eventual answer is to produce more or consume less. I think the answer in Ireland is to produce more and that every Irishman is (p.19) going to respond. It is only in this way that Ireland may build her own economy and make her greatest contribution to the European Recovery Programme. (p.20)
?The Fifth Talk: Mr. Carrigan on Agriculture? (pp.21-26)
The fact that Ireland needs to increase her exports greatly in order to close the gap between outgo and income by the year ending June 20, 1953, has been already emphasised. Actually Ireland needs to double the value of her exports over 1947. This means an increase in exports of $39,000,000 and $38,000,0000 or 97 per cent is expected from agriculture. (p.21)
The European Recovery Programme: Ireland?s Long Term Programme (1949-1953). Dublin: Stationery Office, 1948.
Information Supplied by Ireland to the Paris Conference.
Conor McCabe - 19:58 Sat Aug 29, 2015
I start teaching a level one (introduction level) module in UCD Monday Week on the Financial Crisis. As always, I’ll post what I can here to share it with activists and progressives. This is a short audio I’m putting up for the students to give them a sense of where the module is coming from. [...]
I start teaching a level one (introduction level) module in UCD Monday Week on the Financial Crisis. As always, I’ll post what I can here to share it with activists and progressives. This is a short audio I’m putting up for the students to give them a sense of where the module is coming from.
It’s a clip from a Financial Times interview with Joseph Stiglitz last week, and the main point here is the one he makes about economic activity as informed by rules and power. It’s that idea of economic activity as a power relation, and a deeply unequal one at that, which really informs the whole thrust of the module - and that those who get to set the rules, get to rig the game in their favour.
The report referred to in the clip can be found here - http://www.rewritetherules.org/
The full interview is available here - http://podcast.ft.com/p/2926
Conor McCabe - 21:34 Sat Aug 22, 2015
I’ve been asked to write a short book on money. The manuscript is due in the end of April 2016. As with most things I do with political economy and education I’ll be posting stuff here as I go along. I just find it an interesting way of working through ideas, concepts and analysis. Anyway, [...]
I’ve been asked to write a short book on money. The manuscript is due in the end of April 2016. As with most things I do with political economy and education I’ll be posting stuff here as I go along. I just find it an interesting way of working through ideas, concepts and analysis. Anyway, this is the first page of the outline. It’ll be interesting to see come April how close I stuck to it, or how far I strayed.
It’s funny but when I’m writing I have to type, but when it comes to working out the overall design I have to use pen and paper - and squared paper as well.
Also, being left-handed I work from the back of the notebook to the front, upside-down, so as to not have the ring binder under my wrist. We all have our little quirks I suppose. Whatever works in the end. Anyways. Money in 35,000 words.
Conor McCabe - 09:32 Fri Jan 30, 2015
I’ll be writing more about this at the weekend but I think this is a good standalone clip from evidence to the banking inquiry given by Prof. Ed Kane on Wednesday 28 Jan 2015. He was asked by Deputy Pearse Doherty to elaborate on the statement below which was made in a paper that [...]
I’ll be writing more about this at the weekend but I think this is a good standalone clip from evidence to the banking inquiry given by Prof. Ed Kane on Wednesday 28 Jan 2015.
He was asked by Deputy Pearse Doherty to elaborate on the statement below which was made in a paper that Kane co-authored in 2004:
Professor Kane’s analysis is that the way a crisis plays out in terms of who pays for the crisis is an issue of power - that is, it is related to the nature of political and economic power in a state and the relationships between the worlds of finance and politics.
Anyway, the official transcript is below, with a video clip of the ecxhange. You’ll notice that the official transcript differs slightly from the actual exchange, but not in a significant way. The meaning is still captured and essentially stays the same.
the 2004 paper referenced is available here.
Conor McCabe - 23:11 Thu Jan 22, 2015
Shadows never go away. Might be you don?t see them, but they?re always clinging to your heels.” A Song of Ice and Fire When I was a child in primary school my way of dealing with Irish class was to find a word in the question that matched a word in the text and hope for the [...]
When I was a child in primary school my way of dealing with Irish class was to find a word in the question that matched a word in the text and hope for the best. The sentence I would find would be the one I’d read out. Sometimes it worked, sometimes it didn’t. But, it was a plan, and it helped me get through the hour.
In the absence of any understanding of the grammar, of the way the words actually relate to each other, you grab what you can and try to make sense of the situation.
In terms of the bank guarantee and bailout, and the different narratives that are being thrown out there, we can’t really do this - we can’t just pick out single words, single events, and use them to make our story. We need to have enough of an overview of the dynamics at play in order to make sure we don’t stray from the path as we go forward.
In other words, we need to understand the grammar that holds it all together, and one of the objectives of the bank inquiry is to fulfill this role.
It helps, of course, to have witnesses that understand this, and with Professor Patrick Honohan last week I’m not sure it did.
On paper the purpose of Honohan?s appearance before the Bank Inquiry Committee was to discuss his 2010 report, which looked at the regulatory and operational failure within the Central Bank and the Financial Regulator?s office. On the day itself, however, the proceedings were dominated by talk of the 2008 bank guarantee ? the decision itself and supposed cost.
Honohan initially said that the net cost of the guarantee would be somewhere in the region of ?40 billion. When he was challenged on this he revised the figure and, indeed, the parameters, acknowledging that his figure wasn?t for the guarantee alone but for the subsequent bailout. Even with this, Honohan had not factored in added costs such as interest repayments. The moment he gave the definitive-sounding figure of ?40bn, though, he had handed the journalists the following day?s headline.
He followed his ?40bn with another brash statement ? that Brian Lenihan had been ?overruled? by a more senior politician with regard to saving Anglo Irish Bank. It was obvious that the ?more senior politician? he was referring to was Brian Cowen.
The sole piece of evidence he had for this was a conversation he said he had held with Lenihan ? a conversation that cannot be collaborated as Lenihan has since passed away. The ?overruled? statement had the added effect of handing the journalists in the room the prefect narrative ? the urbane and intellectual Lenihan shot down by the gombeen Cowen.
Honohan also said that to his knowledge there was no phonecall from Trichet strong-arming the Irish government into a blanket guarantee. This is from his exchange with Deputy Pearse Doherty:
Here’s the clip from the RTE documentary, Freefall, that Deputy Doherty mentions in his questions:
This framing of events as down to a clash of social class and personalities had already been put forward in the drama, The Guarantee, and challenged by Eoin O?Broin on The Vincent Browne Show as taking away from the actual facts of the bank crisis. There?s a link below to Eoin talking about the bank guarantee.
The video serves as a short, succinct summary of part of the analysis which underpins Pearse Doherty?s contribution to the bank inquiry, namely that from the late Summer of 2007 the Irish authorities had been discussing, and ruling out, various ways of dealing with a possible crisis involving Irish banks. This isn?t about a panicked meeting at 2am, but a long and detailed process stretching back at least a year.
Getting back to the inquiry itself, Pearse Doherty brushed aside Honohan?s attempts to dictate the story and instead focused in on the substance of Honohan?s report, much to the governor?s discomfort.
Deputy Doherty asked about the ?non-intrusive? regulatory environment set up to facilitate IFSC banks in Ireland and how this affected Irish banks, and he also made the following point regarding Depfa, a German-owned bank with a full Irish banking licence and regulated by the Irish financial regulator from 2002 to 2007.
This is from Deputy Doherty at the inquiry:
The regulation of the IFSC (or lack thereof) had a knock-on effect with regard to Irish banks, but there is more going on here in terms the inquiry. In the case of Depfa, we have a way in to the type of social, political and financial relationships which operate at the highest level in the Irish state.
The point about the relationships that operate with regard to power in Ireland is a key element of the Banking Inquiry. Its terms of reference state clearly that it is required to look into,
With Depfa and the Irish Banking Inquiry, the focus is not so much on the causes and cost of Depfa’s collapse but on the light it throws on the nature of economic, political and social power in Ireland.
On Friday 16 January Pearse Doherty was on the Pat Kenny radio show on Newstalk where he summed up the reasons behind asking about Depfa, the IFSC and regulation. As with Eoin O?Broin, it?s a short clip and well worth listening to in order to get a sense of the overall thrust of Deputy Doherty’s line of questioning on the Bank Inquiry.
In terms of the bank inquiry, in order to make it a story that is more than just a scrambled synchronization of seemingly random events, we need to have a sense of the grammar that underpins the 2008 bank guarantee and 2010 bailout.
Each week we’re getting more and more of a sense of that grammar, and from Deputy Doherty’s questions and analysis we can see that this includes:
1. Mapping the regulatory framework
By the end of the context phase the bank inquiry should have enough of a grounding in these areas to enable it to go forward and ask questions that relate to the overarching story of the bank guarantee and not just to events ripped from their context.
Conor McCabe - 21:04 Mon Jan 12, 2015
Reprieved! Reprieved! I was sure of it. When you’re most despairing The clouds may be clearing.” The Threepenny Opera. Patrick Honohan, the governor of the Central Bank of Ireland, will be before the Bank Inquiry committee this week to talk about his 2010 report into the crisis. We will be able to hear his explanation as to the [...]
Patrick Honohan, the governor of the Central Bank of Ireland, will be before the Bank Inquiry committee this week to talk about his 2010 report into the crisis.
We will be able to hear his explanation as to the conclusions he drew with regard to the role of the Financial Regulator and Central Bank in the years leading up to, and after, the 2008 bank guarantee.
It will also give us a chance to get more of a sense as to where each of the main parties is coming from with regard to the inquiry - the approach they have taken and the analysis that informs their questioning.
In the case of Fianna Fáil, the analysis which underpins their questioning seems to be based upon two main points:
1. The Guarantee decision was taken under enormous pressure and one to which there was no realistic alternative
2. The ECB has questions to answer with regard to blocking any haircuts imposed on bondholders especially from 2010 onward.
For example, this video clip here has these points being raised by Michael McGrath and Darragh O’Brien:
By way of contrast, have a look at this clip of Eoin O’Broin on the Vincent Browne Show, where he argues that the collapse of Northern Rock in September 2007 marked the beginning of the debate within government and state circles as to whether a similar event could happen here.
In other words, the bank guarantee should not be seen purely in terms of the actual night itself (a point acknowledged by Senator O’Brien in the previous clip) - it needs to be seen the context of almost a year of debate and analysis taking place within the Central Bank, Dept, of Finance, Financial Regulator’s office and the Office of the Taoiseach.
With regard to this debate we are still unclear as to its shape and direction, and it is one of the purposes of the Bank Inquiry to throw some light on what happened in the twelve months prior to the guarantee decision.
Conor McCabe - 18:05 Sun Dec 28, 2014
I do not think it is fair to say people partied. People just lived a little better than they otherwise would have done because of the bubble.” Peter Nyberg under questioning from Deputy Pearse Doherty, 17 Dec 2014. Peter Nyberg’s appearance at the Irish bank inquiry marked the beginning of the context phase, the purpose of [...]
Peter Nyberg’s appearance at the Irish bank inquiry marked the beginning of the context phase, the purpose of which is to set the scene for the causes and consequences of the bank guarantee and bailout.
The context part is going to last for a few months, and it may not be until April before the committee starts calling people actually involved in the guarantee decision and its aftermath. So, for those looking for fireworks you may have to be a little bit patient I’m afraid.
However, the context phase gives us the opportunity to do what it says - to place the guarantee within a wider framework than that of the personalities involved in the tense meetings of the night of 29 September 2008. It allows us to see the bigger picture; that is, if we want to see it. It is by no means certain that such a road is one that the various actors involved in Irish finance would choose for themselves.
Alongside this, the committee is itself working within a context where narratives around the crisis have already been formed, most notably the “asleep at the wheel/regulators/bad apples/nobody understood/auditors/collective psychology” theme. I’ll come back to this later as this is something that popped up during Nyberg’s (quite dry and uninspiring) testimony, but it is worth flagging now because in the search for the truth as to what happened we have to deal with a story that has had six years to bed itself down.
The analogy that is closest to explaining what I’m getting at here would be that of a cover story, but it is not as calculated and Machiavellian as that. We’re dealing here with an ideology - Nyberg admits as much in his testimony - and the way that the ideology of modern finance made sense of the world before the crash is the way that it made sense of the world after the crash. It couldn’t grasp the nature of the problem then, and it is incapable of making sense of it now. It knows that the problem was structural, but because it has such a vested interest in the continuation of those structures and practices, it has to find a way of addressing systemic failure without changing the architecture.
Its solution, its way of squaring the circle, is to treat the crisis as a managerial problem. Asleep at the wheel / regulators / bad apples / nobody understood / auditors / collective psychology / etc etc etc. What is needed is better managers, better regulators, better auditors.
It is a bit like if a car crashes because of faulty brakes, the solution is to find a better driver.
There are variations on this story, and indeed outside of Ireland there has been some acknowledgement that a structural problem demands structural solutions, but within the Irish state I see little evidence of even that moderate concession. Here, the bad managers narrative is at its strongest, and has merged, Borg-like, with a morality theme.
In Ireland for the past six years the exploration and analysis of the crisis has been, for the most part, “fecking bad managers and won’t somebody please think of the morality”.
A case of, keep the brakes and get a better driver.
Getting back to Nyberg and his appearance before the Bank Inquiry Committee, I just want to pick up on a couple of points he made that I thought were interesting. The following quote is his response to a question by Fine Gael’s Eoghan Murphy about the efficient market hypothesis which Nyberg highlighted in his report as a causal factor in the crisis.
Conor McCabe - 21:07 Fri Dec 26, 2014
God will forgive them. He’ll forgive them and allow them into Heaven. I can’t live with that.” Dead Man’s Shoes (2004) What are we to make of the Irish Banking Inquiry, which began its public hearings last week. For myself, as I said in Shop Floor in September, I think it provides an opportunity for progressives and we [...]
What are we to make of the Irish Banking Inquiry, which began its public hearings last week. For myself, as I said in Shop Floor in September, I think it provides an opportunity for progressives and we should make use of it.
As to what I mean by that, well, take this quote from a 2012 paper by Gregory Connor, Thomas Flavin and Brian O’Kelly, entitled ‘The U.S. and Irish credit crises: Their distinctive differences and common features’, published in the Journal of International Money and Finance (available as a pdf here).
The key to the Irish bank guarantee and subsequent sovereign debt crisis is right there in that complex web of developer loans with different banks. That’s the rabbit hole, the one we need to fall into, in order to make sense of this whole mess.
But let us be clear: although the loan book is key, this is not just about developers and their bets.
For example, the loans for commercial property speculation cannot be separated from the tax incentives approved by the Oireachtas and various finance ministers; nor from the legislative and regulatory environment that finance and property speculation demanded of, and received from, the Irish State.
Alongside the finance/speculator/state core lie the professional sectors that benefited hugely from this environment - that is, accountancy, law and real estate.
There is also the issue of the media in Ireland - private and public, the newspapers as well as RTE - which as a sector not only benefited from property speculation via ad revenue, but at a deeper level shared (and continues to share) much of the ideological framework which gave an intellectual sheen to such base and futile speculation.
When we take these dynamics and place them within a historical time-frame, we start to observe a reconfiguration of the Irish State, from the late 1960s to the mid-1990s, which parallels the shift in profit-seeking strategies within Western capital, from production to rentier. Ireland’s role as a comprador state, that stays the same, albeit one that shifts from the grazing fields of Meath to the glass towers of the docklands.
The best way to make sense of a ‘complex web’ of social, political, economic and cultural forces is to apply a relational approach, not a causal one.
A world seen through causality is binary, whereas a relational approach is dynamic - it allows us to see the various forces in motion, bouncing off each other, as they create new tensions and contradictions.
The terms of reference of the Irish Banking Inquiry allow for such an analysis. They state quite clearly that,
This is a clear invitation to undertake the type of investigation demanded by the profound consequences of the bank guarantee - that such a decision cannot be dismissed as a case of ‘bad management’ within banks and ‘asleep at the wheel’ regulators.
The people of Ireland, since 30 September 2008, have been taught a harsh lesson in the nature of class power and the Irish State. The dynamics of that class power, the economic and social relationships and institutional structures that sustain and protect it, are key to our understanding of how - and why - the bank guarantee was given.
Conor McCabe - 10:26 Fri Dec 05, 2014
Conor McCabe - 10:08 Tue Dec 02, 2014
Bonds, Balance Sheets & Irish Water : Limerick, Dublin, Galway Dec 2014 from Conor McCabe Marc Levinson, Bond Markets from Conor McCabe