O’Conall Street

Germany has put the cat amongst the pigeons and could well send the British Market into turmoil today by underwriting all private deposit accounts. On Radio 4’s Today programme, Yvette Cooper MP, the Treasury Secretary refused to dismiss the idea of widespread nationalisation of British banks.

Denmark and Austria have followed. This leaves the British government between and rock and a hard place for two reasons. If it does not take urgent action there will be an exodus of cash towards German banks as the German guarantee (unlike the Irish one) is perceived to be rock solid in global terms.

The second headache for Brown and Co is the price of underwriting deposits in the UK. Britain’s exposure would be in excess of £900billion over twice Ireland’s or Germany’s.

Many a banker or government Minister might be thinking the Boom Town Rats got it right.

……..

The past few weeks may well turn out to be cathartic not just in global terms but also right here in Ireland, North and South. Popular focus will shift onto the issues that really matter like the economy and the role government has to play in protecting jobs whilst supporting those who have become, through no fault of the own, causalities of this crisis.  The shock waves from Wall Street will change life here as they will in the US.

I thought it might worth looking at the opportunities this creates for new political leadership here in the North and across the island.

Despite all the progress since the Good Friday Agreement, the challenges this island will face over the next three decades are more complex than ever. On the one hand there is a need to deepen and strengthen regional government in Northern Ireland whilst advocating change across this island – change which must be capable of uniting the people of Ireland.

This demands a strong voice in favour of a better North capable of representing the social and economic needs of northerners as well as leading the debate for a new and agreed Ireland.

After just one year in government north of the border many believe Sinn Fein and the DUP are struggling to deliver for the people of Northern Ireland. Their message is beginning to sound like a justification for doing nothing for the North and doing nothing to protect the distinct interests of all the people of the North. 

There are significant policy areas in which a party, the SDLP for example, could seek to establish a leadership position.  The first is tackling sectarianism, the second is the economy, the third is education, the fourth is health and the fifth is the environment.

In community / good relations terms it means having the courage to acknowledge and tackle the cancer of sectarianism in the North and the reality of prejudice across the Island, by making it the central plank of government policy.

It means having the vision to demand fiscal discretion for Northern Ireland so we can attract more investment whilst nurturing our own entrepreneurs and levelling the very uneven playing field for those in commerce on the island of Ireland. It could mean a single innovation and higher education strategy across the island and absolutely would mean the removal of trade barriers such as currency, tax or banking systems. For ordinary consumers this would mean a single telecommunications market capable of deliver lower cost telecommunications and no more roaming charges.

People will argue there is nothing that a regional government can do to tackle the banking crisis as these matters are not devolved. Maybe so, but what the Northern Ireland Executive could do is express a clear view as to what sort of financial system would be in the best interests of the people of Northern Ireland. One can’t help but noting that had the major building societies not converted to banks in the past decade the problems in the UK and Irish credit markets would not be as acute. A regional government can encourage mutual societies and look at promoting these as the preferred model to deliver finance for the many. 

In health this means protecting what is good about the NHS whist seeking to modernise it for the 21st century. It means rejecting the privatisation of healthcare as is happening south of the border and putting care in the community and public health first.

In education it means transforming our schools into inclusive spaces where faith is protected and difference in accepted. Where excellence is experienced by the many, and is not a preserve of the few. That is good for the economy and good society.

Finally there is an urgent need to acknowledge the importance of environmental governance to our future and to put sustainability at the heart of everything we do.
Being strong on sustainability is good for the island of Ireland. Promoting common regulation, an Island of Ireland carbon strategy and common energy policy building on single electricity market would make common sense. Again this is an issue which impacts on the economy as much as it does on the planet.

Of course none of the above can be achieved without a strong regional government in Northern Ireland which acts in the interests of the many and which is committed to a shared future. Surely this presents an opportunity for progressive politics.   

When Churchill returned from political exile to become First Lord of the Admiralty, he was asked what message to send the fleet. “Winston is back” was his reply.

Peter Mandelson, the only modern British politician capable of repeating such an act of extravagance is about to return. Proof if ever you needed it that nothing unites old foes like the threat of extinction.

Another Thursday, another surreal debate on Hearts and Minds, talk about fiddling while Rome burns.

This time it was Conor Murphy’s turn to explain how meeting would damage partnership and how tackling the real issues of concern to ordinary people undermines equality.

We were discussing Sinn Fein’s bizarre approach to government on O’Conall Street today. Given we could not get our head around their position or their definition of partnership and equality we thought we might offer up our own solution to the current impasse.

Simple.

Lets have a ‘Facebook Executive’. No meetings, no face to face contact, no process blockades just effective open government. And what better way for the Executive to respond to the current economic crisis.

The other nine Ministers would have to join Margaret Ritchie on Facebook. They set up a closed group and get on with posting papers on the ‘wall’ and then use the discussion board for real debate. Surveymonkey.comcould be employed any time a vote was needed. Nothing complicated or requiring any personal contact just a simple click and the Fuel Poverty Strategy would be agreed for civil servants in Omagh and Ballymena to deliver.

The Assembly could get on Facebook too with some public pages for us ordinary mortals to take a peak at the work.

As for the North South Ministerial Council, I am sure now that Facebook is setting up shop in Dublin they might be able to think of a new network called ‘island of Irish’ or something like that to get the two cabinets talking.

The great unwashed could set up groups calling for anything from an Executive Meeting to free prescriptions for pets. And those really committed to this value for money democracy could blog on the side and launch petitions to the First and Deputy First Ministers.

Now for the real good news. No more standing in the wind waiting to get into the Assembly to witness no business. No more personal protection officers lurking about with bulging jackets. No fleet of ministerial cars pumping greenhouse gasses into the atmosphere and for those young mothers at the Executive table some real work - life balance.

I could not lay a figure on the current cost of running the Assembly but do know the bill during the last period of suspension was a staggering £110millon.

A Facebook group is free.

Martin McGuinness opened the Northern Ireland Economic Conference in Belfast yesterday with a poor speech which drew heavily on the First Trust Quarterly Economic Review - a report which has been loosing credibility by the minute since its publication. As one colleague asked; was that last years speech?

He did not stay for questions or any of the presentations. Nor did any of his advisers or MLA colleagues. In fact I spotted only one MLA during the entire day and did not see a single Special Adviser. Pity that because some thought provoking presentations followed which offered a ‘reality check’ on the issues this region’s economy will face in the coming years.

I say this because Tony McCusker, a former senior civil servant and now Chairperson of the Community Relations Council, writing in this month’s edition of Fortnight Magazine expresses explicit concern about the workings in the Executive. Mr McCusker says:

“One key element of this fairly unstable government process is the expanded system of ministerial advisers….. Within OFMDFM they form a cabinet system like in the EU Commission….. Neither in the UK nor Ireland, both of which rely extensively on advisers, does the system operate to the exclusion of the senior civil service to the extent apparent under the current [SF-DUP] Executive. Advisers were apparent in the first Executive but there was then greater appreciation of the views of senior officials and perhaps a better basis of communication between political appointments and the permanent group of officials.

I was one of those advisers in the first Executive and can say that the relationship with the senior civil service was one of partnership. Yes there were tensions, but they were constructive tensions. This was not about one side beating the other or one group excluding the other. In simple terms everyone knew there was more than enough work to go around and we got on with fulfilling our roles as best we could. Back then a good few of us would have been seen as the annual economic think in. After all we were being paid to get our head around the issues and advise accordingly.

Back to the presentations.

Oxford Economics, Adrian Cooper, forecast a drop of in employment during 2009 and 2010 with recovery in 2011.

PWCs Philip McDonagh brought the figures home with some new research findings on the extent of the downturn in the construction sector which coupled with falling consumer confidence, retail spending and much lower public spending are creating a ‘perfect storm’ for the North’s economy. We can expect at 50% drop of in residential construction employment this year according to a survey PWC and the CEF conducted of over 200 home builders. The impact of this downturn will be felt in every county as this sector is well spread out across the North.

If you thought the problems are confined to construction or global factors beyond the executive’s control then think again. Skills are a devolved matter and the presentation on the size of the skills gap in this region was a red flag to our regional government of ever I saw one. The facts were presented by Professor Mike Campbell, Director of Policy and Research at the UK Commission for Employment and Skills.

I have already blogged about Martin Mansergh’s speech and additional comments. The quote of the day goes to Philip McDonagh who is response to a question from NICVAs Frances McCandless about whether there should be a formal social partnership structure in NI simply answered - Yes!

He is right.

With such little economic experience in the Assembly and such an obvious lack of understanding of the strategic issues facing the executive, social partnership would offer experts a stake in the regions future and ensure our fledgling government was able to work collaboratively with all the major stakeholders. Although this could be a big ask given their inability to work with each other.

We can only live in hope.

Also speaking at the Northern Ireland Economic Conference, Finance Junior Minister, Martin Mansergh TD said the legislation currently being debated by the Oireachtas will allow the Minister for Finance to add other banks to the scheme.

The Minister appeared to hint that this provision could be used in the future to include Northern and Ulster Bank.

Wonder if the Executive should get lobbying on this?

Sarah Palin v Katie Couric in real life was good. Tina Fey’s take on NBC’s Saturday Night Live was fabulous.

I am off to the Northern Ireland Economic Conference in the morning. The word is Brian Lenihan is not turning up. He gets a bye ball as there is ample evidence the Irish government is engaged in the current financial crisis and the Dail is engaged in a detailed and important debate about the states future.

There is an OFMDFM speaker scheduled although you would wonder what either the First or Deputy First Minister could say to an audience with its mind on the regional economy. 

I am still meeting very many people who ask me when I think the Executive will meet. Ask SF I tell them. I’m Irish, I care about policing, justice and the Irish language but have no idea what they are up to or how their actions protect partnership, promote equality or furthers the cause of Irish unity.

Before I hand over to Ms Fey, I think its time to say the feeling on O’Conall St is that McCain - Palin lost the election this week.  

When is a bank an Irish bank?

That is the question on everyone’s lips after the government stepped in to underwrite ‘Irish banks’. The answer came this lunchtime from Finance Minister, Brian Lenihan on RTE:

The Government has stepped in to guarantee the entire Irish banking system. The development covers the six main Irish-owned financial institutions: AIB, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent (which owns Permanent TSB), EBS Building Society and Irish Nationwide.

The deal means the State will guarantee all the debts and deposits of the banks and building societies.

The scheme announced this morning does not apply to the liabilities of Ulster Bank, National Irish Bank or Rabobank, which are all supported by large overseas parent banks. Deposits of up to €100,000 in Ulster Bank, First Active and IIB, have already been guaranteed by the Government.

National Irish Bank, owned by Denmark’s Danske Bank, said it was also covered by the Irish scheme. Rabobank comes under the Dutch scheme which guarantees €38,000.

Will this lead to a run on the internationally owned players in the Irish market?

I guess only time will tell. One thing for sure they look much less competitive today then they did yesterday, and all through no fault of their own.

Anglo Irish Bank stock bounced back this morning on foot of the Irish Government’s decision to underwrite ALL deposits in Irish banks.

London is in an all together different place as are the exchanges in New York, Asia and the rest of Europe. The next 18 hours could turn out to be momentous indeed. One thing for certain. When the dust settles an EU wide regulatory solution will be needed. More about that at another time.

I wrote about how rotten our politics were here yesterday. I’ll add republicans the US Congress to the list of self serving public representatives. It is hard to phathom the hypocrocy of those who said their feelings were more important than the future of their nation’s economy.

Off to do a day’s work for a New York listed PLC!

Banking stocks have plummeted today on the Irish Stock Exchange. Globally markets are falling and it is clear the $700 billion US bailout and the numerous state interventions are not halting this crisis.

Dow Jones reports Irish closing prices as follows:

ISEQ Overall Index ends -13% at 3,291.5 amid a sea of red on international markets, with government bailouts of Fortis, Bradford & Bingley and Hypo Real Estate Holding offsetting any benefit from the announcement of a $700B rescue package for US financial institutions, traders say. Allied Irish Banks ends -17%, Anglo Irish Bank -46%, Bank of Ireland -20%, Irish Life & Permanent -38%. Ryanair -11%, Aer Lingus -5%. Traders see more weakness Tuesday as they say the market has lost touch with fundamentals.