Ireland – Where did the money go?

Fianna Fail Government sacked, now what?

Well that is the €85bn question, the value of the “bailout” to the Irish economy from the IMF / ECB not to mention asset stripping Ireland’s “fund” for Public Sector pensions which is to be filleted as part of the IMF / ECB conditions. No doubt many in Ireland will find this question relevant as they stare into the abyss of default, repossession and plummeting living standards.

As I have already pointed out the € 85bn Bailout may well turn out to be nothing of the sort. It equates to roundly € 55,000 for every productive worker in Ireland. Add to this annual interest servicing costs of € 4,960 per annum and you get the scale of the problem, Ireland’s public and private debt is simply unsustainable. Most reconstructions, Bankruptcy and liquidations, involve substantial debt reduction, a write off of debt before you begin a fresh start. Ireland is in unrealistic denial about being able to service its Public and private debt making the hard stop of debt default inevitable sooner rather than later.

http://daithaic.blogspot.com/2011/02/terrible-default-is-born.html

The Irish Banks are increasingly likely to need most of the €35bn bailout fund set aside to keep them afloat, latest estimates indicate. Experts hired by the Central Bank are in the final stages of examining the bank's loans, with financial sources putting the final bill at between €25bn and €35bn. This would be the worst case scenario as envisaged in the IMF/EU bailout agreed last November. The new Government will have to pump even more money into the banks than the €10bn earmarked by the outgoing administration, Finance Minister Michael Noonan admitted yesterday.



News that the Government will have to put even more cash into the banks is a bitter blow to the Fine Gael-led administration, which had insisted it would put no more money into the banks until "senior bondholders" had been forced to take losses. The HUGE mistake Ireland made was to guarantee not just deposits but ALL the liabilities of Irish Banks. The Hedge Fund Bondholders have been in LMAO mode ever since. Having made their financial bed of nails there is no going back, Ireland will be forced to sleep on it for years to come.

Well I can’t tell you where all the money went but a lot of it went into commercial and trophy property in London bought at overheated asset values. Let me illustrate the case of a London mansion owned by an alleged fraudster which it is suggested will attract bids of more than €23m tomorrow. Located at 31 Brompton Square, Knightsbridge, the mansion was owned by Achilleas Kallakis, a Greek property tycoon who is awaiting trial for an alleged £61m (€70m) fraud. Barclays Wealth, which has a mortgage on the property, appointed insolvency experts Begbies Traynor as the receiver to the property and the receiver has set tomorrow as the closing date for bids.



Mr Kallakis and his business partner Alexander Williams are awaiting trial for an alleged £56m fraud against Allied Irish Banks and £5m fraud against Bank of Scotland. The two have each been charged with two counts of conspiracy to defraud, 13 counts of forgery, five counts of fraud by false representation, two counts of money laundering and a count of obtaining a money transfer by deception. AIB had to write off €63m as a result of losses on loans which it gave the duo between 2003 and 2007 to purchase properties in some of London's most up-market areas.

The Blurb for the property which is advertised as “distressed property” says;

"A magnificent Grade II listed family house, with one of the largest private gardens in Knightsbridge, perfectly positioned in the crescent overlooking the communal gardens of Brompton Square. The property benefits from full planning permission to develop over 23,000 sq ft of accommodation with underground parking. This is a rare opportunity to create one of Central London's largest and finest private residences.”

It then goes on;

“The property benefits from a number of historic planning and listed building consents, the most recent being granted in November 2010. The latest permission finalises the extent of the basement to approve the current building works and allow the creation of further bedrooms, entertainment space, a spa complex with swimming pool, staff accommodation, a car lift and garaging. The basement extension is part complete with the initial ground works, excavation and secant piling concluded.”

What the last bit means is that the property has been transformed from a decent family home with a larger than usual garden in a nice crescent but off a busy road in South Kensington into a subterranean building site. Not just that but the new purchaser will have to buy the props and finish off this building site which has remained dormant for two years; so much so that the property is on the English Heritage at risk register which says;

“House 1824-39, part of Brompton Square layout. A series of planning and listed building consents have been granted for internal alterations and rear extensions. Works to implement the consents came to a halt in December 2008. An urgent works notice to make the building weathertight was served and complied with in December 2009.”




How 31 Brompton Square could look with only another £10m spent

So the blank cheque to finish off almost quadrupling the size of the house to Listed Building standards along with the swimming pool, leisure centre, car lift, staff quarters etc; which take up the full underground garden space could easily come to £10m as restarting such a project after two years is more expensive than starting from scratch. So added to the £20m sale price this would make the house price £30m sterling. So what is it actually worth, this development left unfinished with borrowed money by people awaiting trial on fraud charges?

The last recorded house sale in Brompton Square, which is mainly flats, was No. 29 which sold in 2007 some 20 minutes before the credit crunch for £10m. This was of course actually habitable (unlike No. 31) and in walk in condition. You have to ask if I was an Oligarski or a Mid-Eastern Potentate (both troubled classes at the moment) would I want to pay potentially £30m for a shell and a building site in Central London. For £4 – 7m they could buy a similar space in less polluted surroundings on private estates at St. Georges Hill, Virginia Water or Gerrard’s Cross in walk in condition. For £12m they could buy a huge mansion on the Crown estate overlooking Regent’s Park. So I don’t think there is a market for this property at £20m and its value is £4 ½ to 6m, if that, around a quarter of what was borrowed after fees. You really have to ask what valuation criteria did Banks use to lend on property like this that they felt 31, Brompton Square would be worth 3 TIMES the highest price ever achieved on this road at the peak?




Today the 3 storey basement containing the swimming pool, leisure centre, staff quarters and 3 storey garage (with car lift) is a 40 foot deep chasm


Add this in London to the many busted investments bankrolled by Irish Banks such as prestige hotels like the Connaught, Berkley and Claridges as well as the estimated 230,000 unsold new homes in Ireland of which 110,000 are “holiday” homes. Add to this the zombie estates, the zombie hotels built for tax breaks and without customers and the zombie developments then there are so many walking dead in the Irish property world that nobody can reliably predict future asset values or ascertain the reality of security behind current borrowings. The Irish Banks incompetent obsession with lending on property has led to their bankruptcy and the effective nationalisation by the Irish State of Allied Irish Banks, Bank of Ireland, Anglo-Irish Bank, Irish Nationwide and I.L. & P.

It is not a new claim to incompetence by the now bankrupt Irish Banks, indeed Bob Geldof pointed out in his 1986 biography “Is that it” that he was treated with derision when he approached a bank looking for backing for a business proposition, not a property. He later went on to cause outrage by describing Ireland as a “Banana Republic without bananas” and when receiving the civic honour of Freedom of Dublin said that “Modern Dublin and its planning can only be explained in terms of widespread political corruption.” With hindsight as Ireland heads into an extended economic winter paying for hundreds of Brompton Squares even Bob the Gob must be astounded at his gift for understatement.

http://daithaic.blogspot.com/2007/08/bob-geldof-and-me.html


31, Brompton Square today

Dustin is a Turkey!

The Celtic Sage has never claimed infallibility, though some have attributed it to him, but even he has had his feathers ruffled. His confident prediction of 8th April last that Dustin the Turkey with his mould breaking contribution “Irelande Douze Pointes!!” would be the 2008 Eurovision winner was last night exposed as a fowl piece of judgement

http://daithaic.blogspot.com/2008/04/dustin-turkey-2008-eurovision-winner.html

as Dustin was culled early in the Eurovision semi finals.

Dustin may have been lost in translation, as he simply failed to make the cut on the Eurovision stage. The feathered performer set a new standard for the weird and wonderful world of Eurovision last night when he exploded on stage in a burst of green, white and gold. Propped up in a jazzed-up shopping trolley and surrounded by a flock of dancers, the feathered puppet outdid some of the most outlandish acts ever seen in the annual contest -- and that's saying something as the Eurovision sets the kitsch standards the rest of the world rightly fears. Hopes were high for Dustin who had an impressive back up team including Bob Geldof on hair and make up and Dana as spiritual adviser. As Dustin himself pointed out he wasn’t like Westlife, he had talent.

After he was cruelly cut he made a statesmanlike speech to his distraught fans; "I urge my fans across Europe to be dignified in defeat. I do not want street riots as I'm a peace-loving bird," he said. A place in the final would have been a victory for art, beauty, poetry but most of all, for his bank account, he declared.



But dignified as he was a terrible thought occurred to me when the news broke that General Franco’s Spanish Government had orchestrated a conspiracy which cheated Cliff Richard of the Eurovision prize in 1968 for “Congratulations”. Is it beyond the bounds of possibility that this plucky Irish Turkey was stuffed by a Pan-European vegetarian conspiracy?

Bob Geldof and Me.

Bolton Street College

Dublin in the 70’s was a dreary spot. Ireland was in the grip of the old certainties and the thought control mechanisms were still in place. I found myself studying architecture at Bolton Street College of Technology. Here, there were a number of third level courses (Architecture, Surveying, Engineering and Geo-surveying) grafted onto what was basically an inner city college with no campus run by the worthily titled Vocational Educational Committee. It was a clever way of ensuring you had all the disadvantages of university in terms of stress and pressure without any of the advantages of decent campus facilities and a social mix.


The Sage as a student at the 1975 USI Congress, Wexford

However if you wanted to study Architecture you were presented with Hobson’s choice. The only other course in Ireland was at UCD, University College Dublin, and this had been through years of turmoil resulting in it being derecognised by RIBA, the British Architect’s Institute, for poor standards. Either way in those days the grant system in Ireland was so restricted you had to be the 10th son of a smallholder with less than 10 acres to get a grant so student poverty was not an abstract concept. Bolton Street had the other advantage that its fees were a lot less than UCD; the payoff being that very little was provided when you got there.


The Rats

In 1975 I was Secretary of the Student’s Union and a few of us decided we needed to do something to lift the place so we planned the first “Bolton Street Student Festival”, just like the proper universities had! Being Secretary of the Union was not comparable with Oxford or indeed anywhere else. We had no Student’s Union or Bar but rather had an office in a forgotten room somewhere on the top floor and a Common Room with a shop / snack bar at the back of the canteen in the basement and a modest budget based on a capitation fee. In the previous year we had been at loggerheads with the college on a number of issues with canteen boycotts, sit – ins and all that good stuff. This year everybody wanted a fresh start and the college authorities enthusiastically backed the festival – even they realised a gloss needed to be put on the place.


Early Rats

So the week took shape, parties were organised, an art exhibition was to take place in the canteen, a film week was to take place in the “Kinema”, the only proper lecture theatre in the college, a programme of speakers was organised and we were to have a week of lunch time concerts in the common room. It had some hilarious moments such as the Art Exhibition. One of our lecturers was the well known Irish Artist Charlie Harper and he volunteered to help us get exhibits for the Art Exhibition.




Charles Harper and a Burren Landscape

What actually happened was that Charlie and I spent a day touring the art galleries of Dublin in his Renault 4 (with the back seats folded down and Dougal from the Magic Roundabout on the side!). In each gallery the routine was the same. We arrived unannounced, Charlie would be greeted warmly and introduce me, we would be offered and take a drink, explain why we were there and eventually leave with 2 or 3 paintings by well known artists from the gallery stocks. By nightfall neither Charlie nor I were in good condition and I crashed on the floor of his mews in Monkstown whilst outside there was a Renault 4 parked with 25 valuable paintings. All this lending of paintings was done without one shred of paperwork or indeed insurance, we must have been mad!



Three of the group which became the Boomtown Rats were studying at Bolton Street. Pat Cusack, (aka Pete Briquette) Gerry Cott and Johnnie Moylett (aka Johnnie Fingers). Gerry approached me and said he was in a band which had gone down a storm at student gigs called the Nightlife Thugs. I never heard of them but he was anxious to do the gig so I offered him our standard fee of 30 pounds which he accepted. The Common Room only held 300 and 20p was the most we could charge.

On the day of the concert the Common Room had filled up with apprentices. I should mention these were all big guys who wore Boiler suits and generally walked around with vice grips and wrenches! Just 15 minutes beforehand this tall dishevelled guy wearing boots and an ex-army greatcoat came up and asked to talk to me. He said he was Bob Geldof the leader of the band, he hadn’t known the fee was so little and there was no way they were going to play for that sh#t money! My mind immediately turned to the common room full of oil stained monsters and the consequences of the gig not going ahead so after some haggling I agreed to double it to 60 pounds. We shook on this and he then mentioned that I was to introduce the band as the “The Boomtown Rats” as they had now changed their name. The name came from Woody Guthrie’s autobiography “Bound for Glory” and belonged to a gang formed by the kids of newcomers in the oil boom in Oklahoma City who were excluded from existing gangs.


Give us your Effin Money!

So that was how in October 1975 I became the first victim of the now famous Geldof “give us your effing money” technique and nervously I went in front of a common room of oily monsters and for the first time ever introduced the Pop Group “The Boomtown Rats”. Can I tell you it was a wonderful gig? Well no actually, the acoustics were horrible in the bare brick walled Common Room but even still the Rats, whilst making lots of noise, were bloody awful. Some of the audience did start dancing and saved the day but I was mightily relieved that the first historic gig by the Boomtown Rats didn’t end in a riot. Bob describes the occasion in his 1986 autobiography “Is that it?”

“Well, if you’re so bloody clever, you go and talk to them.”

“I did, but my bluff was called. When I said that 30 pound was an insult and we wouldn’t do it for less than double that, the college promoter said: “All right, 60 pound then.” We were committed.”

So this insight into our respective negotiating skills probably explains why Bob Geldof is a millionaire and I’m not! I become part of pop history and Bob can’t even name check me in his book! After all these years am I not entitled to ask the question “Is that it?”


St. Bob with another Deity - Paul Hewson t/a Bono(vox)