Finance committee meeting the Irish Central bank Friday 20th of October 2017

Official transcript is here: http://oireachtasdebates.oireachtas.ie/Debates%20Authoring/DebatesWebPack.nsf/committeetakes/FPJ2017101900002?opendocument#C00100

Banking Regulation in Ireland.

The Central bank of Ireland is the body of civil servants that are charged with responsibility for regulating the banking sector in Ireland.

There are two banking systems in Ireland, a domestic Irish banking system and an International banking system.

The Irish banking system is made up of Irish banks mainly trading Ireland with some trading outside the country. The activities outside Ireland are regulated by the body in that country.

The Irish trading is governed by the Irish Central Bank, and, this activity is part of the Irish banking system.

The Irish Central Bank had to attend a televised meeting with a group of parliamentarians on Friday 20^th of October 2017.

The civil servants spoke freely and as openly as they could. They didn’t betray any confidences they may have given to anybody. The governor of the Irish Central Bank even thanked the parliamentarians for the opportunity to speak to them and seemed to ask for more opportunities to do it again and even implied they would like to do it more often.

All in all, it was a good meeting, and information passed freely.

The problem arises with what appeared to be a naivety on behalf of the civil servants.

During one exchange the Irish Central Bank revealed they could not regulate every bank in the country. They had no intention of investigating every incident, and in particular, they were not really paying any great attention to the international banks. Like good patriotic civil servants, they were concentrating on regulating the Irish banking system, because that’s the system that matters to Ireland.

The Irish Central Bank was only short of saying that the international banks could literally do whatever they want, and, only if they had a whistle-blower in their midst, would they be in any danger of being caught breaking the law, and even then, if the law breaking was intermittent and did not directly affect the Irish system, then, the most that would happen is, they would get a slap on the wrist.

The problem with this attitude is: People working in the international banking system in Ireland are governed by the Irish laws. These laws place a considerable onus on workers to inform the Irish Central Bank when their employer breaks the law. The possible consequences are fines, worldwide restrictions working in the financial industry and possibly five years in jail. When a worker tries to comply with the law, the Irish Central Bank is basically saying, “don’t tell us, ignore the law, and you will be alright” but, “if you do tell us, then you will most likely be hung out to dry”. Despite the fact that Ireland has whistle blower laws with supposedly built in protections, the reality is, the whistle blower will lose their job and will probably never work in the financial sector again. Not a good place for somebody who spent years studying to get qualifications that are rendered useless after they comply with the law.

Bigger picture stuff: The European Central bank supposedly relies on the Irish Central Bank to regulate banking companies that are based in Ireland. If the Irish Central Bank is not regulating the banking companies properly, then the companies in other countries are at a competitive disadvantage. No doubt after the meeting on Friday 20^th of October 2017, all European banking companies are examining the discussions with a view to suing the Irish government for not regulating their competitors operating in the Irish jurisdiction.

The repercussions of the historic meeting of the Irish Central Bank and Irish parliamentarians will indeed be a watershed for financial regulations in Europe.

Land hoarding makes more money than building houses.

How does hoarding land make more money than putting the money into a bank.

For this piece, we will say the investor has wealth of €50 million in cash, in a bank.

Actually, the money is in ten Irish banks. So ten banks with five million on deposit.

Its five million in each bank because, if one bank goes bust, then the investor loses just five million euro.

Banks do not offer a lot of interest. On average you get one percent interest, less charges and taxes etc.

So a fifty million stash, would earn the investor interest of about fifty thousand euro per year. That’s not a lot of money to someone who has fifty million in cash.

Rich people are looking for investment opportunities outside of the banking system, because the return from banking is not very good, and, its high risk, as banks can easily go bust and the investor, loses their money.

Rich people look for Art like, the Mona Lisa, to buy. If they could buy the Mona Lisa, they would pay for a secure place to store it, they would insure it, and they would enjoy the prestige of owning such a desirable artwork. Doubt if the French Government would ever sell the Mona Lisa though, so you need to remember this is just an example.

Really expensive works of art are rare and most are in private collections or owned by governments. This means they rarely come up for sale.

This causes a problem for rich people. What else can they buy to keep their money safe. Cars, yachts, islands even, but, most of these, have already been bought by other rich people.

Rich people look for other ways to invest their money. Building homes and offices has always been good for rich people.

A developer spots a bit of land somewhere, and thinks, I can build houses on that and people will buy them for exorbitant prices. Developers rarely put their own money into these projects. They will find an investor and convince them to back the project. At today’s rates, the return on investment would be about ten percent.

Our investor will make about five million euro on this project. The project will take five years to complete. So, our investor, stores their money in the project for five years safely, and makes about one million euro per year. Good money.

Normally the investor will buy the land in their own name or in the name of a company that they own and control. Let’s say the land purchase price for this project is ten million. The investor now owns the land and the process of drawing up a planning application begins. This can take a long time. In this case the planning process is going to take two years minimum.

While the planning process is being pursued, the investor discovers that the value of the land has increased to fifteen million euro. This means the investor has now made two and a half million euro, per year, by doing nothing with the land.

The money is very safe. It can’t be stolen, no need for any money to be spent securing the site, just let the wildlife run free and the money is safe. If the investor holds the land for another three years and the land values increase at the same rate, then the investor makes another seven and half million euro, basically for doing nothing. There is no more risk to their money, because they have still only committed the original ten million and their other forty million is still safe in the banks.

If the investor continued with the project, they would have to commit all their money, to finance builders on site working, and anything can happen during this process. Any glitches and the investors’ money is at risk, unnecessarily.

At this stage, the investor has already made more money than was originally intended, and, if they hold on to the land for a total of ten years, they can make more money than was ever envisaged from the project.

They have only put a fifth of the money at any risk, however that risk is offset by the fact that, no matter what happens, the money is safer and earning more than it would in a bank.

This investor has found a way to make money hoarding land (even if they became a land hoarder by accident). The money is safe for a very long time and can be left lying in the ground until the investor needs cash. We already know this investor has still got forty million in cash in banks and therefore they are not going to need cash to pay the Tesco weekly shopping bill. They will look for more land to buy, and hope they can make the same arrangements they made with the first land bank.

Building houses on this land will only bring the original investor a return of five percent and will require huge effort and commitment. By doing nothing, the investor can, in fact, make more money, than they can make, building, so, it is inevitable this investor, will in fact not do any building in the near future.

The money is safe and increasing at a higher rate than a bank would give. The police will mind the land free of charge. They do not need to worry about the investment being stolen.

To conclude, you now know why, it is financially unattractive for any rich people to build houses.

Have a nice day.

John

What is the difference between a Fraud and a Nixer?

Unemployed people getting the odd so called "nixer" and getting a few quid, are illegally claiming the dole, but, only for the days they are not available for work, as a result of the nixer. In reality if a person was to sign off for a day’s work, then, the system would penalise them severely. The social welfare would deny that, but the fact is, there would be all sorts of complications and their payment would be disrupted at minimum. For an unemployed person that is the ultimate nightmare. The cost of this for the state is minimal.

People working for an employer regularly, and claiming the dole at the same time, are very definitely breaking the law, but so too, is their employer, and that constitutes while collar crime, that crime that costs the state billions, but nobody ever goes to jail for.

If a person is prosecuted for working and claiming the dole, then, they would not be charged with fraud. I don’t know what the title of the charge would be, but, it would not be fraud.

Fraud happens when you pretend to be someone you are not, and then, claim state payments using the identity that you have manufactured or stolen.

Professionals nixer all the time, i.e. they do work outside of their normal paid work. We all know they are supposed to declare this income for tax purposes, but, we also know they ask for cash on the basis, that, they will have to add the VAT on to their fees if it’s not paid in cash. This is not fraud either. It is a crime to not report the earning to the revenue commissioners, but, it’s not fraud.

Somehow Leo managed to talk about fraudsters and social welfare cheats, and, somehow, he got people on their high horses, about unemployed people claiming social welfare. I know what he meant, he knows what he meant, but, he never came out and explained precisely who he was after. He let poor unemployed people be given the rap. He played to the gallery of FineGael voters, and never once considered how the public would react to unemployed people.

He ruthlessly and unscrupulously used some of the poorest people in Ireland as a stepping stone, so he could rise another rung on the ladder to success.

In some minds that is a sign of strength and decisiveness and is seen in a very positive light. In reality it is just seen as ruthlessness, and those that know it, will refuse to trust you and will never help you. Burning bridges is for dictators and rarely works out well for a democratically elected politician.

The high horses jockeys always look away from white collar crime? Why? It was white collar crime that caused the country to become bankrupted, and, it is white collar crime that is costing millions each year, way more than the working class are responsible for stealing.

How many high horse jockeys make mileage claims each month that do not honestly reflect the actual mileage driven? I could go on and on about those scams, but, the reality is, most hypocrites do not see that as a crime, but the fact is, it is a crime. The high horse jockeys might want to get themselves a new pair of glasses, the kind without the rose coloured tints, and take a long hard look at themselves, before they start throwing stones at other less fortunate people.

#Grenfelltower What is really going on with Official UK?

There is something very wrong at the #grenfelltower that Official UK is not telling us.

Official UK is no different to Official Ireland. 

They both believe they would have great jobs if it wasn’t for the pesky citizens. Citizens are a nuisance and only exist to provide taxes to pay their wages.

That being said, when a crisis comes along, they are usually very efficient, even if, it is, only as an arse covering exercise.

In the case of #grenfelltower though, the normal efficiency is missing. In this case there seems to be absolutely nothing happening in Officialdom

The council has a list of all the people that are registered as living in the Grenfell Tower. They should have compiled a list of those that are now homeless so that alternative homes (even temporarily) are made available.

No doubt if they established a list of those that are definitely alive and seeking housing and then compared that to the list of registered residents, a clear picture of how many people survived thus indicating how many are dead. Doubtless some people will be on holiday and some are injured and in hospital, all of which can be easily checked.

Where have the residents slept for the past few nights?

Where have they eaten?

Where have they showered?

What toilets have they used?

How have people who are prescribed medicine managed to get this medicine?

How have they managed for money? (Presumably many of them lost all their belongings including bank cards and cheque books, etc).

These are daily occurrences that need to be addressed daily,no matter what the circumstances are.

No organisation is coming forward with any of this information being answered and somehow, I think that’s not going to happen. Why not?

This is in London, per head of population, probably the richest city in the world.

The Queen has visited the site and the Prime Minister has visited (somewhere) and normally the normally efficient arse covering and glory seeking civil servants would be falling over themselves to present themselves, to, the Queen, and the Prime Minister. But no sign of anybody from OFFICIAL UK. Why not?

The BBC are present on the ground, Channel 4 also seem to have cameras there, and still no OFFICIAL UK suits in sight. Again, why not?

What is really going on that nobody in OFFICIAL UK wants to take their slices of their fifteen minutes of fame?

Something is very much not right.