High Finance for Dummies - A Day at the Races

©DrumStig
Originally published March 2014

The Financial Crash and the Irish State's Response To It

I was trying to find an analogy that might demystify High Finance for the ordinary punter ... and it came to me: punters! 

Imagine if Shelbourne Park was Ireland.  During the good times Shelbourne Park did really well.  There was plenty of money around and everybody fancied their chances as a high-roller, backing dogs with good form and good odds, hoping to make a killing.  Money was cheap so borrowing to have a flutter was easy and if you knew the right dogs you could make big money with very little risk.

Punters from far and wide, even abroad, had heard that the Irish Economy Stakes was a race with big prizes and flocked to Shelbourne to get in on the action.  There were some interesting runners in the race like Big Pharma Boy, IT Lad and High Street Harry were reported to be on form having given punters good returns in previous races but the star of the show was Construction King.

For a couple of laps the dogs put on a great show, with punters placing side bets on who'd be first across the line at the end of each lap.  Then coming out of the last corner, while starting to pull away from the rest of the field, Construction King suffered a massive shite haemorrage and dropped dead.

The dog's owners were stunned.  Their best animal, a legend in the sport, who they had put a lot of money into breeding, training and preparing for the race was dead.  They had lost every penny they'd put into him.  He'd won a couple of races beforehand but they had reinvested in him and now they would never get their money back.

Then a strange thing happened.

The racecourse management, Fianna Galway  Races Ltd, decided that it wasn't fair that the favourite and by far the best dog in the race was dead and his owners wouldn't win the big prize money.  So they told the owners, "listen lads, we're gonna give you the prize money anyway - even though the dog croked it on the last bend and crossed the finish line in a body bag".  The owners, Big Fat Developers Inc., were stunned.  They couldn't believe their luck.  They hadn't even asked for it but of course they were great friends with the racecourse owners as they had been bringing their dogs to the races for many years.  Shelbourne Park would be flat broke but they'd look after the goose in the hope of future golden eggs.

The locals in the stands had lost a few quid on the King but hey, they thought, that's the way the cookie crumbles and sure we were only risking a week's wages and having a bit of craic ... no harm done... and sure the poor dog - it's only fair the owners get the prize money cos he was going to win anyway.

At some point the racecourse management changed from Fianna Galway Races Ltd to Blue Shirt Bandits Ltd. 

The big players who had come to make their fortunes on the big race decided to come up with a plan.

The foreign punters, who had come to Ireland on the Bondholder Bus Tour, said to themselves "hey wait a minute ... if the dog technically didn't finish but has been awarded the prize money for first place then the bookies need to pay out, otherwise we're not coming back to Shelbourne Park again!"  They didn't believe this would work but it wasn't going to cost them anything to have a go and bluff.

Blue Shirt Bandits Ltd decided they liked the Bondholder Bus Boys and wanted them to keep coming back to Shelbourne Park, after all they, argued, if the big players didn't come then the Park would have to close.

So they agreed to pay the Bondholder Bus Boys all their bets as if the King had won the race.  The Boys pissed themselves laughing at the scam they had just pulled but they couldn't believe what happened next.  Blue Shirt Bandits somehow used an unheard of process of logic and told the dogs owners and the Bondholder Boys "well actually, Construction King was such a good dog that he probably would have won all his races for the next thirty years ... so we're going to pay out on prize money for races he would have entered if he was still alive up to 2040". 

The Bandits, who were actually very wealthy themselves (in fact some of them were on the Bondholder Bus) didn't want to pay out all that money using their own cash so they came up with a plan:  they would charge all the people in the stands to cover the cost.  All the people who had come simply to watch the races, just as spectators or maybe to stick a fiver on number 6, were handed the bill.  Nobody was allowed to leave the stadium unless they had signed over their wages for the next 30 years and handed over their house-keys.

And that's what happened.

Fianna Fail guaranteed the debts of the developers who had financed the construction bubble and Fine Gael/Labour paid out on the bondholders' worthless betting slips.

... and Michael Noonan says it's too complex to explain...

The moral of this story?

While we're living in Shelbourne Park, we're all going to the dogs.

TAOISEACH - It's Irish for WeatherMan...

The latest GUBU fiasco precipitated by Tánaiste Frances Fitzgerald's inept/sinister handling of her responsibilities in the Maurice McCabe whistleblower case has been a huge "TA-DAA" moment in Irish politics.

Fitzgerald and her successor Charlie Flanagan have been shown to be no more than the public faces of the State's Department of Justice.  The position of Minister for Justice is nothing more than a PR persona,  the front man, of an administrative machine of more than two thousand civil servants.  The face changes every few years and the PR machine regurgitates mantras of reform and modernisation, but the machinery - the cogs and wheels, gears and levers - remain the same.

The Minister is the face of the faceless - permanent, job-for-life bureaucrats who not only carry out the work of public administration but are the ones who really understand how the machine works, how to steer it and how to protect it.  The machine is not driven by the Minister - it carries on under its own momentum - a behemoth that stays its course like a supertanker on the ocean.  For it to change course would take years of persistent constant pressure on the wheel

It is understood that the role of President of Ireland is a public office with minimal and limited power within the political system.  The truth revealed by EmailGate is that the same can be said for Government Ministers.  Frances Fitzgerald didn't run the Department of Justice - the Department of Justice ran Frances Fitzgerald...

When Gerald Fleming stood in front of a map of Ireland after the news every night he would give a summary of the days weather, comments on patterns over the recent days or weeks and give a forecast for the next day and following days, but he couldn't actually do anything about the weather.

His forecasting was nothing more than "best guess".

When Leo Varadkar, or any Taoiseach, addresses the country to give historical statistics on employment, growth, inflation, and an overview of economic developments and then gives a forecast for what the government plan to do over the short to medium term he can't actually do anything about any of it.

His forecasting is nothing more than "best guess" or "best intention".

Politicians can't do what they want.

Their options are limited, constrained by "best legal advice" of the private Law Society, the private Central Banks and the vested interests of those individuals and organisations that fund their political parties.

In the grand scheme of things, "PUBLIC INTEREST" comes pretty far down the list.

Budgets are drafted by civil servants who are lobbied behind closed doors by big money.  The single most important element in any budget is the public sector pay element ... what the civil servants (and the politicians) get out of it.

Next comes the tax legislation influenced by multinational corporations who actually have greater asset wealth an annual revenue than the State! This lobbying is done by individual companies with enough clout to call meetings with Ministers at five minutes notice and in the case of American MNCs it is not hard to imagine the type of influence that an organisation like the American Chamber of Commerce in Ireland has, representing as it does some of the biggest companies on the planet.  What is hard to imagine is that there is any "negotiation" done by our public representatives - there is no give and take - Ireland gives gives and gives again.

Then comes the old reliable sources of taxation such as cigarettes, alcohol, fuel etc. which have their own industry bodies lobbying the Department of Finance.  I don't imagine the players in those businesses come away empty handed when their products have been hiked in price at the pleasure of the Minister and the displeasure of the consumer.

By this stage, when the civil servants have had their pay secured, the mega corps have had their tax liability erased and the fags have gone up another 10c, we finally know how much money is left over for public spending.  ...pretty far down the list.

And top of public spending is health...

Successive governments in successive budgets have blasted triumphant fanfares about how they are spending "more money on health than ever before".  We spend more and more money on a health service that gets worse and worse.  The problem with the health service is not the amount of money being spent but the amount of money being wasted.  And that is true of every other public service: education, housing, transport etc.

Finally we get to Social Welfare and how much is left for the most vulnerable - the exact group of people that any government should have as its priority! not its after-thought.

And then everybody else gets a €5 - an extra bag of chips a week.  Wonderful.

So who is lobbying for you - the public?

Nobody.

You give your vote to your local TD because you think they will do your lobbying for you.  But how much influence do you think Seamus McParishPump has in influencing the Budget compared to say ... Denis O'Brien.  One man one vote?!  I don't think so.

Leo Varadkar is a weatherman, a front-man, pitching a narrative of statesman-like altruism and benevolence promising a future of prosperity, equality and happiness.

Leo tells you "it's raining today but tomorrow there will be blue skies with only a slight chance of light showers".

What this fantasy narrative hides is a hierarchy of Global Corporate Dominance, Elite Private Wealth and Sociopathic Political Power.

Public?

Public is not in their vocabulary.

Until election time ... then they need you.  And for one day (and one day only) every five years, you have the power.  And what do you do with it?  You hand it right back to them...!

Elections don't change anything because it's not the players that's the problem - it's the game.

The system does not work for you - it works for them.  So why would they change it?  And even if they wanted to ... the wouldn't be let - THEY HAVE NO POWER!  No real power.

Change cannot come from within the system - it must come from without.

For the Nation to rise ... the State must fall.

©TheDissonantDrum