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Ireland’s boasts come home to roost

Irish Finance Minister Brian Lenihan

Irish Finance Minister Brian Lenihan

Irish literature and legend is full of boasts, like the claim by Christy Mahon in Synge’s “Playboy of the Western World” that he has killed his da with a loy (Irish for spade), only to have the old man track him down in another town.

Perhaps that’s the way to view Irish Finance Minister Brian Lenihan’s announcement two years ago that the state-backed guarantee scheme to rescue the country’s troubled banks, hit hard by the collapse of the property market, was “the cheapest bailout in the world so far”.
It seemed too good to be true. And it was.
On Thursday, Lenihan, who has spent the last two years scrambling from one fiscal crisis to another, announced that, actually, the cost for cleaning up years of reckless lending was “horrendous” and in a worst-case scenario the price tag would be over 50 billion euros ($68 billion).
The bill will shackle Ireland, once the EU’s fastest growing economy, with a public debt burden of nearly 99 percent of gross domestic product.
Ireland’s now crippled economy, meanwhile, has done everything but recover. Unemployment is stubbornly high, property prices remain depressed,  taxpayers face years of cutbacks and, in the second quarter, growth again went into reverse.
What happened?
Maybe what Lenihan said two years ago was wishful thinking, or perhaps it has taken this long for Ireland to wake up to just how colossal a hole its one-time high flying property tycoons have dug for themselves, and for every Irish taxpayer, even though much of what they were up to is so big as to be unmissable.
Take, for example, the Battersea Power Station in London, which is Europe’s largest brick building and has been derelict since it was decommissioned as a coal-burning power plant about a quarter century ago.
In 2006, a firm controlled by two Irish property magnates, Johnny Ronan and Richard Barrett, bought the building and land surrounding it for a staggering 400 million pounds ($750 million) — even though previous plans to develop it had all come to nought.
The boys, as they are referred to in some of the Irish press, had ambitious plans for a new, exclusive, “Knightsbridge”-class development for office, commercial and residential space, including an extension of the Northern Line branch of the London Underground.
Four years later, the site is still derelict, promoted, perhaps a bit desperately, as a location for lavish weddings held inside a marquee, and most recently as the venue for a Red Bull-sponsored high-jinx, daredevil motorcycle show.
Ronan and Barrett’s property empire, meanwhile,  has seen some of its loans  earmarked for the Irish government’s National Assets Management Agency (NAMA) — Ireland’s “bad bank scheme”, which was  established to purge lenders of commercial property loans, many of them non-performing. 
Battersea is at the top end of the scale of Irish property investment during the decade of the Celtic Tiger boom, but replicate it at a lesser level all the way from Eastern Europe to the holiday beaches of Spain and out to Asia, and it becomes clear why Lenihan has had to change his tune.
A historical footnote: a Reuters feature informs us that the Battersea Power Station was used during World War Two to burn 120 million pounds worth of banknotes that had to be disposed of to stop enemy forgeries.
Something to boast about then. Comparatively small change now.

from Ralph Boulton:

Former British Ambassador recalls German unification

Sir Christopher Mallaby, deputy chairman of the Thomson Reuters Trustee Directors, had a front row seat to German Unification as Britain's ambassador to Germany from 1988 to 1992. Mallaby, who was later ambassador to France, served in the British Diplomatic Service from 1959 to 1996. He was also a managing director of UBS Investment Bank from 1996 to 2006. He has been a Reuters Trustee since 1998.
GERMANY/I arrived in the Federal Republic as Ambassador in March 1988. At that point, there was no indication of the dramatic change that soon would transform Germany. I wrote to the Foreign Office in June 1988:
“Amid the mounting display of the failure of communism in Europe, the Berlin Wall is still the greatest admission of its failure. West Germans and West Berliners see no prospect of its going.”

I could not know then that the next 17 months were to be the most exciting and positive in my 37 years as a diplomat. By autumn of 1989, everything was in flux. Change in the Soviet Union led to the banning of some Moscow publications in the GDR -- an unprecedented act of insubordination and a sure sign of anxiety at the top of the East German communist party. Mikhail Gorbachev, visiting East Berlin, seemed to encourage reform, evidently regarding some reform in East Germany as less dangerous to Soviet interests than no reform. His unscripted remark now seems a landmark: “Dangers await only those who don’t react to life.”
After a few weeks East Germany was crumbling. The demonstrations grew bigger and the Soviet and East German forces did not shoot. Members of the East German leadership who wanted to use force were purged. Gorbachev decided not to use the Red Army. People streamed out of East Germany to the West through the Federal German Embassies in Prague and Budapest, making a key contribution to the end of communism in Germany. In the face of this new haemorrhage of people, the East German government opened the Wall, partly through a misunderstanding among the East German leaders -- one of the most positive cock-ups in history.

from UK News:

From Celtic Tiger to road kill: Ireland’s rapid economic descent

How the mighty have fallen. When I lived in Ireland five years ago, the country had a spring in its step. Its property magnates were snapping up prime real estate in central London, or paying eye watering sums for prestigious sites in crowded Dublin. Their banks were some of the top-rated in Europe, busily acquiring businesses in the United States and eastern Europe. High-end housing estates mushroomed, a gleaming new tram system was installed, and the finance district buzzed and hummed with industry as international businesses flocked to a country they praised for its low taxes and well-educated workforce.

Of course, the warning signs were there. House prices were ridiculously inflated (I wrote back in 2006 that less than a fifth of houses for sale in Dublin were on offer below 317,500 euros - the level at which property tax kicked in for first time buyers). The economy was highly exposed to its banking sector and to external shocks, as the central bank recognised at the time - although it saw the risks as limited : "While the strengthening of domestic demand puts the euro area in a better position than previously to withstand a U.S. slowdown, this challenge would intensify if the U.S. economic situation were to deteriorate sharply," the Irish central bank said in October 2006. "This, however, still remains a risk scenario rather than the baseline one."

from Tales from the Trail:

Special Relationship? How quickly they forget….

So much for "Hilly-Milly".

Just last year U.S. Secretary of State Hillary Clinton gushed to Vogue magazine about  former British Foreign Secretary David Miliband,  calling the young diplomat a dashing addition to the international scene. AFGHANISTAN/

"Well, if you saw him it would be a big crush. I mean, he is so vibrant, vital, attractive, smart. He's really a good guy. And he's so young!" Clinton said in remarks that provoked a spate of joking British tabloid headlines about the new "special relationship" between the United States and Britain.

The dark side of German reunification


Germany will mark the 20th anniversary of its reunification on October 3 — but not everyone in Germany will be SPORT SOCCER WORLDcelebrating two decades together.

German unity has been a shaky marriage. That may seem like a surprise to people outside Germany. But opinion polls inside Germany show widespread discontent, especially in the formerly Communist east. Chancellor Angela Merkel has called it a success and other political leaders will be singing the praises of unification in their lofty speeches and German media interviews this weekend. But for many in the east, like straight-talking Brandenburg state premier Matthias Platzeck, German unification in 1990 was not a merger of equals but instead an “Anschluss” (annexation) with West Germany taking over East Germany.

from Reuters Investigates:

Morbid money-spinners

If the life settlements market seems ghoulish, here’s a British scandal which isn’t doing the image of the business any favours. It’s one of the worst the country’s seen.

Around 30,000 mainly elderly investors in the UK put their money into a company called Keydata, hoping to make a little extra cash to fund their own retirement with the promise of a healthy return.

from Pakistan: Now or Never?:

Does that U.S. “retribution plan” for Pakistan still stand?

flagburningOne of the more interesting details in the advance reports of Bob Woodward's "Obama's Wars" is that Washington had prepared a "retribution plan" in the event of a major attack on the United States which is traced back to Pakistan.

"While no contingency plans exist for dealing militarily with a collapse of nuclear-armed Pakistan, there is 'a retribution plan' in place, developed by the Bush administration, if the United States suffers another 9/11-style terrorist attack," according to the Los Angeles Times. "That would involve bombing and missile strikes to obliterate the more than 150 al Qaeda training and staging camps known to exist, most of them in Pakistan, which presumably would suffer extensive civilian casualties."

Madeleine Albright pumps iron — and vouches for healthy lifestyle


CZECH/We knew she was tough — but this tough?

“I can leg press 450 pounds,” the former U.S. Secretary of State modestly told a panel on health in Mexico City on Friday.

Albright, who also served in the 1990s as U.S. Ambassador to the United Nations, spoke of the importance of good nutrition at a panel sponsored by dietary supplement company Herbalife, which counts some 50,000 Mexicans among its global distributors.

Colombia kills a top rebel leader, any chance for peace?


Colombia has killed a top rebel leader of the Revolutionary Armed Forces of Colombia, known by its Spanish acronym FARC. The aerial bombardment of Mono Jojoy’s jungle camp – which was complete with tunnels and a concrete bunRebel commander of the FARC, Jorge Briceno, known as "Mono Jojoy"ker – was one of the hardest blows to the guerrillas in their more than four-decade-old insurgency. Since the launch of a U.S.-backed offensive in 2002, the rebels have been on the run, pushed back to remote hideouts and forced to use ambushes and other hit-and-run tactics. The new government of Juan Manuel Santos says that there can be no talks until the FARC stop attacks and release security forces held by the rebels. The Marxist insurgents have called for talks before and used discussions to regroup. Colombia had dealt significant blows to the group before, but has been unable to completely defeat the guerrillas. Can the insurgents be defeated militarily? What should Colombia do to end its conflict?

Mexican reporters decry gagging in brutal drug war


MEXICO-DRUGS/After his newspaper printed a series of reports about a drug gang with ties extending from the Mexican state of Chihuahua to Los Angeles, California, the editor of El Diario in Ciudad Juarez, Pedro Torres, received a chilling phone call. ”If you publish other news about this … we will kill your people,” said the voice on the other end of the line. 
Threatened and intimidated by drug cartels and seemingly abandoned by authorities, journalists covering Mexico’s violent drug war are increasingly self-censoring in order to stay alive. Patricia Mercado of Imagen de Zacatecas put it simply:    “We’re not doing investigations because we’re being threatened and we can’t say anything about the drug gangs.”  Mexico today is considered one of the world’s most dangerous places for reporters since President Felipe Calderon launched a war in 2006 on violent cartels fighting for dominance in the lucrative drug trade. Robberies, extortions, kidnapping, threats — and worse — are part of the daily landscape for many living in Mexican border towns today.
The violence has so far claimed the lives of over 29,000 people, undermining the global image of Mexico.  More than 30 media workers have been killed or disappeared since late 2006, according to U.S.-based Committee to Protect Journalists (CPJ). A recent report by the CPJ on “Silence or Death in Mexico’s Press” can be found here.  Reporters covering Mexico’s escalating drug war not only are forced to contend with the drug traffickers, but corrupt local and state authorities who operate with impunity, said participants at a full-day conference on Sept. 23 sponsored by the Interamerican Press Society (SIP) and the CPJ. “We’re in the middle of two forces that are trying to limit our ability to do journalism,” said Torres. “What they’ve managed to do is to pressure us to report only the most basic news.” 
Mercado said local authorities are “washing their hands of it all.” “They’re not imposing the law, their police have infiltrated the narcs. Unfortunately the federal government isn’t doing anything either,” said Mercado. “I don’t feel protected.”  Last week, a photographer from El Diario, which publishes across the border from El Paso, Texas, was killed by drug gang hitmen, the second journalist from that paper to be killed in the last two years.  The newspaper published an editorial on Sunday addressed to the cartels, asking them to tell the newspaper what was wanted of them, in order to avoid more deaths.   That controversial stance spurred a sharp rebuke from the federal government, which vowed never to make a truce with the cartels. Members of the CPJ and SIP say they’re encouraged by recent assurances by Calderon that he will push for legislation that would make attacks on the press a federal crime. Similar legislation stalled in Congress two years ago. “It pains me that Mexico is seen as one of the most dangerous places for the profession,” the CPJ said Calderon told them in a meeting this week at the presidential palace. 
But journalists on the front lines are increasingly skeptical of the ability of any authority — local, state or federal — to control the bloodshed.  The United States granted asylum this week to Ciudad Juarez-based journalist Jorge Luis Aguirre, who had received a threatening phone call in November 2008, minutes after the murder of a fellow reporter, in which he was told he was the next reporter to die.
Drug violence has now spread from the border region to the northern business center of Monterrey, and has even cropped up in previously sheltered tourist havens like Puerto Vallarta and Cuernavaca, outside Mexico City. Another challenge to press freedom and safety is coming from inside the media organizations themselves.  Some reporters and editors working for  border area newspapers are paid off by the cartels, who pressure them not to publish certain stories. 
The Pacific state of Sinaloa has a big problem with corrupt journalists, said Ismael Bojorquez of Sinaloa’s Rio Doce. Papers, he said, need to “clean house.”  “You can’t do your job as a journalist if you’re on the payroll of an organized crime group,” said CPJ executive director Joel Simon. “It’s happening on a large scale.” Given the risks, reporters have drastically scaled back coverage of the drug wars and violence in their cities. Specific incidents of violence mostly go unreported now, with papers publishing broader analyses, or statistical reports to keep their readers informed — and the cartels at bay.