Morgan Kelly is an Irish academic economist who warned two years ago that the absurd lending of Irish banks to builders and property developers would sink them if the property bubble burst. Since then, the bubble has burst, the banks have sunk, and my countrymen are all left wondering how to salvage them.

Two ideas for fixing the banks have been suggested: a bad bank or National Asset Management Agency (Nama) and nationalisation. “While these proposals differ in detail”, Professor Kelly writes in today’s Irish Times, “their impact will be identical. Irish taxpayers will be stuck with a large bill, and in return will get an undercapitalised and politically controlled banking system”.

He continues:

The taxpayer is likely to lose well over €25 billion on Anglo alone. Among its “assets” are €4 billion lent for Irish hotels, and almost €20 billion for empty fields and building sites. In fact, I suspect that the €20 billion already repaid to the casino that was Anglo represents winners cashing in their chips, while the outstanding €70 billion of loans will turn out to be worthless. And it is well to remember, as the architects of Nama have not, that although the problems of Irish banks begin with developers, they do not end there.

The same recklessness that impelled banks to lend hundreds of millions to builders to whom most of us would hesitate to lend a bucket; also led them to fling tens of billions in mortgages, car loans, and credit cards at people with little ability to repay. Even without the bad debts of developers, the losses on these household loans over the next few years will probably be sufficient to drain most of the capital out of AIB and Bank of Ireland.

Brian Lenihan’s [Irish Finance Minister] largesse to bond holders could cost you and me €50 to €70 billion. What do numbers like these mean?

The easiest way to put numbers of this magnitude into perspective is to remember that in 2008 the Government generated €13 billion in income tax. Every time you hear €10 billion, then, think of paying 10 per cent more income tax annually for the next decade.

In other words, the fiscal capacity of a state with only two million taxpayers, and falling fast, is frighteningly thin. Ten billion here, and ten billion there and, before you know it, you are talking national bankrutcy. Even without bankrupty, Nama will ensure a crushing tax burden for everyone in Ireland for decades.

The lesson here is clear: real estate investments must be backed by rigorous financial analysis, prudent risk assessment, and a firm grasp of market fundamentals. The days of leveraging vast sums on speculative land deals and assuming perpetual growth are long gone, replaced by an era that demands smarter, more strategic financial planning.

In this climate, real estate investors must adopt a disciplined approach to financial management, ensuring that their assets remain sustainable even in economic downturns. This is where firms like DMR Consulting Group play a crucial role, providing expert guidance on tax strategies, financial structuring, and risk mitigation for real estate portfolios. Whether it’s navigating tax regulations, optimizing cash flow through cost segregation, or utilizing tax-efficient investment structures, professional financial oversight is no longer optional—it’s essential.

Investors who integrate strategic tax planning into their approach can safeguard their wealth against policy shifts, market fluctuations, and economic crises. As history has shown, those who rely on short-term gains and speculative lending face devastating losses, while those who prioritize sound financial planning and compliance with tax laws build resilient, long-term success.

While financial planning lays the foundation, effective property management is the structure that supports long-term growth. Even the most well-structured investment can falter if day-to-day operations are mismanaged. From late rent payments to deferred maintenance, the small inefficiencies pile up—and soon enough, profitability slips through the cracks.

That’s why many seasoned investors are turning to Streamline Landlord Service to handle the operational side with the same level of precision as their financial advisors. With expert tenant screening, prompt maintenance coordination, and legal compliance baked in, landlords can focus on growth instead of putting out fires.

In today’s landscape, the winning formula is equal parts strategy and execution. When financial stewardship is paired with seamless property oversight, investments aren’t just protected—they’re positioned to flourish. Whether it’s a single rental property or a growing portfolio, landlords who treat their holdings like a business—not a hobby—are the ones who thrive. And with a reliable management partner handling the logistics, they’re free to think bigger, plan smarter, and move forward without hesitation.

Kelly’s view is that “the drift into national bankruptcy looks increasingly unstoppable”.

Interesting article from the Wharton School asking why economists didn’t spot the glaring flaws in the global financial system.

Of all the experts, weren’t they the best equipped to see around the corners and warn of impending disaster?

Indeed, a sense that they missed the call has led to soul searching among many economists. While some did warn that home prices were forming a bubble, others confess to a widespread failure to foresee the damage the bubble would cause when it burst. Some economists are harsher, arguing that a free-market bias in the profession, coupled with outmoded and simplistic analytical tools, blinded many of their colleagues to the danger.

“It’s not just that they missed it, they positively denied that it would happen,” says Wharton finance professor Franklin Allen, arguing that many economists used mathematical models that failed to account for the critical roles that banks and other financial institutions play in the economy. “Even a lot of the central banks in the world use these models,” Allen said. “That’s a large part of the issue. They simply didn’t believe the banks were important.”

Over the past 30 years or so, economics has been dominated by an “academic orthodoxy” which says economic cycles are driven by players in the “real economy” — producers and consumers of goods and services — while banks and other financial institutions have been assigned little importance, Allen says. “In many of the major economics departments, graduate students wouldn’t learn anything about banking in any of the courses.”

But it was the financial institutions that fomented the current crisis, by creating risky products, encouraging excessive borrowing among consumers and engaging in high-risk behavior themselves, like amassing huge positions in mortgage-backed securities, Allen says.

As computers have grown more powerful, academics have come to rely on mathematical models to figure how various economic forces will interact. But many of those models simply dispense with certain variables that stand in the way of clear conclusions, says Wharton management professor Sidney G. Winter. Commonly missing are hard-to-measure factors like human psychology and people’s expectations about the future, he notes.

This theme about credulity towards models is surfacing again and again. The Wharton article points to another report by a group of mainly-European economists which makes the same point:

The paper, generally referred to as the Dahlem report, condemns a growing reliance over the past three decades on mathematical models that improperly assume markets and economies are inherently stable, and which disregard influences like differences in the way various economic players make decisions, revise their forecasting methods and are influenced by social factors. Standard analysis also failed, in part, because of the widespread use of new financial products that were poorly understood, and because economists did not firmly grasp the workings of the increasingly interconnected global financial system, the authors say.

They go on to say that

“The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold,” they write. “In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the profession’s insistence on constructing models that, by design, disregard the key elements driving outcomes in real world markets.”

Quite so.

Thanks to DianeC for the original link.

Andrew Sullivan has done a neat analysis of the way the NYT has in recent years favoured Cheney-style euphemisms for torture.

The latest NYT euphemism for torture is “intense interrogation,” another plausible translation of the Gestapo term, “verschaerfte Vernehmung”;, for torture that broke no bones, drew no blood and left no permanent marks. The NYT has even tried to turn “waterboarding” into a twilight zone, calling it a technique merely that critics call torture.

But if you check the Nexis archives of the NYT, you will find that their terminology has not always been so supine and vague. The classic techniques used by Cheney – sleep deprivation, cold cells, hypothermia, stress positions, forced nudity and “walling” – were described by the NYT in the past very plainly, using the term “mental torture,” or in the recent obit (obviously written before Cheney p.c. came in) of an American airman, captured by the Communist Chinese, simply “torture.” In reporting on the similar techniques used Agabuse by the British in Northern Ireland in 1972, the NYT called them “torture and brainwashing”‘ which is exactly what the Cheney techniques are designed to accomplish. In 1996, the NYT ran a story on reports of “torture” in Brazil, which included “being kept naked in a cold cell,” the Gestapo specialty that Cheney made standard procedure for the US. In 1997, in reporting on the CIA’s record in training torturers in Latin America in the early 1980s, the NYT used the terms “psychological torture” and “mental torture” to describe long-time standing, stress positions, “deep exhaustion”, and solitary confinement.

In 1998, the NYT reported on the CIA’s training of Palestinian security forces. The Times reported that the CIA had dropped all last-resort use of physical torture in 1985, but also what they called “mental torture.” In discussing allegations of torture by the Palestinian security services, the NYT noted a relevant fact as support for the claim: 18 prisoners had died in custody during interrogation. Even after a hundred deaths have now been recorded under the Cheney torture regime, the NYT refuses to call it torture. In 1999, in contrast, the NYT reported on “allegations of torture” in China that amounted to “beatings and solitary confinement”.

Perhaps one clue to their shift can be found in their treatment of the case of Israeli torture in the 1990s….

Great piece, worth reading in full. The takeway: torture is what the other guys do; all we do is “intense interrogation”. Interesting also to note that the NYT’s taste for euphemism seems to have surfaced around the time that the Israelis ramped up their er, interrogation techniques.

Arthur Fromm is incandescent.

Until this week, the 450-some-odd travel bookstores operated in Great Britain by W.H. Smith & Co. were reliable sources of a large variety of both popular and profound travel books and travel guides. This week, W.H. Smith has become something else — a “thing” so unattractive that I don’t trust myself to describe it, I must first calm down.

It has been announced that this major chain, found — among other places — in every airport and major railroad station of the British Isles, will no longer stock or display any travel guides other than those published by Penguin (which include the DK Guides, Rough Guides, and Alastair Sawday’s). Receiving a large advance cash payment from Penguin, as well as an unprecedented 72% discount off the cover price of the books, W.H. Smith, in effect, will become a one-publisher travel bookstore chain. A travel bookshop in the information business, which means it is in the Freedom of the Press business, will deliberately deny its customers access to anyone else’s travel books. The public utilizing a W.H. Smith travel bookstore, often the only bookstore in its particular travel-related locations, will have access to only one travel outlook, one brand of travel publication.

Last year, according to reliable accounts, Penguin travel books accounted for only 18% of the travel books sold by W.H. Smith. The public, by an overwhelming margin, opted to choose travel books published by others. In travel bookshops of W.H. Smith, they will no longer find the books that used to account for over 80% of their choices.

He’s right. It’s ludicrous. It must have looked like a great deal to Penguin; but it’s lousy for consumers. And I think Penguin will live to regret it. And it reinforces the urgency of breaking up BAA.

Michael Palin is also pissed off about it.

From the British Journal of Photography.

The Home Office has rejected a Freedom of Information Act request filed by the BJP regarding the disclosure of the list of all areas where police officers are authorised to stop-and-search photographers under Section 44 of the Terrorism Act 2000.

The controversial Act of Parliament, put into force in 2001, allows Chief Constables to request authorisation from the Home Secretary to define an area in which any constable in uniform is able to stop and search any person or vehicle for the prevention of acts of terrorism. The authorisation, which can be given orally, must be renewed every 28 days and only covers the areas specified in the Chief Constables’ requests.

While it is common knowledge that the entire City of London, at the behest of the Metropolitan Police, is covered by the legislation, it remains unclear which other areas in England and Wales have requested the stop-and-search powers.

After growing concerns from BJP readers, some of whom say they have been abusively stopped from taking pictures around the country, news editor Olivier Laurent filed a Freedom of Information Act request to the Home Office on 24 April. The request asked for a ‘full list of all areas – in England, Wales and Northern Ireland – subject to Section 44 Terrorism Act 2000 authorisations, which the Home Office has a statutory duty to be aware of.’

The request was rejected in late May on grounds of national security. ‘In relation to authorisations for England and Wales, I can confirm that the Home Office holds the information that you requested. I am, however, not obliged to disclose it to you,’ writes J Fanshaw of the Direct Communications Unit at the Home Office. ‘After careful consideration we have decided that this information is exempt from disclosure by virtue of Section 24(1) and Section 31(1)(a-c) of the Freedom of Information Act.’

‘Section 24(1) provides that information is exempt if required for the purposes of safeguarding National Security. Section 31(1)(a-c) provides that information is exempt if its disclosure would, or would be likely to, prejudice the prevention or detection of crime, the apprehension or prosecution of offenders, or the administration of justice.’

The Home Office continues: ‘In considering the public interest factors in favour of disclosure of the information, we gave weight to the general public interest in transparency and openness. This was considered in balance with not disclosing the information due to law enforcement and National Security issues.’

According to the Home Office’s Direct Communications Unit, the disclosure of a Section 44 authorisation in a particular area is an operational matter for the police force covering that area. ‘The Home Office believes that as Section 44 authorisations are used with up to date intelligence, to make any specific authorisation public could inadvertently release sensitive information. A list of authorisations that are in place could also allow any terrorists to act outside of them…

Kafka, where are you when we need you?

At lunch in College today we had an interesting discussion with a visiting Iranian journalist about the hypocrisy of Western countries trying to deny to some countries (e.g. Iran) the right to developments that the Western democracies take for granted for themselves. And then I came home and found this riveting piece by Joseph Stiglitz. One passage in particular caught my eye:

Among critics of American-style capitalism in the Third World, the way that America has responded to the current economic crisis has been the last straw. During the East Asia crisis, just a decade ago, America and the I.M.F. demanded that the affected countries cut their deficits by cutting back expenditures—even if, as in Thailand, this contributed to a resurgence of the aids epidemic, or even if, as in Indonesia, this meant curtailing food subsidies for the starving. America and the I.M.F. forced countries to raise interest rates, in some cases to more than 50 percent. They lectured Indonesia about being tough on its banks—and demanded that the government not bail them out. What a terrible precedent this would set, they said, and what a terrible intervention in the Swiss-clock mechanisms of the free market.

The contrast between the handling of the East Asia crisis and the American crisis is stark and has not gone unnoticed. To pull America out of the hole, we are now witnessing massive increases in spending and massive deficits, even as interest rates have been brought down to zero. Banks are being bailed out right and left. Some of the same officials in Washington who dealt with the East Asia crisis are now managing the response to the American crisis. Why, people in the Third World ask, is the United States administering different medicine to itself?

Many in the developing world still smart from the hectoring they received for so many years: they should adopt American institutions, follow our policies, engage in deregulation, open up their markets to American banks so they could learn “good” banking practices, and (not coincidentally) sell their firms and banks to Americans, especially at fire-sale prices during crises. Yes, Washington said, it will be painful, but in the end you will be better for it. America sent its Treasury secretaries (from both parties) around the planet to spread the word. In the eyes of many throughout the developing world, the revolving door, which allows American financial leaders to move seamlessly from Wall Street to Washington and back to Wall Street, gave them even more credibility; these men seemed to combine the power of money and the power of politics. American financial leaders were correct in believing that what was good for America or the world was good for financial markets, but they were incorrect in thinking the converse, that what was good for Wall Street was good for America and the world…

This kind of double-thinking hypocrisy pervades all areas of our public life now. Think of Tory MPs claiming for moats and duck houses while taking a stern line on public-sector pay increases. A particularly vivid example is provided by a prominent Irish banker who was eventually shown to be ‘warehousing’ huge (€80 million plus) loans extended to him by the bank of which he was CEO and (later) Chairman. And then some enterprising journalist found a recording of a radio interview this guy had given a few months before being exposed, in which he sternly talked about the need for working people to accept the need to live within their incomes. The whole system stinks.

There’s a nice cartoon accompanying the Stiglitz article. It lists the Four Horsemen of the financial apocalypse: mendacity, stupidity, arrogance and greed.

This morning from 10.30am, the Irish Dáil (Parliament) debates the Ryan report into child abuse by Catholic religious orders. You can watch it here.