Monday, 18 June 2012

McCreevy's role in the euro crisis. Ireland's contribution runs deep.

"Eeeeeeeggghhhh, I've got a sure-fire economic plan to make ye all rich and happy as pigs in shite!!!!."

Charlie McCreevy was Ireland's finance minister between 1997 and 2004.  After setting the Irish economy on a steady course towards bankruptcy, McCreevy was  rewarded with an appointment as Europe's Commissioner for Internal Markets and Services. 

The rest is history - and present economic reality - as this article in yesterday's Sindo contends.


McCreevy's role in Spain's crash

By Brendan O'Connor
Sunday June 17 2012

YOU'LL never beat the Irish. We always prided ourselves on our inordinate influence in Europe and it turns out that this is true. It transpires that we didn't just ruin our own country, but now one of us is in the frame for helping to ruin the whole of Europe.

As Spain teeters on the edge of needing a full sovereign bailout, one of the factors that could bring down the whole eurozone, Bloomberg has been pointing one of the fingers of blame for the current crisis in the Spanish banks firmly at our own Charlie McCreevy.

Until recently, he was effectively the EU's financial regulator, the guy who should have been enforcing its rules on banking and markets, from 2004 to 2010, when he was Commissioner for Internal Markets and Services. And all this time, Spain's banks were cooking the books, storing up their recent trouble, and apparently the bould Charlie was "one of the more candid advocates of Spain's approach".

A few years ago it was generally thought that Spain's banks had somehow dodged the financial crisis. This is because Spain's banks had been massaging the numbers to make it look as if they were doing okay when in fact they were making huge losses.

Dynamic provisioning was a way of using past profits to hide current losses. It was encouraged in Spain but was against EU rules and Charlie should have stopped it. But Charlie was quite the fan of this form of cooking the books.

Bloomberg's Jonathan Weil has dug up some great exchanges from a meeting of the International Accountancy Standards Board in 2009, where Charlie admits that he didn't pursue the banks for their dodgy accounting, though he should have.

He points out that Spain's banks "have survived the crisis better than anyone else to date". Charlie goes on to say that "I, strictly speaking, should have taken action against them for doing this" (the dynamic provisioning).

Describing some of the rules on banking as "ludicrous", he says of the Spanish approach: "It's worked pretty well for them."

McCreevy dates his support for cooking the books back to his youth in Ireland. "I'm old enough to remember when I was a young student . . . in my country that I know best, banks weren't allowed to publish their results in detail. Why? Because we felt if everyone saw the reserves etc, it would create a run on the banks."

Of course, this is the same Charlie who blamed the Northern Rock crisis on excessive transparency and regulation, while he was the EU regulator.

It's classic stuff. They put an Irish guy in charge of regulating the banks, thinking: "How bad can it be?" He brings his homespun wisdom to bear and supports the Spanish banks in hiding their losses so they keep going, triumphant as far as he is concerned. And now it could contribute to bringing down the whole continent.

Talk about exporting our problems.


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Ella said...

Hi GM, this would be the same newspaper that said in 2004 of McCreevy and I quote

"The most successful finance minister in the State's history is being hung out to dry. Is his unparalleled success, his rare political conviction making him an inconvenience for one or two colleagues, higher up and lower down? Perhaps FFs failure at the polls provides a pretext to place a reckless spender in the Department of Finance?

That is a sure way of losing the 2007 general election. If they stick with Charlie they still have a chance of a victory.

And a healthy economy."

Full gushing article available at

Populist shite from the Sindo - they write what they think people want to read, not what's going on at the time.

The Gombeen Man said...

Thanks for that, Ella. Here's another excerpt from the article:

"WHAT will they do with Charlie McCreevy, the man whose heart lies in Boston?

Dispatch him to Berlin?....

Is this really the Fianna Fail response to its latest election setback? Risk Ireland's economic saviour to assuage backbench panic. Treat their greatest asset as a liability."

What a hoot!!! Ireland's economic saviour, eh? And this piece is from the Business pages, not an op-ed piece. F**kin' eejits.

Dakota said...

Ella, yes absolutely, the Independent is FF lite. Despite the Political Correctness Lobby, which trys to say otherwise.

GM what are you trying to say, Mr Mc Creevy a Bottom Feeder? Mr Mc Creevy is a visionary genius. He had European Corridor Huggers enthralled for decades. Please remember there was a time when Europe couldn't understand where all the Irish paper wealth was coming from.

GM try to ponder if you would, the gargantuan intellect which is captured in that head of his. Think about it, he shafted and screwed a nation for short term kicks and a bit of craic and is now wealthier than P Flynn and all the Lads combined. That's genius, that's Irish.

Ah but come on GM, you think that's bad, wait till the current shower of shysters gets through with the left overs. After proving that they have NO WORD, they are now engaged in taxing and cutting their way to big fat pensions in Brussels (Enda and the Lads are great Craic altogether). GM you could have Bo Bo the clown in there and he could run the show. The real strings are pulled by senior Irish Civil Servants in Dirty Dublin (and now Troika officials, LOL). Of whom, it seems that you only get on, if, you're out by 3.6 Billion. Then you're assured a collusal pension and money for old rope.

GM Ireland has Mr Hollande to thank for some realisation that Austerity without Growth is as successful as a car with no engine. Looks good on paper but won't go anywhere...

Anonymous said...

Is this the same Brendan O'Connor who was using this same Indo column to urge people to buy more mid-2007? This clown has some neck. I would disagree slightly with a comment Dakota made...the European banks (ECB included) understood full well where the Irish paper wealth was coming from...they were financing this increase in property value(this is the main reason the euro was put in place). They also knew that the bubble would burst and Mr and Mrs Taxpayer would be there to pick up the bill.


PS I live in France for the last 10 years and although he is an improvement on what went before, I wouldn't expect much in the way of real change from Monsieur Hollande.

The Gombeen Man said...

The role of the Irish government in cutting capital gains tax from 40% to 20% should not be forgotten, APL. Nor the government continuing property-based tax breaks and shelters. Nor the thousands of Irish investors who outbid each other at every turn to "snap up" investment properties which could not be justified by rental yields, presumably in the belief that capital assets could appreciate forever. Helped of course, by a cheerleading media.

Believe me, I was looking to trade up during this time - to live, not as an investor - and saw it first hand.

Anonymous said...

I agree entirely that the Tax policies of the Irish Government contibuted handsomely to the problem and also that this revenue lost to the state was basically taken (and continues to be taken) by the banks in interest payments on the vastly inflated asset prices. The price of a house is basically what the bank will lend and the Irish banks couldn't lend out enough. The European bankers financed the Irish banks knowing full well that it was not sustainable but knowing also that they would be looked after when the bubble burst. With gems like Charlie in positions of power, how could they loose.