Morgan Kelly Predicts Bankruptcy for Ireland

How often does a newspaper op-ed piece elicit reaction that becomes news in itself?

Yesterday, Ireland’s Governor of the Central Bank, Patrick Honohan, responded to an article by Morgan Kelly in The Irish Times (May 7, 2011) in which Kelly said, “Honohan’s miscalculations of the bank losses has turned out to be the costliest mistake ever made by an Irish person.”

Kelly is a professor of economics at University College Dublin and is credited with having predicted the Irish property crash.

“With the Irish Government on track to owe a quarter of a trillion euro by 2014, a prolonged and chaotic national bankruptcy is becoming inevitable,” Kelly said in his Times piece. “Ireland is facing economic ruin.”

“While most people would trace our ruin to to [sic] the bank guarantee of September 2008,” he explains, “the real error was in sticking with the guarantee long after it had become clear that the bank losses were insupportable.”

Finance Minister Brian Lenihan’s mistake in guaranteeing most of the bonds of Irish banks…was “obvious” and ridiculous,” Kelly said. A few months later, Patrick Honohan was appointed Governor of the Central Bank….and had the opportunity to reverse Lenihan. But instead, Honohan deemed the bank losses to be “manageable.” Honohan “appeared to believe that Ireland was still the export-driven powerhouse of the 1990s, rather than the credit-fueled Ponzi scheme it had become since 2000….,” Kelly said.

Honohan went over Lenihan’s head and stated on November 18 on RTE Radio 1 “that Ireland would need a bailout of tens of billions”. “Rarely has a finance minister been so deftly sliced off at the ankles by his central ban k governor,” Kelly said. “And so the Honohan Doctrine that bank losses could and should be repaid by Irish taxpayers ran its predictable course with the financial collapse and international bailout of the Irish State.”

Kelly says that the IMF “presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: ‘You are Ireland’s salvation’.”

Kelly says the “haircut was vetoed by U.S. treasury secretary Timothy Geithner who, as his payment of €13 billion from government owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers.”

Kelly concludes, “…the IMF was forced by the obduracy of Geithner and the spinelessness, or worse, of the Irish to lend their imprimatur, €30 billion of their capital, to a deal that its negotiators privately admit will end in Irish bankruptcy.”

Kelly writes, “Back when the euro was being planned in the mid-1990s, it never occurred to anyone that cautious, stodgy banks like AIB and Bank of Ireland, run by faintly dim former rugby players, could ever borrow tens of billions overseas, and lose it all on dodgy property loans.”

Kelly predicts “Ireland’s government debt will top €190 billion by 2014, with another €45 billion in Nama and €35 billion in bank recapitalization, for a total of €270 billion”…this for a country of only about 4 million people, half the population of New York City, and with a reported 100,000 planning to leave the country this year. The bill comes to about €120,000 per Irish worker, Kelly says, or “60 per cent larger than GNP.”

As a result, Kelly reports, “the banks that lent to the Irish Government are at risk of losing most of what they lent. In other words, the Irish banking crisis has become part of the larger European sovereign debt crisis.”

Kelly says that government default of its debt would be for Ireland “that trades on its reputation as a safe place to do business, a bankruptcy would be catastrophic.”

Kelly says that Ireland’s national survival requires that “Ireland walk away from the bailout. This in turn requires the Government to do two things: disengage from the banks, and bring its budget into balance immediately.”

Kelly predicts that the current Fine Gael Government won’t follow his advice and that the result will be bankruptcy. Fine Gael and Labour will fall into disrepute and the next election, “after the trauma and chaos of the bankruptcy” will be nothing like the “dull and predictable” one that took down Fianna Fail.

At such a juncture for Irish society, one would hope there is someone at the helm with training in economics and not just smiling and back-slapping. The ship is getting very close to the edge of the earth.

Easter Rising Commemoration

Friends of Irish Freedom held a celebration of the 95th anniversary of the Easter Rising at The Green Tree Restaurant in the Bronx, N.Y., on April 24.
Msgr. Patrick Moloney celebrated Mass for those gathered at the Friends of Irish Freedom's celebration of the 95th anniversary of the Easter Rising at The Green Tree Restaurant in the Bronx, N.Y.
Kelly Donnelly Ramsey of Derry was one of the guest speakers at the Friends of Irish Freedom's celebration of the 95th anniversary of the Easter Rising at The Green Tree Restaurant in the Bronx, N.Y. Ramsey is the sister of Gary Donnelly and she spoke of her brother's experiences as a POW in Maghaberry Prison in County Antrim, as well as harrassment of her family by the PSNI.

Back to the Old Days in the North

Sad news came from Omagh in the North of Ireland this weekend that Ronan Kerr, a young policeman, died when he got in his car and a bomb beneath it exploded.

Kerr, a Catholic, was a member of the North's reconstituted Police Service of Northern Ireland, PSNI, which had replaced the infamous RUC. Only since the Good Friday Agreement of 1998 have Catholics been allowed to join the force. News reports attribute the bombing to republican dissidents who want to dissuade Catholics from joining up.

I have had the opportunity to photograph political murals in Belfast and Derry in the North of Ireland over the past eight years. To my eye, there is peace amid a still raw history. The political murals, such as the Derry mural above, tell that story vividly. Only days after my first visit to Derry, a car bomb was found in the city centre near where I had walked. There is still injustice that does not get reported.

There are still those who are dissatisfied with the Good Friday Agreement. Men and women who were imprisoned and/or on hunger strike have told me they wonder what it was all for if they haven't achieved a united Ireland.

But what I hear this morning on Irish radio is disgust with the cowardly act of killing a 25-year-old as he got in his car to go to work.

Hopefully there are ways for people to express their dissent in non-violent ways. There needs to be, in all fairness. Whoever committed this act has brought only widespread condemnation and the name of "terrorist" on themselves. What were they thinking?

Last Leaders Debate Before Irish Election

Watched on RTE via computer last night the last party leaders debate before the Feb. 25 election in Ireland.

Enda Kenny (Fine Gael), Michael Martin (Fianna Fail) and Eamon Gilmore (Labour) each put his case before the Irish people in the bid to become Taoiseach.

After opening statements, RTE's moderator, Miriam O'Callahan, began the questions.

Kenny, who leads in the polls, insisted that the IMF deal must be renegotiated. "We still don't know the full scope of the stress test on the banks," he said, and won't until the end of March. It could turn out that Irish taxpayers will be due for 100 billion euros in debt from the banks, he warned. Kenny called the situation a "penal taxation level."

Gilmore, whose party may go into coalition with Fine Gael, said, "The choice on Friday will determine the future of the country for the next 20 years." He promised that under Labour, "no family will lose their home" and those with incomes under 100,000 will have no new taxes. Gilmore called the current Irish economic situation "the biggest mess that anyone has ever faced." He offered Labour's program of "three pillars" of jobs, reform of the political system and "fairness."

Gilmore also called for renegotiation of the IMF deal, "a straitjacket on future governments."

Martin was left to defend his Fianna Fail party and to cast suspicion on Fine Gael's "five-point program." "It doesn't add up," Martin said of Kenny's plan to cut government spending by 6.5 billion euros. Kenny is "codding the people by saying there will be 6.5 billion savings, but gives no detail."

As for the IMF deal, Martin said, "Anyone who says they can unilaterally re-negotiate is not honest."

Martin defended Fianna Fail's actions by saying that if the bank guarantees had not been made, "it would have been catastrophic to the banking system."

Kenny countered by saying that if he is elected he will "close down Anglo and Irish Nationwide before the end of the year and sell AIB." He said, "We have enough banks as it is." As things stand, small businesses cannot get "a penny from banks in credit," he said. "It is absolutely critical. We are going nowhere unless we can extend credit to small business."

'We must get the two main banks up and running," Martin said. "AIB and Bank of Ireland have to survive."

In an email to a friend in Cork yesterday, I wished that the best man would win. She replied, "We are all still trying to figure out who is the best man to win the election on Friday -- they are all equally good at spin and ineffective at managing our lovely country."

Bloody Sunday Victims' Brothers Tell Their Story

On the evening after Brooklyn's 39th and last Bloody Sunday March and Mass, two Bloody Sunday victims' brothers joined march organizers and participants for dinner and conversation.

John Kelly and Gerry Duddy had traveled from Derry to be part of the Bay Ridge Irish American Action Association's last march. After 39 years, the 14 unarmed civil rights protesters who were killed by British Army Parachute Regiment soldiers on January 30, 1972, were finally vindicated by the release of the Saville Report on June 15, 2010.

Over dinner, Kelly and Duddy, explained how the victims' families waged an unrelenting campaign to have their loved ones declared "innocent" of any wrong-doing on that Bloody Sunday. They took on the British government and won. "We were a thorn in their side," Duddy said.

Kelly, who was the elder brother of 17-year-old Michael Kelly, said that he never gave up over 38 1/2 years for his mother's sake. His brother's death was devastating for her, and sadly she died before the report was released.

Their lives were taken over by the Bloody Sunday Justice Campaign of which they were both founding members. Postcards, letters, visits to politicians, "any door that was open" kept their cause alive through the years between the Widgery Tribunal whitewash and the commencement of the Saville investigation more than 20 years later.

Duddy, whose 17-year-old brother Jackie was killed, was himself 14 years old on the day of the march. "I went this way and my brother went that way," Duddy said. If it had been the other way, and Gerry had been shot, he said, he knows his brother would have done the same for him in seeking justice.

Kelly said that on last June 15, when the families went to the Guildhall in Derry to read the final Saville Report, they had no idea what to expect. Within a few minutes, though solicitors let them know that it was good news -- the "innocent" verdict they had been seeking for years was there.

It was pure joy to look out on the thousands in the Guildhall Square when the news was shared with the world. The families looked out on the crowd and knew the news was spreading worldwide with the great press coverage there.

Kelly invited anyone who visits Derry to stop by and see him at the Free Derry Museum in the Bogside where the Bloody Sunday story is told. He said that some British visitors have come in and are appalled at what happened on January 30, 1972, and apologize to him. But he tells him, it is the government not the people who needed to apologize.

Kelly did say, though, that the families are not finished yet. They want to see the soldiers who were responsible for the murders of their unarmed relatives to be prosecuted. This has nothing to do with monetary compensation they stressed, but everything to with justice.

Last Bloody Sunday March in Brooklyn

Brothers of two Bloody Sunday victims joined the Bay Ridge Irish American Action Association for the last Bloody Sunday Memorial Mass and March in Brooklyn on Feb. 13.

This was their 39th annual memorial of the January 30, 1972, unprovoked killing of 14 unarmed Irish civil rights marchers by the British Army’s Parachute Regiment in Derry, in the North of Ireland.

Jack Kelly and Gerry Duddy, founding members of the Bloody Sunday Justice Campaign, came from Derry to join marchers through the streets of Sunset Park to Our Lady of Perpetual Help Basilica for 1:15 p.m. Mass.

Marchers carried white crosses with the names of Michael Kelly, Jack Duddy, William McKinney, Patrick Doherty, Bernard McGuigan, Gerald McKinney, William Nash, James Wray, Michael McDaid, Gerald Donaghy, John Johnston, Kevin McElhinney, John Young and Hugh Gilmore.

The Clann Eireann Pipe Band led the march from the Irish Haven on Fourth Ave. Father Francis Mulvaney, C.Ss.R., of O.L.P.H. walked along with longtime memorial organizers Mary Nolan, Mary Lennon and Martin Brennan.

Before Mass at O.L.P.H., Jack Kelly, brother of Michael Kelly, described what it was like for families of Bloody Sunday victims last June 15 with the release of the long-awaited Saville Report, which vindicated the victims as “innocent.”

The report acknowledged: no warning was issued to the thousands who marched that day; contrary to their claims, the British Army was not responding to gun attacks or stone throwing; many died while helping other wounded marchers; and the British Army lied and covered up its actions of January 30, 1972.

Kelly thanked the faithful in Brooklyn for their “support of the Bloody Sunday families” through the years. After 38 ½ years of waiting, Kelly said, “the admittance of the truth was one of the greatest moments of my life.” The seven years waiting for the publication of the Saville Report was frustrating, he said. The last witness had been heard in 2004. The report took 5 ½ years to write compared to three months for the original Widgery Tribunal report, a whitewash of the events of Bloody Sunday.

On June 15, two members from each family entered Derry’s Guildhall at 10:30 a.m., where they were given the opportunity to read the Saville Report, which finally acknowledged their relatives were innocent.

“We took on the might of the British establishment and won,” Kelly said. “What we have always known was acknowledged.” Kelly did note there was still the matter of acknowledging that the RUC had planted nail bombs in the pockets of victim Gerald Donaghy. “The Saville Report still left this lie,” he said.

Nevertheless, the release of the report prompted British Prime Minister David Cameron that day to call the shootings “both unjustified and unjustifiable.”
Cameron admitted in a British House of Commons statement, “What happened should never, ever have happened. The families of those who died should not have had to live with the pain and hurt of that day, and a lifetime of loss. Some members of our armed forces acted wrongly. The government is ultimately responsible for the conduct of the armed forces. And for that, on behalf of the government – and indeed our country – I am deeply sorry.”

“It was a brilliant day, a day I will never forget,” Kelly said.

Two weeks ago, Derry held its own last Memorial March, with 30,000 participating, Kelly said. “We will still have a Memorial Mass,” he said. “We will still continue commemorating the memory of our loved ones.”

Father Colm Campbell, founder of the New York Irish Center, concelebrated Mass with Father Mulvaney. The Bloody Sunday victims had “lived the Gospel of hungering and thirsting for justice,” Father Campbell said in his homily. He commended the families who through “39 frustrating years of seeking justice, never gave up.”

As each of the 14 names was called out during the prayers of the faithful, Gerry Duddy, brother of Jackie Duddy, echoed in a strong, loud voice, “Innocent.”

Coming Elections in Ireland

Brian Cowen, Irish Taoiseach, has stepped down as leader of Fianna Fail opening the way for new elections and a change in national leadership.

God knows who will take his place. Michael Martin of Fianna Fail? Enda Kenny of Fine Gael? A coalition of Labour with Fine Gael?

After months of the desperate voices of the Irish public, who have been strangled by harsh budget cuts, something had to change. Young families are leaving daily for Canada and Australia. Who will be left there to pick the country up off its knees and rebuild?

As an occasional visitor and photographer of Ireland, it has broken my heart to hear these stories daily on RTE on my computer here in Brooklyn. Hope the Irish people are given a good choice and have a chance for some kind of future so their children can stay in Ireland.