Anglo Grinder

Still plenty of ifs and buts in determining final cost to taxpayer – The Irish Times – Wed, Sep 01, 2010

The meter on the bailout has reached €22.88 billion. Some €18.88 billion has come through promissory notes, or State IOUs, which, the Government says, allows it to spread the cost over a “manageable” 10 to 15 years.

I’ve been sticking my head in the sand over this. I find it hard to hold in my head the idea of what a billion is, let alone €20bn. It takes necessary thinking labour time, of which I don’t have a great deal. So I decided to dig into the National Income Estimates yesterday to try to get to grips with what sort of money we’re talking about re: Anglo. As I say, I’ve been ignoring this stuff, so those of you who are already well acquainted with the figures, the arguments, the proceedings and so on may choose to avert your eyes. I apologise if the charts aren’t that clear, I haven’t figured out how to display Excel charts in WordPress properly yet.

Well, the National Income Estimates only go as far as 2009, which makes sense, seeing as 2010 hasn’t ended yet. And the first thing I did, to find out how Anglo Irish Bank figured in all this, was to do a Ctrl+F and search for Anglo. There’s one entry, on tab 23, for capital grants to enterprises, referring to Recapitalisation of Anglo Irish Bank PLC. Here’s how the grants stack up:

So Anglo received more than three times the rest of capital grants combined. And 4bn is a nice and snug round figure, three zeroes in a row, instead of the piddling 78 million for CIE. But what does 4bn mean in the context of government capital expenditure?

Have a butchers at this:

Grants to Enterprise was ticking over nicely all the way through the boom, making up 5-7% of capital expenditure. Then bam! 2009 we’re up to nearly 25% of capital expenditure. Only problem is that in 2009, it’s mostly down to Anglo Irish Bank.

But even at that, we’re only talking about capital expenditure. What the hell do I know about how much that ought to make up of total government spending? So I had a hoke about to see where capital expenditure fit into the overall spending, and I opened out a separate category for Anglo Irish Bank. Here’s where Anglo stacks up against other areas:

Anglo Irish Bank is straight in at number 6 in 2009 in terms of state spending priorities. Bear in mind, none of this has anything to do with the 2010 money for the bank, taking it into the tens of billions. This is just the entry on the National Income Estimates. How the later money is going to be reflected in 2010 estimates I have no idea.

But seeing as we’re heading into the propaganda season leading up to the budget, talking about the ‘savings’ that will have to be made, what with the ‘fiscal austerity’ being demanded by the ‘markets’, in the form of cuts to welfare, education and health, consider austerity in relation to spending on Anglo Irish Bank:

(in millions)

And then consider the additional tens of billions not accounted for here, and ask yourself: whose austerity?

And whose bonanza?


10 Responses to “Anglo Grinder”

  1. 1 DublinDilettante September 1, 2010 at 12:41 pm

    Good work, that’s some head-spinning shit right there. I wonder how the cost of Anglo would compare, proportionately, to the cost of a civil war in a medium-sized country like, say, Sri Lanka. Must look into it. I’d be interested to know what the “other” that constituted €420m of capital grants comprised, too.

    Health and Social Welfare may account for almost 50% of spending but, as a great man recently said, it doesn’t feel like it.

  2. 2 Irish Debate September 1, 2010 at 12:45 pm

    and on top of it all we see a headline like this..

  3. 3 Michael Taft September 1, 2010 at 1:42 pm

    When all the money is paid over to Anglo-Irish (not counting Irish Nationwide) we will be paying €1.25 billion annually in interest payments for, well, a long, long time. However, according to the ESRI, even this cost might be dwarfed by the impact of the debt/interest payments on GNP growth. This arises out of lower growth which will reduce tax revenue and keep unemployment costs high. The fun never stops at the Fianna Fail ponderosa.

  4. 4 Marcus Aurelius September 1, 2010 at 3:28 pm

    Top article, it really puts into perspective the ridiculous amounts of money being thrown at Anglo. So it’s the very first entry in our Rule Hibernia Thumbs Up page.

  5. 5 John mcDermott September 1, 2010 at 5:51 pm

    If one spent too long contemplating all the misery and hardship that Anglo Irish bank (the developers bank) and Fianna Fail, will engender in the coming years;one might just take Bartholomew Ahern’s advice..

  6. 6 Marian Quinn September 2, 2010 at 8:42 am

    I do not understand banking, but for some reason when thinking about the recent bailouts a discovery from another field comes to mind, viz. the remarkable ability of parasites to change the behaviour of infected hosts.

    Assuming that the bailout funds are to replenish loans already drawn down, it would be interesting to attempt a histogram showing where these monies currently reside: some perhaps under the mattresses of landowners, builders’ suppliers and blocklayers, but the vast bulk elsewhere? I don’t know.

  7. 7 John O'Farrell September 22, 2010 at 10:37 pm

    The best description of what a billion actually looks like which I have read is in John Lanchester’s ‘IOU’, also known as ‘Whoops’, and published earler this year.
    Think of it in seconds. It takes about 12 days for 1 million seconds to pass.
    1 billion seconds takes about 23 years.

    Most of Lanchester’s essays are on the LRB website, and make wonderfully clear reading, for example:
    and its follow up:
    which contains the following splendid rant:
    “Having fully indulged their greed on the way up, and created the risks, the bankers are now fully indulging their fear on the way down, and allowing the system to seize up. But it wasn’t just the banks. One thing which has been lacking in public discourse about the crisis is someone to point out that we did this to ourselves, because we allowed our governments to do it, and because we were greedy and stupid. It’s not just bankers who have been indulging in greed, short-termism and fantasy economics. In addition to our stretched mortgage borrowing, Britain has half of the total European credit-card debt. That is a horrible fact, and although it’s nice to reserve the blame for banks who made lending too easy, the great British public is just as much to blame. We grew obsessed with the price of our houses, felt richer than we should, borrowed money we didn’t have, spent it on tat, and now that the downturn has happened – as it was bound to do – we want someone else to blame. Well boo fucking hoo. Bankers are to blame, but we’re to blame too. That’s just as well, because we’re the ones who are going to have to pay.”

  8. 8 Hugh Green September 23, 2010 at 6:29 am

    Thanks to all for the comments and sorry for the delay in responding.

    DD, yeah, no idea what makes up that ‘other’. It seems to be a catch all for some sort of discretionary spending. 2008 it was 534 million, 2007 it was 306 million.

    Irish Debate – there is no question that the administration of the fallout from the housing bubble is a meal ticket for some, like Dukes.

    Michael – right, it’s hard enough to retain some sense of what the numbers mean relative to other things, but it’s only when it comes to gauging what the consequences are of this that the full horror comes into view.

    Marcus Aurelius – thanks for that.

    John McD – The worst thing is that there will be an actual increase in suicides on account of this.

    Marian – this may be of interest:

    Debt default ‘unthinkable’ – Lenihan – The Irish Times – Wed, Sep 22, 2010

    Under later questioning from Ms Burton about the apparent ease with which developers and bankers who borrowed money from Anglo and Irish Nationwide were able to base themselves abroad, Mr Lenihan said that the country does not have exit controls.

    Ms Burton said her constituents wanted to know where all the borrowed money has gone and whether the developers were taking money abroad. She said they had moved to the UK, the United States and to Switerland

    John O’F – thanks for that. I picked up a copy of Lanchester’s Whoops! a few months back, and then loaned it to my sister before turning the first page. If she’s reading this, I hope she’s finished it.

  9. 9 New York furniture restoration June 19, 2011 at 11:33 am

    Good blog! I really love how it is simple on my eyes and the data are well written. I am wondering how I could be notified whenever a new post has been made. I have subscribed to your RSS feed which must do the trick! Have a great day!

  1. 1 Irish Left Review · Hugh Green | Anglo Grinder Trackback on September 1, 2010 at 1:32 pm

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