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Week 45 - Trichet letter set to yield a guilty pleasure


Former president of the European Central Bank Jean-Claude Trichet

Former president of the European Central Bank Jean-Claude Trichet

Shanghai Bund Garden Bridge

Shanghai Bund Garden Bridge

Patrick Honohan

Patrick Honohan


Former president of the European Central Bank Jean-Claude Trichet

The opening week of any month is always fascinating for those trying to take the economic temperature and this week is no exception.

Here is Ireland, we have manufacturing and services PMIs along with the Exchequer figures and the latest live register data. In Brussels we have two days of meetings by European finance ministers while the European Central Bank meets in Frankfurt to discuss how to breathe life into the Eurozone and whether to release that letter from Jean Claude Trichet.

In short, there will be many clues on the condition of the Eurozone economy but I have to confess to a foolish interest in something which has some historic interest but little relevance to business life; Trichet's letter.

Many commentators (who have not read the letter) claim it will reveal that the late Brian Lenihan was forced into a bailout but I expect publication will kill off his canard for good. At least for those who read it dispassionately.

On Saturday, one well-placed reporter alleged the "tone" of the letter was surprisingly harsh without giving any examples.

His report may yet prove correct but I suspect that Official Ireland has been spinning this story for years to distract voters from the truth which is much more prosaic; the same incompetence and unwillingness to speak directly triggered the crash and stopped Ireland from obtaining better bailout terms. Anybody who is surprised that Jean Claude Trichet played tough with Brian Lenihan does not understand politics. As Lenihan's own party told the Greens before the coalition which brought Lenihan's party to power; politics at this level is senior hurling "And you're playing with fellas who have All-Ireland medals."

Fianna Fail has always been good at bullying but, like most bullies, they cave in when challenged. Trichet played a hard game in the days before the bailout was an insolvent and delusional country in the days before the bailout. Don't forget Dermot Ahern, the closest thing we have to an interior minister, was repeatedly telling anybody who would listen that a bailout was not on the cards. No wonder poor Patrick Honohan felt obliged to talk some sense on Morning Ireland while Trichet felt the need to use a few harsh words to ensure the safety of the billions of euro that the ECB had pumped into the economy. Anything less would have been a dereliction of duty.

If Trichet was angry and warned that the entire European banking system could fail, he was only doing his job and honouring his oath of office. The question is, why was Lenihan not angry as well? Why did Lenihan not call the ECB's bluff and remind Frankfurt that he too took an oath to uphold Ireland's national interests and place those interests above all else?

Unfortunately, the idea that the bailout was some sort of ECB trick rather than a necessity triggered by our own stupidly has been allowed to gain legs over the past four years. The reality is that the letter will not be read by most people if, or when, it is published so the myth will probably to allowed to continue unchecked.

We saw much the same thing with the (disproved) myth that German banks owned most of the bonds repaid by the Irish taxpayer.

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It may seem that none of this matters but it does.

The stab-in-the-back explanation for national defeat has a long and dishonourable history.

All over Europe, from Athens to Helsinki, strange nationalist parties are thriving because voters fear the effects of globalisation and blame foreigners for their ills just like we do here.

The latest 'Sunday Independent' polls suggests Sinn Fein is the most popular party in the State for the first time in almost a century. National myths allow us to ignore the truth. All the Government's spinning feeds Sinn Fein's success.

7 Days


Manufacturing PMIs for Ireland and most of the world. PMIs from China, published yesterday, were worse than expected.


Exchequer returns for October.


Unemployment figures along with services PMIs and CSO data on manufacturing.


Kerry Group releases interim results.

European Central Bank and Bank of England both meet to discuss interest rates and economies. No action expected but ECB may decide to release famous letter from Jean Claude Trichet to the late Brian Lenihan.


European finance ministers continue two days of deliberations in Brussels.

US to publish employment figures in what is perhaps the most closely watched piece of economic data in the world.


Governor Patrick Honohan addresses MABS conference in Portlaoise.

New watchdog to replace two quangos

The Government will today give details of the long-awaited Competition and Consumer Protection Commission headed by Isolde Goggin.

The agency will merge will the National Consumer Agency and the Competition Authority to create a watchdog that will regulate some practices in the grocery sector as well as serious competition offences such as cartels and price-fixing.

China slowdown speeds up as exports wane

China's manufacturing slowed further in October, as a property slump and slowdown in investment growth put the world's second-largest economy on course for the slowest full-year growth since 1990.

The Government's Purchasing Managers' Index was at 50.8 in October, trailing the 51.2 median estimate. Readings above 50 indicate expansion.

A pullback in manufacturing will test the government's determination to avoid printing money. The economy expanded 7.3pc in the third quarter from a year earlier, the weakest pace in five years. Growth slowed as new orders and exports began to dry up.

Irish CEOs eye Central Europe for expansion

Nearly a third of chief executives leading Irish technology companies plan to target Central and Eastern Europe, according to a survey by PriceWaterhouseCoopers.

Just under a fifth were looking to Europe this time last year, PWC said.

"There is an untapped opportunity for Irish and Central European businesses to work more closely together," said PWC tax director John Murphy ahead of a conference in Dublin which begins today. "With many of the key US technology companies in Ireland, we have a unique opportunity to be a 'tech hub' for Central European companies looking to access the US market."






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