** ibis posted above

cookiemonster wrote:

You're such a hippy, Audi!

I don't know if I'm a hippy - I listen to Joni and have slept on beaches for days

Another example of command might be the slots which Aer Lingus somehow has - those fuckers command them giving them an unfair advantage and perhaps they should be commanded back off them?

What about Eircom? I'm half of the mind that that thing should be nationalised (commanding is nationalising is SF policy) and commanded but I'm not sure as it has a similar pattern but is very different technology to road or rail because of the alternatives of wireless and mobile. However, fibre is surely always going to be central to comms ... ?

I'd command the total fuck out of the water system by charging rates over a certain human quota.

ibis wrote:

Auditor #9 wrote:

**ibis posted above

I don't know if I like that idea cookie. How much of the flexibility of the free market is gone? I'd imagine some parts of the economy should be commanded - commanding Eirgrid might be an example and constructing it so that it's open to connection from a million private wind turbines or two private nuclear stations, whichever the market and people decide. That also assumes that the likes of carbon ceilings are universally accepted too in that example.

Lots of infrastructure might work that way in my mind, feel free to knock it into oblivion though.

No, you're largely on the money in respect of electricity. Not everything works well as a 'free market'.

Now your talking, Ibis

ibis wrote:

Am I alone in finding this kind of pronouncement slightly overblown?

Indymedia wrote:

Remember the 3rd of September. That is the day the economic conservative consensus died, when all the certainties propagated by our one-party state were shredded. Fiona Fail has panicked in the face of rapid economic deterioration, brought forward the budget by a few weeks, and in that simple, technical act has unintentionally composed a dirge. No one day heralds the end of something as complex and layered as an economic cycle. But they can serve up symbols. September 3rd is such a symbol – of a coffin, and the Ministers polishing it.

Did we never have downturns before?

No you're not, it's from Indymedia which immediately invalidates the force of the argument and its suffused with an excess of alarmist drivel and ridiculous metaphors. The Minister for Finance brings the budget forward six weeks. Big deal. It shows that the government is responsive to the evolving situation in the economy and wants to provide confidence and stability necessary for a speedy recovery. I would imagine that had Brian Lenihan stuck with the traditional December date then Indymedia would be crying blue murder over the inaction of Government to address the downturn at hand.

Indymedia is a shrill, lunatic banshee firmly exiled to the furthest bounds of any journalistic sense of logic and proportion.

ibis wrote:

cactus flower wrote:

ibis wrote:

cactus flower wrote:

ibis wrote:

Auditor #9 wrote:

**ibis posted above me

cactus flower wrote:

Ibis - price isn't an individual matter, it is set across the whole market which finds its averages and levels.

What I am saying is that profit is based on the surplus value added by labour - not "labour costs". In fact, the profit is the difference between the labour costs (and other costs) and what we charge for the item - but profit could not be accrued if value was not added through labour.

Are you saying that labour per se has or should have a value or price? Should that price be fixed to something (the calorie standard ??) or itself subject to the market? It's subject to the market now ...

Doesn't it make sense that what ibis says - that price is dependent on those things he mentions and on what someone is willing to pay for the product? I think ibis came close to mentioning that the producer themselves should be subject to a wage for their time and labour where he mentions the producer subsidising their lifestyle and golf habits etc. I don't think he said it explicitly. Are you saying that there should be a universal wage based on something and reflecting labour?

I think CF is arguing the traditional Marxist labour theory of value, whereas I am championing the marginal utility theory of value.

Utilitarian theory derived from Bentham and John Stuart Mill?

Adam Smith also put forward a labour theory of value. Perhaps Ard-Taoiseach or Cookiemonster would like to chip in here as they are big admirers.

That would be interesting. Mind you, I'm an admirer of Darwin, but appreciate that his theory of evolution is no longer current as such.

I'd be interested to hear you views, on the Darwin thread, of which aspects of Darwin's theory of evolution are in your view defunct.

Not so much his ideas being defunct, as only forming a core to neo-Darwinist theory.

cactus flower wrote:

Ibis said:

Quote :

Marginal utility theory is the one currently in use.

By everyone ?

That would be highly improbable - suspicious even! However, it is the standard view. Speaking as someone who has priced work, both as an individual and in setting product prices for a company, I can safely say the usual rule is to charge what the customer will pay - and in an open, free, market, what they will pay is what they consider it to be worth to them.

I price work as well. I base the fee on the cost of doing the work (including a portion of ongoing tendering costs) plus a reasonable profit margin. If the client is not able or prepared to pay that fee then we would not, and could not, do the work. There is a small amount of elasticity in that some clients are perceived as "good payers", but if I tried charging silly money just because I think the client could afford it we would not last long - someone else would undercut us. What the client will pay is determined overall by the "going rate".

cactus flower wrote:

ibis wrote:

That would be highly improbable - suspicious even! However, it is the standard view. Speaking as someone who has priced work, both as an individual and in setting product prices for a company, I can safely say the usual rule is to charge what the customer will pay - and in an open, free, market, what they will pay is what they consider it to be worth to them.

I price work as well. I base the fee on the cost of doing the work (including a portion of ongoing tendering costs) plus a reasonable profit margin. If the client is not able or prepared to pay that fee then we would not, and could not, do the work. There is a small amount of elasticity in that some clients are perceived as "good payers", but if I tried charging silly money just because I think the client could afford it we would not last long - someone else would undercut us. What the client will pay is determined overall by the "going rate".

I'm not sure why you assume I meant "gouge the customer for everything we can take" when I said "charge what the customer will pay", particularly since I added that what the customer will pay is what they feel the work is worth to them.

While you have said, earlier, that the price is based on the value added by your labour, you've just quite innocently added "plus a reasonable profit margin". What constitutes a "reasonable profit margin" is what determines the price after the cost of inputs - and it's based on an estimation of what the work is worth to the client, and what they are likely to be willing to pay. Both of us, I suspect, keep that profit margin reasonable both because we feel it is morally right, and, perhaps more importantly, because we want the client to do business with us again.

Let me offer you a thought-experiment: assume you do a job that costs you €5000 in labour/parts/etc. Is the "reasonable profit margin" exactly the same for: (a) a regular client; (b) a small, struggling, business; (c) a very rich multinational, and; (d) the government?

Cactus Flower, I think you shoud leave Adam Smith aside for a while and have a look see at Greg Mankiw's Principles of Economics first. Despite Smith's solid and robust logical style a base understanding of economics in necessary to understand the books which were written as a guide for policy makers rather than lay people.

ibis wrote:

cactus flower wrote:

ibis wrote:

That would be highly improbable - suspicious even! However, it is the standard view. Speaking as someone who has priced work, both as an individual and in setting product prices for a company, I can safely say the usual rule is to charge what the customer will pay - and in an open, free, market, what they will pay is what they consider it to be worth to them.

I price work as well. I base the fee on the cost of doing the work (including a portion of ongoing tendering costs) plus a reasonable profit margin. If the client is not able or prepared to pay that fee then we would not, and could not, do the work. There is a small amount of elasticity in that some clients are perceived as "good payers", but if I tried charging silly money just because I think the client could afford it we would not last long - someone else would undercut us. What the client will pay is determined overall by the "going rate".

I'm not sure why you assume I meant "gouge the customer for everything we can take" when I said "charge what the customer will pay", particularly since I added that what the customer will pay is what they feel the work is worth to them.

While you have said, earlier, that the price is based on the value added by your labour, you've just quite innocently added "plus a reasonable profit margin". What constitutes a "reasonable profit margin" is what determines the price after the cost of inputs - and it's based on an estimation of what the work is worth to the client, and what they are likely to be willing to pay. Both of us, I suspect, keep that profit margin reasonable both because we feel it is morally right, and, perhaps more importantly, because we want the client to do business with us again.

Let me offer you a thought-experiment: assume you do a job that costs you €5000 in labour/parts/etc. Is the "reasonable profit margin" exactly the same for: (a) a regular client; (b) a small, struggling, business; (c) a very rich multinational, and; (d) the government?

I neither said that nor assumed it Ibis. I find your style of discussion very odd.

I think you will find if you think about it that a) b) and c) cannot vary much, nor should they. There is only so much pro bono work that any firm can afford to do. Do you think government should pay more than the "going rate"?

**cactus wrote above

Quote :

Sure - that's the asset bubble hangover. Both for the people and the economy, that's why you don't do it - you regulate the heck out of it, unless you're looking for an easy ride through the next election. The funny thing is...

Over my dead body will I vote for those but the suckers who got shafted and whose shafting we all have to share will vote for the c*--- [goes off into a temper to kick the s* out of something more solid than the policies of ... ]

Back to the budget - your man Brian Lenihan got the nod on a couple of squillion from Brussels? Do a couple of state mercs need changing?

cactus flower wrote:

ibis wrote:

cactus flower wrote:

ibis wrote:

That would be highly improbable - suspicious even! However, it is the standard view. Speaking as someone who has priced work, both as an individual and in setting product prices for a company, I can safely say the usual rule is to charge what the customer will pay - and in an open, free, market, what they will pay is what they consider it to be worth to them.

I price work as well. I base the fee on the cost of doing the work (including a portion of ongoing tendering costs) plus a reasonable profit margin. If the client is not able or prepared to pay that fee then we would not, and could not, do the work. There is a small amount of elasticity in that some clients are perceived as "good payers", but if I tried charging silly money just because I think the client could afford it we would not last long - someone else would undercut us. What the client will pay is determined overall by the "going rate".

I'm not sure why you assume I meant "gouge the customer for everything we can take" when I said "charge what the customer will pay", particularly since I added that what the customer will pay is what they feel the work is worth to them.

While you have said, earlier, that the price is based on the value added by your labour, you've just quite innocently added "plus a reasonable profit margin". What constitutes a "reasonable profit margin" is what determines the price after the cost of inputs - and it's based on an estimation of what the work is worth to the client, and what they are likely to be willing to pay. Both of us, I suspect, keep that profit margin reasonable both because we feel it is morally right, and, perhaps more importantly, because we want the client to do business with us again.

Let me offer you a thought-experiment: assume you do a job that costs you €5000 in labour/parts/etc. Is the "reasonable profit margin" exactly the same for: (a) a regular client; (b) a small, struggling, business; (c) a very rich multinational, and; (d) the government?

I neither said that nor assumed it Ibis. I find your style of discussion very odd.

Oh - I beg your pardon in that case. I took "if I tried charging silly money just because I think the client could afford it" to imply that you had taken "the usual rule is to charge what the customer will pay" as meaning that. If I am wrong, as I could well be, it's probably that I am making an unnecessarily, er, combative inference.

cookiemonster wrote:

Cactus Flower, I think you shoud leave Adam Smith aside for a while and have a look see at Greg Mankiw's Principles of Economics first. Despite Smith's solid and robust logical style a base understanding of economics in necessary to understand the books which were written as a guide for policy makers rather than lay people.

Thanks very much cookiemonster, but I've already started, and would not really have time or interest to look at Greg M's book too.

ibis wrote:

cactus flower wrote:

ibis wrote:

cactus flower wrote:

ibis wrote:

That would be highly improbable - suspicious even! However, it is the standard view. Speaking as someone who has priced work, both as an individual and in setting product prices for a company, I can safely say the usual rule is to charge what the customer will pay - and in an open, free, market, what they will pay is what they consider it to be worth to them.

I price work as well. I base the fee on the cost of doing the work (including a portion of ongoing tendering costs) plus a reasonable profit margin. If the client is not able or prepared to pay that fee then we would not, and could not, do the work. There is a small amount of elasticity in that some clients are perceived as "good payers", but if I tried charging silly money just because I think the client could afford it we would not last long - someone else would undercut us. What the client will pay is determined overall by the "going rate".

I'm not sure why you assume I meant "gouge the customer for everything we can take" when I said "charge what the customer will pay", particularly since I added that what the customer will pay is what they feel the work is worth to them.

While you have said, earlier, that the price is based on the value added by your labour, you've just quite innocently added "plus a reasonable profit margin". What constitutes a "reasonable profit margin" is what determines the price after the cost of inputs - and it's based on an estimation of what the work is worth to the client, and what they are likely to be willing to pay. Both of us, I suspect, keep that profit margin reasonable both because we feel it is morally right, and, perhaps more importantly, because we want the client to do business with us again.

Let me offer you a thought-experiment: assume you do a job that costs you €5000 in labour/parts/etc. Is the "reasonable profit margin" exactly the same for: (a) a regular client; (b) a small, struggling, business; (c) a very rich multinational, and; (d) the government?

I neither said that nor assumed it Ibis. I find your style of discussion very odd.

Oh - I beg your pardon in that case. I took "if I tried charging silly money just because I think the client could afford it" to imply that you had taken "the usual rule is to charge what the customer will pay" as meaning that. If I am wrong, as I could well be, it's probably that I am making an unnecessarily, er, combative inference.

So how do you work out your fee when you tender Ibis ? I assure you that any normal advice textbook on business practice would say the same as I have - it is costs (of which labour is normally the largest item) plus profit. There is a variation between what one client and another might pay, but that is not predictable in advance and is the least significant aspect. Tenders are usually competitive, so we have to price as keenly as we can whilst still remaining profitable. Even if it is not a competitive tender, the generally acceptable rate will be influenced by the rate paid for other comparable jobs that are competitive.

cactus flower wrote:

ibis wrote:

Oh - I beg your pardon in that case. I took "if I tried charging silly money just because I think the client could afford it" to imply that you had taken "the usual rule is to charge what the customer will pay" as meaning that. If I am wrong, as I could well be, it's probably that I am making an unnecessarily, er, combative inference.

So how do you work out your fee when you tender Ibis ?

The same way you do, by the sounds of it. I'm not sure exactly what we're discussing any more...

cactus flower wrote:

I assure you that any normal advice textbook on business practice would say the same as I have - it is costs (of which labour is normally the largest item) plus profit. There is a variation between what one client and another might pay, but that is not predictable in advance and is the least significant aspect. Tenders are usually competitive, so we have to price as keenly as we can whilst still remaining profitable. Even if it is not a competitive tender, the generally acceptable rate will be influenced by the rate paid for other comparable jobs that are competitive.

This still sounds like you think I'm suggesting ripping people off.

ibis wrote:

cactus flower wrote:

ibis wrote:

Oh - I beg your pardon in that case. I took "if I tried charging silly money just because I think the client could afford it" to imply that you had taken "the usual rule is to charge what the customer will pay" as meaning that. If I am wrong, as I could well be, it's probably that I am making an unnecessarily, er, combative inference.

So how do you work out your fee when you tender Ibis ?

The same way you do, by the sounds of it. I'm not sure exactly what we're discussing any more...

cactus flower wrote:

I assure you that any normal advice textbook on business practice would say the same as I have - it is costs (of which labour is normally the largest item) plus profit. There is a variation between what one client and another might pay, but that is not predictable in advance and is the least significant aspect. Tenders are usually competitive, so we have to price as keenly as we can whilst still remaining profitable. Even if it is not a competitive tender, the generally acceptable rate will be influenced by the rate paid for other comparable jobs that are competitive.

This still sounds like you think I'm suggesting ripping people off.

Jaysus Ibis - were you not suggesting that you charge people as much as you think they will pay? If that is not what you are saying, what are you saying? I'm just trying to understand your point.

cactus flower wrote:

ibis wrote:

cactus flower wrote:

ibis wrote:

Oh - I beg your pardon in that case. I took "if I tried charging silly money just because I think the client could afford it" to imply that you had taken "the usual rule is to charge what the customer will pay" as meaning that. If I am wrong, as I could well be, it's probably that I am making an unnecessarily, er, combative inference.

So how do you work out your fee when you tender Ibis ?

The same way you do, by the sounds of it. I'm not sure exactly what we're discussing any more...

cactus flower wrote:

I assure you that any normal advice textbook on business practice would say the same as I have - it is costs (of which labour is normally the largest item) plus profit. There is a variation between what one client and another might pay, but that is not predictable in advance and is the least significant aspect. Tenders are usually competitive, so we have to price as keenly as we can whilst still remaining profitable. Even if it is not a competitive tender, the generally acceptable rate will be influenced by the rate paid for other comparable jobs that are competitive.

This still sounds like you think I'm suggesting ripping people off.

Jaysus Ibis - were you not suggesting that you charge people as much as you think they will pay? If that is not what you are saying, what are you saying? I'm just trying to understand your point.

OK - let's rewind. What I said was, "we charge what the client will pay". You have taken that to mean "rip them off" or "charge whatever we can get away with".

However, what reconciles the two points is the things you added, and which I agreed with. We charge what the client will willingly pay, which will not be undercut by our competitors, which will leave the client happy to do business with us, and which we personally feel comfortable with.

Within those provisos, we charge what we can. You, me, and everyone who does pricing.

True, and what we have now arrived at is a description of how the amount we can charge is determined.

cactus flower wrote:

True, and what we have now arrived at is a description of how the amount we can charge is determined.

Which is, I think, what we were originally discussing. The profit we charge on top of the value of labour/inputs is not determined by the value of labour, but by what the customer is willing to pay - within the provisos we've stated - and that, in turn, is determined by what the work is worth to the customer.

Is the "value of labour" not related to "what the work is worth to the customer"?

cactus flower wrote:

Is the "value of labour" not related to "what the work is worth to the customer"?

Not even a bit. If a customer wants me to write a piece of software - something that really only has labour as an input - the amount of labour I put in is of no interest to him in determining what it is worth to him. Indeed, many interesting projects simply don't happen because the customer is willing to pay X, and I know that X will not pay me for the minimum possible amount of labour involved. I would therefore turn the project down, because the customer is telling me that the project is more valuable to me than to him (costs me more than it pays him).

Another customer might offer me 2X to write exactly the same software, because that's how much it's worth to him - and under those circumstances I go ahead, because the project is worth more to him than to me.

I appreciate that bespoke software is something of a strange market, because you don't really know in advance how much work will be involved - you may hit a problem that doubles the time involved, so there's always a risk premium in the pricing. It's not a case, therefore, of totting up labour costs plus input costs plus share of general overhead and adding 4% for a profit margin - it's a case of finding out how much the customer is happy to pay, and trying to estimate whether you can get the job done within that budget.

What I'm describing, of course, is an inefficient market - inefficient because of the lack of information, and the hugely variable quality of software. The situation you're describing is that of an efficient market, where competition means that whatever the customer may value your product at, he/she can shop around for a lower price for an essentially identical product. In a perfect market, competition reduces prices to the point where only the most efficient producer can really make a profit, and the amount of profit is the difference between his cost price and the cost price of his second cheapest competitor.

I never priced software but I was always aware of customer issues where the customer might want something extra during the course of the software development and that would need to be re-priced ...

Getting as many requirements at the beginning was the trick perhaps. There's also a nasty little element of blame, fault and responsibility in that stuff that you need to be able to deal with. You need to be a lot more than just a techie.

We'll get onto what value is another day.

youngdan wrote:

Currency speculation is a different game indeed. But the fact is Soros made a billion and the people lost billions. Soros and most other speculators were betting on one side. The British Treasury was betting on the other side

How exactly will the 300 billion get into ATM machines. If that was done then that bank would be 300 billion richer. You have a mental block that is preventing you from admitting to yourself that the 300 billion goes to someone. Instead you say that a little bit will go to covering your credit card bill. Unfortunately there is no reality at all in that. I pointed out to you that when the bonds double in value the happy owners double their money but this simple fact is not sinking in.

Youngdan, a question for you. What Irish bank(s) would you avoid at the moment?
I went into a few banks the other day and asked them hypothetically
what would happen if they were to go to the wall. It appears that they
are all insured by the one company who is only prepared to guarantee
the first €20,000 of savings. They were all very cocky about how strong
they were.
I went into the credit union to see if it was the same story there and
ended up having a very interesting conversation with the person in
charge of investing the shares. According to her, the credit union was
advised by the financial regulator not to invest in Anglo-Irish as they
were too high-risk. They have invested 60% of the credit union shares
in banks. I questioned the logic of this, given the current climate but
she seemed super-confident.
What do you think? I got a strong feeling that there was a sense of
denial among the staff about the direction the banks are taking.

floatingingalway wrote:

youngdan wrote:

Currency speculation is a different game indeed. But the fact is Soros made a billion and the people lost billions. Soros and most other speculators were betting on one side. The British Treasury was betting on the other side

How exactly will the 300 billion get into ATM machines. If that was done then that bank would be 300 billion richer. You have a mental block that is preventing you from admitting to yourself that the 300 billion goes to someone. Instead you say that a little bit will go to covering your credit card bill. Unfortunately there is no reality at all in that. I pointed out to you that when the bonds double in value the happy owners double their money but this simple fact is not sinking in.

Youngdan, a question for you. What Irish bank(s) would you avoid at the moment?

Anglo.

Quote :

According to her, the credit union was
advised by the financial regulator not to invest in Anglo-Irish as they
were too high-risk.

See.

floatingingalway wrote:

youngdan wrote:

Currency speculation is a different game indeed. But the fact is Soros made a billion and the people lost billions. Soros and most other speculators were betting on one side. The British Treasury was betting on the other side

How exactly will the 300 billion get into ATM machines. If that was done then that bank would be 300 billion richer. You have a mental block that is preventing you from admitting to yourself that the 300 billion goes to someone. Instead you say that a little bit will go to covering your credit card bill. Unfortunately there is no reality at all in that. I pointed out to you that when the bonds double in value the happy owners double their money but this simple fact is not sinking in.

Youngdan, a question for you. What Irish bank(s) would you avoid at the moment?
I went into a few banks the other day and asked them hypothetically
what would happen if they were to go to the wall. It appears that they
are all insured by the one company who is only prepared to guarantee
the first €20,000 of savings. They were all very cocky about how strong
they were.
I went into the credit union to see if it was the same story there and
ended up having a very interesting conversation with the person in
charge of investing the shares. According to her, the credit union was
advised by the financial regulator not to invest in Anglo-Irish as they
were too high-risk. They have invested 60% of the credit union shares
in banks. I questioned the logic of this, given the current climate but
she seemed super-confident.
What do you think? I got a strong feeling that there was a sense of
denial among the staff about the direction the banks are taking.

I would worry about the credit unions on one level - they just settled with a stock broking firm who had sold them bonds that essentially seemed to have no specific date at which they could be redeemed. On the other hand, they have a lot of savers.

I would not want Machine Nation to start a run on the banks, so I suppose the safest thing to say would be to spread your money around, keep some cash and put some in the old kruger rand.

I am not the person to ask about specific Irish Banks as I am in Massachusetts. I am also far more pessimistic than anyone else on P.ie. The ISEQ thread back there was some very good posters but Rockyracoon left and is over here now. It is still a standout thread though and has a lot of people who read it and may not post for fear of showing a lack of knowledge. Some of the other threads are riddled with lads calling for regulation etc and saying free market capitalism has failed. The problem is we do not have free markets.

The problem facing all banks is the same. It is called The Credit Crunch but this is a better name for the result of what has happened. It is really a reality crunch. It began when assets held by banks were revealed to have a much lower value than they had believed. The mortages turned out to have a rising rate of default than anticipated so the bundles into which they were packaged began to lose value. This forced the banks to writedown the value,. To keep within reserve requirements mandated by law they were forced to sell assets to raise cash and to cut back on the new lending. This in turn made getting mortages harder for potential home buyers and this added to pressure on home prices. A viciouse circle began to form which was very deflationary. The injections of credit by the Central Banks was an attempt to prop up the asset values and prevent a deflationary spiral.

With fractional reserve banking the mechanism that is so pleasant on the way up is devastating on the way down. When 100 dollars is deposited a bank is able to lend(credit) a borrower 900. When 100 is withdrawn or defaulted on then either a 100 bucks 0f assets are sold or 900 of loans are called in so that the ratio of cash on hand and outstanding loans is not allowed to fall below a certain level. The banking system we have at the moment can not withstand deflation and that is the reason great efforts are being made to prevent it. These actions are not without cost and that is why Paulson did not bail out Lehman. He is worried about a run on the dollar. This would have included a selloff in the bondmarket which would send interest rates much higher.

What has happened this far is that banks l ike Northern Rock and Countrywide financial here quickly ran into trouble directly due to bad real estate loans on their books and they failed. About 3 months later companies like Ambac and MBIA who were in the business of insuring mortages droppedabout 90%. All this losses of wealth fed into the deflationary cycle. The ability of banks to lend money continued to weaken.

All these companies like Lehman and Aig have gigantic sums of money borrowed by selling bonds. The name of the game is rollover. As bonds come due new bonds are sold to pay off the old ones. But now there were no buyers(lenders) and it was crunch time. The fancy way of reporting this is that "The ability to raise funds in the open market was curtailed" If they missed an old bond payment they were in default

When nobody will lend to them they turn to the government to lend. Lehman was told no but GM and Ford are about to be told yes. Nobody in their right minds would lend to either of them.

The Irish banks have a big problem. The entity they must approach for a loan is the ECB. In the old days it would be The Central Bank of Ireland and of course the reception of their business friends would be friendly. Now the political decision will be to stick it to the Irish people over Lisbon. A big bank will be sacrificed. A lot of Irish people will be hurt badly.

Cowen is aware of this and if it happens that pain is applied for political reasons then he should be brought up on treason charges. He is a sell out.

I have said before that I think Ireland is well caught in a deflationary spiral and the only weapon to fight it has been given away.

I have gotten off the train before it wrecks. It may be too late but my advice a year ago was good. I urged people to buy silver coins and gold coins and hide them. The price on the market is down now but there are no silver coins for sale in the stores here at any price. I don't have a bank account even.

I believe the whole system is going down

ibis is making sense in my mind when he says that the liquidity injection is used to keep the bank running from day to day and ward off panic rushes, that bugbear of fractional reserve banking. This is one form of liquidity injection though and I think it happened in the case of Northern Rock - the debts were honourable just they ran into that ceiling which underwrites the fractional reserve system. This isn't so abnormal at all once those debts are honourable and there are deposits in the bank.

Youngdan is talking about a different situation - correct me please if I'm wrong in all this. Fanny and Fred hold mortgages now that are 1:80 leveraged I believe - Bear Stearns was 1:33 so the chances are that a lot of that debt could have been a really bad gamble. We have the image of a bank and pawn shop and now a betting shop. I think what youngdan is talking about is that there is nothing behind some of these loans the way there is something behind your deposit in a pawn shop; instead, the goon next door in the betting shop (bond holder) put a lot of money on an outsider but it looked like a good bet because it was property but that bet went rotten on him yet the Fed is going to give him most of his money anyway. I say most because the Fed is not propping up all banks in this situation.

I believe the mortgage packages that caused all this shite are called "collateralised debt obligations" and "structured investment vehicles" - high interest loans given to people who don't pay their bills but if they happen to do so then there is a high return. The mortgage is part of a package and is bet on on the stockmarket. How it got this way is really the question but it is obviously a radical departure from traditional banking.

There's a very good chance a lot of European banks are infected too.