Irish Mortgage Brokers Blog

The aim of the new pensions framework is to deliver lasting security, equity, clarity and choice to the individual. To a degree we are taking on a system the Australians have used in which providing for your retirement is mandatory.

The aim is also to increase pension coverage, particularly among those who have traditionally had a lower level of uptake, as well as encouraging provision for retirement that is not reliant upon the state alone.

We took to the streets to talk to people about their thoughts and feelings on the Irish economy and the government. The opinions were varied and colourful, we hope you enjoy this vlog.

Joe Saluzzi of Themis Trading (I mistakenly read the link initially as ‘the mistrading’!) have recently published a paper which accuses traders of intentionally trading huge volumes where they buy and sell for the same price and in the process make a half a cent per share. The volume of trading is fictitious ‘high frequency traders’, what they do is buy and sell and collect liquidity rebates from the exchange (note: 50 milliseconds is a huge amount of time) in this game. Do it 8 billion times and it really starts to add up.

This is just depressing, actual investors don’t get to join in because the firms engaged in this are doing it within the actual exchanges using the fastest computer technology available. They also have an unfair advantage in how they trade because they use rules intended to match buyers and sellers to their advantage, they find hidden liquidity and in essence remove it from the market as profit.

The most powerful deterrent would be to make a rule whereby trades have to be in good standing for a full second, that’s right, 1 second would do away with almost all of this.

The clip below on Bloomberg is supplimentary to the 5 page report which is a fascinating insight into the inner workings of an exchange.

Now I understand why the likes of Goldman Sachs went after the person who stole their computer code with such vehemence, the issue with ‘algo’ trading is that the volume is not truly there, it is instead ‘presented’ as being there but not actually executing and the algorithm trader makes money on that basis.

The age of retirement is going to rise, within the next five years it has to. There are several reasons, the most immediate being that the state doesn’t have the money to fund retirement at present, other factors are that people are living longer and the combined increase in health care costs to the elderly with the weight of funding pensions means one or the other has to give in eventually.

In October of 2005 Seamus Brennan gave a talk at the Merrion Hotel on the subject of the ‘Issues facing an ageing population’. The statistics are particularly relevant as they have not changed much since then.

(Excerpt) ‘The facts speak for themselves, in 2002 almost half a million people were aged 65 or over. The latest population projections suggest this may increase to 1.1 million people aged 65 and over by 2036. Right now we have almost 5 people working for every pensioner, when the demographic challenges are at their height this will decline to two workers for every pensioner. This fact has implications for two major areas, pensions and long term care. Clearly, future workers face an increased cost to cater for our older population unless, that is, we put in place a system which is sustainable and affordable.’

‘Currently out of a workforce of about 2 million approximately 900,000 do not have a private or occupational pension’.

So there you have it, almost 45% of the people at that time had zero provision, and despite the states best efforts with ‘pensions week’ and the like the figures have probably not changed significantly. This means that more and more people will be coming to retirement with their full income expectation resting on the state.

This is a mistake for several reasons, firstly, if the state runs short of money pensions will become increasingly under pressure as voters grapple for money to be spent on schools or hospitals, they might become means tested across the board, relying on the state for anything other than collecting tax from you is (in my opinion anyway) an error of judgement, the person who best knows how to take care of you is the same person reading this article.

Pensions are largely unfunded, this means there is not a ’special reserve’ sitting around waiting to pay for it, instead governments generally rely on an expanding population and on people dying fast enough to make sure that the money is collected faster than it is paid out.

While Ireland does have the NPRF (national pension reserve fund) it is important to remember, it wasn’t set up with ’state pension’ beneficiaries in mind, rather it was there to fund an increased public sector pension responsibility that had/has gone beyond that of being possible to run unfunded. If there was ever anything left it was a bonus but the core reason it exists is not for regular state pensions.

When pensions were first introduced they were meant to be a ‘reward’ to those who were fortunate enough to live so long as to retire, they came about in the late 1800’s and were available for people over (for instance) age 70, when life expectancy was about 50. Prior to this working life had no formal stopping point outside of death. In the USA when Social Security was introduced, retirement was set at 65 when life expectancy was 62, the issue is that we all started to live longer individually and collectively but the age of retirement didn’t change with it.

Today in Ireland a male can expect to live to c. 76 and a female to about 81, that’s the ‘average’ life expectancy, which means that for all the people who die prior to 75 (which will encompass a figure captured by both men and women’s life expectancy) that many must be living well beyond that. With retirement coming at age 65 you can start to find that 20 years and more are being funded for those with good longevity.

It’s a balancing act, you need to balance the people who die young having paid taxes, with those who live to 90 and more who claim pensions for 25 years and more, the only way to change the direction of the coming pensions bubble is to move the goalposts toward something close to what they used to be, in other words, make pensions something that you need to live close to your absolute life expectancy to receive.

A 65 year old today is also in much better shape (in general) than one who turned 65 in the 1940’s and that needs to be reflected in our attitudes to workers and working life as well, I have often wondered if the ‘ageism’ campaign had an ulterior motive!

The age of retirement needs to increase in line with the changing world we live in, for a start the age of retirement should move to 70.

Retirement -at least that part funded by the state- should, like many things be progressive, if you retire older you should be able to claim a higher payment, this is a system that could make a difference because it would allow people to stay in the workforce (and many people are happy working, being put out of the workforce isn’t necessarily for everybody), and lower the cost of provision because invariably many people would not claim retirement for longer periods and they would also pass away leaving their entitlements untouched, this might sound callous, but it isn’t because this is precisely the way pensions work now, I’m just laying out the facts as they stand with some minor tweaking on elements of the existing system.

You could also encourage pension provision (reducing state funding because universal means testing will likely become a part of the system in the future) by allowing people who fund their own pension to retire from 60 - 65 onwards, this would give an incentive to people, ensure that they are saving for their retirement.

A better system would be that of changing our entire tax system, rather than having PRSI going into a pooled collection, the use of personal accounts would be better. What I mean is that every person would have their own Pension/Unemployment/Health account, and a fixed amount of your tax goes into it, divided accordingly across it and invested in different ways depending on the sector (ie: you couldn’t invest your health money in high risk stocks).

This account could be supplemented by additional contributions which would deservingly be given preferential tax treatment, but essentially it would belong to the person, the backup plan -if for instance you were out of work and used up the portion you had put aside for unemployment- would be a means tested state system. It would also be something that you can pass on to others, it makes sense that a person who saved, didn’t get sick, and cost the state very little would be able to bequeath their money to another (under standard CAT rules) when they die.

The issue is really that of statism, one in which we divest key personal responsibilities to that of a centra authority under the belief they can do a better job of taking care of the individual than the individual can themselves.

If, instead of PRSI we had a system that puts your tax money into an account you could manage yourself (to make a claim you’d still have to go through a process) in terms of investing in corporate grade bonds or deposit with some scope for higher risk on retirement provision, it would encourage active planning of the individuals future, it would eradicate the need for huge swathes of state lead substitution for this responsibility and free up resources in the existing mechanism to concentrate on helping those most in need, and the most vulnerable rather than wasting energy on those that don’t.

The name of this post ‘retire young! retire poor!’ is based on the belief that soon, anybody who retires young will increasingly be paid less or not at all because the age of retirement will change, that, matched with insufficient pension planning means we will face a pensions bubble eventually, we are not replicating fast enough to make the current system work by replacing old workers with new ones. Change is needed, it is just a question of what will change and when.

Did you ever wonder why some people seem to be doing better in the investment arena than you? Or why certain people seem to always lose or consistently win? The truth is that there are very few ’superstar’ fund managers, like in any industry there are those that are the best and they totally outshine the millions of others who do the same job but never to the same degree.

If we were to look at some of the factors that may have an effect on your investments you can quickly identify that there are those which you cannot control, and therefore can only hedge against, and those that are within your control for which you are responsible and must consider, these will now be considered:

1. Being too conservative: If you stayed only in the safest areas of the market you would actually lose money over time as the effect of inflation grinds down your investments. This would be because the deposit interest rates would likely not give positive returns when you factor in DIRT (Deposit Interest Retention Tax), opportunity cost, and inflation. The main factor though would be that your hard-earned savings don’t keep up with inflation.

2. Being too speculative/aggressive: If you take bets that are highly speculative you better be ready to accept the downside risk (that you’ll lose big!). The best investors over long periods have something in common, one of those things is that they don’t put their biggest investments into what may be considered risky assets. There are many fund managers and investors who shine for a year making massive gains but few of them hold the same position the following year and over the term of a decade the majority disappear off the map, and that is where the likes of Warren Buffet or George Soros make their mark. Taking big risks brings with it the danger that you might end up losing your shirt or blowing up your portfolio.

3. Trying to time the market: Morgan Stanley gave a ‘buy Europe’ call recently, they have had an incredible record in calling the right times to sell out of positions and buy in. They have full teams dedicated to this, and yet even they (who have the best record of timed calls in the market) get it wrong from time to time. Study after study has shown that no one can consistently time the market, you might get it right once or twice but nobody does it every time.

4. Having a bad adviser/money manager who does a bad job: Perhaps the worst type of monetary poison. A fund or money manager (and this can be your broker or local bank manager too!), especially one you are friendly with, can do untold damage to your wealth. I would say that there is no problem being on good terms with your adviser or investment adviser, but getting to close can be a problem. You need enough distance between you to remain objective and not be skewed by friendship. Hire and fire your investment adviser on the basis of performance.

5. How much you save: Saving, in the traditional sense is a vital element to any stream of income, you will always need a nest egg for the times that money may not be working in your favour, when it may be tied up in stocks that you are not willing to sell, or property (which is largely illiquid). If you have no savings and go through a period of reduced cash flow then you may find yourself liquidating investments at whatever price you are offered, we are seeing this in the current property market where investors are being forced to crystallise losses because they do not have the cash to support their investments. In leveraged finance this is always a risk, on stocks you get a margin call which will liquidate your shares if you don’t meet it, in property you get repossessed (but not on the value like a margin call, instead it is on the ability to meet ongoing payments).

6. How long your investments compound: Napoleon once said of compound interest “It is astonishing that this monster interest has not devoured the whole of humanity. It would have done so long ago, had not revolution and bankruptcy acted as counter poison.” If you look at the power of compounding for gain (it works against you in debt!) it is quite amazing.

Another interesting story is that of the inventor of the game Chess. The King of the land was so pleased that he offered him any prize, the inventor wisely asked for a grain of rice for the first square on the board, two on the second, four on the third, and to double the number of grains for each square remaining.

The king was no mathematician and agreed, he later found out that he owed more than that which existed and insisted that a condition was that the inventor count every grain if the deal was to proceed so that he could be sure he was not stealing from the king! The king might not have known maths but he would have made a good lawyer! Doubling every square would leave a grand total of 18 bazillion, (actually I don’t know the technical word but an 18 with 18 zero’s after it).

7. Your asset allocation: Diversification is key, if you buy into only one asset class then volatility in that asset can wipe you out, if you were 100% invested in property you would be facing hard losses, if you were 100% in the ISEQ you would be down over 75%, that is why it is vital to spread your holdings. Fixed income (corporate/municipal/state bonds etc.), deposits, shares, property, metals and non-correlated alternatives (coins/antiques/wine/art etc.). How you divide your portfolio makes a big difference in the long term.

8. Assets annual return/cash flow: Negative cash flow is the devil, I have said this for years, it is the reason that you need to ensure that a property purchase is at least cash neutral, often you won’t factor in opportunity cost but on borrowings the calculation is simple enough. I ask people all the time, what do you think of when you think of an ‘investment’? And often I’ll say, ‘is it something that should make you money?’ to which people universally answer ‘yes’. Apply this rule to what you hold, are properties cash positive? Are stocks paying dividends and if the answer is ‘no’ do you have strong reasons for holding them? One thing you must avoid is having ‘liabilities’ which are disguised as investments.

9. How much you pay in annual expenses: Are your management fees high? Management fees exist in property and in managed funds etc. If you are making money it doesn’t mean anything if your expenses always outweigh the incomes, then you are back to seeing your investment cross the Rubicon of wealth to join the liability army.

10. How much you pay in taxes: This probably screams out at you, but how many people actually do anything about their tax bill? Do you have an accountant? Do you have a pension? If you have answered ‘yes’ then you are paying too much tax, you are totally entitled to ‘avoid’ tax, and it is financially responsible, but to ‘evade’ is illegal. The simple truth is that the Government have given us plenty of perfectly legal ways to reduce our tax bills, but most of us choose not to actually act upon them.

Hopefully todays article will help you put some perspective on your investments and assets so that you can maximise your upside and minimise the downside, having said that, the market in 2008 has been the most unforgiving I have ever known, there are massive moves afoot, I do however, believe that this bear market will produce strong opportunities and it is for that reason that I would urge all readers and investors to keep a rational view and to use it to spot opportunity when and where it shows.

I have looked back at market crashes, the Dutch Tulip Bulb crash, the Railway crash in the USA, the Great Depression, the Oil Crisis in the 70’s, The 1987 Stock crash, the S&L crisis, the dotcom bust and our most recent and several things have become clear.

The ’solution’ is whatever was done at the time thus meaning we try to find the answers of tomorrow by looking back at what worked in the past and applying it to the new situation, it is one of the most basic human methods of learning. Children will get a burn from a fireplace once and it is then engraved in their minds that fires are hot and can burn you. Thus we see the same happening with monetary policy and with businesses.

The question though is this: What if what we did in the past was wrong? Does it make a solution that appeared to work relevant? If for instance I was the sole solution provider for the Great Depression and my answer was to wear only pink suits and laugh out loud in public (this example is intentionally ridiculous!), and at some stage the Depression ended then arguably I may have found ‘the cure’.

This might seem stupid but it is being done for the sake of example - the solutions we have seen in the past are not necessarily the answer for the dilemmas of today even if they appeared to work historically.

This is where we get into my personal area of concern regarding the bailout packages being offered by governments throughout the world (although mainly in the EU and the USA). Monetarist solutions might work, but they can equally drive high inflation which destroys savers and rewards borrowers, mass intervention might work but we underwrite the whole nation for the sake of banks that are willing to socialise losses when they were never willing to socialise profits.

What we are witnessing today is the end of a credit bubble, if you look past all of the justification for bailouts and ‘crisis solutions’ then perhaps we can see that the true ‘cure’ is to avoid bubble creation driven by low interest rates rather than to concentrate on finding medicine to treat symptoms created by them.

Which is why, when the dust settles and certain people will be deemed as having ’saved the day’ that in my lonely capitalist corner I will still have to say - it somehow worked, but that doesn’t mean it was the right solution, the one that would have served society best.

As we await what is being described as a ’savage’ budget, it is important to remember some of the ideas being thrown about may appeal prima facie. One disappointing suggestion I heard today was a call for tax bands of 50%
(this came from an economics professor too!). In this blog we have said for some time that there are only two solutions to the deficit, firstly taxes must go up, secondly we have to stop spending. However, there is a point at which higher taxation actually reduces the tax take (more on this later in the article)

One thing that we need, in light of what will likely be testing times is to consider the impact of tax changes and also the need for a simplified bankruptcy system. There are currently (so we hear) thousands of well to do ‘non-dom’s’ in the UK who are planning to leave because of changes to the tax system. Ireland is a small country relative to Europe, so what could we do in order to make our shores more attractive to the superclass who, despite all of the tax breaks, are still huge contributors?

We could consider changes that mean that income earned in other jurisdictions is not taxed for non-domiciled people living in Ireland, obviously rich people living here spend money and that brings in a significant amount of economic activity as they purchase goods and services within the country they inhabit, this would mean we get the benefit of their wealth (likely local investment in property etc. ensues) and even though the tax on their foreign earnings would not enter our tax system it is better than not having them here at all! Obviously there would have to be some condition that at least part of their income is derived here and taxed appropriately.

Has nobody ever noticed that ‘recessions’ don’t affect Switzerland, Monaco, Lichenstein and other havens in the same way that they get the rest of us? If we had a world class finance centre -and we do, its the IFSC- and world class education and finance professionals -this can be achieved- then there is nothing stopping Ireland from doing many of the jobs currently performed in the City. Currently we only get the scrappings of the table in the form of administrative operations.

Bankruptcy is another thing that needs to be reviewed, Ireland’s laws are harsh and borderline cruel, risk taking entrepreneurs represent the enterprise function in this country which is actually the largest employer. While being mindful of large multi-nationals the Government have failed time after time to seek out more positive conditions for enterprise, currently the incentives for business creation are insufficient, the problem is that we have a nation of gifted and skilled workers who could innovate into new markets if there was conditions which met two simple criteria. Firstly that starting a company doesn’t mean facing unrealistic financial hardship, and secondly that if the firm does go bankrupt that the process is simple (so they are not also burdened with massive legal bills) and fast (so they can recoup and try again).

Part of what makes Americans so competitive is their view of business failure, the expression ‘fail your way to success‘ originated there and often if you haven’t fallen at least once in the past you are considered ‘green’. Failure brings lessons, and those lessons create better business practice and efficiency - one of the reasons that capitalism must have failure embedded in its ethos as not being the ultimate evil, instead, meddling with failure such as governments are want to do so rapidly is the greater mischief.

Immigration should be reviewed (not in the budget but in general terms), because if you are a doctor from a non-EU country it is harder to get into this country and live than it is for a hardened criminal from Central Europe, something in this equation doesn’t make sense.

Taxation should also be carefully considered, I would urge readers to examine the Laffer Curve which is a theory well known but made popular by Arthur Laffer (economic adviser to Ronald Reagan). It shows that the overall tax take can actually decrease when taxes are raised beyond a certain point, taxation can reach a position where it becomes more viable to make every effort at avoidance and even evasion in certain circumstances. In fact, when understood and effectively used the Laffer Curve can cause unexected economic uplift.

Desperate times call for desperate measures, and there is nobody saying that responsible public spending is a bad thing, it is the irresponsible spending, or the prospects of such that concern the financial community the most, and at a time like this easy answers are not necessarily the wisest.

Today I will give you a tip about the single best way to reduce and avoid debt, it is perhaps the most effective method known to man. Here it is…

“Don’t borrow any more money”

Simple enough to almost make you feel conned I bet? The fact is that debt begets debt and if you enter into a lifelong debt cycle it is something that is virtually impossible to free yourself from. The very first step towards financial freedom and a life out of debt is to realise this fact and to come up with a solution.

Some people think that if they consolidate loans that they will then have more money, but what do most of them do with this ‘extra money’? Save it? Or do they then get more debt and the extra money thus goes into the debt vortex as well?

All good ideas have an exit plan [one of the very reasons Iraq was such a terrible idea to begin with], and you can make yours. To do this you have to decide how you will go about ridding yourself of debt, will you consolidate debts into your mortgage? Take an extra job? Sell up and move to a smaller house?

Thrift can carry you quite a way, we have covered many ideas in previous posts, but we failed (unfortunately) to put the fundamental point of personal finance in black and white. If you want to be richer in the future you have to have a way to fix your debt, a plan is where you start, if you don’t then you might make 20% gains every year but still be in the red.

Living on the money you have is not always easy, but it is the only way to eventually wake up one day and say ‘I don’t owe anybody anything’.

We have written in the past about tracker mortgages becoming an endangered species. It seems that now we are witnessing the demise of them, the interbank rates and the ECB have become so disparate to each other that one is no longer an accurate gauge of the other. What does that mean?

The ECB is the rate set by the European Central Bank, and it is the ‘base rate’ (currently 4.25%), but banks can’t generally borrow at that price and instead they buy on the ‘interbank‘ market, this is the largest market in the world in which over 1.9 Trillion is traded every single day! It is how banks access the ‘Euribor‘ market (European interbank offered rate). This is basically run as an auction and because liquidity is an issue we have seen the prices of the Euribor rise and rise, demand is outstripping supply.

Why is the Euribor rising? Simply put, fractional banking means that banks must have a constant inflow of money in order to stay in business, when money is scarce that gives it a higher value or a so called ‘scarcity value‘, anything scarce for which there is a demand will go up in price and that is the basis of what we have seen on the interbank market.

So how does this affect tracker mortgages? Tracker mortgages were marketed in the residential market as (almost exclusively) a loan that would ‘track’ the ECB by a fixed margin, this was as low as 0.45% above ECB with some banks, this mean that if the base rate was 4% your loans interest rate was 4.45%. A brilliant loan for Mr. Consumer and excellent value, and the banks were happy as well because they were able to provide these loans (albeit at low margins) and still find some profit from them.

Then along came the credit crunch, it started to show up in Euribor rates in July of 2007, and since then the old cosy relationship with the ECB is but a distant memory. The Euribor was typically ECB + 0.1 to 0.2%, since the credit crunch it is more like ECB + 1%. So do the maths, lending out at ECB + 0.45% and buying in your ongoing money supply at ECB + 1%. That instantly tells you that the bank is actually supporting lenders by 0.55% on these loans! And this is the case on many loans, on average trackers were sold out at ECB + 1% so although they might not all be making an instant loss on margin they are creating operational loss because banks can’t run their companies for nothing, although at least it’s not as bad as negative margin.

The Sunday Business Post (article by David Clerkin) wrote this week about the ‘End of the Tracker’ and quite rightly it was pointed out that lending at negative margins is a reality for many lenders. PTsb and IIB have stopped offering tracker mortgages altogether while Ulsterbank and First Active have instead used the blunt hammer of rate to control this, their margin is ECB + 2.25% (huge margins on those loans!). It is therefore fair comment to accept that new tracker borrowers with Ulsterbank and First Active are funding the losses being created by the past customers who are on negative margin loans, I guess even in finance the ’sins of the fathers will be visited upon thy sons’. Unfair? Perhaps, but this isn’t about morals, it’s about margins.

Rates in general now with most institutions are hovering around the 6% mark, this is a full 1.75% above the current ECB, and almost 0.8% above the Euribor, so the margin is actually above where it used to be in 2006 yet this is no solace as every lender is still carrying negative margin loans that likely take the goodness out of higher rates over all. In the Irish mortgage market c. 50-70% of home loans are on the variable rate, so the variable rate hikes must have produced a windfall of additional income for lenders as this is all generally happening on the older developed book, however, liquidity is still an issue and that is what drives the interbank prices, you need interbank money for new loans so while they are gaining ground on one hand they are losing it with another.

One thing nobody is looking at is how this all relates to securitized books, you see, when banks start to raise their margins the effect on borrowers is that they can get less, borrowers who get less have to pay less or not buy at all, this means that property prices have to fall to meet the amount they can/will spend, and this in turn means that the equity of properties in general is lower. What does this mean for a bank? Margin call is what it means, as the asset upon which the mortgage is secured reduces in value it means that the bank (back to that fractional reserve concept) must actually become more liquid in order to maintain the loan, when they securitized their debt (i.e. sold their book of mortgages) there are margin requirements the same as there is in a stock holders position when leveraged.

So are we seeing the end of the tracker? Perhaps the real question here is are we seeing the ‘end of the low margin tracker’ and on that point I think it is fair to say ‘yes, we are’.

Yesterday I made a fairly bold statement stating that I believed we are on the cusp of a recession. Today I am going to point out some of the things that may shape global policies beyond economy.

Simply put its Mother Nature, Naturomics, maybe somebody coined that phrase before me - who knows, what I’m trying to say though is that nature will increasingly have an impact on world economies. The weather systems and ecosystems of the world were in state of stasis for a long time and now we have disrupted the whole thing, derailed a system that worked prefectly well for millenia. The price?

(recent storms in california)

Well, take California (my original home state), during the autumn they had the worst fires on record in a long long time, was the sun particularly hot because we’ve melted away all the ozone? was there no rain because of global warming? were the winds that drove it somehow higher due to shifts in weather patterns being caused by humans? I’m no scientist, so I can only ponder. Then for the last two days California is hit by the worst storm it has seen in fifty years and four hundred thousand are left without power etc. So, maybe there is a market in disaster-recovery goods? Electricity generators, bilge pumps for flooding, interlocking sand bags? Who knows.

Indonesia has eruptions of mud caused by gas drillers, 10,000 families are displaced and scientists reckon the mud might continue for decades!

(picture of houses covered in mud in Indonesia)

My sister in Florida had to leave home six times in 2006 because of hurricanes, and then there was Katrina which really brought the whole operation to a halt and displaced millions.

So be it sun, snow, rain, wind, melting ice, or mud I think that the big ‘leftfield’ or ‘caught off guard’ factor for 2008 is something to do with natural disaster, say that the recession I spoke of (that we’ll realise we are in by the end of Q1ish) doesn’t actually come about but there is a massive earthquake in the USA or more floods in Europe, that can - if its big enough - shake world economies and I believe that any government that doesn’t have a contingency plan for the natural disasters that may befall their nation are living with their heads in the sand.

So try to reduce your carbon footprint, personally I cycle to and from work everyday, and becuase of that I use less petrol, I wear a jumper instead of putting on the heating for an extra hour (although if my wife is home she over-rules this decision most of the time) and we use our green bin and have a composter.

The move to make all lightbulbs into energy saving bulbs is a good one, 17% of world energy currently is used in making light (note to God: when you made ‘day’ was it with the people of the 21st century in mind?).

Katrina’s fall out costs everybody, even here in Ireland, and why? Because insurance companies have a ‘re-insurance’ firm normally, these companies provide insurance to the insurance companies and they are massive in terms of their scope and financial clout, they are also international so insurance companies here may have the same re-insurer as an insurance company in Louisianna, for that reason it costs us because when the re-insurers have to pay out they raise their rates and that happens worldwide, not just for the folks living in Louisianna.

Anyways, before I meander too far off the point this is my 2008 wildcard: mother nature, she doesn’t mess about so watch out world, the Fed and ECB can do what they want to try and save the economy but who tells mother nature what to do? We nailed the last person with that ability to a cross.