Authors@Google: David McWilliams


Uploaded by AtGoogleTalks on 24.11.2009

Transcript:
>> [rhythmic percussion]
>> Okay, guys. Just a few housekeeping things first.
It's going to run for about an hour. David will speak for 40 minutes, and then,
you've got 20 minutes to ask him a few questions. If you have got questions, you can use the
podium mics at the sides of the auditorium. Okay?
So, here he is, David McWilliams at Google.
>> [Clapping]
David McWilliams: It's really nice to be here. And I'd say, 'a wee bit intimidating' actually,
to be here too, as well -- on the basis that, you know, this company has done so much in
the last couple of years, which has kind of changed most of our lives.
I certainly couldn't write books without Google, so thank you very much -- and all your search
engines. That's always very good to just 'cut and paste'
and download. [laughter] It's like, "I swear I came up with that idea;
it was all me own." right? So thank you all -- in advance -- for the
royalties that come. No, but. And also, this book that I do talk about,
but I'm going to talk about other things as well.
This book, "Follow the Money," has come in for a lot of strange attention over the last
couple of weeks, which was kind of unintended. But that's sometimes, I suppose, something
that you just have to deal with, in the course of doing things in Ireland.
I'm going to talk mainly about Ireland, but I'm going to broaden it out obviously, because
the audience is much more international than the audience -- for example, I spoke last
night in Limerick, and it was much more of a local event.
I do need to get out alive, but so, here I am -- it's grand. [laughter] No, I'm only
joking. But, just by way of -- I was just thinking,
kind of as a little bit of housekeeping -- just, please do make sure that your mobiles
are switched off. And the reason I say this is, about two months
ago, amazingly, one of the Irish banks let me in, which is kind of unusual -- I'm rather
their Enemy No. 1. And I was discussing at the board level what
I thought was going to happen. I had written that I thought the banks --
one of the big banks -- was going to be nationalized. And then, all the banks were, "Oh, no. It's
not going to be nationalized. That can't possibly happen, unless we use
up -- no money, and that's kind of what happens." And I was down one end of the board, right?
And there was the chief investment officer, right?
And all his cronies on the other end. And I was kind of a lone voice.
And I was giving the argument for nationalization, and they were giving very good arguments back.
And I was giving the argument, and they were giving the argument.
And then, soon you realize the argument's going away from you.
You're beginning to lose the argument, and you can feel yourself going into a hole.
And, just as he was about to give his killer point, the chief investment officer of one
of our biggest banks, his mobile phone rang. And the ringtone was, "Don't you want me,
baby?" by the Human League. [laughter] Result? I said, "Thank you very much. You'll
never work in this town again." So, what I'm saying is, sometimes some easy
download onto your phones -- that, in the privacy of your own car, might be a guilty
pleasure -- sound really naff when they go off in public.
So just to save you from potential embarrassment amongst your peers, please just hit the mobile
phones' mute. The other thing I'd like to talk about is,
you know, my own experience from working. What I want to talk about is, in Ireland
-- it might be a little bit strange in Google, but in Ireland -- we have a tradition here
that, when somebody or a company or an individual or a group of individuals arrives with a new
idea, those ideas go through three phases. The first phase is "open ridicule," okay?
Right? You are undermined, besmirched, laughed at,
and really held up to be a complete idiot. That's the first phase.
Then, the second phase in Ireland is, "violent opposition" to both you and the idea, okay?
And that can manifest into an amazing array of ways.
And as I've suffered from this over the years, I'm quite aware of it now.
And then, the third thing in Ireland is the "universal acceptance" phase, right?
Where the idea was ridiculed then. Then, it's violently opposed.
And then, it's the taxi drivers, "Oh, well. We all knew the property was going to fall."
[in a thick Irish accent] "Oh, Jesus. Absolutely. You know, you thought you were on your own,
man. But I knew it." Right? [laughter] And so did all the maids down on the Suvman
Inn, right? So that is what happens in Ireland with ideas,
right? But it doesn't happen in Google, because Google
is a big place, full of mad ideas and things like that.
But that's an important thing, because when you write books or when you stand up on television,
you make TV programs or whatever. You do it because you're involved in the idea,
right? And the idea is what drives you forward.
And it's the idea that actually changes the world.
And it's the idea that changes the country. So, this is why, you know, people like me
tend to get up and write these books every couple of years.
But I'm very -- I just want to also make one point about the -- that was the phase of ideas.
The other phase of ideas in Ireland, okay? Maybe all over the world, but particularly
here is, there is no alternative, okay? That's we are hearing at the moment in our
economy with respect to the banks, with respect to cutbacks, with respect to everything.
Anybody who articulates a counter-view, a counter-cyclical view, or a counter-thinking
view is -- there is no alternative. The mandarins are right, and ultimately, the
civil service is right. And to argue with the civil service means
you're being unpatriotic, which is another great Irish thing.
See what happened to poor Auntie Arian Ree. Forget all that, be nice to the bloody Frenchman
and all that sort of thing. You can't do that -- oh, with the left paw.
Anyway. So I just want to talk about these big ideas,
because I put it by way of a story, which -- many years ago -- and it's really, the
important thing is that, "The system can be wrong."
This is what I'm saying. And if the system is proved to be wrong, what
tends to happen is, the system attacks the person who says it is wrong.
Because they believe that, by admitting you're wrong, you undermine yourself.
Whereas I always believed, by admitting you're wrong and the mistakes, you actually learn
something. And our society is in this phase where the
battle for ideas is pivotal now for where this country goes for the next couple of years.
And I'll tell you, years ago, when I was about the age of most of the people here.
And I worked in the Central Bank of Ireland as an economist, in 1992.
And in 1992, this country was rather different from the country that many of you have come
to and, obviously, most of us have lived in. And in 1992, it was very interesting, because
you know that we now -- I presume at Google like, you know, it's all to be kind of cool
with the chief executive and kind of play softball with your manager and all that sort
of nonsense, you know? [laughter] Hang out with the troops, you know?
And the receptionist is the best thing since sliced bread, right?
You know, you just see that in corporate affairs, you know.
"If it wasn't for the people, the company would be nothing," right?
Which is true. But back in 1992, in Ireland, it was the opposite
case, right? We got unemployment was about 16 percent.
And the way to success wasn't to hang with the chief executives.
It was to avoid the chief executive like the plague, right?
To make sure that you never came into any contact with anybody in power, right?
This was the key thing, and you can just meander through the civil service.
My -- you know, I was an economist there, and I used to write articles about Europe
for the governor of the bank. And just think about it now.
It's quite different at Google. The governor of the Bank of Ireland -- or
Central Bank of Ireland -- was so remote from the poor lads who wrote his speeches, right?
-- that he had his own bleeding lift. So you can imagine, right? It's true. It's
true. You go down there and take it now.
There's a little small lift like that -- for one or two people -- and then, there's
a lift for all the sardines who work there, who actually write the policy.
So I was always intrigued by this sort of thing.
I never met him, and that was the whole point is, you'd write the speeches like this.
You'd write a speech like this, and it would go up like in a dorm waiter [oooh] up to his
floor. And you'd wait. And about two days later [oooh] right back
down to you again, with scribbles ________. Which is kind of difficult if you come from
Dunleary. But Dunleary Gaelta didn't actually get that
far, you know? So, you also might remember -- some of you
who might be old enough to remember. I don't think it's many in the room -- but
in 1992, we had a currency crisis in Ireland, right?
But, we had spent the whole of the 1980s and the early 90's pretending to the financial
markets that we weren't Irish -- we were actually German, right?
We tied to the Deutsche mark. And we said, "Don't worry, we're Germans,"
right? And we've saved as much as the Germans, and
we're as clever as them, and our exchange rate is right, okay?
And the rest of the world believed, for about three years, that we were Germans, right?
But then what happened is, Britain fell out of the exchange rate mechanism -- we always
blame the Brits, you know. That was a default position. [laughter] or
the French now; it's all good. [laughter] I like the idea, I was reading the paper.
You mentioned actually Sarkozy's picking up the phone.
And he's got the weight of the world and Charlotte on his shoulders.
And he's -- [laughter] All right, he didn't say that.
It's a nice image, though. Anyway, and Brian kind of reasons with him,
he says, "It's all about the football." I just find it amazing that we're going --
anyway, but the point is -- it's a funny Irish diplomacy.
Anyway. So the idea back then was, we'd said we were
Germans, but then of course, the financial markets didn't believe us, so they started
speculating against our currency, the 'punt'. And the official line in Ireland was -- the
official line from the top was, "No devaluation. Devaluation would be the worst thing we could
ever possibly do. And if we did that, we would be incredible.
And no money would ever come back. And the likes of Google -- which wasn't created.
Or the likes of, let's say, Microsoft, or whatever -- would never come into Ireland,
because we would not be a credible country. And we'd be really a bunch of paddies over
the mid-Atlantic, right?" The financial markets said, "We don't believe you."
So what happened was, we put our interest rates up.
Think about this. Our interest rates were up to 102 percent over night.
Just think about that, right? Our currency was falling like a stone. Our
reserves were falling like a stone. I was working in the bank at the time, and
I was trying to avoid the governor, clearly, to get on in my life.
And we were sitting there one Tuesday, and I was doing what was a very important job
in the Central Bank is to be the official photocopier of the Irish Times crossword,
right? Essential part of the morning, okay?
To get it tuned into the competition for the day.
And I was sitting there -- publisher across this -- and I got this sort of [thump, thump,
thump, thump] and I looked up, and there was the governor.
And I thought, "Oh, Jesus." And he said, "Mr. McWilliams, you'll be aware
we are having some problems with the currency." And I said, "No shit, Sherlock. Jesus Christ."
[laughter] He said, "I would like you to go to the Dorchester
Hotel in London to discuss economics with some people from Germany and Switzerland who
are portfolio managers. Do you know the Dorchester?" And I said, "Well,"
-- what he didn't know was that my second last job was one as a kitchen porter in the
Dorchester Hotel in London. So I'd never been through the front door,
but I've been through the back door a lot of times.
So, I says, "Yes, I do." And he said, "Would you go over there and
explain that we won't devalue?" And what has happened, at the time, is that
Ireland was sending out economists sooner to deal with portfolio managers to say, "This
is the policy." And I said, "Only at the Dorchester?" You
know, I kind of looked at him, and he said, "There will be no devaluation."
And I felt like saying, "Is that a _____?" It was like standing in front of the dougal,
I said, "Oh." [laughter] "All right, Ted. No devaluation."
So, [pause] And at the time, we didn't know how to think
about this now, for all you Googlites. At the time, somebody mentioned something
about Powerpoint. And I said, "What?" He said, "There's a thing
called 'Powerpoint'. I think you should present the case in Powerpoint."
And I looked at him, and I said, "Okay." [laughter] "What in Jesus' name is Powerpoint?"
So we went, and we did a course in Powerpoint on Wednesday in the morning.
We learned the speech. Anyway, got the whole speech ready.
And we did what all the economists do, right? If the economist doesn't understand what they're
doing, or is nervous, they'd revert to mathematics, okay?
Just know that, right? From your university things, right?
If they can't explain in simple terms what's going on, they've got all sorts of songs,
open the blackboard like this, right? Because that makes them look smart.
So, obviously, I put a lot of songs in the document.
And I couldn't trust the floppy disk, so I decided I'd print them all off, right?
All 20 speeches. So I print them all off [biig, biig, biig],
and I wrapped it all up in a brown, cardboard box, put it on the carousel, got onto Aer
Lingus in first class -- when Aer Lingus had a first class -- which was many years ago.
And it's obviously not going to be around here in a couple of years, so that's a shame,
but anyway, there you go. And got the box, went into the thing, and
there was a big room like this. And I arrived in -- and I swear, like I was
riding this _______, right? And a pair of rubber shoes, and looking at
the lots, and I said, "Hi, how is?" And they said, "Hi, fine."
And there were about 17 or 18 very senior people in the room.
And they kind of looked different to us at the time.
When we were poor, rich people smelled different to us.
Remember that? They did. It was like a different race, or something,
you know. [laughter] Like, we were really poor and skinny, and
they were all kind of full of pack air obanee and stuff like that, you know?
Kind of big heavy watches on them. Those big heavy watches have three little
watches on them, so you know. [laughter] I don't know, you can call in an airstrike
on them or something like that. Anyway. So, I went up and I said, "Hello, just got
a little speech." And I got up me box with all me speeches in
them. And I looked in the box, and I looked at them.
And then I looked into the box again, and I looked at them.
And I looked in the box, and they started looking in the box.
And in the box was not the speech, it was six dozen golf balls. [laughter]
So I said, "Hold it. Hold it." And you could just hear them saying, "Sell
that currency. Sell that country." Anyway, the long and short of it, we did make
the speech. And these things happened.
They all tripped out, except one guy at the very back.
And I felt I was going to become a kitchen porter again, actually, at heart.
That was it -- my career as an economist and mathematician is all gone.
And one guy sat in the back -- big, huge lad. Big, huge lad, huge big double breasted ______.
And he says to me -- not that he was actually going to cut me in two, or something.
And he said, "Very impressive." I said, "Oh Jesus, thank you very much, Squire."
He said, "Your ability to articulate economics is extraordinary."
I said, "Well, thank you, sir. Thank you very much."
He said, "You know, you have this ability to reduce technical ideas to something very
simple." I said, "Oh, that's lovely. You're great too.
You're fab, you know." "I like you already, you know? I take you
home." And he said, "You know, but your extraordinary
way with words and confidence," He said, "In fact, you know, what really intrigues
me is that, for somebody so young -- and with a smile on your face, looking almost angelic
-- your ability to lie for your country is phenomenal." [laughter]
All right. Rumbled, "Okay. Fair enough." I thought I was going off to the Old Bailey
at that stage. Then, he looked at me; he said, "Would you
like to lie for me?" [laughter] And I said, "[Rghh]" warming to the conversation,
I said, "Who are you?" Now, okay, at the time, UBS was the biggest
bank in Europe, and I had never heard of it, right?
I thought there was two banks in the world: Bank of Ireland and Allied Irish, right?
[laughter] Couldn't tell you, I didn't know where.
And he says to me -- as senior chaps in these sort of banks say -- he says, "I am from UBS."
Now, I thought the fucker said, "UPS," right? [laughter]
So I was imagining me self one of those brown uniforms, you know? [laughter]
Going around in a little van saying, "Sign here, please."
I thought it was a promotion, and anyway. In subsequent weeks, I did start working for
UBS, in London and then in Russia and all over the place.
But the point of the story is, what happened to Ireland?
We devalued about eight weeks later, right? Now, official Ireland said that, If we devalued,
number one, unemployment will rise, inflation will rise, interest rates will rise, the budget
deficit will go out of control, emigration will rise, and the country might as well saw
itself off the rest of Europe and float out into the Atlantic, Okie doke.
That was the official line. What actually happened? Unemployment fell
rapidly. A huge wall of money that was terrified about
Irish policy came flooding back into the country. Interest rates fell, almost by the minute.
The rate of inflation didn't rise; it fell, okay?
Unemployment fell. The economy boomed. So official policy was that, "If we devalue,
we will end up in a disaster situation." What actually happened is, we devalued and
the country boomed. So what this does -- says to you that ideas
and official positions can sometimes be wrong. And, if they are wrong, they are catastrophically
wrong. Catastrophically wrong.
And in our country, this has happened. But again, those who said that we should devalue
at the time were ridiculed. Then, they were violently opposed.
But ultimately, every single one of the people who opposed the devaluation in Ireland, included
_____, [in a heavy Irish accent] "Oh, sure. We all knew
if we devalued, it would be fine, right?" By the way, they've all been promoted.
Every single person who presided over the failed policy are now very, very senior positions
in the country, right? So, what I'm saying to you is, Always think,
when ideas are first mooted, they are opposed viciously.
Number one, because they threaten people. And the other side of the thing is that, If
a country decides to run up an intellectual cul-de-sac -- as we did in the 90's, and I
believe we are doing now again -- what happens is, we in Ireland can't admit that we're wrong,
because to admit we're wrong is a bigger failure in the eyes of those who are orchestrating
policy than actually doing the right thing. Now, I compare this to -- there's many Irish
people here. Does anybody remember their granny in the
country having a 'good room'? Right? My granny had a good room for so good that
I wasn't good enough to go into it, right? [laughter] The good room was just for the
foreigners, to explain. The good room was an Irish concept, right?
-- that grannies had. And I was always intrigued by the good room
when I was a kid, because I just wasn't good enough.
I mean, Ma wasn't good enough. I mean, Dad wasn't good enough, right? --
to go into the good room. And what happened is, my granny's house, the
good room was locked. She had the key.
But in the good room was kind of China that she'd got for a wedding present, right?
Wrapped it up in faded covers of the Irish Independence, right?
No Irish press in our bleeding house. Anyway. And there'd be delf and pictures of fictitious
ancestors, which we never had. They probably bought in the market in the
Croom to make us look posh, right? Okay? But I don't think any of our ancestors were
rich enough to get their photos taken in 1910. So, that was it, you know?
Like normally, if you go to German houses that have great -- sometimes French houses
-- ancestors, fellows with big mustaches and shit like that, right?
And we didn't have them. Or, if we did, they weren't in our house.
But anyway, the good room was a conceit. And the conceit of the good room was that,
if the local priest came -- or the local doctor or the local big farmer came -- you'd bring
him into the good room. And you'd pretend that you all lived in the
good room. [laughter] But everyone knew you didn't live in
the good room. So, it was a big pretense, right?
So you probably pretend that we are as good as you, so you come into the good room, right?
But the priest knew that we all lived out in the backyard, right?
On top of each other, right? With the animals and shit like that, right?
But the good room was all about a lack of self-esteem.
It's a serious point. I know made light, but it's a serious point.
A lack of self-esteem which percolated through the Irish psyche.
So we pretended we were posher than we were, and the posh people pretended to believe us,
okay? And, in so doing, the status quo of the good
room remained very much part of Irish life for many years. It's gone now, right?
But think about policy. Bad policy is the equivalent of the good room.
We have got a lack of self-esteem to say at the moment when our banks are bust, when our
economy is in terrible difficulty -- we haven't got the self-esteem to go to our European
partners and say, "We're in real trouble. And that trouble demands radical solutions."
Because we are in extraordinary times here in Ireland, but I actually believe we are
in extraordinary times all over the world. But here in Ireland, we're in extraordinary
times. And that demands extraordinary solutions.
But we sit in the good room, pretending that everything is all right.
And we're waiting for the calvary to come over the hill.
It's the, "Something might turn up in the next 20 minutes" approach to economics, right?
Something hasn't turned up for quite awhile. The calvary won't turn up.
Anybody who's traveled. You guys know you're in a competitive global
marketplace. You know what's going on in the rest of the
world. You know what other countries are doing.
You know such technological advances are going. So we are in the good room petrified.
And we have to analyze where we've got to in Ireland -- not only in Ireland, but in
Britain and America. And we are in -- to use the parlance of economics
-- a very classic "liquidity trap", right? We don't want to borrow, because of huge,
inherited debts that we took out in the last few years.
The banks don't want to lend, because we have now become a bigger risk.
And what the banks are doing is, they're taking their money from the European Central Bank.
It's very nice, at one percent. The Irish Government bond market is yielding
5.7 percent for 15-year money. So you say, "I get that for free. That's one
percent money from the Germans. Danke Schon, Zerdie." Okay?
And I can invest it at 5.7 percent, which is a 4.7 percent free carry, without even
opening the doors of the bank. So, why in Jesus' name, would I lend to anyone
-- including a restaurant or a bar or a car dealership or a small company?
-- because it makes no sense. If I was the corporate treasurer for big banks,
I wouldn't lend either. Because I would rebuild our balance sheet
internally based on a little bit of obvious financial play.
But what happens is, then the money that we are getting from Europe gets stuck in the
banking system. We don't want to borrow as much as we did,
because we've got to pay back things. I think there's a moment in Ireland we have
to admit one thing, which is unfortunate. [whispering] We don't have money.
We don't have the money to pay back the 132,000 Euros that we owe per household in this country.
Okay? We just don't have it.
And then again, you've got to think of what we spend the money on.
This is the unfortunate thing. When you're on tele, you have a very, very
unusual relationship with taxi drivers. Okay? I'll just tell you this, so everyone who chooses
the career I've chosen -- so you go to Dublin airport, you know, you come back from London.
And, about two years ago, this happened to me.
I'd made a program about how the economy was going to really, really -- the property market
was going to crash, banks were going to crash, and it was back to the ridicule idea.
You were ridiculed at the time. I got into the taxi, and there's a dog there.
And he's a huge big _______ and the Dublin jersey, you know?
Kind of a man who thinks that blue bubble wrap is a good look, you know?
[laughter] and he stretch down over him like that.
He's kind of kissing the castles, you know? Up in the hill.
And I get in and say, "Hi. Hi, how are you?" And he goes, "Oh, it's only yourself." [laughter]
"That's me. Thank you very much." He says, "I seen you on the tele the other
night, talking through your bleeding hole." [laughter] "Okay."
"You haven't a Jesus clue what you're talking about, man.
Well, I don't mind, for a man has to earn their cross, but you haven't a bleeding clue."
I said, "Can I please?" [laughter] Then he says, "Where are you at?"
And then, we kind of warm into the conversation. Usual thing. Break the ice.
And he said, "Where are you coming from?" I said, "London."
And he was talking about them, he said, "I'm after just coming back me self from Culsedussy."
I said, "Really? Culsedussy." He says, "Yeah."
And he put his log up to the mirror -- as Dublin taxi drivers do when they want to indicate
numerals, okay? And he said, "I'm after buying five guffs
just now off plants in the beautiful development in Culsedussy.
The golf course is coming in 2029. [laughter] And a very nice man from AIB is
after the finest, and the whole thing based on my house in the _____."
[laughter] I thought, "Okay." "Lovely people, them Greeks." [laughter]
Say nothing. Balkan wars and all that stuff, right?
Now, we have to pay for all that stuff now, right?
We have to pay for all that stuff. I mean, it wasn't just this month.
It was a frenzy. And other stuff we got to pay for in Ireland,
right? And this is before we get on to how Google
is going to save us -- so don't worry. There's an evangelical chief executive tone
to the _____. Anyway. I just sort of figure it out as I keep speaking.
[laughter] You know, like the other thing.
We spend on funny things in Ireland. Like, about eight months ago -- I have a friend
of mine, who was in college with me, and she's married to a mate of mine.
And she's very, very nice, but she's got one of those very high-pitched South Dublin voices.
[imitating chipmunk voice] Like talking to a ______, like a ventriloquist.
And I met her at Dan Ducky, and she was [imitating chipmunk voice] [laughter]
"Would you like to come up and see my island?" [laughter]
And I said, "Your what?" "My island." [laughter] There was I thinking -- Tuesday afternoon,
her fellow's away, you know? No, I wasn't. I wasn't. I wasn't.
But, it does cross your mind when you work for yourself. Anyway. [laughter]
So you go off to see 'the island', right? Now, when I was in school -- when I was a
kid -- like, in Ireland was like the Aran Islands or Lambay Islands or Dorkey Islands.
That's an island, right? So you go into this house, sort of typical
Dublin house -- they're all over the country. Not `just -- all over the country.
And you walk through the door, and it looks kind of normal.
But you're having kind of a Dr. Hood tireless moment, because you can sense something's
going on. And you walk in, and clearly, an architect
-- on far too much acid -- has got hold of the house, and pushed back walls and sliding
this and doors and rain forest, and all sorts of things.
And so, you're kind of shocked, but you're still waiting to see 'the island', okay?
And then, you walk into the kitchen. When did we decide that we have to have kitchens,
which you could land an entire platoon of American marines in -- in five Blackhawks
that don't touch each other? [imitating helicopter sounds] And the yummy
mummy is kind of rolling her blade around. [woo!] [woo!] [woo!] And you're kind of looking
at her. She's got one of those great -- you know,
those bicycle things. Those things -- those bike show.
"Let's go for a bicycle ride" -- but would stay in the same place -- sitting over there.
That's a great idea. There will be a view and the whole thing.
And the island is there, and has eight sinks, which is absolutely necessary, because we've
all become Orthodox Jewish people, right? And we don't like our meat in our milk.
You can understand in Israel if there's an explosion in islands, right?
There are religious reasons. But we have the island for vanity.
And then, of course, you look, and over in the corner -- muttering to himself in Sanskrit
-- is the 'genius' child. Does anybody of you that have children you'll
know that everyone else's child is a geeenius. [chipmunk voice] I don't know how it happened.
[regular voice] And the genius child is there with this fat -- called bloody 'Setanta',
or something. [laughter] Or, you know, 'Lir', or something, any name
that predates Jesus by 2,000 years in any culture. [laughter]
Like I heard me buddy black, Ezekiel. [laughter] "Ezekiel, come eat your dinner."
I believe you'll find it's in Leviticus -- anyway, so. Setanta's there, right?
The problem is, we have to pay for all this stuff now, right?
This is my point, right? In humor, there are some serious points.
We have to pay for all these things, right? Ezekiel and Setanta have to pay for all these
things, right? And we have this dilemma, because we can't
pay for them. And what has happened in Ireland is, we have
decided that the way we are going to deal with our past mistakes is to make more of
them, right? Which is not smart, okay?
We are now involved in an economic policy, which is based on grinding down wages and
grinding down employment and grinding down prices, to such an extent that we want to
regain the competitiveness that we lost, okay? Which makes sense -- you need to be more competitive.
But it makes no economic sense to pursue a policy of grinding down wages through deflation,
okay? Because what is happening in the country
-- has anybody here got young children? All right. I have them. It's okay, you know?
Right. But, you might have noticed an outbreak of
nits recently in schools, which didn't happen when I was a kid, right?
You sent your children in, and you scrubbed them with tea tree oil.
And then they go in, and they're smelling lovely, like the forest or something.
And then, they come back going like this, in their hands, right?
So the thing about nits is, if one kid gets nits in the school, the next kid gets nits,
and so on, okay? [Imitating dominoes falling] Now, think about the way the economy works.
If I decide that I'm not going to spend and I'm not confident, because I think prices
are falling, then you're not going to spend -- then you're not going to spend, then you're
not going to spend, then you're not going to spend.
And suddenly, the expectations that prices are going to be cheaper tomorrow -- called
'deflation' -- gets into the psyche. So everybody, rather than bringing forward
spending, retracts spending. And this becomes psychological.
And it's crucial to break that cycle, otherwise what happens in a country is that, ultimately,
you simply end up spending less and less and less.
And it means all the stabilizations of the government will fail.
That's the cycle we're in. We have six percent deflation.
It's worse than Europe, and it seems to be getting worse in Ireland, okay?
So think about what we're doing is, we're allowing unemployment to rise as the residual.
Now, unemployment has always been something that -- one of the reasons I probably went
into economics is because, years and years ago, my father lost his job, which was not
supposed to happen to families who are in Monkstown and Dunleary.
It didn't happen. And so much so that my dad -- and I remember
this as a ten-year-old -- used to put on his suit and his tie and his coat and pretend
to our neighbors that he was going to work. Every morning, got up past seven, he left
the house, pretending he was going to work because of the shame of unemployment.
And I remember as a young boy -- you know, ten years old -- cycling to school, and dad
would cycle behind me. And, when you're ten, you think this is fantastic,
because you've got your dad with you. But what made you feel delighted as a little
boy -- that he'd be there to play football with you in the afternoon -- was killing him,
right? So again, when I was a kid at ten -- one afternoon,
he said, "Listen, do you want to come with me? I have to go give a message to somebody."
And I said, "Fine." And he drove me to a place that I'd never
been before. And I've subsequently found out -- when I
went to Trinity and I used to walk around -- that it was a place called "Warburg Street".
Warburg Street is a big, social welfare office, right?
And it was about as far from our road in Monkstown, Dunleary as you could get.
And my dad was signing on there, because he was so ashamed of being unemployed in Dunleary
that he might meet somebody in the welfare office.
Now, that has affected me as an individual profoundly.
And maybe, you know, in school, I always preferred maybe English and history.
But I used to think, "How can this economics game exist?
How can good people be laid low by bad economics?" Because, it's always intrigued me.
Because if that was happening to my dad, it was happening to hundreds of thousands of
dads and hundreds and thousands of families. And my mother and my father tried to protect
-- as you do your children, you try to protect them.
Now, think about what's happening now in Ireland. We have seen our unemployment rate double.
That means all this strain and stress and emotional trauma, psychological trauma, as
well as financial distress. But forget the finance.
If you want to see the cost of this in our country, don't go and talk to economists,
talk to doctors. I have friends of mine who are doctors in
small towns and big towns around the country, and presenting to them every day are people
of our age -- younger -- who are beginning to give up hope.
And we in Ireland have to give everybody in this country a chance.
We have to have an economic policy that gives us a chance.
Because if we just decide that we're going to grind down wages and prices and let unemployment
rise, -- which is exactly what they're doing, right?
-- we will destroy the country. We will destroy families.
And we will have thousands and thousands of men, like my dad, living in shame.
And this we cannot afford. And this is what people like Roosevelt figured
out in America in the 30's. Roosevelt was advised to stay on the gold
standard by all his advisors, and he said, "No.
The currency can change." This is the key, right?
This is how we get back in. In Sweden and Finland, they have exactly the
same dilemma we had in the early 90's. What did they do?
Change their currency. They dropped their currency.
They changed it to make themselves more competitive. So, rather than go through the six years
-- or the four years -- of having a row with yourself and grinding down wages, you just
drop them overnight, like a company would -- you change your prices, right?
Think of it. Every single Asian tiger -- every single one in the 1990's when I was
working in investment banking, all -- same problem, banks went mad.
People bought property. Usual carry on. -- They all dropped their exchange rates.
They all changed fundamentally, because in a radical situation, you've got to do radical
things. And the interesting thing about Ireland is,
if anybody here -- and I'm sure a lot of you have studied economics, right?
Basic, orthodox economics tells you that, in a crisis of debt deflation, the way you
get out of it is, you change your currency. That's what the whole world -- what is Obama
doing? "Uh, Mr. President, we've just borrowed another
hundred billion, trillion, squillion from China."
We'll just keep borrowing, let the dollar drop, because it's they're full event, no
problem, okay? What is Britain doing? Britain is letting
its currency fall. And if there's anything more nonsensical about
Irish Euro policy, it's a place called Nuri. Nuri is 50-miles away from here, okay?
There was a program about the Berlin Wall the other night.
I think I saw George Lee, former colleague of mine, great guy, right?
And he's made this film -- this great image -- and I presume there's some Germans here
-- it was a great image of the last bit of the wall before, you know, it was put up.
And there's like two or three guards and fellows legging through the last bit of the wall,
right? Doctors and lawyers are getting out, right?
And you think now, "Oh, my God. That was so awful."
Have you ever been to the border of Northern Ireland?
Have you ever seen the queues of our travants, right?
Trying to get in to the North to shop? Because our currency is too bloody expensive.
It will be regarded in the future as the biggest economic nonsense that I have black and white
grainy photographs of us in our 4x4's, which you really need in Donnybrook, because the
mudslides are shocking. [laughter] Swear that whole bits of _____ just disappeared
into the gutter last night. Except for people with 4x4's. Anyway.
Going there, we are denuding our entire retail base -- for a currency, which we only trade
20 percent in. We only do 20 percent of our trade in the
Euro, right? So we have got this -- we're prostrate on
some ridiculous idea. And the reason is because -- I voted pro-European.
I always do in all elections, right? I believe that we should accelerate political
union in Europe, absolutely. And I believe Ireland should be part of that.
But I also understand what's happening in Europe, because what we have -- I worked as
a waiter in Boston, Massachusetts, many years ago.
And there was a thing called the, "Dukakis Boom."
When we were in college, we all went over there.
Pretended to be the antis and the yonkers. It was a fictitious ant in yonkers that we
all went to. And so, needless to say, we didn't go in legally.
I was actually the only white, English-speaking dishwasher, ever.
And I remember my Colombian associate, who was with me.
He looked like Van Duren, football player. Big, big, fro on the man.
And he just used to look at me and he was so intent, you could just see going through
his head, "You must be really ticked if you're in here with us and you're white and you speak
English." And he was probably right. Anyway.
But then, in Massachusetts, what happened was, the economy collapsed, right?
Same sort of carry on. Cycles, booms, busts. Well, once the economy collapsed in Massachusetts,
the rest of the United States paid for the unemployment benefit of Massachusetts, okay?
So what you get -- and the people in Massachusetts migrated to California, or to wherever it
was that was booming, and you got this kind of thing of 'automatic stabilizers' in economics,
right? So your budget deficit doesn't go out of control,
because the rest of the federal republic pays. So what America has is a military union with
a real political union, right? Proper, political, centralized government.
We, in Europe, have a monetary union, and we're pretending -- we're back in the good
room again -- we're pretending to have a government. So therefore what happens is, in the booms,
the booms are exacerbated, and in the busts, the busts are exacerbated.
Because, instead of the rest of Europe saying, "Okay, the paddies are in trouble.
Money should flow into Ireland," which is the objective.
It's where we're going maybe next generation. But at the moment, we're not there yet.
The European Union says, "Ireland is in trouble, but you cut your budget deficit."
But no economics says this. So, at a time when the country is contracting,
the official policy is to contract it even more, which makes no sense.
So this is where I believe the radical option -- the only option -- is for us to step out
of the good room, and analyze where we're at and what we can possibly do.
You take a country like Denmark. Denmark is in the European Union -- very,
very fully paid up member. It's not in the Euro. Sweden's not in the
Euro. Britain's not in the Euro. Czech Republic's
not in the Euro. Hungary's not in the Euro. All the Baltic
states are not in the Euro. Do I have to say anymore?
It's not an anti-European argument. It's actually pro, because what I believe
-- and I've written in the book. Obviously, a lot of this stuff is in the book.
But what I believe is that -- and it's 'NAMAting'. I call it in the book, "VietNAMA," right?
[laughter] That's why I'm not popular with the government.
Anyway, it's a small town as well, which is really a sharp thing.
That's the worst thing. You can say all this in America, nobody will
ever see you again. In Ireland, you bump into everyone.
But VietNAMA -- think about what happened in Vietnam.
The Americans threw everything they could at South Vietnam, because they were operating
in the Pentagon on an idea called the 'Domino Theory' -- you know, the idea that, "If Vietnam
goes, Indonesia might go, Malaysia might go, Thailand." -- blah, blah, blah, the big fear
of Communism -- "So we've got to stop Communism wherever we find it with all our power, because
that's how we prevent the dominos falling." So eventually, what the Americans end up doing
is throwing all their hardware at South Vietnam, but not cognizant of the facts on the ground
-- not aware of what was actually going on in Vietnam.
Because the Pentagon's policy was a global view -- you know, rightly or wrongly. Okay?
We won't get into that argument. But rightly or wrongly.
The ECB has the same view with Ireland. They are throwing all this money at us through
NAMA, okay? Which is Frankenstein creature -- God knows
where he comes from -- okay? We can follow the dots in the ____.
Not because they're concerned about us, but because they're concerned about the Domino
Theory in the Euro. That, If a bank were to go bust in Ireland,
it would be an embarrassment in the financial markets.
They'd say, "That Euro is only a shoddy currency. It allows banks to go bust."
If a country goes bust, it's not because they're worried about us, but they're worried about
the Domino Theory. They're worried about how it'll play out in
Washington -- how it'll play out in Beijing, how it'll play out in London.
So, a bit like the Yanks. It wasn't out of love for the South Vietnamese
people that the Americans threw all their military hardware at Vietnam.
And equally, it's not out of the love of the Irish.
And what happened in Vietnam is, the Americans lost anyway.
And I believe that's what's going to happen here.
The banks will go bust anyway, and we'll be nationalized.
And we'll end up having fought this stupid war -- like we did in the devaluation --
because we couldn't accept that we might be wrong, and we couldn't accept that, by being
weak, you're strong. When you admit that you make mistakes, you
get stronger. All of us make mistakes every single day.
And there's a dreadful thing. You know you make a mistake at work?
It never happens here at Google, right? [laughter] And your first instinctive reaction, "Hide
the Jesus thing." Because, "Maybe they just won't see it," right?
And you're kind of looking suspiciously at your neighbor like this.
Remember _______ the copy books during your junior exams, right?
Swarthy fellows in class, "No, he can't see the answer."
But, when you admit your mistake, it's when actually all the pressure goes, and you feel
better about yourself. And somebody says, "Listen, actually it's
not a big deal. You are in trouble, so." And we in Ireland have to admit that, but
we're not -- we're pretending we're stronger than we are.
And by pretending we're stronger than we are, nobody believes us.
This is the crazy thing. Why are the financial markets fleeing from
Ireland, and charging us 5.7 percent for 15-year money, where they're charging Germany 3 percent
in the same currency? It's because the financial markets believe
that something is going to give here -- maybe this year, maybe next year.
But the risk in Ireland is so big, that they're not prepared to give us money at the same
rates -- as they should do -- in the Euro. So why do -- and I've got friends who work
in the financial markets in London -- you know, very wide boys.
"Auhh, can't believe it." He says, "You're fucking bankrupt, and you
guys are paying me every single piece of the bet all night."
The guys in London can't believe that we are paying them back, right?
And the reason is very simple, because business is business.
If you win some, you do well. I presume it happens in lots of Google initiatives.
You know, it's going great, and then it hits the buffers and you lose and you park that
idea and you go onto something else. And you have a contingency for, you know,
ideas that don't work, and you try to make sure that the ideas that work are substantially
more -- or at least more -- than the ideas that don't, and you move on.
That's the way the markets work. So, the financial markets have already made
provisions for their losses in the Irish banks. But we can't understand that.
Because we believe that, if we admit to the mistakes of the past, that we will be crippled.
But what happened in every country that has admitted their mistakes?
All the Asian tigers recovered straight away. Okay?
Korea, Indonesia, Thailand -- all banks failed; recovered straight away.
Financial markets are forward-looking, not backward-looking.
They want to see, "What's the next gig?" -- exactly like yourselves at work, you know?
You can't dwell on your mistakes; you learn from them, and you move on.
And the book argues strongly -- and that's, I suppose, why it's created a lot of -- maybe
also eating garlic with the final specials. But anyway.
_____ on prime time, which is very stupid. But I come back to the ideas, right?
Even that prime time thing. You know, in 2003, I went on prime time and
I said that the Irish economy was strong in certain areas -- like here, in this area
-- but it was weak in other areas. And the areas that are weak were going to
predominate, and they are going to be -- and I said that property markets wasn't a
sign of strength, but was a sign of weakness. And I said on TV that it was a scam -- perpetrated
by developers, bankers, and the government -- to extract money from the people, which
I believe it was. Back to the idea, "ridicule," and "violently
opposed," then "Actually, we all knew it was a bleeding scam." Right? Okay?
And this idea will be the same, because this idea is pure.
It's what economics tells you to do. I mean, we in Ireland have to realize that,
if we don't do something like this, we are going to find a generation -- your generation
-- will be hamstrung by the mistakes of a different generation.
And this country can actually do almost anything -- once we admit we're wrong and once we've
changed. You know, I believe that this country --
what happened has happened in Google here, in Ireland, and lots of other of our multinational
corporations could be multiplied ten-fold. Because the key to it is to have a country
that is a pleasant-enough place to live, that is open for business, it's open to foreign
talent, and that ultimately plugs itself into -- at a competitive price -- the world market.
This is the key, right? This is what we have to achieve and what we
should consistently be trying to achieve, because I think we can steal a march on many
of our competitors if we just get back to first principles.
Now, to do that, we have got to sort out some of the mess that we've made in an adult fashion.
And, at the moment, we're kind of being very adolescent.
It's like being told what your ma -- have you noticed that? Right?
The reaction is -- rather, when you're adult like, and you get caught doing something,
you fess up and you say, "Okay, let's deal with it."
But, when you're a child, you say "No, no. It wasn't me. No, no, no, no, no."
And we've decided that we're pretending our banks are fine.
And we're pretending that companies can expand. And we're pretending that we can have a strong
currency when we're weak, but we can't. And it reminds me -- the way Ireland should
do is -- Does anyone remember slow sets? Okay. Does anybody remember Wesley? [laughter]
This is very local knowledge. It will be passed on in the canteen of Google
for those -- see, I have red hair. So I have a pathological fear of the slow
set, right? Because red-haired boys didn't get lucky at
slow sets. We lived in fear of the lights coming on.
And she got, [high-pitched voice] "Oh, my God, he's got red hair!" right?
And they'd flee away as if you'd done something to them, right?
I still -- as a mature man with children in a happy marriage -- break out in a cold sweat
at the opening bars of Spandau Ballet's, "True". [laughter]
Because I go back to Wesley, and the big, red fro, sticking out, right?
But there were friends of mine -- good friends of mine -- who, there were three types of
-- two types of people and then us the Newtons, the redsers okay? at the disco, right?
There was the wallflowers, who -- when Spandau Ballet True came on -- all disappeared.
And then there were these people who changed. And they were quite normal before the slow
set, and then they turned into flirts. They just had to have, right?
Friends of mine like bloats just big thin, right?
Girlfriends of mine who are just batting, batty, batty, batty, right?
Okay? Just batty all over the place. So we -- because the redsers were removed,
brown's in good taste. Put at the back, there's ten major and a flag
there, sit out there for awhile. [laughter] Now, but just think what I'm trying to say.
Think about the world economy and a country like Ireland, right?
At the slow set, nobody really had a comparative advantage, right?
Because it was a bit dark and grubby and sweaty, okay?
So the flirts did amazingly well, right? I have a friend of mine -- who I'm glad to
say now is a little bit rotund and follicularly-challenged, okay?
-- but when he was sixteen, he was gorgeous. And on our intercircles, which is juniors
are two, our intercircle was something like, you got about six snogs.
A guy was halfway back to Dunleary on the eight boss of his stage, right?
He got snogs, he'd bring home to your ma, snogs you wouldn't go near the garden gate
with. You Protestant snogs, we counted for two.
[laughter] True or false? Oh! Okay, okay.
So what was he doing? He was flirting. He was making himself known on the marketplace
that was the slow set. But think about all our companies or us as
individuals, right? And then, there are companies, right?
We -- there's nothing really going on here that the competition won't try to steal.
There's nothing going on, let's say, in Ireland at Aer Lingus, that won't be copied by Ryanair,
or vice versa. There's nothing going at Bank of Ireland
-- well, there actually is nothing going on at Bank of Ireland, anyway [laughter] --
that won't be done at AIB. You think about it.
Like, all companies, you get this little comparative advantage for awhile, and then your competitor
notices you, and boom! -- you're gone, right? So it's like a big, slow set.
Nobody has a comparative advantage, except for the flirts.
So the key for all of us in the new marketplace -- you know, when Ireland recovers, and it
will -- whether it's a company or an individual -- How do you do things differently that
people want to pay you more than they pay the competition?
That's all it's about. Because when you come up with a good idea,
somebody else will come up with it. You have a good idea, somebody else does too.
It reminds me -- about four or five weeks ago, I met a very, very swanky friend of mine.
She's very sophisticated, and she is one of those people who knows the difference between
fennel and fenugreek -- which is obviously something you need to know in your early 40's,
because I'm like a girl talking about the offside rule when it comes to foods, right?
I'm a man who lives exclusively on hula hoops and Mars bars.
And any content of Nestle Garage is fine with me, right?
But my friends have got all sophisticated when they talk about 'food' now, right?
And this girl -- a few months ago I met her -- and she goes, "Hello, David, lovely to
see you." She says, "Where did you go on your holidays?"
And I said, "Oh, you know, we went to Spain and it was great. And the kids were fine.
And there was other couples like us..." And she was like recording.
I said, "Well, where did you go?" Which is what she wanted me -- she goes, "Well, I went
to Uzbekistan." "Uzbekistan. Jeez, that's very far away."
She's, "Well, that's the point." But she said, "And last night, just before
we came home -- myself and Jerry -- we're up on the top of the Atlas Mountains, under
the full moon, eating pine nuts with nomadic tribesmen."
So, what she was actually saying was, "You -- who go to Spain -- are a naka." [laughter]
Didn't say it, but this is what was in her head.
"I am a piny, nutty, nomadicky type of person," right? Okay?
Because "That's me, that's my tribe," okay? "And you are beneath contempt," okay?
Now, the point is, somebody has got into her head that if she's a nomadic tribesy, piny,
nutty type of person in that particular tribe, okay?
Somebody has convinced her that that will actually make her feel better about life,
okay? And has made her seven grand lighter as a
result, okay? Because you can't fly in a charter to Uzbekistan
-- which is the whole point, okay? Somebody's flirted with her head and gotten
right inside her head to change the way she perceives herself.
And that, ladies and gentlemen, is what we all have to do.
So irrespective of whether we in Ireland go through a grinding recession, or whether we
take the dramatic move that everybody else is taking by changing our currency, which
is dramatic. For all of us -- whether it's in Google or
individually -- to get on, we've got to go back to the slow set, put on Spandau Ballet's
"True", which is not a good tune, really, to be caught on your iPod, but anyway, put
it on. We've all got _____.
Thank you very much.
>> [Clapping]
>> Okay, guys. If anybody has any questions, the podiums are open.
David McWilliams: Go for it. Who has the first question on Spandau Ballet,
and important things like that?
Q Hi, David. How are you?
David McWilliams: Good.
Q What advice would you give for entrepreneurs in this deep and dark economic time?
David McWilliams: Well, I suppose in many ways, I'm kind of an entrepreneur myself.
Like, you work for yourself, and you create your own stuff, and you hope to sell it in
the marketplace. Just keep doing it, you know?
People asked me the other day -- I presented a panel, right?
The panel is a comedy show, I'm a straight man economist.
And they said, "Why are you presenting a panel?" And I says, "Because I do stuff."
And that's what I do in life. You get up and say, "What are we going to
do today? How are we going to -- how are we going to
earn our cross?" So I believe that it doesn't matter what's
happening up there. It really doesn't matter what's happening
in the banks, or whatever. That is a credit constraint, right? That's
all it is. But it's what's in here -- it's the power
of ideas -- that changes everything. And it's how you convince people and change
and cajole and taking risks. So, I think that, you know -- if you take
it from a macro-economic view, and costs are falling -- some people say it's a good thing.
But I don't think the environment for us has changed at all.
We just do stuff in different environments. So if like, for example, the way I look at
it is, people say, "Do the panel?" I say, "Yeah, do it." And enjoy it.
So I don't think -- I think what happens in Ireland is this extraordinary thing that
-- we have to fix the big things. But if we wait until we fix the big -- it's
like in Google. I mean, I presume you don't wait around for
direction from on high to do stuff. And this is what I think -- the sort of environment
that you've created here -- if we could replicate that outside.
You know, it is going to be difficult. Taxes are going to rise here, dramatically.
Ain't no doubt about it, okay? Social welfare is probably going to be cut.
You know, all these big, macro indicators. The education budget is going to be cut, you
know? I just do things.
Like, you know, the reason I try to put the farming thing together -- the diaspora thing
in farming -- was, it gets people back in and try and get ideas going.
So I would just say, it hasn't changed, really. It's all about up here.
And it's all about expressing ourselves. And yeah, it's a bit more difficult.
And I don't want to lay off people, so we're trying to do all sorts of jiggery-pokery to
make sure that we can keep people. And it's a small company I have, but I don't
see -- apart from the credit crunch -- I don't see any change at all in Ireland.
And I think we've all got to see that.
Q Thank you.
David McWilliams: By the way, my CD for a job in Google is just here.
You can take it, but. [laughter] I can do lots of shifts. [laughter]
Q Many people are very annoyed about the government's decision to nationalize _____ .
Many people really feel it should have been just allowed to collapse because of the corruption
that's going on. What do you say to that?
David McWilliams: Okay, you know. About 15 months ago -- 14 months ago -- I
had this unusual occurrence, which is in the book, which again, has detracted from the
book, because it's where the minister came to my house to chat about stuff.
And what had happened was, I had gone on a radio program with him.
And I said the banks were going to go bust in this country and that's our big problem.
And he said, "Oh, you can't talk like that. That's dangerous talk."
Now, I actually felt a lot of sympathy for him, because if he even talks to the vice
_____, he couldn't as a minister say that. But, you know, I was watching his body language
and the leader of the opposition, a finance spokesman, and they really believe the banks
were fine. So that was in the sixth of September, and
I kept writing that the banks would be in trouble -- not because I knew anything about
what was going on in the banks, but because I knew about economics and cycles and what
happens, right? And I'd seen it -- I'd seen it in Argentina,
I'd seen it in Serbia, I'd seen in Israel -- all these places.
I worked in Russia -- same carry on, right? And then the other day, I went on prime time,
and again, the same thing. Government spokespeople coming out -- central
bankers saying, "The banks are fine." And I was like, "The dogs in the street know
they're bust." We're going to lose all our deposits, because
these guys have been so cavalier with their own finance, that they won't give a damn if
they drag all the deposits with them on a run on the bank.
That's I suppose my -- when the minister arrived in my house, we were discussing this.
And I thought -- not just me, but some other people.
Not lots of other people -- thought that a full guarantee, which is what the Swedes had
done in '92, might work. And the argument was, "Well, what about Anglo?"
Even back then, if you guarantee Anglo, are you not guaranteeing something that you can't
unravel? And my argument was at the time -- and it's
still in the book, and it's still what I make was, the guarantee prevented a run on our
banks. And it was incredibly successful as a policy.
It now runs out on the first of October of next year, 28th of September of next year.
So what we should be doing now, with the likes of Anglo, okay? is saying to the creditors
of Anglo, "Those of you lucky enough to have very short-term paper with Anglo covered by
the guarantee, we'll pay you." But that's a fraction of the total Anglo liability
with creditors. "The rest of you, we can give you a hundred
percent today" -- or we're not going to give you that, because you know that the markets
are liquid -- "But if you wait, at this time next year, you'll get zero, because the banks
are closing." Now what do you want to do? You should start negotiating with the creditors
under the terms of the guarantee. Because they are stuck.
And I come back to the guys in London who can't believe that we, as a nation, are going
to spend 28 billion of NAMA money on Anglo, which is a basket case.
So we've got to go back first, use the guarantee, so that my mother and your deposits don't
fly out, so you don't have a run on the bank. Then negotiate with the creditors.
And what you should do with something like Anglo is, go to someone like AIB and say,
"Do you want the deposit book of Anglo?" because there is a deposit book there.
Sell that a little bit off, and then do what you do when the Swede shop went bust.
You know, you deal with everyone. Creditors take ten cents on the dollar, and
you start again. What you could then do, I think, with AIB
which I think will also be in dire situation is, go to, let's say, a bank -- I used to
work for P & B Parry Bob -- and I'm just using this as an example, right?
All the French banks substantially well-managed during the boom.
You have no problems. And basically say, "Do you want AIB for free?
We give it to you. We'll give you the branch network.
We'll give you the deposit base. What you do is, you give the old creditors
BNP paper at a heavy discount, and we -- as the Irish state -- will act as a broker
in the deal. Not a principal, as a broker, to bring the
buyer and the seller together. That's what you would do in a normal company.
But what has happened is, I think, that the lads are in power -- and they're protecting
themselves. Because it makes no sense at all.
People are right to be angry, because you can wind down Anglo creatively with modest
cost to the taxpayer and maximum payment, extraction, to creditors.
I can't see why. But they're all mixed, and there is a haul
over feeling in Ireland at the very top. It's a very small bunch of individuals.
And if it happened in Serbia, you'd be shot. But this is Ireland, and it's happened --
and it's happening.
Q Hi, David. In the early 90's, when the savings and loans banks in U.S. went bust, the federal
government set up a company called the Realty Trust Corporation to deal with it -- similar
to NAMA. And so, in the last year, when we've been
discussing NAMA, I've heard nothing about similar structures anywhere.
So I'm wondering is, we have _______ McCarthy in here and I just see a big disconnect of
expertise and then people like Culla McCarthy coming out with reports, other experts from
different countries who have been through these experiences before.
And it seems that nobody's learning from mistakes and expertise in other places, and I'm just
wondering why that is, and why can't we?
David McWilliams: I think you're on to the crux of the issue, right?
What I would like -- if in Google. I'll answer the reach in a second, but more
in general like, let's say for example, in Google -- there's never a problem, but tell
me -- let's say there's a problem in the company and you need a solution, how do you arrive
at the solution? Because what I'm saying is, in Ireland in
the civil service, if we're faced with problem they retract the advice base, right?
So instead of having the self-confidence to -- you know, like open source -- to say,
"We need to get all the brains involved, and we need to do it in two weeks, because we
don't have time. But in that two weeks, we're going to talk
to everybody, we're going to take advice, we're going to look at other countries."
That's what I presume adult people do, right? -- when you're faced with a dilemma.
In our country, the civil service -- and I've noticed it, you know, they've done a lot of
-- they've said a lot of quite nasty things about me, but that's neither here nor there,
but it's indicative of the mentality that is -- instead of throwing and opening the
problem, they contract. And therefore, I think, get the wrong answer.
And then, once they contract, it's very difficult to go back on this.
And this has to do with the psychology, to do with the illusion of power, right?
That the illusion of power is that, by being powerful -- by having the badge that says,
"I am the minister for finance." That you will undermine the mystique of that
power by ventilating your problems. I believe that the way successful companies
and individuals work is the opposite. That we have a problem, let's see what the
best practice -- what's best practice -- what happened?
So something like Greeks. The other problem is -- think about it.
What we need in the Department of Finance is a trader with a mentality of a trader,
okay? What we have are lawyers, civil service and
academic economists. What's putting the three of them together?
They have never taken one risk in their lives. So they don't understand risk.
And we're dealing in risk. So I think it would be much better to get
traders to say, "Okay. Well, you know, the way the market works is,
like you take the way those savings and loans -- the bundles of loans drop in price to
maybe ten cents in the dollar, okay? And then they begin to trade and work their
way out. It's taken off the balance sheet and you start
again. That's simple stuff, but it seems to be far
too difficult to do. So I think to do with the inability to see
the world in an 'open source' way.
Q If that's it, thank you very much.
David McWilliams: The book is fantastic by the way.
It's called "Follow the Money."
>> [Clapping]
David McWilliams: Thank you very much.