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Sean Quinn and Ireland’s Boom and Bust

January 7, 2012 by Leave a Comment

IN the green borderlands of County Fermanagh, there was nothing like the Mighty Quinn.

That is what they called Sean Quinn — canny conglomerateur to his friends, wily rogue to his enemies and, until recently, the richest man in Ireland.

Even now, with times so hard in this country, his up-by-the-bootstraps story is the stuff of legend, a Celtic fairy tale for strivers and climbers. This, after all, is the farmer’s son who became a quarry man and then, with gravel and grit and yes, a bit of old-fashioned greed, became a billionaire.

Until, that is, it all came crashing down.

Mr. Quinn, 65, contends he lost nearly everything when the bottom fell out of the Irish economy. His business empire, his concrete factories, his wind farms and hotels, the helicopter and the Falcon jet — all gone. Last November, after apparently gambling away his fortune on disastrous investments, he was declared bankrupt by a court in Belfast. During the proceedings, he said he was down to his last 11,000 euros, and an aging Mercedes and 166 acres of land.

That, anyway, is what Mr. Quinn says. Here in Dublin, at the financial institution formerly known as the Anglo Irish Bank, Mr. Quinn’s skeptical bankers say his assertions are, well, blarney. They suspect that he and his family still secretly control valuable assets as varied as a shopping tower in Ukraine and real estate in Hyderabad, India’s Silicon Valley.

And so the bankers have begun a global treasure hunt. Anglo Irish, which got into so much trouble that it had to be nationalized, says that the Quinns owe it more than 2.8 billion euros, and that it will fight to recover that money for Irish taxpayers.

It is yet another remarkable turn of events in the long, painful saga of the Irish economic collapse. In many ways, Mr. Quinn personified Ireland’s boom. Now, he has come to personify its bust. Banks like Anglo Irish lent lavishly to builders and investors like Mr. Quinn. But when the real estate market finally came unglued, the banks were left with more than 70 billion euros in loans that could not, or would not, be repaid.

The Irish government was forced to rescue the financial industry, and the whole debacle eventually led to a bailout by the European Union and the International Monetary Fund. Today, Ireland’s economy is still struggling. Unemployment is over 14 percent, and home prices are down 60 percent from their peak. Resentment lingers toward reckless lenders and borrowers.

One thing is sure: the Quinn story is full of surprises. Every effort to claim and manage the assets that he used as collateral for his loans from Anglo Irish has run into mysterious — and sometimes violent — difficulties. Last April, shortly after the bank tried to seize the Quinn Group, his holding company, an earthmover smashed through posts outside the company’s headquarters in Derrylin, Northern Ireland, where the Quinn family has kept a farm for five generations. A few months later, a firebomb destroyed a BMW that belonged to the new chief executive of the Quinn Group appointed by the bank. In December, a truck rammed through the company’s canteen.

No one knows who was behind most of the vandalism, and Mr. Quinn and his family have condemned the violence. In court filings, he said he passed his former headquarters nearly every day and still feels pangs of loss. “I no longer own or control the businesses which I have spent my life building up,” he said.

Such assurances aside, his former bankers suspect that Mr. Quinn has masterminded various maneuvers to hang on to at least part of his fortune. They say he has used offshore companies to thwart their efforts to gain control of his empire’s foreign holdings — a contention that the Quinns have denied.

“It is very much a three-dimensional chess game,” said Richard Woodhouse, a British accountant who is leading the quest by the Irish Bank Resolution Corporation, formerly Anglo Irish, to find and seize the Quinn Group’s international properties.

While Mr. Quinn is pleading poverty, his wife, Patricia, and his five adult children are battling the bank in court. They say they don’t owe the Irish Bank Resolution Corporation anything, since they didn’t know what they were doing when they signed the paperwork for Mr. Quinn’s loans.

Neither side agrees on much — not even who said what to whom. When his bankers told Mr. Quinn last April that they were seizing control of his conglomerate, Mr. Quinn said he would fight like a cornered rat, according to the bankers.

One of Mr. Quinn’s daughters, Aoife Quinn, remembers a more poetic declaration: “Put a dog into a corner, and it will come out barking.”

Mr. Quinn, who rarely grants interviews, declined to comment.

Article source: http://feeds.nytimes.com/click.phdo?i=b590e7e4049b57f71d4401f7e325b62d

Filed Under: Economy News Tagged With: , ,

Economix Blog: Bruce Bartlett: Should Democrats Play by Republican Rules?

September 6, 2011 by Leave a Comment

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul.

It’s the nature of complex phenomena to have multiple causes and origins. It’s simplistic to say that a war, revolution or economic collapse can be explained by a single factor. It’s the job of analysts to sift among potential sources, assign weights to particular ones and thus try to understand the nature of such phenomena.

Today’s Economist

Perspectives from expert contributors.

For momentous developments like the fall of Rome or the Industrial Revolution, the analysis may literally go on forever, with our understanding continually reshaped by subsequent history and perspective.

However, in real time, we don’t have the luxury of waiting until a consensus or even a dominant view has developed. In fact, we often don’t have time to do anything except rely on gut instincts derived from experience, theory, conjecture, ideology and a wide variety of other influences.

For those who lack the time, knowledge or education to think deeply about events as they happen, political parties and movements provide predigested ideas, perspectives and remedies.

Unfortunately, people are sometimes led astray by those they trust for insights, information and solutions to problems. This may result from corruption or mendacity, rigidity of thought, simple error or ignorance. And it’s human nature for people and organizations to be reluctant to acknowledge mistakes and to have an almost unlimited capacity to rationalize and force facts and theories to conform to their self-interest.

In the case of the Great Recession or mini-depression that we have been experiencing for almost four years, the best economists in the country are still divided on its cause and cure. It’s not an exaggeration to say that they are deeply polarized, with virtually no overlap among the competing camps in terms of analysis or remedies.

At the risk of oversimplification, one side sees government as the cause of all that has gone wrong in the economy and therefore believes that scaling back government intervention is necessary to improve the situation. That means reducing taxes, deregulation and spending cuts.

The other side thinks that the complex causes for the crisis are not necessarily related to the required response, which can be determined by examining the facts of the situation — high unemployment, nonexistent inflation and extraordinarily low interest rates, among other things.

This camp believes that the problems created by the crisis can be addressed by monetary and fiscal policy — much the way a doctor may save an ill patient by aggressively treating his symptoms even without knowing the precise cause of the ailment.

In broad terms, these dueling perspectives happen to conform to the basic philosophies of the two major parties. Republicans are predisposed to blame government for every problem regardless of the circumstances, and Democrats tend to view government as necessary to deal with economic and social problems.

One reason people join political parties is to save themselves the time and work of researching and thinking about issues. They are too busy with their jobs, their families and all the other things that occupy the time and attention of average people.

And even in the Internet age, it is hard to find the information and analysis necessary to make informed decisions about public policy. It’s vastly easier to just accept one party’s perspective and assume it is correct.

What parties and movements do when an issue comes along that requires them to take a position or presents opportunities to advance their agenda is to sort the possible causes and prospective cures put forward into those that are sympathetic to their program and philosophy and those that are not. Those that are sympathetic are deemed to be correct; those in conflict are deemed incorrect.

Obviously, there are serious problems with this approach, which members of both parties follow. Mistakes are easily made and incorrect positions established that may make matters worse rather than better. These positions may be held so dogmatically that their supporters feel that coercion is justified in forcing people to accept their point of view or that violence is an appropriate response to resist policies whose validity they question.

Thankfully, elections and democracy offer peaceful methods for resolving political conflict. And historically a sufficiently large number of Americans have been willing to withhold judgment until the facts are determined with some degree of certainty, and to be persuaded by logic and evidence, rather than immediately aligning themselves with a particular ideological or partisan political approach.

But without correct information and good leadership, it may not be possible for the rational, reality-based community to exercise influence, and control will necessarily default to one of the extremes.

Right now, it is clear that the right side of the political spectrum is dominant. Virtually all policy debate these days is based on the premise that the conservative position is at least valid. For example, we have heard for months from Republicans that government regulation is a major, if not the primary, factor holding back economic expansion and employment growth.

Just last week, the House majority leader, Eric Cantor of Virginia, posted a memo to House Republicans detailing specific regulations whose repeal would create jobs.

Mr. Cantor offered no analysis or evidence that abolishing these regulations would do anything to raise real growth of the gross domestic product or to reduce unemployment. The Republicans to whom the memo was addressed don’t need any evidence, because they are predisposed to believe that government regulation always holds back economic growth and job creation. That’s why they became Republicans in the first place.

So overwhelming is the Republican view that on Friday President Obama withdrew an Environmental Protection Agency regulation, widely supported by scientists as essential to air quality, because its economic burden is deemed to be unaffordable at this time.

Of course, we can’t be sure whether the regulation would have reduced jobs or if its withdrawal will lead to illnesses by people who would have otherwise remained in good health. All we know is that in the cost-benefit calculation, Mr. Obama considered the costs to be decisive.

His supporters will argue that Mr. Obama made the right call based on the facts of the case, but no doubt political factors also weighed on his decision. And those factors have been heavily shaped by the reality that much of the public has been swayed by the oft-repeated Republican charge that government is the enemy of progress.

In a courtroom, justice requires that both sides be equally well represented. If one doesn’t do its job properly, the jury cannot be blamed for a wrong result. If Democrats are going to accept Republican premises, they shouldn’t be surprised if a majority of people eventually conclude that Republicans ought to be in charge of government policy.

Article source: http://feeds.nytimes.com/click.phdo?i=6103952324bcb590a07c5d701d618990

Filed Under: Economy News Tagged With: , ,

You’re the Boss: This Week in Small Business: The Ratings Go Down, But Will the Ceiling Go Up?

April 25, 2011 by Leave a Comment

Dashboard

What’s affecting me, my clients and other small-business owners this week.

S.P. RATES US. BUT WHO RATES S.P.? Stocks plunge when Standard Poor’s ratings go negative on United States debt. But by week’s end, the market recovers to a three-year high. Time’s Joe Klein asks: “Hey, weren’t you the same guys who gave AAA ratings to the repackaged sub-prime mortgage-backed securities that, in truth, were utter dreck? And didn’t that help cause the 2008 economic collapse?” Paul Krugman doesn’t see what all the fuss is about. If you’re confused, here’s a creepy animated explanation. Eric Tymoigne, an economist, says that credit-rating agencies are showing their incompetence. Zachary Goldfarb shows what can happen to a country when S.P. lowers its rating.

RAISING THE CEILING The debt ceiling looms. Ezra Klein says that not raising it would kill the economy. EconoSpeak’s Barkley Rosser says we need to abolish the debt ceiling: “The U.S. is the only country in the world that I could find after considerable searching that even has one.”

TRUMP LOSES THE SMALL-BUSINESS VOTE Looking for a way to insult Mitt Romney, Donald Trump decides to call the former venture capitalist a “small-business guy.” He also says, “My net worth is many, many, many times Mitt Romney.” Meanwhile, the United Kingdom’s Guardian newspaper reports on new advances.

ONE YEAR LATER It’s been one year since the BP oil spill affected Gulf area businesses. Some feel it could give a lift to a few Houston companies. Scientists feel that the gulf’s health is back to pre-spill levels. Many think that we won’t know the true effect for years. The politicians are still fighting.

TICKLE ME WITH DOLLARS Intel and I.B.M. report record-breaking numbers. G.E.’s profit rises. Apple’s earnings nearly double. The poker industry loses, but Intuit’s small-business bets are paying off. Even Elmo is talking money.

IT’S THE IPAD, STUPID Housing starts increase. Architecture billings remain flat. Jesse Jackson Jr. blames unemployment on the iPad, but don’t tell that to these smart entrepreneurs. And despite Representative Jackson’s concerns, the jobless rate falls in most states. McDonald’s hires 50,000 people. The outlook for builders continues to look grim. A YouTube video announces this month’s winners. China’s growing inflation poses a risk to the rest of the world. Carmakers start to raise prices as the cost of their raw materials rise. Sixty-four percent of small-business owners say that sales are down due to high gas prices, according to one survey. Lending to small businesses is deemed to be back to normal.

THERE’S NO PLACE LIKE HOME Kansas City, Kan. is expected to have the fastest Internet connectivity in the country sometime in 2012, thanks to Google. Oklahoma City considers tougher regulations on taxi drivers, but other small businesses affected by the winter storms there can get special loans from the Small Business Administration. Mark Perry reports a renewed level of energy and optimism in Silicon Valley. Keenan Cahill thinks San Francisco is dynamite.

SHE’S SEEING RED TAPE The government may ask its contractors to disclose their political leanings. Lawyers around the world are gearing up for Intellectual Property Day. Connecticut’s Legislature is proposing a new, $10 million program to help local businesses compete for government contracts. A small mortgage lender is furious at the Dodd-Frank Wall Street Reform and Consumer Protection Act: “Regulating how I am paid isn’t going to help the housing market. With this law, borrowers will have fewer options. Many will be disqualified from buying a home. We will see a big drop in refinance activity.”

THAT’S WHY I’M PAYING $50 FOR BLEACHER SEATS Ticketmaster tries a new pricing model. “Efficient pricing is one of the most important and untapped opportunities,” says Nathan Hubbard, Ticketmaster’s chief executive. Six successful entrepreneurs share their keys to success in a new video series launched by A.D.P. and the Small Business Administration. Ben Huh, chief executive of the Cheezburger Network, discusses the business of humor. An American Express Open survey finds that small-business owners are shifting their focus from just surviving to plotting growth.

DON’T GIVE UP Facing bankruptcy? Michelle Samaad of the Credit Union Times says that a fresh start is still attainable for many small businesses. In a new report, the S.B.A. agrees (PDF). First step is to give up that expensive wine.

CAN SOMEONE HAVE A ‘TALK’ WITH JACK? The average small business spends up to 255 hours and $2.3 million on tax compliance. David Letterman offers his Top 10 tax tips. The Internal Revenue Service allows kidnappers to take a dependent deduction. SmartMoney’s Jack Hough reports that small businesses are the engine of tax fraud: “The numbers suggest no one shirks their duty as taxpayers more than sole proprietors — not corporations and certainly not wage-earners.”

ONE WAY TO CUT COSTS President Obama signs the repeal of that 1099 rule. A Vermont columnist accuses I.B.M. of bullying the state on health care. If you want to cut down on office visits, check out this doctor.

MOONLIGHTING A few big names contribute big bucks to Startup America. Citrix announces an opportunity for entrepreneurs to get up to $400,000 in seed funding. Anil Dash explains how to fund a start-up without venture capital. Example: “Moonlighting. Pros: Lowers your start-up risk. A good fit if you have personal obligations that make quitting your job difficult. Cons: Can be a distraction to manage the old business. Requires immense discipline to pull off.”

GRANDPA, DO YOU HAVE PROTECTION? NASA awards $270 million to space-age companies. Mike Mandel reports that the Air Force is in great need of a bunch of domestic products. It looks like Japan’s construction industry is about to boom. A new venture automatically adjusts and distributes deals for local businesses depending on how busy the locations are. A new market: sexually transmitted diseases soar among seniors. Robert Jordan explains how to spot a $100 million idea. Example: “Successful company founders tend to be truly curious, and they don’t accept the status quo as being beyond improvement.”

SOMEONE LIKES THE PLAYBOOK Microsoft begins beta testing its cloud-based Office version. The next iPhone will ship in September, but the current one will continue to track our movements in the interim. PayPal teams up with Freshbooks in the United States. Tech Republic’s Jason Hiner is pleasantly surprised by the BlackBerry PlayBook. Half of federal agencies will be in the cloud within 12 months, according to a new survey. Google continues to push its WebM video streaming platform. Designer Whitney Hess enjoyed the TechStars NYC Demo Day last week: “I was absolutely blown away by the quality of presentations, the clarity of thought, and the sophisticated solutions developed by these small companies in just three months.”

TELL GILBERT GOTTFRIED Marketing Daily reports that one-third of loyalty rewards go uncashed. MarketingProfs’ Carolyn Hall teaches us the value of customer feedback. Example: “Learn how to share. In many cases, feedback data sits in a series of silos.” A successful chief executive explains his old-fashioned approach for finding customers. Example: “Even if they’re keen on handing over referrals for free, offer to compensate them.” Many motivational speakers are turning to comic books to brand themselves. Chris Pirillo warns us to think before we Tweet: “You’ve seen the Tweets that make you wonder if the person who typed it has temporarily lost their mind.”

THIS WEEK’S AWARDS

BEST REASON TO AVOID SALT Susan Roth offers four cautionary tales of business etiquette. One story: “A group of litigation partners took a promising young associate out to lunch. All was going swimmingly until the hosts noticed that the associate added salt to each course before tasting his food. No one at the table said a word, but all of the partners spoke about it amongst themselves afterwards. They unanimously agreed that something as small as seasoning your food before tasting it was indicative of a serious character flaw — that of someone who makes decisions without having all the facts. Enough said.”

BEST LESSON WE CAN LEARN FROM CUPCAKES Hubspot’s Rachel Graveline gives us some marketing lessons from the increasingly popular cupcake: “Cupcakes are cute, small and easy to eat. You don’t need a plate or fork to eat them and you aren’t stuck with leftover cake for days after. Marketing takeaway: Get to the point quickly. Keep your page titles under 70 characters and your meta descriptions under 150 characters. When asking your visitors to fill out forms, don’t ask them to spend more time than necessary. The goal is to get visitors to learn about your products and take action.”

BEST DESCRIPTION OF MY KIDS Nicholas Carr concludes that Facebook is geared to a certain demographic: “To put it in layman’s terms, the study suggests that if you want to be a big success on Facebook, it helps to be a dullard.”

THIS WEEK’S QUESTION: Do you judge potential employees on their etiquette? (I admit that I sometimes do.)

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

Article source: http://feeds.nytimes.com/click.phdo?i=b4f1390010d9641b709cac64ae07f2d6

Filed Under: Small Business Tagged With: , ,

The Psychology of Cheating

April 17, 2011 by Leave a Comment

But for those who feel most strongly about cheating, the verdict was more like a kick in the stomach. Flouting the rules is, for them, not only morally wrong but a lasting offense to good citizens everywhere: If guilty, offenders should pay, whether they’re rich or poor, malingerers or masters of the universe — like the financial figures central to the economic collapse of 2008.

The sentiment runs particularly high now at tax time, when almost everyone thinks that he’s paying too much while others cheat.

Yet paradoxically, it’s often an obsession with fairness that leads people to begin cutting corners in the first place.

“Cheating is especially easy to justify when you frame situations to cast yourself as a victim of some kind of unfairness,” said Dr. Anjan Chatterjee, a neurologist at the University of Pennsylvania who has studied the use of prescription drugs to improve intellectual performance. “Then it becomes a matter of evening the score; you’re not cheating, you’re restoring fairness.”

The boilerplate tale of a good soul gone wrong is well known. It begins with small infractions — illegally downloading a few songs, skimming small amounts from the register, lies of omission on taxes — and grows by increments. The experiment becomes a hobby that becomes a way of life. In a recent interview with New York magazine, Bernard Madoff said his Ponzi scheme grew slowly from an investment advisory business that he began as a sideline for certain clients.

This slippery-slope story obscures the process of moving to the dark side; namely, that people subconsciously seek shortcuts more than they realize — and make a deliberate decision when they begin to cheat in earnest.

In a series of recent studies, Dan Ariely of Duke University and his colleagues gave college students opportunities to cheat on a general knowledge test. In one, students were instructed to transfer their answers onto a form with color-in bubbles, to register their official score. Some received bubble sheets with the correct answers seemingly inadvertently shaded in gray, and changed about 20 percent of their answers. A follow-up study demonstrated that they were unaware of the magnitude of their dishonesty. They were cheating without being fully aware of it.

Yet the behavior changes once a clear rule is in place. “If you specifically tell people in these studies not to use the answer key and just sign their name,” said Zoe Chance, a doctoral student at Harvard who worked on some of the experiments, “they won’t look at it.”

David DeSteno, a psychologist at Northeastern University in Boston and co-author of the coming book “Out of Character,” about deception and other misbehavior, said: “With all of these kinds of decisions there’s a battle between short- and long-term gains, a tension between the more virtuous choice and the less virtuous one. And of course there are outside factors that can sway that arrow to one side or another.”

That is, low-level cheating may be natural and even productive in some situations; the brain naturally seeks useful shortcuts. But most people tend to follow rules they accept as fair, even when they have the opportunity and a strong incentive to break them.

In short, the move from small infractions to a deliberate pattern of deception or fraud is less an incremental slide than a deliberate strategy. And in most people it takes shape for personal, and often very emotional, reasons, psychologists say.

One of the most obvious of these is resentment of an authority or a specific rule. The evidence of this is easy enough to see in everyday life, with people flouting laws about cellphone use, smoking, the wearing of helmets. In studies of workplace behavior, psychologists have found that in situations where bosses are abusive, many employees withhold the unpaid extras that help an organization, like being courteous to customers or helping co-workers with problems.

Yet perhaps the most powerful urge to cheat stems from a deep sense of unfairness, psychologists say. As people first begin to compete and compare themselves with others, as early as middle school, they also begin to learn of others’ hidden advantages. Private tutors. Family money. Alumni connections. A regular golf game with the boss. Against a competitor with such advantages, taking credit for other people’s work at the office is not only easier, it can seem only fair.

Once the cheating starts, it’s natural to impute it to others. “When it comes to negative characteristics, we tend to overestimate how much others have in common with us,” said David Dunning, a psychologist at Cornell University.

That is to say: A corner cutter often begins to think everyone else is cheating after he has started cheating, not before.

“And if they are subsequently rewarded for the extra productivity, they tend to internalize the feeling of pride and view their success as due to inherent ability and not something else they were using,” said Dr. DeSteno.

Finally, in the winner-take-all environment that characterizes many competitive fields, cheating feels like a hedge against that most degrading sensation: being a chump. The fear of finishing out of the money and hearing someone say, “Wait, you mean to tell me you could have and you didn’t?” Psychologists argue that the sensation of being duped — anger, self-blame, bitterness — is such a singular cocktail that it forces an uncomfortable kind of self-awareness.

How much of a fool am I? How did I not see this?

It happens every day to people who resist cheating. Nothing fair about it.

Article source: http://feeds.nytimes.com/click.phdo?i=cfd84c2ec259ef23749a5bab4dd512a8

Filed Under: Business News Tagged With: , ,