Saturday, November 22, 2008

Buffetted in times of recession

I like many Irish people purchased shares in Telecom Eireann having fallen for all the hype and marketing about how wonderful an opportunity it was. It was my first foray into the world of stocks and shares and apart from those who sold their shares in the first few days we suffered big losses.

In recent times people have suggested that shares are now great value and the "sage of Omaha" Warren Buffett tells us (see video below) "Be greedy when others are fearful and be fearful when others are greedy" But can we trust the stockbrokers not to sell us duds as many have tried over the last decade.

The Sage of Omaha!

As Dave points out on his blog here at 6:30 on a Wednesday some "expert" over at Davys is ramping up Bank of Ireland shares and then at 8:20 the next morning they are revising down their price target and as he says some explanation and disclosure as to the drastic change would be helpful. Of course if an ordinary consumer bought €20,000 of shares based on this advice at the time, they would be sitting on shares worth now about €1500. But no fear Davys would still have their hefty fees.

Of course Shane Ross is the man the stockbrokers hate, because he was a stockbroker and he knows that the so called "experts" in stockbroking firms are just making it up as they go along. As he points out they have been wrong so many times and they are still listened to. His article is a fairly damning indictment of the situation and that was January 2008 and since then share prices have fallen much much further. He also makes a good point about a conflict of interest where a stockbroker personally or his/her company could well be the broker for the firm they are encouraging others to invest in. Is this always declared to the client? Its a serious issue when people's life savings can be lost or massively reduced by these recommendations.

This is an area which does require greater regulation, but will the stockbrokers who are powerful vested interests really want our politicians upsetting their applecart? Indeed there have been some minor changes and the Financial Regulator has now some oversight of the work and procedures of the Irish Stock Exchange, but I don't think it is enough a lot more needs to be done. Of course our stockbroking firms have always been very supportive of the democratic process and in return some politicians appear to have been very forgiving when of "errors" that have occured, so I wouldn't "bank on it" and the prospect of any serious and meaningful regulation of this area any time soon.

But that doesn't mean that we shouldn't try and this is an area I will be returning to in the coming months. And of course apart from the big regulation issues there are the individual cases where people find they are being charged hefty fees for a bad service, and unlike the price of a pint of milk, huge sums of money are involved.

Friday, November 21, 2008

Protective or Defective Directive?

I was out judging a schools public speaking competition last night for the National Forum on Europe, thankfully the subject was not Lisbon! All the speakers were really impressive, I remember the first time I spoke in public, the room spun around and I got my cards mixed up so I repeated about half the speech. Public speaking competitions are a good starter, but debating is much better for helping you frame an argument, think on your feet and of course the odd bit of heckling. Had some fun times in debating competitions in Tipperary, including one famous occasion where one of our team (now an esteemed member of the legal profession) managed to convince our opponents he was an adjudicator and asked them for their main arguments prior to the contest, you can imagine their surprise when he took his place on our team!

While we are still dealing with the fall out from the Lisbon Treaty defeat here in Ireland, the EU machinery in Brussels works away on a daily basis churning out reports, recommendations, opinions and directives. Many of these impact on our daily lives, but in most cases what is decided today may not affect us for many years. The EU "Community Method" is complex and slow, but it does work, having experienced it myself during my time with the EYF.

My friend Dominic encouraged me to join him in Croker on Wednesday night, it was more like Krakow or Warsaw than Dublin-the Polish fans far outnumbered the Irish and were great fun and in great voice....a nice side of EU integration even if Ireland lost 3-2

I was over in Brussels last week and got a briefing on the proposal by Commissioner Kuneva for a new consumer directive. As you can see here the Commission is saying that this directive is a great step forward. BEUC (European Consumers' Organisation) on the other hand is not so happy, raising concerns about a number of issues.

From my experience the big shift here is the move from minimum harmonisation to maximum harmonisation. This means that if passed that EU law in the areas covered by the directive will be the same in all member states. The benefits of course are that the law is consistent across the EU and where legal provisions are weak, consumers will be better protected. However where the law is stronger, maximum harmonisation could undermine hard won gains by consumers over many years. Do we really want to forgo rights just to enhance cross border trade?

Its unlikely that the directive will be passed before the European elections next June and the installation of a new Commission in the autumn of 2009, so the current proposal could fall. In any event it is a proposal to monitor because it could have a big impact on us all in the year ahead.

Thursday, November 20, 2008

Not a perfect storm!

Vodafone will soon be launching their Blackberry Storm in Ireland. However it seems they will be charging Irish consumers a lot more for the phone and the tariffs than in the UK and on the continent. Thanks to for spotting this and the detailed analysis.

I am sure they will try and justify it on the basis of that costs are higher here, but of course all these companies forget to mention our very favourable corporate tax rate. Termination rates may be more expensive here, but definitely not six times more expensive. The data doesn't cost a cent more and we already know that the mobile companies here generate the second highest ARPU (average revenue per user) in Europe at €40.87 compared to an EU average of €25.99.

So as Keith says its another paddy tax on the Irish consumer. Obviosuly Vodafone believe that consumers here will pay more, only time will tell. The best way of course for consumers to apply pressure on Vodafone to reduce the price is to hold off on buying the product.

Tuesday, November 18, 2008

Cutting down on the overheads!!

Perhaps I will try this next time!

Well in these recessionary times we are all on the lookout to cut costs and for bargains. I pass through that boulevard of broken credit limits otherwise known as Grafton Street twice a day on the way to work, it always dangerous to stop there because you end up spending money! Anyhow to my surprise there was an offer of a free haircut there when I passed today. I noticed this before, but since I needed a cut and it generally costs me €13-€15 to get the job done thought it might be worth a try. So I thought practice what your preach Doorley!

Anyhow its a hairdressing training school and in return for the free haircut you are a guinea pig for a trainee hairdresser. Now my request is not too demanding, four on the back and side and trim the front and top. I am suffering a little from Androgenic Alopecia but not quite having to do the comb over just yet! My only request is that they don't take too much off otherwise my hair just stands up! I empathised with the trainee, she is only 3 weeks training and lacked the confidence to do all the job herself. It was fascinating listening to the interaction between tutor and student, he encouraging and challenging her at various times. She got a bit frustrated at times because she couldn't quite get the hang of some of the technics he was showing her. In the end he stepped in to finish off the job. It may have taken twice as long, but I am happy with the result. It may not be everyone's cup of tea but I got my hair cut for nothing and hopefully contributed something to the next generation of hairdressers. So folks there are savings and bargains to be got out there if you look!

Monday, November 17, 2008

Irish Consumers being "Pounded"

Got a call from Newstalk yesterday asking me to comment on their survey of the difference between the cost of clothes in euro on sale here and the price of the same items in sterling on sale in the North and in the rest of the UK. The results of their survey are as follows with the sterling price, the current euro price here and what the price should be based on the value of the euro against the sterling.


  • Black Skirt - £19.99 - e29.90 (Exchange Rate e23.27)


  • Knee Length Coat - £75 - e113 ( Exchange Rate e87.29)
  • Silver Knee Length Dress - £65 - e 94 (Exchange Rate e75.65)
  • Black T-shirt with frill - £25 - e38 (Exchange Rate e29.10)

Ted Baker

  • Multi coloured stripped shit £70 - e100 (Exchange Rate e81.47)
  • Washbag £35 - e50 (Exchange Rate e40.67)
  • Coat £85 - e120 (Exchange Rate e98.76)

I subsequently did a piece on their breakfast show this morning. This is not news to many of you I am sure, we are all sick and tired of seeing the sterling price and then the hugely inflated euro price. I pointed out that the euro prices are based on the 2007 value of the euro when the it was worth about 66p to 67p. The euro has strengthened considerably since the start of 2008 and is now worth about 85 pence sterling

When CAI raised this issue back in March we were told that there was a time lag and the currency fluctuations would be reflected in the prices after about 6 months, however almost a year later nothing has changed. There is nothing illegal about what these retailers are doing, but it is still galling. I suppose they are charging what they think we will pay. If consumers want to effect change, the best thing to do is to take your business to another shop or else go across the Border as many thousands are doing.

I know some people have said to me can I not pay in sterling to get around this, unfortunately this is a non-runner, there is no legal obligation on retailers to accept sterling. However both the media and consumer advocates can keep the pressure on by highlighting the difference and if consumers continue to vote with the feet the retailers will have to respond.

Monday, November 10, 2008

Fares Fair and the Audacity of Hope!

On November 1st new EU rules came into force which will require airlines and others advertising ticket prices for flights to include the full cost including fees, charges and taxes upfront. In addition passengers should get the breakdown of the different categories of costs making up the final price:tariff, taxes, airport charges and other fees. We all know the story, a flight is advertised as free or for a €1, but by the time we pay for it the price is €60. Now there are good deals out there and people can get cheap flights. But the problem with this sort of advertising is that it lures people with an initial misleading offer and having gone through the booking process most people just buy rather than start and search again. So instead of booking a flight with another airline for €50, we pay €60 because the initial cost quoted was a €5.

It would be like a supermarket saying we charge 10c for a loaf of bread, but you have to pay 20c for the car park, 10c for the trolley, 10c for using the check-out. Up to now many consumers didn't have the detailed price information they needed up front to make an informed choice and decision. Price transparency is a key component of any consumer contract, so these new rules are welcome. However there will still be wriggle room for the airlines, some have introduced a number of discretionary charges such as check in and baggage charges, so it will still be difficult in some cases to know the full cost until consumers gets to the point of purchase. Consumers will have to factor these extra costs into account.

The other positive measure being introduced is that airlines will not be able to impose charges on consumers without their express consent. Up to November 1st airlines such as Aer Lingus, Aer Arann and Ryanair have automatically included insurance on flights booked online, requiring the customer "to opt out" if they wanted to exclude an extra such as insurance from their purchase. I have come across cases where the consumer was not aware that they were paying for insurance or thought they were required to buy insurance. Obviously its a matter for each consumer to decide, but do you really need to pay insurance on a flight from Dublin to London? The merit of many of these insurance policies is questionable in my view. From now on the websites of all airlines should be designed so that consumers have "to opt in" to order and pay for insurance and or other extras if they want them.

The key thing now is to ensure that these new rules are enforced. In the first instance that's the responsibility of the Department of Transport and I assume the National Consumer Agency, but also us as consumers to report if we find the new rules are being breached.

I also see that the EU Commission has launched a website for consumers where they can get advice on and report what they consider are unfair commercial practices. Looks like a good initiative.

I cannot leave the blog this week without a mention of events in the US. Well as my friends know I am a bit of a political and election junkie. Watch and enjoy elections and politics from all over the world, and in keeping with habit since 1992 (then all I had was BBC Radio 4) stayed up for the elections. Apart from watching the historic election of Barack Obama, I was keeping an eye on the Senate and House races, would the Democrats get a filibuster proof majority in the Senate and would the 2006 Democrat surprises hold on? My friend Dominic tells me that there is a technical term for this affliction called Psephology not sure if there is any cure! I had been keeping an eye on North Carolina since the summer and was really pleased to see Kay Hagen win over Elizabeth Dole, who ran a nasty and negative campaign, especially in the end.

Inspiring stuff

The thing that inspired me most about Obama was the triumph of hope over fear and optimism over negativity. That got me thinking about consumer advocacy where there is a danger of always being negative, of always knocking, of always being the hurler on the ditch. Yes it is important to highlight deficiencies, but consumer organisations and advocates also need to be positive and put forward solutions and proposals. We are all too familiar with the naysayers, the hurlers on the ditch, the bores who come to meetings, never have a good thing to say, and just criticise and who stay talking when there is nothing left to say. These are the sort of people we all stop listening to after a while, so like people, organisations need to avoid falling into this nexus of negativity or else we won't be taken seriously after a while too.

Classic Naysayers, but at least they were funny unlike some I know!