The boy who knew too much: a child prodigy

This is the true story of scientific child prodigy, and former baby genius, Ainan Celeste Cawley, written by his father. It is the true story, too, of his gifted brothers and of all the Cawley family. I write also of child prodigy and genius in general: what it is, and how it is so often neglected in the modern world. As a society, we so often fail those we should most hope to see succeed: our gifted children and the gifted adults they become. Site Copyright: Valentine Cawley, 2006 +

Monday, October 13, 2008

The Irish solution to financial meltdown.

When it comes time to write the history books of this financial chaos the world now finds itself in, I believe a turning point will be noted in the Irish response to the crisis. Indeed, it may come to be known as the Irish solution, in time to come.

As many of you will know, the Republic of Ireland - or at least its government - was the first country in the world to guarantee the bank deposits of its homegrown Irish banks. This was a masterful move - and will be seen (and is already by many) as a wise move. You see, by guaranteeing the banks, Ireland created the world's safest haven for depositors - thus, if no other country did the same, money would fly to Ireland, in a jiffy, from all over the world. The Irish banks would be overladen with newly won cash. Of course, Ireland knew this - and knew, therefore, that the risk of having to pick up what was calculated to be a potential 9 trillion dollar bill, was remote. Irish banks were safe because Ireland said they were safe.

I believe that the Republic of Ireland knew that the rest of the world would be forced to follow suit. The Irish government must have been aware that other nations could not stand by and do nothing in response. Thus, Ireland's unilateral move has forced the hands of governments around the world to do what they should already have been doing: guaranteeing their banks, so that depositors would not withdraw all their funds and deplete the banks of capital, killing them in the process. So, Germany and Greece followed, in quick succession - and now Australia, too, has said that it will "guarantee ALL deposits for three years".

Ireland's financial wisdom may just have saved the world from an even greater catastrophe than would otherwise have befallen it. Islands of surety in the chaos are being created all over the world, as other governments come out with guarantees of their banks - and all because of the Irish.

Of course, some governments will resist backing their banks in this way. Such governments will, I think, sit by and watch their banks shrivel up and die as the deposits are moved to banks in territories that do offer such guarantees. In time, all governments will be moved to offer some form of guarantee: it is the only way to bring some confidence back into the financial system.

It is interesting to see that it was a small nation like Ireland that led the way in this. It was not the United States of America - which hereafter shall forever be known as the CAUSE of this global financial mess. The USA spent its time arguing over whether it was socialist/communistic to bail out the banks - letting the chaos grow, as they did so. Ideologies such as capitalism/socialism really, really, really don't matter when the entire financial system is collapsing around the world: what must be done, must be done, irrespective of what people might call it. It rather amazes me that they would even consider ideologies at this point.

The small nation of Ireland will be thanked, by history, for its unilateral initiative, in stepping up to do what must be done to ensure that the financial chaos we have now entered, globally, does not endure a moment longer than it has to.

Perhaps, people everywhere, should go out and drink a pint of Guinness, in salute to the Emerald Isle, land of leprechauns, pots of gold and wise finance ministers.

(If you would like to learn more of Ainan Celeste Cawley, a scientific child prodigy, aged eight years and seven months, or his gifted brothers, Fintan, five years exactly, and Tiarnan, twenty-eight months, please go to: I also write of gifted education, IQ, intelligence, the Irish, the Malays, Singapore, College, University, Chemistry, Science, genetics, left-handedness, precocity, child prodigy, child genius, baby genius, adult genius, savant, wunderkind, wonderkind, genio, гений ребенок prodigy, genie, μεγαλοφυία θαύμα παιδιών, bambino, kind.

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posted by Valentine Cawley @ 6:30 PM 


Blogger Eaststopper said...

Dear Valentine,

I am not sure if the Irish approach is the silver bullet to resolving the current crisis.
In economic terms, guaranteeing the banks' depositors base is tantamount to guaranteeing the liabilities part of the banks' balance sheet.
Since the balance sheet has always to 'balance', the asset side of the equation is being depleted by write-downs while the liabilities are kept at the same level if we guarantee deposits.
Hence in the current crisis, the need is for banks to bolster the asset side of their balance sheet - capital injection via equity injection (UK) or buying up mortgages (US) are key.
The Irish economic landscape will face serious headwinds due to the Irish banks' heavy exposure to the domestic construction and housing industry and hedge funds - many which are over leveraged.

1:13 PM  
Blogger Shannon said...

As an American of Irish ancestry, I'm very familiar with Irish optimism. I'm having a bout of it myself right now. The upside to this financial mess will be, and mark my words, the end of Hip Hop. No one is going to tolerate some guy singing about his gold chains and bank accounts. Once this financial crisis subsides, the new economy will have its positives. I'm looking forward to the day that I don't see Jay-Z flaunting his Euros on MSN. Doesn't he look foolish now.

3:37 PM  
Blogger Valentine Cawley said...

The Irish are everywhere, Shannon...even in Singapore! Now, that's a migratory instinct for you.

It would be good to see the end of crassness in American popular culture - for it has been exported around the world to the general detriment of all. A more discrete, better mannered world would be good to see.

Best wishes.

3:46 PM  
Blogger Valentine Cawley said...

Eaststopper, thanks for your comment.

I don't think you have paid enough attention as to WHY the government is guaranteeing deposits. They are doing so to prevent the flight of capital. If depositors are sure their money is safe, they won't take it out - and so the liability as you call it, is never cashed in: it remains with the bank. In this manner, effectively they are making the banks a safe bet, and therefore making them a safe place to put money. This strengthens the bank much more, I would say, than a simple capital injection - because depositors from all over the world will inject their own cash into such a bank, as long as there are relatively few other banks doing this (as is still the case).

The Irish solution is, in my opinion, better than either of the other two options. Since, capital injection still doesn't make people's deposits they can still take them out. Thus, the banks may still fail with the Brown or US methods.

Best wishes

3:51 PM  
Blogger Eaststopper said...

Hi Valentine,
For the Irish banks, yes the liabilities are safeguarded, but their assets are being depleted. In this scenario, no banks would want to do any business with the Irish banks because of the huge risks. In regulatory terms, banks depositors base makes up only 8% of the total asset base and the remaining 92% have to be funded by the market. If no one wants to lend to the Irish banks, then the government would have to eventually take over.

9:01 PM  
Blogger Shannon said...

I'm detecting a bit of anti-American sentiment here, Valentine. Can I call you Valentine?

It's unfair to believe that all Americans are crass. It's absurd to think that Americans are anti-intellectual.

The US promotes unconventional and high level thinking. In a recent interview, Warren Buffet commented on the three I's: "There are innovators, imitators, and idiots." I find it funny that those who write about the idiocy of the US do so on their MacBooks.

I think many of these comments, the crass and anti-intellectual comments are a backlash from the current economic crisis. The global economy is in pain and the natural reaction is to find a scapegoat.
The crisis began in the US, so naturally the crisis is thought to be caused by the US.

It's a logical fallacy, of course, to assume that when one thing occurs in correlation to another that it causes the other.

I feel terrible for those throughout the world who are losing jobs, houses, and investments. My father recently retired. Half of his 401K was wiped out in a matter of two weeks. It's tough.

Kind Regards

(I do believe you are correct in pointing out the necessity of good leadership.)

2:52 PM  
Blogger Valentine Cawley said...

There is no anti-American sentiment Shannon. I was just pointing to certain crass elements in American popular culture which the rest of the world is better off not imitating.

I believe that history will identify American mortgage lending practices and their securitization as the cause of all this mess. People have already identified it as such.

Yes. there any left?

3:19 PM  
Blogger Valentine Cawley said...


I find it difficult to believe that the deposits only form 8 per cent of a bank's assets. If that were the case NO bank would be worried about capital flight and no banking system would take steps to stop it: 8 per cent wouldn't make much difference. As it is, many banking systems are guarding against capital flight by guaranteeing deposits. This seems to indicate that they are fighting over a lot more than 8 per cent.

Kind regards

4:52 PM  
Anonymous Shannon said...

I think that many are seeing the darker side of globalization. When one hurts, we all hurt. As far as blame goes, the US should have handled the economic crisis better. Why did Congress wait until the market crash to pass the bailout? It's infuriating. At the end of this crisis I hope to see less ignorance in America; less arrogance in Europe; less greed Asia; less stupidity across the globe. (Ireland is, of course, the exception.) Take care!

9:39 AM  

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