A Night at the Opera

The 12th Duke of Devonshire owns the castle at nearby Lismore — where we went on Saturday night. It was the Blackwater Opera Festival, the highlight of the social season in the area.

Molana Priory on the River Blackwater, Source: Wikimedia Commons

Wednesday, June 05, 2024

Bill Bonner, writing today from Dublin, Ireland 

In our first visit, almost 30 years ago, Dublin was still a grim city on the Liffey. And it took three hours to drive... on little, winding roads... to get down to our office in Waterford. Eating out was not an easy matter back then; there were few good restaurants. And bars were still of the “old Ireland” vintage. 

In one, we recall standing on a bed of sawdust and talking to an Irishman, both of us holding big tankards of Guinness. In the course of the conversation, our companion got drunker and drunker. And then, he fell down... not once, but three times. 

Remarkably — and perhaps as proof of his Old Ireland pedigree — he didn’t spill a drop of his beer. 

But that charm has all been swept away by wealth and progress. Today, a modern highway system spreads out from Dublin. In just an hour and a half, you can zip along to Waterford. And the old pubs? Some are still there. Many have been turned into Italian... or Thai... or French restaurants. 

Even the Irish themselves have changed.  

“We think of ourselves as European,” explains a neighbor.  

Like Europe, Ireland has become risk averse and law abiding. No more drinking at the pub until late at night. Now, dads share childcare... and put on helmets before riding a bicycle.  

Still, we ran into a little of the Old Ireland at home in Youghal over the weekend. 

The Old Ireland

Colm is a man in his 40s. The weather was cool and breezy, but he was dressed only in jeans and a T-shirt, shod in a heavy pair of rubber boots. He came over with two chainsaws and offered to cut down some trees in exchange for the firewood. He had a youngish face, a bit like Michael J. Fox... with straight dark hair, gray on the edges, that bristled out like a toilet brush.  

After a few words of introduction, Colm lit a cigarette and bent to put gasoline in his chainsaws. Your editor stepped back. But Colm knew what he was doing. 

After cutting for a while, he came over to talk. 

“I was down on the river yesterday,” he said, the cigarette still between his teeth. “When I’m not milking cows or cutting trees, I like to fish. I use the weir right down there.” 

Colm pointed down to a salmon weir on the river. It is a simple thing... a stockade made of ash sticks driven into the mud. The salmon, swimming upriver, get trapped in it. 

“I thought you weren’t allowed to fish in the river. The Duke of Devonshire has the fishing rights... hasn’t he had them since the 17th century... something like that?” 

The 12th Duke of Devonshire owns the castle at nearby Lismore — where we went on Saturday night. It was the Blackwater Opera Festival, the highlight of the social season in the area. You dress up. You explore the extensive gardens, a glass of champagne in hand. Then you sit for a meal under a big tent and say hello to your friends. 

Finally, a bell clangs to tell you it’s time for the opera to begin.  

Julius Caesar, by Handel, was on stage. And it was dreadful. Painfully boring. The arias were unbelievably repetitive. The music was uninspired, even dull. And the characters dressed and acted in ways that made little sense. Caesar was played by a woman. What message were they trying to convey? It wasn’t clear. Tolomeo Cleopatra’s scheming brother (who had Pompey killed and sent the head as a gift to Caesar) was portrayed as a foolish, fat, gay man with a taste for gaudy outfits. Only Cleopatra was plausible.  

Our mind wandered. How many people have died watching this opera, we wondered? It’s been around for hundreds of years. Yet, the show is so tedious, it must result in a substantial death toll. And for each one whose heart stopped, there must have been hundreds of others whose will to live was stretched to the breaking point. 

As a point of American interest, Kathleen Kennedy, sister of JFK, once figured in the history of the castle. Despite the objections of her mother, Rose, she married a protestant, William Cavendish, (aka Billy Hartington) who was in line to become the 10th Duke of Devonshire. Unfortunately, he was killed in WWII only four months after their marriage. The title, and the fishing rights in the Blackwater River, went to his brother. 

After a few years of widowhood, Kathleen, known as “Kick Kennedy,” took up with another British aristocrat, the 8th Earl Fitzwilliam. This time her mother threatened to disown her; her new squeeze was divorced. Kick flew to France, in 1948, to plead her case with her father and died in a plane crash.  

“Aren’t you afraid of getting caught?” we asked Colm. 

“The Duke doesn’t have to know I’m out there. And I don’t take many fish; he won’t miss them. 

“And I did get caught. Once. I got home and there were two gardai (policemen) waiting for me. 

“But they didn’t know anything about the fishing rights. I told them I have a special license that gave me the right to fish out in the ocean or in the river. It was not exactly true... but who really wants to look out for the Duke of Devonshire’s fish? 

“I invited them in. We had a drink. Then, they left. That’s how you settle problems in Ireland. 

(The Hutchs and the Kinahans should have thought of that.) 

“But now, with your new neighbor [billionaire James Dyson bought the property next door], everything has changed. He has a security team. They drive around and keep everybody out. I can still come up the river, but I can’t come the way I used to... from the river bank. 

“And over there (Colm pointed to the old abbey that has been in ruins since the ninth century), he even tried to prevent people from going to look at it. But that is sacred here in Ireland. No Englishman is going to come in here now and keep us from going there. Even if it is on his land. 

“They had closed the gates and told everyone they couldn’t come in. But then the security team got a visit from some old IRA guys. I guess they made it clear that if Dyson didn’t want his new house burned down, he would open up the gates. They were opened the next day.” 

Stay tuned. 

Regards, 

Bill Bonner 

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Research Note, by Dan Denning

Who will be left holding the bag when commercial real estate loans begin to default? The Federal Deposit Insurance Corporation highlighted the problem in a report published on the last day of May. Earlier in the month, CNBC reported that as many as 282 American banks could be ‘at risk of failure’ due to a combination of higher interest rates and commercial real estate loans.

From the FDIC report:

Unrealized losses on available-for-sale and held-to-maturity securities increased by $39 billion to $517 billion in the first quarter. Higher unrealized losses on residential mortgage-backed securities, resulting from higher mortgage rates in the first quarter, drove the overall increase. This is the ninth straight quarter of unusually high unrealized losses since the Federal Reserve began to raise interest rates in first quarter 2022. 

Speaking of losses, check out the operating losses generated by Federal Reserve banks in the chart below. When the Fed runs a profit, it remits the cash to the US Treasury. And when it runs an operating loss? What happens then?

Through a clever accounting sleight of hand, the Fed reports operating losses as a ‘deferred asset’ on the balance sheet. The loss is ‘paid off’ through future operating profits. That way, the losses don’t put the Fed in the position of having negative equity (although the Fed doesn’t have equity capital in the traditional sense, it has retained earnings and capital stock held by member banks).

Where is it losing money? And why? How much more can it afford to lose? The Fed’s current operating losses are $171 billion. The balance sheet reports $43 billion in capital. But as we know in Monopoly, the bank can never go bankrupt, can it?