From the Chairman of EU GMBH

Dear Shareholder,

¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† I am writing to reassure that all is going well with your company’s strategy. A few shareholders have asked me to explain what is going on in our ¬†Irish subsidiary.¬† Let me confirm that we have every intention of supporting our Irish company, and are engaged in helpful talks with them so that in future it can be organised in a sound way. We need to ensure that local management follows Group policy and observes all the wise controls on borrowing, spending and revenue collection that have been so successful in our core areas of operation.

                   There is absolutely no question of us wanting to change the Irish management. As in all our subsidiaries, the choice of management is a locally determined matter and should stay so.  We have found that they now understand fully the position, and wish to work with us to resolve it as quickly as possible. They realise that they cannot allow their overdraft from the Group banking subsidiary to build up at the rate it was growing, and want to seek longer term proper financing facilities. They also value Head Office assistance in  tackling the losses in their banking division. We will of course work positively with whoever local  election chooses  when the management falls due for re-election to the local Board.

¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† Some have said that the Irish company’s low pricing policy in corporate markets was one¬†of the ingredients in their past fast growth phase. We beg to differ. We think all subsidiaries should set realistic prices, and should not be seeking to undercut other group companies. We do think higher prices and charges ¬†are an integral part of a successful solution to their trading problems.

¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† Some have also argued that the Irish company needs to set its prices in a different currency to the Group currency, to allow for softer pricing. This is another variant of the mistaken notion that profitable¬† trading comes from trading down. We will assist with more training on how to run a successful operation with firm prices¬†using ¬†our¬†ever popular ¬†¬†“Never knowingly undercutting” philosophy.

                  We wish to spread best practice around the Group more successfully. Our German subsidiary has an excellent record at controlling its borrowings. It has recently come up with imaginative proposals for controlling loans in all subsidiaries. It recommends that each subsidiary should remain resp0nsible for raising its own money in the Group currency, but that each loan agreement should have clauses that require the lender to accept less interest and capital repayment if the subsidiary concerned is unable to meet all the payments. This way will avoid other  Group subsidiaries having to assist in providing cash for the loan repayments for a subsidiary which has spent too much and earned too little.   This seems to me to be an excellent discipline, and I look forward to agreement to introduce it soon.

             I would also like to express my thanks to Group companies that do not share our common bank account at the moment for nonetheless being so helpful in assisting our Irish subsidiary. It shows the true spirit of solidarity for which our Group is rightly famous. We now need  to ensure all other Group companies have learned the lessons, and will take immediate and strong action to rein in their spending.

               I give notice to all speculators that we will not stand idly by and watch them trying to make money by weakening us collectively. We are currently looking again at what legal actions we can take to stop them selling our debt short, or failing to appreciate the underlying strength and health of our trading position.

              As always, we are grateful to all our subsidiaries which are trading well for their continued contributions to cover the central overheads. At times like these the value of a strong Head Office is so clear to all.

Yours sincerely



  1. StrongholdBarricades
    November 25, 2010

    So, you are saying that the Irish subsidiary is for sale?

    Or are we talking “football speak” when the phrase full support is used?

  2. Geoff not Hoon
    November 25, 2010

    Mr.Redwood. Excellent ineterim report from GMBH. Is the Chair looking for a new job yet!!!!

    As in the UK subsidiary the Irish think wacking up VAT levels will increase their income. Were this a real business (certainly those I have run) we would be considering competitive pricing ( reductions) to stimulate demand rather than stifle it. I am trully amazed at the number of our friends and contacts who are planning late Winter trips to New York for what they believe will be ‘bargain’ shopping compared to the UK. In many cases folk will simply postpone purchases because of these VAT increases which is the complete oppsite of what is needed. If income does drop because of the rise in VAT what shall we do put the rate up even higher? A nonsense IMHO.

  3. lifelogic
    November 25, 2010

    You could add that – The last thing head office want in any competition in taxes any small government or any groups with real political, democratic or financial powers. We will thus eliminate all these together with any vestigial democracy in the member states (save for the usual fig leaf MEP veneer which will be preserved – large pay/expenses increases to them should keep them safely in line).

  4. figurewizard
    November 25, 2010

    No doubt the next statement we get about the Irish subsidiary will be coming from the receivers.

  5. Brigham
    November 25, 2010

    I have just heard that a woman named Honeyball, an MEP, has said that now is the time for Britain to join the euro. Is she mad? As she is a Labour MEP, is this political dogma drowning out all common sense?

    1. Norman Dee
      November 26, 2010

      the clue is in the statement “is she (foolish ed)?” “she is a labour MEP” are good indicators of the truth behind the story

  6. Robert K
    November 25, 2010

    A masterpiece!

  7. Caratacus
    November 25, 2010

    Dear Mr Chairman,

    We are most grateful for your thoughtful, wise and calming words. I represent a small group of shareholders (you may have heard of us – “The British Taxpayer”. You haven’t? It is of no matter) who had been looking a bit pensive of late with regard to the general direction of board policy. We can now see that all is well and that the value of a stark – I am so sorry – a STRONG Head Office is more fully understood.

    You will be delighted to hear that our recent coffee morning in support of our Irish friends raised a considerable sum (enclosed herewith). As you will see, the initial amount raised of £2.47 Рplus a Zimbabwean $500,000 note Рhas been rounded up to £7bn by saving a bob here and there on unnecessary fripparies.

    Thank you once again for a most welcome mid-term report.

    We beg to remain, etc..

  8. Denis Cooper
    November 25, 2010

    Hang about – I’m sure there was something in the Group rules saying that each subsidiary must keep its own accounts and manage its own finances, and absolutely prohibiting any kind of intra-Group bail-out if any of them got into difficulties.

    Or has there been a change to the rules that I didn’t notice?

  9. edgeplate
    November 25, 2010

    Dear Chairman,

    In a lengthy letter, you haven’t managed to explain how you intend to return the Irish subsidiary to profitablity or rid the rest of the company of its losses by selling it off or dissolving it. There may be strategic reasons for maintaining a loss making subsidiary but you haven’t explained what they are. Furthermore you avoid specific mention of the Greek, Portuguese, and Spanish subsidiaries which all have a patchy trading history. It seems to me that a rationalisation of the company, retrenching to core activities which are likely to be profitable and robust in the face of downturns, is a possibility which should be urgently investigated before the worsening economic climate forces it. Smart companies change before they have change forced on them.

    I’m afraid your letter has done nothing to reassure me that you have a grip on the current situation and that my money would not be better invested elsewhere. I am therefore selling my shares.

    I wonder if you are really cut out for this chairmanship business. Have you thought of a new career in politics where spending other people’s money and waffle are valued abilities.

    Yours faithfully

    Edgar D. Geplate.

  10. Bob Eldridge
    November 25, 2010

    I see that the EU has awarded itself a big pay rise.
    Everybody knows that the Lib Dems will loose every bi-election and will vanish at the next election, because of its sell out. I suspect that the 5 year parliment is because it is realised that an election will destroy the coalition. At least they get 5 years at the trough.

  11. Mark
    November 25, 2010

    Gesellschaft mit beschränkter Haftung Рor company with limited liability (or preferably, translated as shrunken responsibility) Рso where are the limits of their liability, and how soon can we shrink their responsibilities?

  12. Acorn
    November 25, 2010

    Does this mean we are backing Frau Merkel with haircuts for bond holders? I am confused?

    Reply: No, I am not – this is the Chairman talking.

  13. alan jutson
    November 25, 2010

    Mr Chairman

    I think you should know that it would appear that a National Newspaper in the UK has today launched a “Get out of the EU” campaign.

    I am not sure if this type of action falls within the rules under which the EU operates, or indeed if any other overseas newspapers are operating a similar campaign.

    Can you please confirm that you will/can take immediate action to launch a counter attack of information, so that the population in all of our trading areas are bought up to speed. We simply cannot have people trying to think for themselves, as this would upset our workers and supporters at Head Office.

    Once again looking forward to ever more Control,Regulation and increased Taxation.

    Your loyal Servant

    Bill Me-Onceagain

  14. Johnny Zero
    November 25, 2010

    If a State defaults on its Bond debts would that mean their Banks would also be in default too? I am thinking that if Ireland defaults, what happens to the huge Irish RBS debts? Would RBS losses simply be covered by the British Government as it is now a National Bank?

    Reply: Not necessarily. The banks can still meet their bills if they are solvent and liquid, even if the state is not. If state financial support is crucial to the banks then it is more difficult. UK banks with Irish risk are likely to have mainly private sector risks, so they still depend on the ability of the private companies and individual to meet their obligations. The aim of the “rescue” package is to prevent a default on state debt.

    1. Iain Gill
      November 25, 2010

      how much of private sector pension fund money in the UK sits in Irish bonds? especially the “supposedly” lower risk funds?

      going to be a lot of decent folk who did the right thing and paid regularly into pension funds left penniless in old age if the bonds default?

      would it be cheaper for the chairman to bail out such pension funds directly rather than the irish state?

      or do we just let folk who did all the government advised and saved for old age go penniless?

      thoughts welcome

  15. Glyn H
    November 25, 2010

    I thought that it was a forced bailout to protect European holders of Irish bonds!

  16. Kenneth
    November 25, 2010

    Dear Mr Chairman, would you consider restructuring the company into EuroA and EuroB in order to better match supply with demand?

    NB is there any chance of getting the accounts approved next time round. We really are a laughing stock you know…

  17. edgeplate
    November 25, 2010

    Dear Chairman (or should if be Dear Leader?),

    Following your most instructive letter, and before framing my previous reply (which you have not yet graced with a reply) I sold my shares in EU Gmbh.

    The reason I write is that I am intrigued as to what the purpose of this company is. It certainly doesn’t appear to be the normal commercial imperative which govern companies, i.e. making a profit. Therefore I assume the main purpose is to maintain you in a style to which you could not aspire by trading profitably.

    Yours faithfully

    Edgar G. Eplate.


    Your letter was very inspiring, at least in so far as it induced me to cast the funds realised by liquidating my involvement with your venture into the hands of the speculators betting for its collapse. It seemed a near enough certain way to make good the losses I have suffered by placing undue faith in your activities.

    Yours faithfully

    Edgar G. Eplate.


    No hard feelings eh? It’s just business.

    Yours faithfully

    Edgar G. Eplate.

  18. English Pensioner
    November 25, 2010

    Dear Mr Chairman,
    Wouldn’t it be cheaper to let the Irish subsidiary go into liquidation?
    I’m sure an arranged liquidation whereby the existing directors buy out the bankrupt organisation and then continue trading under a slightly different name, but without the debts, could be achieved as this seems to be common practice in the UK these days.
    You remain, sir,
    My obedient servant,
    English Pensioner

    1. alan jutson
      November 26, 2010

      English Pensioner

      Ah yes the old Friday Monday trick.

      The only people who then make money are the Recievers.

      But what would we call the new Company.

      Answers on a postcard please.

  19. Norman Dee
    November 26, 2010

    When I lived in Portugal during the late 80’s, you could always tell when a shop was in trouble, because they used to put their prices up “to make as much money as they could before they close” ???? Naturally they always closed with plenty of stock remaining.

  20. Bill
    November 26, 2010

    Dear Chairman

    I take note of your comments, the Euro has worked well for your German subsidiary, stabilising your exports ensuring that no other subsidiary could depreciate against you.

    When your Irish satellite hit problems ‚Äď hangover induced by overheating ‚Äď you took a deeply partial view shouted ‚ÄúFire‚ÄĚ and told the world that our creditors would have to take a hit.
    At a stroke you increased our interest bill by a few billion

    (Maybe we should start by refusing to pay intercompany debts to your German subsidiary)

    Where are friends when you need them? I note that you Germans treated your employees in the east rather differently; your borrowing to sort them out damaged other subsidiaries balance sheets.

    Maybe it’s time for a MBO

  21. johnny
    November 26, 2010

    great report from gmbh.

    someone needs to remind chancellor merkel of what Clinton’s advisor (james carville) said.

    “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody. ‚ÄĚ
    Her explicit statement that politics needs to show the market who’s the boss show she has learnt nothing.

    November 27, 2010


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