The Irish Independent reports that Dutch banks have agreed to put strict limits on mortgage lending, amid signs that Europe's most indebted borrowers are getting ready for another spree.

Mortgage debt in the Netherlands is almost 200pc of disposable income. This is about double the estimated 100pc figure for Ireland. The Dutch banks have agreed tighter rules on lending following concerns that households are vulnerable to a fall in house prices or rising interest rates, the Dutch Finance Ministry said.

Banks will limit maximum repayments on variable mortgages to 30pc of disposable income, to ensure households can still afford their mortgages should interest rates rise, Finance Minister Gerrit Zalm said in a letter to parliament.

Guidelines

A spokesman for the Irish Financial Regulator said there were no specific repayment guidelines for Irish lenders. "We stress the need for lenders to assess total affordability for the customer. However, it is an issue we continue to monitor very closely."

Industry sources say Irish banks used an average affordability ratio of 40pc of the borrower's disposable income.

Household debt

Although Dutch house prices rose at less than half the speed of Irish ones - up 74pc since 1997, compared with Ireland's 180pc - household debt more than doubled. The fast-growing economy crashed in 2002 and, although house prices did not fall, consumer spending plunged as households stopped borrowing against the value of houses.

The economy is now showing signs of life and house prices have begun to pick up and the government is anxious not to see a repeat performance.

"Dutch households are taking on a lot of risk to finance their own home, even by international standards," Mr Zalm said.

Lenders agreed to better inform borrowers about the risks associated with taking out a mortgage worth more than 100pc of the value of the home - a popular product in the past. The government will consider legislating if the measures do not have the desired effect, the ministry said.

The Irish Independent also reports that Irish advertisers spent an additional €61m last year, with spending totalling €1.4bn, new figures from advertising body IAPI indicate. This means that advertising spend was up 4.4pc last year, less than many had expected 12 months ago.

The biggest winner in 2005 was the radio sector, which saw ad revenue grow 16.5pc to €106m, according to the IAPI BASE report.

This is good news for the radio sector as several more radio stations are in the pipeline, including the quasi-national licence, which Newstalk has applied for. Commercial radio sales house Independent Radio Sales said yesterday radio is up 15pc so far this year.

Cinema was the only medium which saw a notable fall in spending. The medium took a 7.5pc hit and Gary Power of Saor Communications said that was due to "blockbusters such as 'Mr & Mrs Smith' and 'War of the Worlds' not performing as well as planned".

Print spending once again took the lion's share of ad expenditure, although the amount it took was almost unchanged from 2004, at €926m.

The IAPI figures indicate that TV was up a massive 14pc overall to €287m.

The Irish Times reports that Fortis and An Post could each need to spend up to €200 million on their banking joint venture over the next few years, analysts suggested yesterday.

It emerged on Tuesday night that An Post had chosen to enter into exclusive talks with the Belgian/Dutch banking group about setting up a new banking business in the Republic.

Neither party would comment on the details of the planned joint venture yesterday, aside from confirming that talks would begin soon and expressing optimism at the development.

The move caught the attention of analysts however, with Rabo Securities choosing to lift Fortis's price target on the basis of continued growth at the group.

Rabo identified the Republic as an attractive market for life insurance in particular and said the link with An Post could require an investment of €100-€200 million on both sides over several years.

Other analysts wondered if Fortis could use the deal to test the Irish market with a view to taking over one of the domestic banking players in years to come.

The terms of the proposed relationship between An Post and Fortis have yet to be settled, with negotiations on these expected to last a number of months.

An Post said, however, that it expects the new financial services business to offer its first products "early next year".

The firm is known to be keen to compete in all areas of the sector, including savings, insurance and perhaps mortgages. The venture is likely to be targeted in particular at customers who are as yet "unbanked".

Fortis could be expected to rely on its decade-long experience in a joint venture with the Belgian Post Office in building an Irish operation. This Belgian business also offers telephone and internet banking.

It was unclear yesterday how the proposed new deal would affect An Post's existing banking relationship with AIB, which is said to have about a year to run. Few expect it to continue, however.

An Post would not comment on the matter, while a spokesman for AIB said only: "We work hard at it and it's a positive relationship."

The AIB deal is considerably more limited than the proposed joint venture with Fortis. It was equally unclear how An Post's insurance intermediary, One Direct, would emerge under the new structure.

An Post's move into large-scale financial services comes at a time of increasing competition in domestic banking, with the sector already absorbing Bank of Scotland (Ireland)'s increased presence as well as the forthcoming official relaunch of National Irish Bank under Danske's ownership.

"We see that there is still room for additional competition," said a Fortis spokesman yesterday. He added: "We consider Ireland as being a growing market."

Eamonn Hughes, an analyst with Goodbody Stockbrokers said Fortis would represent "another competitor, not just for the incumbents, but for new entrants". He pointed to Bank of Ireland's initial experience with its UK Post Office venture however, noting that it showed this type of market is "a difficult nut to crack".

The Irish Times also reports that a fraudulent replica of Bank of Ireland's website has been shut down following an attempt to con €85,000 from a consumer.

The Irish Financial Services Regulatory Authority yesterday made a fresh warning to consumers to protect their personal financial information following the attempted fraud.

The target of the fraud was informed by e-mail that he had won a lottery and could collect his winnings from a website with the address www.boireland.com, which a spokeswoman for Bank of Ireland said was a high-quality replica of its UK website.

The consumer, who was not a customer of Bank of Ireland, was told he needed to give his account details and personal information number (Pin) in order to transfer the proceeds of a fraudulent bank draft into his own account.

He was also told he must pay 10 per cent of his winnings, about €85,000, in solicitors' fees. The Garda Bureau of Fraud Investigation was alerted and the website was shut down.

The Bank of Ireland spokeswoman said there was no breach of its online banking security.

This is the third so-called "phishing" attack involving Bank of Ireland in the past two years. Phishing is a type of fraud where e-mails purporting to be from banks and credit card companies are used to glean unauthorised access to consumers' accounts.

The Bank of Ireland spokeswoman said no bank would ever ask for Pin numbers by e-mail or telephone.

The financial regulator warned consumers not to give account details to companies with which they have no dealings.

The Irish Examiner also reports that IDA Ireland faced strong criticism yesterday for its failure to get sufficient investment to the regions.

Members of the Joint Oireachtas Committee on Enterprise & Small Business demanded explanations from IDA boss Sean Dorgan why areas such as east Galway, Kerry and Clare had done so badly in recent years.

Mr Dorgan and other executives were before the committee to discuss the IDA’s 2004 annual report.

Senator Fergal Browne said IDA facilities were not attracting any investment and questioned the body’s commitment to regional development.

Mr Dorgan said there were 28 business and technology parks of a worldclass standard nationwide.

But Carlow-based Senator Browne told committee members that there had been no major industry in his town since 1973.

“We’re blue in the face from listening to the IDA telling us how great our area is. There are lots of business parks around the country but we’re not getting any investment into them.

“The reality is that they are lying idle and they’re costing millions. I see no proof of any proper regional development.”

Mr Dorgan said: “I don’t regard it as a matter of failure or fault that we have parks that are ready for new investment. I think that’s what we need.

“I think that if every park was full or almost full, we would be failing in our provisions.”

He added the business parks should not be “seen as a source of criticism, but a commitment for the future.”

Senator Mary White was ruled out of order when she asked if the use of Shannon by the US military was damaging our reputation internationally.

Kathleen Lynch, Labour TD for Cork City, asked if enough was being done on upskilling.

Mr Dorgan said upskilling was given very serious attention by IDA and Fás to ensure Ireland retained its ability to compete internationally.

He also noted the dramatic change in the nature of inward investment.

Investors require “large population bases with a strong urban centre” to create a clustering effect. Industries go where they know they will get staff and the back-up required to run their businesses.

On that basis IDA has to look at the bigger picture when setting about attracting companies to a region, he said.

It was no longer good strategy to think of a single town as a location for inward investment, said Mr Dorgan.

“Competition exists between every location in Ireland and every location internationally.”

The Financial Times reports that one of Silicon Valley's most prominent venture capital firms has raised $200m to invest in new technologies to fight global pandemics.

However, it warned that the technology needed to combat such health emergencies would not be widely available until 2007 at the earliest.

The unusual new venture capital fund from Kleiner Perkins Caufield & Byers reflects an escalation in efforts by governments and the World Health Organisation to improve the detection and prevention of potentially widespread outbreaks of infectious diseases such as Avian flu.

Private money was also needed to encourage companies to invest more in areas such as vaccines, which had received little recently in the way of technological advances, said the new fund's backers.

"We're concerned and alarmed by the lack of innovation in this area," said Brook Byers, a Kleiner partner. "There are very few manufacturers of vaccines today, and the plants are not distributed widely."

Part of the fund's aim is to help discover cheaper ways to produce vaccines so they can be made available in large quantities in the developing world, he added.

However, even with the heightened concern about the danger of global health emergencies, the firm warned it would take time for effective prevention technologies to become widely available.

"We think these things can get to the world in scale in 2007," said John Doerr, a Kleiner partner best known for his investments in internet companies such as Google and Amazon.com.

To try to accelerate the pace of development, Kleiner said it planned to invest much of the money in established companies that had technology that could be used to fight pandemics but which were not developing their capabilities.

That is in contrast to the normal venture capital route of investing in start-ups.

The FT also reports that Microsoft on Wednesday moved aggressively to counter the European Commission’s latest antitrust charges, saying the regulator had “ignored key information and denied Microsoft due process in defending itself”.

The criticism came as part of its formal response to Commission allegations that Microsoft had failed to comply with Brussels’ landmark March 2004 antitrust ruling. It is fresh evidence of the breakdown of trust between the two sides in a battle that has been raging for more than six years.

The regulator threatened in December to impose fines of up to €2m ($2.4m) a day unless Microsoft provided rivals with accurate and complete technical information about the Windows operating system. This was a key element of the Commission’s 2004 ruling, designed to ensure that other companies’ software could function with Windows.

“Microsoft has complied fully with the technical documentation requirements imposed by a 2004 European Commission decision, and the Commission has ignored critical evidence in its haste to attack the company’s compliance,” the US software group said on Wednesday.

It added: “The Commission waited many months before informing Microsoft that it believed changes were necessary to the technical documents, and then gave Microsoft only weeks to make extensive revisions. The Commission and its experts had not even bothered to read the most recent version of those documents” before issuing charges in December.

Microsoft also sought to turn up the heat on the Commission’s technical adviser, the British computer scientist Professor Neil Barrett, whose scathing assessment of Microsoft’s compliance efforts to date formed the basis for the regulator’s charges. Mr Barrett dismissed Microsoft’s documentation as “totally useless”

Microsoft on Wednesday handed in a rival assessment that concluded that “the inter-operability information...current industry standards” and provides “complete and accurate information”.

The New York Times reports that Google, Yahoo, Microsoft and Cisco Systems came under fire at a House human rights hearing on Wednesday for what a subcommittee chairman called a "sickening collaboration" with the Chinese government that was "decapitating the voice of the dissidents" there.

The statements by the chairman, Representative Christopher Smith, Republican of New Jersey, opened a much-anticipated session aimed at getting an accounting of the companies' dealings in China, and to air criticism that they do business there at the peril of human rights.

The session, in a crowded hearing room, was convened by the House Subcommittee on Africa, Global Human Rights and International Operations. It was the most extensive public review of the companies' position since criticism started gathering steam well over a year ago.

Among the chief issues is the alteration of some of the companies' online offerings in the Chinese market — from search engines to blogging tools — to conform with the requirements of the government there.

Also of concern is the sale of Internet hardware that the Chinese government has used in surveillance of its online population, as well as the role of American companies in providing information leading to the imprisonment of Chinese citizens for online activity that in the West would be considered free speech.

Representative Tom Lantos, a California Democrat whose own Congressional Human Rights Caucus was snubbed by all four companies when it invited them to speak two weeks ago, had sharp words for the executives on Wednesday. "I do not understand how your corporate leadership sleeps at night," Mr. Lantos said.

But while acknowledging the concerns of Congress and their critics, executives of the four companies were unified in their insistence that their presence in China provided a net benefit.

They also suggested that the United States government could do more than companies to promote human rights reform abroad — a notion that divided members of the subcommittee over where blame lies if companies have gone adrift in China.

Jack Krumholtz, associate general counsel at Microsoft, noted that since the company started its online service MSN Spaces in China last May, more than 3.5 million Chinese had created Web sites and blogs with it.

MSN came under fire late last year for shutting down the Web site of a popular blogger in Beijing on orders from the Chinese authorities. Despite this, Mr. Krumholtz suggested, "there's more opportunity for communication and freedom of expression as a result of our services and other services, and we expect that trend to continue."

But some members of the subcommittee were not persuaded by such arguments, nor by the suggestion from Elliot Schrage, a vice president for corporate communications at Google, that a voluntary disclosure that it had entered the Chinese market with a censored version of its search engine three weeks ago was an adequate compromise.

In examining whether the Chinese government provides Google with a list of terms that must be filtered from its search engine, or whether Google voluntarily anticipates the authorities' wishes, an exasperated James A. Leach, an Iowa Republican, asked Mr. Schrage, "How do you know what to block?"

Mr. Schrage explained that among other things Google studied the filtering habits already in use by competitors and the Chinese authorities.

"So if this Congress wanted to learn how to censor, we'd go to you — the company that should symbolize the greatest freedom of information in the history of man?" Mr. Leach said. "This is a profound story that's being told."

Mr. Schrage replied, "I hope it was clear from my written testimony that I submitted, and from my oral testimony that I gave, that this was not something we did enthusiastically, or not something that we're proud of at all."

Not every member of the panel was prepared to take the companies to task. "Let's assume for a moment that no U.S. tech company does business in China," said Representative Adam Smith, a Washington Democrat. "Does it get better? Is it less repressive? Does China move forward? I don't think so."

He pointed out that the Internet was notoriously difficult to control, and that even the best corporate filters and firewalls sooner or later proved porous even in the United States.

"I think we all know that those things are only so effective, they are consistently broken, consistently hacked into, and the same is happening in China," he said. "China is not going to be any more successful at filtering and firewalling everything than we are. If you have them there, people will get through those firewalls and get information that they otherwise wouldn't, and I think we have to be mindful of that."

But Lucie Morillon of Reporters Without Borders, which tracks online censorship in China, suggested later in the hearings that ordinary Chinese could not be expected to hack their way around electronic walls any more than ordinary Americans could.

She also noted that software tools available in the West to make users anonymous online are often inaccessible in China.

One of the more pointed moments in the hearing came when Mr. Lantos peered down from the panel and asked each executive if they or their companies were ashamed.

There was no easy way to answer the question, although the repeated legalistic responses of Cisco's general counsel, Mark Chandler, were enough to annoy Mr. Lantos and draw a chuckle from the audience: "Our company provides access to information to people all over the world, including China," Mr. Chandler said flatly, "with a consistent global platform that maximizes the opportunity for freedom of expression."

But Representative Robert Wexler, a Florida Democrat, took up Mr. Lantos's question later and asked if Congress ought not be ashamed itself, for having granted China trade status as a most favored nation. Mr. Wexler said that it was "duplicitous" to blame the companies for doing what the government had legally sanctioned them to do, and that the firms were in a "no-win situation."

That suggestion drew an incredulous response from Dana Rohrabacher, a California Republican. "Most favored nation status?" he said, "Who lobbied for that? Come on. The corporations did."

In an article in the NYT economist Robert Frank writes: Suppose a politician promised to reveal the details of a simple proposal that would, if adopted, produce hundreds of billions of dollars in savings for American consumers, significant reductions in traffic congestion, major improvements in urban air quality, large reductions in greenhouse gas emissions, and substantially reduced dependence on Middle East oil. The politician also promised that the plan would require no net cash outlays from American families, no additional regulations and no expansion of the bureaucracy.

As economists often remind their students, if something sounds too good to be true, it probably is. So this politician's announcement would almost surely be greeted skeptically. Yet a policy that would deliver precisely the outcomes described could be enacted by Congress tomorrow — namely, a $2-a-gallon tax on gasoline whose proceeds were refunded to American families in reduced payroll taxes.

Proposals of this sort have been advanced frequently in recent years by both liberal and conservative economists. Invariably, however, pundits are quick to dismiss these proposals as "politically unthinkable."

But if higher gasoline taxes would make everyone better off, why are they unthinkable? Part of the answer is suggested by the fate of the first serious proposal to employ gasoline taxes to reduce America's dependence on Middle East oil. The year was 1979 and the country was still reeling from the second of two oil embargoes. To encourage conservation, President Jimmy Carter proposed a steep tax on gasoline, with the proceeds to be refunded in the form of lower payroll taxes.

Mr. Carter's opponents mounted a rhetorically brilliant attack on his proposal, arguing that because consumers would get back every cent they paid in gasoline taxes, they could, and would, buy just as much gasoline as before. Many found this argument compelling, and in the end, President Carter's proposal won just 35 votes in the House of Representatives.

The experience appears to have left an indelible imprint on political decision makers. To this day, many seem persuaded that tax-cum-rebate proposals do not make economic sense. But it is the argument advanced by Mr. Carter's critics that makes no sense. It betrays a fundamental misunderstanding of how such a program would alter people's opportunities and incentives.

Some examples help to illustrate how the program would work. On average, a family of four currently consumes almost 2,000 gallons of gasoline annually. If all families continued to consume gasoline at the same rate after the imposition of a $2-a-gallon gasoline tax, the average family would pay $4,000 in additional gasoline taxes annually. A representative family with two earners would then receive an annual payroll tax refund of $4,000. So, if all other families continued to buy as much gasoline as before, then, this family's tax rebate would enable it to do so as well, just as Mr. Carter's critics claimed.

But that is not how things would play out. Suppose, for example, that the family was about to replace its aging Ford Explorer, which gets 15 miles per gallon. It could buy another Explorer. Or it could buy Ford's new Focus wagon, which has almost as much cargo capacity and gets more than 30 miles per gallon. The latter choice would save a whopping $2,000 annually at the pump. Not all families would switch, of course, but many would.

From the experience of the 1970's, we know that consumers respond to higher gasoline prices not just by buying more efficient cars, but also by taking fewer trips, forming carpools and moving closer to work. If families overall bought half as much gasoline as before, the rebate would be not $2,000 per earner, but only $1,000. In that case, our representative two-earner family could not buy just as much gasoline as before unless it spent $2,000 less on everything else. So, contrary to Mr. Carter's critics, the tax-cum-rebate program would profoundly alter not only our incentives but also our opportunities.

A second barrier to the adoption of higher gasoline taxes has been the endless insistence by proponents of smaller government that all taxes are bad. Vice President Dick Cheney, for example, has opposed higher gasoline taxes as inconsistent with the administration's belief that prices should be set by market forces. But as even the most enthusiastic free-market economists concede, current gasoline prices are far too low, because they fail to reflect the environmental and foreign policy costs associated with gasoline consumption. Government would actually be smaller, and we would all be more prosperous, if not for the problems caused by what President Bush has called our addiction to oil.

At today's price of about $2.50 a gallon, a $2-a-gallon tax would raise prices by about 80 percent (leaving them still more than $1 a gallon below price levels in Europe). Evidence suggests that an increase of that magnitude would reduce consumption by more than 15 percent in the short run and almost 60 percent in the long run. These savings would be just the beginning, because higher prices would also intensify the race to bring new fuel-efficient technologies to market.

The gasoline tax-cum-rebate proposal enjoys extremely broad support. Liberals favor it. Environmentalists favor it. The conservative Nobel laureate Gary S. Becker has endorsed it, as has the antitax crusader Grover Norquist. President Bush's former chief economist, N. Gregory Mankiw, has advanced it repeatedly.

In the warmer weather they will have inherited from us a century from now, perspiring historians will struggle to explain why this proposal was once considered politically unthinkable.