There’s something very comforting about the idea of confession. It’s a great idea. When I was a kid I used to love the ritual of confession on a Saturday. A half dozen of us would traipse down to the empty, echoey church after ‘Football Focus’ on BBC. I remember the anxiety of waiting for my turn and counting the seconds as the penitent in front of me mumbled unspeakable acts to the priest who went through the motions. His hushed blessings were always drowned out by the giggling — that unique and uncontrollable giggling that the combination of church and six young boys can spark.
Then there was the ritual of comparing notes. “What did you get?” ” Jesus, six Hail Marys, a Hail Holy Queen and a pair of Our Fathers”. Fr Moore was always the hanging judge of the place, doling out heavy sentences for tiny misdemeanors such as Macaroon bar-thieving which everyone knew was “allowed” — and even expected at the age of 12. Anyway, the whole process of getting away with it and starting again before Mass on Sunday appealed to me as a child.
Over the years, many non-Catholic friends have slagged the very idea of confession, when they heard that all you have to do is go in and say sorry and you are absolved, but there is something wonderfully simple about this sacrament. If God can’t forgive sins what can he do? In fact, the very ability to forgive is what makes God, God. The Vatican also understands that confession offers hope. There is great energy in the second chance. Confession is crucial for continuity; absolution and forgiveness are essential for renewal and recovery.
This morning, all over Ireland, bankers are meeting their clients. At the table will be two bankers, the lad who lent the money and the lad who is trying to get it back. On the other side of the table is the sinner who has borrowed heavily and now can’t pay his debts. There might also be a liquidator there with the sinner, explaining to the bankers just how desperate the situation is. The first thing the bankers have to get their head around is that the “security” they were pledged against the loans last year isn’t worth the paper it is written on. The second thing they have to understand is that they are not getting their money back, not today, not tomorrow, not ever. The bankers have to start thinking like priests. They need to get into the forgiveness game.
Why, you might ask? Surely someone who was stupid enough to expand his or her business using borrowed money at the top of the boom doesn’t deserve forgiveness? Surely, they deserve punishment? Well in an ideal world retribution has its place, but now Ireland has to start talking about forgiveness. We need to soften our stance toward our debtors, not because of any moral requirement, but because it is the only way out of the situation.
In the meetings that are taking place all over the country as you read this, one man is terrified. There is one person at the table who is petrified of losing everything. He is not the debtor. He is the lender and at this stage, he has no place at the meeting.
Think about what is happening today. Many companies have seen their turnover halved in six months. There is no way they can pay back borrowings based on last year’s turnover metrics. But the lad who lent to them is snarling at them over the table demanding that they pay every penny. He is doing this because if they do not pay he will lose his job. Therefore, he digs his heels in. So he is thinking like a debt collector, not a priest.
If the company is told that it will have to work the next decade simply to pay back the bank, that company may simply choose to fold. What is the point in building anything now, if all the profits will simply go to the bank? Therefore, the bank loses everything, the business fails, the liquidator is called in, employees are laid off and something is destroyed. More importantly, the credit crunch gets tighter, not looser, and the prospect of more defaults increases as the negative impact of this company’s closure shunts on throughout the system.
What would a priest do in this situation? The priest’s job is to keep the flock together as much as possible and, particularly for a proselytising organisation like the Catholic Church, keeping the numbers up is the bottom line. So the priest would act like a businessman here and he would cut a deal. The banker has to think like a businessman or priest and give hope to the company or the individual. The banker has to appreciate the powerful psychology of the second chance. By cutting a deal, the banker gets something, the company survives and the debtor is energised to try again. Yes, there is a risk that the debtor just walks way laughing, but by keeping a hold over the debtor, which is firm but doesn’t strangle him, everyone gets a second chance.
The first thing the banks must do to achieve this mindset shift is get the lender out of the room. In the negotiations between the bank and the debtor, the lad who lent can’t be present. He has too much at stake and as a result of being both personally and professionally involved, he will not make the right decision. He wants all his money back so that he doesn’t look like an eejit. In so doing, the lender makes a bad situation worse.
When he is out of the room, the writedown lad can deal with the possible, not the fanciful. By forgiving, we can start again. And, counter-intuitively, the only way to get liquidity going again is to forgive debt.
There is nothing unusual about this. This is the process by which we grope our way to the bottom. We need to find the floor and the banks have to lead this operation. If they continue to behave as if nothing has changed and as if we can all pay back the billions we borrowed, we will not get out of this mess. Catholic Ireland needs to start thinking like a Catholic again. Central to this will be financial confession where the debtor shuffles into the confessional and, depending on his delinquency, is offered a penance. This way, we keep hope alive. The economic equivalent of two Hail Marys and an Our Father is doled out and we start again. The banks take the hit because it is they who lent the money in the first place. We draw a line under the problem and move on.
You won’t read this Catholic forgiveness stuff in economic textbooks but then again, there was always something very Protestant in free-market economics. Max Webber mightn’t like it, but debt forgiveness will be part and parcel of the recovery.
It is entirely appropriate that David brings sin and forgiveness into our economic discussions as the Vatican recently restored the doctrine of Indulgences to the Catholic compendium of beliefs. See: http://www.nytimes.com/2009/02/10/nyregion/10indulgence.html One priest said: “Confessions have been down for years and the church is very worried about it. Indulgences are a way of reminding people of the importance of penance. The good news is we’re not selling them anymore,” –Thank heavens for some Good News these days! One wonders whether Seanie will be able to avail of a Plenary Indulgence to reduce the number of strokes he spends in the… Read more »
Completely disagree with you David. Those responsible for this mess should be jailed. Period. We keep on having bank scandals because we adopt this so called “forgiveness” attitude – From Ansbacher accounts to DIRT avoidance schemes (including a certain Flynn) to now effectively stealing a generations wealth and handing it to a bunch of property developers who then get their bribed politicians (either in or out of the ‘golden circle’) to raid the national pension fund to bail them out. Oh and for good measure get one-sixth of the working population (public sector employees) to pay for the raided pension… Read more »
And then at some point in the future there will be a Holier than thou member of the banking community that will say the credit cris-ocaust was merely a fabric of our imagination and never happened.
Hi David, David why do you contend that the banks are the way out of the crisis. The Banks are the contagion. The banks are under nefarious control. The evidence is writ large. The banks deliberately inflated the property bubble to fleece the people working the real economy. The individuals running the banks are duping the public. Tell me David, why is it that the majority of people are unable to explain fractional reserve lending. Surely you must be aware it s the practise of this mechanism by which bubbles are inflated. Creating money from debt is morally indefensible. Why… Read more »
The Catholic boy’s delusion of forgiveness is it? Ah sure, Father, I firmly resolve, blah dee blah dee blah, whatever I have to say, and Bob’s your uncle and away we go again, sure isn’t bankruptcy a badge of honor in the good ol’ U S of A. but wait a minute, it’s those stern Northern Europeans of Protestant persuasion who are having all kinds of problems with Catholics or Orthodox southern Europeans who get carried away, knowing God loves all his children, especially prodigals who have been whipping it up lately, and are now truly sorry, etc. whatever. This… Read more »
[…] by David McWilliams, February 18th, 2009 Irish Independent This morning, all over Ireland, bankers are meeting their clients. At the table will be two bankers, the lad who lent the money and the lad who is trying to get it back. On the other side of the table is the sinner who has borrowed heavily and now can’t pay his debts. There might also be a liquidator there with the sinner, explaining to the bankers just how desperate the situation is. The first thing the bankers have to get their head around is that the “security” they were pledged… Read more »
Before commenting on David’s latest sermon, I’d like to make a plea: let us hear no more negative remarks that compare RoI to so-called “banana republics”. I for one love bananas and banana-ism remarks are hurtful to many. It is a terrible insult to banana republics to put RoI in the same boat. Come out of hiding you magnificent 10, you used to be role models for Mr Cowen & Mr Lenihan. We have no interest in stringing you up – it’s enough to stick needles in your effigies. Hopefully most people have realised the folly of involving lawyers, the… Read more »
Davids article has just been misunderstood by Paulomahony. Davids
article is not as you describe it aka gauntlet revealing opposites etc
etc blah blah. I notice in you pov you speak as if you and david
are in some sort of superior zen economic mind state looking
over squabbling comments. Do you think the Bankers should
be bestowed mercy. Are you saying such should be our fate and
turn a blind eye.
The banking system is deliberately making this crisis and
David wants to do business with them.
I just wonder who the 10 apostles in the Golden Circle of Faith are….
David , macaroon stealing ‘was allowed’ only to the privileged , if you were in rags or tinker clothes this was still ‘classed’ as stealing and as such is wrong even when your peers allow it. Forgiveness can be given where remorse is shown and those around the sinner can see the difference in the man. This will not happen here simply because of our twisted Catholic culture and the fact we are all in some form or other sinners , no examples have to be made as stated above we have had our Dirt and Charlie accounts , enough… Read more »
Davids Article is economic reportage treason.
Carrying your proposal to its logical conclusion
then for us means it was all an accident. The
bankers are not responsible for this minor
indiscretion of economic pathology.
What about the Inquisition? For banking heresy.
…quoniam punitio non refertur primo & per se in correctionem & bonum eius qui punitur, sed in bonum publicum ut alij terreantur, & a malis committendis avocentur
“… for punishment does not take place primarily and per se for the correction and good of the person punished, but for the public good in order that others may become terrified and weaned away from the evils they would commit.”
It`s kind of an opium solution: those who got high on easy credit would be up for it allright. And there might even be the odd worker out there who`d rather keep his job than watch his employer drown in debt, and his colleagues line up beside him at the dole office… I`m not into vengeance or the idea of paralysing the lot of us for the sins of – even – a fair few. So I`ll go along with the idea of forgiveness, as long as you put the 25-30 year olds with young families & mortgages based on… Read more »
Mr Mc Clure,
Please note that the article you cite is full of inaccuracies. The Catholic Church has never ‘abolished’ indulgences:
Whatever works David, The way I see if, youre forgiving debt so building can start again and life can move on, get something moving in the country, maybe the end justifies the means. Yeah there may well be an argument for various levels of debt forgiveness… But the Americans have a term for unintended consequences in covert operations … blowback…. worth considering what these could be given the covert nature of the nationalization of Anglo Irish Bank and the debt forgiveness granted to the “golden circle”. Funny I havent heard the term used in the context of economists and central… Read more »
David, Thanks for the article. Certainly, the banks should do the deal you suggest with the debtors (drop the interest, reduce the monthly repayments, extend the term – whatever it takes) and, thereby, 1) Help us to keep companies running and maintaining jobs and b) Help us to keep people in their family homes. If the banks refuse/neglect [remember sins of commission and sins of omission? ; )], to give these people a break, they must be forced to. This can be done by legislation in Dail Eireann being passed to take back the â‚¬7bn and use it, as I… Read more »
If you had learned the Bible instead of all that other stuff, you would know Matthew 18:23-35 – one guy is forgiven ten thousand talents and goes after someone for a hundred denarii – it’s like fifty billion and a hundred thousand – sound familiar? Anyway, the guy who is forgiven the big amount is thrown into jail and tortured because of his lack of forgiveness; which is the way a lot of people are feeling about our banks at the moment.
Incidentally, I don’t see many dour northern European Protestants amongst the PIGS.
Is it wise to forgive those who remain un-apologetic
for their banking malpractice and re-enter into working
relations with them without shuting the money out
of thin air fraud down only to get stung by it again
and again and again.
Your government debt owner lost the instant those flights went into the towers. Nothing since is in the normal country. Where did you expect the injection of funds from the ‘war’ to go, and the game playing of the 150 per barrel.
Inflation is not some moral visitation, it is a product with all and every market, and evil only when it bites into your personal capital.
And two bites. it will concentrate, anything beyond 100 is foolish.
In the States or France they dont seem to forgive that easily. Irish people would only do so because they are ‘irish’ and beyond everything they really cannot do otherwise because the country is genuinely screwed, any link between these two conditions…?
Folks, for anyone still interested, I have combined the “Top 5″s submitted, as requested by Ruairi under the last article, into ONE post for easier analysys. It is back there, if anyone is interested in some light reading! I think we should keep relevant posts there for now, just to keep lines of demarcation clear on our Host’s blog.
I think we touched on this a few blogs ago. Lets say, for example, that the people that bought family homes during the bubble were identified and the bubble element was marked down from the mortgage. Take a nominal figure of 20%. Just erase the bubble price hike, so to speak.
What affect would that amnesty have on the economy overall?
Over to the economists.
While on the subject of forgiveness , I forgive you Tim as now that I have looked back a page I saw the copy and paste job you done and now that the Top 5 ( odd ) points have been placed together I see at least your heart is in it . Just step back on the posts , your hits fill up outlook reading
If a couple of Hail Marys will forgive the small town developer or over stretched yuppie, looks like the Government is in for a recitation of the whole Bible….
Getting the lender out of the way and cutting a deal for the company or individual who was misled by ‘experts’ is good enough. Using the analogy of the grieving process, many of us are in the throes of the anger stage directed towards the lenders and their powerful facilitators, buffered from loss with impunity. Therefore the prayer, not quite of holy absolution, that resonates with me right now is this one; – A PRAYER TO AFFLICT THE COMFORTABLE – MICHAEL MOORE(from Stupid White Men) Dear Lord (God/Yahweh/Buddha/Bob/Nobody): We beseech You, O merciful One, to bring comfort to those who… Read more »
I think David has a very valid point in what he is saying in his latest article. We should not forget that it is small to medium sized businesses that are the back bone of the country and that they really generate the bulk of the country’s wealth that allows the country to operate. Over the past number of years Ireland has lost all competitiveness due to increases in wages and over heads. Many companies are facing financial difficulties due to down turn in business and stuck on fixed rates which now way above the variable rate which looked the… Read more »
Leaving aside the moral hazard, the law of unintended consequences, and the signals that this would give to property investors and mortgage holders, the fundamental problem with this idea is that it just wouldn’t work. Let’s just imagine for one moment that this is done, and let’s fast forward to the day when it’s all complete. We all get up on this great and glorious morning, open the curtains, and look out over a land where there’re no defaulting mortgages. Then what do we do? What happens next? Sit down at the breakfast table and open the paper. There’re 100,000… Read more »
Martin Mansergh, on “Tonight with Vincent Browne”: “Brian Cowen, as Minister for Finance, has dined with Bankers many times; that’s part of his job”. So, there! A bank, surely, is just a private sector, for-profit-business. Many, here, have suggested that a bank should, rather, be viewed as an essential utility, such as water and energy (and I see merit in that view). Why, on earth, would it be “part of” the job of a minister of the government to “dine” with the bosses of such private sector companies? Surely, his job SHOULD be responsible stewardship of the entire economy of… Read more »
michael manseragh today quoted de valera in the 1930’s saying “no man
is worth more than 1000 pound” and he compares this to 500,000 in
todays money. After using all the inflation calctalors available on line i come up 1000
pound in 1930 the same as 50,000 in todays money.
@gadfly55, like yourself Gadfly, I’ll be having my say this Saturday. I’m all for forgiveness but at the same time there are those amongst us who are ultimately so drenched in filthy sin and corruption and who are so utterly beyond redemption or conversion. You wouldn’t offer Hitler or Osama Bin Laden a confession, and I intend to use my presence on Saturday to do whatever I have to, to make sure that this government get the message that some of those amongst us are unfit for purgatory and need to be given the ultimtate unconvertable sanction. It’s time to… Read more »
Tim, I thank you for taking the trouble to put the lists of proposed action in one place on the previous thread. I think I’ll work on presenting it in a more digestible form… I must say I’m taken aback by your… “I still want the crooks punished, and they should be, as they are never remorseful and I intend to turn up to the national protest on Saturday at 2pm at Parnell Square (so fitting).” I wasn’t expecting that. Also when you followed up by urging caution – in case it would be hard to charge culprits (my word)… Read more »
mccool, I hope that you can “hold on”. You are a hero in our country; one of many, I know. People like you, if you manage to come through this ( and I do mean “manage”, because so many bosses are only in business to make profits instead of, just “staying in business to make a living and keep their loyal workers in jobs/ a living”), should be the people that this country honours. I am trying to give “work”/ an income to people I know who need it at the moment. Let’s all try our best to “hold on”.… Read more »
Apologies to all for missing out on a huge tranche of the previous blog. I’ll piggy back Deco’s comments if I may. All good stuff. Personally I prefer Shakespeare to religous doctrine. Less smoting and smiting with deeper insight into the human condition. Brutus: There is a tide in the affairs of men. Which, taken at the flood, leads on to fortune; Omitted, all the voyage of their life Is bound in shallows and in miseries. On such a full sea are we now afloat, And we must take the current when it serves, Or lose our ventures. So to… Read more »
Wouldn’t ye miss johnALLEN. No mystical insights.
It seems to me that during the celtic tiger years, the bankers, government and media put their own interests ahead of the wider Irish society by creating the narrative that consumerism/purchasing was good for the wider society and thus it was ok to take out loans that could not be certain of being paid back. However, the wider society took out those loans and are now blaming the above institutions for creating that narrative. Is it because of Ireland’s particular history (religious and relationship with Briton) that we went overboard with taking credit, buying new houses and spend spend spend… Read more »
as we forgive those who sin against us…..
I agree with Dvid that the banks should start forgiving but Irish people alsoo need to forgive – the banks, government etc for their actions during those years.. Then we can move on the road to recovery.
I completely agree with David. Without debt forgiveness, there will be no recovery. The borrowers will leave for shores that have embraced expansionist policies and are producing opportunities. The debts will be left to fester on the banks’ books. They (the banks) will be unable to lend into any uplift – mired, as they will be, in the “puddles of the past” (I know Furrylugs likes Shakespeare – but I prefer Paddy Kavanagh). Until there is new bank lending on a commercial basis, we are frozen in this depression – and depression it is! P.S. I see that the smell… Read more »
If it’s ok i’d like to park God up for a moment (he’s probably busy chatting G.Bush anyway).i’ve gone back and re-read the original Basle accord and compared the updates in Basle II accord re. Banking practice and regulation.I’ve also read a report published in the Central Bank dated 2004 re.housing,credit risk,etc which appears to identify and highlight in great detail the state of play in Ireland at that time.Remember the first draft of Basle II was also published in 2004.I’ve read a speech B. Cowen as then Minster for Finance made to SME’S to launch the toolkit cd re… Read more »
@ Jim. yes, surely some sort of economic war games were run by Finance.
Football Focus? Saint and Greavsie maybe.
Did you know that Sigmund Freud, the famous psychologist proclaimed that he figured out all about the human mind and psychology of people except he could not explain the Irish and their personality traits. No joking, look up ‘Freud and the Irish” on google.
Are we beyond help?
Good morning friends, I’ve been listening to RTE radio. If Willie O’Dea has lost the plot, there is no hope for this cabinet. He’s a politician skilled at listening to his grass roots, skilled at communicating with the concerns of his electorate. That is, I suggest, his greatest asset. Willie has just said that he’s against doing anything that risks compromising future prosecution of the 10 hidden men, if they’re guilty of doing anything illegal. He’s said he doesn’t mind whether the names are published or not. He’s indifferent to that. At least Dermot Ahern has said the names should… Read more »
For the sake of transparency, I better declare an interest.
I am working on a business idea which will involve seeking funding from government, and will require support from Willie O’Dea in his role in the Task Force for the mid-west region. Obviously I hope what I’ve written will not be held against me.
The only reason I bother to criticise anyone is because I still have hope for them.
Hi David, I’m glad you are looking at the business credit bubble, because not only did excessive credit go on property, it also went into building many businesses which are equally unsustainable. And now that folly is coming home to roost. I realise that religion in our childhood can form many lasting memories, good and bad and even funny, but I’m not in favour of using religion of any kind as an analogy/metaphor to explain our economic situation. Its too ‘touchy’ and turns many off, including myself. One problem with religion, and the problem in your thesis, is that it… Read more »
[…] You can read David McWilliams last post here http://www.davidmcwilliams.ie/2009/02/18/forgive-debtors-dole-out-the-penance-and-move-on […]
The government is dominated by lawyers, quibbling lawyers who threaten paralysis of government whenever legal advice can be used to defer decision, clarity, transparency. The Greens ministers should be reminded of the Brendan Smith case and its implications for the FF-Labour coalition, and the collapse of the Labour Party. Dick Spring left it too late to demonstrate his integrity, once he had done the deal with the devil for the sake of office, blah dee blah dee blah. For the sake of expediency, for the sake of believing you, the minister, is actually capable of doing anything but fiddling while… Read more »
PaulOMahomy: Thank you for your thoughtful and toldful contributions. We are at a Darwinian moment in the history of philosophy, when a whole range of old ideas becomes extinct in a short space of time, to be replaced by sounder and fitter concepts that stayed quietly in the background while the brash upstarts of global communism and capitalism flourished, fought it out, and died. We are entering a Kuhnian paradigm shift in global attitudes, assisted by the very medium we use here. The Irish can make some contribution, but maybe we need to look farther afield to make sure we… Read more »
By Christmas the European Commission and ECB will have effectively imposed conditions for funding of the Irish government bonds, because no private investors will touch them. Cowen is delaying the treaty vote to hold back the imposition of conditions , and allow the commission on taxation to maintain corporate and personal taxes in favour of the elite. Only disintegration of political stability through rolling strikes and mass demonstrations will dislodge the FF tribe under siege, who are digging in for the long haul, although they know the Greens can walk, and all come tumbling down. The independents are now holding… Read more »
But David, we need to know what the penance would be. What is the banking equivalent of ‘a few Hail Marys’? If it doesn’t include any transactions involving Euros we may have other problems. Not paying debts is an attractive proposition, but has longer term ramifications, most of which involve no money for us.