It’s been nearly 18 months since the Government announced its bank guarantee. Anglo Irish Bank was nationalised over a year ago and it is coming up to a year since the Government first mooted the NAMA plan. Yet nothing has actually been done since then. Not a single loan has been transferred to NAMA. There has been lots of talk, lots of bluster and point scoring, but still credit in the economy contracts, house prices continue their slow strangling decline and, most significantly, the rest of the world has moved on.
Why the delay? One interpretation is that our government doesn’t understand that speed is crucial. If we compare our stagnation with other countries that have been faced with national bankruptcy, we compare dreadfully.
Look at what the Swedes achieved in their crisis of 1993 when their property market collapsed along with their banks. In the four months between November 1993 and February 1994 Sweden issued a bank guarantee, set up and transferred all the bad loans to a bad bank, committed state money only after all the private money had been wiped out, let some weak banks go bust, nationalised some big ones and devalued their currency by 40pc!
Sweden took all these decisions quickly in order to save the economy. The financial markets saw that the country was serious about sorting itself out and money cascaded back into Sweden. In a short time the Swedish crisis was over and the casualties were those who caused the problem — the banks and the big landowners. The devaluation allowed industry to recover quickly by becoming hyper-competitive.
So, is the reason for our inactivity the Government’s failure to understand that speed and significant policy change are crucial to getting out of the mire quickly? Or is it that they understand this perfectly, but also cynically understand that if they can brazen it out for another two years they might just be able to run an election campaign on the fallacious myth of taking “hard” decisions?
By adopting the latter tactic, the Government can divide the country between the “insiders” and the “outsiders”.
The insiders are those who have a stake in the society and, therefore, will support a government that is taking decisions that protect their dwindling stake. The insiders prefer the certainty of a tarnished status quo to risking the unknown of a rejuvenated country.
The outsiders are those with no stake in the society, who therefore have most interest in fundamental change. During the boom, some outsiders got inside the tent for a few years, but now they are back outside, in negative equity. They are likely to emigrate or go on the dole as they dutifully did in the crises of the 1950s and the 1980s.
The cynicism of the current approach is that it gives a political party, which is playing the percentages, a chance. On the other hand, it means the recession is longer than it should be. Credit dries up and the country is fixed in a holding position, which is sustainable as long as the Government can borrow abroad and the insiders are kept in a state of nervous anxiety rather than acute fear about their future. This allows the insiders to see the outsiders as, at best, a worrisome nuisance and, at worst, a threat to the insiders’ standard of living. The outsiders quickly become the enemy.
Playing the insider/outsider game allows the ruling party to experiment with what could be described as “ground hurling”. Ground hurling means you keep close to your marker, don’t do anything dramatic and see how the ball breaks. Ground hurling allows a team that shouldn’t have a hope in hell to eke out a win and rob the prize.
Think of this in political terms. We are now faced in Ireland with the pathetic spectacle of the Government protecting the rotten status quo based on the entirely mendacious strategy of political survival rather than national renewal. This starts with the banks. Forget patriotism, self-preservation is the name of the game.
The ongoing public sector versus private sector debate is also part of the bigger insider/ outsider tactic, as it creates false skirmishes. This new conflict is a by-product of the failed “a lot done, more to do” economics of this government. But expediently, this row actually helps the Government because it detracts from the real issue of who mismanaged the economy to such an extent that we ended up here. As smokescreens go, the public/private fight on radio and TV current affairs shows suits the Government.
The reality is that most Irish families are made up of workers who work in both private and public sector. Most families are made up of a small business person, a civil servant, a student, a pensioner, an employee of a private company and someone on the dole. There is no public/private divide.
It is entirely made up to detract from the real issue, which is that the present administration, their senior civil servants, who are supposed to run and regulate the country, and the insiders at the top of the banks and property companies destroyed this economy. This is the one and only issue. But that is not the issue the Government wants discussed so it sets up roadblocks, like the private versus public wage debate.
This is also what the NAMA strategy is based on. The Government argues that it is patriotic to save the banks and the bondholders of the banks because not to do so would undermine the “credibility” of Ireland. What do you think actually undermined the credibility of Ireland? Could it possibly be appalling management of the economy in the past five years?
It is not patriotic to lumber the next generation with the debts of the last. This is not patriotism, it is theft. But for a political power base desperately clinging to power, saving the banks and borrowing to do so is a strategy based on buying time and hoping something will turn up. If it works, Fianna Fail saves itself from obliteration at the cost of hundreds of thousands of extra outsiders being forced — unnecessarily — to go on the dole or emigrate. But they are outsiders, so who cares?
In Sweden of the 1990s, the government took a different approach. It fired those responsible. It nationalised the banks. It made sure all the stockholders’ funds were wiped out before it put a penny of government money into the bankrupt banks. In so doing, Sweden learnt from the disaster. The main lesson is a simple one, which is that the “more of the same” approach is not good enough.
This country needs to be fixed, not patched up. We don’t need tinkering about with the old model. We need to see through the present government strategy. It is not about renewal but is all about keeping its incompetent fingers on the levers of power until something turns up. In so doing, it is aided and abetted by the ECB, which will keep the Irish banks afloat because it is afraid of an embarrassment such as a default within the euro.
The only way it can achieve this is by allowing the banks to mortgage the next generation with more useless borrowing to keep land prices falsely underpinned using the new device called NAMA bonds.
That’s the game — and they dress it up as patriotism.
More fool us if we go along with it.
We’d be better off the government did absolutely nothing
How can we not go along with it? What choice do we have… I lost my manufacturing job in December so my immediate future is not exactly rosy, however, how can us individuals shape the future??
Good points all, David. The insiders have Ireland in a vice grip.
One of your better articles David, getting closer to the flame of truth. Dempsey was smirking while the government was being tackled on the current unemployment levels, pushing 440,000 – with many thousands having left the country, who had they stayed would see it brought to 500,000. ‘Official’ unemployment is 12.7% – the actual figure, which we all know is higher, closer to 15% one suspects, 30% among 20-24 year olds. No stimulus, no jobs creation, no address to the country, no mass meetings, no plan with some ‘media friendly’ ministers disappearing into the shadows. The silence generally is quite… Read more »
Hi fellow posters, we have a good intellectual debate here for several years now and while the intellectual stimulus has been enjoyable. I think now is the time for action….if you are going to comment…please include a few lines on how “we can change the status quo” and what plan of action needs to be put in place. Fellow posters can vote simply by putting +1 beside the comment. The best plan of action is decided upon and “acted upon” by us all as a single group. Remember the brave spartans , 300 changed the course of history. There are… Read more »
I was just talking about this to my work colleague this evening, got back to my desk to find David saying the exact same thing! Albeit that David is a helluva lot more convincing/eloquent than yours truly…… I’m a public servant who does his job competently, believes the public service in general is one of the worst in Europe and believes that my responsibility for this state of affairs is negligible. This does not mean I do not take responsibilty for my actions. No, sir. However, I can only imagine the demoralisation of ordinary workers in the Department of Health… Read more »
The outsiders must make a stand. FF were returned to power at the last general election because Cowan went on Questions and Answers and threatened the insiders with catastrophe if they didnt vote FF. The insiders deserved what they got because they voted to keep their SUV’s while their grannies continued to languish on hospital trollies.
Must it be left to the outsiders again as in 1916 to rescue the middle classes ?
Excelent note, as usual David. A few points: 1) I have seen it written here in the recent past, and I will write it again: Ireland needs a new politics. The politics that we operate gives the electorate a poor choice between 2 right of centre parties with very similar policies or a left of centre party that have no real credibility. The fact is that most of our young political talent actually goes to work in some other more lucrative or challenging field, either at home or abroad. Those young talents that do decide to go down the political… Read more »
Would you not think of getting into politics David? How can we change the status quo until there is soemone worth voting for?
My Proposal :
I suggest that from four corners of Ireland such as Wexford, Cork Limerick & ,Dun Aengus people agree to walk all the way to Dublin to the Dail with banners ‘ listen to David Mc Williams’ . I will walk from Dun Aengus …..so….
OK, well, who’s going to do it? Form a new political movement.
It needs a name, an easily articulated reason to exist, an identity, a set of policies, a personality, and it needs a group of dedicated workers to get out and let the world know about it.
‘Simplicity Stupid ‘ – I believe Tim’s site can be the focal point to centralise the event ( Tim’s permission of course) – just a long walk to draw attention and see what happens and maybe others will join in.
Banner – ‘ Listen to David Mc Williams’
Even though I have never voted either FF or FG in my life and despise them both (although not equally, FF are truly despicable), after the next election they need to be in coalition together. The people of this country have to be MADE realise that there is NO difference in substance between FF and FG. If FG go into govt with Lab after the next election, then FF will oppose everything tooth and nail, attack from left and right, attack dirty and convince people in each constituency that the local FF gombeen is “their” guy, and before we know… Read more »
Before we get carried away with names and policies, I’d suggest we start to hold some public meetings.
There are countless people in homes all over the country not sure if they should rock the boat for fear of the consequences, real and imagined.
That fear may not seem as daunting if we realise that the majority of us are in the same boat.
People will come to the fore at these
meetings. Ideologies and the rest can be agreed as it happens.
While the blogosphere can give us the theory of revolution, the practical requires physical participation.
David { This country needs to be fixed, not patched up. } This should be our societal plan for the next ten years. As of now, the only fixing that has occurred has been to fix everything in favour of the insiders, those with money and power. Some things have happened in recent days that should provide encouragement. 1) Record numbers trying to get into college. 2) The pharmaceutical union has dropped it’s prices in a range of medicines. 3) The report into the efficiency and effectiveness problems at An Gardai Siochana has been published. 4) People have resisted the… Read more »
Termal underware is important before we agree policies of left foot or right foot
recoveryplan, you can contribute to “The 5s” that Ruairà mentioned above (the idea came from him, originally – I just ran with it and kept bringing it back here), yourself, if you like, at this collaborative editing pad at the URL below; It works like an open and shared Word document that many can edit simultaneously. For those people calling for “action”, I offer this as one part of the “plan-of-action”, as well as to say that many of us here are, indeed, engaged in action all the time – action that is positive, productive and fought on many fronts.… Read more »
Deco – I think you are talking about an ‘icelandic geysir’ in O’ Connell Street .
+1 OK I’ll see what I can do about hosting such an event in my hometown – Prob the weekend before Paddy’s day. I ll keep you all posted. Proposed theme…..Alernatives to Civil War Politics in Ireland. if anyone has any other ideas, please post reply.
There was a debate concerning record unemployment levels today in the Dail. And I actually seen Joan Burton laughing because Gilmore was scoring points against Cowen. In my mind that is sick.
Deco – I will carry paidi’s lobster pot
I don’t think that the establishment is trying to play ground hurling. It seems to me that they are making the rules to suit themselves and appointing referees/officials to adjudicate in an unbiased manner.
In fact getting a biased referee is essential towards maintaining the status quo in Ireland.
Everytime there is a crisis with one PIGS economy (or PIGIS if you include Italia) the rates on government debt go up. In the Irish media there seems to be this assumption that we are safer than the others. Our per capita debt is extremely high. So this is a flawed assumption. In absolute (real) terms we have to work harder to clear it all, or else default on some of it. http://www.telegraph.co.uk/finance/economics/7150118/Greece-under-EU-protectorate-as-funds-shift-fire-to-Portugal.html Greece is now increasingly under a finance directive from Brussels. The Greek prime minister believes that the biggest problem in Greece is widespread tax evasion. (Mr. Ahern… Read more »
Good evening, In a nutshell, I intend to see the roots of the crisis deliberately planted in the years of G.W. Bush and Greenspan’s activities, too many key indicators point in the same direction, as such the Irak war was a war against the Euro in the first place. Irak’s incumbents, empowered by the very same USA that later invaded the country, officially played with the idea to sell Oil no longer for petro dollar, but Euro, this serious threat in my humble view was the underlying reason for a great deal of events occurring as a result. As for… Read more »
David is correct. Implement the Swedish approach – all of it. The Gordon Brown approach is ludicruous in the extreme.
And we must show solidarity with Iceland.
ARE WE ALL FOOLS ?…..good question all right David ! My Answer is no , we’re just a bit Stupid at times ! ( Like the last Decade) Today like many others I had to listen to fat Biffo stating the unemployment figures were within government forecasts and he doesn’t have any simple solutions but they are doing the right things !….jesus How Stupid does HE think we are ? There is some very simple solutions which could be operational within 6 months , the BIG Problem we have here is been a small island we have a small pool… Read more »
David says “It is not patriotic to lumber the next generation with the debts of the last. This is not patriotism, it is theft.” Desperate times require desperate measures. The government needs to raise a lot of real money… Fast. Therefore, since the wealthy of this generation benefitted from the boom they will have to pay for the aftermath, not the next generation of the middle class. To accomplish this, the government need to pass a law that death duties on estates worth over €100,000 will be increased to 90% of all assets exceeding that figure at the time of… Read more »
BrendanW – you are correct – the media are compromised. They are more interested in lying to us than telling us the truth.
In fact the media only tell us the truth so that they can lie to us (sell us something either by advertising or by fanning the flames of nonsensical euphoria – as occurred in the housing ‘boom’.
We need to develop a culture of deep, careful, factual and independent thinking amongst the citizens. This will disarm the media arm of the establishment from controlling us.
+1 ….. Here’s what We should be doing in Poolbeg instead of Gormless and his plant
http://www.youtube.com/watch?v=CWf9nYbm3ac
Its a Clip on how in Philadelphia they are turning house hold waste into OIL !
[…] a friend of the Left, expresses frustration at the complete absence of any fundamental change. Writing in today’s Irish Independent, he says: This country needs to be fixed, not patched up. We don’t need tinkering about with the […]
Mr jcurran , you raised some very interesting points but your last point was the best and I quote ” now we need leadership and now who will stand up and lead ?” That is by far the best point I´ve seen raised in a while . There a lot of people who go around saying we need this and we need that and Ireland should do this and Ireland should do that and we should do this and we should do that But who among you is going to actually DO something . Who among you is going to… Read more »
A good article from David; the bottom line I think is that the government is composed of stupid, self-serving individuals. Their day has come, they are simply out of their depth. There is no creative thinking coming from them and they are incapable of improving society by applying logic. This goes for all walks of life, not just economics. If a new party were to be founded, I would propose the name ‘The Truth Party’ because only by facing the truth can you bring about a wholesome society. If anybody is interested in making a protest, John Gormley will be… Read more »
Folks, Is the fact that the VAT receipts loss is approximate to the aggregate pay-cuts+tax-levy+pension-levy =17.8% lost on most people?
SO What are the Greeks doing now ?,.. Well again it is the Farmer , the man on the land who takes a stand
http://www.youtube.com/watch?v=-W9fx1NC8Qo&feature=player_embedded#
The Time for action starts now!!!!.. Yes, we all disguse and debate what has to be done.. We hear all the talk, the spin, the BULL, but still nothing is done. So its time that everyone stands up and does there bit, no matter how small it is.Its time the good people of Ireland, took their country back!…Firstly we need to affect the banks liquidity force them to go bust….. I call on everyone here to withdraw as much as there savings or anything else from the rotten banks and put them into somewhere else. The Credit union, under the… Read more »
Folks, Keenan (Economics editor of the Irish Independent) said on Newstalk radio on Wednesday morning 3rd Feb 2010: “In December last year [sic] (2008) we had no idea how bad a situation we were in”.
Shall we direct him to this website, and the comments we were making, back then?
This is typical of the lies continuously perpetrated in the mainstream media in Ireland; typical brainwashing of the sheeple.
Keep feeding them lies and, unfortunately, most of them seem to believe them.
Let’s keep at it! (more people are waking-up, every day).
I reckon April Fools Day April 1 we might just see some magma inside the volcanic valuations burst NAMA open. To be a fly on the well for those valuation exchanges between developers/bankers and NAMA valuators? Interesting:) They should pull the plug asap on NAMA when its failure becomes apparent, nationalise what’s worth saving, dump what isn’t, both toxic loans and banks. On the basis of the above exercise, get the IMF to write down a prescription as we can’t. With IMF backing and with our total debt shortfall, go to the bondholders and get them to write down our… Read more »
Patriotism is the last refuge of scoundrels and the Irish upper classes look and sound like the hapless Mr McCawber of Charles Dickens fame – “Something will turn up”. The people of Ireland have been subjected to government smoke screens for long enough and even the dumbest sheep can see that they are going to extract every cent they can from us to preserve the obscene privileges of the few. I would encourage anyone who cares and reads this blog to help to promote it. Link to it from your website and bookmark it on digg, delicious etc. What we… Read more »
How about a home produced, sort of mini paper containing news on this subject? Maybe A4 in size, containing non-party-political articles on the state of the economy, the banks, the politicians, and business. No ranting and raving, no ‘banksters’, and no conspiracies – none are necessary anyway. Just well thought out, clear, reasoning, backed up with things people can check for themselves. Print out a few hundred, hand them out, leave them on tables, and leave them on seats. It needs to look attractive enough for people to pick it up and read it. It could be combined with a… Read more »
The French and the Belgians raped the Congo, FF and to a lesser extent FG raped Ireland.tUnemployment in Ireland is as high as Scotland, Wales and Northern Ireland combined.In London there are 300,00 out of work in a population op 8 million!.Fucking ridiculous.FF will still get 30% @ the next general election.
Folks this cronyism re NAMA looks like clear conflict of interest to me; see what you think:
Fordmount directors are NAMA solicitors: LIMERICK solicitors Dermot G O’Donovan, three of whose partners are directors of Fordmount, believed to owe in excess of €100 million to ANGLO.
http://bit.ly/aZG7N7
http://www.limerickpost.ie/index.php?option=com_content&view=article&id=1461:fordmount-directors-are-nama-solicitors&catid=37:local-news&Itemid=60 LIMERICK solicitors Dermot G O’Donovan, three of whose partners are directors of the Fordmount Group, now in receivership, have been appointed by NAMA to provide legal services. Fordmount is believed to owe in excess of €100m to Anglo Irish Bank. One of the partners, Adrian Frawley, was appointed managing director of Fordmount following the departure of accountant Michael Daly, who is said to be the majority shareholder of the Fordmount Group. Other shareholders in the Fordmount Group include the firm’s other partners Dermot G. O’Donovan, Michael Sherry and ex-partner Tommy Dalton, who has left the firm. Speaking to this… Read more »
David, That’s a very realistic overview of what is happening and where we’re at – Cowen is honest in that he doesn’t hide the fact that Fianna Fail’s interests are his priority and the country must come second. His pursuit of that same line as minister of finance, brought this country to its present sorry state. Destroying a country by flooding it with money was considered by Hitler during the WW2, known as Operation Bernhard, it was never implemented. Mr. Cowen did exactly that with the help of another Bernard, and now talks about patriotism as though nothing ever happened.… Read more »
While I agreed with the general thrust that we have a broken political and non-representative system, a change will not come without some major and rather noisy change. Change that would affect everyone and change that would have to redefine how we see the State. So all the anger while understandable will lead to nothing unless a few TDs stick their necks out and pull the plug. And that’s the end of it. Anyway, was reading a very interesting article on China in the Indo by Anatole Kaletsky – “We must find a new form of capitalism to take on… Read more »
“There is no public/private divide.” Never a truer word written. “That’s the game – and they dress it up as patriotism.” Haven’t they been doing that since 1916? What I find frightening is our lack of concept of scale. Other countries with 15 times our population regard a small business as one with 5-10 employees – we regard a “small business” as one with 50 employees. We allow entire towns to become completely dependent on single employers (usually US multinationals who have also been allowed to deny collective bargaining rights to a huge number). My Dad was a member of… Read more »
Philip – well spoken . I agree with most of what you say except that the past determines the future .I have extensive knowledge of middle east from another time and many of these places and even within the same country many tribes live together with their own seperate customs , religions and lifestyles .Some slower than others and some faster .I believe here in Ireland we have arrived at a juncture where some of us will seperate ‘ at the cross roads’ and travel our own paths .This could divide families especially among siblings and and their issues .It… Read more »
Folks have a look at the results of Gavin Sheridan’s FOI applications on ANGLO’s risk reports here:
http://thestory.ie/2010/02/04/anglo-risk-reports/
…. and you will also be interested in this assessment of what comes next, drawing heavily as it does upon both David’s work and that of Morgan Kelly:
http://thestory.ie/2010/02/04/the-coming-crisis/
Folks, here is the just-released Finance Bill 2010:
http://www.finance.gov.ie/viewdoc.asp?DocID=6190
Looking at markets today it is in freefall the focus is now on government debt. In europe problem states are Greece, Portugal and Spain so far Ireland has not been mentioned but it is surely now only time until we default on our debt. Our national debt including NAMA will be 120 billion at the end of 2010, thats 27000 for every man women and child in the state. The ECB is now calling the shots wait for the spotlight to come on Ireland this year. It is only a matter of time before the funds from abroad will dry… Read more »