This will be a long post, so stay with me if you can:
Countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Ireland grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise.
In Ireland, for instance, the private sector is now in serious trouble because, over the past seven years or so, it borrowed at least $130 billion from banks and investors on the assumption that the country’s property sector could support a permanent increase in consumption throughout the economy. As Ireland’s oligarchs spent this capital, acquiring other companies and embarking on ambitious investment plans that generated jobs, their importance to the political elite increased. Growing political support meant better access to lucrative contracts, tax breaks, and subsidies. And foreign investors could not have been more pleased; all other things being equal, they prefer to lend money to people who have the implicit backing of their national governments, even if that backing gives off the faint whiff of corruption.
But inevitably, oligarchs get carried away; they waste money and build massive business empires on a mountain of debt. Local banks, sometimes pressured by the government, become too willing to extend credit to the elite and to those who depend on them. Overborrowing always ends badly, whether for an individual, a company, or a country. Sooner or later, credit conditions become tighter and no one will lend you money on anything close to affordable terms.
The downward spiral that follows is remarkably steep. Enormous companies teeter on the brink of default, and the local banks that have lent to them collapse. Yesterday’s “public-private partnerships” are relabeled “crony capitalism.” With credit unavailable, economic paralysis ensues, and conditions just get worse and worse. The government is forced to draw down its foreign-currency reserves to pay for imports, service debt, and cover private losses. But these reserves will eventually run out. If the country cannot right itself before that happens, it will default on its sovereign debt and become an economic pariah. The government, in its race to stop the bleeding, will typically need to wipe out some of the national champions—now hemorrhaging cash—and usually restructure a banking system that’s gone badly out of balance. It will, in other words, need to squeeze at least some of its oligarchs.
Squeezing the oligarchs, though, is seldom the strategy of choice among governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Dublin bailout technique—the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large.
Eventually, as the oligarchs in Cowen’s Ireland now realize, some within the elite have to lose out before recovery can begin. It’s a game of musical chairs: there just isn’t enough cash to take care of everyone, and the government cannot afford to take over private-sector debt completely.
First, an admission. The above is a quote from Simon Johnson’s excellent essay in the Atlantic in May of this year, The Quiet Coup. But I have modified it ever so slightly. I simply replaced the word ‘Russia’ with ‘Ireland’, and other slight edits to take into account energy versus property. You can see the original here.
Why the modification? Well it demonstrates at exactly the level Ireland is at.
We are a two-bit emerging market economy, dominated by political and business elites. I think it’s an open and shut case. Every word Johnson intended for Russia accurately applies to Ireland. We are almost the definition of a banana republic.
The only difference is in the last paragraph. “Some within the elite have to lose out before recovery can begin.” No. In Ireland, no oligarch property developer will lose out if the government can help it – thanks to the €90 billion NAMA, what will be the largest property ‘firm’ in the world.
The only people who will end up paying are you and me, our children, and our grandchildren. If people think our political leaders are acting out of the interest of the taxpayer they are dead wrong. Our political leaders are acting only in the interests of themselves and their paymaster developers.
Let us examine some of Johnson’s indicators that we are an emerging market, dominated by oligarchs. We could make a checklist:
* “Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders.”
Check.
* “As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise.”
Check.
* “As Ireland’s oligarchs spent this capital, acquiring other companies and embarking on ambitious investment plans that generated jobs, their importance to the political elite increased.”
Check.
* “Growing political support meant better access to lucrative contracts, tax breaks, and subsidies.”
Check.
* “Oligarchs get carried away; they waste money and build massive business empires on a mountain of debt.” Check.
* “Local banks, sometimes pressured by the government, become too willing to extend credit to the elite and to those who depend on them.”
Check.
* “Overborrowing always ends badly, whether for an individual, a company, or a country. Sooner or later, credit conditions become tighter and no one will lend you money on anything close to affordable terms.”
Check.
* “Enormous companies teeter on the brink of default, and the local banks that have lent to them collapse.”
Check.
* “If the country cannot right itself before that happens, it will default on its sovereign debt and become an economic pariah.”
Check.
* “The government, in its race to stop the bleeding, will typically need to wipe out some of the national champions—now hemorrhaging cash—and usually restructure a banking system that’s gone badly out of balance. It will, in other words, need to squeeze at least some of its oligarchs.”
Check.
* “Squeezing the oligarchs, though, is seldom the strategy of choice among governments.”
Check.
* “At the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Dublin bailout technique—the assumption of private debt obligations by the government“.
Check. NAMA.
* “Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large.”
Check, minus the riots. Yet.
* “Some within the elite have to lose out before recovery can begin. It’s a game of musical chairs: there just isn’t enough cash to take care of everyone, and the government cannot afford to take over private-sector debt completely.”
Except in Ireland, where we are trying to assume €90bn in private sector debt. Liam Carroll as the elite one losing out? Check.
And so we return to the original question posed: What is wrong with Ireland? My answer is this: We believe we are something we are not.
We believe we have a more mature regulatory environment, a mature, transparent and accountable political system, we believe the media holds our government to account, and we believe that our elected leaders will act in the best interests of citizens. Even the media believes it holds the government to account.
These assumptions are all wrong.
When you examine, even to a minor degree, any aspect of Irish society, you will invariably find a distinct lack of all the above factors. For example captured regulators: The Financial Regulator, the Irish Stock Exchange, the ODCE, ComReg, the Financial Ombudsman.
Whenever and wherever corruption is discovered, nothing happens. Whenever and wherever whistles are blown, nothing happens. We live in a country where the very idea of accountability, or that our politicians are our servants, simply does not exist.
As a nation state, we are a failure. As a democracy, we have failed. As a country we are bankrupt, both morally and financially. We are the emerging market, banana republic of the European Union. Our political system is broken. It is beyond redemption.
Some will reply that I am a socialist, or other such attacks. I am actually right of centre economically, I just recognise what is standing in front of me for what it is. An almost incalculable political and financial mess – generations are being saddled with the debts of the oligarchs, and the taxpayer is being lied to by its own government.
The only hope is this: That the people, in whose hands all power rests, will realise the appalling vista of a broken Ireland – a country in need of radical political reform – and demand that it is changed.
If it is not, everything that has happened, will continue to happen, and we, the citizens, will continue to pay the price.
Please fell free to Digg this :-)
Related links:
Michael Taft reckons NAMA won’t be so bad. Maybe.
Constanin Gurdgiev is less optimistic about NAMA.
Karl Whelan has lots of posts on NAMA
Very provocative and more than a little scary. I think the increase in the number of independents is is indicative of the failure of democracy, as personal and local interest subsume the greater national good. granted, you have to ask who is looking after the national interest.
Brian Lenihan is certainly not looking after the interests of the people. Nor is Fianna Fail. Parish pump politics reigns supreme too…
I am always nervous of commenting on political blogs for fear of revealing the depths of my ignorance but heres my uninformed two cents anyway.
You have lots of valid points but the problem is in the line “the people, in whose hands all power rests”
Most people I know feel almost disenfranchised the way things are in this country. The theory is that one has their say when voting but almost all the candidates still come from the same political class who are unlikely to rock the boat no matter how much shouting they do while safely ensconced in opposition. (I still vote, but out of a sense of duty than any hope of influence)
What else can the people do? Strike. We have a government who are excellent at turning the people against one another to take the heat of themselves. Besides strikes cripple the small businesses who have no powerful lobby group but are essential to getting the economy back on track.
I can’t really see what riots would achieve.
It might be possible to lull people out of apathy to make a difference, but that would require a leader who could help define exactly what change ‘the people’ want, figure out the steps needed to achieve it (rather than the ranting without solution that all opposition parties specialise in) , and rally the disparate groups to work together for the national interest. Unfortunately good leadership is difficult to source in this country.
I have long asked myself – why us Irish are so apathetic?
I can only answer for myself. This “democracy” is technicaly set up in such a way that no one man can make a difference.
Therefore, we need another uprising and though we may try to keep it peaceful, it won’t be if it is to succeed but it won’t happen because I, for one, don’t believe in violence. That’s the problem.
They have the game sewn up. They can only win.
While I agree that we live in a country where accountability is almost totally lacking, I think that otherwise you are overstating things.
We can fix things in Ireland if we change the electoral system and also learn to stop electing “legally corrupt” (and illegally corrupt) politicians.
I am no lover of the banks (that’s an understatement in fact) but it’s not true to say that they are being bailed out by generations of taxpayers. The losses that the banks incurred, through their unparalleled folly, have been borne in the first instance by their shareholders, who have been largely wiped out. The capital injections by the Government have been, and will be, on terms which should provide a return to the taxpayer, again at the expense of existing shareholders. And NAMA should not be pre-judged – let’s wait to see it in operation. It’s a bad solution but others are probably worse.
I disagree. NAMA lacks any transparency, accountability, oversight… you name it. It is a license for the taxpayer to be royally screwed. It is buying assets at current market rates on the expectation of a return within a decade. It is a nonsense. If we wait and “see” it in operation, it is already too late. We won’t see it in operation at all, since there is no oversight.
The losses of the banks have been borne by the taxpayer – via capital injections of over €10 billion. If the losses of the banks were actually borne, they would have gone to the wall. If the losses of the developers were actually borne, they too would go to the wall.
Yet somehow, it is deemed necessary to save our oligarchs. Why?
Well put Gavin. I agree 100%. Our big problem is that the mindless sheep that make up our electorate keep electing the same bastards again and again, no matter what they do. Its like a battered wife taking the abusive husband back again and again.
You have apathetic people who claim “sure why would I vote for the other crowd? they’re just the same” – Vote for the other crowd just to teach the current muppets a fucking lesson! If they see that the people will turf them out sharpish when they make a mess of things they might not be so inclined to squander it all in future.
[...] Steve on Aug.06, 2009, under Ireland, Politics Go read this blog post right now. It describes very well precisely what’s wrong with modern Ireland and should be [...]
Gavin, I note that you state you are right of centre on economic issues.
While I agree with the vast majority of what you state in your post, I’d hope you bear in mind that it was, to a great extent, right of centre economic ideology that got Ireland where it is today – the privatisation of economic gain and the socialisation of economic loss. I’m not having a go, I am just pointing it out because I think right of centre economic ideology is relevant to how Ireland got to this point. Right of centre economics must not be seen as a cure for our ills. It is not the cure; it is one of the causes.
In terms of the political system, the root cause in the breakdown of it is the Civil War and the party that split because of that. That party is now Fianna Fáíl and Fine Gael. They are the same thing. As long as people vote for either of these two parties to the large scale exclusion of others, Ireland will never mature politically because a vote for Fianna Fáil and a vote for Fine Gael are the same thing.
I’d also like to ask all of those people reading a question.
What are you going to do to change Ireland? Are you going to sit there, reading this post and agree, nod your head and go on your way, or are you going make an attempt to change society in Ireland?
Hi Tom,
Right of centre economics, poorly regulated, with poor oversight, has led to the current global, not just Irish malaise IMO. Many of the regulatory lessons learned from the Wall Street Crash were gradually eroded, and ultimately eroded under Clinton in the late 1990s. As for Ireland, we *never* had much in the way of regulation, and even when we did, it was never enforced.
Whatever our political ideology, the common ground is the mess we are in, and recognising that for what it is. We all seek the same things, cliches as they are: transparency, accountability, rule of law.
I agree to some extent on the political system, but as far as I can see, even if Labour were majority government, the broken system would still persist. The system itself is rotten, an alternative must be found, and applied.
[...] Gavinsblog – go read. [...]
Gavin, right of centre economics *is* poorly regulated. That is the modus operandi of such an idealogy because right of centre economic idealogy is about the “free” market, with little intervention. Regulated economic ideology is not an ideology that is right of centre.
In terms of the political system, do note that I did not specify the Labour Party (which is, I admit, my political leaning). I deliberately did not specify it because I wanted to make the point that FF and FG are the same thing. They are not an alternative. If people voted for anything other than FF, FG, whether it was for Labour or some other party, it would be a start because it would be different.
But that said, I don’t think the broken system would persist if Labour were majority government – for the reason that they do not come from the same history, took no part in the Civil War, and have a different outlook to FF and FG on what Ireland should be. They have a different perspective to FF and FG.
Oh shit, oh shit, oh shit, oh shit, oh shit, oh shit, oh shit, oh shit, oh shit……..etc (ad infinitum).
We got the government we deserve. If FF put a donkey up for election in some parts of the country, people would vote for it.
It’s rediculous.
I think it is safe to say we disagree on that first point Tom, but I don’t think that alters where we do agree.
On the broader political point, you may be right. But I as much as I might sympathise with your views, I do believe that the political system such as it is will persist no matter what party is in power (and likely because of PR STV it won’t be just one party).
It is a broken system of cute hoorism parish pump gombeenism whatever way you look at it, and whoever is in power. Maybe labour would change, maybe they wouldn’t if it suited them. The point is the system is broken, and I am not sure Labour (or any current party) are the ones to fix it.
Why all the silence from all parties on TD expenses (Gilmore said some stuff, but where are the actions?).
Yawn, This is a total piece of shite. You give people too much credit (it’s not just mastercard then). Greedy sods who have trades and many who pretended to have trades jumped all over the property band waggon. unlike russia we tell our polititians what to do, hence the abundance of pohole fillers and lack of states men. No we are not as eamon gilmore would have us priestlynching, blame dodging, neo-communists. People all over ireland made bad decisions and through the scourge of partnership agreements we ended up with a fat assed public service and no savings of any substance except for the pension fund set up by the no so popular c. mccreevy. I owe nothing to anybody purely because my masters couldn’t match the reciepts for 3 breakfat rolls in terms of earning power so I didn’t buy an over priced timber framed house in north dublin tucked neatly between some well looked after asylum seekers and someone who works in the airport on 50K a year for handling luggage . I am happy that these free loaders are now feeling the pinch. Suck it up it’s your own fault. Have a paninni for yourself or something
Let the banks twist in the wind. There are others. Tons of others only too happy to come in.
Protect only those new borrowers, now with negative equity. (Owners occupiers only) Give them help, give them millions. They don’t need billions.
All other mortage holders won’t mind the “loss” in property values. The house they might want to buy will have lost value, and equitably with their own, too.
Devalue the country by 50%.
Justice Peter Kelly has it right.
Thanks Eugene, you make absolutely no coherent point there. Not even a smidgen…
I had look at some more of the rubbish above and wondered if some people have a problem realising that the reason a fianna fail donkey could beat a nice hair, nice smile all the answers smells good labour boy in many parts of the country, is because the issues they push even NAMA, a childrens rights referendum or any other old well spun shite aren’t what the electorate really care about and these people labour put forward aren’t generally close enough to the electorate and use formulaic waffle. Sometimes like joan burton they sound too desperate. Who wants a desperate woman apart from a hairy backed young lad at 3 am outside coppers. Not enough people care about the rubbish from amnesty, the council for civil liberties that some more raw politicos run with. These won’t cause a riot but get a couple of bus loads of orangemen for a march in dublin. Two and two mean no riot and it’s not a priority for people.
One more thing just to help the slower big word using people out there. Here is what government recapitisation is good. What is the governments interest on these loans??? 8% What are irish bonds to the raise this money paying??? at most 4.5%. The difference is money that the government needs. Unless I’m wrong it’s a better return than you’d get investing in bus lanes or someother shite
There are many sources of the problem. But one is that we are post-colonial. The new ruling class got decades of mileage out of not being “the Brits”. That let them get away with a lot.
Then there are the more recent critical events where you wonder “what if”. 1997. Perhaps a poorly timed election, perhaps the voters taking revenge on Labour for going into coalition with FF. Funny how FF never encounters any revenge voters. And of course the Indo screaming about “payback time” on voting day. It’s “payback time” now for sure.
2002. As Stephen Collins said recently, 2002-2007 government the worst in the history of Ireland. At that point the tribunals were only half way through figuring out Bertie’s finances. In any other country, the tax man or the prosecutors would have long since got him. So again it’s hard to disentangle the national crisis from the FF talent for staying in power. Until that’s undermined, we’re screwed.
But as commenters above have said, it was up to voters to sort this stuff out, and they didn’t.
Mr. O Neil makes a point albeit inaccurate, after hundreds of years of occupation (and don’t blame the brits- if they didn’t do it someone else would!) the biggest problem with the silent majority of irish people is their spineless wish for the status quo, the “beloved” 1916 rising is a prime example, on that easter sunday the vast majority of the capital were hob nobbing with the so called occupiers, betting on horses (which SMACKS of a certain tent in galway many many years later) while a handful of “upstarts” were holed up in the gpo…. Bertie made a re-election promise as the voice of “experience” to “protect your house price”, the mindless sheep followed his every word, he told migrant workers and potential first time buyers “get in now or miss out” within a year he had failed…. Did anybody give out? No. in general this “proud race” are much happier giving out about an issue in the pub than getting docked pay and taking to the streets, that’s why the paddies are credited with building every country they emigrated to…. they shut up and did what they’re told! The vast majority of irish folk are not leaders… we’re lead, it’s in our psyche.
Don’t think for one second i’m praising the scatter of fruits who march/cause obstructions over “no more war” or a parade facing the wrong way, or even our “neutrality” because lets be honest if it came to a crunch, we as a nation are completely unable to defend ourselves and the only folk at our disposal are the brits and the yanks.
it was irish greed that continuously re-elected the haugheyesque sham government we have- as a previous poster said “We got the government we deserve. If FF put a donkey up for election in some parts of the country, people would vote for it.” yes they did but only if the donkey was convicted of fraud and tax evasion before a ballot was cast. and for the guy who said we tell our politicians what to do.. ya right! go to Scandinavia where public outrage forces a minister to resign for not having a TV licence.. in ireland it’d get him votes!
so yes people of ireland… shall we march on Parliament, demanding a reversal of income levies, liquidation of all bankrupt developers (with the spin-off of cheap properties for all), accountable politics, jail for half the golden circle, and the rebanishment of all snakes?
any takers…
no…….
yea… didn’t think so
I wish P O’Neill would drop the pseudonym and the blame-the-Brits mantra. The Republic of Ireland is a banana republic precisely because of the P O’Neills with their Michael Collins thumbnails. From 1916 on, the country was placed on the road to ruin through home misrule by an ignorant clique of ultra-nationalist murderers, perverted clerics, bad poets, mediocre civil servants, cattle jobbers, cute hoors, Cork hurlers, Kerry footballers, Dublin economists and cheap drink.
The Irish made a fatal error when they opted for the allure of the gunman instead of an agreed form of co-existence with their neighbours, regardless of how long and frustrating that process would have taken. Killing was easer, faster and delivered the state that has become what it is today. The stonier path would have required patience, hard work, sacrifice, tolerance and forgiveness. For P O’Neill and his Provo-like ilk, however, this would not have delivered the blood they so thirsted after. The result is fiscal and moral bankruptcy and Michael Collins as an icon on blog posts.
Heh, Mr. Fitzgerald I like the cut of your stirring gib there sir!
The established clique have learned to play the game of left and right all too well. I have no suggestion for a replacement but the rules need to change or the board be tilted before anything will improve. That is up to the people. In the mean time I will pray to the gods above for the opportunity to remake the film Hard Target with Bertie reprising the role originally played by the muscles from Brussels I’m getting archery lessons and everything :-)
Small point for Eugene: Children’s rights referendum was not, as you suggest, the work of a “nice smile all the answers smells good labour boy”. Rather, it is a semi-active Government policy set in motion by Brian Lenihan in his previous role as Minister for Children.
Hi Gavin, like the posting. The words of former IMF staffer Simon Johnson have also been echoing in my mind. You do him no injustice by quoting him here. I especially like Johnson’s description of that moment when an IMF man decides, in a face-to-face a cabinet representative from the in-trouble government, whether they are ready to throw some of their oligarchs to the wolves.
“So the IMF staff looks into the eyes of the minister of finance and decides whether the government is serious yet. The fund will give even a country like Russia a loan eventually, but first it wants to make sure Prime Minister Putin is ready, willing, and able to be tough on some of his friends. If he is not ready to throw former pals to the wolves, the fund can wait.”
With all the good will in the world, I cannot see a firesale of Liam Carroll’s assets being a bad thing. At the very least, it will give us a benchmark (pardon the dirty word) against which to measure NAMA’s decisions.
Sovereign debt and sovereign ratings are just as strategically relevant as the maintenance of an army.
In much the same way as, and for the very same reasons that, credit rating agencies (CRAs) awarded triple A ratings to what they knew – or should have known – were toxic products with a view to increasing their revenue, CRAs have been assigning investment grade ratings to sovereign issuers whom they know to be in a state of unresolved default on debt obligations inherited from previous governments by virtue of the successor government doctrine of settled international law, despite the fact that according to CRA-published rating methodologies and definitions such investment grade ratings are only assigned to issuers who are willing to pay and settle their repayment obligations in full and on time.
They do this by disingenuously publishing footnote disclaimers concerning debt repudiations pronounced by revolutionary regimes such as those of Cuba, the People’s Republic of China, and Russia, knowing full well that the footnotes are not empowered by the quasi force of law attached to credit ratings themselves and will therefore not be binding on institutional investors who find themselves under the obligation to allocate specific amounts of capital to securities enjoying specific investment grade ratings.
This should not be mistaken for yesterday’s old-timer battle.
While the spotlight has mostly concentrated on the flawed ratings of structured products very little coverage has been allocated to the crucial matter of flawed sovereign ratings – although these now carry the germs of the possible next crisis since governments worldwide have de facto become the guarantors of last resort for banking and financial institutions and also private depositors, and are poised for fierce competition to tap financial markets in order to plug huge deficits, all as a result of the wrongful actions of the CRAs leading to the subprime crisis in the first place.
All this is happening under the complacent eyes of regulators who, just as they turned a blind eye to early Madoff warnings, have also turned a blind eye to complaints and documented evidence from holders of defaulted yet investment-grade rated sovereign debtors, see SEC complaint at the following link:
http://www.globalsecuritieswatch.org/Letter_to_SEC_Inspector_General
The problem is: how are investors to tell the difference between a bona fide sovereign who is demonstrably willing to pay debts in full and on time and a rogue state with a proven track record of taking evasive action, when they are both rated investment grade?
Ireland is a case in point: we know it is willing to repay, but we are not sure it has the capacity to repay. So, what should be done about Irish debt, since it is rated just as the debt of rogue countries, who are in the opposite situation: they hace the capacity to repay, but are not willing to do so.
What is the point of such ratings and how can general confidence be restored in CRAs as long as they persist in ignoring a) the absence of willingness to repay on valid claims and b) the false public accounting which results from public accounts which make no mention of – and therefore conceal – the existence of said valid claims?
While some mainly cosmetic regulatory efforts are underway on both sides of the Atlantic to clear up the mess caused by reckless CRAs and regulators the overhaul will remain a toothless tiger as long as CRAs remain immune to liability and protected by the First Amendment.
Ratings are not mere “editorial opinions” and everybody knows full well the power they wield all the way up to governments, heads of state, and international treaties.
Ireland recently illustrated this when a few comments from a rating agency prompted immediate and furious reactions from the heart of the Irish government.
The European Parliament has recently voted an unsatisfactory Regulation for credit rating agencies. Following the action of representatives of holders of thousands of defaulted sovereign bonds it has unenthusiastically asked the European Commission for a preliminary enquiry on the matter of misleading investment grade ratings assigned the many sovereigns who remain in a state of unresolved default: such as the Russian Federation of course, but also the People’s Republic of China, Poland, Hungary, Turkey, Greece, and others, see the press release at the following link:
http://www.archive-host.com/compteur.php?url=http://sd-1.archive-host.com/membres/up/203786733364141878/G20PREN.doc
Efforts such as these need the full support of anyone interested in restoring transparency, efficiency, confidence and finally sound performance to world financial markets and economies.
Henry Mermet
Many of your points are valid.I just want to poing out your closing remarks;
“The only hope is this: That the people, in whose hands all power rests, will realise the appalling vista of a broken Ireland – a country in need of radical political reform – and demand that it is changed.”
You must bear in mind,Ireland has the most apathetic population in Europe,the FF class is only too happy to exploit this apathy.Irish apathy has a share of the blame too,after all who voted time and time again of FF despite the many problems in health,education,transport during the boom years.Until people go out into the streets and demand change nothing will change.
Sinead said “Most people I know feel almost disenfranchised the way things are in this country. The theory is that one has their say when voting but almost all the candidates still come from the same political class who are unlikely to rock the boat no matter how much shouting they do while safely ensconced in opposition.”
Our problem doesn’t stem from having a political class, it stems more from the fact that our public representatives are very much of the people they represent. When people say the political class they appear to mean anyone has been elected or who is a member of an existing political party that has broad support. And those outside the political class are thus those that no one has supported. That’s a odd way to view the electorate process. I was a candidate in elections and my background is far from any political class. But in the eyes of some the mere fact of being a member of a political party or having been a candidate makes me a member of a political class.
The fault lies not in our stars but in ourselves. The problem isn’t that the politicians on their own are politically corrupt (by which I mean their functioning in their political role has been corrupted by the political necessities involved in getting elected), it is that the people, the electorate, reward such corruption and run about after every new shiny thing when there is a problem. The election of Mannix Flynn ahead of Daithi Doolan of SF in Dublin City Council is just one minor example. Mannix had a raised profile because of the Ryan report but what had this to do with the workings of Dublin City Council? Nowt but Mannix was in the news, and didn’t Pat Kenny and Gabriel Byrne say he was a great man! And the manner of the election of George Lee with enormous support is another manifestation of this chasing after the latest will-o-wisp, people run out in the street for a messiah when what we need is not messiahs but a reformed electorate.
We need to be the change we want in the world. We need to change our own behaviour. If we want an end to hospital waiting lists then we need to stop electing people who will help us jump the queue and elect people who will end the need for a queue at all. If we want a competitive economy we need to stop saying that only the prices others charge for their services have to come down. If we want an end to how FF behave in power then people need to stop voting for them.
I’m glad someone used the battered wife analogy because it is all too true in Irish politics. FF bankrupted the country in the late 70s and did all they could to prevent FG sorting the problem out in the 80s until the people ran back to them in the late 80s.
There are people who will always find some reason to not vote for particular parties because of X (FG took a penny off the pension) or Y (Labour don’t value the language enough) and the same people will always find some excuse Z for FF misbehaviour (sure Charlie Haughey did great things for this country, didn’t he give the old people the free travel). They’re locked in, forget about them. But we need to make the case to the rest of the population that voting for a party candidate must matter over and above how nice a person they are. Voting for the FF nice gal despite not being a fan of their policies is an aberration of what democratic choice is about. It’s voting for the bad singer with the sob story in Pop Idol and then bemoaning the lack of good music on the radio.
Well Gavin, that’s a very well written blog.
But I have to disagree with Tom Cosgrave about FF and FG being the same party, FG appear to have more integrity as they have had much less allegations of corruption made against them (with the exception of Michael Lowry-who is still suprisingly an independent TD in government!) He was ejected from the FG party because he was corrupt. Unlike Beverly-Cooper-Flynn who got a light slap on the rist for encouraging her clients to evade tax! She ran as an independent TD for a while and then got lovingly reaccepted back into the FF party when all the fuss had – “died down”…
Fine Gael wants to sack wasteful ministers, not a bad idea! The hallmark of the past FF governments was throwing money at problems with out trying to at least tackle the root cause of the problem itself (because that would actually involve work).
Why would I support FG over FF? Because they are fuckin better than FF! The last time FG and Labour were in government together (in the mid 1990′s) an economic boom was brought about through prudent spending and good management. This was the boom which FF and later the FF – PD government squandered.
Trying to bring change to the Irish Political establishment is like trying to walk on water, you have to be in a political party to influence any real change nationally and everytime a young – freshed faced person enters the dail it is only a matter of time before they end up being silenced and marginalised by the older zombie TDs that are already there, and sooner or later they give up and allow themselves to become corrupted and jump on the gravey train.
If any government in this country wants to be taken seriously and doesn’t want to be met with cynisism amongst the people, they can start by giving back their perks and benifits as well as taking a 50%+ cut in pay. That is real leadership. “Why should I ask people to do something I wouldn’t do myself!!” You won’t find this sentiment in any of the mainstream dail parties!!
NAMA is a crock of shit, they say that they’ll go after the builders, developers and bankers… Will-they-fuck, only after they have put all their money into their wives names so we the ordinary Irish people wont get a sniff of it! We should have set up a state bank to guarentee that the Irish peoples need for credit was met, thus securing farms and small businesses whilst also investing in this “Smart” economy we keep hearing about and funding public works programmes to take people off the dole.
But sure wouldn’t that be communism? Eh, no. Its actually socialism and in theory is the correct capitalist approach to the bad banks! Let the stupid bastards go to the wall! Thats what capitalism is all about. Survival in a free-market and they can’t survive so let them die off…
Tribunerals are a waste of time too! Bring in the special criminal court to deal withe the corrupt developers, bankers and polititians- seperate them from their over paid leadal teams and shoe ‘em up for what they really are! and save the tax payer tens of millions in the process whilst securing convictions with mandatory prison sentences attached.
But sadly the public and political will just aren’t there….
p.s. Try to keep in mind that Fianna Fail have only been out of power for a total of 16 years in this country…. For Christ’s sake can’t we help ourselves?
But again, very good blog Gavin!!
Colm.
What’s wrong with this country is our lack of confidence. People are constantly bleating on about how our politicians are worse than everyone else’s, our private sector is more inefficient than everyone else and somehow we’re morally more degenerate than everyone else. For god’s sake, Irish people are alway using the phrase ‘that’s soo Irish’. That’s not so Irish. Our politicians are no worse than anyone else’s and in some cases they’re better. They haven’t blown up atomic bombs in the pacific, they haven’t suggested invading someone elses country for oil, they don’t sleep with seventeen year old. We don’t have widespread poverty, the likes of which you see in developing countries, everyone (more or less) is educated and we get to choose our politicians, even if we tend for ‘more of the same’ all the time. The facts of the current crisis is that a lot of small countries are suffering. We were raised higher in the bubble of the last twenty years and we’re also sinking lower than bigger countries. We’re in the unfortunate situation of having a property bubble burst at the same time but even that is a common occurrence – we didn’t invent the term ‘property bubble’ nor was it invented for us. There have been property bubble in some of the biggest economies in the world.
If you don’t like how things are in this country then do something about it. Hassle your local politicians, join community groups, buy Irish etc. Just please stop moaning.
Excellent post Gavin, really thought provoking. Now, I’ll just go back to googling nonsense and reading breaking news and doing nothing about it.
Every single revolution in Ireland has failed, 1916 included. We’re just too lazy. We want to be spoon fed all the time and it’s that very inertia which allows us to be ridden by our own kind. Even the British weren’t that bad.
What we don’t need is a revolution, something short and sharp that we can go home from after a week. We need to a political evolution, something that takes place over years and requires us to pay attention all of the time and which is hard work. We need to give more credit for making sure that roads are built properly in the first place and don’t fall apart instead of hailing the road opening and then the application of patchwork fixes to potholes once it falls apart. It’s the long term stuff and the dull politics of maintenance that we’re appalling at.
Great responses to an excellent post, apart from Eamonn Fitzgerald’s ignorant, ill mannered and bizarre attack on P.O’Neill. All that can be concluded from that post is that Mr Fitzgerald cannot read or comprehend simple sentences. But sure why should that limit anyone when the answer to all questions is “it’s the Provos fault”? Provos? What f*cking Provos?
I recall Johnston’s essay and remember noting the scary Irish parallels at the time.
Well done Gavin for teasing out the analogy and putting the real scale of this crisis, and the scale of the corruption that led to it, on the record.
There certainly something extremely flawed about the Irish alright. It is clear that the elite are so corrupt that the Irish should have the powers to regulate their banks withdrawn and transferred to Europe permanently. Crony capitalism seems to be entrenched in the Irish psyche and limiting the damage by transferring these rights to responsible adults who once had empires seems to be the best policy. Lets all hope that the states finances hit a wall sooner than later so that the Republic can start behaving less like a hedge fund and more like a sovereign nation. Pearse and Co. must be rolling in their graves! I love my country but I hate it…
With regards to Beal Bochts comment, a year ago I would’ve strongly disagreed with handing over the regulation of our banking system to the E.U. but now I think it might not be a bad Idea given the poor attidude and in-action of our regulator and stupidity and greed of our bankers. I guess the Irish mentality of “sure it’ll be grand ;-)” has bitten us in the arse again…
p.s. I love my country and many more Irish people love it as well. If only we could get the the polititians, developers and bankers to feel the same way…
Superb post. Hope you’re well Gavin. Best wishes,
R
While I do agree that we got to the mess we’re in today via crony capitalism, populist policymaking and an over-reliance on the construction industry, there is a wider cultural issue which must be resolved.
As a nation we have a rather narrow outlook on life motivated entirely by our own self-interests, where if it benefits us and our immediate circles, then that’s all that matters. This crosses over to the way we vote, where we’ll pick, for instance, the person who promises to benefit our particular tax brackets the most, or allow us to buy a second house, not the one who’ll improve the infrastructure of the country. A good example of this narrow self-interest can be found in a well known book by Joseph Lee called “Ireland, 1912-1985″ which highlights the Irish people’s deeply ingrained focus on the “possessor principle”, or the ownership of property and material goods, over the so called “performer principle,” have led us to consistently underperform economically since the establishment of the independent Irish state.
This narrow outlook is also the reason why, after 15 years of almost unbroken economic growth and prosperity, we have absolutely nothing to show for it, apart from plasma TVs, extensions on the back of our houses, a casual cocaine habit and a holiday home. It’s the reason why teachers feel they can give out about earning €40k+ (more than the european average) for working 9 months a year (less than the european average), if even, with below average results – see http://www.ronanlyons.com/2009/04/20/tackling-the-thorny-issue-of-teachers-pay/ , and electricians feel entitled to go on strike for pay rises even though the sector they work in has imploded under their feet.
Meanwhile, Ireland still has an abysmal health service, crap roads, crap public transport, and schools made of portakabins. It’s a bit rich for us, therefore, to moan about a lack of accountability and transparency in (recently scandalised industry x) when we never sought it in the first place because we were rolling in dosh when the dirty deeds were being done.
Gavin you have mostly got everything spot on.
My two cents (not) worth (a damn) follows. The mentality of this nation is borne out in the comments (including this comment). We come on here and bitch and snipe about the “state of the nation” yet not one of us has the nadz to say NO. No to more tax on an already overtaxed workforce. No to more motorways – fix the fucking roads that we have first. No to lack of a working health system. No to the cunt next door who works and draws down the dole because “he knows he can get away with it”. No to the cheeky git who takes as much as he can get from the country without ever giving back. No to the scum who dump their rubbish at the side of the road in a black sack because they say “that’s ok … sure the council will pick it up”. etc. etc. ad-infinitum.
Vote for the other shower of jabasses. If you vote them in they are still the same shower of jabasses that are already in there – not one thing will change. One of the biggest problems is this Political Party system. Political Party’s breed scullduggery and an “I’ll scratch your back if you scratch mine” approach. Political Party’s breed contempt for anyone who is not a member of that Party.
Here’s something new – get rid of the Political Party system. All wannabe-Politicians should run based on their own ideals for this (great?) Nation. Then let the individual voters choose their preferred representative. Also when the voters are voting they also choose their preferred leader. It’s just an idea and I don’t see anyone else posting solutions – just more griping.
We need ideas and solutions not more of the same shit we’ve had since forever.
I left school in Dublin’s Northside in 1984 . Unemployment was a way of life . The solution was to emigrate . A minister even told us that there was not enough room for all of us on this little island . Now we have their offspring ruling over another failed economy . Whose fault is it ? Well its not the government . Its not developers and its not bankers either . It is the Irish people . We reelected the same government for 12 years . We sat by and did nothing except vote them back in when faced with naked corruption via the tribunals . We cheered them on with booming property and jobs for everyone . We sneered at international economic organisations warning us over our unsustainable economy . We actually thought that we had discovered a secret economic theory . Irishness . We were more than delighted when a house in Dublin was more expensive than in the centre of Paris . Thought nothing about pricing Eastern Europeans out of their property market . We were drunk on greed .
And now in a final winner takes all we are transfare all our wealth to the banks and developers through NAMA . FF can’t even run a health service and thats something that they have experience of running . Its in their job description . However we expect them to run the biggest property portfolio in the world and actually turn a profit . They will close every hospital in the country to keep NAMA afloat if they have to . Ireland has no future . NAMA will cost billions and as banks like to drip feed bad news they have not yet revealed the next bailout that they are going to need through bad debts from credit cards , business loans , mortgages etc . If that does not send us begging to the IMF , Anglo will hoover up billions more . 60 billion in fact .
Because I left school in the 80′s and lived under FF ‘s economic policy I know live in Australia , having left Ireland in 2005 . I could not wait until the sale of my house went through as they were so overpriced even then that I thought that they would collaspe at any minute . I learned a very important life lesson in the 80 ‘s . FF would never hold me in economic prison again while they lived like Kings . I was right as they are doing it again with everybody unemployed while they enjoy massive wages with expenses coming out of their ears .
Hey Gavin, I’m back again, thanks for correcting my earlier comment.
You are accurate in the statement of the problem and its genesis. Very accurate. There is a solution too I think, which I tried to explain in my earlier comment.
Why should we care if property values fall? The vast majority of us have not speculated or invested in the property market, save for our homes or apartments. Who stands to lose? Of course it is the people you have pointed at in your post.
Understanding this, and also being sensitive and generous to the 1st time owner occupiers, we should let this banks fall .Words fail when I come to Anglo Irish, and I have yet to find anyone among my circle of friends who are banking with them. This is the institution which held a gun to the lamped rabbit Brian Lenihan late that fateful evening when this NAMA chaos was born.
There are maybe 50,000 people out there with negative equity (owner occupiers), who might need 100 k each, that’s 5 billion. (There could be many iterations of this calculation, but I think the figure is correct)
Help these people – the rest of the owner occupiers are okay, they can buy and sell.
Deficit to date 2009, 16 Billion, up from 6 Billion this time last year – 6 Billion of the increase is accounted for to prop the banks. And this just the start.
So, let them go to the wall. Why not. We don’t need them. Use our taxes to help the people. Others will come and take up the slack.
Start shouting and marching.
Thanks for the opportunity.
Reading all the above has brought something back to me about my father and why I am so proud of him.
He was Workers Party during the bad times of the 70s and 80s and never ever sold out.
It was a very small party, but I’m intensely proud of it and the sense of revolution and integrity and being “outside” of the gombeen class that it brought to me as a kid, trudging through the streets of Cork, delivering election leaflets door to door.
Ireland needs something like that now – no, not the Marxism – but a movement, or party or whatever , that is utterly OUTSIDE the current political system and has no connections to it whatsoever.
In my view that is the only way we’ll be able the purge the current system and look forward to the day when we we declare a constitution for the 2nd Republic.
excellant post Gavin,I couldn’t possibly add to it,sums up all I feel ’bout this country,perfectly.I left Ireland during the last recession,{’85},and returned 1995,now I find myself almost back it seems,in the same situation.I curse the day still I came back,{but I console myself by blaming a now ex-wife,missed the mammy and the sisters,y’know the script}.Now at the age of almost 50,I wait for my sense of ‘adventure’ and or nerve to come back,and head to blighty again,where I never felt I was serving a Queen or Government,unlike here.Last month I visited a pal in Germany,and unlike most othher times when abroad,I dreaded anybody inquiring of my nationality,’cause of the shame,real or imagined,of how I feel of what people might think of ‘The Irish’…..I really feel that bad…again,a wonderful article,maybe your best,in my opinion,and you’ve had some good ones over the years…thanks,if you do,for allowing me space for a rant…..and this article is whizzing across the world to many friends who had the stamina to stay away from this excuse for a nation..
Great post.
Hearing Bertie Ahern saying he is proud of the country he has created is nerve-jangling.Even after being told to drop the Celtic tiger spiel from his ‘after dinner’ speeches,he still feels his ‘legacy’ is sound.
I am fucking seething.
“Viz.,that they are not ashamed to sin,and yet are ashamed to repent;not ashamed of the action for which they ought justly to be esteemed fools,but are ashamed of the returning,which only can make them be esteemed wise men.”
- Robinson Crusoe.
Not alot has changed in 300 odd years.How comforting.
I heard Bertie on Talk106 this am and I am in despair since–he won’t accept that we have a problem and neither I think will the privilaged elite. Until they accept the reality or are made accept it there is no hope.He is even dictating his terms for being the first directly elected Lord Mayor of Dublin–nightmare scenario—suppose he runs and gets elected.It couldn’t happen, could it.
Well, considering the drubbing de Bert’s brother got in the by-election, perhaps people have come to their senses about that particular slimeball.
Jaysus I don’t know but I’ve had a bit of a search through this and many other sites and I can’t find a single example of anyone bemoaning the fact that they were making a load of money during the good times ! Maybe I’m missing something !
Well Peader, in all honesty, nobody really made money during the good times because they thought they could afford to spend it rather than save it…
Whats more the rip-off republic was and STILL IS in full flight. People were being fucked left, right and centre. They were ripping off peter to pay paul. Pay rises only helped to raise the prices of goods which were already over inflated. Easy access to credit was also partly to blame with people gradually sliding into debt without any alarm bells ringing only spend, spend, spend. In reality, all we had was the illusion of wealth.
In 2007 Ireland was said to be the richest country (per head of population) in the world, but there was little or no public wealth i.e. no health system worth speaking of, poor services and low grade infrastructure… If one thing can be said it is that the people did make alot of mistakes, they got credit-cards, they took out 100% mortgages, car loans etc. etc….
Yes they made the same mistake that a small mouse makes when it goes in after that bit of cheese and gets itself killed in a trap that it has no comprehension of. And thats whats basically happened, if the boom was managed properly and the crash hadn’t been so severe in Ireland people would be able to work off their debts, but because we are loosing jobs (435,000 on the dole today), and those who have work have to pay for those that don’t through excessive tax, it is made tighter and more difficult to get by for ordinary workers.
Jesus the country isnt on its knees, its on a leather sofa, and all you pop-psychologists seem to have all the answers to her dark past…
A lot of what you say Gavin seems to make sense, and I am even beginning to wonder what would have happened if Lenihan and co had folded their arms and said fuck the lot of you (banks and developers) Maybe it mightnt have been the dooms-day scenario they told us it would be..
Would FG and Co, if elected in the morning, scrap NAMA?
What is this change people call for by the way? Who should we change to?
We couldnt afford a labour government at the moment.. All we could hope for (economically) is for the FG boys to revert to their old ultra right wing ways and penny pinch our way out of the turmoil…
Gavin – if you want a starting point you have to formulate an aim. What is your final end point? What are you trying to acheive?
I would suggest a very simple idea – a 2nd Republic
(like France – they periodically go through renewals of La Republique…)
And the basic principle of this 2nd Republic is a total and utter separation of Church and State – a secular republic like France or the United States.
From that basic principle, a heck of a lot of things will flow.
For the commentators on here, and Gavin, here’s one example from the UK that is a political party and is outside the mainsteam
http://lpuk.org/
Now, you might utterly disagree with their politics , but the key point is this:
“At the last UK General Election, 4 in 10 registered electors—over 17 million people—chose not to vote. That’s 17 million people who aren’t happy with business as usual. Are you?”
In other words, if you are going to formulate a political movement, you *have* to go after the electorate that do NOT vote. It is pointless to chase after core FF, or core FG , or core Labour..
In my view, with regards to Ireland, I think that the Socialist Party is a good example of going after this disillusioned vote.
However, that leaves out the disillusioned voters who are instinctively right-of-centre.
The Progressive Democrats , when they were formed, recognised this and went after that vote. Their downfall was that rather than being outside of the political class, they became part of it. And merged with it – in an almost Borg like fashion.
We have to avoid the Borg if we are even to have a chance at forming the 2nd Republic.