The recent so called ‘bailout’ of the Irish economy to the tune of €85 billion by the IMF/ECB has lead to increased hysteria in the media in particular but also among the Irish populace at large. This sense of outrage and despondency culminated in the Union organised march in Dublin last Saturday supported by about 50,000 people. There have of course been many commentators before this, proclaiming Armageddon if Ireland continued on its current path towards restoring fiscal rectitude and some, little David McWilliams the economist have even toured some of the country’s theatre venues like biblical soothsayers proclaiming the end of the credit world for our sovereign identity and indeed for the nation itself.
In the last few months Fintan O’Toole has used his newspaper column to also preach against the inequalities inherent in the fiscal solutions being proposed by our financial ‘saviours’ and has highlighted in particular the challenge to the democratic process inherent in decision making being executed by unelected European and indeed international decision making organisations. Mr O’Toole lays the blame for this situation arising at the door of ‘the demoralised rump administration served by the Department of Finance’ and more generally on a government that was ‘spooked and stamped by the small-time bullies of the Irish banks’. He also calls for the creation of a new more genuine, democratic republic and has even taken his sense of grievance to the forum of the streets like Ireland’s famous worker rights figure James Larkin.
However, while I fully understand and concur with Fintan O’Tooles sense of outrage and indeed support his call for a fundamental reappraisal of the benefits of a privileged elite in the Ireland of today even in the recession, I have severe doubts that he will achieve his goals. The real danger in the current approach I feel is that it is too broadly focused, dissipates too much energy in pillorying the alleged culprits and its prescriptions for change are too general as to make them practical to implement in the short term at least. Simply put, I believe that the current clamour for change may produce more energy that light and may simply produce an alternative government administration with a renewed fiscal friendly focus but basically selling the same flawed product. In other words, it could resemble the process of re advertising an existing washing powder product as new when it in fact is merely being repackaged to gain increased market penetration.
Thus, I feel we should focus succinctly on the core issues facing the country, being how we got here, what we should do about it right now and what should we aspire to in the future, as elaborated upon below:
Context on Crisis:
I fully accept Mr O’Tooles contention that ‘the primary responsibility for what has happened in Ireland lies with our own political, administrative and banking elites’ and that ‘Europe was barely less stupid’. However, I would also emphasise the broader context in which much of our economy in the Celtic Tiger years was forged. Thus our economic ‘success’ was mainly due to the fact that we were considered a very poorly controlled tax haven and that the 12.5% corporate tax that we now defend so strongly was merely an additional bonus to those firms relocating here. Thus we created a milieu of tax free money and light regulation in which it was not only considered opportune but highly advisable if not essential for foreign banks to invest here, in order to maximise financial returns to their shareholders. In essence during this period, our country was a National Money Laundering Location for foreign investment and this alone explains the decision of bond holders/foreign banks to invest so much here. However, it is too easy to just dwell on past excesses and waste time indulging our new found fury on politicians alone. We have a short memory indeed in this respect as very few people complained during the boom years. So much of the responsibility rests with our good selves for overindulging at that time.
Indeed we could be said to resemble a person with a severe hangover who blames the party guest the next morning for providing free beer.
At any rate, the current obsession with finding scapegoats will only contribute to excess negativity and only fan the flames of bitter dialogue over supposed corporate greed and bank bail-outs. Peeved petulance is no remedy for the real grievance felt by many tax payers now burdened with the cost of the Celtic Cull of our lapsed largesse.
Context of Bailout:
Fintan O’Toole rightly states that it is the core capitalistic system of money supply and investment which is effectively holding the World to ransom at the moment despite the best efforts of government’s world wide. Thus the ECB and the IMF are merely bit players in this worldwide economic perspective. Nevertheless, we gladly played this financial game in boom times as pointed out above. However, the price now being asked of us is so severe that we, as a nation have had to seek a ‘bailout’ from European/
International funding organisations. In response, we are prone to act like spoilt children who want to throw their toys across the floor in exasperation when told off and demand more pocket money. We have been so profligate with the money extended in loans to us that as a nation we are now effectively bankrupt and have a Hobson’s choice now facing us as a Nation.
Hence, we must accept the terms of an €85 billion bailout or be unable to pay ourselves within six months. Furthermore, we will probably need yet still further funding if the albatross nature of our bank loans is to be reduced. Faced with this appalling dilemma, we vent our fury on the government and blame such as Brian Lenihan, for guaranteeing the Bank Loans. In the process, we have moved from Celtic Tiger Land to Cloud Cuckoo Land. Unless we want to strike out as a new genuinely socialist republic and adopt a Cuba like isolation from other capitalist nations, we simply have no choice but to cut the best deal we can get and no nonsense about the government playing a better hand of cards will detract from this cruel reality. Essentially we are victims of the three card trick (IMF/ECB/EU) whether we like it or not and any other type of card game is only going to involve a game of Blind Man’s bluff!
Sovereignty Debt and Bank Debt Distinction:
As most economists will testify, there are two distinct parts to this real debt burden: one the sovereign debt and the other being the bond holding debt, or in actual terms, the European banking sector debt. In the former case we have no option but to meet our obligations in this respect but in the latter case we can seek to transfer some cost of the bank bailout to the bond/bank holders. However, as the actual cost of bailing out our banks is likely to greatly exceed the current amount of the IMF/ECB loan, and as contagion is likely to spread to Portugal/Spain at least, it is better to wait a ‘final fiscal’ solution before formally raising this issue further at this stage. Thus, on balance, I feel that we have no option but to bite the bullet and get on with a 4/5 year recovery plan whichever government is in place.
Real Caring is Fair Sharing:
I feel that true leadership at whatever level in Irish society can only flourish if there is genuine feeling of hope in the future and a sense that the ‘gain will justify the strain’ as it were. However, in Irish society at the moment, as Fintan O’Toole and indeed Constatin Gurdgiev and other informed economists have rightly pointed out, there is no fair or even an agreed foundation on which to build this leadership structure, and as an architect I can testify that poor foundations augur badly for future stability. I personally feel that the poor in our society are becoming increasingly marginalised and frustrated by the direction of government cut backs and that salaries should be cut by up to 50% for sums more than €150k if any progress is to be made on perceived sharing of this pain. The need for other major structural reform has been flagged elsewhere.
Value versus Cost of Social Inclusion:
There would appear to be little appreciation of the value as opposed to the cost of the contribution made to this society by those classed within its currently redundant work force, especially the young. Core business activities for both small and medium sized firms are being starved of bank cash support. Furthermore, there has been an exponential increase in red tape and regulative activity by government agencies presumably to keep them busy during the recession.
Thus, I would personally be more concerned by the absence of any attempt to ‘cherish all the children of the nation equally’ as expounded by our founding fathers as any concern for a supposed loss of our sovereignty. If we personally take out a mortgage on our home we don’t loose ‘sovereignty’ over it, we only loose that sovereignty if we cannot repay that loan. Thus, it is essential, that all vulnerable people in our society be particularly cared for in the current recession. In this respect, I would like to see the dole abolished and jobs offered in lieu to all our people in conjunction with loans extended over a lifetime if they are unable to pay premiums on mortgages in the current situation. Thus, instead of hounding people into Fas courses for training in jobs that will never exist, young people should be offered structural employment at a minimum pay if necessary as an alternative to the dole. Many people I’m sure would prefer even a basic structured job than the prospect of being idle and being treated as a mere number on a dole register.
Hope in a Time of Malady:
The extreme sense of malaise and despair felt by most of the Irish population in the current recession is systematic of the waste and lack of appreciation of talented and creative people, both young and old in our society. People in protected jobs in both the private and public sectors cling to their sense of entitlement and the government’s tries to usage the guilt of the excluded unemployed by an unreal new emphasis on the merits of the supposed smart economy. However, for many buried under the weight of joblessness and personal debt, this emphasis is neither really smart nor genuinely economic.
One Last Wilde Wish:
I have avoided commenting on our countries financial dilemma for a long time and have endeavoured to offset my own severe loss of work opportunities as a self employed architect by posting mostly light blog entries on Twitter as a light distraction from my own problems in this respect. However, I feel that the carefully argued proposals of both Fintan O’Toole as a journalist and such as Constantin Gurdgiev and Brian Lucey as economists, deserve at least a considered response and support from me. I do not pretend that I have set forth any brilliant insights but I assure all those who read this blog that its sentiments are heartfelt and genuine.
In ending this little discourse, therefore, I would like to refer finally to a quote from Oscar Wilde, which even in the sense of acute despair felt by many aspires to a feeling of hope in it’s uplifting outlook for the future:
‘We are all of us in the gutter, but some of us are looking at the stars’
I for one, despite having felt severe adverse effects from the recession on my own business in architecture, remain hopeful both for my family and their future in this wonderful country that we all love so much.
Signed:
Colm O’Riain
Twitter profile: @COLMORIAIN
Photo: Christmas Cheer in the Crystal Ball?
In the last few months Fintan O’Toole has used his newspaper column to also preach against the inequalities inherent in the fiscal solutions being proposed by our financial ‘saviours’ and has highlighted in particular the challenge to the democratic process inherent in decision making being executed by unelected European and indeed international decision making organisations. Mr O’Toole lays the blame for this situation arising at the door of ‘the demoralised rump administration served by the Department of Finance’ and more generally on a government that was ‘spooked and stamped by the small-time bullies of the Irish banks’. He also calls for the creation of a new more genuine, democratic republic and has even taken his sense of grievance to the forum of the streets like Ireland’s famous worker rights figure James Larkin.
However, while I fully understand and concur with Fintan O’Tooles sense of outrage and indeed support his call for a fundamental reappraisal of the benefits of a privileged elite in the Ireland of today even in the recession, I have severe doubts that he will achieve his goals. The real danger in the current approach I feel is that it is too broadly focused, dissipates too much energy in pillorying the alleged culprits and its prescriptions for change are too general as to make them practical to implement in the short term at least. Simply put, I believe that the current clamour for change may produce more energy that light and may simply produce an alternative government administration with a renewed fiscal friendly focus but basically selling the same flawed product. In other words, it could resemble the process of re advertising an existing washing powder product as new when it in fact is merely being repackaged to gain increased market penetration.
Thus, I feel we should focus succinctly on the core issues facing the country, being how we got here, what we should do about it right now and what should we aspire to in the future, as elaborated upon below:
Context on Crisis:
I fully accept Mr O’Tooles contention that ‘the primary responsibility for what has happened in Ireland lies with our own political, administrative and banking elites’ and that ‘Europe was barely less stupid’. However, I would also emphasise the broader context in which much of our economy in the Celtic Tiger years was forged. Thus our economic ‘success’ was mainly due to the fact that we were considered a very poorly controlled tax haven and that the 12.5% corporate tax that we now defend so strongly was merely an additional bonus to those firms relocating here. Thus we created a milieu of tax free money and light regulation in which it was not only considered opportune but highly advisable if not essential for foreign banks to invest here, in order to maximise financial returns to their shareholders. In essence during this period, our country was a National Money Laundering Location for foreign investment and this alone explains the decision of bond holders/foreign banks to invest so much here. However, it is too easy to just dwell on past excesses and waste time indulging our new found fury on politicians alone. We have a short memory indeed in this respect as very few people complained during the boom years. So much of the responsibility rests with our good selves for overindulging at that time.
Indeed we could be said to resemble a person with a severe hangover who blames the party guest the next morning for providing free beer.
At any rate, the current obsession with finding scapegoats will only contribute to excess negativity and only fan the flames of bitter dialogue over supposed corporate greed and bank bail-outs. Peeved petulance is no remedy for the real grievance felt by many tax payers now burdened with the cost of the Celtic Cull of our lapsed largesse.
Context of Bailout:
Fintan O’Toole rightly states that it is the core capitalistic system of money supply and investment which is effectively holding the World to ransom at the moment despite the best efforts of government’s world wide. Thus the ECB and the IMF are merely bit players in this worldwide economic perspective. Nevertheless, we gladly played this financial game in boom times as pointed out above. However, the price now being asked of us is so severe that we, as a nation have had to seek a ‘bailout’ from European/
International funding organisations. In response, we are prone to act like spoilt children who want to throw their toys across the floor in exasperation when told off and demand more pocket money. We have been so profligate with the money extended in loans to us that as a nation we are now effectively bankrupt and have a Hobson’s choice now facing us as a Nation.
Hence, we must accept the terms of an €85 billion bailout or be unable to pay ourselves within six months. Furthermore, we will probably need yet still further funding if the albatross nature of our bank loans is to be reduced. Faced with this appalling dilemma, we vent our fury on the government and blame such as Brian Lenihan, for guaranteeing the Bank Loans. In the process, we have moved from Celtic Tiger Land to Cloud Cuckoo Land. Unless we want to strike out as a new genuinely socialist republic and adopt a Cuba like isolation from other capitalist nations, we simply have no choice but to cut the best deal we can get and no nonsense about the government playing a better hand of cards will detract from this cruel reality. Essentially we are victims of the three card trick (IMF/ECB/EU) whether we like it or not and any other type of card game is only going to involve a game of Blind Man’s bluff!
Sovereignty Debt and Bank Debt Distinction:
As most economists will testify, there are two distinct parts to this real debt burden: one the sovereign debt and the other being the bond holding debt, or in actual terms, the European banking sector debt. In the former case we have no option but to meet our obligations in this respect but in the latter case we can seek to transfer some cost of the bank bailout to the bond/bank holders. However, as the actual cost of bailing out our banks is likely to greatly exceed the current amount of the IMF/ECB loan, and as contagion is likely to spread to Portugal/Spain at least, it is better to wait a ‘final fiscal’ solution before formally raising this issue further at this stage. Thus, on balance, I feel that we have no option but to bite the bullet and get on with a 4/5 year recovery plan whichever government is in place.
Real Caring is Fair Sharing:
I feel that true leadership at whatever level in Irish society can only flourish if there is genuine feeling of hope in the future and a sense that the ‘gain will justify the strain’ as it were. However, in Irish society at the moment, as Fintan O’Toole and indeed Constatin Gurdgiev and other informed economists have rightly pointed out, there is no fair or even an agreed foundation on which to build this leadership structure, and as an architect I can testify that poor foundations augur badly for future stability. I personally feel that the poor in our society are becoming increasingly marginalised and frustrated by the direction of government cut backs and that salaries should be cut by up to 50% for sums more than €150k if any progress is to be made on perceived sharing of this pain. The need for other major structural reform has been flagged elsewhere.
Value versus Cost of Social Inclusion:
There would appear to be little appreciation of the value as opposed to the cost of the contribution made to this society by those classed within its currently redundant work force, especially the young. Core business activities for both small and medium sized firms are being starved of bank cash support. Furthermore, there has been an exponential increase in red tape and regulative activity by government agencies presumably to keep them busy during the recession.
Thus, I would personally be more concerned by the absence of any attempt to ‘cherish all the children of the nation equally’ as expounded by our founding fathers as any concern for a supposed loss of our sovereignty. If we personally take out a mortgage on our home we don’t loose ‘sovereignty’ over it, we only loose that sovereignty if we cannot repay that loan. Thus, it is essential, that all vulnerable people in our society be particularly cared for in the current recession. In this respect, I would like to see the dole abolished and jobs offered in lieu to all our people in conjunction with loans extended over a lifetime if they are unable to pay premiums on mortgages in the current situation. Thus, instead of hounding people into Fas courses for training in jobs that will never exist, young people should be offered structural employment at a minimum pay if necessary as an alternative to the dole. Many people I’m sure would prefer even a basic structured job than the prospect of being idle and being treated as a mere number on a dole register.
Hope in a Time of Malady:
The extreme sense of malaise and despair felt by most of the Irish population in the current recession is systematic of the waste and lack of appreciation of talented and creative people, both young and old in our society. People in protected jobs in both the private and public sectors cling to their sense of entitlement and the government’s tries to usage the guilt of the excluded unemployed by an unreal new emphasis on the merits of the supposed smart economy. However, for many buried under the weight of joblessness and personal debt, this emphasis is neither really smart nor genuinely economic.
One Last Wilde Wish:
I have avoided commenting on our countries financial dilemma for a long time and have endeavoured to offset my own severe loss of work opportunities as a self employed architect by posting mostly light blog entries on Twitter as a light distraction from my own problems in this respect. However, I feel that the carefully argued proposals of both Fintan O’Toole as a journalist and such as Constantin Gurdgiev and Brian Lucey as economists, deserve at least a considered response and support from me. I do not pretend that I have set forth any brilliant insights but I assure all those who read this blog that its sentiments are heartfelt and genuine.
In ending this little discourse, therefore, I would like to refer finally to a quote from Oscar Wilde, which even in the sense of acute despair felt by many aspires to a feeling of hope in it’s uplifting outlook for the future:
‘We are all of us in the gutter, but some of us are looking at the stars’
I for one, despite having felt severe adverse effects from the recession on my own business in architecture, remain hopeful both for my family and their future in this wonderful country that we all love so much.
Signed:
Colm O’Riain
Twitter profile: @COLMORIAIN
Photo: Christmas Cheer in the Crystal Ball?
I've been following this from across the pond and appreciate your detailed insights.
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