Nov 2010

A province once again

There’s a famous Irish rebel song, A Nation Once Again, with the following refrain…

A Nation once again,
A Nation once again,
And lreland, long a province, be
A Nation once again!

Written around the time of the Great Famine, it yearns for a time when the people of Ireland are in control of their own destiny and no longer just a province in someone else’s empire. Several rebellions (including the most significant, in 1916), one war of independence and one civil war later, Ireland eventually achieved self-determination and threw off the yoke of foreign rule.

Remarkably, during the past few weeks our government has reversed all that. And I can only assume that the relative lack of public outrage is down to the fact that most people have yet to realise that’s what’s happened. But when they do…

Well, to be honest I don’t know what’ll happen when they do. If economist Morgan Kelly is correct, it’ll result in Irish society taking a dramatic lurch to the right… with the traditional parties eclipsed by the rise of an anti-Europe, anti-traveller, anti-immigration party. Kelly has a better track record than most with regards to our current crisis, having been repeatedly denounced as doom-mongering only to have his predictions borne out by subsequent developments. So, predictably, politicians and pundits have been rushing to denounce him yet again.

I think he’s right about the scale of the problems looming in the near future, though I’m less convinced by his claims that Ireland will lurch rightwards. My own reading of Irish society is that we’re more likely to lurch left. Socialism is part of our cultural DNA. Our constitution is infused with it, and almost every one of our national heroes was “of the left”. I think we’re more likely to see an anti-market backlash rather than a descent into xenophobia. Leastways I hope so.

Of course, it’s not that the Fianna Fáil / Green coalition secretly sold the country back to the British. That particular empire is long gone and besides, they have their own problems now… I doubt they could afford to take us back — even at the knockdown price which would be accepted by our betrayers in government. No, this time we’ve been delivered into the hands of international capitalism. It’s a more abstract empire certainly, but no less ruthless.

How did we get here?

Just over two years ago, it emerged that a small group of people had managed to comprehensively torpedo the Irish financial system. These people fell into three categories… property developers, bankers and politicians. The developers, driven by greed and stupidity, took out massive loans to buy overpriced land on which they built houses, hotels and offices that nobody needed and for which there was no market. In total we’re talking about tens of billions here. For a country the size of Ireland it’s an absurd amount of debt.

The bankers, driven by greed, stupidity and cocaine happily approved the loans without bothering to consider the consequences. In many ways they were worse than the developers who at least technically did their job… the empty houses, hotels and offices do actually exist. The job of the bankers on the other hand was to approve loans with a half-decent chance of repayment. Nobody expects them to have a 100% track record, but to have so spectacularly misjudged the market demonstrates that they simply hadn’t the faintest idea what they were doing. If the developers had been as bad at their jobs as the bankers, every day the news would be filled with stories of buildings collapsing.

Worst of all though — and given how utterly useless our financial sector was, that’s really saying something — was the performance of our politicians. Charged with passing our laws and with protecting the people of Ireland, the government somehow neglected to make “destroying the Irish economy in pursuit of personal profit” a criminal offence. The deregulation of our financial system, the lack of oversight and the enthusiastic support for unsustainable practices brought the nation to its knees. What’s worse, having allowed this to occur on their watch, our government decided it would try to put things right not by protecting the interests of the Irish people (i.e. those they are legally obliged to represent) but by protecting the interests of the very financial institutions that created the mess.

It’s a staggering sell-out of Ireland. One that will last for generations to come. And as this slow collapse plays out on the world stage it is vital to remember that the massive millstone of debt that now hangs around the neck of the Irish people was not incurred by them. It was incurred by private businesses (banks and developers) and legal liability lay squarely on bond-holders.

This is an important point and one that’s not stressed nearly enough. There was no obligation on the Irish public to pay for the debts run up by the banks. The international bond markets were legally obliged to absorb the losses when those debts turned bad (as many of us predicted they would do). They took the risks. They would have reaped the rewards, in interest, had the debts been repaid. And yet, the government of Ireland has decided that rather than allow this to happen, they would instead repay those debts from the public purse. It’s nothing short of a massive expropriation of public funds by the private sector. And it’s all happening out in the open, as though it were the most normal thing in the world.

Good old capitalism.

Remarkably, it now seems as though the bond markets have engineered a situation where they’ve eliminated any and all risk of loss by ensuring that it gets covered by public taxation. It’s welfare fraud on an unprecedented scale. And it gives investors a licence to take more and more foolish risks because they stand to lose nothing when their greed and idiocy inevitably results in disaster.


Instead Irish schools and hospitals suffer. Individuals whose jobs have evaporated thanks to this obscene mismanagement of the economy find themselves with an increasingly threadbare social security net. Councils are forced to slash services and the youth of the nation once again finds itself forced to choose between emigration and poverty. And all this is being imposed on us by our government in order to insulate international bond-holders from the losses they themselves incurred. From the risks they took. The poor, the sick and the vulnerable are forced to suffer the consequences of the reckless greed of the wealthy.

And it’s so disproportionate it beggars belief. While with one breath politicians assure us that every sector of society must share the burden, with another they tell us that a rise in corporation tax is not on the cards. It was corporations who created this problem, yet far from sharing the burden equally, that’s the one sector not being asked to contribute in any significant way to the solution.

If you ever needed evidence that the government of this country places the interests of the free market above the interests of the Irish people, this is it. As a result of government policy, tens of thousands of people in Ireland will be faced with choices like whether to skip some meals or to pay the gas bill. They’ll put off doctor’s appointments to ensure their kids get new shoes. Their savings will disappear as they try to keep up payments on their mortgages, all the while receiving nasty letters from banks who defaulted on their loans.

People mutter and shake their heads, but beyond the metaphorical, there’s not even much fist-waving going on. With the exception of the recent student occupation of the Department of Finance building and the chap who drove his cement mixer into the gates of The Dáil, there has yet to be a response proportional to the crimes being committed by our government and the markets they serve.

How long before the barricades arise?

Posted in: Opinion