Nov 2010

Unearned debt

All a bit surreal over here at the moment. It’s one of the very rare occasions where rolling news isn’t repetitive… everything’s changing so quickly, almost by the hour. Seems as though Ireland, with 1% of the population has managed to generate over 10% of Europe’s total debt. A little excessive. We’ve got a 4 year plan, a looming budget, and ever more grim prognostications. So the men from the IMF are stalking the halls of power, wielding arched-eyebrows and briefcases. “The Irish need supervision”, is the message. “Someone’s got to put an end to our profligate ways.”

But it’s a false narrative. I’ve already lambasted the Irish property developers, bankers and politicians for their part in our downfall, but it’s worth remembering that they were a symptom of a widespread disease. Ireland’s crime is to have been the most enthusiastic proponent of a global obsession. We embraced the delusion a little tighter than others. But it was a shared delusion, make no mistake, and it certainly didn’t originate here. That debt we’ve run up? It’s in Euros. It’s not like we were printing our own money all this time. The European Central Bank (ECB), along with a couple of UK banks, were funding all this madness. Irish bankers were meeting with their European counterparts and saying things like, “You know how property bubbles usually burst? Well we’ve got one over in Ireland that never ever will. Seriously, it’s going to expand forever.” And their European counterparts would say things like “Finally! We’ve been looking for one of those for ages! Mind if I chuck in a few billion?”


The sudden arrival of these serious looking men from international institutions onto our streets and televisions isn’t because they’re worried Anglo-Irish Bank might go out of business. Or rather, that fact in itself doesn’t worry them. No, it’s the damage they’ll suffer should it occur which has drawn them to our shores. Be under no illusions here, the job of these men — and the Irish government that is aiding and abetting them — is to legally bind Ireland to the debts they incurred. They made a reckless bet on a 100/1 shot, and are now demanding the horse’s owner absorb the losses. It’s a nonsense. But it’s a dangerous nonsense.

We really should have gone the route of Iceland and let the chips fall where they may. We should have defaulted. We should have calmly announced that a bunch of financial instutions making insane bets with one another had bugger all to do with the Irish public. Consequently the Irish public won’t be paying for it, thanks very much.

But we didn’t go down that route. And we didn’t because the people making decisions for us now are the same we people we elected to prevent this happening in the first place. If there’s one job of government more important than almost any other, it’s to ensure the country doesn’t go broke on your watch. Fail at that, and surely you forfeit the right to make further decisions on behalf of the nation. Certainly the moral legitimacy of those decisions must get called into question.

But even if this gross act of piracy wasn’t morally indefensible, I’d question its consitutionality. Not that I’m a constitutional expert, and I suspect my interpretation might be broader than most, but it seems to me that recent government decisions have brought it into conflict with the very first Article of the Consitution…

The Irish nation hereby affirms its inalienable, indefeasible, and sovereign right to choose its own form of Government, to determine its relations with other nations, and to develop its life, political, economic and cultural, in accordance with its own genius and traditions.

I love the word “genius” in that sentence (I like to imagine it was a ‘2am decision’ that got it included in the final text).

I think there’s definitely a case to be made that the current Irish government are radically curtailing Ireland’s sovereignty over its economic life. And when the government wants to do something unconstitutional, they need to hold a referendum first. Are there any constitutional experts out there who can tell me whether that’d be the basis of a realistic court challenge?

Don’t get me wrong, we have a large budget deficit and that’s definitely our problem, and we need to deal with it. But it’s far from an insurmountable problem and it certainly doesn’t warrant having the IMF beam in. We have a balance of trade surplus and we are arguably one of the few potentially self-sufficient nations in Europe… we can feed, house and clothe ourselves and still make an income from foreign trade. So the fundamental ability of Ireland to survive isn’t at issue here. What’s at issue, and the only reason the IMF are here, is the bank debt. And that’s their problem. Punishing the Irish workforce, and the hundreds of thousands now out of work, the Irish pensioner, patient and pupil. It’s fundamentally unjust.

And it’s not made any better by a media coverage that constantly uses words like “humiliation” and “shame”. We’re so bloody Catholic, I tell you. The Taoiseach is forever being asked how much “personal shame” he feels over this. It’s important stuff to us here. The names of great Irish heroes of the past have been invoked. Collins, Pearse, Connolly… was it for this they died? And de Valera is surely turning in his grave.

One thing I’ve found fascinating though, from a cultural perspective, is just how much this crisis has highlighted the disgrace into which the Catholic clergy have fallen in this country. If this economic collapse had happened even just 20 years ago, the voice of The Church would be one of the most influential in framing the entire narrative. And with a bitter irony for those of us who condemned the level of Church influence over Irish society, they’d almost certainly have been on the right side of the argument on this particular issue… opposing the stringent cuts to welfare, the minimum wage, health and education that loom large in our future. And they’d have been a powerful voice in favour of raising taxes on the highest earners — quelling some of the opposition that such a move would face.

But today the Church is nowhere to be seen, though our Catholic obsession with shame and guilt remain. The endless panel shows are devoid of men of the cloth.

Perversely, there’s a part of me that thinks this process might be a good thing for the country in the long term. With resource depletion going to hit the global economy like a freight train in a few short years*, it might not be a bad idea to get a bit of a head-start with the powerdown (do our initial stumbling while there’s still a semblance of an international safety net to help us avoid serious injury). It’s hard to know though. Maybe going down first just means the rest will fall on top of us…

So yes, all a bit surreal over here. Just this morning the government collapsed. And that might not be the biggest news story of the day. There’s hours to go yet.

* Incidentally, the Pentagon has woken up to peak oil in a big way recently and is talking seriously about liquid fuel shortages beginning in 2012 (that’s three years earlier than many of the oil analysts I’ve cited in the past). They also see fit to include this observation in the “2010 Joint Operating Environment report”:

One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest.

Clearly not the sort of people who view the depletion of fossil fuel reserves in terms of a unique opportunity for positive change. But then, the sort of people who choose a career in the Pentagon aren’t going to be, are they?

Posted in: Opinion