Apr 2015

Dermot Gleeson renews his apology

Over the past few years the citizens of Ireland have, collectively, been plunged into crippling debt likely to last generations. This was done, ultimately, by a fairly small group of politicians, bankers and property speculators. Our response has been fascinating. With the singular exception of the water privatisation* issue (which has sparked protest and may yet prove a rallying point for a broader “anti-austerity” movement**) we’ve pretty much accepted it with a reluctant shrug. There’s been plenty of anger, don’t get me wrong. But it tends to be seething and grumbling and the narrowing of the eyes with us (rather than riots and petrol bombs and voting for socialists).

I could write at length about why the Irish collective psyche has reacted this way, but I’ll leave that for another day. For now I just wanted to highlight the weird way in which powerful establishment figures involved in the financial crisis occasionally pop up in the media ostensibly to “apologise” (or in this case “renew their apology” – how weird is that!?) but actually seem to be insulting the very people they have completely screwed over. What other explanation can there be for former Allied Irish Bank chairman Dermot Gleeson’s testimony in front of the Oireachtas Banking Inquiry today?

I feel confident in saying that every person reading this post had learnt and understood, by the time they were 10 years old, that “but everyone else was doing it” does not constitute a legitimate justification for doing something. Parents and grandparents will ram the point home with questions about hands in the fire and jumping off cliffs. We knew, as children, that doing something wrong because “the others were doing it” is bullshit plain and simple.

So I feel no hesitation in shouting “Bullshit!” when Dermot Gleeson acknowledges that yes, absolutely, AIB was indeed engaged in:

lending that was ‘expansive’ at a time of excessive risk taking on the back of a construction and property-fuelled boom

but that no single lender could have done anything about it. Because:

“if AIB had stopped lending, their competitors would have happily stepped in to satisfy the demand”

Dermot GleesonIt’s hard to believe, I know, but that really is the former head of Ireland’s second biggest bank telling a government committee that because all the other banks were running up huge unsustainable debts that would one day collapse the economy, it was OK for his bank to do it too. More than that, it was the government’s fault for not stopping him.

The regulator was “hopeless” he claimed. I can’t be the only person made furious by that, right? The man was in a powerful position with a huge amount of public responsibility… but he didn’t comprehend that the point was not to see how many insane things he could do without falling foul of the regulator. We clearly need regulators (not least because of eejits like this guy) but if you’re in charge of a bank deemed of national importance and structurally vital to the stability of the public finances and you’re playing a game of chicken with the regulators. Then you’re doing it wrong!

The heads of our major banks should not be tasked with seeing how close to the edge they can bring the institution in the name of ever increasing “shareholder value”. These banks, sadly, are too damn important to us – the people – to act in so reckless a manner. Or be allowed to. And if we’re still employing that kind of fricking idiot to run our big institutions (hint: we are, because absolutely nothing has changed in that respect) then we need to stop right now.

That said, Gleeson is correct in implying that the government are far from blameless… everyone involved should be writing their memoirs in jail. But as the head of the second biggest bank in the country it was at least part of Gleeson’s job not to run the bloody thing into the ground and the country with it. It’s not acceptable for the head of AIB to steer the institution in whatever reckless direction he fancies so long as he manages to find a way around government regulation and oversight.

Mind you, you kind of have to admire the way he so succinctly illustrates the central attitudes of capitalism with his every utterance.

Also let’s be very clear about something… if the second largest bank in Ireland had actively tried to put the brakes on during the run-up to the collapse; while it clearly would not have prevented the crash, it’s not unreasonable to imagine the country would be in slightly better shape today… a few billion less in debt at least.

And because that equates to a few billion less for the salaries of doctors and nurses and teachers and policemen and the coast guard… well, let’s just say that Gleeson’s failure to learn a lesson most of us grasped as children has caused a great deal of suffering and maybe even cost a few lives. But hey, he’s sorry. So leave him to his wealth. We will condemn him to the inconvenience of appearing before committees every year or two – that’ll surely deter future bankers from destroying the financial system.

* But it’s not privatisation, I hear you object. To which I say “Feck off!” And loudly at that. I’m well aware that this first step does not represent privatisation, but it takes a special kind of naive to think that the ideologues who forcefully rammed this current system down the throats of a defiantly unwilling electorate do not have privatisation as an ultimate endgame. We have been forced to borrow money to install a system at our expense that is perfectly designed to control, monetise and profit from our water usage. Even if the current gombeens in government aren’t aware of it, they’re setting that up to be sold off down the line as a nice little earner for the shareholders of Global Water Inc. (registered office: Cayman Islands). Why the hell else oppose – even in principle – a constitutional amendment on public ownership?

And let’s not go on about water being a scarce resource and metering being necessary to curtail usage. Study after study has shown that water-metering produces a short-term drop in usage followed by a return to previous levels over the course of a relatively small period of time. The same amount invested in infrastructure repairs produces a larger saving over a much longer period of time. Also… in global terms, yes. In global terms water conservation is a huge problem. In Ireland though, it’s just an infrastructure thing. We’ve got all the water we need falling from the sky and draining off the island into the sea. All the bloody time. The raw resource is there to be used and is effectively renewable so long as the Atlantic Ocean stays roughly where it is. With a growing population and plenty of money, governments over the past 20 years could have invested in a modern water collection, storage, treatment and distribution system and there simply would not be an issue today. They could have done that. But they didn’t. Instead they gave massive tax breaks to already wealthy people and proceeded to somehow allow the banks to magically create and destroy tens of billions of euro doing god only knows what, high on coke and spreadsheets, and saddling bus-drivers, hair-dressers and pensioners with the bill.

Now we’ve gone and spent another fortune, on tick, not to upgrade the system and fix the leaks and dig a reservoir or two… oh no, we’ve decided to add water-meters to every property in the country. Seriously folks… that’s only the kind of decision you make if privatisation is the endgame. It doesn’t make any sense otherwise (though maybe I’m giving this thing too much credit when I assume it makes sense on any level at all).

As a final thought, can I also point out that at a symbolic level, “charging the poor for water” has got to be one of the most singularly unchristian things I can think of. I’m not suggesting religion should play a part in public policy (it shouldn’t). I’m just suggesting that when someone betrays even the best, most enlightened, most cherished core values of their faith in the name of economic ideology… they probably can’t be trusted to take care of anything of real value.


** I put “anti-austerity” in parentheses there because I don’t entirely like the phrase. Firstly because I don’t necessarily think “austerity” is always a bad thing. Indeed it may well be appropriate for western societies to take a more austere approach to resource consumption in general. And how we do that should be the subject of informed and rational discussion (like that ever happens when it comes to important subjects). Secondly though, because I don’t think what we’re seeing right now is austerity – certainly those actually pushing and promoting the policy don’t seem to be living any more austere a lifestyle than they were prior to it. So while “anti-austerity” is a useful label because most people pretty much understand what you mean by it… it’s actually a little misleading.

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Apr 2015

Syriza demands war reparations

For a little while now the Leftist government in Greece, led by Syriza and most visibly represented by Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis, has been raising the issue of “German war reparations” whenever the Greek financial crisis is discussed. Up until now however, they had not proposed a figure. A few days ago they got down to brass tacks and suggested €279bn might be fair.

SyrizaOn facebook feeds and web forums I’ve seen a surprising number of people suggest that this somehow represents a “distasteful” strategy. That it’s somehow “below the belt”. So-called moderate leftists have been tut-tutting this apparently shameful behaviour and suggesting Syriza need to retreat to the centre, agree to EU/IMF instructions and calm the hell down. And it’s not just on social media you hear this… the bloody Guardian is full of these “moderate leftists” attacking Syriza. Going so far as to wonder aloud as to whether Greece’s Left is falling under the spell of Moscow. Yes, that is Britain’s flagship “left of centre” newspaper whispering “reds under the bed!” ominously in your ear. God only knows what the Mail and the Telegraph are up to.

There are two things to be said about left-wingers who call for Syriza to return to the centre… firstly, they are totally misreading the situation in Greece which is on a real knife-edge. And secondly, they are – unwittingly – calling for a course of action likely to produce a sharp swing to the far right in southern Europe. At best it’s an ignorant centre-right position. At worst it’s a bit more sinister than that. It’s certainly not “left wing”.

There is genuine concern among many Greeks about the volatility of politics there right now. By and large no modern democracy actually wants to be in a position where they are forced to vote for “a radical solution”. That almost always means something has gone terribly wrong and the safe, conservative, quiet middle ground is no longer working for some reason. And that’s the situation in Greece right now. The country is on the verge of economic collapse (in the sense of there being no money in the banks and no bread in the shops; not in the sense of middle class Greeks being unable to afford a second holiday this year). And the reason for this is two decades of centrist corruption, coupled with the subsequent European banking crisis.

If you’re one of the army of unemployed graduates in Greece right now, you’ve lived your entire life under a centre-left/centre-right political class which actively falsified national accounts at the behest of wealthy oligarchs who refused to pay tax. What’s more… pretty much everybody knew it was happening. Corruption was endemic and both the far left and the far right were shouting about it. But so long as the status quo permitted the Greek government to generate ECB credit; it was ECB policy to encourage it to continue.

And then, surprise surprise, the whole thing collapsed. The European financial institutions acted shocked (just as they did when the Irish property bubble burst… because that was never going to happen, right?) and demanded that the people of Greece be punished for the sins of their corrupt government. Try to remember… it was ECB policy to offer limitless credit to idiotic Irish property developers based on absurdly inflated valuations. And it was ECB policy to offer limitless credit to a corrupt Greek oligarchy (via the Greek Central Bank). I find it mystifying that so many people have bought into the idea that the citizenry of those countries be held responsible for the reckless debts and corrupt behaviour of a few private individuals and institutions.

And that, of course, is the point being made by Tsipras when he demands German reparations. This seems to have gone over the heads of many (or else they are wilfully ignoring it). He’s a pretty smart guy and he knows he’s not going to get any war reparations. He’s merely publicly highlighting a vast discrepancy… how the German people were supported after their government betrayed them, and yet the Germans (who are the principal drivers of European financial policy) are demanding the Greeks be treated entirely differently. It is not distasteful to point out a very relevant double-standard.

When a government betrays its people and rips the nation apart, the international community can offer a Versailles Treaty or a Marshall Plan. It was literally the single most obvious lesson of 20th century history, and we – quite staggeringly – appear not to have learnt it. (Hint: The Marshall Plan turns out better for absolutely everyone involved)

Tsipras and Varoufakis are walking a tight-rope. The IMF/ECB intervention was not working in Greece. The situation didn’t need “adjusting”, it needed a new approach. In Ireland austerity is biting very hard, but the fact is – life in Ireland today is still considerably better than it was for most of the past half century, so people have adjusted. It rankles that we’ve accepted this debt with so little resistance, but that’s how it went.

In Greece though… circumstances are very different and the country has been decimated by the policies imposed by the troika. In 2005 Greece had the lowest suicide rate in Europe. Today it has the highest. Let that statistic sink in. Seriously. Think about how radically a society must have changed for that to have happened… think about how socially damaging the policies of the troika have been to result in that outcome. Nobody can be happy when unaccountable international financial institutions are laying waste to their society. And nobody can be happy when all of their mainstream political parties have accepted this situation and speak almost casually of “a further 10 years of austerity”. Those are precisely the circumstances in which nations are stirred to seek “radical solutions”.

So of course the Greeks have looked for an alternative. To do otherwise is literally suicidal.

The policies currently being imposed on Greece today are very similar to those imposed on Yugoslavia in the 1980s by the IMF (under the behest of a rabidly anti-socialist Reagan administration). Are we really dooming ourselves to walking that grim path again? Golden Dawn are unlikely to ever gain a popular mandate the way Syriza did… but the Greek people will not quietly trudge back to the centre ground if Syriza fails. They can’t afford to. And if Syriza fails, if the current government collapses, it is very possible that a right wing coalition will find themselves requiring the tacit support of Golden Dawn in order to hold power. And once you let fascists into government, even in an unofficial capacity, it can be pretty tough to get them out again.

I believe that Tsipras has one card – and one card only – he needs to somehow stall the EU and the IMF until the Spanish elections and hope (against hope) that Podemos somehow do in Madrid what Syriza managed in Athens. If that happens, it’s just about possible that a leftwing bloc within Europe, strong enough to demand policy change, could emerge. Very unlikely but it’s really their best bet (and I suspect they know it). Hence all the delays and stalling and missed meetings and “promises to review”. Also hence the demands for war reparations. It’s a stalling tactic*, but one with bite, and one with a real point to make.

Those calling for Syriza to fail in Greece (and right now, a call for a return to the centre ground is a call for their failure) are either hoping for a hard-right government or – at best – another decade of the Greek people watching the elderly kill themselves because they can no longer afford their medicine, and young men kill themselves because they see no future in a country where youth unemployment has now passed 50% and is still rising. The Greek people don’t deserve what’s happening to them. It’s crushing them. And it’s business-as-usual centrists… moderates… that are doing it and insisting upon years more of it. So the only real choice facing Greece right now is “left” or “right”?

Those who want the left to fail should – in this instance – be very careful what they are wishing for.

* I also think the logistics of a rapid switch to the New Drachma take a while to put in place so every day they can stall is an extra day of preparation (if Tsipras hasn’t got a warehouse full of newly-printed banknotes and a fleet of trucks on stand-by, he’s not as smart as I think he is).

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