Fact and Prediction
I often wondered about the meaning of the Chinese curse that went: ‘May you live in interesting times…”
Now, I no longer wonder.
Politics is as interesting as it has been since I started writing about it full-time over five years ago.
But it’s also truly frightening. The prospect of half a million people out of work would have been inconceivable only two years ago. But then a lot of unpalatable things that are occurring before our eyes were unimaginable two years ago.
One of the exercises I conducted during the course of the weekend was a comparison between the notices of liquidation in current isues of the State journal Iris Oifigiúil and those last year and in 2007. Of course there was an increase of almost exponential proportions in the numbers of suckers walking the plants. The names of many screamed property bubble and naive hope that a ballon had been found that could never be burst no matter how much hot air you pumped into it…
We got a little taster this weekend of how thin the gruel is going to be. The book value of the distressed loans held by the bigger financial institutions is in the order of €80 billion to €90 billion. Two stockbroking companies (connected, in every sense of the word) have said the discount that NAMA pays should be no more than 15 per cent. Dan Boyle is the only Government figure to hazard an educated guess, saying the discount should be at least 50 per cent.
This is mainly development land and commerical property that’s at issue. If you look at the precipitous fall in residential property, you would have to say that Boyle is on the money and is probably being conservative.
The counter argument is that if the Government does apply a severe haircut (economist speak for discount – oh how exciting their use of language!) it will leave the banks in such an under-capitalised position that almost complete nationalisation will be inevitable.
I’m sorry but I have little symathy for the teachers. Just look at what’s happening in non public-sector land. The black tide of recession is lapping at everybody’s shore. Look at the 100 high-end jobs that were lost in a high-tech company this morning that was promising expanision last year. Look at the redundancy programmes and pay cuts that have been introduced in so many companies. View the devastation that has wreaked across many sectors.We have already had a voluntary redundancy programme in this newspaper and we are currently voting on proposals for 5 per cent and 10 per cent reductions in salary. Sorry, secure, well-paid jobs with long holidays and guaranteed pensions means something in these days. Whatever about cutbacks in educations, the teachers will not get much support for their stance on pay from people in wider society.
There was a lot of commentary at the weekend claiming that the budget was ‘soft’ because it didn’t effect cutbacks in public services (and that’s social welfare folks, no matter how you look at it) and concentrated on taxes. However, when people see the massive gouge it has taken out of their pay packets in May, its true savagery will become clear.
Will it work? We just don’t know. Anybody who predicts what’s going to happen now has been – or needs to be – lobotomised. If it does work, Cowen and co will get the order of the boot. If it doesn’t work, ditto.
Cowen said earlier this year that he will get no thanks for any measure he takes, no matter how successful. On that, he is 100 per cent correct. He is a one-time Taoiseach. That’s for sure.
Prediction One: FF will get anihilated in the June 5 elections.
Prediction Two: Declan Ganley may nip in to win the third sea in North West.
I know. I know. My predictive powers are as good as BBC weatherman Michael Fish who said nothing to worry about in 1987 a day before Britain was battered by the worst storms in a generation. But, hey, it’s what we do.