Mr Cowen’s inadequate response
‘Sorry” is an inadequate response Mr Cowen. You may have left public life, but citizens of this State carry the burden of an economic collapse caused by governments you both led and served in. Claiming ignorance or blaming others does not answer adequately. The US Federal Reserve put it pithily on economic management: “the hardest thing is to take away the punchbowl when the party is in full swing”. On that criterion alone, you and your colleagues failed to do what was required.
Many politicians conflate the interests of their party with the good of the country. In that regard, few have had more practice than Fianna Fáil ministers. Mr Cowen has taken that approach, ignoring the effects of policies and practices that were designed to get his party re-elected. He may not have laid the foundations for a building, banking and economic crash – Bertie Ahern and Charlie McCreevy have more to answer for in that regard – but he certainly followed where they led.
Mr Cowen took over from Mr McCreevy as minister for finance in 2004 and the light touch regulation/let-it-rip approach of his predecessor continued. In different circumstances, rising wages and inflation might have slowed the economy. But, with EU money flooding in and the tax base shrinking, that didn’t happen. A building bubble, linked to bad planning and excessive lending, and encouraged at every point by government policy, grew out of control. When that bubble popped, so did government revenues. A flight of capital brought panic and the banking guarantee.
In defence of a lack of preparation, Mr Cowen said his belief the economy would not collapse was shared by international finance agencies. He did not explain that their assessments were based on Department of Finance figures. Similarly, in presenting his promotion as taoiseach as something of a surprise, Mr Cowen ignored the fact that Mr Ahern had publicly chosen him as successor and appointed him tánaiste a year earlier. He may not have wished to draw attention to Mr Ahern’s likely motivation for that action, because of subsequent findings by the Mahon tribunal, but it placed a question against his recall.
Those who expect a Dáil inquiry to produce new information about the circumstances surrounding the banking guarantee may be disappointed. That the banks – and Anglo Irish Bank in particular – treated the government with contempt and received the €64 billion in taxpayers’funding they needed, is a matter of record. Some benefit may accrue from examining external pressures. Ultimately, however, bad decisions and poor management, involving a wide variety of parties, caused the meltdown. Identifying specific failures may provide a cautionary tale for the electorate. But it will not change the prime motivation of governments – to be re-elected.