We cannot fix what is permanently broken – we must fundamentally reconstitute our political and economic systems, writes ELAINE BYRNE
THE FIRST Irish Times editorial of 2010 stated that “at least there is a balance to be debated between optimism and pessimism instead of unrelieved gloom”. This is the typical black or white choice presented to those who contribute to public debate. The rules of engagement insist that we must agree or disagree with one another within the confines of a mindset limited to discussing whether the proverbial glass is half-full or half-empty.
But what if that glass is already broken?
It’s not enough any more to try and temporarily fix what is permanently broken. We have to fundamentally reconstitute, restructure and rethink our political and economic systems, which are no longer fit for purpose. Our intellectual crutches of conservatism and groupthink are dysfunctional.
No amount of blind optimism dressed up as national interest, which patriotically sails forward and ignores past mistakes, and at the same time tells us that we have turned a mythical corner, will alter the fact that this crisis is only beginning. Unemployment will reach 14 per cent this year. Four companies a day are expected to go out of business in 2010. Twice the number of homeowners are in mortgage arrears than this time last year.
Yet, self-flagellating pessimism will not help navigate a safe passage through stormy international markets either.
The pessimist complains about the wind; the optimist expects it to change while the realist adjusts the sails.
Here’s some realism.
The recapitalisation of AIB and Bank of Ireland and the nationalisation of Anglo Irish Bank have to date cost the exchequer €11 billion. The recent RTÉ Prime Time Investigatesprogramme on the banking system estimates that a further €15 billion will be pumped into consolidating the banking sector this year. Including the estimated €54 billion for Nama, the banking crisis has cost the taxpayer €80 billion to date.
That’s 20 times the draconian public spending cuts announced in the Budget, over three times the Budget deficit, and does not include the €440 billion September 2008 banking guarantee that has not yet been called upon. Now what kind of glass am I meant to analyse that through?
The low cost of international finance is the convenient scapegoat used to explain why our self-inflated property boom burst. Lehman Brothers and the international bogey man were responsible for our dependency on such a narrow tax base. It was someone else’s fault.
Yet, Irish property-related tax incentives “had grown to about twice the average size recorded in Europe and the US by the time the bubble burst”, according to a recent paper by Trinity professor Frank Barry (www.irisheconomy.ie).
Oonagh Smyth's Prime Time Investigatesraised disturbing questions about the cosy consensus that contributed to Ireland's economic collapse. Why, she asks, did the Central Bank and the regulator "armed with so much information" do so little, even though banking recklessness was known about at a political level?
Let’s answer the question by taking the hypothetical example of Fianna Fáil, the bankers and developers. “Legal corruption” is defined as undue influence by vested interests over regulation and policy-making where elites have access to insider information that they utilise for their private benefit. In Ireland, in our antiquated deference to the powerful, we politely call this a golden circle.
1. My study of the Standards in Public Office Commission’s (formerly the Public Office Commission) records from 1997-2007 reveal 40 per cent of Fianna Fáil’s disclosed donations came from developers and construction-related donors. That’s a conservative figure. The legislation does not require donations under the legal threshold to be disclosed.
2. The records also show that Fianna Fáil received £10,000 in political donations from Anglo Irish Bank from 1999-2000; £16,100 from the Seán Quinn Group from 1999-2000; $10,000 from AIB in 1999 and £35,000 from Irish Life in 1998.
3. Olivia Greene, a former home loans supervisor at Irish Nationwide Building Society, alleged in Prime Time Investigates that Charlie McCreevy, the minister for finance from 1997-2004, was fast-tracked a €1.6 million mortgage to buy a property at the K Club golf resort. Standard banking procedures were also ignored when former Fianna Fáil senator Don Lydon availed of informal Irish Nationwide banking practices to avail of a €3 million loan. Incidentally, Frank Dunlop is serving a jail sentence after pleading guilty to bribing Lydon and others in relation to the Carrickmines rezoning.
4. Michael Fingleton, former chief of Irish Nationwide, has retired on a €27 million pension and a €1 million bonus paid out after the State guarantee. Former Anglo chief Seán FitzPatrick enjoys a €3.5 million pension, a €400,000 golden handshake and has stopped repayments on his €100 million Anglo loan. FitzPatrick hid loans of up to €122 million over eight years on Anglo’s books.
“We have to be somewhat positive [going into] the future”, McCreevy told Miriam O’Callaghan on her radio show before Christmas. “Great political leadership and great positive thinking” Fingleton told BBC radio when the Government announced the €440 billion banking guarantee.
Yes, our politicians and bankers have every reason to be positive because Ireland, unlike Iceland, does not do white-collar crime, consequences or banking inquiries.
Where has the outrage gone?