Cheerleaders of boom among harshest Nyberg critics

 

INSIDE POLITICS:Well-publicised errors of judgment are failing to halt some of those calling for ‘guilty’ to be named and shamed

THE NEGATIVE reaction to the Nyberg report, on the basis that it failed to name a small group of “guilty men” who could be blamed for the country’s economic collapse, epitomises the desire of large sections of Irish society to avoid facing up to the underlying causes of the crisis.

The same attitude is also evident in the continued resistance by so many individuals and organisations to the kind of measures that are required to put the country back on the long road to economic health.

It goes without saying that primary responsibility for the collapse rests with the Fianna Fáil-Progressive Democrat government which presided over the madness from 2002 onwards and with the people who ran the commercial banks and key regulatory institutions like the Central Bank.

However, if Irish society and all of its institutions, including the media, criticised by Nyberg do not have the humility to learn lessons from his analysis, it doesn’t say much for our ability to work our way out of the crisis.

The truly appalling vista facing the country is not the necessity for a painful readjustment but the prospect of a long-term decline back to poor-country status if that readjustment is not made in time. One of the great ironies of our current situation is that some of those expressing such disappointment that Nyberg did not identify the guilty by name were actually among the cheerleaders of the boom.

In his report, Nyberg was critical of the media for lauding Anglo Irish Bank. “Anglo in particular was widely admired domestically and abroad and lauded (by many investors, consultants, analysts, rating agencies and the media) as a role model for other Irish banks to emulate,” said the report.

One of those in the media who lauded Anglo and Irish Nationwide was Shane Ross, who was also a senator during the boom and is now an Independent TD for Dublin South.

During the recent election campaign, his constituency rival Alan Shatter pointed out that from 2000 to 2007, Ross “criticised Bank of Ireland and AIB for their failure to adopt the catastrophic banking practices of Anglo Irish Bank and Irish Nationwide, and used his position as a journalist to put public pressure on those banks to follow the disastrous banking road map constructed by Seán FitzPatrick and Michael Fingleton.”

Ross’s error of judgment on the banks has not stopped him from pontificating on the crisis and calling for others to be punished for their errors. In the Dáil during the week, he dismissed Nyberg as “ineffective” because he failed to name names; he went on to demand that former Labour leader Dick Spring be sacked from the position he has held for the past two years as a public interest director of AIB, because of the massive and probably unavoidable pay-off approved for former chief executive Colm O’Doherty.

Ross is not the only public figure who has been quick to behold the mote in eye of others while conveniently ignoring the beam in his own. The general secretary of the Irish Congress of Trade Unions, David Begg, has been vocal in his criticisms of government since the crisis began and also of anyone who has dared to point to the role of social partnership in stretching the public finances past breaking point. He has not been so quick to account for his own performance as a member of the board of the Central Bank right through the boom.

Of course the point is that almost everybody in positions of authority failed to understand what was going on. As Nyberg concludes: “This is true of politicians (whether in government or opposition), central bankers, regulators, department officials and bank board members, as well as influential analysts in the media, academia and financial enterprises.”

The fixation about finding someone on whom all the blame can be pinned is not just a distraction; it is getting in the way of a proper analysis of what has to be done now.

It is probably no accident that some of the cheerleaders of the boom have now turned into leading prophets of doom. The same reckless, gambling instinct that fuelled admiration for Seán Fitzpatrick also underpins the “burn the bondholders and damn the consequences” philosophy.

If there is one lesson from Nyberg it is the need for prudent economic management in the years ahead, with careful weight being given to the views of the European Commission and our EU partners. A way will have to be found to ease the massive overhang of debt from the banking crisis, but it can only be done in co-operation with the EU and the European Central Bank. Before those institutions agree to a long-term strategy more favourable to us, they will need to see evidence that we are taking our own responsibilities seriously.

There is still a deep reluctance at all levels of Irish society to absorb the simple lesson enunciated by Nyberg that Ireland lived beyond its means for a decade and is now going to have to live below its means for a few years.

During the election campaign, the opposition encouraged the view that there was some simple cost-free way out but since they took office, reality has quickly dawned on Fine Gael and Labour. To be fair they are shaping up as if they are serious about finding viable long-term solutions.

The reality is that the EU-IMF plan for getting the public finances in order only spells out what we should be doing in any case. The problem with all the whinging and whining about being dictated to by outsiders is that it provides excuses for avoiding necessary and painful reform.

The decision of the Labour Court to award payments of €2,000 and extra leave to HSE staff who have to move location is a clear demonstration of how out of touch with reality so many individuals and institutions in Ireland still are.

With officialdom prepared to make decisions like that, the omens do not look good for the prospect of getting a national consensus on the really difficult measures required to reduce public spending and raise taxes.