Do you recall all that stuff about standing up to Frankfurt and making bondholders pay? Just a weird dream and the same old shower, writes FINTAN O'TOOLE
FAREWELL, THEN, to the shortest government in the history of the State, the government of hope that lasted for all of three weeks.
Readers of a certain vintage will remember the moment in Dallaswhen Pam Ewing awoke from uneasy dreams to the sound of someone in the shower. Who should emerge but her husband, Bobby, who had been dead for the whole of the previous season? He smiled and she realised that all those overwrought episodes had been a horrible nightmare.
Last week, Cathleen ní Houlihan woke to the sound of the shower. Who should emerge but Fianna Fáil? The election? All that stuff about standing up to Frankfurt and making bondholders take some of the pain? Just a weird dream. Pretend it never happened. To all intents and purposes, Brian Lenihan is still minister for finance. His catastrophic policies are to be continued, with barely an apology for the brief interruption during which we had the illusion of democracy.
There is, of course, one big difference between the high camp of Dallasand our bank bailout: Dallasis a lot more credible. The €70 billion we're putting into insolvent banks is €38,000 for every person at work in the Irish economy. If we throw in €35 billion for Nama, it's €57,000 for every worker.
A worker on the average industrial wage will pay €260,000 in tax over a working lifetime. It would therefore take all the tax paid by more than 400,000 workers over their entire careers to pay for the bank bailout. Even if we’re wildly optimistic and assume that we’ll eventually get back half of the €105 billion, that still leaves 200,000 of us working our whole lives to pay off the gambling debts of a private elite.
This is grotesquely unjust, but it’s also impossible. The underlying proposition is that the Irish economy can afford to pay (in proportional terms) 10 times what the UK economy has shelled out to rescue its gargantuan banking system. This self-delusion is no less grandiose than the fevered hallucinations of the boom years.
You know a proposition is absurd when those who support it, even though they are highly intelligent, end up speaking gibberish. Thus, for example, the Irish secretary general of the European Commission, Catherine Day, announcing last week that “Nobody made us take the loans. We did it . . . The bottom line is that when you take out a loan, you take out a liability to pay it back, and that’s part of the credibility of countries as well.”
Who are this “us” and “we” of which she speaks? What Day seems to mean is that when anyone in a private Irish company takes out a loan, everyone who happens to be Irish acquires a liability to pay it back. When someone of her gifts ends up peddling such nonsense, it’s obvious she knows she’s defending the indefensible.
But the new Government already forages in the same fields of fast-growing twaddle. Listen to Michael Noonan on RTÉ Radio One's Morning Irelandon Friday, explaining why it doesn't matter that, in spite of widespread expectation to the contrary, the European Central Bank did not even make an explicit commitment to medium-term funding for the Irish banks: "They didn't say 'medium term', they said 'ongoing' . . . 'Ongoing' is another word for 'medium term', they just didn't use that word." Switch the languid Limerick lilt for sonorous Law Library cadences, and you could have been listening to Lenihan at his most bizarre.
The same Michael Noonan who, less than four months ago called the IMF-EU deal “a downright obscenity”, now tells us that “Europe has been very good to us . . . They’re actually treating us very well.” The same Fine Gael whose endlessly plugged five-point plan suggested that Ireland might have no choice but to “write down the value of the bonds in the Irish banks” now blithely informs us, via Noonan, that “that debate is over”.
And as for all those promises of change that brought people out to vote for Fine Gael and Labour? Why, they’ve been triumphantly delivered. What voters most desperately desired, it seems, was to put all those mega-billions, not into six banks but into two. “They voted for change,” said Noonan, “and they’re getting change. They’re getting a major revamp of the banking system . . . The restructuring of the banking system is the change.”
This is, of course, mere babble. The restructuring of the banking system has been on the cards for two years. Brian Lenihan introduced the legislation to allow him to do it last December. It is part of the EU-IMF package. It is not a change of policy. Trying to sell it as the transformation that people voted for in February is like serving warm Dutch Gold in a champagne flute and telling us it’s Cristal.
Michael Noonan sounded weirdly upbeat as he announced the capitulation to policies he and his colleagues know to be insane. That’s surely because he knows the political price will be paid by Labour. Eamon Gilmore’s strange silence on the biggest U-turn in his party’s history suggests that he knows it too.