By Philip Pilkington, a journalist and writer living in Dublin, Ireland
Recently the Irish Taoiseach Enda Kenny pandered to his base once again by saying that the Irish people are to blame for the current state of their economy due to reckless borrowing undertaken during the boom years. I refer not to his base in Ireland, of course — their opinion has hardly mattered since the election — I refer instead to his base among the international financial community. For it is these people that need Kenny’s confession because it is their economic model that has been proved false by the Irish crisis — and so a mea culpa is needed from the victims so that they can avoid the responsibility that they know they bear.
This little stunt by Kenny made most Irish people spit and a political analyst might wonder what Irish voter would Kenny appeal to after laying the blame on the ‘Irish people’ in the abstract. It was a stupid move by a politician long known for his tactlessness. But it also says something about what the international financial community require of the countries that they have destroyed.
On May 31st 2004, then President of the European Central Bank Jean-Claude Trichet heaped praise upon Ireland for its economic miracle. ““The process of transformation that Ireland began over four decades ago has become a model for the millions of new citizens of the European Union,” he said, speaking at the Irish central bank, “The new Member States of the EU have had to confront economic challenges whose magnitude and long-term importance are similar to those that faced Ireland when you began your work. Thanks to Ireland’s economic success, to which you devoted your life, we can be confident that economic reform works.”
Trichet believed in the Irish model because it conformed to how he, together with the vast majority of other economists and policymakers, understood an economy should work. While we should not go too far into the technical details of this, put simply these commentators missed the massive expansion in private sector borrowing because they did not believe it could have harmful consequences.
Although it is not often spoken about in such terms, the fact is that economies need debt to grow. If we accept as a given that the ability of an economy to produce exports (not to mention find buyers) is limited, the only way in which new money can enter an economy and facilitate growth is by some entity in a given country going into debt.
During the boom years Ireland played by the rules of the neoliberal game. From 1998 to 2004 it ran a roughly balance current account — which means it did not import too much in relation to exports. And as far as the government budget goes Ireland ran a surplus every year from 1998 to 2008 (except for 2003 it ran a tiny deficit). No wonder then that Ireland was the star pupil of the international economic consensus. This was quite literally model behavior.
But with the government not running into debt and imports and exports roughly balanced, where could the new money required for growth come from? Well, obviously the private sector is the only place left — and indeed the new money came precisely and predictably from there. Ireland’s growth, as we were soon to see, relied almost wholly on private sector borrowing and the inflating of a massive housing bubble.
After the international community encouraged Ireland on this path, believing it to be the poster child for a dubious economic ideology, it is the Irish people that are supposed to take the blame for the failure of this policy model.
This is madness, of course. But no one notices. Why? Because they do not speak the language of power and must try to understand things in simple moral terms. Since most of the Irish population do not understand the economic model that was bestowed upon us by international leaders and their representatives in Ireland they must instead seek solace in simple moral arguments.
But why don’t our own patriotic commentariat explain what has happened and absolve the Irish people of their guilt in simple logical terms? Why don’t they point out that these reforms were sanctioned and pushed by the very people that now demand our infinite apologies? Because, quite simply, almost every single person in Ireland today qualified to explain what happened was complicit in pushing this economic ideology. And so to explain to the Irish people what actually happened would be to give them the rope with which to hang the commentariat.
Tragic as this may be, there is at least one saving grace: namely, that the Irish people know something stinks when the likes of Kenny comes out and play-acts his guilt in front of an international audience. There is a general feeling amongst the populace that they have been had. They know that during the boom years they played by the rules handed down from Frankfurt, Brussels and, yes, Davos — and they sense that it is these rules and the lawmen behind them that are to blame for the current mess.
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Bravo. And as in Ireland, so in the rest of the world.
We have to change the money, though. It is not necessary to go into debt to have money if we change the system.
http://strikelawyer.wordpress.com/2011/01/24/gold-standard-ii/
http://strikelawyer.wordpress.com/2011/12/27/saving-the-world-revised-edition-part-ii/
http://strikelawyer.wordpress.com/2011/12/27/saving-the-world-revised-edition-part-iii/
http://strikelawyer.wordpress.com/2011/12/31/brief-history-of-jubilees/
Begone gold bug! You’ll make no converts here.
The classic gold bug http://www.scrapgoldbrokers.com/blog/wp-content/uploads/2010/01/The-Gold-Bug.jpg
The dollar bug vs. the gold bug http://static.seekingalpha.com/uploads/2009/11/29/saupload_dollar_bug_v_gold_bug.jpg
Fishing for gold with the Fisher Gold Bug (sadly, it’s been discontinued) http://nettrash.com/users/detectors/goldbug.htm
Can’t blame a guy for trying.
Money cannot be nothing. It has to be something.
http://strikelawyer.wordpress.com/2012/02/02/fiat-money/
Money is measurement imposed by violence.
The dollar is backed by the bomb. Word up!
Read David Graeber, Debt: The First 5000 Years
Money cannot be nothing. It has to be something. John Regan
Commodity money if used as a commodity ceases to be money and if used as money ceases to be a commodity.
Fiat is backed by the taxation authority and power of the issuing government; any other backing is superfluous, wasteful and fascist.
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Gold money is based on debt too.
Nobody held a gun to the Irish (or US, Spanish….) people heads and forced them to sign mortgage- or other credit contracts, no?
I do certainly not defend banksters and the rest of the so called finance industry, from my POV they are enemies of the people and nations. But the main street people are not just victims, as portrayed by you. It was their very own sovereign decision to buy now, pay later.
As for “Although it is not often spoken about in such terms, the fact is that economies need debt to grow” I agree. So since long I wait for the oh so clever elitist economists like Krugman et al to come up with a new economic model which works w/o such need for ever increasing debts.
Everyone is to blame. I agree. So blame is universal and, relatively speaking, meangingless.
So now what?
Jubilee.
What good is a jubilee if it is combined with a government enforced monopoly money supply for private debts – a gold standard – unless it is periodic as it was in the case of ancient Israel?
Also, a debt jubilee does not compensate savers and they too have been cheated by the counterfeiting cartel. Steve Keen’s universal bailout idea is far better.
I like Steve Keen’s idea. I don’t agree with everything about it but it’s better than doing nothing.
My impression, though this is as yet somewhat undeveloped, is that it would be highly inflationary, and those who were deeply in debt would have a very hard time since they would not have any money but prices of things they need would skyrocket.
But I could be wrong about that. In any case, if this were a problem I am certain Steve would be very concerned about it and make adjustments to his idea accordingly.
My impression, though this is as yet somewhat undeveloped, is that it would be highly inflationary, and those who were deeply in debt would have a very hard time since they would not have any money but prices of things they need would skyrocket. John Regan
A universal bailout could be accomplished without changing the total money supply (reserves + credit) IF further credit creation was banned and IF the bailout was metered to just replace existing credit as it is paid off.
Thus a universal bailout is a way to move to 100% reserve banking without deflation.
No, not everyone is to blame. This world is divided to two kinds, predators and clueless. The clueless didn’t understand the logic behind the dubious theories not to mention the consequences of these policies, while the predators mostly benefited from the ignorance of the clueless. By sharing the blame, but obviously not the profits, the predators are making sure they can do it again.
And who was funding the house builders who’s over production led to the boom? Who was investing in the construction market so that, even though apartments and houses and office space was sitting vacant, real-estate prices continued to rise? Germans, that’s who. The author’s point is that the boom was inflated from outside, funded from outside, burst due to outside circumstances, and now the Irish are being asked to pay for it.
As to your question about those Irish who found themselves in debt after the collapse, let me lay out a little scenario for you. You’re a middle-class type living a modest middle-class life. You get your home appraised. Because the R-S bubble is driving up home prices, it gets appraised at, say, 220K, even though you bought it for maybe 60 or 80k years ago. That’s a lot of capital to just leave laying around. So you look into taking out a mortgage and it seems safe; the bank offers you a good rate and every commenter you can find save for The Economist, Paul Krugman, and maybe 5 others says r-s prices won’t fall anytime soon and -if anything- will keep going up. So you take out a mortgage. Then the Real Estate market collapses a year later. Your house is now not just back to 80k, it’s actually less because of how over-built real estate is and how pessimistic investors are. You’re stuck servicing a 220k dollar mortgage on 60k a year on a house worth 50k on the market (if you can sell it) and your bank -being pressured to make stupid German CDO traders whole- wants to foreclose on your home, so it fabricated some missed payments and starts court proceedings without informing you. Now you’ve got court debts, too.
That’s how Irish folks -and US folks, and Spanish folks- can currently be in debt by no fault of their own. A variant on this involves CC companies jacking up rates for no reason and consistently hassling you with claims of missed payments even though you’ve never done such athing, but it’s more or less the same story. Lots of people have stories just like this, and if you’ve read this sight for awhile you ought to know that plenty more have far worse stories than this.
Ahhh, fantastic opportunity to comment on a realistic scenario of self-indulgent shysterism, and in what is not at all a subprime situation, but a prime borrower who can well service the re-mortgage she deliberately took:
«You’re a middle-class type living a modest middle-class life. You get your home appraised. Because the R-S bubble is driving up home prices, it gets appraised at, say, 220K, even though you bought it for maybe 60 or 80k years ago.»
So you are talking a real estate speculator who is sitting on a 200% tax-free capital gain after a few years (the whole bubble took 10 years). Just totally normal times; after all which middle class person hasn’t a right to a 200% tax-free capital gain (without producing anything) in a few years. Pure income redistribution upwards to middle class speculators is a sacred right.
«That’s a lot of capital to just leave laying around.»
Ahhh this phrase is so revealing. A 200% tax-free speculative capital gain in a few years is entirely notional, unrealized, yet it is «capital». That’s exactly the mindset of greedy speculators.
«So you look into taking out a mortgage and it seems safe; the bank offers you a good rate and every commenter you can find save for The Economist, Paul Krugman, and maybe 5 others says r-s prices won’t fall anytime soon and -if anything- will keep going up. So you take out a mortgage.»
This is exactly what a malignant profiteer would do: I can have my cake (the house) and eat it (the 200% tax-free capital gain in a few years) too thanks to my friendly bankers. Totally risk free: the salesmen say so, they are such nice people. “F*ck YOU! I got mine” is however the logic.
And how many of these malignant profiteers looked at screwing those poorer than themselves harder by doing the obvious: take the 200% tax-free capital gain and buy another property! Ideally a buy-to-rent property, after all there is no risk of prices going down ever, and the rent is free profit.
«Then the Real Estate market collapses a year later.»
But you have remortgaged your house for 220k cold cash, so no problem: after only a year you still have the 220k of «capital», haven’t you? You just wrote: «That’s a lot of capital to just leave laying aroundx so obviously you secured your «capital».
«Your house is now not just back to 80k, it’s actually less because of how over-built real estate is and how pessimistic investors are. You’re stuck servicing a 220k dollar mortgage on 60k a year on a house worth 50k on the market (if you can sell it)»
Fantastic! So you speculatively borrowed 3-4 times your annual salary to avoid realizing a 200% tax-free capital gain by selling your house, so you could have your much larger cake and eat it too, and even if you can easily afford to pay a mortage that is 3-4 times larger than your annual salary, and you want to renege on it because it is pointless from your point of view because the capital gain evaporated? Because the evil crooked bankers MADE YOU DO IT?
Didn’t you get a 220k tax-free cash delivery from those evil bankers just a year ago? Why do you have any problem now repaying it, as that’s only 3-4 times your income, which is pretty well affordable? Just because your 200% tax-free capital gain has evaporated, so you actually have to work to pay back the 220k of tax-free cash you got?
«and your bank -being pressured to make stupid German CDO traders whole-»
Why should you made whole and screw those poorer than yourself and screw the pensioners relying on the German pension funds that bought your mortgage? Didn’t you get 200k tax-free cash a year ago, in a mortgage application signed by you?
«wants to foreclose on your home, so it fabricated some missed payments and starts court proceedings without informing you. Now you’ve got court debts, too.»
While the previous part of the scenario is quite realistic, this seems completely made up. If the mortgage is 3-4 times your salary you can very well afford to pay it, and indeed you are paying it, because otherwise there would be no need for «fabricated some missed payments». And why ever would the bank want to foreclose a 220k mortage that you can pay off and are paying off to get a 50k house in a foreclosure?
My overall impression is that the above is mostly a realistic description of how greedy, malicious middle class prime re-mortgagers wishfully thought they would enjoy risk-free, tax-free, work-free speculation redistributing wealth and income from those poorer than themselves, and now want to keep the cash they borrowed and screw everybody else because they are «in debt by no fault of their own».
This is just “aspirational middle class shyster entitlement complex” and it not less despicable than “best and brightest crooked banker entitlement complex”.
“Nobody forced them…” actually Sam, in many cases, yes they did. Ireland (and many of the other countries you name) did not have much by way of rental markets. When you’re young and raising a family, you buy a house. Your parents did, and their parents before them. You’re told its a form of saving and important to get your foot on the ladder. Buy as much house as you can afford. Most of these people weren’t speculators, they were poor sods priced out of having a roof over their head. Low interest rates and tax deductions are no friend of the house buyer – they are benefits and subsidies to house sellers (mostly developers). So now you’re stuck in a wildly overpriced house with a mortgage you can barely afford. Thanks, low-interest rate policies and lax banking regulators!
(FWIW, no I am not one of the victims).
Very serious Sam. Wages in Ireland were kept low by a process called ‘Partnership’ which produced ‘wage moderation’ and massive profits for Mutlinationals.
Debt became the only means to obtain any reasonable standard of living. It wasn’t so much a ‘sovereign decision’ by people as debt becomming a necessity to get by.
Added to that you had the continual advertising of the ‘Irish Dream’ where mortgages and cars were advertised to the hilt by the financial groups who caused the crisis.
So you could blame the Irish people for causing the crisis to some degree. Yes. To the same degree as you could blame them for electing Kenny now and accepting the Austerity without burning the place down and to the same degree that you could blame them for accepting the ridiculous ideas of fundamentalist economists, the new priests of Irish society who still daily pollute our airwaves.
Perhaps a people who can look back on a history of being starved almost to extinction by decisions taken by board members in distant capitals easier than other European peoples can see the obvious parallels to today’s situation.
The pattern should be obvious to Ukrainians, also.
«Perhaps a people who can look back on a history of being starved almost to extinction by decisions taken by board members in distant capitals»
That related to the saddest and most shameful aspect of the Irish story: that after centuries of being put down by rentier speculator Lords of the Manor, at the first opportunity so many of them got themselves the “F*ck YOU! I got mine” persuasion and to pillage anybody else poorer than themselves.
But let’s hope that one consequence of this part of their history is to give even the more corruptible Irish a stronger respect for the aim of earning a living in a more egalitarian way instead of adopting the English Dream of extracting it in rents from their inferiors.
It’s a sad fact of human behavior that bullied people don’t become defenders of the weak, they become bullies themselves.
éirígí
The sophisticated party, the banks, the lenders, establish the premise that it is ok for them to lend because home prices rise every year so the unsophisticated party follows this advice and borrows, then it all falls apart, but we should blame the borrowers?
Its hard to even fault the most wild ass house flipper when all of their information about the profitability from the transaction is confirmed as positive from the highest sources in the land.
and the bankers made a FORTUNE based on THEIR false premise!!!
Should we blame the egg for the chicken that laid it?
Agree. Hello Ireland! Can you please speak louder? And also please send Obama a few of your pithy phrases; he has confused cause and effect as well. Please ask the world how it is that anyone can be a reckless borrower when “dubious economic ideology” totally rigs the market.
Well said!
Also, when a government sanctioned counterfeiter is loaning out his “money” then the game is borrow or be left behind by those who do borrow. It’s a “Tragedy of the Commons” situation.
But a large segment of the «Irish people» is indeed at blame for the housing bubble: they wanted to become Lord of the Manor, MAKE MONEY FAST, just like their English neighbours and their distant USA cousins and their even more distant Australian ones.
Sure, the financial and political elites laid the bait, deliberately crated the temptation:
«the continual advertising of the ‘Irish Dream’ where mortgages and cars were advertised to the hilt»
and they did do because there is vast evidence that petty property speculators largely become anti-labor, pro-rent authoritarians voting ever more to the right, and anyhow they would make a lot of money in the up phase of the bubble.
But who took the bait? Who eagerly fell to the temptation to GET RICH QUICK? Are the petty speculators who fueled the mass phase of the bubble in Ireland and elsewhere “babes in the woods”? Innocent victims? No, they were full-on enthusiasts, really proud converts to the “F*ck YOU! I got mine” temptation they were offered.
Because a real-estate pyramid scheme has the delicious property that it is almost purely redistributive, and redistributes upwards: from the “parasites” too poor or prudent to make huge and hugely leveraged “one-way” bets to the “deserving” who could and did.
Perhaps not a majority of the Irish, but a very substantial minority endorsed, sponsored and voted for that kind of attitude, for those “rules”:
«There is a general feeling amongst the populace that they have been had. They know that during the boom years they played by the rules handed down from Frankfurt, Brussels and, yes, Davos»
Fulfilling the best strategy of confidence trickers, like the Nigerian “409” ones: tempt the “marks” into complicity with a scam on someone else, and then they cannot complain if they get scammed themselves. And the Irish, USA, UK wannabe MAKE MONEY FAST scammers, those who would screw their poorer fellow citizen to retire in luxury, don’t deserve any sympathy for their actions, and cannot complain.
J. K. Galbraith was not exactly a right wing moralizer, and in his classic “The Great Crash 1929” he does not spare outrage at the baiting and scamming of the great names of finance (chapter 4 is entirely about Goldman Sachs), but also he does not refrain from pointing out that they got the committed enthusiastic complicity of so many in the public.
My usual quotes, which could be used to describe Irish, USA, UK, Australian petty would-be Lords of the Manor today:
page 32: «One thing in the twenties should have been visible even to Coolidge. It concerned the American people of whose character he had spoken so well.
Along with the sterling qualities he praised, there also displaying an inordinate desire to get rich quickly with a minimum of physical effort.»
page 68: «For now, free at last from all threat of government reaction or retribution, the market sailed off into the wild blue yonder. Especially after 1 June all hesitation disappeared.
Never before or since have so many become so wondrously, so effortlessly, and so quickly rich.
Perhaps Messrs Hoover and Mellon and the Federal Reserve were right in keeping their hands off. Perhaps it was worth being poor for a long time to be so rich for just a little while.»
page 35: «The Florida boom was the first indication of the mood of the twenties and the conviction that God has intended the American middle class to be rich.
But that this mood survived the Florida collapse is still more remarkable. It was widely understood that things had gone to pieces in Florida. While the number of speculators was almost certainly small compared with the subsequent speculation in the stock market, nearly every community contained a man who was known to have taken “quite a beating” in Florida. For a century after the collapse of the South Sea Bubble, Englishmen regarded the most reputable joint stock companies with some suspicion.
Even as the Florida boom collapsed, the faith of Americans in quick, effortless enrichment in the stock market was becoming every day more evident.»
page 206: «Yet, in some respects, the chances for a recurrence of a speculative orgy are rather good.
No one can doubt that the American people remain susceptible to the speculative mood — to the conviction that enterprise can be attended by unlimited rewards, which they, individually, were meant to share.
A rising market can still bring the reality of riches. This, in turn, can draw more and more people to participate.»
page 25: «Just as Republican orators for a generation after Appomattox made use of the bloody shirt, so for a generation Democrats have been warning that to elect Republicans is to invite another disaster like that of 1929. The defeat of the Democratic candidate in 1952 was widely attributed to the unfortunate appearance at the polls of too many youths who knew only by hearsay of the horrors of those days. It would be good to know whether, indeed, we shall some day have another 1929.»
I think this is the right way to look at it Blissex.
Most ordinary home-buyers are not greedy. They just want to own a home, and will borrow and pay the prevailing inflated prices if the prices are high.
But the bubble itself is cause by the speculators, people greedily playing the money-for-nothing game.
Minsky understood this process so well.
Replace greed with social ladder climbers and I concur.
I live in Ireland but never bought into the madness.I am solvent today because it was obvious what was going on was madness.
The truth is 40% of the Irish electorate voted in a party,Fianna Fail, of known criminals who were openly corrupt for three terms (15 years).One Minister for Justice was convicted of taking bribes and the Minister of Finance stated in an inquiry that he did nt have a bank account and large sums of money denominated in sterling (undeclared for tax) which he had he said he won in a horse race.
Yet 40% of the electorate saw nothing wrong with this.
Unfortunately those of us who did nt partake in the madness and corruption are paying the price along with everyone else.
Thats one good reason we need a Tea Party equivalent in Ireland.
@Philip Pilkington
”….But no one notices. Why? Because they do not speak the language of power and must try to understand things in simple moral terms. Since most of the Irish population do not understand the economic model that was bestowed upon us by international leaders and their representatives in Ireland they must instead seek solace in simple moral arguments….”
This is patronising left wing claptrap ,typical of the type of analysis of far left groups in Ireland such as ‘People against Profit.’
Unfortunately for them they have nt gained much traction in this depression because there are enough of us who know we are being snowed by both sides.
No one forced people to pay exhorbitant money for hovels.Whilst there is much sympathy for those who bought houses to live in and raise families (these people should be catered for),too many were buying several apartments hoping to make bumper profits ,their analytical brains anaethetised by greed.
Your analysis of the situation in Ireland is seriously one dimensional.
You state above you are a journalist in Ireland but I have seen nothing by you in Irish media having trawled through everything from far left to far right and no one I have asked here has ever heard of you.
So perhaps Americans reading this piece should be a little skeptical.
“This is patronising left wing claptrap ,typical of the type of analysis of far left groups in Ireland such as ‘People against Profit.’”
Haha… No, I don’t think that’s PBP’s line. They claim that capitalists are on ‘investment strike’. The Irish people played by the rules of the game and the whole thing blew up. And now those that wrote the rules want a mea culpa? You can go and sling mud at your neighbour if you want, it appears to me quite obvious who should be doing the apologising here.
“You state above you are a journalist in Ireland but I have seen nothing by you in Irish media having trawled through everything from far left to far right and no one I have asked here has ever heard of you.”
Look harder.
http://www.independent.ie/business/irish/150-new-outsourcing-jobs-for-dublinbased-financial-services-firm-2883489.html
Philip,
Your point that about complicity is the central conclusion of the Nyberg Report on the Irish Financial Crisis.
Complicity was not limited to Ireland, but has been shown to have applied in the US as well.
P.S. Your argument is incoherent. Look:
“This is patronising left wing claptrap ,typical of the type of analysis of far left groups in Ireland such as ‘People against Profit.’
Unfortunately for them they have nt gained much traction in this depression because there are enough of us who know we are being snowed by both sides.
No one forced people to pay exhorbitant money for hovels.Whilst there is much sympathy for those who bought houses to live in and raise families (these people should be catered for),too many were buying several apartments hoping to make bumper profits ,their analytical brains anaethetised by greed.”
First, you’re telling me that I’m a far-left sympathiser. Then you’re complaining that I’m not hard enough on the property speculators.
Come on. Sort it out. I think you just like complaining.
The priority for retribution should be to wipe out the folks who concocted the rules (and made the vast majority of the money) before paying any attention to the individuals who followed these foolhardy rules. We have done just the reverse, leaving the rule makers free to inflict their new rules on a new set of followers. Be careful with your bravado of remaining solvent, as you may become a victim of the next scam–unless you decide to opt out of society which takes substantial sums of money to accomplish.
@Wolverine
You just took a stroll through a metaphorical 19th century China and blamed the opiate addicts.
Yes credit empowered the ass lickers – that was what it was meant to do – DESTROY.
I remember vividly having a argument in a Kenmare pub about the credit explosion 10 or more years ago – people were in a sort of credit daze.
Many were retarded yes – anybody who gave wise counsel were shunned as embittered losers.
Many of us were embittered alright – something was lost in the country after 1987 (the beginning of the credit explosion)
But what could we do against such a wall of propaganda ?
@Philip
By the way – we never had a Independent CB , that is a illusion.
Post 1979 they gave us “independence” so that we could merge with the continental economy.
We did not do so bad in the 70s when we were still integrated with the UK although they took a heavy price.
But our GNP was higher then our GDP up to 1976 (Labour Remittances) as the scraps from London was recycled back into the domestic economy.
“…anybody who gave wise counsel were shunned as embittered losers…”
Absolutely. I told a load of people not to buy houses. I caught a lot of flak for it too.
But I found that many people were caught up in it with no way out. I remember one immigrant who worked as a manager in a major supermarket chain. Worked his ass off to get that position. He bought a house at the top of the boom in some ghost estate. I implored him to sell. He was no dummy — an engineer by training — and he saw my point. But alas, he’d just had a child. The kid was in a school down the road from the new house. Everything was in place for his new life in Ireland. And his wife would hear nothing about selling and renting.
People like Wolverine don’t understand the situation of many in Ireland, either now or during the boom. They think because they didn’t buy into the hype they’re somehow morally purer. Well, I can tell you, as the overlords of deregulation and private credit expansion in Davos and the ECB tighten the screws in the coming months and years, they too will feel the pain. But better to blame your neighbour, right? Far more sophisticated…
Yes – could not agree more , was in the trenches in 2004 when capital pitted middle class easterners against local working class young fellas in a very very dramatic fashion.
Me thinks there was a huge demand slump via reduced wages / wages export in the private sector beginning after the 2001 dot com thingie which really affected Ireland (look at the computer imports { encompassed parts for remanufacture & export} which declined dramatically after that time) – the banks accelerated the credit hyperinflation changing the consumption patterns from things like drinking down in the pub with the lads to buying personel capital goods such as houses.
But the credit explosion thing goes very far back – I look at 1987 as being a seminal year.
Car registrations is a very good indicator for this.
The rise of car purchases from 88 to 90 was large for the time.
I can remember holidaying down in Glandore West Cork in 1990 (rich set area) and being struck with the amount of Mercs & Volvos about.
Me thinks the credit remained on top of the food chain for that first cycle which ended after the first Gulf war & EMU crisis – things picked up again post 1993……….. & the rest is History
Pretty much agree. I trace the poison to Fianna Fail’s budget surpluses in the 00s. Up until then the economy was broadly growing at a steady pace. But this could not get unemployment down sufficiently.
http://www.irisheconomy.ie/wp-content/uploads/2009/05/unemployment.gif
What was needed was more demand — and yes, this was due to low wages. The government, then, should have been running structural deficits to get unemployment down and tightening up lending practices.
But this is not what the international elite told them to do. Instead they were told to suck demand out of the economy by running a budget surplus and allow the private sector to go on a borrowing binge. Almost every commentator in Ireland at the time thought this was sound policy. It absolutely was not.
Yet, the commentariat in Ireland and the international elite still have not come to terms with this. Because if they were to recognise it they would have to admit to being the charlatans that they are.
I disagree a bit – I don’t think the 1990s were sustainable in Ireland although the 00s were just silly.
I just look at central fund services as a % of GNP to get a measure of the leverage in the economy – it was 8 to 1 up to 1987 – then climbing rapidly up to 1995 before going into a zoom climb to top out at about 40+ to 1 leverage for about 5 years before 2007.
I think the problem with 1980s Ireland was that the Irish banks did not own enough Irish sov debt although its just a guess on my part , this probally drained the domestic money supply when only operating at 8 to 1 leverage – the CB eventually had to defecit spend in 1986 I think ….. after that they hyper inflated domestic credit to pay off external sov debt probally through the Basel mechanism of false accounting.
I try to make this point on the Irish economy blog but get no answers as it is a good old boys club with a few noble exceptions.
The Irish domestic elite always want to please their masters.
The sad truth is we were never a nation – just a sometimes moderately well managed estate & sometimes a catastrophically badly managed estate.
Well the local land agents have F$£Ked up big time so the Landlord has to come back from whoring in Venice to clean up the place.
PS – try to pick up this book if you can “Captain Rock – the Irish Agrarian Rebellion of 1821 – 1824” by J.S Donnelly Jr.
It describes what went on particularly in the south of the country after a massive agricultural bust following the end of the Napoleonic wars.
Cork was a major supplier of convoys for the American war of 1812 I believe.
Anyway I don’t believe the Power dynamics have changed much in the country since that time , with the Church of Ireland just wanting to be left alone if people just pay their tithes , the Catholic church wanting their dews and the foregin landlords wanting to keep whoring on the Continent.
sorry “unsustainable in ireland”
I think the leverage you see back in the 90s was largely just a response to increased economic growth. Private debt usually grows with economic expansion, as Steve Keen has so aptly shown.
I’ve proposed a debt jubilee and the wolverine approach is the biggest obstacle, I think. It’s very prevalent. It’s part of the slave mentality to love your servitude and resent others that would try to free you or anyone else from it. Old story.
Don’t preach liberty and simultaneously advocate a government enforced gold standard. The two are incompatible.
I would have to say the opposite: personal liberty depends upon the gold standard. Also, the government doesn’t “enforce” a gold standard. Quite the contrary, the gold standard binds the government, not the other way around.
I would have to say the opposite: personal liberty depends upon the gold standard. John Regan
That’s absurd on its face and a form of idolatry too.
Also, the government doesn’t “enforce” a gold standard. John Regan
Indeed it does. By recognizing gold as money, government grants it a special privilege over all other potential private money forms.
Quite the contrary, the gold standard binds the government, not the other way around. John Regan
It binds the government to special interests: the banks, other usurers, gold owners and gold miners.
«He bought a house at the top of the boom in some ghost estate. I implored him to sell. He was no dummy — an engineer by training — and he saw my point. But alas, he’d just had a child. The kid was in a school down the road from the new house. Everything was in place for his new life in Ireland. And his wife would hear nothing about selling and renting.»
It is hard to imagine a nicer clearer cases for showing that suffering a speculative loss is well deserved.
The alternative is to give as a tax-free present a house near to school to a shop manager by picking the pockets of his shop assistants directly via taxes or indirectly by raising prices faster than wages.
@Wolverine
The Tea Party – a corporate funded bunch of mé féiners!! We have them. Fianna Fail and Fine Gael.
Wake up. The rentier right is engaged in full scale class war. In the US they use the tea party, in Europe the Liberals or even the ‘Socialists’. It amounts to the same thing and it has been ever.
I agree with you about grass roots activism, however, but the tea party certainly aint that.
@philip Pilkington
”…People like Wolverine don’t understand the situation of many in Ireland, either now or during the boom. They think because they didn’t buy into the hype they’re somehow morally purer. …”
Idealogues tend to see the part of an argument they agree with and reach a conclusion based on that.
What we had in Ireland is a bit like having no police force, no judicial system ,bad roads and 40% of the population driving at 100 MPH drunk as skunks.
The fact the drunks could mow down people with impunity (their fellow citizens) does not absolve them of that responsibility.
I want to live in a society where we have the complete opposite of the above.
I dont care for people who will drive drunk because the cops are nt there and likewise I dont care for people who are reckless with their finances because their is no one there to stop their foolishness.
There is an infantilism evident in how many in Ireland react to losing their shirts financially.Unfortunately they make it difficult to sympathise with them when you remember what they were saying four or five years ago;how much they were charging their tenants rent;how much their buy to lets apartments had soared in ‘value’.
I have sympathy for those just trying to live within that system and did nt speculate who are now in dire straits but not for speculators,banks,politicians,journalists,estate agents and the sizeable portion of the population who gambolled buying properties, charging me and my fellow citizens exhorbitant rents and who now want us to bail them out because their bets went south.
Whom sets the table at which we dine?
Haha… Well I guess that makes me an ‘idealogue’ then…
As for the drunk driving metaphor, this shows just how people have come to view this in moral terms. Drunk driving has, in Ireland, been stigmatised by the media (probably rightly) and now has become a sort of ‘moral crime’. Just in the same way some in Ireland look for a moral in the story.
But there ain’t one. The real story, as myself and The Dork of Cork were discussing above, was a low wage economy and a government that shunned regulation and increasing budget deficits. The real story involves certain international institutions pushing this line on the Irish government and then looking for an admission of guilt when The Model blows up in their face.
But that’s a story without an easy moral, so its hard to swallow.
The real story involves certain international institutions pushing this line on the Irish government and then looking for an admission of guilt when The Model blows up in their face. Philip P
Haha! Economic theories are amoral except when they fail and then it’s the population’s fault?
Great point!
Stalin – We just need to kill enough people until those that remain are the “New Soviet Men”.
put simply these commentators missed the massive expansion in private sector borrowing because they did not believe it could have harmful consequences. Philip P
Haha! What borrowing? Since “loans create deposits”, then no existing money was lent (except between banks as reserves). Instead, new temporary money (“credit”) was created as it was lent. How is this different from counterfeiting except the money is lent, not spent into existence? Worse, the money is destroyed as it is repaid causing the bust, not to mention the interest, which is a drag on the economy.
Although it is not often spoken about in such terms, the fact is that economies need debt to grow. Philip P
But not borrowing. Nor usury. Government money, fiat, can simply be spent into existence and taxed (as needed to control price inflation out of existence).
If we accept as a given that the ability of an economy to produce exports (not to mention find buyers) is limited, the only way in which new money can enter an economy and facilitate growth is by some entity in a given country going into debt. Philip P
Private entities could also produce money. Common stock is an ideal money form that “shares” wealth rather than reaps it. Don’t liberals and Progressives believe in sharing? Also, with private monies, non-governmental monetary policy could be adjusted on a company-by-company basis.
“adjusted on a company-by-company basis”… beard.
Skippy…. alters thingy.
Don’t you worry. Those companies would still be subject to taxation except not by the “stealth inflation tax”, a decidedly crooked and unjust way to tax since it is sneaky and regressive.
Or we can insist on a single, government enforced monopoly money supply for private debts in which case we might end up with a gold standard. Would you prefer that?
Your endless dialog of fear to make a point is redundant.
You know, that “good cop – bad cop thingy.” :)
Btw, are you surprised that I loath a gold standard?
Your hypocritical, non factual and inconsistent view points, are a sign of your models several thousands of years_rein of terror.
The churches and gathering places across America, cheering the death of women, children and men, all due to a belief. I was there and witnessed it, it is ongoing. Every thing you say is tainted with blood, to use your tomb, is to incite violence and a separation of humanity.
For all your bluster and projection of fairness, you only wish one out come, gods kingdom on earth. What could be more fascist than a myopic kingdom of one?
Skippy… death threats from birth… nice.
PS… only bad and even when your told its good, its only when you accept the mental rape… willingly.
What could be more fascist than a myopic kingdom of one? Skippy
Assuming for the moment that “fascist = tyrannical” I agree.
But having confidence in the truth, I do not seek to force it on anyone. And you?
You personally? It does not matter, what matters is the totality of the faith and its objectives, its history.
Skippy… your just a mouthpiece, parrot of it, willingly.
It does not matter, what matters is the totality of the faith and its objectives, its history. Skippy
Yea, those “Love your enemies” and “Turn the other cheek” and “Do good to those who persecute you” thingies are real sinister.
Gibberish in thought and action trotted out like some guide to the universe.
Skippy… you pander to the crowds ignorance, some like it rough lol.
Gibberish, eh?
I have not seen you advocate a plan that would make capitalism ethical and fend off the gold bugs. And you are opposed to a universal bailout.
Do you oppose principal reductions too?
But some can’t see the light unless they experience a lot of heat. Poor God that He should have to torture His own creatures. But hey, any parent should understand that? Do you?
I’ve made suggestions… carrying capacity based activity’s. You know pricing and value of that which enables life, all life, before people attach social class values to it.
Yet all that concerns you[!] is some idea that banks are slavers?
Skippy… newsflash beard, capitalism is and always was a slave ownership ideology, starting with ownership of the land. And the bond holder is at the apex of that pyramid. Why do you ignore the owners of the banks?
Why do you ignore the owners of the banks? skippy
1) I would put the banks out of the counterfeiting business forever or at least greatly reduce their ability to do so.
2) The owners could easily be pension funds that old people are dependent on.
3) Steve Keen recommends a universal bailout too.
4) A universal bailout could be accomplished without hurting anyone in real terms if it was combined with 1) and metered appropriately to just replace existing credit as it is paid off.
5) “Blessed are the peacemakers”
capitalism is and always was a slave ownership ideology, starting with ownership of the land. Skippy [bold added]
The Bible agrees with you if the ownership is concentrated in a few hands:
For the vineyard of the LORD of hosts is the house of Israel and the men of Judah His delightful plant. Thus He looked for justice, but behold, bloodshed; for righteousness, but behold, a cry of distress.
Woe to those who add house to house and join field to field, until there is no more room, so that you have to live alone in the midst of the land! In my ears the LORD of hosts has sworn, “Surely, many houses shall become desolate, even great and fine ones, without occupants.
“For ten acres of vineyard will yield only one bath of wine, and a homer of seed will yield but an ephah of grain.” Isaiah 5:7-10 New American Standard Bible (NASB) [bold added]
But if you are advocating collective farms, that has been proven to be a big failure by the Soviet Union.
The Bible’s ideal is small family farms. Do you object to those too?
Hello F Beard!
Your reply indicates a fundamental lack of knowledge about the nature of money and the characteristics it should have to render it useful or to functional.
Shares are calculated by ‘money’ (in terms of their market worth), but they can’t be exchanged for good or services because they lack key characteristics of money – namely acceptance by people grounded in faith (i.e. fiduciary issue) and, most importantly, they lack certainty – the value could (and does) fluctuate. I’m also perplexed as to how private companies could produce money. Institutions, heavily regulated (i.e. the early history of banking) produced ‘money’, but it was document allowing a call on a deposit – it led, quite frankly, to chaos and a plethora of bank runs that saw people’s savings decimated. Are you referring to modern corporations? Work eight hours for MacDonald’s vouchers that are redeemable against your mortgage?
Yours is an confusing argument, not because of its sophistication, but because of inarticulate stupidity.
As to the last comment, about ‘sharing’ I think it’s your axe and you’re grinding it. I’m fairly certain liberals and progressives propagate an alternate way of running society, rather than the ‘sharing’ you crudely envisage. Says a lot about the foregoing ‘analysis’.
Your reply indicates a fundamental lack of knowledge about the nature of money and the characteristics it should have to render it useful or to functional. Oh! Matron!
Back at you.
Shares are calculated by ‘money’ (in terms of their market worth),
Not very accurately else the value of the entire stock market would not decline as it does in a depression nor rise as it does in a boom.
If instead corporations were forced by government or market necessity to use their own common stock as money then the value of each stock would be directly related to the demand for that corporation’s goods and services and NOT by the fluctuations in a single, government enforced monopoly money supply.
but they can’t be exchanged for good or services because they lack key characteristics of money – namely acceptance by people grounded in faith (i.e. fiduciary issue)
Faith is based on the past performance and knowledge of the object of faith. Some stocks would be accepted by the population and others rejected.
and, most importantly, they lack certainty – the value could (and does) fluctuate.
Yes the value does fluctuate – when measured in a fluctuating money supply. But if a money is measured by what it can buy then that fluctuation is likely to be far less and far more just too.
I’m also perplexed as to how private companies could produce money. Institutions, heavily regulated (i.e. the early history of banking) produced ‘money’, but it was document allowing a call on a deposit – it led, quite frankly, to chaos and a plethora of bank runs that saw people’s savings decimated.
Common stock is not normally redeemable so bank runs are not an issue.
Are you referring to modern corporations?
No. I am referring to corporations with no access to a government enforced counterfeiting cartel.
Work eight hours for MacDonald’s vouchers that are redeemable against your mortgage?
Perhaps but I don’t envision a world where much borrowing is required.
Yours is an confusing argument, not because of its sophistication, but because of inarticulate stupidity.
Well, no mere human is perfect.
As to the last comment, about ‘sharing’ I think it’s your axe and you’re grinding it.
Got cut by it, did you?
I’m fairly certain liberals and progressives propagate an alternate way of running society,
Which is why they are unpopular. People don’t desire “to be run.”
rather than the ‘sharing’ you crudely envisage.
Common stock is democratic too. Are you also against democracy? And yes, the votes are per share but in the absence of a counterfeiting cartel to borrow from, the corporations would be compelled by market pressure alone to issue more shares and thus share more wealth and power.
Says a lot about the foregoing ‘analysis’.
Thanks for your remarks. You have revealed a lot.
I think it was the CRA.
A fantastic report on the housing bust by Maynooth college was published nearly 2 years ago.
It looks at it from a geographical spatial planners perspective.
I can’t seem to get a link but Google this PDF doc and yee may get it.
[PDF]
No 59 – Ju ly 20 10 A Haunted Landscape: Housing and Ghost
@Dork of Cork
”…I think the problem with 1980s Ireland was that the Irish banks did not own enough Irish sovereign debt although its just a guess on my part ..”
Up to the advent of ECU in 1998 over 80% of Sovereign Irish debt was domestically denominated .The inverse of this is now the case.
I guess what I glean from Philip Pilkington is that ordinary citizens who let rip during the boom are not responsible in any way irrespective of all the other players involved.
I voted No to the Nice and Lisbon treaties and wrote to many politicians and I talked to many people regarding the threats the expansion of EU power imposes.No one wanted to know.
These treaties were voted in even though most people actually had nt even read them right through.
Philip Pilkingtons article in my opinion is misleading.
Its a bit like everyone blaming Frankenstein ,the monster for smashing up the joint instead of its creator.
Unfortunately a large section of the Irish people share blame with the political,legal and business establishment in Ireland and in Europe for what has happened.
@Wolfverine
Appreciate a link to those figures – I am sceptical to be honest.
I know post war we held most of our sov debt in Sterling bonds via the “Irish banks”
Maybe things changed post 1979 but I just don’t know – its hard to find 80s bank data.
@Philip
Any data from that time as I think it would shed light on the post 1987 world.
PS Wolf – I am a believer that credit / money production / destruction shapes people behavior first – behavioral responses to money credit production is very very strong.
Its a bit like how ecosystems change when less or more food is available.
I believe the Irish people are to blame for Irish Taoiseach Enda Kenny, and predecessors?
@Wolf
Yes I get where your coming from – I am not talking wether it was domestically denominated in punts , I am talking about wether it was held outside the country.
Two very different things
We were pushed into dramatic physical surplus during the 80s……..ie less oil was burned – that meant it went somewhere else.
We have a foregin currency also now – which I think is 85% outside the country or thereabouts.
Sorry scrap “domestically” thats confusing.
I am intensely interested in how financial centres force countries into physical surplus so that they can remain in physical trade defecit.
The few will invariably led the many to its ruin. To make the many pay penance for such ruination seems in bad taste, but de gustibus non est disputandam. The epic failures of liberal democracies may be the most interesting events of this era for future historians, assuming civilization of some sort.
Who the hell is this Zuckerberg?
@Philip
Sorry have to disagree with you there , I am more on F.Beards side with this one _ I profoundly distrust credit growth.
Can understand the Advantages of giving credit to individuals with no money but lots of talent but I think even Steve Keen would disagree with what went on in the banking world Post Basle.
Anything more then 8 to 1 leverage goes into the danger zone as it takes too much money from the future.
Phillip
Here’s the part I’ve been trying to get my mind around. As I understand it the Irish government essentially stepped in to guarantee loans made by private banks. That would be equivalent in America to the State of North Carolina stepping in to guarantee loans made by Bank of America, that would never happen.
So I’m wondering what is the justification offered by the Irish government for socializing the losses created by private banks. It just seems really bizarre at least from an American perspective.
Please explain.
They don’t justify it. They tiptoe around it. In the last election they bashed the bankers, by the time they were in government they were cosied up together in bed.
Most Western democracies, in my opinion, have lost legitimacy with voters. Ireland is simply leading the way in this regard.
And when confronted in public with what has happened? The politicians just argue in terms of raw power. “We have to do what the Germans say,” they tell us, “otherwise terrible things will happen.”
The political environment in Ireland has become VERY cynical. More so than in the US or anywhere else.
@Greg
Ireland is impossible to explain to a outsider – the closest approximation is a very badly run large estate.
But we were given the maximum neo liberal dose to see how the local landlords agents would manage it.
Its a interesting experiment anyhow.
@Philip
Elements of FG were always very close to BoI – sure Micheal Collins (The Irish states first finance minister) could not get any seed capital for Finance from the BoI – they just would not give it.
Churchill eventually had to intercede and ask / request BoI for the Money.
I tell you Ireland is a farcical place.
The 2 pillar banks phrase is a very masonic term – it refers to the Catholic run AIB & Church of Ireland run BoI.
Modern post Cromwellian republics are a illusion – they are banker run fiefdoms , they always were.
The quality of governance depends solely on the quality of the bankers.
The executive in Ireland has always been a joke.
Ditto for Scotlands Bank of Scotland & RBS.
Ireland needs to stop relying on the banking sector for money. They need a good Keynesian government. It’s as simple as that.
They need an MMT government but without the love for banking and government borrowing.
Actually, Dorkonian, a story goes like this: when Collins was first told that the Bank of Ireland wouldn’t honour the Free State checks because they “had no equity”, he marched down to the office of the MD in full military uniform, put his revolver on the table, and told the man that if the checks didn’t start clearing within the next couple of days, he would return and shoot him.
_That’s_ equity.
@Marcus
Its a nice story – & I hope its true.
But who really knows what historical truth is anymore – everything is spun out on a thread & remade every few generations.
But perhaps its why he was shot !
I think the constant in everything is the dangerous line leaders cross when money is the question.
@ Philip
Actually, I don’t see how house purchasing or other consumer credit is to blame for the present situation, or dreadful outlook at all.
For the most part, the debt for home purchases, small time me-too landlords etc is still being serviced. Where are the scale of losses in this sector? No where I suggest.
It was the major developers for big commercial projects, quite a few of these not even in Ireland, as the workings of NAMA reveals. It was these massive losses, eg. those of Anglo Irish which wasn’t involved in high street lending at all, when dumped on the government, that created the crisis in public debt. Draconian austerity over the last 4yrs explains most why the domestic economy plummeted & high unemployment persists.
MMT definitely offers the solutions (& correct commentary) imo.
An ECB financed Job Guarantee scheme, eurozone wide would get us moving out of the current crisis quickly & give breathing space to sort out the whole flawed neo liberal cr@p.
Sacking every last politician, ‘adviser’ & economist still peddling the rubbish would be a good start. (& that’s most at irisheconomy.ie)
MMT definitely offers the solutions (& correct commentary) imo.
An ECB financed Job Guarantee scheme, Mike Hall
Oops! That’s another thing of which I disagree with some proponents of MMT – their employee of last resort scheme. For Heaven’s sake, just hand out money to the population instead. That will:
1) Drive up the wages labor can demand by making workers less desperate.
2) Allow the population to create and do the jobs they want done – not what some elite wants.
Of course legitimate infrastructure spending is OK but that is not likely to require the least skilled labor.
this thread is probly cooked but the Irish didn’t do anything other cultures don’t do.
more and more I’m realizing embedded social cooperation structures are at the root of all of this. Money and everything.
The money comes after and takes its value from the former. And the former are determined by a range of highly complex historical antecedents.
this line of thinking transcends and eclipses both economics and political economy. Admittedly it trespasses uncomfortably into what we call “pSYchology”, and even there, the thought is relatively undeveloped and still somewhat primitive.
glad my own thoughts are coming back into my head like memories of a dream. the solar storms were a bitch this past week. or it might have been all the $5/bottle wine, but I think it was the storms,
all right I admit, maybe they are to blame.
Jared Diamond described an island in the South Seas that never did anything like this.
It never collapsed.
that amazes me. how did they do it? what form of thinking did they possess that kept them in balance? was it a barely tolerable boredom made endurable by repitition and early death? or was it some sort of transcendent rapture, like living inside the mind of God?
I’ll never know. I think I’d be almost afraid to find out, because I’d hate to lose either my illusions or my sins. haha
Hay! They went from building Moi to swimming through shark infested waters ( after a jog down a near cliff face ) to harvesting bird eggs off a coastal island appendage and back ( that always fixes stuff! ).
Whats not to like… eh. Go long coconut head, your open!
Kinda makes you wonder why you sit on your ass all day ( transport – desk ) and then go physically work out on your own personal time. Productivity is god[s]ly thingy, demigods with whips ( Yves making ya think… nice! Oedipus complex? ).
Skippy… any who… we will always have Sancta Susanna between us.
http://www.youtube.com/watch?v=P3sINSbp–4
I believe it must’ve been the same island that was featured in a series called “The South Pacific”. Unlike the Easter Islanders of “last tree standing” fame, this group’s economy was built around fish and palm trees. They used everything in their environment in unbelievably ingenious ways – everything – but with infinite care not to waste or damage any aspect of their surroundings.
Actually, I suspect it was because it was the fact the island was so small, and the limits so obvious, that made the difference.
Diamond’s book “Collapse” gets a bad rap because they say it’s all about failure. But half the stories he tells are of success. He deliberately does this, partly to guard against denialist complaints, but also to guard against despair. It is possible to avoid collapse, and past societies have shown how. It only remains to learn and apply their methods.
My entire life has had these in the economic background: the Vietnam War, the oil embargo, inflation, stagflation, Reagan tax cuts, corporate re-structuring, defense spending binge, beginning of globalization, asset bubble, s&l bailout, 7% interests rates (omg are they low!), intermediate globalization, internet bubble, 9-11, defense and security spending binge, 5% interest rates (omg are they high!), asset bubble, latter stages of globalization, deflation.
At a very high level, the internal contradiction of modern economics is that debt (I’m thinking any kind of debt) requires stability – of employment, of income growth, of tax revenue, corporate profitability. And few of the traditional methods of underwriting debt work very well anymore.
In addition to the inherent instability, there does seem to be a rapidly growing consciousness of how central FoxConn is to modern life, and that nearly every one of us is dependent on post-modern slavery.
What you say re stability and debt is bang on. My chief problem with economists of any stripe these days is that they refuse to see we are in for a very long period of continuous crisis – financial war, real war, resource war, continuous global upheaval. The past 15 years have been a dead loss on VITAL issues as 2 bubbles consumed everything going up and down and there’s every reason to expect another big round of completely wasted effort expended NOT dealing with fundamental problems then running smack into another serious crisis (and they keep getting more serious).
Sometimes I just cannot believe how easily those who count themselves on the “left” (I’m a democratic socialist) keep leaving the entire well-educated portion of the population out of this, as if it is all about some Utterly Evil .1% vs 99.9% of Pure Souls.
Nonsense. The fact is that a substantial portion of the population went on a prolonged, grotesque binge all over the world. And while you certainly cannot blame people who had no chance to know better, nor any who could never known better under any circumstances, it was the people with “smarts” who dug themselves the deepest holes (and can thank Bernanke et al for saving their hundreds of millions of asses with their very own bailouts), the educated ones who with one moment’s thought would know what they did for a living had not suddenly doubled in value. I mean, c’mon, the first time I read a lengthy piece on the “Celtic Tiger” and its globalization “miracle” model maybe 7 years ago I was absolutely certain Ireland was headed for the rocks.
The “people” you want us to think of in our imaginations are indeed quite innocent. However, that covers maybe 70% – maybe. The other 30%, who you would have us ignore, just as in the US and many other bubble areas (those in Australia Canada still to pop), checked their brains and educations at the door and went straight to the bar. And in my experience, it was all but impossible to convince people of the danger directly ahead. I’m talking about smart people. These were the very people who are SUPPOSED to look out for the interests of the less advantaged and maintain some sort of check on those in power. Who ELSE could do it? Well, what the fuck happened to THEM? EVERYWHERE they repeatedly voted in complete assholes who promised to deliver free wealth for anyone with money (and many without) without even bothering to provide a credible explanation as to how. And on went the greed lights, out came the “I Love Easy” sign and up in smoke went any thought of prudence – as for those who REALLY needed help, the ones now living in places they could not possible afford, well, fuck them. Not my problem.
In the US, half the population has been permanently relegated to a completely different economy. No real effort has been made on their behalf in decades. This could not occur absent the sad fact that the CHARACTER, the embodied, living VALUES of US (and “Western” elites generally), has taken a very bad turn for the worse over the course of the last couple of generations and what little remained of the “left” had no interest whatever, it seemed, in doing anything that might slow “growth” or jeopardize “jobs” even as everything was going down the toilet in front of them. The extant of the betrayal by those who could and should have made the difference was, and is, where the real political fault line lies. There are always those who will attempt to become something equivalent to the “1%”. They are who they are for all Time. It’s the vast group that SUPPORTS them that has completely checked out on its responsibility. And that includes the US, most of Europe, Canada, Australia, the UK, and of course, Ireland.
And those 30% STILL won’t budge, absolutely refuse to find some minimal courage to take back the role that is theirs and only theirs because they are the ONLY ONES who can take their bosses down.
“I’m talking about smart people. These were the very people who are SUPPOSED to look out for the interests of the less advantaged and maintain some sort of check on those in power. Who ELSE could do it? Well, what the fuck happened to THEM? EVERYWHERE they repeatedly voted in complete assholes who promised to deliver free wealth for anyone with money (and many without”
Well, in the US, those people were SUPPOSED to be in the D-Party. The D-Party is the paternalistic party. The D-Party faithful–including the upper middle class “bleeding heart” liberal–voted for the D-party to DO THIS.
2008 wasn’t THAT long ago. Beyond the “Behind the Primary” identity politics melodrama, the D-Party still claimed it would roll back the excesses of the Bush II era and look out for “You and Your Families,” to quote HRC.
Granted, the people who deputed this responsibility to the increasingly neoliberal D-Party through 2008 weren’t paying enough attention to what the Party was actually doing and what was actually going on in the larger national economy beyond the end of their own noses.
The D-Party also fed them the excuse that they were powerless before the power of the Repugnants and truly Awesome Power of the Repugnant mouthbreather sexist, racist, and Christian fundamentalist base.
They still do. This season’s Evil Other is the sexist, racist, and Christian fundamentalist “libertard”–they needed a new twist, I guess. There is a tremendous gullibility out there for this sort of complete transference of blame.
There is also a terrific and terrible naivete about work in the US educated classes–including good liberals– who don’t look beyond the education of the individual to the larger macroeconomy and who assume the ONLY thing a nation needs to do is educate its young.
Their own experience “confirms” this thinking and many strands of political thought in the US funneled them into this one narrow channel. This is STUPID, but it’s not immoral.
So, really, I would say the problem is more that many of them weren’t as smart as you or they think, than that they were ill intentioned. The pundit and political class that was in a position to know better but seeks its own individual advantage anyway– and still keeps doing it even today after the complete collapse of the charade– is another story.
We’ll see what happens with “voters” moving forward. I suspect so long as they continue to consider themselves mere voters, probably not much because there’s nothing to vote for.
““libertard”–they needed a new twist, I guess. There is a tremendous gullibility out there for this sort of complete transference of blame.”
That’s why I get p*ssed off when I see people who should know better picking up and fueling the new memes.
You can critique the ideas without making yourself a part of the lowest common denominator, another member of the mob. It’s not like you “convert” anyone that way.
Enda Kenny, like most politicians is a hand-shaking fellow-well-met who managed to hang on until his turn for power came around. Irish politcal parties tend to keep their actual political beliefs well hidden, because anything that looks like an ideology will only lose you votes. Kenny and his party believe in the same neo-liberal policies of deregulation and privatisation that led to the global financial crisis in general and Ireland’s downfall in particular. The reason for Ireland’s catastrophe are simple. First, the financial regulator was in the pocket of the fincial institutions he was meant to regulate (while government was in the developers’ pockets). Second, the bosses of the financial sector borrowed massive funds from European banks, with which they proceeded, with reckless abandon, a) to pay themselves eye-watering bonusses and b) to drive their own institutions and the Irish economy into a brick wall. Ultimate responsibility comes down to about three politicians, two or three top civil servants, and about four bank CEO’s, who should all be in jail. Enda Kenny’s version of events: The Irish are mad. Thanks Enda!
I just want to add that the banks granted bonuses to their employees on the basis of how much money they were able to lend, technically known as shoveling money out the window.
On the other side of the argument let’s not forget the level of consumer borrowing, which is less excusable than mortgage borrowing. Unfortunately, the “reasonable standard” of living in Ireland was a kind of materialistic fantasy involving SUVs, holiday apartments, restaurants, pubs, shopping malls, Gyms, and seasonal tickets to a football stadium, Old Trafford, which was only a short flight away. Were we to blame for our love of life, our hunger for recognition, our lack of character, our failure to fight the filthy modern tide? What could we have done, being what we are?
If a carnie cons a pack of marks, who is to blame? The carnie or the marks? There will always be carnies. Will there always be marks? Imagine a “world without marks”. What would it look like?