Saturday, 28 January 2012

Kenny - "people went mad borrowing during the boom"

What is it about so many of our fellow Irishmen/women that they can’t face the truth? Our esteemed prime minister, Enda Kenny – who makes a shade of grey seem rather exciting – says that  “[Irish] people went mad borrowing during the boom”, and it creates a furore.

But Irish people did go mad borrowing during the boom – or bubble, as it might be more accurately termed. Not all Irish people, mind you, but enough to get the country up to its hoxters in debt. People who are now saying – like Kenny in another context – that "it’s not our fault”.

Bloody hell. Years back, a German/Turkish mate of mine came to visit – just as the bubble was puffing up nicely – and he was shocked by the amount of expensive cars on our roads. He was even more shocked when I told him some of them cost nearly twice as much in Ireland as they did in Germany, thanks to Ireland's  Vehicle Registration Tax.   All bought on the never-never, when Paddy and Mary were happy to take the money from the banks, bondholders or not.

I remember trying to move house during the boom years, and everywhere I went was swarming with investors. One estate agent – a refreshingly honest young lad – told me how a postman had a portfolio of seven properties on the go. How many did your average solicitor have, I wonder? Given how much easier it was to take care of the legal stuff?  Portfolios that now translate into loss accounts for all of us.

The same lad related how everyone in the estate agent’s office, where he worked, laughed out loud when a semi-D down the road “made” a million. But back then, Paddy and Mary thought it could go on forever. Bertie Ahern thought the naysayers should commit suicide. The media talked it up, uncritically, and the opposition benches were quiet about the Ponzai scheme on which the Irish economy was built. If you stuck your head above the parapet and said it was “mad” you would most likely have it knocked off.

And now, even in retrospect - with the supposed benefit of hindsight - the story is the same with Kenny's belated admission.

It's a pity the ostrich is not indigenous to these barren shores.  It would make a lovely national emblem.

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John said...

I think that what annoyed people was on two points.

1. He said "You are not to blame" on his lame broadcast.
2. Then, the manner of using "People" in the way he did, was to tell the narrative without context.Which was that Kenny said nothing against the "Boom" at the time, it would have been different if he had stated this at the time. And that there was no mention of the creators of the pyramid scheme Goldman Sachs and all the banks that followed their lead. This also absolved the Department of Finance civil servants who were willfully wrong in their economic forecasts and pandered to their
masters, that we would have a"soft"

In 2006 I got a call to see my bank manager and he tried to persuade myself and wife to take a loan of 565,000 Euro. And both of us on very modest incomes. We declined and the whole deal was high pitched sell, as bank managers were getting their bonus based on what was loaned and they did not care. When my wife suggested if things should get bad in the economy, he told her that we had "New" economics and that we would never have a recession and that it was our loss not to take this great chance to get "wealthy".

Anonymous said...

Dame Enda has no choice but blame the man in the street, lest the real culprits and traitors be named. Debt is of course a major problem, but I think it gets too much play. I think a more important issue is the way that FF guaranteed the bank deposits with a blank cheque. Not even the USA can afford to do that: they limit deposit insurance to, I think, USD 250,000. You'd better believe Ireland can't afford it.

So what was that about? Very simple, I think: the national plutocracy had to be protected at all costs. There is no way that Europe would have sanctioned an unlimited deposit guarantee. So Brian & Brian did what anyone in their positions would do, assuming that they are Irish. They transferred the entire wealth of the nation into the hands of the national elect, and let the cheque bounce against the account of the citizenry. It was a fait accompli, deliberately bankrupting the nation so that the living gods who walk among us a bit less than 183 days each year would be safe, and Europe would bail out the dessicated husk of the nation. Europe would *never* have bailed out our banks and all their depositors, but it would, and did, bail out the State. So we protected the plutocracy by bankrupting Ireland. No Irish politician would have done anything different.

It was a simple plan, and it worked as intended. But let's not imagine that Dame Enda would have done anything else. This is Ireland. He might have *talked* against it so he could later claim to have been against it, but he did not lift a finger against it in any real capacity. He is in bondage to the same people every other politician is in bondage to. He is blaming everything on the credit fiasco because he has to deflect responsibility onto Paddy and Mary: he has to do battle on behalf of the corrupt political system and crony capitalist system of which he is just another purpose-built product.

Joyce called Ireland the old sow that eats its farrow. Today, she is the old whore who pays her johns to f*ck her.


Anonymous said...

Everyone is entitled to their opinion but, not two opposing opinions either the people are to blame or they are not.

Maybe now people will begin to realise what a Gombeen Enda Kenny is.

Frederick said...

As pointed out by "John", what Kenny said was right in a way, but he could given context and delivered a much more comprehensive answer which actually demonstrated that he had an understanding of how we got into this mess.

Of course people "went mad" and borrowed recklessly, but reckless borrowing is impossible without reckless lending. Banks "went mad" too on the basis of a "new" neo-liberal economics that figured capitalism had finally perfected itself and the days of "boom and bust" (copyright Gordan Brown) were finally over - a new mathematical alchemy would eliminate risk in the financial world and outrageous mortgages could be given to people (including people with no jobs in the United States) and it would all somehow be OK.

Kenny could have pointed out that there was a prevailing ethos which demanded that "the market" was always right and governments and regulators should back off and let the market do it's magic. He could have said that if the market is oriented entirely towards a quick buck, with no responsibility for the outcome (we're bailing it out after all) lots of shit will happen.

It did. He didn't.

The Gombeen Man said...

Fair points all. But I think I'd be a bit more critical of that enity "the people", as a rule. But that's just me.

As for the "opposition" silence during the Bubble, too true. I can only recall one TD, namely Joan Burton, voicing any criticism of the Government's property-based tax breaks and shelters. And you got the feeling she was being told to shut up....

Dakota said...

It's unbelieveable, with all the new and increased stealth taxes there is so many fools, even now, up in arms when Mr Kenny tells them there was a culture of greed in the country. Oh everyone now is not part of the culture, don't you know? It's the traditional Irish cliche of say one thing and do the exact opposite. Aided and abetted by a media so saturated by the run off from the ingrained greed, by now, either doesn't care, or can't see the difference any more. One section, the state broadcaster, is exactly that, the state broadcaster.

Just look for one moment at the irony: The government are just doing what they always have and thats be ineffectual and directionless. WHERE were the present crowd when they could have provided a voice of sanity?

Try to fathom this, GM: The Troika gave them largely free reign with regards to financial matters. In effect, they could apply fiscal breaks wherever they deemed necessary. Where did the Irish Govt apply the breaks? Yep, where do you think, on a tanking housing market and on domestic consumers! LA LA Land economics......Every man, woman and child, are paying and will continue to pay for many years to come? Why? Because they KNEW they would get away with it.....And they were right......Soporific moralistic thinking, with mantras such as, every other country is doing it, is all they can offer up......Genuinely SCARY.....Yeah and every other country is as open and hasn't got Ireland size of debt (Lets not mention the history written by the Catholic Church).

As for the cars GM, the government (doesn't matter which one) in it's incentive to the Irish psyche, to get the masses buying ever newer cars, made it easy to see the greed before the observers eyes. The many 2008, 09,10,11,12 cars says that we are not in a depression. Again, that strange mix of reality and irony raises it head and says we are. Irony there for all to gawp at.

GM Ireland is one of a few countries on the planet, where self proclaimed socialists are against taxes. That alone should tell all those up in arms something.

The Gombeen Man said...

It's a funny old place alright, Dakota. In 2006 I was looking to change my car which I'd bought in 2000, I had awful trouble trying to get a trade-in on it as the car was too "old" at 6 years. Now it wasn't that run-of-the-mill a motor as it was a two-seater convertible, and usually people hold on to these for a while before selling them on.

I was in a dealership on the Navan Road one day, and the sales guy told me that people changed their cars every three years (presumably when the loans were up, which I imagine were easy enough to get given John's bank experience above). But he also said that some people changed them every year! Every year!!!

I can only imagine it was to have an up-to-date reg plate, because I could think of no other country where people would take such a hit of depreciation on a new jammer every single year. Money was something that seemed to come from the Bank of Waddingtons.

The worst thing for all us here, is that we will, indeed, be paying for this for a long time, unless closer political and fiscal union within the EU would enable Eurobonds and the debt burden of Ireland, Greece, Portugal and other countries to be shared. I think that's our best hope. But if Paddy and Mary had a referendum, they would vote "no" to it.

That Bank guarantee has sold us all down the river, there is no doubt. Thomas' comparison with the US says it all... if they could not back up something so monumentous, how can we?

The Irish elite carry on as usual, and the failed developers, the so-called "risk takers" - who in a real capitalist society would be on the street begging - are employed by the State through NAMA and the "little people" taxpayers. So Frederick has a point there.

Are they "free marketeers" or not? It looks like they are all socialists now. Socialism Irish style, where we - even those among us who did not seek out investment properties and did not take out 600,000 loans - have to subsidise the "risk takers" who wanted to "get ahead".

Jasus, it would put years on you. In fact, it would make you go mad.

John said...

GM, putting the date of car year on car reg, was cute hoorism at its best, the idea was to show the plebs
that you had the latest car model.
I like this guy Max Keiser, former
stockbroker,he does a program on Russia Today, you can pick it up with a Lidl Sat. Here is his take
on the bailout

In 2 parts, worth a view/

Dakota said...

"I can only imagine it was to have an up-to-date reg plate, because I could think of no other country where people would take such a hit of depreciation on a new jammer every single year." That's what it's all about, GM, sadly, it's that shallow. Never has a generation sold their future and that of their childrens for so little.

Natalia said...

I'm glad I finally found someone who thinks like I do. I definitely agree that it's people's fault. They live way over their limit and can't really see that. If this country is in the recession then tell me why the hell all those pubs in my area are full not only on the weekend?

The Gombeen Man said...

Yes John, Dakota. The whole reg thing was/is a "get one over on the Jones's" thing. At least when they good get loans to buy them.

True Natalia. I think some people de-prioritise financial commitments after holidays, nights out, and all the rest.