Farewells and the feelgood myth
LAST weekend I met a weeping widow. The middle-aged mother of three had just returned from Dublin Airport. She had bade farewell to her last daughter, heading for Australia. There was no job for her daughter in Ireland, so she was following her two siblings Down Under.
The widow was not only distraught. She was puzzled. She had been bombarded by endless articles about how Ireland's economy was picking up and how jobs were being created by the week.
She had even read that at least one Irishman -- Enda Kenny -- was in the running for a job. He was being tipped in key quarters to succeed Jose Manuel Barroso as the next boss of the European Commission, or even as a successor to Herman Van Rompuy as president of the European Council.
A bit of a stretch for the modest man from Mayo, but the rumour is embedded in the ether.
No less a source than Leo Varadkar, Enda's Minister for Transport, had told the Journal magazine that Enda was being "seriously talked about in Brussels" as a contender for both jobs.
Varadkar is a fine minister, but when he begins to extol the virtues of his leader his words should be taken with a pinch of salt. His December eulogy of the Taoiseach was just another in a series of fatuous feeds to newspapers to persuade us how lucky we are to have Enda still with us.
The Taoiseach has responded to questions about his dazzling career prospects in Europe by coyly protesting that he was "flattered" by the suggestion, but that he wants to stay at home to fulfil his mandate.
As the suggestion seems to have come from sources close to the Taoiseach, such as the loquacious Leo, we should not see it as an unconditional offer from the 28 member states; but all such speculation helps to lionise the man who is being credited in Europe -- and wider afield -- as turning round the Irish economy.
At the high tables of Europe, Enda and the "success" of the Irish economy are almost synonymous. So popular a poster boy is Enda's Ireland in Brussels that Barroso himself took umbrage at not being invited to the pre-Christmas bailout bash celebration in Dublin.
He sees our exit as a triumph for Europe first, Ireland second and Enda third -- in that order. Enda paints it in reverse, with himself as the hero, Ireland a good second and Europe a poor third. (He always tactfully adds plaudits to the Irish people for their endurance.)
The weeping widow hasn't a clue what either of them is bragging about. Bailout exit or not, she is a big loser.
Europe is the big winner. Every day the corpulent Barroso must wake up, gorge a good breakfast, tickle his tummy and thank God that gutless Ireland did not wreak havoc like wayward Greece.
The congratulations tumbling on Enda's head from Europe make grim reading for Irish people in distress. The Taoiseach's response, his decision to mark the bailout with a state-of-the-nation address on RTE, inflamed hopes of economic restoration. Self-satisfied ministerial press conferences on Liberation Day added to the giddy expectations.
The feelgood factor has taken off. The Government is recovering at the polls. But what about the economy?
Have you not been listening? Unemployment has fallen to 12.5 per cent. Growth is forecast to hit 2 per cent this year. Exports are booming. The Irish stock market rocketed by 33.5 per cent in 2013 , the best performer in Europe. Our closest neighbour -- the UK -- is rapidly recovering. The NTMA has already pre-funded our borrowings until 2015. The property collapse is over. Retail sales climbed this Christmas. We have hit the deficit targets set by the Troika.
Unfortunately the weeping widow is a sceptic. She is weary of bloated growth projections from the Department of Finance and the Government's lackeys in the employers' group, IBEC.
She sees her daughters' and thousands of others' unwilling flight to Australia doing far more than Enda for the jobless figures; she is left cold by boasts of an Irish stock market boom as she lost her life savings in Anglo and AIB; she is indifferent to the rise in the property market as she has no intention of selling her house, emptied since the loss of her three girls; she is deeply suspicious of the NTMA's boasts of prefunding since she has heard that the €21bn borrowed to pre-fund has come at a chunky cost of €500m a year.
Awards to the Taoiseach from Time magazine and to Ireland from Forbes as the "best country in the world to do business" cut no ice with her. She knows that our tax regime offers seductive incentives to foreign business -- but is an economic swamp for native entrepreneurs. She has heard that interest rates could be on the rise. She can spot spinners and spoofers.
To hell with such negativity. Perhaps 2014 will see a real turnaround. Maybe the next Budget will be benign? Maybe the banks will fly through their stress tests later this year? Maybe they will ride to the rescue of small business? Maybe pigs...?
She sees it differently. She sees the boys boasting about reaching the bottom. But the bottom is a lonely place. And there is no bottom without the banks being tackled. Once loud government denials that the banks will need recapitalisation are vanishing as the day of reckoning approaches.
November's balance sheet assessments of Irish banks revealed that all our banks are living a lie, and are critically in need of bigger loan loss provisions. Instead of facing the threat, our political leaders are banging on about how the banks must lend more to small business, posing as some sort of disinterested observers.
Most of the banks are now fully owned by the Government -- but their political owners are attempting to distance themselves from these financial minefields.
They will not be able to distance themselves when the European stress testers hit town in the autumn. Ominously this time the same standard pan-European stress tests will apply to AIB as to Deutschebank. This time there will be little wriggle room, even less scope for fiddling.
And where will Enda and Michael Noonan find the money to recapitalise the banks? Barroso has already told his Irish poodles (admittedly still in a bit of a huff) that we can forget about legacy debt being funded by the European Stability Mechanism. The promises made to Kenny by his European fairweather friends on June 29, 2012, have proved as binding as the Treaty of Versailles back in 1919. Ireland has served its purpose. It has delivered itself to Europe, an exemplary pupil that has exited a bailout. Now we are on our own, at the mercy of the bond markets.
The bond markets are not the Mecca which we have been led to believe for. They will demand the same austerity as the Troika. Bond dealers will freak when our banks are exposed as short of capital. They will not swallow the latest government pipedream of raising equity from the private sector. We are more likely to rape depositors and ask the weeping widows to take more pain.
Enda is right. Depending on growth, we have probably stumbled to the bottom. Down at the bottom there is a European embrace and some better numbers. But there is no way back for the weeping widow's daughters.