Gene Kerrigan: Relax, we're out of the woods -- again
Two economists are mildly upbeat about Ireland's future -- but Gene Kerrigan has heard this one before
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DID you see the good news? Apparently, we're out of the woods. As the Irish Independent headline put it: "Resilient Ireland plays cards right to ensure happy ending." And the Irish Times: "Markets are making the wrong call on Ireland's debt." And the Financial Times: "Ireland's unexpected economic comeback."
Out came the breakfast champagne. The Tiger had returned! By lunchtime, I'd bought two London hotels and put the missus on the waiting list for a seven-grand handbag at Brown Thomas. By that evening, myself and this week's supermodel were hopping off the private jet in Marrakech, ravenous for a kefta magawara on a bed of couscous. Then, back to Dublin by dawn, me already on the iPhone 5 (Steve Jobs gave me the loan of an advance prototype, he values my opinion).
It was while I was closing my third Bulgarian real-estate deal of the morning that I noticed that all three articles mentioned above were. . . well, they were the same article. (Being a busy little tiger, I find it tedious to actually read all that grey stuff; I usually rely on the headlines to clue me in.)
It seems that a pair of economists, Vines and Watson, wrote an article for the Financial Times. Its upbeat conclusions so impressed the Indo and Times that they reprinted it. Vines was interviewed on RTE ("A positive view of the Irish economy") and Newstalk ("An Oxford professor is fighting Ireland's corner over our international image").
It never went away, that old national trait -- the inferiority complex that ensures that whenever anyone from outside says anything positive about us we perk up like a mouse sniffing a tasty chunk of cheddar.
I read the Vines and Watson article and for a piece written by two genuinely smart guys it seemed a bit light on facts. But there's two things we can say about it.
One, Vines and Watson could be right. I mean, who knows? A statistic I've just made up tells us that 98.4 per cent of us have only the foggiest notion of the mechanics of economics (and that includes a surprising 99.9939 per cent of economists, given the failure of almost all of them to notice that the 'Celtic Tiger' was actually a bubble).
All we lay people can do is assess the evidence, judge the tone and the coherence of the experts' views, and place them in the context of everything else we know. And to me, to be frank, that evidence suggests that we're in (to use the technical term recommended by the standard economics textbooks) deep do-do.
The second thing we can say about the Vines and Watson article is: did you know it's exactly a year since Newsweek magazine published a list of the world's top 10 leaders and Taoiseach Brian Cowen ('The Fiscal Taskmaster') came in at number five?
Remember that? Remember Brian? (Chubby chap, usually with a pint in one hand, a song on his lips and -- eventually -- his P45 in the other hand? That's the lad.)
Ah, I remember well the media celebrations when those authoritative outsiders recognised Brian's political and economic genius. Apparently, it was a sign that we were out of the woods.
So given the evidence from the experts, its tone and coherence, and the context within which such views are expressed, what can we conclude?
Well, suppose we assume -- and I think we can -- that the rich will persist in refusing to face the reality of the debt crisis and refusing to take the losses they're due, their gambles having failed. We then have, broadly speaking, the pessimistic view and the optimistic view.
We could face years of stagnancy, pain and worry, as the smart guys dump their debts on us. And that's the optimistic view. Or the bottom could fall out of the global economy and we're into Mad Max territory. In which case, you and I will meet at the docks to fight each other for bags of rice sent by kindly Chinese people to feed our kids.
Politically, we appear to be already into the post-independence era. We had hundreds of years under the proud invader, then the Act of Union drew us into the English embrace for 120 years. We then had about 90 years of independence.
The current rule by the EU/IMF/FG/Labour coalition seems to be heading, under the guidance of Merkel and Sarkozy, towards some hazy notion of an EU-wide fiscal authority. This will set the framework within which our national government will collect taxes and allocate resources.
It will involve a debt ceiling written into our Constitution. Last week, Michael Noonan explained why this will be a good thing. "If the analysis of the crisis," he said, rewriting history, "is that the last Government recklessly borrowed the country into a major bankruptcy crisis . . ."
No, Michael, that's not what happened. The last Government, with your approval, transferred private bank debt to the public, making a manageable public debt unsustainable, then squandered our cash reserves on zombie banks and depressed the domestic economy in an effort to balance the books.
But, go on.
He continued: ". . . then there's merit in the argument that the public, the people, should have in the Constitution a protection against future reckless governments."
That's how they'll sell us the constitutional framework that will formalise our post-independence governance -- as the people's protection against feckless politicians.
There's something to be said for handing the country over to technocrats from Germany, France and elsewhere. Our current democratic institutions are deeply flawed. The Seanad is a joke, within which senators make speeches about having their cars clamped. The Dail rubber-stamps legislation derived at cabinet level, while TDs write endless letters about potholes. There's little reason to believe that many TDs read the bills they pass, let alone govern in any meaningful way.
In theory, allowing our "external friends" a determining say over the running of the country couldn't do much damage. In practice, these bureaucrats see the interests of the citizens as subordinate to the interests of the EU, the ECB, the euro and the French and German banks.
On Morning Ireland, Mr Noonan referred, casually and in passing, to "when the Taoiseach renegotiated our interest rate reduction".
Now, we all know the interest rate reduction was arranged as part of the deal with the Greeks and the Irish politicians were delighted to learn that it had to apply to us too. I thought for a moment that Mr Noonan was pulling a stroke, claiming kudos for his party leader, sucking up and pulling the wool at the same time. But, no, I don't think so. I think he now genuinely believes that's how it happened.
This will be the role of national government in the post-independence era. The politicians will grab credit for the good things that happen and disown the bad. You know how they'll put it: "That's part of the EU framework agreement, which, of course, we're locked into, allowing the ECB to fund the . . ."
So, here we stand, unsure of which way this will go. Some of us yearning for that seven-grand handbag, others dreading the bag-of-rice-from-China nightmare.
All in this together.
Originally published in
