Are you Old Testament or a New Testament person? This isn't a census-type inquiry into your religious status. In fact, you don't need to be religious at all to answer. What I'm basically asking is this: Are you a forgiving sort of person or not?
With 80,000 mortgage holders in arrears or worse and another 18,000 on Mortgage Income Supplement, it's an important question. OK, so some warnings about these numbers spiralling out of control have a book of revelations ring to them. But grow they will and by enough to make the issue of mortgage debt forgiveness unavoidable. Some people have already decided that the issue is a non-starter. Old testament types, they also tend to be public servants on high salaries who bought their properties in the 1980s. And although I'm a new Testament person myself, one of my favourite quotes from the New Testament has an old Testament logic to it: In Matthew 18:25 a servant begs a king to forgive a debt owed. The king duly forgives the debt only to learn that the same servant nearly choked an underling to death for owing him a smaller sum. Horrified by the hypocrisy, the king has the servant tortured. Those advocating no help for the younger generation are guilty of similar hypocrisy.
They want younger generations to bailout their pensions and were happy to benefit from the sale of their overvalued houses but now want to pull the ladder up after themselves. This double standard also applies at a policy level: Banks and bondholders have gone to their king -- the European Central Bank -- who has forgiven their recklessness and forced taxpayers to bail them out. Now indebted taxpayers seek help, the public servants who advise government are -- from the security of positive equity and secure jobs -- telling government to ignore us.
If done carefully and for the right people -- residential purchasers -- mortgage debt forgiveness makes as much if not more sense as the policy of bailing out bondholders that is supported by Fine Gael and Fianna Fail and now also by the Labour party. Actually the word forgiveness here is a bit of a misnomer. To be forgiven, you must have done something wrong.
The argument against debt forgiveness goes something like this: Those who bought overvalued property knew what they were doing and could have rented instead. Let's look at the many ways in which this argument is total nonsense.
Firstly, every aspect of housing policy in Ireland has been designed to give young families no safe and viable alternative to house purchase: The lack of secure tenure for rented accommodation makes rearing a family potentially unstable. Unlike on the European mainland, the quality of rented accommodation is often totally unsuitable for raising a family.
And politicians in local and national government spent a whole decade cajoling, incentivising and bribing us to become home owners. In government Fianna Fail politicians created a reckless and morally delinquent banking system. They then created tax incentives to build property where none should have been built. Then local councillors and TDs lobbied and accepted bribes to zone land for housing estates. Then the media jumped by elevating property ownership to the status of a cult.
Despite its title (based on a recovery by 2020, which I believe can happen) my book The Best is Yet to Come spent several chapters warning about how the chronic incompetence of national and local government was forcing young families to buy property at outlandish prices in undesirable areas. We should have instead clustered property development into properly planned cities and encouraged more fixed-rate mortgages and more rented accommodation of high quality.
The bankers, the media, the landowners, the local councillors and the civil servants who made policy and the social partners who encouraged this national insanity have all been forgiven. But not mortgage holders. Now just think about the morality of this for a minute: The bankers, developers and landowners -- and to some extent the media -- who encouraged this frenzy were acting in pursuit of profit while the politicians and social partners were promoting their own interests.
But taxpaying mortgage holders were pursuing merely a human objective of having a stable home to live in. Of all the actors in the crisis, they deserve most forgiveness. And they are getting the least.
The new government should issue a formal recognition that residential mortgage holders are not responsible for their own position but are in fact victims of gross incompetence at the level of international governance (central banks and rating agencies), national governance (governments and financial regulators) and local governance (local authorities and local councillors). A carefully constructed and implemented programme of debt forgiveness -- aimed at middle Ireland mortgage holders -- should then be implemented together with a mix of other instruments including extended moratorium on repossessions, fixed mortgage rates for a minimum of five years, flexible mortgage options and the release of pension funds to those in dire need.
Long-term solutions need to be implemented as well to release the property market from the debilitating and self-defeating trap of negative equity. As well as being morally fair, this policy agenda is also economically competent: It will break the cycle of indebtedness and negative equity that could otherwise bring Nama and the bailout crashing down.
Every government minister should watch Pulp Fiction and especially Samuel L Jackson's performance. Having conceded forgiveness for bondholders, if like the servant in Matthew 18:25 it fails to apply the same principle to young indebted mortgage holders, it will be in for a dose of Ezekiel 25:17 sooner than it thinks.
Marc Coleman is a candidate for Seanad Eireann on the TCD panel www.marccoleman.ie