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George Garvey: Kenny's straight talk is a blast of political fresh air

Taoiseach Enda Kenny has been roundly criticised for saying that Irish people "went mad" borrowing during the boom and that this borrowing had been spurred by greed.



But was Mr Kenny merely stating the previously unmentionable truth?

Mr Kenny is at least partially the author of his own misfortune.

It is doubtful if his comments at the World Economic Forum in the Swiss ski resort of Davos would have provoked such a strong reaction if they hadn't come less than eight weeks after his pre-Budget TV address to the Irish people when he told us that: "You are not responsible for this crisis."

However, while the timing of the Taoiseach's remarks was certainly unfortunate, was he just telling the plain, unvarnished truth?

Maybe the Irish people, no matter how much we dislike hearing it, did lose the run of themselves during the boom years and, carried away by greed, borrowed recklessly.

Determining whether someone was merely unfortunate in their timing or if indeed they did allow their greed to get the better of their good judgment when borrowing, is ultimately a value judgment.

However, Central Bank lending statistics do allow us to separate those who were most probably unfortunate from those who were almost certainly the victims of their own greed and recklessness.

Who were the people, terrified of being 'locked out' of a seemingly ever-rising property market, that borrowed too much for homes and apartments that have now lost half their value; and who were the people who bought half-a-dozen houses or apartments to rent out?

Including home loans that have been securitised -- sold to investors -- the Irish banks had €132bn of mortgages on their books at the end of September 2011. This is down about €4bn on the peak level of €136bn reached in mid-2009.

So what is the breakdown of these loans? Who was borrowing to merely put an, admittedly over-priced, roof over their heads, and who were the mad, greedy speculators?

The Central Bank figures reveal that almost €102bn of all home loans, over three-quarters of the total, were taken out to purchase principal dwellings.

While there may well have been some cases of people extravagantly 'trading up' to a more expensive home which they couldn't afford, it seems reasonable to assume that most of the people in this category were at worst unfortunate in their timing.

With the benefit of hindsight it is difficult to recreate the hysteria that gripped the Irish housing market in the middle of the last decade.

Even people who had previously resisted the temptation to purchase what they regarded as over-priced homes succumbed to the temptation as values soared to ever more stratospheric heights.

If the Taoiseach's comments were directed at this group of purchasers then they were unjustified and unfair.

But they almost certainly weren't.

In addition to the lending for principal dwellings, there was a further €32bn of mortgages that were advanced to purchase buy-to-let properties and second homes.

According to the Central Bank, there was €29.2bn of buy-to-let-mortgages and more than €1bn of mortgages secured against holiday homes at the end of September 2011.

Even if one doesn't fully agree with the Taoiseach's Davos remarks, it is far more difficult to acquit these purchasers of the charges Mr Kenny has made against them.

While most reports of taxi drivers owning several holiday apartments in Bulgaria are probably no more than urban myth, there is little doubt but that many Irish people, doctors, civil servants, lawyers, teachers and many other normally sane and upstanding members of society did not cover themselves in glory during the boom years.

As property prices continued to defy the predictions of the naysayers and climb to unprecedented levels, many people who should have known better were sucked in.

Aided and abetted, it must be said, by an extraordinarily irresponsible banking system, they threw caution to the winds and bought multiple properties with borrowed money.

Regardless of what they might now say, there is no way that someone with an income of €100,000 or less who borrowed a multiple of that amount to fund speculative property investments can claim that they were not at least partially the authors of their own misfortune.

That the loans taken out to fund these speculative investments were 'secured' against properties whose values were already grossly inflated is no defence.

For too long, our political leaders have tried to avoid telling us the unpleasant truth and if they have to do so they will still try to sugar-coat the unpalatable message so as not to unnecessarily scare voters.

Mr Kenny's pre-Budget TV address was very much in this touch-feely, caring and sharing mode.

The Irish people need to be told the plain and unvarnished truth.

It is only when our leaders begin to tell it to us like it actually is that we will begin to believe them once again.

Mr Kenny should ignore those who criticised his Davos remarks. Now that he has made a start, he should stick to straight talking. If he does, Ireland will be the better for it.