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How the great Irish fairy tale hides the true horror story

Gene Kerrigan's new book presents an alternative view of the economic crisis, suggesting that some people are actually benefiting from austerity policies. We've been subjected to the Big Lie. We are not all in this together, as this extract reveals

By now, they can recite the fairy tale in their sleep. Politicians, their media fans, tame economists and hired mouthpieces use the fairy tale to explain what happened. Like all stories, the details can be changed from time to time, but the basic fairy tale about the Celtic Bubble, the crash and the recession is pretty consistent.

And it goes like this.

Once upon a time, the Irish people threw off the shackles of the past that held us back. We began to work hard, to innovate, to find within us the talents we always had but which had been suppressed or neglected for too long. In the bad old days, you see, the Brits held us back, or perhaps the Catholic Church stifled our innate talents.

Whatever it was, once we threw off the yoke of oppression we became 'a nation of entrepreneurs'.

We began 'punching above our weight'.

We loved saying that.

'Punching above our weight.'

Those four words explained so much. We were still a small country, with the intimacy and the charm of small countries, yet we were up there with the big guys.

Punching above our weight.

The economics that underlay all this remained hazy. There was no shortage of economists who felt free to expound on the roots of the miracle, but never convincingly. And they were usually working for banks or estate agents. When it came to explaining how a basket-case economy was suddenly being touted as an example for the rest of the world -- well, there were a lot of gaps in the story. And an element of fairy dust.

Anyone suggesting that this might be a problem was a begrudger.

And we all knew what to do with begrudgers.

Now, when a company bought or built a new building it wasn't just accommodation they wanted, they wanted to make a statement.

It had to be state of the art, it had to be world class. Money was no problem; it was cheap to borrow. And people heading world-class companies needed rock-star salaries and bonuses.

Our rampant entrepreneurs bought a rake of prestigious London properties. For some, it was the ultimate victory -- the peasants taking over the Big House. We discussed such triumphs ('Hey! Johnny's gone and bought Battersea power station!') with the same pride we displayed when Seamus Heaney won the Nobel Prize or Roddy Doyle the Booker.

And when anyone looked around at the Ireland we all knew still existed -- with the lengthy hospital waiting lists, the Accident and Emergency chaos, the prefab classrooms, the ghettoes and the potholes -- well, that just meant we needed to 'reform' some outmoded ways of doing things. And we'd get around to that in the by-and-by.

People might now and then become angry about something -- maybe an A&E unit where the nurses were run off their feet and a relative had to wait 12 hours to be seen. Or another relative had an important operation postponed three times, in a hospital where the Department of Health never got around to replacing the beds they closed in the Eighties and Nineties.

But, hey, take a chill pill. Within the Celtic Bubble you could find any number of places in which to relax, while a cheerful barista offered you one of four sizes of eight versions of beverages our parents never dreamed of sipping, poor buggers.

Of course there were faults, the fairy tale admitted, but only losers dwell on the negatives. There was a lot done, and some more to do.

Then, according to the fairy tale, even as our courageous entrepreneurs climbed new heights, our new kick-ass nation was being undermined from within. They caricature this as: careless bankers lost the run of themselves; the regulators took their eye off the ball; and the politicians never noticed.

Even then, everything might have been all right if it wasn't for the bloody Americans.

The fairy tale explains how the Yankee bankers sold a lot of mortgages to poor people, who couldn't pay them, so their banks got into trouble. Then the George W Bush government made a big mistake. When Lehman Brothers was going bust, Bush should have propped it up, say the people who know things. Instead, George W and his people decided to let it go under, which caused no end of bother.

Credit froze right throughout the global banking system, at a time when the Irish housing market was slowing down and the grey, dreary waves of recession were lapping at our shores.

Oh, dear. Perfect storm.

Brian Cowen and Brian Lenihan were overwhelmed by it all, the fairy tale says, and they only had a few hours to make a decision -- and they made the mistake of guaranteeing every cent the bankers borrowed from their fellow bankers abroad.

Most of all, the State had gone deep into debt, spending far too much. Now, we couldn't pay our bills, the cost of borrowing went through the roof and -- the shame of it -- we had to be rescued by the IMF and our friends in Europe.

This involved some harsh measures, some tough decisions, but that's what happens when a country loses sovereignty.

And we're all in this together.

Tough as it is, the only thing we can do is knuckle down, take our punishment. We'd had the fun, now it was time to pay the bill.

Fianna Fail paid the price of its failure, the new government came into office -- but their hands were tied.

There was a 'big hole' in the public finances, and the only way we could fill it was by kowtowing to the European Central Bank -- and the ECB said that a lengthy blast of austerity would straighten things out.

No choice, you see.

But, if we all pull together and do our penance for our sins, we will eventually achieve a state of grace.

The fairy tale said it was just a matter of simple arithmetic. The amount of money collected in taxes was X. And it cost X plus Y to run the country. So, we had to borrow the Y.

But why are we paying billions to the bondholders and . . . ?

Ah, that's about confidence.

We have to generate confidence in our ability to pay back the money we will borrow in the future. And we do that by paying bondholders for the money we borrowed in the past.

But we didn't borrow it.

No, but they were Irish banks that borrowed it and -- look, sure didn't Cowen and Lenihan think up that unfortunate guarantee . . .

But we've been paying billions in unguaranteed bonds and . . .

Look, this is complicated stuff.

Trust us. We know what we're doing.

Besides, our friends in the EU are giving us all sorts of concessions: money at cheap rates, the use of promissory notes -- they can't do enough for us, God bless them.

And the thing that matters more than anything else is that -- if we do as we're told -- we'll eventually get our sovereignty back. We'll wave goodbye to the ECB and the IMF. We'll be free again!

The great thing about the fairy tale is that it uses bits and pieces from real life to prop up the fantasies that are woven through it. Fantasies and downright lies.

When we tell fairy tales to children they work because the children want to believe in dragons and princesses, in villains and heroes and magic; they want to see the world as black and white, easy to understand, with evil punished and good rewarded. For the same reason, we want this infernal economic catastrophe to make sense. And when people in authority hold up a map that shows where we are and how we can escape from Oz and get back to Kansas, it's tempting to believe their fairy tale.

After all, they want what we want, don't they? Freedom, a return to prosperity.

Trouble is, they've been telling us fairy tales for almost five years now, and with each telling the story becomes more threadbare.

We took them seriously, the fairy tales, and the tired old political has-beens who told them. We wasted time, giving each changing tale a fair hearing. We allowed things to get much worse -- to the point where the country is far more broken than it was in 2008.

The time for comforting fairy tales is long past.

We are where we are.

How did we get to where we are?

And where is the tired, old, failed politics trying to take us?

Sunday Independent