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Brendan Keenan: Ruin was the result of human folly, not our preordained fate

WE are a fatalistic people, says the Lonely Planet guide. Well, to modify Winston Churchill's (inaccurate) description of Labour leader Clement Atlee, we have a lot to be fatalistic about.

I recall noticing during the boom years -- I hope it wasn't too far into the bubble years -- the number of people who would ask when all these good times would end. Their view seemed to be that this sort of thing -- healthy incomes, full employment -- just wasn't natural in Ireland. It was bound to end in tears.

Which, of course, it did. But ruin was not inevitable; at least not up until 2003 or thereabouts. It was the result of human folly, not preordained Irish fate.

What intrigued me at the time, and still does, is whether this underlying pessimism (Lonely Planet is right on that one) contributed to the ruin. If the good times could not last, it may make sense to make the most of them while they do. Unfortunately, for individuals that often meant buying property, while for Fianna Fail it meant buying votes on a scale beyond its previous wildest dreams.

Despite the best efforts of several economists (but almost no politicians) there was little thought as to how, having achieved prosperity, we might bed it into the Irish economy and, to use the jargon, make it more structural.

During a bout of spring cleaning among the files last week, I came across a 2003 statement from Richard Bruton setting out to prove how Fine Gael/ Labour were the true tax-cutters, and the Fianna Fail/PD crowd were falling down on the job.

Nothing to do with Mr Bruton personally -- but that's how it was and it is no good rewriting history.

History has a lot to do with this. The previous golden years, for the southern Irish economy at least, were at the end of the 18th Century, snuffed out by the United Irishmen rebellion and the subsequent Act of Union. We do have much to be fatalistic about.

The strange eruption of the chances of a second bailout as a major talking point seems another example of this state of mind. There is something more going on than just an analysis of likely trends; just as there was when the end of the boom, rather than the nature of the boom itself, was a subject of fascination.

Both cases share a reluctance to engage with the present. The present is always more complicated than imagined futures, and the present in which we find ourselves is far more complicated than most.

One also has to say that the talk about a future second bailout is simplistic even by the standards of such musings, given the extraordinary range of possible outcomes from the present unholy mess.

It is true that, if one draws a fairly straight line from the past six months, Ireland will not enjoy the kind of growth which might allow a return to commercial borrowing by the Government from 2014. Goodbody published an admirable analysis of such trends last week.

Drawing lines from current trends is all that professional forecasters can do, although many helpfully include better and worse case scenarios for choice. But it is also the case that if one had drawn a straightish line from the previous six months ending last June, it would have shown a very good chance that a second bailout could be avoided.

The line did not run straight. They hardly ever do. The July-December trend may not continue smoothly either, although I would not like to say whether any turn will be upwards or further downwards.

There is just too much happening. Although it is quite a short time until the present bailout expires, it is a lifetime as far as the euro is concerned. For better or worse, it will surely be a very different entity by the end of next year.

Should they somehow manage to turn it into a collective currency, rather than just a single currency, the effect on the creditworthiness of a member state like Ireland would be profound. It could well be accompanied by a sharing of the cost of winding down Anglo/Nationwide and a re-structuring of Irish government debt from its expected level of around 120 per cent of GDP.

Also extrapolating from current trends, this optimistic scenario seems the less likely. But a failure to stabilise the euro makes talk of a second bailout even fanciful. Should that happen, the bailout business itself could be in receivership.

One senses, in fact, that the bailout talk is indeed code for another dose of pessimism. Failure is pre-ordained, no point in discussing that, goes the thinking, but what will it be like? Where is our Don John of Austria -- he that says not kismet, he that knows not fate?

Sunday Indo Business