Friday 18 October 2019

Gene Kerrigan: 'OK, folks, fingers crossed for the bankers'

Bankers are nervous, economists too, and the politicians pray there'll be no crash before an election, writes Gene Kerrigan

Cartoon by Tom Halliday
Cartoon by Tom Halliday
Gene Kerrigan

Gene Kerrigan

Those of us who were paying attention will recognise the signs. We're being lined up for another episode of the old boom and bust drama.

That's where a boom that mostly benefits the few is followed by a bust that we all pay for.

Early days yet, but the nervousness is unmistakeable. And it's the top bankers who're most nervous. Why? As the American TV dramas put it at the top of each new episode - "Previously on Boom'n'Bust..."

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Back in 2009, we were all pissed off about the banks. Minister for Finance Brian Lenihan had to do something about the outrageous pay those people were getting.

The top guys, whose utterly stupid banking policies caused the crash, were on two or three million a year, each.

Plus massive bonuses for any bank executive brilliant enough to get through a year without actually setting fire to their own office.

"We are," said Brian, "fighting for our financial and economic survival." So, from now on top bankers would be paid no more than half a million a year. And no "bonuses".

The bankers accepted their €500,000 burden, grateful that we didn't actually hang them from those lovely red scaffolds someone kindly erected in Grand Canal Square.

After all, how long could it be before we were begging them to hike their pay to an even million, or two?

And now, 10 years on, the bankers can already see the shape of the next bust, to be followed by the next austerity period, during which it will be impossible to demand millions.

So, they're nervous. Do it now, the bankers quietly chant, do it now, do it now, do it now!

Poor Paschal Donohoe is terrified of a public backlash if he okays a banker bonanza, so he's been setting up buffers between him and any decision.

Last year, he hired one of those 'consultant' outfits that charge you an arm and a leg to produce a report explaining that it's absolutely imperative that you do what you wanted to do anyway.

Paschal got the consultant's report a couple of weeks ago. No doubt marketing consultants are right now finalising details for their campaign to leak this on to the public. This will tee us up, so Paschal can take a quick swing at it, and before we notice they'll all be back in the clubhouse, celebrating a game well played.

I rather suspect that key media personnel have already been approached in their favourite pubs and restaurants, by chatty spinners who just happen to be there.

"Have ye heard the trouble the banks are having recruiting young geniuses????"

(Mind you, in 2009 bankers warned of a "mass exodus" of executives who couldn't manage on €500,000 a year. Did you notice a shortage of bankers over the past decade?)

Another class of people now highly nervous are the economists. Why?

"Previously on Boom'n'Bust..."

Most economists endorsed the madness of the property bubble. Most predicted a "soft landing".

Then there was Morgan Kelly. Remember him? Grumpy little bugger. He threw a quick eye over the figures and pronounced us screwed.

Prices will collapse, the market will crash, houses will be worth half nothing, the banks will go bust, the country's f**ked.

Or words to that effect.

The celebrity economists and the media geniuses pointed out that Kelly specialises in historic economics - sailing ships, Chinese dynasties and the like.

Unlike the high-price bankers, the celebrity economists and the media specialists, Kelly really hadn't a clue about the Irish housing market.

Kelly rolled his eyes, repeated: collapse, crash, half nothing, banks bust, country's f**ked.

And so it proved to be.

Kelly wasn't a genius; he just wasn't part of the club. The ESRI had identified the property bubble danger; got barked at, and subsequently fell into line, predicting a soft landing.

Now, economists are terrified to be caught again. They carefully note their worries, for the record.

Most nervous of all - the Irish Fiscal Advisory Council.

"Previously on Boom'n'Bust..."

The IMF forced the Government to create the IFAC in 2011. This is an independent body which assesses government figures and warns against dangerous choices.

It has no power.

The IMF idea was that the IFAC would be a trusted adviser, outside the cheerleader club of chums and buddies.

The Irish Government idea was that the IFAC is very handy for endorsing its austerity policies, when required. ("See, we don't want to do this to you. But these IFAC experts tell us we must or the country will collapse.")

Otherwise, the Government ignores the IFAC.

The IFAC last week got very jittery about Varadkar committing the State to costs that will return annually, based on current revenue that probably won't ("the current outlook is unusually uncertain", its report said).

Smooth-tongued FG hacks were despatched to assure us these IFAC fools are just worrywarts and chatterboxes, there's nothing to worry about and there'll be no end to electoral goodies on offer.

So, first, the campaign to jack up bankers' pay is well in hand.

Second, the IFAC is nervous, but as long as they don't all suddenly resign, we can let them chirrup away, ignored, until they're required to sell our next austerity package.

And, third, the populace is still remarkably calm about the ransacking of the economy by the usual suspects.

Huge cuts in pay; huge cuts in services, over a decade. Austerity burdens have seen nurses flee the country and teachers realise the contempt in which they're held by the comfortable classes.

Meanwhile, those who benefited most from the boom were shrugging off their debt (soft bankruptcies). And servicing the occasional questionable transaction (€103bn channelled through the IFSC to Russian outfits).

The insurance companies, according to Charlie Weston's eye-opening report in the Irish Independent, have jacked up profits by 1,300pc. And, no, that's not a misprint.

Projects such as the children's hospital, which should have been a simple infrastructural addition, became a slow-moving mammoth made of money, onto which hordes of over-charging leeches attached themselves, siphoning off the basis of fortunes that will endure through the generations.

Paschal Donohoe didn't have effective cost checks in place. Well, he was busy, briefing those consultants he appointed to examine banker pay.

You can see why the bankers, without their traditional super-wage, feel left out.

Meanwhile, this week, around 10,000 of the most vital, yet low-paid, workers in the country will have to strike to get the HSE to even talk to them, about pay they've been deprived of.

Porters, hospital caterers, maternity care assistants, instrument technicians, laboratory aides - y'know, the people who help the medics save our lives.

They're not expecting a quick response, so they've got five other strike dates lined up.

In the schools, the department is raising capitation fees by 5pc, which is great of it. Except, after a decade of austerity, the capitation fee is down 20pc.

Well-off areas can depend on voluntary contributions. Schools in minimum wage areas will continue to struggle.

Meanwhile, we'll keep you updated on the bankers' pay. We know you worry.

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