ESRI badly damaged by Bank Inquiry revelation
The obvious reaction to John FitzGerald's revelation to the Banking Inquiry that the Economic and Social Research Institute (ESRI) was, to use his own words, "totally wrong" about the economic collapse in 2008 is, "well it's a little bit late telling us now." While his honesty is commendable, at this stage it only adds to our retrospective knowledge of a situation that has led to a lot of suffering for a lot of people.
Up to this point, we have been heaping blame for not foreseeing the collapse on Brian Cowan's government, various bankers and a coterie of developers who managed to borrow billions. But now we have been told that the government's own key economic advisory body, the ESRI, itself failed to foresee the impending economic collapse in 2008, which would seem to mitigate criticism of, at least to some extent, those who have so far carried the blame for this national catastrophe.
Prof FitzGerald, former chief economist at the ESRI, did qualify his remarks by saying that the ESRI had, between 2001 and 2007, called on the Central Bank to implement policies to diffuse the runaway housing market and reckless bank lending, which, he said yesterday, if implemented, would have helped Ireland to escape much of the damage suffered in the financial collapse. But this begs the question, if during those six years the ESRI had seen it coming, why was it not more vocal and forceful in denouncing both the government - which mostly funds its operation - and the Central Bank for its lack of action?