Posts Tagged ‘crisis’

Today I finally read through the Nyberg Report on the cause of the banking crisis in Ireland. The report was released recently but doesn’t really contain anything that someone with a brain and a heartbeat didn’t already know. Hence I will not rehash the content as there are legions in Ireland already doing so.

Playing the blame game seems to be de riguer at the moment, we’re all frantically pointing the finger in a desperate attempt to assign blame to some faceless party for the mess we are in. It’s the bankers, the government, the developers, the regulator, the media, foreign banks, the EU, the ECB, Lehman Brothers who are at fault. However what you rarely will hear is that we the people living in Ireland (or at least the majority) are just as much at fault. Yes we had banks with unhealthy lending practices and we had a government who not only failed to prevent a crisis but who actually encouraged unsound financial practices but we also had people buying 1, 2, 3, 4 and more houses at inflated prices, we had people taking out 2nd & 3rd mortgages on the same property, we had the frenzy of buying a new car every time the year changed. We had people from lower & middle-income classes taking multiple foreign holidays. We had designer kitchens, designer luggage, designer clothing and designer weddings. We even had designer pets and designer pet accessories. Most of us basically went mad.

Allthis was paid for with borrowed money. Not our own borrowed money but money that our banks borrowed abroad without actually applying logic to the feasibility of ever being able to repay it. And when the economic shit hit the financial fan we were way up the proverbial creek with not a paddle in sight.

However while reading the Nyberg report there was a paragraph on page 116 that really put the frighteners up me;

The result, as shown by the crisis itself, was that no effective brake on risk-taking existed for years.
It does not appear wholly unfair to propose that this is what may happen also in the future if
and when another new financial or banking paradigm appears. Many of the very reforms that
recently have been undertaken, at short notice, to shore up the functioning of the present
financial system could turn out, once again, to be ineffective.

And there you go. In spite of all the talking, report, and the endless stream of Primetime, Frontline, Vincent Browne broadcasts we have learned nothing….

People who know me personally or those who follow me on Twitter know that I have very outspoken views on politics and how this country should be run. Because my rants are more often than not squeezed into 140 characters I think it is time to flesh them out a bit and put them in some kind of structure. hence a blog-post. Now I expect this to be a long one so I will split it up in several parts to keep it digestible. Please also don’t critisize me for lack of nuances or detail. If I start including those the post will go on for 500+ pages and I will never get any real work done. What I want to get across is a growing frustration with the fact that we are going through momentous times but that a large percentage of people (particularly the ones currently in government) don’t seem to realise that we need to get it righ this time.

There are several levels on which we “the people” are in the shit at the moment. We have a global economical & financial system that is in an advanced state of collapse. We have politicians in our own country, on European level and in charge of the most powerful nations in the world who pander to the populist vote and who have abandoned principle, honor and integrity. The catholic church, still a mainstay in  much of the western world, is losing followers faster than a middle-aged man loses his hair.

On a national level we have a crumbling public infra-structure, a failing health care system, a underfunded educational system ( the majority of primary schools are owned by the Catholic church), violent crime which is beyond the Gardai’s (Irish police) control. We have a economy which is circling the drain and we are governed by a bunch of incompetents who have less understanding of macro-economics than my 10 year old.

So where does this leave us? In my opinion we are going through a metamorphosis; all mainstays & supports in our society are gone. The faith in religion is gone (pardon the pun), financial security (banks, pensions etc.) is gone. Not only are most banks in dire straits, the actual system of banking and the financial industry seems to have been built on smoke & mirrors. The government has failed at all it most basic tasks, it is unable to stabilise the economy, it cannot keep it’s citizens safe, it cannot provide a sustainable living environment for most of it’s citizens, it disrespects democratic vote (hello Lisbon treaty referendum) and it uses tax payers money to bail out their cronies while cutting back on provisions for the lower classes of society (NAMA, health care cutbacks etc.). I can see a realisation dawning where people see that they cannot depend on the nanny-state they so craved. We will have to go back to a system where we will have to do things ourselves. We need a system build on direct rule and direct action. Strip the government back to a bare minimum (public safety, defence, public services etc)  and let the private sector take care of the rest. Issues like trade & economic development should not be handled by civil servants. A civil servant operating in a free market environment is asking for trouble. Services and the provision of them should be based on supply & demand. A bloated government apparatus will only be staffed by people whose only interested is to secure their own jobs rather than serve the people who they represent.  Free market economics will prevent such waste.

Look at the current hot issues in Ireland; the global economic & financial crisis has been aggravated by the overdependence on the (now collapsing) property & construction industry. We have no indigenous industrial base to speak of as the IDA has for decades squandered money away by paying foreign owned multi-nationals to set up base here. As soon as the cost-base increases these companies flee to cheaper shores (something recent developments have clearly illustrated). The government is now in a blind panic throwing money around using expenditure as a measurement of effectiveness. Again it is “form over function”. Several of the largest banks are on the verge of collapse and what does the Irish government propose? A state owned body that will buy all the toxic debts of the banks so that said banks can put the results of their blatant mismanagement behind them and continue like nothing has happened.  The bill for this adventure will be footed by the tax-payer who is already being crippled by increased taxation and reduced spending by the government. To put it bluntly, the people who have the least fault will have to bail out the institutions that are at the root of this disaster. And what would the result off all this sacrifice be? The survival of the same mindset that has brought us here. We would be much better off to let failing banks collapse and to build a new, healthier financial system on the ruins of the current one. This might mean 5-10 years of struggle but if is greatly preferable over 25-50 years of un-imaginable amounts of debt having to be paid of by the taxpayer. That will be you, your children and quite likely your grandchildren.

But lets not blame everything on the state. We have become a society of pussies who expect to be compensated for or protected against every form of discomfort. A large swathe of society prefers to sit on their sofa, stuffing their faces with low-fat crisps watching such mindbogglingly tripe as X-factor, “UK’s got talent” or”next top model” while the global economy slides headfirst into a quagmire. They will moan and groan as they call Joe Duffy but really they are more concerned with the rental cost if a bouncy castle than the effect the current crisis has on our economic competitiveness, our GDP or the tax burden on future generations. They will take legal actions against the owner of a shop if they slip on an icy patch on the way out but they won’t shovel snow from the doorstep of their elderly neighbour. People like myself who blog & tweet slip into the assumption that everyone is as engaged and switched on as we are. WRONG!

Part 2 of this post will follow shortly…