You are not responsible for the crisis (Oh yes you are)

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Whoever it was aimed at, Enda Kenny’s performance in Davos doesn’t seem to be going down well back home.

The Irish Times reports that he said:

“What happened in our country was that people simply went mad borrowing,” Mr Kenny told a meeting at the World Economic Forum meeting in Davos, Switzerland.

“The extent of personal credit, personal wealth created on credit was done between people and banks – a system that spawned greed to a point where it just went out of control completely with a spectacular crash.”

His statements flatly contradict his state of the nation address in December where he told everyone:

“You are not responsible for the crisis.”

Earlier in the week, a €1.25bn unsecured, unguaranteed Anglo-Irish bank bond was paid out in full by the IBRC without any form of negotiated or dictated write-down (Anglo’s debts were largely those of developers rather than individual mortgage holders). At the same time, it is widely believed that the bondholders who were repaid in full purchased the bonds at the expectation that only 30-40 cents in the euro would be recovered.

On the same day, Ivor Callely was arrested for questioning about some dodgy expenses claims (from eighteen months ago) in a repeat of the questioning of Sean Fitzpatrick and others magically coinciding with various other fiscal nadirs. Notably, three years on there is still no sign of charges over the various alleged breaches of the Company’s Act by Anglo staff.

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  • Mick Fealty

    I think you’ve harden an indefinite article into the definite. There’s quite a difference.

  • John Ó Néill

    You should see the front pages down here Mick. Most people are choosing to read this the hard way.

  • wee buns

    The leather of Davos furniture has proved too seductive for the Mayo man.

    Aside from the general offense caused at home by the ‘mad’ remark (lacked the wit to temper it by saying ‘some people’ went mad…) his comments re our Lisbon referenda take the biscuit – Taoiseach calls his people mad AND stupid while hob knobbing with Europe’s elite.

    He has just gifted 649 Euros from each Irish citizen’s pocket to unsecured bondholders – a sum equivalent to one whole year’s car tax, or a month of hot dinners for a family of four.

    Enda’s Davos remarks amount to an appalling lack of connection to the people and to the issues of the wider problems of the euro crisis.

    As for that creeping incubus that goes by the name of Noonan, let him come to our doorsteps and tell us our children made a ‘lifestyle’ choice by emigration; a stake through the heart might be the appropriate response.

    Yes the tragedy is the lack of a credible alternative to these idiots, and they know it, hence the FF type insolence we know so well .

  • Mick Fealty

    I know exactly what the front pages are saying. It wouldn’t be the first time the press had blown something entirely out of proportion.

    But if you peel it back you have ask yourself who was responsible for the madness that’s left the nation bust? Not the bankers or the developers alone. Though the government’s debt forgiveness package is getting stick from those who think they weren’t greedy (mostly I suspect, folk who bought at a much lower price).

    Probably not the people who sought to buy in a market where the price of buying a house went through the roof.

    There was pretty run of the mill compact of stupidity which involved a system unfit to take year on year growth levels of 8-9%, of the type we have seen following long periods of exponential growth.

    ‘People’ were gripped by greed and the thought the momey machine would keep on paying out. But it’s ‘the People’ who have to get the country out of this mess whether they contributed to it or not.

    Not sure how Ivor Callely’s fake receipts fit into all of this either…

  • John Ó Néill

    Mick, a lot of this stems from the ECB’s refusal to allow a bank to die. The risk assessment on lending, be that from finance houses to banks, inter-bank lending and individual mortgage lending was inept and inappropriate. Many mortgage holders are in negative equity, accumulating significant debts and will no doubt default, lose their property etc. The debts of the people at the upper end of this chain have been socialised, when their profits clearly wouldn’t have been. The debts of those at the bottom end clearly won’t be socialised. While they aren’t entirely blameless, the media, the banking industry and politicians bombarded people with the message that if they didn’t jump on the property wagon now they would never be able to afford it. While the banks could still lend this myth persisted, lending people 110% mortgages at 10 times their salary – relaxing all normal borrowing rules.

    Bottom line, though, is that Enda has clearly reversed himself.

  • John Ó Néill

    Btw – it is worth following the links above about Callely and Fitzpatrick (to Joe.ie and Broadsheet.ie): conspiracy theory territory, but, given the inertia around these investigations, their mysterious sparking to life to share headlines with bad economic news, only to immediately disappear again, is now the stuff of comedy.

  • tuatha

    MickF – Not the bankers or the developers alone. strictly true but tendentious in its mendacity.
    The common fold, even those desperate to buy an over priced roof, wouldn’t be 20% of the debt assumed, so magisterially generously on their behalf, by the previous cabal of fools & shysters, aka the government.
    So again, why should they who did not have their snouts in the trough have to mortgage their futures, AND that of their children who stay mired in this benighted morass of a society, to support, not the compatriots however undeserving & duplicitous, but the french banking system?
    Of course, when (not IF) that collapses, the german Bundesbank will re-emerge from beneath the skirts of Merkozy, declare force majeure and burn every bond holder within sight. We won’t even register as collateral damage.
    Deutsche Mark uber Alles.

  • Mick Fealty

    And the media (including us) are in danger of compounding that problem by getting in a tissy over what turns out to be a truthful remark by the Taoiseach in Davos.

    It also turns out that Ivor Callely was released without charge. It’s all a little bit too Sindo for my tastes.

  • Nordie Northsider

    “The leather of Davos furniture has proved too seductive for the Mayo man.”

    I love it. Seriously, though, it should be easy enough for Enda’s people to get him out of this. He can say that the ‘greed’ and ‘madness’ was on the part of the banks and lending institutions. But Enda has a habit of putting his foot in it. The shocking racist joke he made about Congo’s Patrice Lumumba shows that all too well: http://www.guardian.co.uk/uk/2002/sep/15/world.race

    No wonder Party Central kept him on such a tight leash during the election campaign.

  • Mick Fealty

    Em, tuatha. I had to go a look up a dictionary to understand that first line of yours.

    Mendacity meaning untruthfulness and tendentious meaning ‘intending to promote a particular cause or point of view’.

    Which is to say I’m being partial in my untruthfulness even though what I have said is ‘strictly, true’. Don’t get it.

    As for the rest, I’m all ears on how you plan to divine who did and who did not have their noses in the trough?

    And one for you to look up: “demagogic simplification’…

  • John Ó Néill

    “demagogic simplification”…?

    I didn’t see anyone in Fine Gael come running out after Enda’s State of the Nation gig to say that we were all responsible and had merely taken him up wrong. His facility to communicate what he (or FG, or his populist-prone pr people) thinks his audience want to hear may work, but only if he remains consistent, which isn’t happening.

  • Neil

    And the media (including us) are in danger of compounding that problem by getting in a tissy over what turns out to be a truthful remark by the Taoiseach in Davos.

    Both true and untrue I’d say. The largest chunk of Irish based Irish held debt was held by property developers. So the ‘people’ referred to by Enda are not the Irish people who are largely blameless (certainly not having borrowed anything close to the per capita national debt the state now owes).

    A small number of developers and bankers have been allowed to engage in risk-free speculation – doubtless the government relies on these moneyed people to continue funding their party and as such will do anything to maintain the status quo. It’s capitalism Jim, but not as we know it.

  • Nordie Northsider

    The point is worth making: Irish people had no choice but to borrow a lot of money. I don’t suppose it was anyone’s choice to pay 500,000 euro for a 3 bedroom semi-D in Donabate but that was the market and those were the prices. There are mechanisms a state can use to regulate markets. They didn’t.

  • Mick Fealty

    John,

    That reference was for tuatha. As Einstein was once quoted as saying “Everything should be a simple as possible, but not simpler.”

    Neil,

    I refer you to my point about the widespread elision between definite/indefinite articles in the reporting of this story.

    Now on the capitalism point, I do agree. But I am not sure that can be dropped so crisply at the door of the current government.

    It can be dropped firmly at the door of the last government, and of an electorate that kept voting them back in, year after year after year. That, under the democractic bond is ‘the people’ Enda is accused of blaming, but did not mention, in Davos yesterday.

  • John Ó Néill

    Mick – I was just taking note of the demagogic comment.

    As to the people Enda is blaming – I’d read the rest of his comments, he is clearly not referring to the NAMA cohort, but the general public. In so far as the current government merely continues the policies of the last one (to the point that today Kenny is being accused of parroting the ‘we all partied line’), it appears that, in a wider sense, the same people were voted back in again (contrary to what was in their now discarded, demagogic, manifestoes). Democracy, eh?

  • Mick Fealty

    I heard him live at the time he said. And your quotation gives a fair flavour of what it was. Is it your contention that no “people” were involved?

  • John Ó Néill

    No, my contention is simply that this is clearly not what he said in his State of the Nation address in December. As with the nonsense of high profile detentions for questioning coinciding with bad news (which is widely believed, whether it is true or not), they need to quit the amateur dramatics and find an actual message to get on and stay on in public. Given that, in the next week or so, they are going to have to find a way to deal with not holding a European referendum Enda has not set the scene particularly well (in fact, he may have made it much more difficult to defend).

    If you follow the line that the most acute critics are those close to the party, check out Ivan Yates on Newstalk from this morning (about 1.15-1.20 in). He is really scathing about where the govt line is coming from and how it has settled into the same cadence as the last govt (essentially upper echelon public service speak) which he think spells bad news for them.

  • Mick Fealty

    I’m just wary of the rule of the mob, on or off-line. I’ve no reason to back Enda, and I can see he got as close as anyone might to saying ‘we brought it upon ourselves’.

    You only have to read a few early chapters of JK Galbraith’s The Great Depression to understand market bubbles throughout history require widespread idiocy.

    But that is NOT what he actually said. It’s what his political opponents wished he had said.

  • http://garibaldy.wordpress.com Garibaldy

    Blaming everyone is a good way of lessening the blame on those who were guiltiest in the whole corrupt political-developer nexus, but more importantly it also shifts attention away from the system itself, which has crises such as this one built into it in its very nature.

    Of course individuals and institutions made mistakes, lied etc, but the overwhelming majority of what has happened is simply due to people doing what capitalism demands, and financial capitalism in particular. The state worldwide has truly acted as the executive committee of the financial bourgeoisie in this crisis, while seeking to convince the people whose wages, working conditions, public services and pensions are being devastated to pay for it that it was really their fault.

  • http://garibaldy.wordpress.com Garibaldy

    Mick,

    Missed yours when I was writing mine. The widespread idiocy thing being repeated across continents time and time again is an attractive explanation. But again misses the structural issues at hand.

    If Enda said the bubbles and the busts are the necessary cost of capitalism then that would at least be honest.

  • Mick Fealty

    Yeah, but he did NOT say everyone. That’s what he’s being hung for. But it ain’t what he said.

  • John Ó Néill

    This getting into pure semantics, but he said: What happened in our country was that people simply went mad borrowing; I would expect him to say was that some people simply went mad if he was excluding anyone from that.

  • http://garibaldy.wordpress.com Garibaldy

    I agree with John that the way it was phrased was suggestive that the majority of the population was at fault. So it mightn’t be everybody (as clearly not everybody borrowed), but there is an indication that the population en masse was at fault. Which serves the same purpose of clouding the real reasons and muddying the waters of responsibility just as much as if he’d used the word “everybody”.

  • http://garibaldy.wordpress.com Garibaldy

    Conor McCabe (whose work to be honest I’m surprised isn’t discussed much more on Slugger given the ability with which his book in particular brings out the reality of class and economic power in the south) with just one example of the way in which “people” in fact should just refer to a tiny proportion of the population who were bailed out at the expense of the rest of us

    http://dublinopinion.com/2012/01/19/the-illegal-loans-sitting-on-namas-books/

  • Greenflag

    John O’Neill and Garibaldy are correct .Enda Kenny is merely repeating the mantra that the ‘people ‘ i.e ourselves alone’ are to blame which is no different to what other politicians are saying in other countries from the USA to Spain to Greece etc , basically a lame excuse to get themselves off the hook of ‘compliance ‘ in the mess or to distance themselves from their predecessors . The major cause of the worldwide crisis goes back to Wall St and the City of London a couple of decades ago and the then politicians who aided and abetted the ‘financial services sector’ to wage their weapons of mass economic destruction on the world .

    As for fearing the mob (in the gangster sense ) ? The American mafia nor a combination of Russian , Italian or other mafiosi ever wreaked as much financial and economic destruction on the USA or the world as did Wall St these past couple of decades .

    As for the mob (in the risen people sense ). Yes I’d be afraid too but I’d be even more afraid if there was’nt a mob taking to the streets in these times .

    On this Holocaust Day it might be well to remember that one reason why so many Jews went quietly into the night of arrest , concentration camp , deportation and eventual extermination was because they did not become a mob . Too many of them believed that the ‘system ‘ would never end up behaving as it did . Sometimes in history there is no recourse but to take up arms against tyranny be it of the political , religious or economic ilk.

    In today’s parlance Wall St would’nt bat an eyelid if 50 million Americans were to starve to death other than be concerned about the effect on share prices or yields on investments .

  • Mick Fealty

    GF,

    Another convenient elision. Wariness is not the same as fear. There is wisdom in the crowd, rather than the herd:

    “Men, it has been well said, think in herds. It will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” – Charles Mackay.

    And we’ve history to show us just what sort of damage herds gone mad can do once they break loose.

  • cynic2

    But you ARE responsible. Politician tells truth. Shock. Horror

  • Comrade Stalin

    John,

    At the same time, it is widely believed that the bondholders who were repaid in full purchased the bonds at the expectation that only 30-40 cents in the euro would be recovered.

    Huh ?

    Bondholders purchased bonds expecting a loss ? Why would they do that ?

  • Alias

    “Bondholders purchased bonds expecting a loss ? Why would they do that ?”

    Fortunes have always been made and lost in junk bonds in the secondary market. If you held 5 billion of unsecured Anglo bonds and it looked like the bank would go bust, you’d be happy to sell at a price close to what you’d calculate you’d get back from the bank – probably 5% of the issue value. In that case, you’d be delighted if a bond speculator offered you double that amount. He’s not referring to the primary market.

  • Reader

    Alias: He’s not referring to the primary market.
    So, is the implication then that the primary market had already taken their loss through discounting to the secondary buyers, and then the secondary market made a mint through the bailout?

  • Alias

    Yes, that’s the implication but they could have made a loss or a profit via half a dozen means when trading in the seondary market. It’s also a huge opportunity for ‘insider dealing’ if someone in the Department of Finance (or in the ECB where the decision to underwrite all bonds was actually made) tips off a bondholder. Billions could be made.

  • John Ó Néill

    CS – Alias explained it better than I would have. R

    eader – hard to believe but that is true.

  • Comrade Stalin

    John, ah so you are referring to traders who purchased the bonds at a steep discount which priced in the expected loss on the original value. I see.

    Alias – cheers, I stand corrected.

  • tuatha

    MickF – ‘demagoguery’ is a prime requirement of politics, as is the ability to oversimplify or ‘rabble soothe’ which is what Enda tried to do, you are not responsible, with his banal verbosity some weeks ago.
    Such figures as can be garnered, and that is unnecessarily difficult to do (almost as if there were something to hide), show that, of the billions borrowed, the overwhelming majority was by a small, well connected cohort.
    On average, using a deliberately incomplete & obfuscated total of 1.84T, every tax payer borrowed just under a million. I didn’t and know nobody who did so neither I, nor the other non troughers, should be saddled with austerity to make repayments for those who did.

  • wee buns

    Long live ‘The Non Troughers’ .
    (Great name for a band btw!)
    I also know NO-ONE who guzzled at the trough – but maybe I mix in weird circles.
    Thanks to Garibaldy for the Conor Mc Cabe link.