A work colleague mentioned the other day that his widowed mother, ailing and elderly, was greatly worried by the state of Irish banks in these days. She wondered about withdrawing her deposits and putting the cash under her mattress. When it was put to her that the Irish government had guaranteed all deposits, she did not seem to be greatly reassured: her attitude was — but can I trust them?
Her worries are widely shared and the breakdown of trust is pervasive. Bankers, property developers, politicians, bishops have all fallen from their pedestals.
As recently as 2007 it was a different story, at least on the economic front. In that year the figures for economic growth, unemployment and inflation were 4.4 per cent, 4.6 per cent and 4.9 per cent respectively. The respective figures for 2009 were -11.3 per cent, 12 per cent and -4.5 per cent.
What has become apparent in retrospect is that, at least since about 2001, the Celtic Tiger phenomenon in Ireland changed from export-led growth to debt-financed capital spending, as cheap credit for housing led to a property and construction bubble. When credit became tight because of the global recession, the extent of Ireland's indebtedness gradually became apparent. Its economy went into recession.
Since then there have been four major attempts to bail out the banks, estimated to cost up to 60 billion euros, with a further 25 billion as a contingency fund. It is part of the loan from the international troika (International Monetary Fund/European Central Bank/European Union special fund).
In addition, as the recession hit harder and the tax take reduced, Ireland found itself running a fiscal deficit of up to 20 billion euros and has been given five years to reduce that debt to the 3 per cent ratio demanded by the Euro zone currency members.
This has led to a number of severe budgets, with more to follow in a 45 year plan. It will reduce the minimum wage and social welfare payments at a time of growing unemployment and emigration.
The international 'bailout', which the government preferred to call a loan, has all kinds of conditionalities and erosion of sovereignty built in. It was necessary because the markets were charging Ireland prohibitive rates for borrowing to meet its fiscal responsibilities.
This whole debacle has raised serious questions for Ireland about the type of economic model it has been pursuing. The over-reliance on one source of wealth — property in this case — is the obvious.
But there were many other fault-lines as well. They include the failure to tackle inequality: the relatively poor infrastructure, the lack of universal access to health care, insufficient investment in education, under-resourcing of social workers, an inhumane prison system, and a slowness to come to terms with the demands of environmental protection, to name but a few.
What makes many Irish people so furious in these days is that it is the 'big boys' (banks, politicians, professionals of all classes) who have suffered least in this crisis, who have in effect been 'bailed out', while the poor have taken a disproportionate hit. There is much talk about reducing the minimum wage but little or none about imposing a maximum wage.
In this context it is particularly galling that senior bankers, who have been so reckless in their past behaviour, have tried to resist attempts to cap their salaries and bonuses. It was admitted recently at a Dail (Parliament) sub-committee that they have continued even now to give 'misleading information' to public authorities about the true situation of their institutions.
A crowd of over 50,000 marched through the centre of Dublin last Saturday to give vent to their feelings.
A hopeful sign in this bleak landscape has been the emergence of commentators, mainly secular but some religious, advocating the transformation of the economy to a model based on values like the common good, solidarity, environmental concern, equality, active and inclusive citizenship. This kind of vision is familiar to anyone conversant with Catholic Social Teaching.
Indeed, one wonders how sustainable the hitherto dominant neo-liberal model is at a global level either. Perhaps we need to learn more about the 'richness of sufficiency', as an ecumenical group of Asian Churches meeting in Bangkok in 1999 put it to churches in the North. If the Irish can, with others, bring this concern to the global table, then some good will have come from this debacle.
Gerry O'Hanlon SJ of the Jesuit Centre for Faith and Justice is author of The Recession and God.
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Louise J. Kellyville
02 December 2010
Alleluia, sufficiency tops the violence of inflated fantasy.
02 December 2010
The Irish have fought for centuries for the Irish right to their wealth and particularly land. They have now succumbed to the attractions of a property driven short term bonanza. They have alllowed their politicians, bankers etc to do what absent landlords failed to do.
The danger is to think that Ireland is any different from the rest of the world. Australia is probably following close behind. We must all come to know that there is no stability for working people in an economic system based on special privileges for speculative investments in land. If Australians do not heed the Henry Review and adopt a well thought out land tax our property bubble will burst as all property bubbles do, and it is the worker who always pays. They get the crumbs from the expanding property prices and then bail out the predatoring investors when they blow up the economy.
Learn from history. Speculating in land is neither honorable nor economic viable.
02 December 2010
When are we going to hear from the bishops concerning catholic social teaching with an emphasis on the teaching?
02 December 2010
The catastrophe that has hit Ireland has, simply, been caused by the greed of the ‘upper classes’.
Anyone wishing to understand the enormity of their behaviour can find the facts in Finton O’Toole’s book “The Ship of Fools: How Corruption and Stupidity Sank the Celtic Tiger”. It was published more than a year ago.
Sadly, many senior people in the Catholic Church in Ireland, and perhaps elsewhere, have seemed to go along with the tide – despite greed (if I remember correctly) being one of the 'seven deadly sins'.
02 December 2010
I visited Dublin in late October 2003. The city was enjoying an Indian summer. There were crowds of tourists from all over Europe and North America. Cafes and restaurants were full. The pubs were bursting with music and song and dance. This was city (and a country) on the up and up.
Then I went to the General Post Office. There were four clerks in the one stamp kiosk. Three had obviously deserted their posts to listen to this one girl tell them what a wild weekend she had with this Swedish bloke.
I stood at the window for some time waiting for her to finish. A queue of customers grew longer by the minute as we waited for the storyteller to finish telling her mates about her smashin' weekend. Had it not been for a big bluff American calling out: "How about some service!" I think she would have continued making craik until closing time.
I thought to myself the success of this country, the land of my birth, is a veneer. When a crucial public service like the post office is staffed by people who find serving the public a chore the country is heading for trouble.
02 December 2010
The only difference between Ireland and Australia is our opportunity to sell mining resources to Asia. The real estate prices have been pumped up to a level, which makes purchasing a home extremely hard for some. When we bought out first home, it cost us about 2 years salary and now it may take about 7 years of earning to pay for a home. The real estate boom has been feeding a massive bureaucracy with massive stamp duties and other taxes. China and India are investing in Africa and South America to gain access to cheaper alternative mining resources. The current mining boom will come to a slowdown in a few years time.
I try to work out how Australia will be able to deal with higher unemployment and declining real estate prices. I am not sure how we will be able to feed the massive Public Service, which we created to soak up some of the excess money during the boom times.
28 December 2010
And what of "the poverty of deficiency"?