While stopping short of unilaterally defaulting, the time has come to renegotiate with our creditors.
“Si vis pacem, para bellum — If you want peace, prepare for war”
— Vegetius
To read some of the commentary over the last week, one would be forgiven for reaching the conclusion that Ireland was about to be plunged headlong into a full-scale, but highly asymmetrical, economic war against an array of powerful international adversaries. The images conjured up included hostile foreigners impounding our airliners and middle-class people in Dublin foraging for food in dustbins. The Kelly-Pye analyses (which I found very compelling) seemed to be that the only choices facing us are either near-permanent indentured servitude to cruel foreign bankers, or an admittedly risky attempt at a mass slave-break from the Euro-plantation, carrying nothing but the shirts on our backs, and the remaining scraps of our self-respect.
Others countered that such a “servile insurrection” against the Spartan but secure subsistence offered by our continental masters, would be a form of slow collective suicide. In other words, if we honour the bailout terms, we might get the occasional lash of the foreman’s whip, but at least there would be cash in the ATMs.
One of the first casualties of war is truth, and we know that vigorous anti-Irish propaganda is being fomented in creditor countries, propaganda which portrays us as irresponsible, dissolute, feckless drunks, who borrowed the savings of German hairdressers to go on a 10-year-long Dodge City spree of oysters, champagne, Marbella holidays and Mercedes. Now, we are told, we must pay for our epic party, and it hurts.
Is this stereotype true? I think not. The average Irish family made one really bad investment decision during the bubble years. For most it wasn’t non-existent Bulgarian apartment blocks, or the Dorchester Hotel, or a million-euro wedding for their daughter, although for some it was. No, most of them just bought a house.
Having absorbed years of cultural propaganda about home ownership, having been advised by EVERYONE about the necessity of getting their foot on the property ladder, having been numbed senseless by the repetitive ritual incantation of the national mantra “bricks and mortar, bricks and mortar” chanted in their ears by bank managers and mortgage advisers (a formerly trusted but now vampirical priest-class, whose bonus-fuelled blood lust fed their need to seduce new victims), most of them borrowed to buy a home for their family, or the family they hoped to have. It was an overpriced house, but not a lavish house, generally the same type of humble three-bedroom semi-detached box that we have been buying for years. This was Bacchanalian excess? What else did we fritter it away on? Prudent Irish people who wished to provide for their retirements and for their children’s futures were systematically and repeatedly advised to invest in tax incentivised pension schemes. Now these pension savings are in danger of being raided.
I have a better idea. Let citizens with negative equity mortgages, and untouchable savings locked away in immature pension funds, liberate their pension prematurely, pay the tax now, and use the savings to pay down their debts. The Government gets the revenue now, personal debt is reduced and the banks get much needed equity. For individual citizens it could mean the difference between keeping and losing the family home.
Such personal tragedies do abound. Mr Edward Honohan, the Master of the High Court, departed from the stereotype of a judicial system that exists to serve the needs of the moneyed classes when he attacked the brutality and incompetence of lending agencies. Having duped and seduced citizens into taking out mortgages that they could not afford, they were now pursuing the same clients, re-cast as troubled debtors, to the very brink of suicide. There is no doubting the statistics. Suicide in Ireland has increased since the recession.
Mr Honohan’s contribution was a thoughtful and highly sympathetic analysis of the real social and personal consequences behind the economic jargon. Meanwhile, an equally relevant utterance by a German court official, while superficially reading like a Tory pamphlet, contained within it, a possibly ironic, but more likely unintended wisdom.
During the week, the Cologne Higher Regional Court affirmed a ban on gambling by welfare recipients. Bookies, according to the ruling, should not take wagers from people which “were far in excess of their revenues”. In other words, welfare recipients shouldn’t gamble with other peoples’ money. It makes a sort of sense, and is the sort of thing that taxpayers like to hear.
Yet, isn’t that EXACTLY what the German banking sector did when it stupidly wagered billions on Irish real estate, billions which they now want reimbursed by the children on Crumlin Hospital waiting lists, by the recipients of the soon-to-be slashed pensions, and by Irish teachers, fire-fighters, guards and nurses?
To take the analogy to its absurdly logical conclusion, their gamblers (ie fund managers and bankers) took the long odds option of betting on terminally ill, three-legged, crippled arthritic nags (ie grotesquely overpriced Irish property) which were being ridden by overweight blind drunken jockeys (ie our real estate/banking complex). When, unsurprisingly, the nags fell dead at the first fence, they are now screaming for a welfare bailout from the Irish taxpayer, so that they can cover up the true extent of their foolishness from the German hairdressers whose money they frittered away.
We should seek to renegotiate, to tell our creditors that we will honour legitimate international debts, debts which partly stem from our own folly. We should, however, also inform them politely, as our new Government said pre-electorally that it would do, that much of our international debt was forced on our State by gamblers who wished to protect their own institutions. This persuasion may not work, and while we should not seek to default unilaterally, we need to ready ourselves for the consequence if it is forced on us. Vegetius (incidentally not a member of the Green Party faction in the Roman Senate) was right. We need to work for peace, but be ready for the alternative.
