Whatever happened to the Celtic Tiger?

by Terence Wed Jan 14, 2009 00:21

In today's Irish Times (Tues 13th Jan), there is an article with the above title reporting on a presentation made by the UCD economist Morgan Kelly who for the past several years had been warning us about the perilous state of the Irish banks, housing bubble and economy.

In the presentation he predicted that house prices would fall by 80 per cent from peak to trough in real terms.

As reported, he painted a very gloomy picture of the state of the Irish economy giving some insight to the enormous damage caused by the fools in charge, who up to last year were treated as mythical hero capitalists. Quoting from the report it says:


Mr Kelly said Ireland’s “reputational capital” had been damaged by “chancers” such as ex-Anglo Irish Bank chairman Seán FitzPatrick, who had been abetted by “buffoons” such as former financial regulator Patrick Neary, Minister for Finance Brian Lenihan and the Taoiseach.

In discussing the €110 billion given in loans to developers, Mr Kelly said a typical regional housing collapse in the US saw banks sustain a 20 per cent loss on these loans, but the narrowness of the Irish market increased the risk of “substantially larger losses” for Irish banks.

“The guarantees of Anglo and [Irish] Nationwide liabilities have a strong chance of being called in over the next 21 months,” he said. Extending the Government guarantee to these two financial institutions was “extraordinarily unwise” and could produce losses that the State cannot afford to repay.

The global financial crisis may have been positive for the Irish economy as it “stopped us dragging ourselves even deeper into our hole,” he said. “If it had taken another year or two, we would have ended up in an Icelandic-shaped hole, which is not to say that we won’t end up in one.”


However returning to the points raised in the main article above by Chekov, he raises the key point is that it will be us the ordinary people who will pay dearly for these mistakes and it looks like we will be paying for a very long time. The question naturally arises as to why on Earth, we just accept this collectively. And whats worse is that all these same people are proposing that we go back to the same system again once the "recovery" happens, so that they can make a stack load of money again while we plod along with shoddy services. They of course make all the right noises about having more regulation this time, but as always all this regulation as has proved to be the case is just windowing dressing. The financial; regulator is a case in point. There was never any intention that it should have teeth and do it's job. It was merely all PR, as we all know as we had to listen to all that nonesense for every banking advert over the past few years about .... this bank is regulated by the ..

Before this gets worse and our health system is badly cut back, our bus services are severely curtailed and who knows what else, people should seriously consider forcing the govt to forget about the property developer banks -i.e. Anglo Irish and let them fail, no bailout. We need to be collectively sending the message of what the public thinks to the government and getting it implemented.

by Terence Wed Jan 14, 2009 00:00

This question frequently arises... if the free market was truly free. Such a thing never exists nor can exist. In the Capitalism system if you start to accumulate money that automatically gives you more power than the next person who might have less than you. And why is that, because if I have a stack of money, I can get other people to do things for me simply by paying them. As we know in reality really serious amounts of money can accumulate and for those with the highest amounts they gain enormous leverage over regulators and politicians through slick lobbyists, mutual benefical relationships and institutional sponsorship and the promotion of their ideas and theories and not least outright corruption. Those who have the most will seek to shape the system so that it protects them.
So the free markets that you refer to have never actually existed and are never likely to either. It should also be quite clear that is the lack of regulation and rules and the adherence to them that accelerates the process of instability.

You also raise the question if socializing the losses but privatizing the profits is socialism. No, it isn't. A real socialist system is designed to run for the benefit of the people in a political system that reflects the will of the people in a society where they are informed of the facts and not mislead on a daily basis about practically everything.

On the contrary, this merger of corporate and private capital with state power is in essence the very core of what fascism is about. After all, it was Mussolini who said: ’Fascism should more properly be called corporatism because it is the merger of state and corporate power."

by confused Fri Jan 09, 2009 11:28

In a sad agreement with the most said in the article, I'm still puzzled by this discrepancy: if it was really free market, no-one, especially not the government, would intervene (inject more poisonous money) into already (in economic terms) sick companies, right? The bad companies (non-liquid banks) would go bust and end of story (with all it's dire consequences for their workers and clients, but not the extremely "competent" bosses).

Socialising debt through rescuing packages for banks can hardly be called free market. It's much more similar to socialism, right? The only difference is who gets the benefits, is it only the political elites like in socialism/communism or both them and their buddies in big companies in statist-corporatist capitalism.

I'd be glad to be corrected...