December 10, 2008

Brace yourself now for the Deckland Depression

Posted in Debt · 159 comments ·
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It was a mirage fabricated by other people’s money. There was no miracle; it was an overdraft

One of the most harrowing memories of the past few years is of my children, strapped into car seats, screaming the Harvey Norman ad — yes, you know the one — the most annoying ad in recent Irish history. Harvey Norman hijacked our radio airspace, screeching about cheap furniture. Nothing represented the boom in housing, the interiors fetish and the lower, more seedy end of the property porn market, than the repetitive Aussie belting out “go Harvey go”.

You don’t hear that much about Harvey now because the market has collapsed and with it, the demand for beds, kitchens and furnishing. On the good side, a generation of young Irish children will be spared the ads; but the huge downside is that many of the same children will be brought up in families and estates that will have been traumatised by this downturn.

Ireland is about to experience its first middle-class recession. The big difference between this recession and previous ones is that this one will have a dramatically negative impact on the expectations of a generation whose world-view was almost unquestionably positive.

Commuter towns such as Naas, Arklow and Navan are likely to be hit hardest and the people who will lose their jobs and, eventually, their homes are the very ones who bought into the boom most. They are the young working families, largely employed in white-collar jobs, who believed the hype and bought the new houses, complete with decking and barbeques, close to the top of the market. They are the Decklanders and Ireland is about to endure the great “Deckland Depression”.

A few years ago, it was all so different. Deckland, that vast expanse of new suburbs, which emerged in the past 10 years, was the most optimistic place in the country. It was young, energetic and despite the snobbishness of many commentators who believed that these new towns were soulless, Deckland was as vibrant and community-focused as any new suburb has ever been. If you dispute this contention, look at the growth of community organisations like the GAA or new school rolls in the commuter counties. Deckland was Ireland’s “Babybelt”; and for many thousands of people, Deckland represented a New Ireland, where people could settle, own their own houses and begin the great Irish process of trading up. Deckland embodied the essence of the New Irish Dream, where the population was on an upwardly mobile conveyor belt, propelled by the twin forces of easy credit and rising house prices. Everyone could be a winner.

Now all that is shattered and the dream is over. Unemployment is rising fastest in these areas, house prices are falling quickest and a recent survey indicated that the most insecure part of the workforce are young, heavily committed white collar workers.

The reason that Deckland has every reason to be fearful is that it is home to a much higher percentage of non-public sector workers than more traditional, older suburbs. This is because the public sector has a considerably older age profile than the private sector and therefore, safe public sector workers don’t, in large concentrations, live in the newest suburbs. Secondly, considerably more immigrants live in Deckland; as they leave to go home, house prices in these estates will collapse because there is simply no one to replace them.

Thus, most Decklanders work in the highly vulnerable domestic service economy, which boomed even as the signs from elsewhere were turning negative. Over the past few years, as Ireland Inc has become dramatically more uncompetitive, the domestic service economy managed to continue growing. This confounded many people. If Ireland was so uncompetitive, how could unemployment keep falling?

The answer is simple: it is all down to easy credit. If we look at the activities of the three largest banks in the country since 2004, we see that they all nearly doubled their loan books, funnelling money into the country.

To achieve these rates of credit growth, they abandoned all sense of banking decorum and borrowed heavily abroad. As a result, domestic spending went through the roof and Irish inflation rocketed. The prices of everything rose; as did wages. This massive increase in Irish costs was ironically most easily gauged by free-spending Irish tourists complaining to Joe Duffy about the great value they could get in Spain in comparison to home. The difference between a dinner for two in Spain and the same in Athlone, became the staple conversation of the new Irish middle class.

All this disparity was telling you was that Ireland was pricing itself out of the world market. We could only keep the show on the road by borrowing even more of other people’s money we didn’t have, to buy stuff we didn’t need.

We were all on the same trip.

Such huge spending meant the local service industry didn’t feel the global effects of our country going off the rails. Tax revenue, itself a derivative of all the borrowing, kept rolling in, allowing Deckland’s “group trip” to continue. No one could wreck the buzz.

Then the international banks stopped lending to each other and stopped lending to Irish banks, who, in turn, stopped lending to us. This had the effect of someone turning off the tap.

When people ask bewilderingly now, how did it all stop so quickly, the answer is simple, it had to stop quickly, because it was a mirage fabricated by other people’s money.

There was no miracle; it was an overdraft. This simple fact will plunge Deckland into a depression, because without inflated local demand there is nothing there to keep people in jobs.

Consider this one fact. Now all our politicians are talking about the need to switch to an export economy. But just think about how many people the exporting sector actually employs and then make a stab at how many people can be productively employed in a short space of time in this sector — even if they had the skills. The multinational sector accounts for 87pc of Irish exports and only 100,000 employees, whereas total employment is 2,000,000. So there are 20 times more people employed in the domestic sector than the export sector. Therefore, the export sector has only the most modest capacity to take up the slack caused by collapsing local activity.

Ultimately, Deckland is facing a depression. We are beginning to see the first signs of this in the official figures, but if you want to get the real story just drive out to the new shopping centres, to the Woodies DIYs and the Currys of the new out-of-town stores. They are empty now and next year it will be worse as we will see the total capitulation of the consumer.

What will this mean for the country? What happens when a generation is betrayed? How will the Deckland Depression manifest itself? And how will it affect Irish politics?

With this background noise, history suggests Ireland won’t be pretty; and one thing is certain, the new soundtrack of the suburbs will not include anything by Harvey Norman


  1. Johnny W

    David,

    I can’t fault your analysis but dear God give us some sunlight or at least point in the direction of sunlight

    I’m in utter despair as all rational analysis suggests that at best we will have a deep and punishing recession. I fear the most likely scenario will involve a return of popular socialism, further increased government spending and an accelerated economic decline

    Help!

  2. Enda B

    David, love your work and agree about the reckless practices in the banking sector. You however seem to gloss over the culpability of your “economist” friends in the public sector.

    The asset bubble was fuelled by interest rates which were too low (particularly for Ireland) for too long and then increased at the very time house market needed support- an inverse relationship between asset prices and interest rates. What of our central banker who voted for an interest rate increase in July, When our economy was in recession for months (and commodity prices were falling and cost push inflation had receded). It appears that all the Germans had to do was put a few biscuits in front of Mr. Hurley for him to do whatever the bundesbank ECB required. Pay without performance, this man presumably earns more than 200k a year and will soon pick up a pension fund worth millions.

    What of your public sector economist friends who have got the budgets wrong for almost every year in the last two decades. How many public servants on more than 200k a year does it take to lead to the biggest deficit in the OECD.

    What about the part of corrupt and incompetent planning. The reason why our children in west & north Dublin don’t have school places, that there is no room for their mothers in the maternity wards, for their fathers on the trains, the reason that their grandparents die without dignity in hospital corridors from MRSA and that we can’t trust the water that we drink- is the greed, corruption and incompetence of our public servants- not the bank officials (i’m not one) on modest wages who are being made redundant.

    Tell the other half of the story- there won’t be anymore lucrative consultancy work from the public service anyway.
    e

  3. David,
    great article as usual.Pure “Jeremiah”.Nobody listened though.The high priests of the Soldiers of Destiny will throw you into a lion pit-or a deep well.
    Im no economic wizard,but every sound dog in the street with a head on his shoulders knew that a single interest rate for all members of the EU was total lunacy to begin with.
    It certainly suited Fianna Fail; “The Developers Party” because there were no brakes ( boron rods) to damp down the economic overheat during the Celtic Tiger party years. The economy briefly “went critical” to use a metaphor from the nuclear industry, and spewed out houses and new apartments like toxic waste.the developers made huge fortunes.Landowners and farmers became multi-millionaires overnight as the re-zoning frenzy went into overdrive in the hazy,smoke filled, council chambers countrywide.
    Nobody knows what the “half life” of this disaster really is.?
    Two years? 5 years? 10 years (Japan).
    Batten down the hatches stock up with tinned food and cartridges -you wont need those iodine tablets (mad-remember?)
    It is ironic though.Three times,the people voted for those who brought them to this sorry end.
    They have four more years to go. my misses says it is the best thing ever. They will be wiped off the face of the earth next local elections. Not so sure though that their pretenders for the cars with the stars, and the travel tickets to Mars have much else to offer..God help Ireland.

  4. Furrylugs

    @Webmaster,
    Apologies.
    I was a bit naughty and jumped the gun posting the link to this article earlier today.
    There was an interesting reaction though.

    • Ire_in_Exile

      I suspect the Independant newspaper is behind the delay..”.wait until they’ve all read it here first before posting on
      your own site!”

  5. Johnny Dunne

    “The multinational sector accounts for 87pc of Irish exports and only 100,000 employees, whereas total employment is 2,000,000. So there are 20 times more people employed in the domestic sector than the export sector. Therefore, the export sector has only the most modest capacity to take up the slack caused by collapsing local activity”

    Agree the multinational sector can’t if we keep promoting the same message ‘Invest in Ireland’ – there is no money to invest. Why not say come to Ireland to save money – lowest tax guaranteed with ‘cheap’ rent in new buildings – 200k people available to employ now !, Not everything needs to be R&D – in the current market that’s not happening….

    If the IDA keep doing the same thing they will get the same results – losing companies and no net gain in employment..

  6. The Dude

    In the end the people in the banana republic of Ireland will get what they deserve
    and nothing more

    What you reap is what you sow

    • Well dude, that’s a bit harsh.

      Being a dude, you’re most probably a citizen of the world or something. But even that is looking like a large pile of sh1t for the time being.

      The most worrying aspect, alluded to on many pages of this forum, is that prudent types will also now suffer in Ireland. Excessively so, in respect of their debt position, I mean. And so we’ll have more distortion of markets.

      But yes dude, the surf’s out for a while and won’t be back in, so best hop on a wave o somewhere else buddy. The ‘people’ of ireland are very dear to my heart and don’t deserve anything. The leaders of politics and commerce may do though.

  7. I think your point about how this will affect irish politics going into the future is an important one. the young families being cut adrift daily will not be wooed by ff empyty promises come the next big transfer of representation. Jesus! Heartland by The The springs to mind here. I never thought I would see the day when these tunes of socio economic degradation would become pertinent again. Not the end of the world though, afterall this aint Africa, right?

  8. David your Decklander’s deserve to be exactly where they are ,as it is a situation of their own making. If Mr decklander had sat back for one day and asked himself and his second car driving mummy what were they doing getting out such a loan to purchase a house that hadn’t a school, shop or community area within walking distance of it , even after breakfast roll man had laid their estates road surface they would never have bought into this illusion .
    The reality is something different though as Deckland man and his wife live in a fantasy land fuel led by cheap money ,beer and satellite television. Neither ever questioned why they were paid so much for doing their service jobs or ever questioned how come Spaniards who brought them their meals when they were there on holidays were paid less , yet seemed to have great life styles as well as the sun shine. No Mr Deckland man prefered to go and lie with his bank manager and play with his actual earnings so he could go out and get the BMW to drive off out to Woodies to order the barbecue before he headed off to buy his English soccer top before heading down to the pub to get the slaps on the backs from his fellow deck heads who complimented him on his new wheels.
    And why should he question any thing any way , were the National Media not telling him every week how great the New Modern Ireland was ?
    No Mr Deck man now deserves to loose his job and to suffer for a while , then maybe when he stays off the wine for a few days and sees his badly built house is no longer worth what he’d borrowed to get it, he’ll start to ask these questions and maybe wonder how he never saw through the Governmental scam and see the lie , he and the rest were living. .

    • Furrylugs

      Brendan,
      But are we not talking about a whole Sky TV generation that saw the “Hollywood” version and simply wanted that for themselves, aided and abetted by a lax if not criminally seductive financial sector?
      I’d have some sympathy for the more innocent duped into this nirvana. If they all knew what we know, it wouldn’t have happened. I’ve been told (warned) many times about being well travelled, knowledgeable, understanding

    • Furrylugs

      Brendan,
      But are we not talking about a whole Sky TV generation that saw the “Hollywood” version and simply wanted that for themselves, aided and abetted by a lax if not criminally seductive financial sector?
      I’d have some sympathy for the more innocent duped into this nirvana. If they all knew what we know, it wouldn’t have happened. I’ve been told (warned) many times after returning from abroad about being well travelled, knowledgeable, understanding of business and the implicit meaning was that if I was going to join the “circuit” I should cease educating the great unwashed.
      Corporate and Political ireland has ways and means of control that would make a Grandmaster blush.
      C&P Ireland will get out of this mess at everyone elses expense. They will, in one shape or another, the sop for emigration being “He couldn’t stick it out”. And the PeeFlynn theory; “Let them off, The best will come back with money.”
      The division of the Irish people by the C&P to prevent mass demand for change is well under way. It’s not just FF. It’s an elite club that uses the island as a private spa with the rest of us in attendance. If we don’t lke it well then, to quote our verbose Taoiseach, Feck Off.
      Inclusivity is alien to us. If we can reach out to Deckhead and all those others taken in by the cynical abuse of Greenspans self regulation we may, just may, start to mature as a Nation.
      That is the greatest signal we can send to C&P that the times are a-changin.

    • RingoStar

      People who bought a house when prices were OTT are not the greedy ones they are the victims, the developers and banks are the ones who made all the money.

      What choice had a young family they either bought in a commuter town or rented which is very unappealing given tenants have very few rights unlike in the US. It’s a sad situation but “Mr. Deckland” did not create it banks did buy sub-prime leading

      You need to lay off the poor people now stuck with negative equity and direct your distain towards the people who deserve it the investors and bankers.

    • This is true Brendan W. But we must have parity in the social system.

      We shouldn’t throw deckland people to the wolves without firstly throwing the powermongers to the wolves.

      If banks got the foot taken off their neck, then so should every strata of society, par for par. Or else we let the market take its toll on all. Banks first.

      Instead, the banks have been collectively handed a loaded shotgun and are harassing SME families before the turn on the even weaker householders. Its politically expedient to now blame Deckland man for his own troubles. They must shoulder negative equity perhaps, but not lose their homes? I don’t see that as good news for anyone. Maybe for Eddie Irvine (just an example) or the like buying up even more houese to put the little people in!!

      If you only live for 75 years average, and you are only of marrying / childbearing / foot on the ladder age once, then of course you get anxious and perhaps buy into a dream that everything will be alright on the night. Much like using a credit card. But unless the creators of our social structures / builders & sellers of our dreams are equally sanctioned, we will have civil unrest here.

      People did deny the reality of hard work and saving, but equally they had no other option where housing options/ release of landbanks onto the market in a drip-fed manner were concerned.

      The market would take care of FTBs through negative equity, which is a harsh enough blow from now til grave. Why would anyone wish to see the punishment of such such naked greed brought to bear on the average Joe, middle class, working class or otherwise?

      This is the downward spiral, true to form. The employed attack those on the dole, the solvent attack the unwary, the farmers attack, the teachers attack.

      What is lacking? A path forward and proper leadership. Now before anyone thinks I’m getting at Cowen, I’m not. He’s not solely to blame. Yes, deckland man needs to shoulder his burden. But to wipe out a generation’s hope is extremely unwise and hazardous to personal health for any political leader or contributor here. There’s too much at stake for people not to now make measured and just contributions (this last part is not meant directly at you at all Brendan! Just an observation of tone of some posts today).

  9. Where is your Celtic cub, David?

  10. VincentH

    The vision of the Mc W’s brats chained to the chassis of whatever ‘safe’ motor you have found, and belting out -while dad grits his well fashioned gift from the dental union- can only give one hope.
    Ah, well. At the moment it is the concept of debt, which is holding things up.
    Before, we had the nicety of value, where the central bank could sit it to realistic levels. Now, no longer can we afford to play the american game without the american protections. Nor the European stagnancy. So, it might be better for a look at the idea that one can die and carry the debt onwards, be looked at.
    There is a bet from both sides when a contract is entered. Earlier here, the moral has been spoken about. However the active control is missing.
    You write of other peoples money, Oudo, I think you mentioned. Well, Oudo, nice man as he is will not suffer. The projection on his cash might.
    One way or another, the FF will come out of this better, and in the US Rep will do the same.

    • Garry

      one can die and carry the debt onwards….

      So let me put this bluntly, you want people to be born into debt?

      Saw this on a blog some time ago, think its the best description of debt I’ve ever read…

      “Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours. . . . Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.”

      If someone inherits debt, it will reintroduce slavery.

      • Nono

        “If someone inherits debt, it will reintroduce slavery.”

        No, as soon as someone gets into debt, he turns himself into a slave…

        • Slightly off the point but valid Nono. That ignores the plight of the person who inherits it. Sins of the father etc. It is a huge future social justice issue. Garry is spot on

  11. Malcolm McClure

    David said: “The multinational sector accounts for 87pc of Irish exports and only 100,000 employees, whereas total employment is 2,000,000. So there are 20 times more people employed in the domestic sector than the export sector. Therefore, the export sector has only the most modest capacity to take up the slack caused by collapsing local activity.”

    Now consider what is happening: The young well-educated people in Deckland are being laid off in ever-increasing numbers. Those who become unemployed are in competition for any openings with a flood of new graduates, who have fewer comittments so are cheaper to employ. The pre-contraception baby boomers are reaching pensionable age, so a smaller productive economy has to support not only the decklanders, graduates and pensioners but also the over-stuffed public services.

    It just doesn’t add up. Even the Germans are having trouble marketing their bonds (thanks mediator) so what hope has Ireland of avoiding the Iceland saga scenario when we reach to the global capital market for salvation?

    We will have to go for Milt Friedman’s Chilean solution. Cut back all forms of social security to the bone. Establish private health and employment insurance and trim back public services to an absolute minimum until the country is economically viable once again. Thus we will survive, emerging slimmer but fitter.

    • Furrylugs

      Good Lord Malcolm.
      How long will that take?
      Or, discounting the “Tiger”, was this country ever economically viable?
      We seem to have been a calving -jack for every other economy and borrowed our own way into oblivion.

    • Do you propose Juntas too?
      Actually Allende was doing a fine job on the Chlliean economy before the Chicago school intervened, but I guess history gets written by the victors, or those who spilled the most blood anyway.

  12. juicylucy

    Hi everyone

    been reading your comments & I’m starting to come to the conclusion that the rest of the world is facing a recession, but Ireland is facing a depression or very very long recession (the latter being the best case senario).

    Even if Ireland started pumping billions (which is doesn’t have) into R&D, very high skilled jobs etc during 2009………I think Ireland will only reap the benefits in 15 – 20 years time.

    I don’t think schools will be overcrowded by the end of 2009, alot of young families have packed their bags & some will post their home keys to the banks and never return to Ireland.

    I think that for the last 30 or 40 years people really believed that the price of property never goes down, after 2008 I think people will only buy property they can afford to lose, and the appetite for “Capital Gain” from property will never be the same again.

    I think programmes like RTE’s “I’m an adult ……..get me out of here” lead people to believe that 20 & 30 yr old young adults were a burden on their parents and were eroding their pensions, but I bet most parents will be begging their kids to move back in with them in the coming years because after 2008 they no longer have pensions & jobs and they still have to pay for the holiday home in spain, which can’t be sold.

    Ireland and the Irish are a “joke” once again:

    What’s the latest Irish invention?………………a window with a peep hole.

    What’s the latest Irish invention?……………… a motorbike with an airconditioner.

    this sums up Ireland’s economy and the way we think.

    People travelling overseas will soon realise that Ireland’s free education is not that good & our degree’s (just like our economy) are not worth the paper they are printed on.

    Remember guys: things look bad, but you gotta keep the faith and keep moving forward.

    Have a nice day

  13. Brian Lenihan Jnr

    This comment is a result of a conversation in a pub. What could our political masters have done to prevent this recession from happening? Lets say Bertie had, five years ago, woken up and said Jesus if I don’t do something the whole country’s up the swanny economically. What actions could Bertie have taken? The mantra from the hard core FFers is that none of our current travails could really have been avoided. I know this isn’t the time for “I told you so’s” but I am a great believer that if you cant see where you have gone wrong in the past your bound to repeat the same mistakes over and over again.

  14. Kenneth O

    Don’t know if David McW has used the term “Roy Keane Man” but in The New York Times it is suggested that such a type exists:

    http://goal.blogs.nytimes.com/2008/12/10/roy-keane-the-celtic-tiger-tamed/

  15. ”Ireland is about to experience its first middle-class recession.”

    Forgive David and Co. but that has got to be a positive thing, we definitely don’t want the next generation growing up with the wrong values. The whole world (EU/USA) economic direction was wrong, unjust, put any word you wish in there that spells failure.
    I felt it coming in the late 70’s and saw it clearly with Thatcher on up to Clinton, and nearly lost hope when Bush arrived, and he’s not gone yet. I still don’t sleep too sound especially with the first shapes Obama is throwing: everybody working, infrastructure speak meaning property developers boom again.
    Gordon Browne – saving the world – aghast at the German finance minister for pointing out the truth.
    You simply can’t expand indefinably in one direction or many for that matter; everything must pass. That’s not some hippy lippy statement, that’s a fact: the laws of gravity.

    I said it before: ”all of the people can do well some of the time, and some all of the time, but all of the people can’t do well all of the time.”
    So how can you be content with the inevitability of loss; hoping/as long as it’s not your own.
    We’ve got to get it into our heads, when any part of our – micro world – society (especially when it is the majority) is losing/neglected then we will all lose in the end.

    I’ve got to get back to work; lots of now today to clear. To be con ….

  16. Colin

    I can see church attendance increasing with the hopeless praying for divine intervention. The collection basket will need to be chaparoned by a securicor employee fully decked out.

  17. ger

    If you criticise, you also have to offer solutions

    This is now yesterday’s story – we need leadership, solutions and positivity – that does not mean I am putting my head in the sand, in fact I used my head, didn’t move to Dublin and haven’t bought a house, or decking for that matter.

    If the rest had held out, the money men would have been forced to drop their house prices and the knock on affect would have been great – but no, people ran in, eyes wide shut, and I ran the other way.

    This so called cycle may educate (unlikely), people will now have to pay the piper, but the situation was aggravated by immoral lending practices, no regulation and no government leadership – disgraceful

    For those now forced to work the night shift, this is worth reading: “Extraordinary Popular Delusions and the Madness of Crowds’ – http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds

  18. “I can see church attendance increasing with the hopeless praying for divine intervention. The collection basket will need to be chaparoned by a securicor employee fully decked out.”

    (The collection basket will probably be stolen by a 12 year old drug addict armed with a gun and wearing a bullet proof vest-who is himself gunned down running towards his motorbike by a rival hoodlum and the opposition will immediately call for another 3 thousand farmers sons to be sent to Templemore but there will not be enough money in the kitty to even keep the existing serving members in the overtime to which they are accustomed..)

  19. Bird flu, Foot & Mouth, Pork and Beef dioxin cancer scare, fish stock quotas and after the financial collapse Ireland has become a vegetable state.

    David if the 20 times those employed in the export industries have to be looked after (public sector, pensioners, the ill and unemployed) where else but through international sales and services are we going to get the funding for it?

    We can’t sell ourselves any more houses. We can’t employ ourselves in expensive cafes’ and hotels and we can’t maintain and upgrade the M50 with Connemara stones any more.

    Just like those in the 80′s who left Ireland and sent money home, as the Ascension country migrants did in 2004 is now the prospect facing many of the young as they search for income. Unfortunately the world is no longer in high growth mode and low paid workers in Spain (as you point out) are willing and eager to work for far less than any current Irish emigrant in search of a new life abroad.

    So we are faced with paying off the accumulated debts by punching above our weight as far as generating income from abroad and our future survival relies upon that. To do that requires innovation. We need to stop putting our hand out to overseas multi-nationals as we lose too much to lower cost countries with as good educational systems. China, India, Indonesia, Uruguay (as I pointed out have their own high tech developers) all have their hand out.

    You in a documentary pointed out that with 70 million Diaspora we are well placed to leverage off of this. We won’t get them to buy any more diddly-idle music or donkey and thatched cottage postcards, but we can perhaps think about piddling out of the tent instead of the other way round.

  20. the mediator

    Malcolm McClure

    I would be very wary of advocating any solution put forward by Friedman or his disciples. His ideological “solutions”
    have proven to be a mirage and caused untold suffering in those parts of the world unfortunate enought to be
    used as guinea pigs.

    What we need is to avoid extremes – extreme left wing government type solutions and extreme “market” led solutions. In America
    and here in dear old Ireland the “market” means a huge transfer of wealth from the poor/lower middle class to the wealthy, and an commensurate evisceration of the middle class – an inverse pyramid and this is what happened in Chile and other places following Milton Friedmans market reforms.

    If this type of thing continues you eventually get a huge gap between the rich and poor with attendant social upheavel which eventually boils over into
    revolution or the breakdown of society into anarchy and black marketism.

    Some solutions were asked for? Here goes…

    1. Leadership, moral and intellectual.

    How?

    If the government started acting in the interests of its people. This requires a complete change of attitude I would almost say conversion.

    1st Step
    Inform the public of the difficulties we face (inability to borrow parhaps next year) and to do a Mea Culpa, to stand up and say
    “We the Government together with the connivance of the majority of the Irish people (Their policies were applauded by the majority) have made poor choices over the past few years and looked after vested interests at the expense of the general good, we are now in a position where we are spending more than we are earning and this can’t continue. We cannot borrow our way out of this – we need to make cuts”

    Heres the important bit…

    Taoiseach and ministers take a 20%-40% pay cut followed by pay freeze to provide leadership. This sounds impossible and indeed it may be but even with a 40% cut they would still all be among the best paid people in Ireland.

    Politicians and other similar pensions not paid until retirement or unemployment) (EG John Bruton currently gets the guts of 90k per annum despite earning a fortune as EU ambassador to US), there are many others like Bertie and former ministers.

    Senior Civil Service Grades (Assistant Principle/Equivalent and above) Pay Freeze and Roll back on recent increases. This pay freeze to last for the forseeable future.
    This may be a hard sell however if its made clear to public servants that without this there may literally be no money to pay their salaries in a couple of years they may get the message.

    Some targetted staff cuts but these should be very small and targeted at administration and management.

    Lower grade civil servants should continue to get increases for the moment (They are poorly paid) however if things continue to disimprove the next thing to go for the higher grades should be increments.

    If things get very bad then pay decreases are in order.

    I myself am a public servant (A productive one) however although I’m at the mid scale I’d take a pay cut if I saw a meaningful willingness for the fat cats at the top to
    pay their share.

    What I wouldn’t accept and would go on the street for is 1980′s style cuts for the people at the lower end / coal face while our politicians continue with their gracy train.

    Now back to work…

    • Malcolm McClure

      Mediator:
      You speak as a public servant whose approach depends on the sweet reasonableness of most people you meet when confronted with authority. This was fine when the economy was stable but it breaks down when people feel that their way of life is threatened. I am saying that we need stern Thatcherite policies clearly laid out by the Government and begun within a few weeks or we are all doomed.

      Your appeasing ‘Mea Culpa’ speech seems to me to be the wrong approach. The Toiseach needs to stand on the steps of Leinster House, backed by 20 of the most respected people in the country from all walks of life. He needs to declare a National Emergency and list clearly the steps he will take, starting with the establishment of a wider Civil Defense Force. This will concentrate people’s minds.
      There is a serious danger that this course might lead to fascism, so there need to be serious checks and balances on the authority of the Toiseach by the ‘Top 20′.

      To sort out the full range of vested interests from top to bottom will require a steady hand backed by firm action. Trouble is we are unprepared for firm action. Think about the ‘Winter of Discontent 1973-74 in London, or the Poll Tax riots, or various riots in Paris and lately in Athens and the stern co-ordinated reaction of authorities there. Historically the Irish don’t do riots. We are far too passive when confronted with authority. Otherwise how could a Garda force totalling only 14000 prevent even a seriously discontented Croke-Park-size crowd from reaching Grafton Street on their way to Leinster House?

      Sorry to paint a frightening picture, mediator, but as Roy Keane said “Fail to prepare, prepare to fail.”

      • Paulo

        With the utmost respect, please read some Irish history……

        http://news.bbc.co.uk/onthisday/hi/dates/stories/february/2/newsid_2758000/2758163.stm

        1972: British embassy in Dublin destroyed
        The British embassy in Dublin has been destroyed by a furious crowd of demonstrators protesting over the shooting dead of 13 people in Londonderry on Sunday.

        The crowd was estimated at between 20,000 and 30,000 strong. It had been besieging the embassy building, in Merrion Square near the parliament building, for almost three days.

        • Malcolm McClure

          I take your point Paulo, but a distinction has to be made between riots prompted by an external threat to our people and civil disorder caused by internal political exasperation. Folk memories of the Civil War seem to have undermined our will to organize serious political demonstrations that lack the Orange distractions of bands, banners and boozy bonhomie.

          If stewards at a football match can keep order then similar provisions could prevent disorder if a large crowd of Decklanders demonstrated for a change in government policy. When politicians feign deafness, it is a fundamental Human Right to make an orderly demonstration to gain their attention.

        • Paulo

          Malcolm,
          But the Irish have had a safety valve for internal social tension for centuries, it is called emigration. If you look at the history of the British, US and Australian Social and Labour movements, there are many examples of Irish emigrants becoming leaders of those Social, Political and Labour movements.

          One example that springs to mind are the Chartists of the 19th century in Britain (but there are many other examples).

          http://en.wikipedia.org/wiki/Chartism

          http://en.wikipedia.org/wiki/Feargus_O'Connor

          Also, Ireland had a small population for many years, lacking the urban and Industrial populations of Britain, France or other countries with radical movements. Emigration of course means the young leaving and many never returning.

          Finally, I seem to remember many large peaceful demonstrations in Ireland for example the PAYE marches in 1979 (200,000 people?) and the anti-war demonstration in March 2003 (100,000 people?).

          Of course marches and demonstrations are not enough to change the political landscape. Here is the real test for the Mr. McWilliam’s Decklanders, will they change the current politcial status-quo or will the Irish Kleptocracy remain in situ? Our Kleptocracy have survived and thrived through worse economic periods of our history for example the 1930s, 1940s, 1950s and the 1980s. They may prevail yet again.

          http://en.wikipedia.org/wiki/Kleptocracy

          Regards,

          Paulo

        • Malcolm McClure

          Let’s just hope that future demonstrations in Ireland remain peaceful. This blog, unfortunately contains some ingredients that could ignite trouble, so I hope our fellow bloggers will try to be temperate, forgiving and constructive, so far as possible, in their remarks.

      • Paulo

        “Historically the Irish don’t do riots.”????

        http://dictionary.reference.com/browse/donnybrook%20fair

        Donâ‹…nyâ‹…brook Fair
           /ˈdɒniˌbrʊk/ Show Spelled Pronunciation [don-ee-brook] Show IPA Pronunciation
        —noun
        1. a fair which until 1855 was held annually at Donnybrook, County Dublin, Ireland, and which was famous for rioting and dissipation.
        2. donnybrook.

        http://en.wikipedia.org/wiki/New_York_Draft_Riots

        “The crowd began throwing large paving stones through windows, bursting through doors, and setting the building ablaze. Many of the rioters, being Irish labourers, were also opposed to gradualism, because they did not want to compete with emancipated slaves for occupational opportunities.”

  21. Derek

    I left ireland, my paid for by the company bmw and my souless telecom sales job 5 years ago to live in a country where people changed their own light bulbs and car regs didn’t carry the year of purchase.. I earn a third of the salary i earned in Ireland .. live in the center of Paris and have not went into overdraft since my move.. incredibly i even own property which i rent.. how is this possible… i gave up every trapping that Irish people clung to so desperately to cure their status anxiety.. i even saved my money!

    While i do feel sorry for Irish people of my generation who are now entering what will be a very painful period I do firmly believe that only the shock therpy of this nature could shake the Irish people out of their smug belief that their ship had come in and was moored for the next 1000 years..

    Ireland lost it’s way and did not want anyone even talking about the how a nation with so many wonderful attributes sold it’s identity for the type of Subway sandwich/Kids Gym culture that ripped Americas socitey apart…

    • Barry

      I too live in France, not in central Paris, thankfully, lovely city, but a city nonetheless, I visit it often. I live in ‘far Provence’ and my telecom based job allows me to do what I couldn’t do in Ireland, work, because, although I live in a village of 1.5k people, I have broadband, landline and mobile for €35/month.

      However, all is not that rosy, la France is affected by the current crise, but is taking another tack, spending, to get out. Not sure it will work, the public sector overhead is bigger here than in Ireland.

      OK, so nobody likes ex-pats writing home to say how fantastic it is; I’ve lived and worked ‘on the Continent’ for more than 20 years; the various countries I’ve lived in had money when Ireland didn’t, a BIG consideration when trying to drag themselves out of the mire, their banks are just as bad as anybody elses, but their resources are better spread.

      One q for David, can you answer the question you left at the end of the piece about the effect on politics, in some future writings?

      Enjoy Reunion, bon voyage!

  22. Deco

    Ger – u sed it. Popular delusions and the madness of crowds. An entire generation became lifestyle junkies, pumped up their arrogance level and went plain bonkers. They say that a proud man will fight and die rather than contemplate humbling his ego. This will happen. The decklanders number 1 loyalty is to a lifestyle. they are a lifestyle buyer group. A cohort of show-offs. Our energetic, aspirational, confident, liberal, no worries, trendy, selfish, narcistic, consumerist, brash, cohorts made the Modern Ireland and Celtic tiger. They supplied the labour, the skills, the expenditure, the arrogance, the group think, the norms, and the obedience. The obedience was almost ‘Somme-like’-as they rose like lemmings to the answer every advertising trend. This was a generation that wanted to express themselves before figuring it allout, to spend before earning, to have leisure before work, and to impress rather than tell the truth. The obedience is probably going, as they race past each other in SUVs up the M1 to Newry ?

    They forgot something really important – in Ireland the economic system is rigged. And it should never be forgotten. In the heady haze of mindless pointless euphoria they consumed and were happy. And this made those that rigged the system more powerful and stronger. And Bertie Ahern said ‘long may it continue’. Now the danger is that they will find out what is really going on in this country. It will probably cause many people capable of working this society out of it’s problems into leaving the country for good. But the key thing for authority in Ireland is that the system continues to be rigged. That we will have no change without direction from those that control the banks, the monopolistically inclined commercial interests, the political establishment, the public sector unions, and of course the networks of nepotism/cronyism.

    Maybe now we will have thought before action, saving before investment and humility before self-expression. Welcome to the Asian Century.

  23. Deco

    Mediator – you are correct the idea that politicians get annual pensions when they are still not retired is completely absurd. That has to go. ‘Scrappage schemes’ for politicians that have been rejected by the electorate is an insult to democracy. They should get no compensation for being voted off the national stage.

  24. McGoo

    Almost 10 years ago I told an English friend that Ireland was going through it’s “1980′s Thatcerite” phase, and I think I’ve been proved correct. Remember how that ended in the UK? (housing crash, recession, mass repossesions and unemployment, for those too young to remember).

    So, to predict what will happen here next, we should look at what happened there. It wasn’t pretty, and it brought the rule of the Tories to an end.

    One of my abiding memories of living there at the time was of rents soaring and huge numbers of homeless people begging in the streets. Fortunately I don’t think that will happen in Ireland: the UK didn’t have the massive housing oversupply, or emmigration, that we have, and these are driving rents in Ireland down.

  25. rodge

    All of Ireland’s problems have been caused by the euro.Look @ the present exchange rate V sterling.Leave the euro and the economy will start to grow.We should never have joined.Expect unemployment to hot 450,oo0 next December.

    • To have joined was the mistake that caused all the free money to flow. After the hard-laid work of early 90′s.

      To leave now, would be an act of financial suicide and the worst mistake in our short life as a nation. Perhaps leave in the future, or 5 years ago. But now??

  26. MK1

    Hi David,

    So after your ‘sunny sojourn’ its back to the realities of the ‘Celtic Bust’. You are spot on in your article of course.

    > more seedy end of the property porn market

    Perhaps this is a bit low. Harvey N may not be ‘designer label’ but it was not poor quality stuff nor is/was it cheap. Many ad jingles are nauseating, its not the only culprit. (can you please shut up that one in Terenure!)

    > Now all our politicians are talking about the need to switch to an export economy.

    Are they? I havent heard much. Okay, when pork and beef is threatened our exporting agri-business does of course get support and rightly too. But expansion of exporting business? Have I been missing an initiative?

    > But just think about how many people the exporting sector actually employs and then make a stab at how many people can be productively employed in a short space of time. The multinational sector accounts for 87pc of Irish exports and only 100,000 employees, whereas total employment is 2,000,000. So there are 20 times more people employed in the domestic sector than the export sector.

    Be careful of such conclusions which are in error. Many of the stats are skewed by the large MNC’s which have zero production costs (eg: software licences from Microsloth, Oracle, etc) yet get in huge EU (EMEA) revenues. This goes in Ireland’s export column yet one email sending out a large software licence to a 10,000-desktop customer only takes a mere one Irish employee in Dublin. Pharma has similar ‘multiplier’ effects. Dell likewise.

    The reality is that there are more people employed in Irish indigenous companies which are gainfully employed due to exports, than those employed by MNC’s. I dont have the figures to hand but I think that is the case (Enterprise Ireland should have them).

    I do agree that there is no way we can expand our export businesses (whether MNC or Indig.) fast enough to take up the people dropping off the ‘services’ conveyor belt.

    > Ultimately, Deckland is facing a depression.

    That is the vista we now face. And other areas of society will face ‘cuts’ too.

    Jobs (export or otherwise) is the answer …. but how?

    Agri? Booze? Artisan-agri? Tourism – with a soft-Irish lass scantily clad at each crossroads with a shillelagh and a smile and an aran geansai, and asking the male tourists “where would you be off te? can I help you get there?” …. altho that may rightly be construed as porn! ;-)

    We need some new imaginative suggestions …..

    MK1

  27. Philip

    Rodge, not all of Ireland problems are caused by the Euro. Just exascerbated. UK is having some major issues itself.

    I think Malcolm Mc is on the money in recommending a kinder version of the Friedmann solution for Chile. It needs courage and leadership and an understanding of what is needed to keep the fabric of society together.

    Real Income does not have to fall if we do this right. True, there will be the 20-30% or more wage cuts etc. but everything needs to drop across the board. We need to ramp exports. 100K supporting 2000K is not tenable. We need a 5 fold increase in the exporting component.

    Right now, there is a significant chunk of that 100K made of skilled immigrants who are probably heading back and there young families will no doubt be making similar plans. This would seriously damage our economy in the medium to long term. So action is needed as a matter of emergency

    Was listening to that brat, Hobbs, on RTE yesterday who recommended a higher tax on secure PS jobs. This is in recognition of their secure status, pension etc. We’d see a corresponding tax reduction if not elimination in the productive sector. I suppose as the economy revved up, this could be reviewed and other PS Ts & Cs remain in place.

  28. Garry

    I think first our leaders need to level with us….. spell out the problem and only then will there be any hope of sorting it out

    Reading here, there’s as many stages and reactions to the bubble bursting as there was to the bubble forming…. looking for some external event or country to blame, looking for a magic solution, fear, fear that somehow we have fucked it up much worse than anywhere else, anger, acceptance and looking for ways to cope with it

    Some of the links show that we may have less than 12 months of being able to conduct business as usual, by borrowing to pay for salaries,services,dole etc., its a very short timeframe. the lads here running the show will get a very violent reaction if they try telling people to tighten their belts without at least looking like they are tightening theirs.

    Hope Obama is up to the job…it’ll be interesting to see what he does…..

  29. MK1

    > Hobbs who recommended a higher tax on secure PS jobs.

    Well how about if the Public Sector paid the SAME level as the private sector do now, so that would result in an INCREASE in PRSI (employer and employee) to meet the private sector levels, plus all their Pensions based on contributions rather than future-defined-benefits which can only be afforded by the state from taxes gathered from the private sector..

    SO FIRST, let the Public Sector pay its fair share and not that it is a group which is an effective tax on the private sector ….. a yoke with a plough around our oxen necks.

    And we havent even started on the financial benefits derived from public sector tenure of job or the cost to the state for poor performance delivery (bang for the buck).

    Fixing the Public Sector is like fixing the bones of a human which has been driven over by an 8-axle 40-tonne truck – which bone do you tackle first. There are many to fix.

    MK1

  30. Deco

    Philip – never mind Hobbs and his latest suggestion for an extra tax on the public sector to roll back the excesses of Ahern’s Benchmarking disaster. The PRSI rates in the public sector, and outside the public sector are completely disconnected. This is effectively discrimination against those outside the public sector. It is unconstitutional. However reforming this, like reform of any area of the public sector is completely impossible. This is the millstone around the neck of the economy right now-productivity and costing in the public sector are completely skewed out of shape.

    MK1 – firstly we need to stop fooling ourselves into beleiving that ‘we are different’ to everybody else. That has been perpetuated since the late 1980s, and is a load of delusional nonsense. And we need to get our costs into line. That is our problem numero uno. Costs in this country are far too high, and the longer the cost base remains out of line the more economic activity will disappear oversees. But I do not see any public organization admitting that there is a cost problem in the Irish economy. A few economists, but that is about the height of it. Irish people need to abandon the daft delusional thinking that created this mess, and start holding onto the jobs that are still left in this country. This is the intellectual basis of fixing the country. But dropping the delusions would cause a major societal shift. And every interest in the ERI economy will want to control society, to ensure their snout stays in the trough. There is a high degree of control over intellectual discussion in this country.

  31. John ALLEN

    Euro v New Irish Pound – if all the revolutionary ideas in this room come to fruition do the honourable thing ………get out of the Euro….and ….live in the Jungle

  32. Fergus

    Mediator: Thank God somebody is talking sense! Malcolm McClure, the health service is being privatised out the gap as we speak, so maybe we will get to live in your dystopian Chilean paradise.

    Like mediator, I too work in the pubilc service in a middle ranking job. In my own humble opinion, I do my job competently for reasonable pay. The equivalent in other European countries is probably lower paid, but before people start moaning about public service unions, let us all take a breath and see why we are where we are.

    Most middle ranking jobs in the public service (teachers, guards etc) are paid much more than their European equivalents, but the public service unions in those countries are tough when it comes to pay deals as well. Has anyone ever witnessed airport strikes in Paris, metro strikes in Barcelona or Rome etc? They are not to be messed with.

    The problem in this country is that public sector unions sought increases way above their European counterparts because the cost of living in this country is insanely high. It is insanely high not because of the public service, or multinational corporations, but because a triumvirate of developers, bankers and FF Government wanted it to go that way. While they ramped up the cost of living in this country, other service providers and producers got in on the act. We all know how expensive it was to get a plumber to do a bad job during the Celtic tiger era, the insane cost of solicitor’s fees for buying a house, the cut taken by the auctioneer, the surveyor, the cost of insurance, VRT etc etc. The only answer from Bertie and his chums in the Government was to throw more money at everything: thus the pay demands of the public service unions (and others) were met every time.

    Let us be clear on this. If the price of a house and the associated cost of living had not risen exponentially during the Celtic tiger era, then teachers and nurses would not have been looking for 11% pay rises, something that seems insane now. Everybody was “at it” for the simple reason that the Government prized electoral success over any moral authority or vision for this country.

    On a related issue, I personally think the public service in this country is lousy, even though there are some good people who work in it. But again, is that the fault of public service workers? The top of the public service is headed by our politicians,specifically FF/PD politicians, and they have shown time and again that they WILL NOT take responsibility for their actions. When they refuse to do this, then it is hardly surprising that the upper echelons of management refuse to take responsibility for their cock ups (Roddy Molloy a belated exception in exceptional times) and therefore, it is hardly surprising that the lower echelons of the public service are mismanaged and demoralised. I argued about this a long time ago on this forum, following a David MCW article on the train drivers strike in Cork. Irresponsible unions, incoherent management and unaccountable politicians caused that particular strop.

    Yet while the public service leadership is incompetent and unaccountable, can we say that the private sector equivalent is anyway different? The engineers and techies that seem to frequent this forum seem to be hard working and innovative, and I take my hat off to you all. However, the private sector also consists of banks, service providers such as the solicitors and plumbers mentioned above, utilities such as eircom ( a private company that is destroying Irish telecommunications infrastructure in accordance with its fiduciary obligation to its shareholders), and contains managers like Jim Flavin of DCC (only resigned because the Supreme Court found that he had engaged in the criminal activity of insider trading, thus destroying the pension funds of thousands of people: no charges yet to be brought by the DPP of course!).

    My politics are definitely left of centre, but like mediator, I believe that the first part of the solution to this problem lies simply in having honest politicians in charge. Unlike mediator, I do not think Cowen et al will do what he is asking, but strangely enough, I have some hope for the first time that things will change. The old FF trick of driving people out of the country rather than make hard decisions isn’t gonna work this time. Too many people are being hit by negative equity and so remain rooted in their homes unemployed. They will not see cuts in services or increases in indirect taxes while bankers and developers are being protected by the Government. They fell for Bertie’s bullshit the last time (FF topped the poll in every Dublin constituency in 2007), but they do not have the political loyalty their parents had. They will hammer FF next May(and not just in Dublin), and the FF government won’t last another 12 months. It simply does not have the moral authority to govern anymore. At the next election, all it takes is for Labour to refuse to go into coalition with FF and FG, so that these two dinosaur civil war parties can come together in the interests of the nation. They can drive a hard bargain with another, and take the consequences. God knows they’d have a large enough majority. We might then have the grown up politics of a proper left/right divide that this country so badly needs.

    That is the only way a revolution without bloodshed can occur in this country.

    • Fergus

      Two corrections…..1.they will not “accept” cuts in services…..while bankers are protected. 2. They can drive a hard bargain with “one” another, and take the consequences.

    • You mean I don’t get to be head of the junta’s secret police? :-(

      • No. Under the current rules that will be an FF Quango handed out to some loyal servant of the party whose done his (or her to be fair) level best to enrich themselves on the back of the taxpayer for years.

    • Excellent post. I think we’ve seen an attitude from those at the top of the banking sector and the civil service that are directly comparable. It’s the arrogance of the seemingly untouchable. We ask our politicians to be accountable for their own actions and to provide public sector accountability yet it’s a myth. We have the veneer of accountability in processes which didn’t seem to apply to those at the top of organisations like FAS. I blame the Quango and the perversion of its goals by political appointments. We have quango’s that reflect FF in all their mediocrity and cronyism. We have similar issues in the judiciary, again due to political appointments. There’s a common denominator here. The political appointment is the root of most/all evil in this country and we need to change the way many key roles in the management and regulation of the public sector are appointed. Until we do, we’ll find it difficult to improve matters as those who rock the boat are currently not likely to be promoted to manage Ireland Inc.

  33. Paul Moloney

    “Let us be clear on this. If the price of a house and the associated cost of living had not risen exponentially during the Celtic tiger era, then teachers and nurses would not have been looking for 11% pay rises, something that seems insane now.”

    This needs to be emphasised; lots of people, including myself, to whom money isn’t a prime motivator, increasingly felt they had to push for as big rises as possible or otherwise they would be priced forever out of the property market. The property crash will in the long term only be a good thing.

    P.

  34. the mediator

    Couple of quick comments

    I don’t expect for a minute that Cowen et al have the morals or the integrity to do something even remotely like
    I’ve suggested, the point I was making was that they need authority if they are going to make decisions which
    could minimise the trouble coming down the line.

    As for the decisions themselves I haven’t indicated anything thusfar other than pay restraint in public sector.

    Fergus has it right re the high wages in the public sector, I am qualified beyond all of my private sector friends yet during
    the Celtic tiger my pay was far below theirs and I couldn’t afford a house (I mean house, not mortgage as I wasn’t foolish enough to
    buy in and take a mortgage like the majority of deckland). The rise in houses caused the public sector pay bill to rise.

    Last point – I’m a financial economist and can tell you that from my perspective Milton Friedmanism / Thatcherism is the last thing this
    or any country needs at this point. Theres a large lag involved in economics, and whats happening now can be directly
    traced to the policies put in place during the Reagon/Thatcher era

    The next big thing is going to be hyperinflation in the USA which is just around the corner. This seems
    to be whats happening re US bailouts and money supply.

    Would be interested in a comment from David re how that will affect us here in Euroland…

  35. Deco

    Fergus – a lot of interesting points in your entry.
    ‘Let us be clear on this. If the price of a house and the associated cost of living had not risen exponentially during the Celtic tiger era, then teachers and nurses would not have been looking for 11% pay rises, something that seems insane now.’

    I heard a remark from a lady in Portlaoise town, two years ago – she said we make a joke around here – “the only time you see a garda is when there is a house for sale”. She was of the opinion that the gardai were big into property speculation. Now in fairness they face many restrictions because they are officers of legal enforcement. But In any case this seems to indicate that they could afford housing.

    ‘Everybody was “at it” for the simple reason that the Government prized electoral success over any moral authority or vision for this country’.
    You are correct. And the supremo at doing this was the Drumcondra ditherer. Though he did claim to have the ‘vision’ to spend a billion on a third sports stadium for Dublin(or was it a fourth). It came to very little, apart from a swimming pool that was full of leaks. McDowell torpedoed that. McCreevy got shafted because he was not supportive enough of Ahern’s strategy. Then Ahern discovered his true identity and proclaimed ‘well, I was always a socialist all along’. And the binge went overboard.

    Concerning the public sector, problem number one is nepotism. The political parties have become foutains of patronage, handing out directorships here, and management positions there. The entire hierarchy of the public sector is rife with politics as a result.
    It is also the biggest problem in large parts of the private sector. I work in the private sector, and I can tell you it is endemnic there also. You will not see it mentioned on the IDA brochures, or in their Irish Mind advertising. (maybe Pheonix Magazine created a feature for a joke – like they do to describe our politicians minds). It is worse in older Irish owned organizations, especially if they are large. The banks in particular are rotten with nepotism. But it is widespread. Old school tie networks, political parties, family connections, previous employment networks, and of course the entire sports based nepotism thing. Mostly a male thing, though females do it also.

    There are the odd Roy Keane ‘bust up’ moments in Ireland. And there are the odd Willie Walsh figures, who speak plain sense, but who are just doing too good a job, and become a treat to the rest of the establishment. They get shafted. And they always have to leave the country – shafted because if you are too good in Ireland, you are more of a problem than if you are plain awful. Willie Walsh had to leave Aer Lingus, and Ireland even though he was a sharp as a butchers knife. Because Walsh could probably run the country. But the ex-Taoiseach’s ex-girlfriend can stay in the national consumer agency. And what exactly she does for the public, to deserve sure a salary, nobody really knows. And why she is qualified to get there ? nobody knows that either. Roy Keane is villified, but Steve ‘stan’ Staunton(useless) is rolled out for veneration. When Stan proceeds to rally the sheep, er sorry, official version, rallying the troops/the patriots, is anybody surprised ?

    Authority, as always, is the real sacred cow, in Ireland. Once we know that, and once we make that dictinction, then there will be improvement. At the very least, we can stop being other people’s fools.

  36. John ALLEN

    deco – you are the most respected commentator on the blog…well done

  37. Furrylugs

    America led by a Fool of a Fool with Clinton as meat in the middle caused this. In Obama we must have clear leadership. Euroland is failing before our eyes, either via the Lisbon Treaty (Trough) or via the inability to coherently attack the economic crisis.

    Look to our neighbours next door. Woolies and all the other staples that engender a sense of Britishness are being eroded. The British Public expect their leaders to prevent such occurences and are not slow to act when perceived standards drop. If the vaunted pound drops to parity with the Yo Yo, expect fireworks on the streets. There will be a tangible sense of failure amongst the general public.
    That might frighten our buffoons here to actually do something realistic.

    Deckland is being told already that mortgage payments and the cost of living is down. Any leader worth their salt would tell the spin doctor coming out with that crap to go and boil his/her head.

    Today it emerges that local councillors failing the summer elections ,or not even standing, will get 40 k each “severance”. When people get Christmas out of the way, things will start to happen.

  38. johninmunich

    Hi,

    I am 30 so have to completely disagree with some of the stuff written here about an entire generation losing control. I did not follow the lemmings over the cliff and I know many others who did not do so either. There seems to be a perception out there that something needs to be done for Deckland. Any money given away or debt forgiveness would be a complete waste of time. These guys aren`t going anywhere, so the best thing we can do for them is to create an environment which encourages enterprise and creates jobs. Unfortunately we have the wrong people in government for that to happen. I`m glad the Irish government does not have the money for “economic stimulus” as it would likely be wasted trying to promote the construction industry once more.

    The UK and US are trying to create “economic stimulus” by throwing money left, right and centre and increasing their debt further and further. Even if it helps now, it will just create a bigger bang further down the road. And can anyone give me an example of when economic stimulus by a government actually worked in the past? The Germans have tried it before and it never really worked properly for them, which is part of the reason why they are so reluctant now.

    What worries me most about Ireland now is that there is a lot of frustration but no emerging political force. It takes years to build up a party which can attain the majority of peoples trust and also the capability to govern. Local elections would be a good start. It needs to happen soon as otherwise it will be the same parties and same type of politics in 10 years time. I often read posts about the crisis being bad for Fianna Fail and them getting wiped off the map. If that was the case shouldn`t they have been wiped off the map in the 80`s?

  39. Sean

    Well I did my bit when after realising that on above average earnings all I could reasonably afford was a council house in Tallaght (but doesn’t the whole of Dublin look like that) I left in 2003. I went for a ride end to end on the Dart before leaving and in Malahide overheard some vile woman boasting how she had chosen a designer handle for her husband to fit in his ‘latest development’, on the shed door! Get me an exit visa and a sickbag.

  40. Geizer

    To the people who moan about political stagnancy, in my opinion, the government has made it´s bed and now must lie in it. It has created false expectations based on taxes received from the monopoly money (credit) of the housing boom. If it reduces spending, people will be infuriated. If it borrows to sustain spending, the country will be run into the ground. It´s now in a lose lose situation.

    Just like lifestyles and cheap credit cash-flow must adjust themselves with considerable pain to some, so must the political system. We are in a period of adjustment and for all the panic people are experiencing at the moment, the world will not end and equilibrium must be acchieved sooner or later.

    It will be a refreshing change from having graduated from college two years ago barely able to afford rent.

  41. Quote:
    “all it takes is for Labour to refuse to go into coalition with FF and FG, so that these two dinosaur civil war parties can come together in the interests of the nation.”
    Fergus how naive you are. Any one of them would go to bed with the most clap ridden slapper in town for a
    ” car with a star”.!
    “As the heart grows older
    it will come to such sights colder”.
    Besides, Labour only really represent the big public sector unions.
    They did not have the guts to break the umbiblical cord and -like Tony Blair-begin to represent the disaffected people out there. Maybe this Libertas guy Ganley.? Hope springs eternal.

  42. Geizer said:
    “To the people who moan about political stagnancy, in my opinion, the government has made it´s bed and now must lie in it. It has created false expectations based on taxes received from the monopoly money (credit) of the housing boom. If it reduces spending, people will be infuriated. If it borrows to sustain spending, the country will be run into the ground. It´s now in a lose lose situation.”

    Not for four more years it isnt.! Still plenty of time to laugh at the mugs who elected them.

  43. Philip

    A Pinochet style correction might be the medicine we need. I think we all know who to torture as well …starting with them leftie whingers pining on about the lack of PS etc. and Thrifty can still have that job he’s after…

    Joking aside, the PS here really are profoundly crap and I speak with some direct experience of the French and Belgian systems – no comparison in terms of organisation, response and interaction with the public. So, if we went Friedman style, I think no one would notice. We’d just save a load of money. The social impact would be minimal becasue the services never existed. Let’s cut the nonsense about how horrible such a monetarist might be. We are already living it while being screwed by a huge PS bill.

    The harsh reality for this economy is that like any company, if there’s more money going out than coming in, you are in trouble. We just do not have a cash flow issue just now…but that is rapidly changing. I think we are months (not years) from an expenditure freeze.

    And it’s worse than that becasue there is no where to run. There is no safety valve and as the governments start to intervene more trying to maintain the status quo, they will be rebutted by hyperinflation.

    The best thing now is for governments to back off. Just enure that law and order prevails while the economy sorts itself out. This will not happen of course. So my advice is keep yer heads down and go black economy asap with those you trust – becasue the so called real one is about to vapourise.

  44. jk

    rodge, leave Euro and Ireland = Iceland within weeks!

  45. John ALLEN

    USA – HUGE Massive Bankruptcy in USA to be announced before midnight USA time 12th Dec 2008 …………repeat………..repeat……the show has started to travel to eeeeerland ………bring in ……The CLowns

  46. Philip

    Well, if the Automotive bailout has gone west, John ALLEN you could be onto something. Are for the Clowns, we’ve enough of them running about at the moment…

  47. Ger

    The bankruptcy to be announced is not GM, Chrysler or even Citibank. It is another corporation. Rumours flying around all day about this.

    It will be interesting to see who it is.

    Ger

    • Coltrane

      It’s General Growth Properties, big loan refinancing due this evening and unlikely to be met. Quite possible to be extended though. Don’t get too excited though, the stocks already off 96.5% this year.

  48. Time to stop all the talking.
    I’m delighted to hear the German finance minister telling it like it is.
    Bail-out will not solve anything.
    The car industry’s gone – 6 000 000 out of work world wide,. this will help to push quicker the health care system which was going anyway.
    Start stocking up on canned food, you’re going to need it very soon.
    Those of you who can’t stand the word socialism better get used to the fact you’re going to need it now/shortly more than you ever thought. Like when someone falls seriously ill in your family and you need what you can’t pay for.

    O, yes, wolly jumpers. Start learning how to knit.

  49. Shane Dempsey said:
    “I blame the Quango and the perversion of its goals by political appointments. We have quango’s that reflect FF in all their mediocrity and cronyism. We have similar issues in the judiciary, again due to political appointments. There’s a common denominator here. The political appointment is the root of most/all evil in this country and we need to change the way many key roles in the management and regulation of the public sector are appointed.”
    Pray tell us how?
    You had better start the long process then, like getting together some fellows for meetings in beer halls in Munich..(sorry-Dublin)
    Certainly government buildings will be ripe for torching in the coming years..and National Socialism for re-birth.
    We could send the Civil Servants who refuse to accept a 50% cut in wages to “re-education camps”
    Reminds me of a story a friend told me last year when I was in Berchtesgarten in Bavaria (where Hitlers “Eagles nest” mountain retreat was located)
    Seems that Adolf was buying up all the land in the area around his home to ensure privacy etc and one farmer stubbornly refused to sell..
    He was given a choice. Sell the farm or visit a concentration camp. He sold.!

    • Not suggesting anything so harsh. I don’t hate the public sector at all but I think its over-politicised in a way that’s bringing the country to ruin. We need to reexamine how senior civil servants and quangoers are hired or promoted. Many Quangos which are important for regulation or oversight of public and private sectors are political appointments. I’m proposing that this should stop and that obtaining such a position should be a difficult process of multiple interviews with experts from academia, public sector and industry. The panels should be public record. I think the same process should apply to senior civil servants.

      It’s not that I think the quangos are overpaid it’s that I believe that the current process makes it very easy for political parties to give gifts to their friends and toadies of relatively high paying state jobs. We have a prime example of this with Celia Ahern and the National Consumer Agency. Does anybody believe she would get such a position if it was open to all and decided on merit? At least Eddie Hobbs guarantees representational diversity, hailing from Cork :) Wasn’t Celia in a relationship with the then Taoiseach at the time of her appointment (correct me if I’m wrong) Under a reasonable appointment process she should have been AUTOMATICALLY disqualified from such a role. If we have these expensive quangos we can’t afford for them to be toothless or partisan.

      The same goes for the senior civil servants. There’s an strong element of politics in these appointments and a difficulty for those outside the club to get the top jobs. I’ve nothing against paying the top civil servants large amounts of money. We want the best people we can get and they have a position of huge responsibility to the economy. However, their performance needs to be openly assessed in the manner of a board of directors, up for re-election at each AGM. I’d propose that they should have to justify their performance every year. They should face public questions and any pay increases should be given based on improvements made against a range of key performance criteria. Cost-cutting is one of them. There should be no such thing as a one-size-fits-all increment for all the top civil servants. Admittedly they’d have a tough job so we need real performance related pay across the civil service. Those not performing should fear sacking. If only we could do the same for the ministers. Failing that we can start scouting out the beer tents. Where shall we start?

      Although in reality this just side-steps the issue that our elected representatives are a very mixed bag and we don’t seem to have a single inspirational leader among them who looks up to handling the challenges we now face as a nation. Indeed some of them come across as completely inept. When is change going to come to Ireland?

  50. Furrylugs

    Looks like the start of the meltdown with lack of money preventing investment in basics such as electricity and the $5tr TARP strategy hasn’t arrested the banks slide.
    Would a worldwide one year moratorium on repayments across the board jump start the global financial system? People can’t pay or won’t pay which is causing bad debt forecasts to quadruple. That in turn is causing immense damage to business and the only ones making “money” are the markets, which are all grubby speculators anyway. They produce nothing and exist to prey on the weak.
    Take oil. Down to say $25 by Xmas. The old sheikh is still getting the same few bob for his barrel so the difference is pure speculative profit on the market.
    So agree a set price with the old sheikh for say 5 years and take oil out of the loop. Do the same with all essential commodities.
    Bit drastic but so is pouring Trillions into the black financial hole. Essential commodities necessary for existence should have special status and be free from speculation.
    Before the more knowledgeable economists rubbish the notion, I see the JUdge & Jury markets doing more damage at the moment than the original perps. No matter what governments do in good faith, the markets sit back in judgement based on profit while ordinary people are thrown out of work, go bankrupt, divorce or as a lad up the road did last week, commit suicide.
    Social justice has to take the fore now since the money market system is broken.
    We exist to live on this planet not to be hostage to a flawed mechanism designed to help us exist. Money has taken over as the end rather than the means.
    Better stop now before biblical prophesies start emerging.

    • Garry

      Furry, not sure i follow you 100%… one thing I have issue with is “Bit drastic but so is pouring Trillions into the black financial hole.”

      Its being reported like that but I’m convinced people are making serious money out of this…. For every debtor there’s a creditor so the US putting hundreds of billions into companies/funds etc has to be making money for somebody. Now the market is pricing and assigning risk to countries debt, some of the countries that have bailed them out, they have a hard neck….
      But giving these billions away must dilute the value of money in ordinary peoples pockets down the line. I think all derviatives/CDOs and other ‘complex financial instruments’ need to be frozen immediately, and a suggestion by Malcolm in an earlier post, no share trading without exchange of securities at the time of trade to prove ownership. Were just feeding the beast with the current strategy.

    • the mediator

      Furrylugs

      “Better stop now before biblical prophesies start emerging”

      Its already too late in my opinion, biblical prophesies are and have been emerging over the past couple of years. Human
      greed and corruption from our leaders (political economic and religious) have set the scene and we’re about to see the results.

      If you have eyes to see and ears to hear these things are becoming more apparent by the day. The human project to fix the world
      is going full steam ahead re various supranational agencies. Once the major collapses happen we’re all supposed to get in line and
      accept whatever solutions the elites have in mind for us. For example, its going to be hard to argue against Lisbon II when people are losing
      their houses and jobs – I’m not sure I’d even try.

      Don’t despair though – put your trust in something other than people and you won’t be let down.

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