October 19, 2009
Do you remember back in school how the smart lads in the top class looked down their noses at the other lads in the streams below them? I have distinct memories of the fellas in the top stream at my school, many of whom went on to be doctors and lawyers – and who are now at the top of their professions, having a lofty view of their own abilities.
Why wouldn’t they? They were mainly decent enough fellas, and they were lucky because the entire Leaving Cert system was designed to bolster their egos, tell them how clever they were and usher them on a professional southside Dublin path to prosperity. They were very much the type of lads that the system was designed to foster and produce – the six straight A merchants.
After school, they flew through college and joined big accountancy or law firms, while the doctors went to the US to work like dogs, climbing up the greasy medical pole. They all sought the financial nirvana of a consultant’s position back home, knowing that it guaranteed a huge income and buckets of status in an increasingly status-obsessed society.
In the meantime, the lads in the streams below got on okay in the Leaving Cert, and many went into business, buying and selling, ducking and diving. As is the way of things in a big rugby-playing school, the two tribes – many of whom knew each other, but never really hung out together – would meet up at internationals and the like, swapping stories as their paths went on different tangents.
Over the years, many of the lads who were academically ‘average or below average’ moved into property and finance.
Some initially sold insurance or worked in the banks. Others might have moved into the building trade and graduated from site managers to having their own small companies.
By the 1990s, these lads, if they were still here, were starting to get a few breaks.
Others who had emigrated and got into business abroad thought about coming home to an Ireland that looked as if it was finally changing.
The top-stream boys carried on at the law firms, gaining status as they moved upward, becoming more and more respectable as they grew in seniority. In the big accountancy practices, they were being bumped up to partners and, although they worked outrageously long hours, the prize was in sight. The doctors, by their mid-30s,were on their way home with consultant positions up for grabs.
Most of them were also getting very rich.
The smart boys had joined companies which were benefiting enormously from the boom. The law firms, the consultancy outfits and the accountancy firms – not to mention the banks – were making a fortune, and they were all taking their cut. A small bit of a huge and growing pie becomes significant very easily.
The Dublin professional classes had become very wealthy in the boom. And the extraordinary thing about all this was that, in the main, they didn’t take any risks. They just worked hard, charged huge fees and, with both eyes firmly set on leafy suburbs, moved up the ladder. They had huge status and, in some cases, egos to match.
In the meantime, the lads who had done pass maths in the Leaving Cert were also on the make, but they were in business and property. They were making even more money than the straight-A boys. They were buying and selling, wheeling and dealing and, most of all, flipping.
They had seemed to be able to make money out of nothing, buying property and then selling the stuff on in a few months – making an enormous and seemingly effortless twist.The ‘stupid’ lads, at least in the eyes of the straight-A students, were achieving far above their abilities – and it all seemed so easy.
This is not what the system and the doting mothers had predicted. They, the professional class, should be on top – after all, hadn’t they done honours Latin, Irish, French and maths – not to mention the sciences – for the Leaving Cert? The ‘stupid’ lads just kept buying and selling, and now they had this new thing called leverage, which made the gains astronomical.
So, around 2005, just as the market was peaking, the smart lads decided to get into the game. They were invited by the ‘stupid’ lads they knew in school to get into what were termed ‘syndicates’. The less academic fellas were putting these things together all day, promising riches beyond their smart lads’ wives dreams. They all knew each other, after all, so everything would be grand.
Because the smart fellas had never taken a risk in their life, they had no idea how to access risk. They thought it was easy to become a Dermot Desmond.
They thought that the type of calculations someone like him was doing on a minute by minute basis couldn’t be that difficult, particularly as lads four streams below them in school could figure it out. And so, about four years ago, the complexion of the property market changed.
It became a free-for-all for the lads who’d done well in their Leaving Cert, but wouldn’t know how to ‘take their profits’ in a month of Sundays.
The people they used to look down on – the pass maths students – saw them coming and began to sell property syndicates to them, pretending that the clever lads were getting the deal of the decade.
So the professional classes, having been told from their childhood onwards that they were geniuses, were too arrogant and hubristic to know they were being had. After all, why would they not think they were smarter than the lads who had sold them the deals? They were smarter, and they had the UCD parchment on their mammies’ living-room wall to prove it.
But, in truth, the smart boys knew nothing about commerce, and had just bought a pig in a poke. Then the crash happened, and the chill could be felt in the equity partner offices of our top law and accountancy firms. These guys are now bankrupt, with enormous cash calls being made to finance the syndicates that are now under water. The top barristers and bankers were equally hammered, because they didn’t understand the rudiments of commerce. They thought it was easy. We are now left with the destruction of Dublin’s – and other cities’ – professional classes.
But the professional classes aren’t giving up that easily. They need to protect themselves, and what better way to do it than with Nama, a construction so devoid of commercial common sense – and so complex and legalistically elegant – that it could only have been constructed by a swot, a straight-A student whose mammy always thought commerce was vulgar and not for her boy.
Nama can be seen as a ‘class rescue scheme’ for Ireland’s professional elite. It has all the hallmarks of something that was constructed by the clever lads. The same ones who destroyed themselves and the property market at the end of the boom are now, via Nama, destroying the property market in the bust.
They didn’t understand commerce on the way up, which is why so many of them are bust; and they don’t understand the basics on the way down, which is why they have come up with Nama.
And who is going to gain from it? They are – because a floor has been put on their investment portfolios and, more to the point, they will make a fortune from the legal and accounting fees which will come with the bureaucracy of Nama.
The pass maths lads can see that the thing won’t work, which is why hardly any business people support it – but, then again, the sense of entitlement of the straight-A fellas is so strong that even a national catastrophe could not dent it.