October 21, 2009
As the 10.50 train from Galway to Dublin pulls out of a rainy Tullamore, it is difficult not to conclude that the country is in a garrulous and angry mood. My neighbour — a middle-aged woman with grown-up children — has just got off but she was livid, venting spleen since we left the fields of Athenry.
Her predicament is not unfamiliar. Her children are in negative equity. She focused on a book I had published two years ago called ‘The Generation Game’ which foretold of a generation — the “Juggler Generation” — people in their 20s and 30s who would be the main victims of the coming housing bust, which had yet to materialise.
What I had failed to appreciate fully back then is just how impossible it is to separate the generations in Ireland. We are all in this together now. When one generation loses out, so too do all the members of their family, usually, beginning with the person who worries most about everything, the Mammy.
This was not the first such experience of people’s anger I have had in the past 48 hours. On Sunday night, I got the train to Cork and had a similar experience and on Monday, after working in Cork in the morning, I hopped on the City Link bus to Galway. There is no train from Cork to Galway — a point that the American opposite me on the Dublin-Galway train couldn’t get her head around.
But not to worry because the bus is a fine and cheap way to travel between Cork and Galway, equipped with WiFi and comfy seats and the most jovial driver I’ve had the pleasure of meeting for a while. The bus is full of pensioners, students and Poles. By the time the 2pm City Link to Galway was in Mallow, a few students had struck up a chat with me. We talked about all sorts, the world, Ireland, the economy and of course, what they were going to do when they left UCG.
They too were angry and like the mother on the train, they were angry in a misdirected way. They knew something was wrong and they feared for the future, but they didn’t quite know who was responsible. Who was to blame? Was it the banks, the politicians, the landlords, the builders, the public sector, the private sector, the immigrants?
On Monday night, the television similarly featured people who thought they had been had. In reality, at the root of a lot of this anger lies personal responsibility because no one forced anyone to do anything. But that said, I do share sympathy for people who got into the property market late, not least because the State did everything in its power, bar coercion, to push people onto the ladder. In this lamentable venture, our politicians were aiding their friends in the banks who we are now bailing out. The simple circularity of this argument is what pisses the average person off more than anything else.
The mother on the train asked me why, if there was a NAMA for the banks, couldn’t there be a NAMA for the people? Fair question and in financial terms there seems to be no reason to favour one sector over another. In fact, if you are going to borrow money to bail out rich bank creditors, why not bail out out struggling bank debtors?
This column argued last year that once you start deviating from the basic capitalist principle of risk and return by protecting bank creditors from the stupidity of their own decisions, via NAMA, then it is hard to know where to stop. If the bond investors who took a punt on AIB or BoI did so for precisely the same reasons as the first-time buyer, should they not be treated equally? Both the creditors and the first-time buyers assessed the information they had and made a financial decision which turned out to be catastrophic.
The professional bond investors believed the hype that the Irish banks could grow and grow based on a rocketing housing market and the first-time buyer believed the hype that the housing market would continue to grow and grow based on the rocketing banking sector. The creditors and the first-time buyers are different sides of the same coin. Yet the State has decided to bail out one side and in so doing, given the other side a legitimate cause for anger, which is festering contagiously.
The Government seems to think that if it shafts the bank creditors they won’t be around next time when the State comes looking for money. The State knows that the citizens have nowhere to go, so if they shaft us now, we’ll still be around next time. It is a simple, if devious calculation but in so doing, our Government has turned the iron rule of capitalism on its head and also undermined its own political legitimacy.
The idea that bond markets would close in the case of a deal with a bank’s creditors is a dreadful misunderstanding of the way the financial markets work. Financial markets are always forward looking which is why some of the investors buying Bank of Ireland stock today are the same people who lost their shirts on the same stock last year.
In contrast to the financial markets, which are forward looking, the electorate is backward looking. We have memories and while we can’t disappear like bond creditors, we can exercise a democratic mandate.
This is where this misdirected anger on the bus, on the train and in the bar is worrying. Because the Government, through farces like NAMA, is destroying the credibility of all party politics as we know it. It is destroying the centre.
With so many people, rightly or wrongly, feeling betrayed and hard done by, the chances of a lurch in politics cannot be ruled out. Thus far, we have been extremely tolerant, some might say even docile in the face of the unraveling of our economy. Will this last?
Who is to say a messianic leader will not emerge in the next year or so to harness all this anger?
At the moment the false dichotomy of “public versus private sector” is being exploited by all sides. But there are no distinct lines in Ireland. Most families are made up of gardai and nurses as well as small business people and employees of large private sector companies. It’s not as easy as one side against each other. That’s not how this country works. So, in truth, we are limbering up for a monumental scrap with ourselves.
As the anger mounts and the body politic atrophies, the only question, as Yeats posed 100 years ago, is whether the centre can hold?