October 6, 2010
The last time I checked there was a harp on the front of my passport, not a picture of Michael Fingleton
The other day I met a German radio presenter from ARD, the German public radio station. I’ve known her for quite a while — since a brief spell working on the German economy in the 1990s for an investment bank. She, like many other foreign correspondents, has been sent to Ireland to see what is going on here.
After a while, I wondered why she hadn’t asked me anything about the Government, or the prospect of an election or what new political constellation might emerge here. She joked and in an exaggerated German accent laughed: “David, it doesn’t matter who your next prime minister is, he will have no power — we own you now, and he will do what we tell him.”
The problem is that the joke is on us. She touched on the nub of the issue: the Irish elite is prepared to sell the sovereignty of this country to protect the likes of Roman Abramovich and other vulture investors who bought up third-rate Irish banking debt at a discount and are hoping to get paid in full.
In the world of debt, these people are referred to as ‘rogue creditors’. Typically, they are treated as rogues. They are nothing to us and should be treated as nothing. As the clever economist Karl Whelan observed, if we are happy that our tax is used to pay Frank Lampard’s wages, then that’s more of a reflection on us.
People such as Abramovich, like the other creditors, can be told to line up in an orderly queue and wait for the liquidator to give them the morsels that might remain from the broken Irish banking system. The crud Abramovich owns — an IOU from Irish Nationwide Building Society (INBS) — is not the same thing as Irish government debt.
The last time I checked there was a harp on the front of my passport, not a picture of Michael Fingleton.
Any political party that fights the election on that premise of protecting the Irish taxpayer from vulture investors will get my vote. Not only will that party be doing the right thing, but it will begin the process of giving back to the people the country that we built. This country and our future income needs to be ripped from the grip of the ‘political elite’ (a group the governor of the Central Bank identified the other day) who are selling us to the lowest, not highest, bidder.
My German friend was amazed when she saw Abramovich’s caper and she observed that the Irish parliament kept genuflecting to some crowd called bondholders. She asked me one of the most insightful questions I have heard throughout this long saga: “Do you Irish need to be loved so much that you will stand up for nothing?”
With Germanic precision and with the benefit of distance, she touched a nerve. The Irish weakness for not causing any trouble (bar a few theatrically drunken songs for the audience late at night) has led us to a situation where we are embarrassed to admit that we messed up. We don’t want to stand out. We don’t want to draw attention to ourselves for serious reasons. Is it because we want to impress the foreigner and above all make life easy for him?
Is it fair to say that over the years the language of resistance has been replaced by the language of compliance?
What is clear is that some countries fight, some make nuisances of themselves, but the default position of Ireland, or at least the Irish elite, is to comply — no matter what the cost.
So take the example of euro membership. Denmark and Sweden — two great European countries whose bona fides as EU members was never in doubt — decided to keep their own currencies because they were perfectly happy with them and the euro’s case wasn’t compelling enough.
Meanwhile, what did our elite do? They went along for the ride — one which the evidence would suggest was an extremely ill-advised ride. Ireland had much greater cause for concern about joining the euro, but we hardly made a noise. Why?
Could it be — to follow my German friend’s line of enquiry — that we didn’t have the self-confidence to stand on our own two feet and do some hard analysis about the consequences of this currency or any other decision?
Did we just want to be a mute member of the club — unlike the pesky Danes, Swedes or, God forbid, Brits?
It is difficult to answer these questions. They are fraught and can lead to lots of heat and sometimes not too much light, but you don’t have to be a conspiracy theorist to see a pattern.
Take, for example, Abramovich owning a huge amount of INBS debt. How did he get his hands on it? Who sold it to him? Would it be too much to conclude that whoever — whichever broker — sold the debt to him, also sold it to some other mega-rich clients elsewhere?
That would stand to reason. If so, could it be that the mega-rich who are closer to home find themselves in the same position as Abramovich?
Could it be that the only people benefiting from the Government’s blind rush to impale the small guy with the debts of Fingleton et al are our own “high net worth” individuals? Could they be pulling the strings?
In all this haze, allegation and counter-allegation, can the “cui bono” question help us at all?
A clear domestic banking resolution law would clear all this up. But we have no such law. So the people are left in the lurch wondering who to believe.
We do know that, for example, the EU Commission gave its opinion on Friday at the wind-up of a Danish bank where it enthusiastically supported the principle of burden sharing.
Here’s the quotation from the EU Commission regarding bust Danish banks: “Moreover, burden sharing is ensured by excluding shareholders and subordinated debt holders of the failed bank from any benefit from the aid.”
There you have it in black and white. This is what the EU has advised Denmark to do. It clearly states that they won’t give any state money to the troubled bank until the subordinated debt holders are burnt.
So let’s get back to my German friend’s observation: is it because we need to be loved or are we protecting someone big?
The EU says burn them and move on. Logic says don’t sacrifice your sovereignty to bail out the hyper-rich, democracy says it is unfair to penalise the poor for the mistakes of the rich. What do you think?