March 2, 2011
Yer man never stands his round.
He does normally.
But he’s not doing it now.
‘Cause he is broke.
I don’t care; a man has got to stand his round.
What are ye havin? I’m buyin’.
Good Man. I knew you’d always cough up.
Never let it be said I wasn’t good for me round.
Why is it that even when a fella hasn’t the arse in his trousers, he will never hide on his round?
We’ve all been there. In the bar, in a round, you know you won’t have a bean when you get home but tomorrow can look after itself; you won’t be seen not to pay your round. In contrast, we all know of the lad who will disappear out for a fag when his round is imminent. Such evasions are noted, especially among friends.
But, no matter how broke we are, we in Ireland will always dig deep. It is all about the shame of not having enough to pay our way, so we find the cash even when there mightn’t be a sausage at home. The poorer the man, the more he pays his way.
Normally, a rich guy is much more nonchalant about not having cash on him and is not fazed by the idea that he will get you back tomorrow. But the poor lad, the one who is financially insecure, will always be the first man with his hand in his pocket. No round is too large, no double brandy too extravagant.
Sure why not make it a Remy Martin, while you’re there?
He just wants to be one of the lads and if he has to scrounge the money in secret he will. The poor guy who can’t afford it gets further into debt just to keep up appearances, because keeping up appearances is important.
Paying his way becomes a form of perverted personal pride.
Rather than leave the bar, he stays to pay so as no one will whisper behind his back. He is the small guy trying to act like the big lad.
Small countries that are broke often act the same way before going bust.
By pretending that we can afford the bailout, Ireland is now behaving like the poor guy at the bar, digging deep for the last few cents to keep up with a round system that he can’t afford. We know that we can’t afford the IMF/EU deal, even if the interest rates were half the 5.7pc, and the reason we can’t afford it is that we are the poorest country in Europe. Yes the poorest. You read right — poorer than Albania, poorer than Serbia, poorer than Bulgaria.
If the definition of wealth is the difference between your liabilities and your assets then the definition of poverty is how much greater your liabilities are than your assets.
We are the most indebted nation in Europe and although it doesn’t seem like it now, we are among the poorest. Granted, our capacity to earn is higher than traditionally poor countries, but our balance sheet is wrecked. It is being kept afloat by more and more loans from foreigners.
Let’s look at the figures to see just how broke is the lad buying the round.
The Central Bank of Ireland released some interesting data on Monday. In its monthly ‘Money and Banking Statistics’ for the first time it released a consolidated balance sheet of the guaranteed banks. It does not make for pleasant reading.
At the end of December 2010, our banks were borrowing a (net) â‚¬153.5bn from the ECB and Central Bank of Ireland. Meanwhile, guarantees extended by our government now cover â‚¬196.4bn worth of bank liabilities.
For any of us who imagined what the guarantee might look like in the crisis of September 2008 and were adamant that a timeframe be put on it and that time be used to sort the banks out, the fact that the guarantee is still in place and these banks are still open is a sick joke.
The â‚¬196.4bn does not include the â‚¬31bn of promissory notes we have issued or the â‚¬7bn of preference/ordinary shares we own in AIB and BoI or even the â‚¬4.7bn of cash we put into Anglo, Irish Nationwide and EBS.
Looking at those huge numbers, you’d nearly think for a minute that we are a rich country. But we are anything but. In fact, we are broke.
This, of course, puts Ireland in a rather ridiculous position. We cannot afford to pay our day-to-day bills, yet we are saying that we can afford to pay billions to our banks.
There is some kind of reality failure going on here. We are the lad at the bar shouting out a round he can’t afford but far too proud to tell anyone of the real financial position. But deep down everyone knows.
There is a chance that our new government will face reality and admit that we are on the road to national bankruptcy.
Like many lads at the bar, penury was caused by incompetence, arrogance or a blunt refusal to face the facts.
Let there be no doubt about that. Cutting interest rates on the EU/IMF package that exists only to save the banks is not going to make any difference. Proper negotiation is needed, and if that fails, unilateral action will be required. To make that unilateral action more palatable and more democratic, it would be a good move for the new government to call a referendum on the banking stitch-up. This would ease their position and make it more difficult for the EU to actively crush Ireland.
We voted on Friday last and by today we know almost every TD who is going to be in the next Dail. During those six short days, more than 850 people will have emigrated from Ireland. This is the human face of this economic tragedy.
But maybe the people leaving now are those who can get out. There are plenty living in Ireland who cannot escape, or feel they cannot. This is the case for owners of the one in 10 mortgages that are in arrears.
In 2007, I published a book called ‘The Generation Game’ which focused on this generation who would have to default on their mortgages and explained that these would be the people who really paid for the boom. At the time, the usual suspects sneered and laughed at such a prophecy. Today it’s a reality.
It is time to tell the ECB they are not getting their money back because, after all, this is what a Central Bank does, it is the lender of last resort. It is time to walk away from the subordinated debt holders. It is time to force a debt for equity swap for the remaining bondholders and it is time, armed with an overwhelming referendum-based mandate, to stand up for the people.
We need to stop buying rounds we can’t afford. We need to stop desperately trying to be one of the lads. We lost face years ago when the clowns ridiculed the sceptics and drove this economy over the cliff. But there is always time to change and no time like right now.