ahern:dempsey90205587dan

From top: Fianna Fáil ministers Dermot Ahern (left) and Noel Dempsey; Ajai Chopra (centre) and  Ashoka Mody (left) of the IMF with Jerome Hughes of TV3 in November , 2010

The fifth anniversary of the bailout prompts some overdue myth-busting.

Dan Boyle writes:

Greens don’t lack for apocalyptic anthems. In the 60s there was Barry McGuire with ‘Eve of Destruction‘. In the 80s R.E.M. were telling us ‘It’s the End of The World‘ as we know it. My own favourite piece of singalong depression is David Bowie’s ‘Five Years‘ from his ‘Ziggy Stardust’ album.

I make this tenuous connection, between half a decade and the apocalypse, because over the next month the phrases like these will be linked ad nauseam. I want to get my spake in first.

This month sees the fifth anniversary of the bailout of the Irish economy. A national embarrassment certainly, but also a course of events we are still many years away from understanding in its full context.

Let me try to put aside some of those myths. The first of those was that the government knew for a considerable time what was likely to happen. The Noel Dempsey/Dermot Ahern doorstep was offered as definitive proof. I hold no brief for either man, and had had severe run ins with both, but neither knew that the IMF was on their way.

Brian Lenihan may have known something but found it difficult to trust many or share information. Green Ministers were better briefed than many Fianna Fáil Ministers. As party chair and our finance spokesperson I was just as well briefed. The Green parliamentary party understood the situation far better than its Fianna Fáil counterpart.

The country was being bounced into the bailout. The ECB and the German government wanted this to happen. Their rationale was certainly punitive. The bragging of the Celtic Tiger era had come back to haunt us.

Patrick Honohan, who was the right choice to lead the Irish Central Bank, became bouncer in chief. His motives were right but I believe his intervention then was wrong.

Let me post a number of alternative scenarios. One is that the IMF should have come earlier, say at the time of the Bank Guarantee. The medicine would have been more severe but recovery could have happened more quickly.

The second scenario was that intervention need never have happened. The revised programme for government in 2009 had already committed to water charges and a site value property tax. If the government had served its full term until June 2012, most of the heavy lifting would have been done.

Neither Fianna Fáil nor The Greens would have received any political benefit, perhaps rightly so, but the country would be in a better, fairer place.

The final myth I’d like to puncture is that the opposition then, singularly and collectively, acted in any way in the national interest. The political interest was always foremost. I can’t deny that if the shoe was on the other foot that it would have been any different, but the ability to look beyond the next election has served us badly. Again.

A one term national government along Swiss lines, may have been the best option altogether. But then, as now, the political interest will always hold greater sway. The saddest fact is that it can all happen again, as if it had never happen before.

Dan Boyle is a former Green Party TD. Follow Dan on twitter: @sendboyle

59 thoughts on “Five Years

  1. mauriac

    it wasn’t a bailout of the Irish economy.it was a bailout of the banks and a small golden circle which crippled the Irish economy.

    1. ReproBertie

      The same golden circle that either retired with massive pensions or took well paid jobs within NAMA. Either way, they got off scot free while the rest of us were, and still are, shouldered with their burdens.

    2. Owen C

      It was a bailout of bank depositors, bank bondholders, sovereign debtholders/creditors and senior public service workers/pensioners (ie: people in receipt of pensions or at advanced stage of career and drawing down these pensions in short or medium term. It was not a bailout of junior public sector workers – they will pay at least a material amount of their eventual pension pots). Essentially it was a bailout of creditors of the Irish banking system and the Irish state, both domestic and external. It was a bailout of the ECB in this regard, but a central bank would always be the most senior creditor in any insolvency, so they were always going to be repaid, so they were only bailed out in extremis.

      It was not a bailout of banks themselves (previous shareholders took massive or total loss writedowns), developers (most were treated toughly by NAMA), or any alleged “golden circle” (excluding public sector pension holders mentioned above). It was a partial bailout of Irish banking sector workers (as many have lost their jobs, or taken large reductions in effective take home pay via loss of commissions/bonuses).

      1. ReproBertie

        “developers (most were treated toughly by NAMA)”

        Treated toughly? Their debts were taken off their hands and replaced with jobs paying €100K or €200K a year. If only someone would treat me so toughly.

        “NAMA is paying FAR MORE than developers’ salaries – developers’ salaries are just the tip of the iceberg. NAMA is paying entire overheads for developers’ companies. Earlier this year in a Dail Parliamentary Question, we learned that NAMA is paying €55m in overheads to 41 developers – that’s more than an average of a million apiece.”
        https://namawinelake.wordpress.com/2012/07/17/myths-and-realities-about-nama-and-developers-salaries/

        1. mauriac

          poor Johnny Ronan treated so roughly by shielding him from creditors ,paying him €200,000 then letting him exit stage left with all his assets.
          one scenario Dan doesn’t mention is bank nationalisation and bankruptcy for bondholders and delinquent developers while keeping the guarantee in place for normal depositors.
          whatever way you slice it f.f. (and fg in turn) prioritised a relatively small group of insiders over the good of everyone and their children and grandchildren .

          1. Owen C

            he exited left stage by paying 100% for those assets. I don’t really know what you were suggesting as an alternative? Asset seizures even for guys who were paying their debts?

          2. Owen C

            Mauriac

            the amount that could have been saved by burning bondholders is very dependent on the timing of such an act. In Oct-2008, it would have been a large amount. In Nov 2010 it would not have been. And with the insolvency of the banks, there obviously would have been severe knock on effects for the rest of the economy, not unlike what we have seen in Greece this year. The guarantee to be sure was a horrific mistake (more so with hindsight), but it was not a €50 billion mistake. Probably something more of the order of €10bn. A lot of money, but not as big as people think in the context of a €190 billion economy.

  2. ahjayzis

    We’ve had a national government already – in that our wishes last time out were completely ignored and this government has followed on precisely the path of the one we threw out. We would have saved money on pensions and pay-offs if we’d just cancelled the last election, the results would be the same.

    I didn’t understand the argument at the time – a ‘National Government’ is deeply undemocratic – basically all the parties ganging together in a bid to offer zero choice.

  3. Clampers Outside!

    The first “myth” is believed by feck all people, the govt was clueless, simple as.

    The second “myth” is a scenario and is 20:20 hindsight and nothing more. IW & LPT on the way, if the time in govt was served to 2012…. so?

    The third “myth” that “opposition then, singularly and collectively, acted in any way in the national interest” …I dunno what you are reading or what circles you are socialising in, but I don’t know a single soul who would believe that statement.

    Mythsbusted… No gold star for you this week Dan.

  4. chicken

    “The ECB and the German government wanted this to happen. Their rationale was certainly punitive. The bragging of the Celtic Tiger era had come back to haunt us.” – this has to be the best line of the piece!!!
    Yes ECB and Germany were so jealous of the Celtic Tiger they “wanted” to bail us out – as payback for success or what????

      1. Anomanomanom

        We had plenty of reason, just unfortunately one of the worst governments in the history of the state, and they threw that reason away buying votes. Not to mention some very corrupt people who will live out their life with fantastic pensions.

  5. perricrisptayto

    How’s that 20/20 vision with hindsight coming on dan?
    Pity you had no answers when you had the power.

  6. Zuppy International

    But, but, but…

    The Greens were in the cabinet at the time of the bailout and in the government during the run up to the same bailout so stop trying to airbrush yourselves out of the responsibility for the disastrous decisions YOU AND YOUR PARTY made in the name and favour of the criminal crony banksters.

    There is a reason the Greens were wiped out at the last election Dan, and you fupping know it.

    1. Neilo

      Come over to the Dark Side, Clampers! Tell me there isn’t a thirst for strong fiscal medicine deep within you…

  7. fluffybiscuits

    He kind of hangs himself on the point that he mentions the ministers in the Green Party were better informed. Were that to be the case they should have known been of the left persuasion (just like Labour) that they could have foresaw the crash. As they were however capitalists, capitalism would have dictated that the banks closed and free market forces do the rest of the work.

      1. fluffybiscuits

        You could have introduced a financial transaction tax on speculative stocks and bonds and especially commodities, introduced an extra .5 % Corporation Tax, Changed tax rules for non domicillory residents, raise tax on tobacco a tad higher., Increased inheritance tax and cut back on spending on the arts, Irish language and other areas.

        So that is right do not dare think outside the box

        And that is why you went the way of the PD’s…

        *Sigh*

      2. ollie

        Dan, do you actually know what the word “government” means? If you do, and you put forward a hunch about 2 government members as proof that the bailout came as a surprise then you are a fool.
        Also, as has already been pointed out here ( a point which you have chosen to ignore), the Irish economy wasn’t bailed out. Private banks and their investors were to the tune of 100% of what they were owed plus interest.
        Greens in government were a disaster. Their legacy includes such notables as cheap car tax for those who can afford luxury cars and huge profits for retailers who can now sell plastic bags instead of giving them away for free.
        Bravo!!

  8. Dan Boyle

    We did change no dom rules and increase capital taxes. We proposed several of those things. Wanting them and getting them never the same.

      1. Dan Boyle

        We did leave when it became impossible for us to remain.18 months before the term was to finish. Before that we stayed because we knew a change of government would not bring a change of approach, and by staying we

        1. Dan Boyle

          By staying we helped influence budgets in a more progressive way than any of the budgets that followed.

  9. Mourinho

    The Greens were so focused on fixing the economy that they brought in legislation about the sex life of dogs.

    1. Dan Boyle

      Again wrong. That bill was introduced by Dick Roche. Others chose to give that an importance we never felt it had. The economy totally dominated our time in government.

        1. Dan Boyle

          From government very little. Most of my pension contributions were made while I was an opposition TD.

          1. Owen C

            so a 2.5% pension contribution? Thats vs a 25-30% funding cost. So lets be clear, around 90% of ur pension is funded by the taxpayer, not your contributions.

          2. Dan Boyle

            Have answered that question on many occasions. It’s publicly available information. The formula is known. My salary was known. My time in the Oireachtas is known. My experience is that most who ask that question already have the answer.

          3. Sarah

            Dan, I don’t know what your yearly pension is, that’s why I’m asking. Could you answer the question if it isn’t too much. Just a figure for the gross yearly amount. Thanks.

          4. Dan Boyle

            I don’t play games Sarah. It’s a figure that’s been published in public many times. The information I’ve given you is sufficient to work it out. In serving almost ten years I qualify for one quarter my average salary. In my case that’s about one and a half times the old age pension.

          5. Sarah

            Dan, I’m a working mother, I’m not flush with time. I googled ‘Dan Boyle pension’ etc. but nothing came up. You’d swear I asked you for your pin number rather than just a simple thing.

          6. scottser

            a true politician’s response dan; answering a question by not answering the question. you won’t even give us taxpayers the simple courtesy of advising us of how much you’re taking off us every month.

          7. Dan Boyle

            It’s a question I’ve answered many times. I’m not going to spoon feed people. It’s publicly available information, as someone on this thread has all too clearly shown.

          8. Sarah

            Is your pension really 20 grand? You retired aged 48 and get a pension of 20.000? I don’t make that in a year, and I work for that. I won’t be getting a pension til I’m 68, 20 years after you retired. That’s insane, just beyond corrupt.

      1. Anomanomanom

        You can’t honestly think your time in government was in any type of success. Everyone and their dog knew of the going’s on in the government and you lot stayed in with them. The biggest gangster in the history of Ireland got a send off with a very personal touch from Bertie, that alone sums up that government.

  10. Jake38

    In the 1930s that economic giant deValera decided to start an “economic war” with our biggest trading partner. To describe the result as 20 years of economic decline would be charitable. By 1958 the population had fallen to 2.8 million. In 1977 Jack Lynch bought the election with a string of populist giveaways that would make your eyes water. As a result by 1985 the country was almost bankrupt again and the young were leaving the septic isle in droves. In 2003 that other gombeen statesman Bertie Ahern revved up another overheating economy in time to win another election and ensure the biggest crash in the history of the state. Only one thing is certain. They will do it again.

  11. ollie

    Spot on Jake!

    The difference between the latest economic collapse and previous ones is that the punt couldn’t be devalued this time to hide the mess.
    Anyone remember mortgage interest rates of 14% in the 80’s?

  12. Truth in the News

    The former TD who has a high profile and can’t answer a simple query what Dail
    Pension he recieves now indicates a certain kind of arrogance, that infects a
    certain element of the Political Class and it seems the Greens are not exempt.
    Its delightfull to see that they self destucted, in respect of the IMF Bailout, all
    this was to borrow money from the IMF to Bail out Bondholders, German Banks
    and Wall St that have insured them and straddled the Irish Taxpayer for Generations with Debt, those responsible for the continuance of this debacle
    will soon go the way of the Green and Fianna Fail.

    1. Dan Boyle

      Arrogance is ‘asking’ questions to readily and publicly available information over and over again, only to use any answer as a pretext to express an already ingrained disgust. That’s what’s dishonest. Anonymous keyboard warriors whose anonymity they believe gives them the right to be sanctimonious about anyone who attempts to be open and honest. The internet is full of ‘are you still beating your wife’ questions. Those who ask these questions don’t want answers, they aren’t open to persuasion. That’s my rant done.

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