Ghosts of Anglo’s Past

If Irish water is the Omnishambles of 2014 then Anglo Irish bank is likely to be the omnishambles of the first several decades of this millennium.  Like some banking Chernobyl poorly encased in an ill designed hastily erected carapace it continues to leak its toxicity poisoning all around it.  Anglo let us not forget was brought low by its participation in, fuelling of, and entwinement with the housing market.

The first act of this government, elected with a massive mandate to drive a democratic revolution, was to pay an instalment of the promissory note. This in my opinion was the font et origo of the malaise that affects the coalition, proving that it takes a very short while for the elected to lose touch with their promises.  It became very clear that it was in fact to be Frankfurt’s way.  Anglo, like Jacob Marley, rattles and moans, an object lesson to Labour in particular. In A Christmas Carol Scrooge listens to the warnings of his past. Will they listen? The next instalment of the notes was parked, rolled up in effect. That bought time. Faced with a large bill the government then enacted a feature of financial legerdemain, converting the promissory note, which had previously been argued by Michael Noonan to be illegal,  into national debt, indisputably and ineradicably legal.  We will continue to pay, in a strange and convoluted manner, €25 billion over the next several decades for Anglo Irish bank.  Having had an opportunity to walk away the government buckled.  They have been buckling ever since. 

Again let us not forget Anglo was brought down by the property bubble.  This last couple of weeks we have seen the national asset management agency, a bad bank set up as a skip into which rotten loans could be thrown in order to prevent them further infecting the banking system, converting itself into a property developer. NAMA is of course owned in the legal sense by the very banks which it was set up to save.  The last paragraphs of animal farm were never so apt as now.  NAMA has done a great job of slowly drip feeding out the underlying properties, preventing a precipitous crash, and doing its part in supporting the “ongoing recovery” of the property market.  The banks still remain in severe difficulty, the property market is at lethargic, but those who were involved in the market as middlemen are beginning to make a killing again.  With 40% price rises over an 18 month period somebody is making money.  We have forgotten that high house prices are toxic to the economy. And they are clearly toxic but addictive to the elected government. The government was spooked when the financial regulator, rightly pilloried for not having done its job in the boom, did its job. Why the argument “making it cheaper to buy houses” is not deployed is unclear

We have 90,000 persons on the public housing list, we have an epidemic of hidden homelessness, we have rents rising to the level where they are becoming unaffordable, we have anecdotal evidence of international inward executive movement being stymied by the Cost/quality ratio of Irish housing, we have people literally dying in the streets because they cannot get into emergency shelters.  Unbelievably, the government are considering, , and it is not even April 1, paying €250 million to the subordinated bondholders of Anglo-Irish bank. That’s 2/3 of the budgeted spend on health service capital.  It was the need  (never explained) to protect the subordinated bondholders of Anglo Irish bank that precipitated the need to protect the subordinated bondholders of all Irish banks, which precipitated the need to protect higher rated capital, which precipitated the bank guarantee.  Six years on and we face into a situation where rather than spend €250 million on purchasing emergency housing, on alleviating Child poverty, on proper redress for the many victims of state activities in the 50s 60s and 70s, on fixing many of the elements of the Irish society in which we now inhabit, the government are willing to spend €250m to placate the very risktakers who gained high yields in exchange for taking on high risk.  This is not just economic nonsense, it would be a profoundly immoral act.  If the government wonder why their popularity is at rock bottom, why people have in large swathes given up on established and indeed organized parties, and they need look no further than this proposal.  Economic nonsense, political insanity, moral bankruptcy…  What’s not to like…

Even if they decide not to pay these monies the on-going elimination of billions of euros on an annual basis consequence to the conversion of not-national debt into actual-national debt will continue.  We have become desensitised to the magnitude of the immorality of this act.  We have become desensitised to the fact that a housing boom is being stoked, a boom which serves us ill, but which may provide an extra vote here and their are in the middle-class suburbs that are the heartland of the Labour and Fine Gael parties.

The last but one issue of the National Geographic magazine, to which I have been subscribing since 1976, contained a very interesting piece on real-life zombies.  These were parasitical insects and fungi that take over their host, killing but maintaining a semblance of life in pursuit of the parasitic aim.  The more I see the more I think that the Irish body politic has succumbed to some form of zombie parasitism, we being the host and the driving impulse being towards the creation of more and higher house prices. 

 

This is a version of a column published in the Irish Examiner 6 December 2014