Categories Uncategorized Irish Journalism during the Celtic Tiger period Post author By Philip Lane Post date March 24, 2015 43 Comments on Irish Journalism during the Celtic Tiger period The Media Show on RTE Radio featured a debate between Harry Browne and Richard Curran – podcast here. Related ← Mortgage Debt Restructuring → When is macroprudential policy effective? 43 replies on “Irish Journalism during the Celtic Tiger period” Woodward and Bernstein I mean, journalists can talk all they want to talk really. But if Ireland had about a 0.02 level of a Woodward, and about 0.01 level of a Bernstein to go with Woodward, . . . then this whole rotten story about banking and politics in Ireland, would have been blasted wide open, a decade ago. Experts may wish to debate the ratios, that could be deemed appropriate, but I’ll stick to my own guess-imate. BOH. The fact that Irish journalists have not identified one single bondholder and have zero interest in doing so says all needs to be said about Irish journalism Look no further than the recent press coverage – and the public pressure on Patrick Honohan which it whipped up – from October onwards in response to the Irish Central Bank’s announcement that it intended to regulate the supply of credit available for bidding up property prices. There is an aptly titled thread on some of it here: http://www.thepropertypin.com/viewtopic.php?f=10&t=63661 Re: Main Street Journalism Journalism is a lot like a main street. There are different parts, of the street. There is the part with the sports bars, and the guys wearing jerseys stumbling in or out of crowded, rowdy sessions. There is the part which is all pink with sparkly things scattered all around. The part with black expensive leather, with silver metallic accents. And the part with diamonds embedded in other precious metals, and watch faces, with various Swiss logos visible in them. Then there’s the part, of journalism main street, which comprises of several lots, which loosely are referred to as investigative. In Ireland, it seems as if all of the other lots, had been thriving. There is always one or two lots in a mainstream though, where the beer cans and burned out vehicles reside. It’s the location, where sometimes even the crazies might move in, and paint the walls using aerosol paint. For some reason unknown, in Ireland, these were the lots of mainstream journalism which would otherwise be referred to as investigative. Sure, all of the other parts of the street do add colour and they are variety, even some sparkle. But for some strange reason, in Ireland, those who would attempt to set up their stall on investigative lots, would find themselves trying to survive against the odds, in a small part of it, where even the police would avoid. It was there, all along, with its weedy out-growing, the old carcass of a hungry animal, years of discarded crisp packets and bits of drenched paper, or cardboard. These lots of main stream journalism, fell victim of the general neglect that was a feature of these particular lots. And as mentioned, the refusal, to operate in these places, invariably leads to only one thing in the end, . . . some guys who might be half way or all of the ways around the bend, . . . fill the void that is left. I am even tempted to mention late-night television or radio slots in national broadcasting too (those other wind swept locations that have been forsaken by ‘the crowds’, but I think I will leave it there. Even though unlikely settings on late night broadcasting, have provided some kind of happy home to Irish economists, in the aftermath of ‘the crash’. BOH. One of the IT journalists, Simon Carswell, admitted back in the heat of the bailout/Anglo shenanigans that it was very hard to understand everything that was going on especially the technical details and that he had to struggle to keep readers informed. One of the more obnoxious features of modern finance is complexity http://www.ft.com/cms/s/0/1bc9a586-925d-11e4-b213-00144feabdc0.html complexity means control for insiders. Another ref would be the the Gorse Hill war- complexity there was designed as a STFU to outsiders. When things fall apart very few people know what is going on. CF Sean Quinn. “Seán Quinn: On September 11th, 2007, FitzPatrick and the then Anglo chief executive David Drumm met Seán Quinn and his associate Liam McCaffrey in the Ardboyne Hotel in Navan, Co Meath, so Quinn could tell them about his huge clandestine investment in the bank via “contracts for difference” (CFDs). “David was more up to speed clearly about the activities of CFDs. He was bringing me because he always felt that Quinn regarded me as a superhuman, as a superhero. He wanted Quinn to see how disappointed I would be.” When FitzPatrick learned the size of the Quinn holding “I was physically shocked. I wasn’t expecting that. I said: What! David said afterwards to me that he looked at [Quinn] and that he saw the surprise in Quinn’s eyes at my reaction.” Fitzpatrick thought Quinn was a “real 1960s Irishman. He was one of those hail fellow well met, ah sure I will go down there and play the old cards, five or six lads for 10 bob, or whatever it was. He was always producing all that and would be nearly blessing himself. Everything will be all right. He was very human but, I didn’t easily like him.” Government also uses opacity to push through stupid decisions/ hide ineptitude eg “Nama chairman Frank Daly told the committee last week that Geoghegan has written nothing down. His report has been delivered verbally to Michael Noonan and to the Nama board. The “watershed” review of Nama is, in other words, a chat between a banker who was steeped in the culture of grotesquely excessive entitlement, the Minister and the people who are already tucked in under the covers at Nama.” The notion that journalism is some sort of white knight protecting the right of citizens to fair insight is not really credible in 2015. At least not for stuff that really counts. Just look at the EZ. Re: Bling The Irish have a very strange relationship with their media. In other countries, public might gaze at photos of very healthy, athletic types who jump around in running clothes and climb mountains. Other societies have something like a fitness fascination, or health fascination. This isn’t so much the issue in Ireland. But, what I have noticed in the last half decade or so, is that one is reminded when one opens a weekend newspaper, or a weekday broadsheet, of how inadequate one’s supply of digital gadgets, or digital accessories is. It’s like an exercise in self recrimination now, to open certain pages of newspapers. It’s like look at all of those new gadgets, and I’m so old and old-fashioned, that I can’t understand even how they work (not to mind affording them). It’s the same with the motor supplement. Whole housing estates now, around Ireland are packed with automobiles which are all reaching up to a decade in age. The motor supplement is still there, in the weekly newspaper, but it’s now more of a spectator thing, that a participatory thing. And after, we have waded past the colour pages full of fashion, gadgets and motor vehicles, . . . and in case, at by that stage, one is still not overcome with a feeling of complete inadequacy, . . if one is very unlucky, then one turns to the pages on residential property. One is subjected to the ultimate level of self recrimination and lowering of one’s self esteem. At that point, one is more less feeling, like a creep. I dunno. Maybe like they have those sugar sweet teenage movies, that tell you not to feel awful, by not being a teenage super model, . . . maybe we in Ireland, ought to invest in a few good, Catholic, short instructional films, that help people not to feel like crap, just because they made a mistake of opening up an Irish newspaper. I’d pay, to see one of those movies. Newspapers in Ireland, which is choc full of stuff, written by a peculiar Irish, or British type of journalism, which is often geared towards making the reader feel bad, or at least hyper self-critical. Newspaper organisations in Ireland too, have completely misdiagnosed why their ‘business model’ is under threat. It has nothing to do with digital. Yesterday, when I was finished with my copy of the Irish Indo, for instance, I offered it to an old gentleman who was waiting for his wife at a shopping mall. He refused the newspaper, surprisingly, saying, . . . bad news, I can’t take any more of it. This is what editors, don’t seem to get. Paddy is fed up. BOH. One property Ed told me that they couldn’t say anything mean about a house or its asking price because then the vendors could sue if it didn’t sell or for as much they wanted. LAWYERS again. In my experience journalists are interested in getting ministers and bishops disgraced but not much else and definitely not in exposing the hypocrisies of their own industry. There’s a lot of focus on cross ownership these days, but not much on cross employment. How can a journalist criticise another part of the media if they might need a job there some day, or in fact, already work for them? I see journos holding back on each other and that bugs me. Re: Different bubbles What I think was fascinating to me, about the efforts of the banking inquiry in respect of their questioning of many figures associated with print, magazines or broadcasting in Ireland, was this theme, which always presents a problem to a lot of folk, who endeavour to understand what the period in Ireland of the 2000’s decade was all about. Brendan Keenan actually wrote this quite well recently, in one of his columns. Keenan noted how Ireland’s economies could be contrasted with that of other economies, nations really, throughout Europe. Keenan observed that ‘housing’ bubbles did take place in other countries in Europe, in this same period. Keenan also observed, that in some countries, a construction bubble happened, coincidentally with a housing price inflation bubble. It is crucial, for even a most basic analysis to remember that these distinctions do exist. Obviously, what will tend to happen is that people will reach for the issue, which is closest to them in their own experience. I.e. Residential dwellings, and that form purchase using lending, or that form of construction. The point is though, the residential dwelling builders only formed a portion of what was collectively, the construction bubble. A lot of builders went from one end of the bubble to the other, without doing much in residential at all. In the case of Morgan Kelly economist, he used history of some bubbles in the past, Japan in the 1980’s, and Ireland’s agricultural land price bubble of the 1970’s. Many of the folk, collectively referred to as developers, in Ireland did little more than speculate on land, for the entirety of their participation in what is called ‘the bubble’. And sometimes, where developers built a few significant housing projects, you look at the full scale of what their company’s balance sheet shows, and what you realize is that this construction activity, is a small portion only of what they traded in. In some cases, the construction activity only served as a ‘smoke screen’, for the larger portion of what they traded in, which was land. As Keenan also pointed out, there were two other major bubbles in Ireland that coincide with our house price bubble, and our construction bubble – and those are the commercial real estate bubble (which involved buying and selling completed bits of commercial real estate, using large chunks of finance), and we also had a general ‘credit’ bubble. In other words, there were about four major identifiable ‘bubbles’, that happened together at the same time in Ireland. Other European countries, had one or two of those same kinds of bubbles, in their economies. What was exceptional in the case of Ireland, was that we scored high, all across the board and managed to accommodate significant bubbles in different areas, at the same time. But in terms of the banking inquiry analysis, which involved five or six, sit-down sessions of quite a duration, and involved twelve committee parliament members, and involved as many as ten or so witnesses, from print media and broadcast in Ireland, . . . no one witness was asked to comment, on anything except residential property supplements. The other major, major editorial which the Irish print journalism featured throughout the period, was the building of ‘the titans’ of commercial real estate development, in Ireland, up into something like ‘rock stars’. Some often joke, about certain Irish academics becoming ‘celebrity’ economists, after the crash. However, before we had celebrity economists, we had Captain Invincible real estate developers. Banking in Ireland, was particularly funny too during the period, in that the lending industry in Ireland was quite savvy at using Irish journalism, for it’s own means. Banking in Ireland was particularly good at creating these characters who roamed the landscape, striding around confidently like immortals, when they were leveraged up to many times the size of their real cash balance. In other words, like every kid in the street who tosses around a football, with their mates, they want to be like the sports stars of their time. At the same time, everyone in Ireland, during the ‘boom’, who applied for any form of credit, somewhere in the backs of their minds, they had internalized this media campaign by Irish banking and lending, . . . that they wanted to be a little bit like the over-leveraged rock star real estate guy. The mover and shaker, Captain Invincibles, which the Irish banks in particular were good at creating. This is what made all of the various ‘bubbles’ that existed in the Irish economy, so credible at the time, was that people who leveraged their incomes to ten or twenty times, were only in the Ha’penny place. Really, the guys who were in the professional sport, at the top, were playing on a whole different level. But all of us, in our own little way, could aspire to having some of it. This was essential, in the whole eco-system of finance, credit delivery and bubble economics, of the period in question. It was fundamental. The Irish print media, created the role models, which we all then followed in whatever minor way that we could. This whole analysis, was completely missed by all of the witnesses and all of the committee members, in the banking inquiry I think. What the banking inquiry, does demonstrate in ample measure, is just how very far away we are in Ireland, in terms of real research, from obtaining sufficiently robust models by which to understand and analyze, what actually did happen during the boom years. I haven’t looked exhaustively at the inquiry testimony of this week, but if I did, I’ll bet I’d be more astonished by what was omitted in the inquiry, as opposed to what it did include (as will future historians of economics too, no doubt). BOH. Public relations distinction to Journalism Perhaps, the distinction which the Irish parliamentary banking inquiry, has failed to identify sufficiently well, in it’s questioning, is that between great public relations work, on the part of the commercial organisations, which were the Irish banks during the boom, and that which we term journalism, as a profession. Certainly, in extreme circumstances, where public relations professionals do do their work sufficiently well, . . . that the fourth estate ends up, being captured and enslaved to PR. It is a personal subjective question, as to whether that happened in Ireland, during the later Celtic Tiger economic period, or not. But what is perhaps, worthy of note, is that the banking inquiry in it’s media module did not include, analysis from an expert professor or some such, in public relations research, . . . as opposed to that in journalism profession. Because, in the most extreme of circumstances, where commercial organisations, be they big banking, or big tobacco, the journalism profession is only there to mirror what the PR industry, gives to it. The phenomenon in Ireland, whereby almost the entire population were captured in some way, and forced to consume to the levels which they did, from one particular supplier of product, . . as they did, the products supplied to them by the Irish credit industry, in the boom, is worthy of a State Parliamentary inquiry and committee in itself. Just as it would, if it had been any other industry, which poses to threat to the overall health and well being, of the vast majority of citizens. This is a offence, in my humble opinion, which no industry or no entity, has ever been held accountable for, in Ireland. And as bruised and battered as the Irish citizens have become, as a result of the previous campaign of PR, and scare mongering to tell people to consume certain products, . . . the industries who deliver those toxic products, may be gearing up for another round of the same, as we ‘kick off’ again. And that that would happen to the population without any protection exercised by a State. BOH. “One property Ed told me that they couldn’t say anything mean about a house or its asking price because then the vendors could sue if it didn’t sell or for as much they wanted. LAWYERS again.” Presumably you meant to say “NON-LAWYER spouting nonsense misrepresenting the effect of the law again.”? Or perhaps the lawyers advice was that the paper might have a liability if it got its facts wrong, in which case you could change it to “Irish newspaper Editors not willing to check facts again.” Your property editor friend was of course giving a wholly false justification for the way the newspapers sold out and started publishing advertorials under the guise of journalism in exchange for huge revenues. No fear of being sued by a home owner justified the property puffing/pimping that newspapers got involved in – “you love this house long time, five hundred thousand dollar”. One can hardly imagine an issue less relevant to the country’s real problems than a discussion of the role of the media! Other than, perhaps, that the discussion demonstrates the national capacity to concentrate on the irrelevant when to concentrate on what matters would disturb too many interests. Two recent items from the IT serve to illustrate the point, first a comment by Fintan O’Toole, brilliant in terms of analysis but mistaken in its conclusion (as the author simply does not seem to understand how a modern economy functions). http://www.irishtimes.com/opinion/fintan-o-toole-stability-can-only-come-from-radical-change-1.2150216 A short letter today corrects this lacuna. http://www.irishtimes.com/opinion/letters/fintan-o-toole-on-stability-and-change-1.2154658 “Failure to reach our potential is due to our chronic inability to develop internationally competitive indigenous businesses on a sufficient scale to drive economic development. The result is that we lack a critical mass of citizens who, either through political activism or how they cast their votes, are intolerant of lobbies and rent-seeking. These activities, which promote redistribution at the expense of development, are so deeply ingrained into our national psyche that even our recent loss of economic sovereignty has not sparked fundamental institutional reform. Without this, performance over the next number of decades will surely be “wobbly”!” It seems to me that the author may be too pessimistic in his assessment as to the creation of the necessary “critical mass”. It may be that enough of the MNC entrepreneurial spirit has rubbed off on the indigenous sector to bring about the necessary change. The outcome of the pressure put on the Central Bank in relation to mortgage finance is one very hopeful indicator. Paradoxically, the ball and chain of debt may have the necessary impact. It is its existence that distinguishes Ireland’s past experience from the country’s most recent difficulties. And enables parallels still to be drawn, in political terms, with Greece! Re: Euro-vision contest for economic bubbles Ireland – four points. Spain & Portugal – two points. Netherlands – one point. United Kingdom – one point. Something like that anyhow. After it all, I’d say that news media, such as the Indo do still manage to offer space, in which some economic analysis and commentary gets carried out. As do, other Irish newspapers. But if one really, wishes to scare oneself, go into some archive and extract a ‘business section’ from one of the Irish national newspapers, and read it. The stories from the time, even as early as 2003, which have scared me the most today, . . . are those articles from business sections of Irish national newspapers, that are commentaries about Irish banks. Because back then, roughly ten years ago the Irish banks are described in national newspapers are these brilliant, awesome corporate enterprises. And I am sure, that those I know who worked in Irish banks, also viewed themselves genuinely as working within these awesome, successful organisations. It was into that context, of journalism in Ireland, which featured article after article in business sections, about how wonderful Ireland’s banking sector was, . . . that appeared the specter of these new kinds of articles, often written by economists, . . . that questioned the fundamentals of the whole thing. Those articles, which were written by Irish economists back in the second half of the 2000’s decade, . . represented not only a puncture to the bubble of ephoria about banking, . . . but it also marked a change, in the euphoria of those in Irish business journalism, who wrote about industries like finance or banking. But to appreciate this, for real, one has to have a physical, actual contemporary newspaper business section, from the earlier 2000’s decade, in one’s hands. One has to actually handle it, and read some of the headlines and articles. There was one article, in particular, which grabbed my attention from late 2003 in a business section, which genuinely advised readers about the pitfalls of borrowing money from Irish banks, to put it on the stock market. It was a sort of pro’s and con’s piece, whether it was worth borrowing money, to speculate on shares in Ireland’s banks or not. As it turned out, shortly after that article appeared in late 2003, it would have been worth borrowing money, to use to buy Irish bank shares with. And when readers of business sections, in Ireland’s newspapers realized this, . . . they actually did, go and borrow tens of thousands to do just that. But the thing to bear in mind, is that while the business sections in Ireland’s newspapers were full of this stuff, all throughout the 2000’s decade, . . . a larger portion of Ireland’s journalism profession, were more worried about the fact that the prime minister used ‘brown sauce’ on his dinner plate. There was a silliness, of sorts contained often in the main news sections of Ireland’s newspapers, contrasted strongly with a sort of ‘reckless economics’ editorial in the back pages, in the ‘business sections’, which the accountancy professionals and so on, would read first. In fact, I would argue strongly, that the Irish newspaper readership, before 2008, has to be entirely separated from Irish newspaper & media readership, listener-ship and viewer-ship, post 2008. Because post 2008, the Irish public developed a brand new capacity for knowledge and information about Irish business & finance, which simply had not existed prior to 2008. I can only draw that observation, based upon many folk whom I know in Ireland. But the point hast to be made strongly, there was a particular sub-set of the Irish population, who fervently read ‘the business section’, in Irish newspapers before the crisis. This is one thing, again, which the Irish parliamentary banking inquiry could have exploited in terms of questions to ask the various editors of Ireland’s newspapers. Because those same editors, would have had some impression of the customer in Ireland, who was most likely to read the business section, as against a sport, or general news one. But I can highly recommend to any economics student researchers, to dig out some of the old physical newspaper copies from the libraries if they can, and do this. They are full of cool ideas, about the new and cool ways, in which consumers and businesses in Ireland, can absorb more cheap and available credit, in all kinds of new and weird ways. This fact, ought not to go un-recorded, in my humble opinion. And to be honest, business journalism in Ireland ought to be more up-front, about this, given the fact that all of the old business sections now, exist there for researchers to examine, on the shelves in several archives. BOH. Re: Circular effects I will return again to my original point, which is based upon recent observations by economist Brendan Keenan, in his column in the Independent, in which he categorized the markedly different bubbles which Ireland did display, in contrast to other Europeans countries where the bubble was not nearly as widespread or pervasive as it was here. There is a quite serious point underlying this, in relation to the ownership at the time of Ireland’s bank corporates, . . . because a lot of the dramatic acceleration of the price of shares in Ireland’s banks, . . . was created on top of the general expansion of credit, in the Irish economy as a whole. That is, one almost witnessed a situation, where Ireland’s banks were lending money to the general public in the country, and that money was finding it’s way right back, into the share hold ownership of those same banks. What we perceive in the Irish economy of the 2000’s, was inflated performance of shares of Ireland’s banks, based on the same credit that those banks were supplying right into the Irish economy. This is why the cumulative effects, of commercial real estate bubbles (using leverage to purpose hotels etc in major international cities for instance), residential price inflation bubble, construction bubble (spurred on by government public works spending projects, inflated by credit supplied, finding it’s way back to public purse via taxation), . . . and the general credit, . . . all of these are separate bubbles, but they do not operate in isolation from one another, . . . and indeed, what we do see, is that they feed off one another. It might appear to be like a little bit of a joke, to draw this comparison between European music competitions, . . . and economic analysis. But actually, underneath that jibe exists a fairly serious observation, about economic cycles research in general. The point being, that economists at present, even the very best will struggle to understand the impacts on a wider economy of only one type of economic bubble, at one time. What economists, nowhere at all in the world have studied, much less in Ireland, is the cumulative effects on the inhabitants of a small island of a few million, . . . when several different, but parallel bubbles all inflate, at about the same time. BOH. Re: Investigative broadcasting One snippet example. Non-performing loans represented a mere 0.7pc of the group’s EUR 18,0 billion loan book at end September. . . work-in-progress (loans approved but not yet drawn down) topped the EUR 3,0 billion mark at the start of the year – a record and some EUR 600 higher than the same point last year. . . . elements point to the underlying quality of Anglo’s loan book and its ability to continue growing organically at a pace that is the envy of the European banking sector. This is from a business focused newspaper from 2003, after a bank reported on that year. It was entitled Anglo sparkles as share trades over eleven euros for first time. Whatever about before Ireland’s economic crash, it’s absolutely appalling, the absence of effort and analysis on the part of Irish journalism and broadcasting, by the assortment television and radio stations in Ireland, to do any research of the same archive for program material. It’s like as if, such work is beneath them. Random gems, such as the one above await the real researchers of economic history, at some time. BOH. @DOCM, I expect you have noted that the author of the letter to which you linked is the author of this monograph: http://www.irisheconomy.ie/index.php/2015/03/10/new-book-on-irish-economic-development/ I would share the author’s pessimism. The price level of Irish household expenditure remains stubbornly 15% above the Eurozone average, while Actual Individual Consumption per capita is almost 10% below the Eurozone average. In the sheltered private, semi-state and public sectors we’ve long had ‘rule by law’, but not the ‘rule of law’ – which are very different things. The so-called economic regulators and the competition and consumers’ authority simply implement policies determined by laws that are rammed through the Oireachtas that favour the powerful special interest groups in these sectors. We’ve all seen the pre-2008 effectiveness of banking supervision and financial regulation, but we can’t assume that the dysfunction was limited to these sectors. The energy regulator, the CER, has long implemented policies that favour the state-owned businesses. Its latest proposed decision is a blatant attempt to kill the Shannon LNG project because it would threaten the full recovery or previously excessive and unjustified over-investment in the gas networks. It was simply pushed aside last Nov. when there was public rejection of the water charges it was forced by government to implement last October. When the Minister for Transport intervened to compel the aviation regulator to change his initial proposed decision on Dublin Airport passenger charges both the airport authority and the two main carriers sought an appeal. The Minister had no option but to commission a review of aviation regulation because the appeal process would have revealed his starring role in this shambles. Communications regulation has long been a sick and costly joke and it is interesting that it was the UK OFT and then the UK Competition Commission that investigated and rejected Ryanair’s attempt to takeover Aer Lingus – and not Ireland’s Competition Authority. I agree with Eoin O’Leary – the future performance will be “wobbly”. It is stupid, costly and unnecessary, but we simply don’t have the critical mass that would encourage politicians to emerge to deal with this sensibly. All of those currently offering themselves for election are beholden to some extent or other to the various powerful special interest groups. @ PH It had slipped my mind as the relevant thread went off at a tangent. I quoted the letter directly as I have not seen the central problem confronting the Irish economy better expressed. A point on which I think we are agreed. As to whether one leans towards optimism rather than pessimism, I lean towards the former because, apart from the country becoming heavily indebted, both publicly and privately, it is also for the first time a member of a “Continental” currency, the euro (previously known as the Deutschmark). Both elements are new relative to the past. And make us comparable with Greece. The experience of Greece in the coming weeks, therefore, seems to me to be likely to play a decisive role in developments in Ireland at a political level cf. http://www.wsj.com/articles/greece-discloses-expected-proceeds-from-planned-piraeus-sale-1427635775 Feather-bedding state enterprises and gouging the consumer can work, for a while at least, when a government is solely responsible for its own affairs. Sinn féin, in other words. But it is no longer feasible IMHO, in a globalised world and certainly not within a monetary union such as the retro-fitted euro represents cf. http://www.ft.com/intl/cms/s/0/ab24675a-d15c-11e4-86c8-00144feab7de.html#axzz3VZuKWFPX The retrofitting has changed the nature of the euro in that the ECB is now also responsible for banking supervision. It simply cannot participate in supporting any systemic bank not abiding by the new rules, because to do so would jeopardise the entire future of the currency; a fact that Syriza, apparently advised by a gaggle of economics professors doing little for the reputation of their profession, is either unwilling, or too dim, to comprehend, The opinion of Kathimerini! http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_29/03/2015_548632 What is running out is not the “patience” of the ECB, but its legal mandate. @DOCM, When it comes to the sheltered private sector, the leading professions, the semi-states and the public sector, Ireland is just too darned small and incestuous with the various special interest groups too intertwined and too deeply embedded and integrated in to Irish society for any effective politically-driven curtailment of their insidious and damaging activities. Eoin O’Leary is correct; there isn’t the critical mass of citizens sufficiently intolerant of the pervasive and persistent capture of economic rents prepared to act collectively and effectively. I have longed hoped that, with some others equally outraged, it would be possible to demonstrate the economic damage and to provoke the required response, but I was wrong. It is simply not possible to do so in Ireland. @Zhou Completely fair point. People going around claiming what lawyers said when if they made a half-arsed effort to challenge the supposed advice they could say or write something meaningful. Is it the same with the government? Claiming that something can’t be done because of legal advice, when actually a decent challenge could be made? (HSE being no. 1 culprit there. No one’s yet given me a decent answer as to why the right to die case ended up in court. Bunch of cowards all round if you ask me). I’m still not happy with the pari passu codology but no one bothered challenging that. @ PH You may well be right! There are, however, two further points that can be made (i) the cost differences you identify may not be all attributable to rent seeking but, in part, to the peripheral and limited nature of the Irish market and (ii) everything is relative, the Irish economy being remarkably open and flexible relative to other European economies, both peripheral and central. Wolfgang Munchau returns to the wider issues today. http://www.ft.com/intl/cms/s/0/399f30d4-d47b-11e4-8be8-00144feab7de.html#axzz3VZuKWFPX I think he is mistaken. A bout of high inflation in Germany would simply leave the non-performing countries, or rather the “elites” (in the sense of the chosen ones, many not from the most wealthy sections of society) untouched and not fix the fundamental problem which is one of productivity. What Germany has agreed to in the matter of QE is the limit to which it is prepared to go. That is not say that Germany should not also move in relation to its own restrictive structural problems; and lack of public investment. It seems to be grasping the need for this. And QE also appears to be working. http://www.irishtimes.com/business/economy/german-inflation-turns-positive-in-march-1.2158662 @DOCM, I have no doubt that the peripheral and limited nature of the Irish market plays a part, but those who capture these economic rents devote far too much effort to highlighting this factor as a means to dismiss or to distract attention from any consideration of their rent capture. And the private exposed (or tradable) sectors in Ireland have proved remarkably adaptable and resilient. And their adaptability and resilience would have initiated the current economic recovery much sooner if they (and the vast majoirty of ordinary citizens) hadn’t been weighed down by the sustained rent capture by the sheltered private, semi-state and public sectors. And as for Germany’s structural problems, the current Grand Coalition is designed to protect probably the fullest panoply of rent-capturers across the political spectrum. So I don’t envisage much change there. The political structures in most of the advanced economies have been designed for and by the various selections of special interest groups to facilitate their capture of economic rents. @all Right. Back to basics – Both Mick Clifford in the Irish Examiner and Dan O’Brien in the Indo question the credentials of the Bank Inquiry’s ‘expert witness’, Julien Mercille of UCD, as (a) never having worked in the media; (b) as a geographer, having little or no knowledge of what he’s talking about when it comes to the media, its political economy, or the relationship between ownership of an outlet and the integrity/provenance of its journalistic content, and (c) having a predetermined ideological neo-marxist/SWP/neo-anarchist bias. In short, in their terms, he’s all (theoretical) hat and no (empirical) cattle. Having read Dr. Mercille’s 2012 article on the Irish media and their so-called stoking of the Irish property bubble for commercial largesse, and as a ‘media studies’ researcher in my own right, I think there is much to take issue with in both his and, in other contexts, Dr. Harry Browne’s analysis. I also think that the direct representatives of the media who also gave evidence to the Banking Inquiry Committee – as reported, from the Irish Times, Irish Independent and the Irish Examiner – adequately disposed of Drs Browne and Mercille’s 20/20 vision of some idealised national media scenario in their incisive accounts of how mainstream media actually works. For me, the question remains as to what any of these people were doing there at all? From the date of establishment of the said inquiry, and particularly after Joe Higgins T.D. was appointed, and at whose insistence the ‘media module’ was added, I was concerned about the implications of ‘calling the press to account’ in this context. The media/press do not make policy. They may influence the general public and/or be the primary source of information to them on policy content or direction, but they don’t make political decisions. Insofar as the media have a role in critiquing policy, they rely primarily for information sources on expert advice, political, economic, scientific or otherwise, and thereafter their own critical faculties and policy experience in arriving at an editorial line. Moreover, their audience are not fools. All the more recent studies of perception and belief show that, irrespective of educational levels or social sophistication, people extract as ‘facts’ from the information they consume whatever most accords with their own values, beliefs and social/relational alignments. The mass media reflects the prevailing values of society. In terms of political critique, which is a small part of the overall media package and more influential within political elite echo-chambers than in any general publicly mobilizing effects, the fact remains that the media are not responsible, or accountable, for policy decisions. The most they can do is to draw public attention to the flawed processes, whether administrative incompetence, corruption or stupidity, that may be involved in policy decisions and directions. That’s all they do. It’s a hugely important function in society. It has been recognised as such from the days of Edmund Burke and others, and long before representative democracy and the role of the media within that, evolved to its present form. The mass media has evolved alongside forms of democracy. A ‘free media’ has little or nothing to do with ultimate corporate ownership. It has to do with democratic values. But without a ‘free press’ and freedom of expression, subject of course to journalistic norms and values and regulatory constraints on the provenance of reports and opinion, representative democracy is meaningless. As the media has evolved, in Ireland as elsewhere, being able to make a commercial profit is essential to survival and independence. The mass media process, with all its freedom of opinion, ideas, creativity and all the rest of it, has proven essential to the emergence of processes of normal democracy. It’s within themultiplicity of political perspectives; that variety of independent views; the accepted rules of individual journalistic integrity and conduct that the media exercise such a valuable constituent part of any vibrant liberal representative democratic system. Which brings us back to why the Irish media are being ‘called to account’ before the Oireacthas Banking inquiry. To my mind it’s a mean-spirited and ideologically driven attack on press freedom. Nothing new here, though. What’s been heartening is the excellent contributions from media representatives, from owners to executives to editors, who’ve done their best before the Committee to explain how their organisations work in practice. They should not be there at all. My concern is that this experience had the potential longterm to damage or constrain media freedom in our state. @Sarah “I’m still not happy with the pari passu codology but no one bothered challenging that.” Could you expand? Not sure what you mean. @ DOCM: “Fintan O’Toole, brilliant in terms of analysis but mistaken in its conclusion (as the author simply does not seem to understand how a modern economy functions).” His alleged lack of understanding of the workins of a ‘modern’ economy’ is, I believe, widely shared. That’s something that will not change any time soon. And, productivity will not do it either. Something about diminishing returns, and all that. @ Veronica Great comment! Blaming the messenger has always been a favourite standby in the hunt for scapegoats. I am, however, all in favour of “experts” attending. They help undermine the attempt to do so. @ PH The Germans can afford to carry a much higher level of rent-seeking because of the effectiveness of their industrial policy. https://www.asme.org/engineering-topics/articles/manufacturing-processing/how-does-germany-do-it @Veronica, There’s no doubt that some of the left-wing factions are seeking to establish that the mainstream media advanced a ‘neoliberal narrative’ that somehow affected the formulation of policy, the enactment of legislation and the application of economic regulation. And they’re being indulged to an extent by the other parties because there is a clear desire by this committee of inquiry to absolve the Oireachtas of its continuing failure to discharge its primary duty to citizens – to subject governments and the legislation they advance to scrutiny, restraint and accountability. The objective of the Government, of course, is to ensure the damning of FF, the PDs and Greens as political parties in government during the relevant period. But the focus will be on the main protagonists and on the then governing parties as political entities, and not on backbench TDs. I have often been critical of the mainstream media for either being unwilling or unable to pursue genuine investigative reporting of the process of governance – in terms of how policy and regulatory decisions are made, of how they impact on ordinary citizens and of how they benefit the various powerful special interest groups. Occasionally if detailed evidence is advanced of faulty decision-making by a minister or a regulatory agency, the media may hghlight the issue, but, once the usual official rejection (without any supporting evidence) is provided, there is never any follow-up. However, if resources are scarce and ordinary TDs are unwilling to pick up the issue, there is probably little point. In addition, as I’ve pointed out above, Ireland is too darned small and incestuous and this means there isn’t the necessary social distance, or scrutiny – or, more importantly, a willingness to risk causing some offense. We end up back at Eoin O’Leary’s key conclusion – we lack the critical mass of citizens which will force TDs to do their primary job in the Dáil. It is this critical mass that will provide the eyeballs, ears and clicks for the media. If this mass doesn’t exist, the media can’t and shouldn’t be faulted for not seeking to conjure it in to existence. And it is both unfortunate and ironic that the left-wing factions (and their intellectual fellow-travellers), with their out-dated, irrelevant and potentially dangerous ideological analysis, contribute so much to preventing this critical mass of citizens from forming. Re: Response to Veronica Veronica writes, The mass media reflects the prevailing values of society. I doubt very much, if we can say that the Irish Parliamentary banking inquiry, had really got their brains around the concept of what a ‘media module’ in a banking inquiry context, ought to have been. Maybe, it is the case, in this case, that the parliamentary inquiry committee ought to have gathered input from more experts such as Veronica and other colleagues. But we all know what happens, in the rushed environment, in which parliamentary committees operate, where they endeavor to just fit something in, to an already busy schedule. Indeed, fitting something in, which they may not have intended to have been the primary focus of their investigation, in the first place. On balance, between the advantage of having some form of ‘media module’ in there, even with witnesses and questions, that weren’t well selected, . . . as against, having no media module at all, . . then on balance, perhaps what we got was better than having nothing at all. I mean, I have offered examples above, of ways in which I would have constructed a ‘media module’, if I were to be given ‘free reign’. However, having said that, all of the things that I have mentioned above did not ‘come to me’, before I had viewed the contents of the media module on the inquiry website. And indeed, for days after that, I still had not fully got my head around what it was, about the ‘media module’, which did happen in the parliamentary inquiry, that bothered me. I was only able to work it out, in bits and pieces, after reflection. The point I am making, is that perhaps, the inferior media module which we got, after the parliamentary committee have had a chance to review the same, might throw up questions which the members may wish to add, in further sessions of the committee. I guess, the point that I am making is that committees and inquiries, can build up some momentum. I am reminded for example, of the excellent Ron Howard movie, known as Frost versus Nixon, in which for a lengthy period, it seemed to have been a failed experiment. There was much accusation that, that David Frost was not a serious investigative interviewer, that he was only capable of doing ‘silly’ television, for the want of a better description. Indeed, what bothered me so much about the Irish parliamentary banking inquiry, in it’s media module, was that only ‘puff balls’ were pitched at those giving evidence, and those witnesses were easily able to bat the same, back towards the committee members. The thing, of committees and governments reaching for ‘experts’, who happen to have a report, or some study to hand (I baked this one earlier, so to speak), is widely known. For example, at the time of the creation of NAMA, which was based upon a consultant’s report and analysis, the government at the time in Ireland, was heavily criticized for using this approach. On the whole, I would not be satisfied myself with the performance, of the inquiry committee in it’s media module. It wasn’t so much the stuff, which they did cover, but instead the parts which were left out. And I think, that that reflected the bias which was introduced by the ‘evidence’ provided to the inquiry committee, which was the Mercille and Browne media research. That research, in itself, did leave out whole aspects of the problem in the media and journalism (and the ability of ‘PR’ in certain industries in Ireland to control the message). The way that committees operate from my understanding, is that committees need a piece of research, or some piece of ‘evidence’, and the committee members are allowed to question that. But not to go outside of those parameters. I.e. Not introduce new evidence, of their own creation or invention. This is a constraint upon what committees can do. They were constrained in their investigation, by what was contained (or more importantly, not contained), in the Mercille and Browne items of research. Now, here is the really big question. What is needed in Ireland, is a journalism investigation into journalism itself. This is what I tried to describe above. One could almost call it, journalism ‘self-regulating’ itself. The fact that journalism in Ireland, has not been allowed or able to investigate journalism, in Ireland, is the really huge ‘story’ here. Because what the banking inquiry committee, ought to have been able to read, and inquire about, was just. A full and frank, no holes barred, full disclosure, journalistic investigation into journalism in Ireland – the idea of self-regulation. No more than the financial industry in Ireland, or real estate industry, or any sector is able to ‘regulate’ itself, . . . neither is Irish journalism, it would appear, able to shine a light, back upon it’s own output, and it’s own relationship, with the public relations industry, which in turn works for the corporates, the Irish banks. By the way, all that PR for banking in Ireland has done recently, is to replace ‘Mick the Builder’, rock star guy, with ‘John the Farmer’, with his closed circuit television of his livestock. That is, the farmer guy, who is going places, in made into the new version of a rock star. And you see this going right through fast food advertising and retail industry, and everything else. ‘Returning to our’ roots, and this nostalgia for a simple life, where we all enjoy the produce off of the Irish farm. I mean, let’s analyze that, and also lets analyze what was the appointed ‘role model’ before farmer John, and celebrity economists took over. BOH. Re: Recollection of the boom I remember during the boom, for example, that Monday morning coffee break, and lunch times, would be buzzing with debate and discussion, about did you read about so-and-so developer, and what they just did? On Sunday mornings, in Ireland, where people were arguably at their most vulnerable, and slumped down in their most comfortable chairs, to get a ‘break from it all’, they were wading through page after page, full page splashes and spreads, detailing the life and life styles, of Ireland largest bank borrowers. A strange thing happened, whereby we got to know these characters, or we felt that we did, better than we knew our own friends, via journalism. Often, what happened is that on Monday mornings, without really knowing why, people began to sit into their automobiles, and drive down to their local bank branch, and tell their manager, I want to buy a field. I want to build something. I recall, one time, I spoke to an old woman in the south west part of Ireland, miles away from anywhere. She told me, she had a site and wanted to build two houses. She had become a property developer. I knew the old woman, all my lifetime, and I also knew that by the time that this individual had ‘caught the disease’, as I saw it, then I was really and truly looking at the ‘Last of the Mohicans’. The campaign as orchestrated in Ireland by lenders, had achieved it’s purpose, and then some more on top of that. If one wishes to argue, that these people had choices, and made decisions, okay. No one will argue with that. But one can’t ignore other aspects of the whole sordid story either. The reason that the Irish parliamentary banking inquiry were so confined to certain topics and to certain lines of questioning, is because the research simply has not been done, into the areas, which I mention. There are certain areas to do with the intersection of financial industry, politics, PR and Irish journalism, which are still ‘no go’ areas for researchers. Still, even in 2015. This is why it will be left only, to future archaeologists to ‘excavate’ this past, long after many of us, are gone. BOH. Varoufakis in Le Monde! http://www.lemonde.fr/economie/article/2015/03/31/m-varoufakis-estime-que-la-grece-ne-peut-pas-eviter-une-restructuration-de-sa-dette_4606887_3234.html Incroyable! @unfeasibly charming on pari passu. We were told that the bondholders could not be burned, because they were “pari passu” with deposit holders. ie. they had to be treated equally as creditors and if we “burned” the bondholders we had to “burn” depositors too. And who said this? well. lawyers. But lawyers CAN disagree with each other. There’s a paper out there issued by the Bank of England’s financial markets regulation committee on the subject of pari passu in english speaking countries which included reps from the ECB. As far as I recall it concluded that you CAN rank creditors when it comes to payment. I kept telling people about this paper but it was pointless because the pari passu ideology had been sunk deep into the narrative. Now fair enough, maybe if it went to court, you could lose, but it always bugged me that no one even tried. (apart from Thomas Pringle. He tried something, unrelated, but he still tried). The debate ended at the point where Lenihan said the legal advice is that bondholders and depositors are ranked pari passu. @Veronica Well, try telling all that to Richard Delevan. He wrote a story about an auctioneer who was claiming that the market was FINE while he was getting it hard to sell his own house. He got fired. But that kind of aggression is very rare. I work in the media and honestly, I see the consensus forming in front of my eyes. For example – during the boom using bank economists on radio interviews as if they were neutral. They never should have been used, and if they were they should have been challenged. Instead they were treated as neutral parties. The dangerous part is that consensus forming Still Goes On. I don’t think the media learned much at all. However, I do agree that the banking enquiry has been calling some ridiculously irrelevant witnesses. The people we wanted to hear from were the politicians, advisors, including Morgan Stanley etc and bankers WHO WERE IN THE ROOM ON THE NIGHT. After that, what does boring background achieve? Sure we know all that. Another nail in SF’s coffin: http://sluggerotoole.com/2015/04/01/northern-ireland-water-charges-to-rise/ Where are the protests from SF? Where is Paul Murphy? We need you at this hour. Je suis Asher cake. @Sarah Carey, There are huge pressures to form a consensus on the broad outlines of economic policy in such a small market where the differences between the historically established political tribes are both cultural and confected. And this consensus is affirmed and validated – and a fiction of diversity and disputation is projected – by allowing some space to those advancing out-dated and irrelevant neo-Marxist clap-trap. Other contrarian voices are indulged if they are capable of providing amusement and entertainment. But behind the scenes the various powerful and influential special interest groups will continue to jockey for position. Some will be on the rise and some will be in decline. And there are cyclical patterns and rhythms as the composition and effectiveness of these special interest groups change over time. But they will always ensure that policies are formulated and implemented, regulations are devised and applied and the enabling legislation is enacted to protect or advance their interests. That’s just the way it is. And as for this ‘context phase’ of the banking inquiry, it does provide some context, and it might extract a ‘mea culpa’ or two from largely peripheral (in terms of decision-making) players. But the objective is to fill up some space until the main players are hauled in closer to the general election – so as to maximise the political damage to FF and the Greens. Response to Sarah I would say, that one has to sub-divide the activities of the type of investment banking advisor groups, or commercial law advisory service provides, during the boom. The reason that I would argue that is as follows. What happened during the boom in Ireland, is that the same professional legal and financial strategy consultants, who offered their services to private clients in private sector commercial strategy formation and what not, did exceptionally well by those private clients. The untold story during the boom in Ireland (this again gets back to my point above, about shallowness in general of any journalism or investigative business journalism here), is that certain private individuals, who had huge support from Irish lenders took one avenue – it was the avenue which earlier empire builders and entrepreneurs in the earlier phases of development of the Irish post-independence economy took. I.e. This idea of the lone gunslinger, the guy who could through the sweat of their own brow, build up something amazing. We had decades in Ireland, during the 1970’s and 1980’s, which preceded the ‘boom’ in Ireland from the mid-1990’s onward, that saw an absence of major entrepreneurial activities. There were some exceptions. There were examples, in aircraft leasing for instance, in places like county Clare. But during the 1970’s and 1980’s in Ireland, the Irish lenders, the banks, did not have a major amount of experience in dealing a lot with entrepreneurs. There were a few ‘builders’ for example, who did for one reason or another, choice to return from Britain and begin to do some deals with the Irish banks, in order to create a certain type of entreprise. And the experience of Irish banks, in dealing with any form of entrepreneurship at all, therefore, was a lot of the time in dealing with these individuals who had worked in Britain during it’s post Second World War phase of its history (i.e. the old British ’empire’ had receded into history, but the new British ‘welfare’ state building process, became an example in the post-1940’s era, for many other states in Europe). Many of the Irish guys, who went to Britain in the various decades after the war, were exposed to that type of a re-construction and expansion environment in Britain. This was a model, which of course, they understood would suit well, with the Irish context. They brought home a sort of a ‘blue print’ for want of a better word, to Ireland, and Irish banking and politics, backed that master plan right to the hilt, in the decades of the 1990’s and 2000’s, when it had access to cheaper funding from European lenders. I know people who remembered outer London, from the 1950’s and 1960’s for example, who looked at Ireland during the 2000’s and said that it was like deja-vu. They said, that it was freakish how similar it felt to them, having worked in London all those decades earlier. This was the so-called miracle of economic growth, that Ireland and it’s banking organisations discovered in the 2000’s era. However, what needs to be contrasted with the above, is while all of this was gaining it’s ‘green light’, in the background there were private investment banks and commercial legal firms, advising private clients in how to manage their assets as part of a longer term strategy. Whilst, at that time, one had the swash-buckling, Galway tent, kind of phenomenon, which greatly celebrated the individual man, with the ‘golden touch’ (who understood, that post-WWII, British re-construction era blueprint well), these guys who were backed to the hilt by both Irish lending institutions and by Irish politics, and news media and journalism, . . . considered the ‘individual entrepreneur’ aspect of their business strategy so important, . . that they also de-valued the idea even, of collaborative working with reputable legal and financial advisory teams. It was really like one would conduct an experiment, to see which strategy would win. Generally speaking, the Irish banks mostly had all of their eggs, in the one basket, which placed all of its roulette wheel chips on one square, that was that older 1960’s model of the ‘self-made man’ entrepreneur. The builder guy, who knew what the mid-20th century British master plan, was all for, and all about. Then, quietly working away in a few less numerous instances, you had those who took a more modern, present day approach to strategy, in regards to management of very large blocks of investment finance. Generally, speaking it was this later, less publicized group who fared much better. As a consequence of those sequences of events, what happened in later 2008, was that the Irish banks, and regulatory organisations around Irish banking and lending, lost credibility. That was finally, when the Irish government, decided to try to turn the game around, in the dying minutes of ‘the game’, and it was willing to suddenly part with large amounts of cash, in order to purchase advice. Of course, it was far, far, far to late in the day. All that it could do at that stage, was to really put a little more dignity, on what had been a whole history of blunders and mis-comprehensions. What we witness following this period, is a sort of ‘flight of the earls’ of many in Irish commercial and business life. I genuinely do believe that the politicians in Ireland, did learn some lesson out of it all, even if it was much too late. Or at least, some of the politicians may have. We do not again have the type of research available to us, to hand, here in Ireland about this story in Irish finance and business. This story has never been fully excavated. In other words, it is difficult in the extreme for a parliamentary inquiry to venture into areas, which are not mapped out for it sufficiently well, owing to the shortage of really good financial and business investigative journalism and economics research, happening in Ireland as we speak. That’s really, the long and the short of it all. And I would offer the suggestion, that this could be the lasting and more significant finding, conclusion that the parliamentary inquiry committee might arrive at. BOH. @BOH good post! Of course, from the journalism perspective not only are “lessons not learned” but actually it’s getting worse. With most of us working freelance for ever lowering rates and with shorter and shorter deadlines, the time required to put into research is either not available and/or not worth it for fee being offered. It’s easier to write a piece a fluff about Jeremy Clarkson than spend weeks delving into something meatier – which may not even get published in the end. That’s why I really admire someone like Gavin Sheridan who for pure passion chased up so many things via FoI. I was so glad to see him do well at Storyful. Proper journalist. One of the few. Those who envisaged the banking inquiry as a rollicking soap opera with the citizens of this state glued to the google box, dipping into the large bowls of popcorn balanced on their laps, and gasping in shock and excitement at the revelations as they unfold, must be disappointed. The banking inquiry has so far failed to capture the public’s imagination, or even its attention. No drama, no excitrement, but there have been some interesting moments, nonetheless. There was the Governor of the Central Bank’s ‘senior moment’, for example. He revealed he is less than perfect, in his recollections of some past conversations at any rate. He also made it quite clear that the political obsession with “the guarantee” over the past several years as the cause of all our subsequent woes has been misplaced: whatever remedial decision was taken on that fateful night, there was no avoiding the bulk of the costs of the banking collapse. It is also clear that economic contraction and austerity policies were also unavoidable in the wake of the dramatic fall in tax revenues. As well as several notable contributions from economists, the evidence of political scientists, notably David Farrell on the need for parliamentary institutional reform, has been incisive. Professor Farrell and his colleague, Prof. Hardiman, have pointed to a a massive wasted opportunity of this crisis; the failure of the government to effect political reform where it is needed – within parliamentary institutions. Former IT Environment editor Frank McDonald’s evidence has also been impressive and informative. Like others from the media sector, his evidence underlines the complexity of the role of media in our society and its limitations. I hold to my view that, in principle, hauling the media before the inquiry to account for itself as a so-called bubble-stoker is entirely misplaced. Context is important. Without making some stab at establishing a context, the next stage of the inquiry arguably would involve an even more partisan exercise in political grandstanding for party purposes than might otherwise be anticipated. As for ‘consensus’, I guess it’s all about how it is defined and its purpose. Besides it’s not a constant. I know it’s a generalisation, but it seems that in Ireland we are often far too concerned with ‘winning’ points in discussions of public policy than arriving a consensus as to the best possible/least worst policy choice, which requires taking on board perspectives that may challenge our own dearly held beliefs. @Veronica, The comments here seem to reflect the reality that it didn’t matter what the media (or any other commentators with ‘public standing’) said or didn’t say during the bubble years. The main decision-makers were going to do what they ended up doing. And, although the severity and type of blow-out experienced in 2008 is unlikely to be repeated, the same mentality is being exhibited by today’s key decision-makers. And, despite the severe and fully deserved electoral FF and the Greens received at the hands of a majority of voters, it appears nothing has really been learned by those who replaced them around the cabinet table. While it will not inflict anything like the political damage the 2008 blowout inflicted on FF and the Greens, the water charges shambles still has the ability to inflict serious political damage on FG and Labour. This is highlighted here: http://www.independent.ie/opinion/columnists/martina-devlin/dam-burst-of-anger-on-irish-water-could-sweep-enda-away-30704050.html and here: http://www.independent.ie/opinion/columnists/ivan-yates/realpolitik-means-its-back-to-drawing-board-on-water-31112795.html It is extremely rare for large numbers of Irish citizens to be so opposed to a government policy that they abandon their usual willingness to bide their time until they get an opportunity to cast judgement in the polling booths. The protests in October and November of last year were not unprecedented, but they were highly significant. The Government’s panicked response on 19 November (together with the antics of some protestors) may have discouraged many voters who previously took to the streets from doing so again, but it doesn’t mean their opposition has been transmuted in to cheerful compliance. For many it means a hardening of their resolve to evict this Government at the general election. The Government has lost the argument, but it seems determined to double-down in its efforts to suppress all opposition. Witness the Government’s announced intention to draft legislation to enforce the extraction of payment and former minister Rabbitte’s rant at RTÉ in the Dáil. The trashing of any lingering credibility the CER might have has as an independent economic regulator, rather than as a policy-implementing, semi-state favouring agency, is just part of the collateral damage. Anyone who takes the trouble to look at the Irish Water revenue model published by the CER will see that it has no chance of stacking up. And, perhaps as Ivan Yates suggests, Eurostat will put Irish Water out of our misery. What is interesting in this instance is that the media, while not investigating this shambles as thoroughly as they should, are doing a reasonable job. They are simply reporting on the deep-seated popular opposition and on why this opposition exists. And on occasion they have been more harsh on some of the protestors’ antics than Government representatives have. It would be wonderful if this shambles activated the critical mass of citizens in tolerant of this blatant pandering to influential special interest groups. But I’m not holding my breath. Re: Response to Sarah That makes sense to me. It’s a pity though, that perhaps that such a report or piece of research on behalf of the journalism profession in Ireland, was not available to the committee to scrutinize in the parliamentary banking inquiry. This is the whole point. If there is even the possibility that such challenges do exist for the industry of media and journalism, then maybe it would be nice if those challenges were explained in a better way, to committees such as that of the banking inquiry. This is the entire objective, to understand the nature of some of the challenges or difficulties that certain professions, or sectors of the economy might be facing. This is why I keep on getting back to the idea, of the journalism professional itself in Ireland, begin allowed to investigate itself so to speak. The question I would ask, is why the journalism profession in Ireland, was not able to present to the banking inquiry, a proper study into it’s own coverage of the real estate bubble in Ireland? Why was it felt appropriate for example, on the front page of a business section as far back as 2003, to write about bank result reports, like one was reporting about a Eurovision song contest? What was the investigation, which led to a claim for example, that an Irish bank was the envy of the European banking sector? I think, that is particularly worrying for people in the Irish public, is the inability of the profession of journalism in Ireland to own it’s own share of responsibility, for its own participation in the boom period. No one is denying that mistakes and miscalculations – sometimes vast in dimensions – needed to be made by a whole collection of participants, for the ‘bubble’ to become as inflated as it did become. However, what is most terrifying for the ordinary public guys, is the inability of any participant today, as it were to own any of their decisions, work or contribution, today. It’s true in areas of economics professions, journalism professions, construction professions, banking professions, political professions. It’s the common theme, that no profession or sector is allowed to ‘break ranks’ as it were. There is a consistent line that is being held there, across a broad area of society and influence in Ireland, and in fact, this is the ‘torch’ that we have passed on to the younger generation too, and we expect them to also carry that same torch. What is it that Einstein once said, doing the same thing, and expecting different results? Or to translate that into some speech that relates to Ireland, continuing to build ‘recovery’ around bubble inflation policy and effort, while still hoping that we will be able to afford third level education of future generations, or whatever else. I think what worries people most of all, is not the inability of professions such as journalism to look backward and admit to something, . . . but instead, their inability to look forward and change, to accommodate the outcome of what we hope, will be a different result, . . other than another massive economic crisis, which the state itself will not be able to afford the next time. BOH. @Paul Hunt Couldn’t disagree with a word of your analysis! In fact, the media have done more than just report on public outrage at the ‘ omnishambles’, as some have dubbed it, of Irish Water. In particular, RTE aired some interesting background info. about the way in which discussions about the establishment of IW were conducted by key actors in the policy process,which have, quite rightly, raised concerns about the standards of governance involved. Ironically, although the majority of citizens probably recognise that a centralised insitutional structure for water services is desirable and that metering and charging for domestic supply is perfectly reasonable, IW is itself a political debacle and the loss of public confidence in it is irredemable by this point. If Eurstat don’t give it the nod; then it will precipitate an immediate GE, but the issue that precipitates an election does not always dominate the agenda of discussion for long. If Eurostat give IW the thumbs up, however, several months later the government can plead the electorate’s forgiveness in respect of small sins by comparison with their achievement in restoring the economy to growth, and so on. As for Mr. Rabbitte and his rant, as someone in the media said: “Oh, we must be getting it right then, after all.” @Sarah This thread is a bit old and I don’t want to waste typing on a reply that you might not read. There was more subtle analysis available at the time – but nobody was interested – and Lenihan misled Vincent Brown and others by saying “depositors and bondholders are the same” by way of exaggerating the point. He even convinced Joan Burton (without actually saying so) that there was a very particular Irish law that didn’t apply to other countries on the equivalence between bond holders and depositors. Bring it up again. @Veronica, Thank you. It may be that Eurostat will not be able to give its verdict until it has verifiable data on one quarter’s, or even more than one quarter’s, costs and revenues. It may actually need a full year’s data. The Taoiseach has already indicated that Eurostat’s assessment has drifted from this month in to the summer. The original intention was that bills would be sent out from 1st Jan 2015 for the last quarter of 2014. The application of Eurostat’s test in April would have examined the first quarterly billing cycle. That has slipped now by at least one quarter. It’s easy to see how the slippage of a further quarter could be justified. That would get the Government to and ideally beyond Budget 2015. By then the exclusion of the subventions to Irish Water from the general government deficit would be a done deal. Even if Eurostat were to cry foul at that stage, the Government would be in full re-election campaign mode and any response would be kicked in to the long grass until after the election. And there is another factor that could come to the aid of the Government. Although it is very jealous of its independence – remember the politically inconvenient timing of the publication of its re-calculation of member-states’ contributions to the EU budget, Eurostat has to be aware of prevailing political imperatives. The EU and its institutions are adept at bending rules when there is a need to secure a ‘higher’ objective: http://www.economist.com/news/europe/21646274-rules-are-rules-europe-except-when-theyre-not-your-flexible-friend Given its willingness to administer (much, but not all, of) the Troika’s medicine, and the subsequent evidence of the rude health of the economy, the Government will be cut some slack when it comes to the application of any rules applied by the EU’s institutions that might cause it some grief. Eurostat’s market test could fall in to that category. Apart from some mild murmurs of disapproval about the absolute and total shambles the Government has created, the EU and its institutions won’t cause the Government any serious grief. The problem the Government has is the extent to which voters will have this shambles in mind when they enter the polling booths next spring. Continued media reporting of how this shambles plays out will help to keep it in the minds of voters. That is what is really annoying the Government and its well-heeled army of apparatchiks, hangers-on and camp-followers. It just wants to make this story go away. But it won’t. It was extremely unusual taht so many ordinary voters were prepared to go beyond their usual reliance on communicating any annoyance to their local councillors and TDs and on then casting their judgement in the polling booth by taking to the streets – and we can be sure they had the support of many, many more who didn’t. The Government may succeed in minimising the electoral kicking it deserves, but the whole affair may help to open some voters’ eyes about how the various special interest groups in the sheltered private, semi-state and public sectors conspire to gouge them. We probably won’t reach the critical mass of voters required, but ‘every little helps’. @unfeasibly charming I personally told VB about the Bank of England paper but he didn’t take the point seriously at all. For all his guff he’s just another establishmentarian. Lenihan gave him the line and nothing would budge him. I will bring it up again! and I thank you for your interest 🙂 @Veronica on Irish Water the media has utterly failed to explain about the Water Framework Directive and how we were supposed to have water charges in place by 2010 and that the bogus argument about our imaginary derogation is bogus. So EVERY SINGLE TIME a protestor like Murphy or Barrett says “imposed by IMF to pay bondholders” they let it go. It’s disgraceful. I, of course, tried to correct the record, but no one listens to me. Sniff. http://www.independent.ie/opinion/columnists/sarah-carey/if-wed-started-in-2000-thered-be-no-water-mess-30934887.html @ Sarah, As I understand it, the implementation date for the Directive was 2010. This did not require imposition of domestic water charges for private households providing the data underpinning any such exemption claimed under Article 9 (4) of the Directive supports that claim. It doesn’t. The Irish Government has already been in receipt of a ‘reasoned opinion’ from the Commission on this point. Irrespective of any Troika agreement, the Irish government is required to introduce a system which complies with EU law. Failure to do so will inevitably result in ECJ proceedings at some point in the future. It’s clear that claiming exemption under Art. 9 (4) provided temporary political cover for the Irish Government against having to implement a new regime for domestic water charges, which given previous experience going back to 1985 and in the mid-1990s, would have proven politically contentious. Something of the order of €5bn was invested in improvements and upgrades to water infrastructure from the mid 2000s. However, the problems with our infrastructure, treatment, asset loss etc. are of such magnitude that the political cover to avoid the introduction of domestic water charges has inevitably run out. Fine Gael, Fianna Fail and the Green Party have, as I recall, have long acknowledged that charging for domestic water use would, at some stage become unavoidable, as did Labour whenever it held government office, although it adopted a different stance in opposition. There’s no denying that the present government has made a complete mess of the introduction of a new water charging regime. It would be hard to find a more clear example of political bungling than the activities surrounding the establishment of IW and the implementation of the metering programme, compounded by the ineffective policy U-turns announced in December. In framing their own narrative, it’s up to the government to highlight EU Directive compliance as an issue. given the persistent incoherence of their general public communications on the policy, it’s probably not so surprising that such explanation got lost in the noise. On the media, I don’t agree that there has been a failure to explain/report the relevance of the Directive in a debate that has been aired and extensively reported over several years. Maybe I’ve been listening to the wrong broadcasters, but to my recollection the sweeping generalisations by the AAA and others about water/bondholders have been effectively debunked. They’re entitled to their narrative, but it has not been allowed to go unchallenged. Certainly, the issue of Eurostat approval of the proposed IW framework has received due prominence in the media debate. Also, there has been more than one newspaper columnist highlighting the significiance of the Directive, particulary in the Irish Examiner, Sunday Times, SBP etc. As Paul Hunt points out above, the litmus test of how far the EU are prepared to go to accommodate the current Irish government in its difficulties on this issue remains to be seen. @ Veronica The situation is as you and Paul Hunt outline it. However, it is a mistake IMHO to assume that the implementation of EU law is a matter of political appreciation. It isn’t! It is this fact that make the EU what it is and unique in terms of an international organisation short of a full federal system. Eurostat will do what it will do and the government will have to live with the consequences, In fact, I think the government’s approach is rather astute, or rather that of the new minister responsible is. The die was cast with the huge capital investment in water meters. This simply cannot be reversed out of short of a blanket refusal by the public to pay their water bills. These are now likely to be so reasonable – at least initially – that this is unlikely, especially as a wide swathe of the rural population i.e. farmers are already well used to metered water. As to the shambles made of the introduction of IW, this is a reflection of the wider failure to face up to the radical change in approach required with regard to the provision of collective public services. They are not a God given right but something that the general economy must be organised to finance. The prognosis on that score is poor. I am beginning to think that PH may be right. As an example of what I mean regarding the EU, herewith a recent agreement by the ECB, and the Bank of England, which went largely unremarked. https://www.ecb.europa.eu/press/pr/date/2015/html/pr150304.en.html And a – probably general – view with regard to the possibility of the UK leaving the EU. http://www.irishtimes.com/opinion/ireland-must-play-a-daring-role-in-debate-on-british-membership-of-eu-1.2151687 It is not a case of Lanigan’s Ball but of defending the vital interests of the UK which London has been adept at in terms of its legal position. The role that Ireland might play, daring or otherwise, is unlikely to be very large. Comments are closed.