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| Michael Lewis |
I highly recommend carving out time to read the full article, but here are a few choice excerpts:
Not knowing why they were so suddenly so successful, the Irish can perhaps be forgiven for not knowing exactly how successful they were meant to be. They had gone from being abnormally poor to being abnormally rich, without pausing to experience normality.
Ireland’s financial disaster shared some things with Iceland’s. It was created by the sort of men who ignore their wives’ suggestions that maybe they should stop and ask for directions, for instance.
The journalists were following the bankers’ lead and conflating a positive outlook on real-estate prices with a love of country and a commitment to Team Ireland. (“They’d all use this same phrase, ‘You’re either for us or against us,’ ” says a prominent bank analyst in Dublin.)
The most obvious change in the country’s politics has been the role played by foreigners. The Irish government and Irish banks are crawling with American investment bankers and Australian management consultants and faceless Euro-officials, referred to inside the Department of Finance simply as “the Germans.” Walk the streets at night and, through restaurant windows, you see important-looking men in suits, dining alone, studying important-looking papers. In some new and strange way Dublin is now an occupied city: Hanoi, circa 1950.
At the rate money currently flows into the Irish treasury, Irish bank losses alone would absorb every penny of Irish taxes for at least the next three years.
A banking system is an act of faith: it survives only for as long as people believe it will. Two weeks earlier the collapse of Lehman Brothers had cast doubt on banks everywhere. Ireland’s banks had not been managed to withstand doubt; they had been managed to exploit blind faith.
If the Irish wanted to save their banks, why not guarantee just the deposits? There’s a big difference between depositors and bondholders: depositors can flee.
Now the Irish people finally caught a glimpse of the guy meant to be safeguarding them: the crazy uncle had been sprung from the family cellar. Here he was, on their televisions, insisting that the Irish banks were “resilient” and “more than adequately capitalized” … when everyone in Ireland could see, in the vacant skyscrapers and empty housing developments around them, evidence of bank loans that were not merely bad but insane. “What happened was that everyone in Ireland had the idea that somewhere in Ireland there was a little wise old man who was in charge of the money, and this was the first time they’d ever seen this little man,” says McCarthy. “And then they saw him and said, Who the fuck was that??? Is that the fucking guy who is in charge of the money??? That’s when everyone panicked.”
Ireland’s 87 percent rate of home-ownership is among the highest in the world. There’s no such thing as a non-recourse home mortgage in Ireland. The guy who pays too much for his house is not allowed to simply hand the keys to the bank and walk away. He’s on the hook, personally, for whatever he borrowed. Across Ireland, people are unable to extract themselves from their houses or their bank loans. Irish people will tell you that, because of their sad history of dispossession, owning a home is not just a way to avoid paying rent but a mark of freedom. In their rush to freedom, the Irish built their own prisons. And their leaders helped them to do it."Financial-catastrophe tourism" is how Michael describes his visits to various European countries since the financial crisis began.
For more from Michael on his latest story check out the article's accompanying Q&A, where he predicts the Irish people, like the Greeks, will eventually say nach bhfuil níos mó (Gaelic for 'no more') and default:
(quote from Lewis' driver) "The problem with the Irish is that you can push them and push them and push them and they don’t do anything, then they snap and go whacko.” (Lewis' response) I think that’s going to happen. I think that you’re going to be surprised how much punishment they take, and then at some point they’re going to cease to take it. This may be years off; it may not be six months off. I think it’s a pretty slow-burning fuse.
As an Irishman, I can state that Lewis' article is so inaccurate that it brings the rest of his journalism into question;
ReplyDelete1.The Irish parliament does NOT require that speakers use both Gaelic and English. Had Lewis bothered to look at even 10 minutes of a typical debate – available on the web – as distinct from a vote, he would have seen that
2.The Irish boom was initially technology-driven. A country that hosts the European and world HQ's of so many tech companies demands a little more examination. No wonder no-one wanted to speak to him, beyond a few notorious media whores; the gentleman who pursued him with a baseball bat acted for many of us
3.What Lewis also neglected is that a large amount of the debt is NOT for Irish property; in fact during that period, Irish “businessman” invested more than US such in Britain
4.Lewis even missed the real story; the criminality for which even the property scam was a front, with - to take one example - mafia money being laundered through an Anglo affiliate in Austria;
http://www.politics.ie/economy/137983-kathleen-barrington-sbp-12-9-10-a.html
Many of us had been warning about the Irish kleptocracy at a time when his sources like McWilliams were cheer-leading it, and doing so at conferences in the better American universities. (In fact, he can pop along to his hometown university at UC Berkeley on Mar 10 to hear the arguments )
Lewis never asked; given that the Irish are the most successful ethnic group in so many countries to which they emigrate, why is “their” country such a disaster?
The truth may be found in the buttressing of this kleptocracy by the international financial community. The sullen lack of grace with which Cowen left power betokens a feeling of betrayal – after all he had done in serving up generations of Irish to the like of Goldman Sachs.
Finally, "When Irish eyes are smiling" is famously about as Irish as Pad Thai.