A lot may have changed in the last 20 years, but in many ways, few lessons have been learned from how we lived in the late 1990s and early 2000s, writes.
It is 20 years since the millennium. The time has shot by. Let’s look back on a world that, in some ways, already seems distant.
There was a lot of excitement and optimism back then. Dublin was about to get a new pedestrian bridge along with a River Liffey clock — that particular idea did not work out. The clock never clocked in — so to speak. It was later fished out of the river.
We were fretting about the so-called ‘millennium bug’. It was feared that planes would start falling out of the sky. Some computer consultants made serious money. The planes continued to fly. The bug went on its merry way.
The European single currency was in existence for a year when January 1, 2000, approached — at least from the point of view of accounting transactions.
The notes and coins would become available a year later and for a while, shops would display prices both in euro and in the old national currency.
People remembered the time of decimalisation and the disappearance of pounds, shillings, and pence back in 1971, and they fretted that shopkeepers would, again, use the opportunity of the changeover to jack up their prices.
A new European Central Bank came into existence, headed up by a Dutchman called Wim Duisenberg. He was nicknamed ‘Dim Wim’. It was his successor, Jean-Claude Trichet, who would eventually help to turn down the lights across Ireland.
Ireland had worked hard to qualify for the euro team of countries centred on the continent of Europe. This was really a French project largely foisted on Germany which lost its beloved Deutschmark.
Britain had stayed out of the project. Its prime minister, Tony Blair, favoured entry to the eurozone, but the country’s powerful chancellor, Gordon Brown, exercised his veto.
He would have remembered well the humiliation endured by the Tory government under John Major in ‘Black September’ 1992 when the UK was forced out of a predecessor currency system.
This humiliation would haunt the Tories for many years, destroying their reputation for competence and ultimately setting the stage for the Brexit referendum vote in 2016.
Irish entry to the eurozone, meanwhile, ensured that funds would be lent to this country at really competitive rates of interest. We did not know it then, but this would amount to a terrible curse.
A few of us would end up like those spendthrift characters headed down the road to penury, painted so brilliantly by the 18th century artist, Hogarth.
Many more would wake up to the realisation that carefully husbanded investments had suddenly shrivelled away to almost nothing.
It was UK-based banks, such as Bank of Scotland Ireland, which led the way in introducing competitive loan offers into the Irish market, forcing down mortgage rates across the board, helping to stimulate a housing boom.
We would be gifted cheap money on easy terms for a while and would convince ourselves that we were truly rich as many a farmer’s field was turned into a goldmine at the flick of a bank manager’s pen.
On New Year’s Eve 1999, however, Ireland was still a star performer in the fiscal class, having spent the preceding seven years as the EU’s fastest growing economy. That year, the Government recorded a fiscal surplus of 3.3%.
As The Economist magazine put it, “Ireland is flush. So is its Government.”
The then finance minister, Charlie McCreevy, had just unveiled a giveaway budget along with controversial tax reforms. The move to assess married couples as individuals outraged traditionalists at the time.
The State was also loosening its belt. We were on our way into the naughty noughties with years of giveaway budgets to come before the inevitable day of reckoning.
The Government coffers were already full as a result of the privatisation of the national telecommunications company, Telecom Éireann — afterwards renamed Eircom.
Amid much hype, shares were sold to 575,000 investors. The company’s mobile communications arm, Eircell, was sold off at a discount to Vodafone in May 2001, the board having endured a vocal campaign led by then-senator Shane Ross and media pundit, Eamon Dunphy.
The shareholders — this writer included — took a bath. Those who held on lost 35% of their initial stake. The company’s ownership changed six times over a period of decades. Tony O’Reilly’s Valentia consortium was a big winner.
Investment in the country’s broadband infrastructure suffered, prompting the Irish Congress of Trade Unions (Ictu) to state: “This must rank as one of the biggest mistakes made by an Irish government prior to the disastrous bank guarantee of September 2008.”
Ironically, Eircom employees hit the jackpot with their Employee Stock Ownership Trust netting €750m. This deal had been negotiated by their chief union leader, David Begg. He later took over as head of Ictu.
At the time, however, it seemed more the case in Ireland of ‘onward and ever upwards.’ Foreign direct investment from the US, in particular, into Ireland was buoyant as the so-called ‘dot.com boom’ reached its apotheosis in Wall Street and beyond. The Irish software sector, in particular, was riding high.
In London, the fever took hold. Young tech entrepreneurs, such as Brent Hoberman and Martha Lane Fox, were soon being lionised.
They would eventually sell on their company, Lastminute.com for £577m.
Internet companies — nearly all loss-making — were accorded breath-taking valuations as investors placed heavy bets on an online future that would eventually arrive. Many players, however, got their timing and their individual stock analysis, badly wrong.
Irish tech entrepreneur Fran Rooney was riding high as CEO of Baltimore Technologies. Following its flotation, its share price soared. The company joined the prestigious Ftse-100 list. At one point, Baltimore’s market valuation exceeded that of Bank of Ireland.
Companies such as Riverdeep, Iona, and Trintech became household names netting large sums for promoter, investor, and senior manager alike.
I glanced at a few archived back issues from The Economist from that era.
This was a time a when the US was definitely top dog all on its own and Bill Clinton’s centrist presidency was in its latter stages, the president having recently come unscathed politically through an impeachment process following the exposure of his relationship with White House intern, Monica Lewinsky.
On September 9, 1999, among the topics covered by the magazine were: US-Chinese relations, China’s ‘cooling economy’, money laundering in Russia, the reform of the North’s police force, the rise of biodegradable materials, and the unveiling of his team by the European Commission president, the Italian politician, Romano Prodi.
By 1999, the internet had arrived. At the time, the world wide web was seen as a major boon. The dot.com boom was all about a realisation that all this capacity could be put to commercial use.
At the time, I considered that these developments would pave the way for much more home-based working, less long-haul computing, and an end to the age of the large office block. Nothing of the sort has occurred.
But most of us had yet to sample the smartphone and social media, not to mention the extraordinary rise of Amazon and its huge impact on the high street and on retailing in general. Society is still grappling with the consequences. Many Irish firms are struggling to adapt to online retailing.
Few foresaw the huge impact of globalisation: The scale of the shift of production activity to Asia and the effect on Western economies as funds flowed back into the banking systems from countries such as China which were generating huge surpluses.
In 1999, Russia was still stumbling in the direction of democracy though the growing pains were huge. Across the Western world, governments still operated by consensus.
There remained faith in the mixed economy based on free trade, loose regulation, a slimmed down public service, strong welfare, and cuts in income tax.
In Ireland, the experiment in social partnership was in full swing. It brought many benefits, in its early stages, though critics would argue it may have led to complacency and the building of excessive costs into the system.
By 2001, the dot.com bubble had burst.
It resulted in considerable pain for investors and, as if in compensation, governments and central bankers were happy to collude in a policy of easy money that would ultimately end in tears.
The late 1990s were the best of times, but they helped give birth to something altogether more sinister.