Burton’s cheap criticisms of bank guarantee have added up for her
It’s not the voice. It’s the blatancy of her populism. Throughout the financial crisis, she kept up, as finance spokesperson for the Labour Party, a simplistic narrative borrowed from a fairy story.
The characters were crudely drawn. The baddies were the bankers, the bond-holders, the developers and Fianna Fáil, and some, or all of them, were sailing away on a yacht together.
The goodies were you — if you had a vote. The baddies and the goodies were pitted against each other in a Titanic struggle between good and evil, with only Joan as referee.
“He is the Minister for Finance,” Burton said, in the Dail, of Brian Lenihan, following the bank guarantee in 2008, “so where is his big stick? The big stick was taken out on the poor pensioners, who got a belt from which they will be reeling for years. Where is the big stick for the bankers?”
You might remember that the “belt” to which Burton was referring was the decision to limit medical cards to over-70s to those whose incomes were below a certain threshold, rather than extending medical cards to all over-70s, as a previous, Fianna Fáil-led government had done.
I would have thought that was the kind of ‘blank cheque’ that Joan said Labour didn’t write. But, oh no. They write blank cheques for goodies, not for baddies. Until they’re in government, where they’ve lowered the income threshold for a full medical card for a couple over 70 from €1,200 to €900, in this year’s Budget, to say nothing of the disastrous cull of 30,000 discretionary medical cards.
Back to the baddies, though. What kind of finance spokesperson suggests to the minister that he should approach the banks with a “big stick”? A very popular one, is the answer. When talking to Labour friends about the leadership contest to be decided tomorrow, I told them I’d back Alex White if I had a vote, because he has specifically promised “honesty”, and I see this as a comment on Burton’s unashamed populism.
“Don’t take Joan away from us,” they said. “Joan was all we had at the doorsteps.” Because right from the moment Joan found herself centre-stage, as opposition spokesperson during the biggest financial crisis in the history of the State, she played it for every last ‘ooh’ and ‘aah’. She was in a happy position: enough parties had supported the State guarantee of the banks, so the fact that her party did not to support the guarantee had no effect except to make them popular.
If the State had failed to extend a guarantee, Anglo-Irish would have crumbled, followed, within a few days, by AIB and Bank of Ireland. This would have led to “a catastrophic, immediate and sustained economy-wide disruption” that would have cost “tens of billions of euro” and had “very significant ... social costs”, said Central Bank governor Patrick Honohan, who quibbled only with the inclusion of subordinated debt.
The cataclysm didn’t happen, because every other major party in the Dáil took the bullet for the outrageous levels of bank debt that had accumulated during a housing bubble as big as any the world has ever seen.
Leaving Joan standing, and providing people with what they wanted, which was a narrative that blamed as few people as possible. We began to weave the fiction of the “catastrophic” late-night decision but for which the people of Ireland could have walked away from nearly a decade of greed, speculation and light-touch regulation.
But there was no walking away. That’s the truth. “The damage had already been done,” as Honohan wrote. The only choice left was whether to try to retain our position in the global financial world and shore up as much of our social infrastructure as possible, or walk away from the global financial world and put that social infrastructure at still more risk.
No party in Government in Ireland has ever taken the latter path, because they think it would be much costlier. I look forward to hearing Sinn Féin admit this when they get into Government and continue the policies of the preceding two governments.
Let’s not forget that they voted in favour of the bank guarantee, and let’s not forget that that’s a perfectly credible left-wing position. The banks should have been heavily regulated in the first place, but, unfortunately, you can’t rerun history and edit out the bits you don’t like.
By all means, let’s put a ‘sunset clause’ on Cabinet confidentiality, admitting every syllable uttered in the lead-up to the bank guarantee. But I’d be more interested in the conversations Sinn Féin had when they realised their electoral success depended on parroting Joan Burton’s simple ‘goodies and baddies’ line, and did a U-turn on supporting the banks.
Let’s not forget that the basic policy of strutting up failing banks is a response to the horrors of the 1929 Wall Street crash and the ensuing Great Depression, which is, ironically, one of Burton’s favourite history lessons. When she cited the depression story, Mr Deeds Goes to Town, in 2008, saying, “We need a Mr Deeds who will, without fear or favour, sort out what is valuable in the banks and what has lost value,” she could have been talking about NAMA.
Except that, predictably, she opposed NAMA. Because what Burton did, at all times during the financial crisis, was to demonise the measures taken to clean up the mess rather than the mess itself.
THAT most of the media could overlook this entire history, and attribute Burton’s failure to get a financial ministry, in this Government’s first Cabinet, to the fact that she is a woman, shows them going to their task with little more rigour than opposition politicians looking for votes.
Finance Minister Michael Noonan’s interventions on the financial crisis, in the Dail, were clear-headed and that is why Burton’s hopes of having a financial ministry were dust well before the general election.
The feminist hoo-haa over Burton’s disappointment provided the new Government with a wonderful smoke-screen behind which to re-guarantee the banks twice, and decide not to ‘burn’ senior bond-holders, despite new legislation brought in by Brian Lenihan in January, 2011, that specifically allowed them to do so without hurting depositors.
Noonan is not a stupid man and he may, indeed, have been taking the cheaper course by not ‘burning’ these bond-holders. My worry is not so much that the Government has broken its promises on banking, as that Burton make a pretence of trying to keep them. But I think that’s unlikely. Because, by the time this column is face down on the floor mopping up its first spill in your kitchen, Burton will probably be Tanaiste and the fairy-tale she concocted will be told by Sinn Féin on the opposition benches.
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