Time to face up to worst case scenario - General election 2016

PAUL O’CONNELL never led any of his teammates to heroic acts of defiance by telling them their opponents were magnificent athletes, wonderfully skilful players, do-or-die competitors, and all-round good blokes who phoned their mother most nights.

Equally, there aren’t too many votes in telling people that another economic crisis is a very real possibility. Negativity, consumer sentiment, and all of those mercurial indefinables have a way of being self-fulfilling. Gung-ho candidates naturally prefer to ooze optimism even if that means being unrealistic. This is especially true in a country where we’re far happier to shoot the messenger than face an uncomfortable reality. Nevertheless the growing evidence of uncertainty in international markets cannot be ignored and all Oireachtas candidates must have a plausible answer to the dreaded what-if-it-all-goes-wrong question.

We may be seduced by best-in-class growth predictions but our smugness is challenged by a international economic basics. Global markets yesterday sought refuge in the Japanese yen, gold, and top-rated bonds, and dumped US dollars believing the Federal Reserve will not increase interest rates. The dollar hit a 15-month low on the yen, and gold, the ultimate refuge in challenging times, hit its highest since May as a wave of pessimism swept trading floors. Europe got off to a torrid start, with Britain’s Ftse 100 down 2.3%, Germany’s Dax 2.4% lower, France’s Cac 40 down 2.8%. In Ireland, the Iseq was down 1.9% or 114.30 points to 5,780.41. AIB shares were down 7.14%. Some €4bn was wiped off the Irish market on Monday with the index closing down 5.4%. This was its worst performance since August 24, 2010, when banks were on life support and dependent on tax-funded restructuring.

Oil prices, the great international leveller, have this year surprised even the most bearish punters by dropping 18%. On January 12 West Texas Intermediate (WTI), America’s benchmark, briefly dipped below $30 a barrel, its lowest since 2003. Standard Chartered has predicted that oil might have to fall as low as $10 a barrel before speculators concede that “matters had gone too far”. China’s economy, that huge, mysterious catalyst for world growth, is contracting and sending a ripple right around the globe. The Russian economy is a basket case supervised by a kleptocracy.

In reality the last economic crisis never really ended and another one may, unfortunately, loom. Europeans have endured years of unemployment or underemployment, frozen or falling living standards. In most countries state services have been reduced or rendered unfit for purpose. This decline has brought huge gains for Europe’s far-right parties who stand ready to exploit any new downturn. In the US that decline is the driving force behind Donald Trump’s frightening progress. Our politicians promise a land of milk and honey but unfortunately a small, open economy like ours is only so much flotsam and jetsam in terms of international markets and we would be very foolish not to consider how we’d ride out another devastating storm. So demand a plausible answer before you promise your vote. Doing anything else would be, once again, dangerously delusional.