A NEW ‘national question’ stalks the land. The historical civil war between pro- and anti-treaty was replaced by extreme points of view on the North. These were represented as either a ‘Brits out’ and unitary state perspective or allowing a veto for unionist consent.
The Belfast Agreement, subsequent referendum and devolution delivered a consensus.
Division now relates to the nation’s solvency. The two camps separate into those who believe we are pursuing a path towards sovereign debt default versus those who decry the doomsday naysayers as the biggest obstacle to economic recovery. The Government are the principal cheerleaders of optimism.
Their charges of ‘pervasive negativity’ seek to decry critics as making a bad situation worse – even undermining the national interest. The guilty parties comprise academics, international rating agencies, economists, commentators and the media.
The question of motive is worthy of analysis. What can the Cassandras gain by their pessimism and gloom? It’s hardly audience ratings as all research indicates a switch-off from excessive bad news. In contrast, the Government has its credibility on the line. Its fiscal and banking plans must work in order to restore any vestige of standing.
Which side are you on? It depends on your pocket. Few remain unaffected by the downturn. Public sector workers have been subject to a pension levy and pay cut, while promotion prospects are receding. The recruitment embargo means less staff doing more work.
The self-employed are clinging on by their fingertips, hearing that some 38,000 indigenous businesses face failure. School-leavers and graduates can’t get jobs, with 455,000 on the live register. Somewhere in the region o f 120,000 are now emigrating on top of 100,000 who have already left, while 20,000 college applicants have not had a CAO placement offer as people seek to educate their way out of the recession.
Facts determine the truth. Alan Dukes tells us he cannot guarantee the Anglo Bank losses will not exceed €25bn until there is visibility on the property market, ie, when a floor price will be established on asset values.
Last week, I heard of an anecdote of a four-bedroom semi-detached house being bought in a most fashionable part of Dublin 4 in 2006 for €1.2m. The owners are clearly in negative equity. They believe the house is probably worth €750,000 today. The property is not for sale. A neighbouring house in the same estate can obtain a willing tenant at a rental of €2,000 per month. This establishes the current real capital value of the house. If €24,000 per annum represents a 5% rate of return, we can multiply this rental by 20 to establish the home is worth €480,000.
This represents a 60% loss on prime residential property. The impairment on less fashionable or worse located assets can only be greater.
This level of write-down is fundamental to the ultimate viability plans of NAMA and all our banks, subject to the state guarantee. The ready reckoner information is there. We want to deny acceptance of reality. The wet blanket brigade have crystallised these losses at €38bn for Anglo and a taxpayer hit on NAMA of €12bn.
When the costs of the banking bailout are added to the cumulative budget deficits for the recession, €100bn will be added to our national debt.
There is little to gainsay these facts. Concealment is not a sustainable policy. The figures are so large that many just allow them to sail over their heads in bewilderment. Acknowledgement would add to the Government’s integrity. Making the media whipping boys is futile.
Positives are also evident. Over the past year, sterling has appreciated by about 10 pence in the pound relative to the euro, greatly enhancing competitiveness in our nearest largest market. Cross-border shopping has abated. Low 1% ECB interest rates are in stark contrast to the penal 17%-18% charges applying in the 1980s. Steep deflation has facilitated Irish cost correction. Our infrastructure standards have never been better: major improvements in our motorway network, Luas, Terminal 2, Aviva Stadium, Dundrum shopping centre and third-level colleges are lasting landmarks of physical development.
Agriculture is turning the corner with greater returns for dairy, meat and grain producers. EU and US export markets reveal significant growth opportunities. Collectively, these truths provide a genuine basis for confidence.
These plusses and minuses are not subjective, they are matters of fact. Instead of debating and decrying the black hole of our public finances, we should accept it and move on to the subsequent stage. Faced with these setbacks, how do we respond as a people to this adversity? Let’s not deny its existence, but acknowledge and confront it. Let’s accept we may be every bit as bad as Iceland and Greece. But we dust ourselves down, roll up our sleeves and get stuck in. Our reaction to adversity is more important than diminishing the extent of the crisis. At a personal level, people are suffering different levels of quiet despair. They may fantasise about punishment beatings and internment for wayward developers and bust bankers. We know it won’t happen. Recourse to alcohol (in medicinal quantities) provides temporary respite. Sport is probably our best form of escape with its passion and emotional excitement.
Whether your private relief comes from DVDs, Facebook or music, the key point is that we must overcome these exceptional challenges instead of wishing them away. We cannot be reduced to a nation of whingers and moaners. We must take responsibility for recovery.
LAST Friday, after a busy week of broadcasting on radio and TV, I caught up on three essential calls. Firstly, to talk to a close relative after the first week of chemotherapy; secondly, to chat to someone recovering from a near fatal farm accident; finally, to reassure a close friend who is today undergoing prostate cancer surgery. Our national problems seemed to pale into insignificance as we conversed.
The calls reinforced in my mind the old maxim, “Life’s a bitch... and then you die”. We can bemoan a lost decade worse than the 1950s or 1980s or we can immerse ourselves in resolution. Life is a game of poker – not every hand you are dealt is full of aces.
My recipe for survival is simple. Tell me the worst prognosis. Throw your nastiest manure. Then procure the best damage limitation scenario and dedicate your energy to activity. Focus on the solutions. Live in the moment. You may be reduced to a busy fool.
Virtually everyone has the opportunity to get stuck in. Not just work – perhaps relationships, voluntary or community activity or a hobby. The miniscule satisfactions from hard work and full application are part of the tiny steps on a longer journey.
Ireland is undergoing an unprecedented baby boom. This is the ultimate definition of long-term optimism. Let’s dedicate ourselves to hand on the best possible baton to those five million people.
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