The cowards have failed to act as our mad debt soars by €60m a day

Each passing week we add €400m to the national debt to keep the show on the road. We’ll be lucky if the fiscal outcome for 2009 is limited to an appalling gaping deficit of €20bn. Political decisions alone are responsible for this madness. We can’t blame Lehman Bros, subprime lending or the credit crunch

THE parliamentary party “retreats” this week kick-started the annual political cycle. The most recent opinion poll reflects a growing disenchantment with all party political leaders. Their satisfaction rating peaks with Eamon Gilmore at 47% and plummets with Brian Cowen’s approval rating at 15%. The minimum reduction is two points while John Gormley is minus eight. The disconnect between the electorate and their political leaders has never been greater.

The body politic is taking a kicking. Excessive lavish expenses have copperfastened disaffection between the governing and governed. Paradoxically, leadership has never been more required to chart a clear course for the country’s survival. An autopilot approach cannot suffice for a nation facing economic peril. Decisions taken in 2009 will leave an indelible mark on future generations.

The Lisbon Treaty referendum, banking crisis, gaping budget deficit and loss of competitiveness combine to threaten our nation. The next 100 days will determine our prospects of economic recovery. Failure to deliver on any one of these could catapult a Dáil dissolution and general election. Positive advocacy, conviction and self-belief need to be asserted by our politicians to confront our present crisis.

It appears referendum Yes voters are shifting to Undecided. The No campaigners seek referendum rejection on the basis that “it’s the exact same wording and treaty that was previously rejected”.

Herein lies the real politique of the situation. Despite the previous No vote, the other 26 EU states have proceeded to ratify the treaty. Their leaders, representing 99% of the EU population, have told Ireland they are not prepared to alter the treaty for us. They have finalised their own national ratifications. We were assured by the No side last time that the treaty could and would be amended. They were wrong.

The debate on its content is closed. It’s not open for renegotiation. Instead it’s simply a case of whether Ireland opts out or signs up. If we were to reject the treaty again EU leaders would inevitably find a mechanism for member states to proceed without us – sidelined and isolated.

Our politicians have been less than candid about our dependence on the European Central Bank over the past year. Up to €100bn has been pumped into our government bonds and banking system. If we were not one of the 16 states within the euro currency, we could have been cut loose like Iceland. The entire NAMA proposition is being underwritten by the ECB. How could we conceivably take leave of our senses by spurning and jeopardising the relationships that are effectively our economic lifeline? Cheerleaders for NAMA are using similar refrains to those used in 2005-’06 – then it was unpatriotic to talk down the economy. Critics expressing doubts about the sustainability of the Celtic Tiger, property bubble and credit explosion were ridiculed as anti-national doomsayers. We now know Emperor Ahern had no clothes, as boom turned to bust. Current ministerial assertions about there being “no alternative” to NAMA must be rigorously stress-tested. Every NAMA advocate should be assessed for their latent links to banks, property owners and developers. All of these have to fulsomely favour NAMA, out of self-interest.

As a NAMA sceptic, I have noted significant shifts in Minister Lenihan’s position since June. While deriding his political critics, he now only intends to pay distressed current market values for toxic assets. A much more severe impairment and haircut is now being proposed than the original 20%. The “Honohan amendment” proposed medium to long-term value increases in property alone would result in top-up payments to banks. This now seems acceptable. Bank recapitalisation and state majority ownership was rejected outright last April. Now it’s deemed probable.

Further refinements are necessary in relation to the operation of NAMA. The spectre of cronyism and favouritism has not been adequately dispelled. Complete transparency will be required in relation to NAMA’s handling of all property portfolios. Failed banks and developers should be prohibited from buying back their distressed assets in years to come.

Competitive tendering must be legally obligatory in the future disposal of any asset. Foreign property mortgaged on Irish bank loans does not deserve support from the Irish taxpayer.

I remain to be convinced that good performing loans need to be managed by NAMA. How will credit be made available to business? Next week’s Dáil debate must resolve these outstanding flaws.

Each departmental secretary general has until tomorrow to submit to the Department of Finance their proposed savings for expenditure in 2010. An overall reduction of €3bn is being sought. The Bord Snip menu will inform these proposals or alternatives can be put forward. The areas where Brian Cowen can be most fairly criticised has been his failure since 2005, as Minister for Finance and Taoiseach, to control public spending. Our public finances are out of control. Every day, state expenditure exceeds revenue by at least €60m. Each passing week we add €400m to the national debt to keep the show on the road. We’ll be lucky if the fiscal outcome for 2009 is limited to an appalling gaping deficit of €20bn.

Political decisions alone are responsible for this madness. We can’t blame Lehman Bros, subprime lending or the credit crunch. Our Government is spending money it doesn’t have.

While the media and vested interests have debated Colm McCarthy’s report all our politicians have been absentee bystanders instead of immediate decision-makers. The lack of urgency in reducing public expenditure is appalling and nauseating. Any business would have implemented several rounds of emergency cost-cutting already.

A PAINFUL price will be paid for this indecision and paralysis. Any wonder this Government has the lowest satisfaction rating in the history of polling. Bland rhetoric about tough future decisions isn’t even a fig-leaf for proper governance.

Many politicians seem to accept the inevitability of a change of government at the next general election. FG (34%) + Labour (24%) gives a combined total of 58%. The FF (17%) + Green (3%) total lags 38% behind the opposition. It’s hard not to conclude that the present administration is not in the same category as our zombie banks and developers.

A year ago I advocated that Cowen should get on the front foot and courageously pursue a “back me or sack me” leadership stance. His recent media appearances fail to convince that even he believes in his own convictions.

In present circumstances it is not good enough merely to seek to cling onto power. Risks have to be taken to procure national economic recovery. Vested interests have to be tackled. Exorbitant pay, perks and expenses for John O’Donoghue and Prof Brendan Drumm proceed regardless. Ordinary voters are cynical about the blatant lack of accountability.

Politics is ultimately about power. If you don’t use it, you lose it. This may be the epitaph of the incumbent Taoiseach and Government. Cowardice and indecision at the top is the reason why poll standings of every party leader continue to plummet.


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