Just read this blog - thought it was a prettry interesting account as to whats going down in Dublin ...
Some prespective from the epicentre here in Dublin.
This is NOT about a failure of the euro or a one-size-fits-all interest policy. It isn't even about a systemic failure of the 'European project'. What it is - put plainly - is a history of grotesque mismanagement by the previous Fianna Fail/PD government aided and abetted by the staggeringly greedy and corrupt triumvirate of bankers, developers and estate agents.
At the height of the boom, Ireland was raking in vast shed loads of cash through the temporary and - most importantly – one off taxes such as stamp duty, VAT and various taxes on labour. These temporary revenue streams were then used to fund a current account but PERMANENT spending spree by vastly expanding the size and the payroll of the Irish Public Sector. When these temporary income streams then evaporated around the time of the crash, the permanent outgoings remained and caused our deficit this year to reach a worrying 12%. Interestingly, there are no recurring property taxes or council taxes for private property in Ireland – this as a result of a political ruse in 1977 by the omnipresent Fianna Fail to abolish domestic rates (council tax) as a populist means of assuring their re-election. 33 years on and Ireland remains the only country in the EU to have no recurring property taxes and the failure to do so has had a terrible impact on the already suffering local government sector here.
This above scenario was then coupled with the advent of the euro and the ability of Irish banks to borrow mind boggling amounts of cheap cash typically from French and German banks who were quite happy to fund our hubristic folly. Not one politician in power had the guts or the wisdom to shout stop. Regulation and prudence were thrown out the window while we wallowed in our new sense of self importance. Like the emperor with no clothes, we delighted in hearing of how our per capita GDP was the highest in the world and how Dublin had more Mercedes Benz cars per capita than California, or anywhere else for that matter.
….and then we got found out. When the cost of the banking bailout is added to the enormous public sector overspend we hit a new statistical low – an eye watering 32% deficit – the biggest recorded deficit anywhere since the War.
It has been a true bonfire of the vanities - the greedy developer who bought and ‘flipped’ several prestige hotels in London for outrageous profit for him and his greedy cronies is now skulking somewhere in Switzerland and afraid to face the consequences of his stupidity - the greedy banker who conspired to ignore all the known rules of prudent banking lent vast sums of other people’s money on extremely shaky property deals and is now living the life of a virtual fugitive somewhere in Cape Cod trying to avoid facing the music - the vile head of an utterly corrupt and crooked building society (S&L) took a eur1million bonus for himself while at the same time getting a 2 BILLION euro dig out from the Irish taxpayer.
Anyone Irish reading this knows exactly who these 3 princes are.
But everyone else should know who the real political princes are – Bertie Ahern (previous PM) and Charlie McCreevy (Previous Finance Minister) are the real architects of this disaster. They presided over the boom and got out just before the bust. They oversaw a vast and permanent expansion of the public sector here fuelled by temporary tax receipts. They were quite happy to let the banking sector let rip with lending on a scale never seen in history. They let the housing and property boom rip without doing an iota to adjust tax policies to try and take some of the heat out. At the height of the boom in 2006/7, Ireland built approximately 90,000 new dwelling units. The same year, the comparable figure for the UK was some 120,000. We are a population of 4 and a bit million – the UK some 62 million. Think about that one. In Leitrim, a beautiful but isolated county some 2 hours from Dublin, they have an ‘overhang’ of property of some 300 odd percent! I.E they have THREE TIMES the number of houses they actually need.
Not content with fueling public sector expansion, the dynamic duo of Messers Ahern and McCreevy then introduced an whole array of property based tax concessions which had but one effect – they put more petrol on the fire. They also oversaw a disastrous policy to try and ‘decentralise’ the public sector away from the capital which resulted in subverting land and property prices in many remote cities and towns in Ireland. In hindsight, it is quite easy to see now that this policy was driven by little more than party political considerations – a shiny new call centre in Kilkenny will clearly do wonders for our local man.
I’ll leave the last word to Charlie McCreevy, the policy er, ‘brains’ behind much of this madness. “If I have it, I’ll spend it”.
That you did Charlie.
Comment