2011 - The Year of Living Dangerously
StubbsGazette Retail Issue
It was a year that ended with the most inglorious of anniversaries: for how long henceforth will we be reminded annually of the national humiliation of the national bailout?
Over nearly 90 years of independence, and the crushing economic crises the state has suffered very often through rank mismanagement – the economic war of 30s, the depression and fiscal disaster of the 70s and 80s – it was commonly speculated that we might perhaps be better off back in the hands of our former colonial master. Or perhaps to hand over our economic sovereignty to Brussels. Maybe even take up as the 51st US state.
Speculated but not seriously considered. Now we don’t have a choice. Almost incredibly, that’s where we are. And, as if to underscore that fact, the German parliament now finds itself in a position where it is able to consider our Budget before our own cabinet.
Of course, just as personal failure can be somewhat mitigated when colleagues and rivals fail also, so the looming disaster in the Eurozone puts our own faults in perspective. Now that giants such as Italy, Spain – and even France – find themselves in the eye of the storm, perhaps our own performance can be seen in a new light. Would that there was any consolation to be had for Ireland in this spreading gloom as, thanks to our neighbours’ escalating troubles, we find ourselves forced to tear up the growth projections on which our recovery plans are based.
A secondary – and not insignificant – factor in the unfolding Eurozone crisis is the fact that have long since dropped off the front page news. In fact, we’re barely in the paper. For most of this wretched year we were at least hopeful that one of these days the Europeans would reward our valiant attempts to meet their impossible terms. Now, with unsecured Anglo bondholders being paid in full – some €720 million last month, €3 billion more to come next year – that idea now seems like what it was – a wishful reverie.
And yet there are some shafts of light in the gloom. The economy is growing again – or at least that part of it that sells itself abroad. We’re making our bailout numbers – although the fabled low-hanging fruit is all but harvested.
In a sense, the story of the past year has been about chasing shadows. For all the immense volume of words written about the crisis and Ireland’s predicament, we are still confused about what it all means. Panic does what it usually does: it leads to wooly thinking and dysfunctional decision-making.
For example, successive governments have spent years and trying to persuade the public of the critical necessity of providing for retirement and not relying on the state for pensions – and so in May the government hits already decimated private pension funds with an 0.6 per cent levy.
Or, to take the banks: the national strategy here is to get them profitable and sold but at the first opportunity the government berates them to the gallery for trying to restore margins to sustainable levels. Selling banks abroad is not easy when there is a perception that the government is in the boardroom.
For businesspeople, 2011 threw up challenges the likes of which have never before been faced. And chief among these is a state of affairs where it is all but impossible to plan.
Anybody in business and over 40 knows that this is not a country where business success comes easily. It might be said that in the past the economy was something of a rollercoaster – although prior to the sustained boom and bubble it was more lows than highs.
Coping with even relatively sharp dips and peaks is manageable but the economy right now can not so much be likened to a rollercoaster as to a field peppered with landmines, any of which could go off at the stroke of a pen in Kildare Street or Brussels.
The other dilemma is the risk and reward equation. Across the country business-owners are trying to guage the probability of acceptable returns for heightened levels of risk and many are making the decision that it’s just simply not worth it.
Yet there remains the strong sense that, were it not for the debt millstone that we have placed around our collective neck, Ireland is an incomparably better place than it was prior to the 1990s. You don’t have to travel very far from Dublin to recognise how far the country has come: it is a country where it is now possible for ideas, energy and ability to be identified, encouraged and rewarded. Let’s hope that this is enough to see us through.
Predictions for 2012 can only be gloomy but everything is contingent on the future of the euro. It is impossible to contemplate that Ireland can continue in the single currency without signing up to the most stringent of fiscal conditions overseen by the creditor states. The horsetrading, posturing and positioning are already well under way, with Taoiseach Enda Kenny and Chancellor Angela Merkel setting out their opening gambits.
Ultimately, Ireland and the euro may be saved in some form because the alternative for our creditors (and Italy’s and Spain’s) is even more horrific.
Other than that, the prospects of an amnesty are limited. We could perhaps throw the final of the European Championships to Germany in return for a large fee. Or perhaps the Department of Finance might find a stray decimal point that reduces the national debt by, say, €50 billion or so.
In days like this, predictions are foolhardy. Looking back is sufficiently fascinating and in 2011 there was one standout event that in its sheer human dimension relegates all the rest and that was the death of Brian Lenihan. As the months go by and as the scale of the catastrophe that was the bank guarantee becomes ever more apparent, so Lenihan’s political legacy as Minister for Finance becomes ever more compromised.
Yet, set that beside his exemplary and towering personal courage in the weeks and months before his death and you regain a quality that is incredibly short supply in times of panic.
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