Dublin's New Land War
There are some lessons for free market ideologues, not the least of whom is Guido Fawkes (a blogger whose posts I like a great deal), in what is happening in Ireland. You'll recall that NAMA plan. It was a plan to set up a National Asset Management Authority, a bit like McCain's 'toxic bank scheme' in 2008.
The idea is that the state could buy, transfer and underwrite toxic mortgages, and move those assets to a new body. The banks would also support the new body minimally, leaving themselves free to lend and to rebuild their balance sheets without being nationalised. State payments for the new assets would move money to the banks, and put a floor under losses.
Many of those who hate and despise the idea of government actually asserting control over things it pays for liked this idea. It was contrasted to Gordon Brown's 'cash for shares' deal, and to Barack Obama's 'subsidy plus levy' plans. When accompanied by a bank-friendly budget, people saw it as fair.
But, well what's this? The banks and associated lawyers not playing fair? Properties being transferred being rated as worth far less than previously estimated value with the government being forced to cover the difference? Lalaland valuation from real estate people in the past or lies from banks now? Surely some mistake.
It's no mistake at all. Ireland's role as a pharmaceutical and insurance base in Europe for many big firms may well see it not slump as much as it could. But everywhere you look in Dublin, a country that gave itself over to an unrestrained market is being brought face to face with moral hazard--with the idea that freedoms that give people rewards if they are dishonest will be abused. It's a sign of the decatholicization of Ireland that anyone is surprised, though tediously predictable that big business would blame government for it.
Take rents in Dublin; previously scandalously high, the extortion in Grafton Street, noted last year, and in St Stephen's Green is driving people to the wall this year. The only companies able to pay the rents are big British high street chains of questionable value.
Ireland, of course, once fought a land war against the British 'absentee landlords', but those landlords were never short of Irish people to help their cause. There's something grasping about the prices in the republic at the minute that speaks to a certain sort of moral cowardice. Does it really make sense to allow landlords to maximise revenue because of the pressure from banks on them at the obvious expense of the collapse of businesses that could pay to a more stable owner?
I also note the closed stores on the main shopping streets; the way revenue and pensions 'reforms' that will cost thousands of euros a month are being forced on small businesses; and the massive indulgence of an academic class that does not seem to be transferring gains in its status, or at least those of its administrators, to the country in terms of productivity.
I was in Cardinal Newman's University Church early this morning. It's a gem of a building. A man whom I took to be sheltering from the cold asked me if I had any money. When it isn't only the cod-gypsies on main street (and every ATM has a native beggar between the cashpoints here, as well as colourful versions of the Queen of Sheba rattling coffee cups on most corners), but the sub-holy people in church who are begging, don't you know that you are in serious trouble?
In Britain, and for the American political-media class, recession is 'over' and those in the upper middle classes can pat themselves on the back and say 'the stimulus and quantitative easing worked'.
Ireland has a way of threatening storms in miniature that tell you something different. Shops and businesses are hanging on by their fingernails. Banks are not going to behave with any sense of the wider community, because they can't, in any system of organisation. The first storms of the great recession are over. However, it looks to me like we are headed full steam for something even worse.
Perhaps that's what recessions this size look like. I have, after all, been in Jeremiah mode for a couple of years, and am reminded of Jonah, put to all that trouble just so God could spare the city and make him look like a tool.
Such trouble we are in, though. Don't let anyone tell you, in the midst of the 2010 election cycle--that it is over yet. One bank slip, one oil price rise, one unpredictable event--and we are back into the high waves and whirlpools.