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.

Comments

DBC Reed said…
As a land taxer and therefore a supporter of Davitt ,I tend to the opinion that the land wars were justified ,( though Henry George was dubious telling the Irish in his The Irish land Question that they were no worse treated land-wise than anybody else and to make common cause with the English working-class).Of all the solutions that were then being touted,Land nationalisation,land value Tax and Peasant Proprietorship ,the third, successful, option realised by all those land acts converting leaseholds into freeholds only meant the replacement of a few English landlords by hundreds of Irish ones as both Davitt and Connolly ,though hating each other, pointed out.A fixation with widespread ,but not universal,land ownership combined with cheap Euro money is surely to blame for the Irish property bubble and crash.But land value tax has made a comeback and is now official coalition government policy.Feasta is a useful source of Irish LVT information and pleasingly one-sided argument.
Martin Meenagh said…
I was shocked by how badly Ireland has been burned by this nonsense idea that when a bank loans you most of the money for your house that you own it. Ghost estates, commercial rackrents and lies upon lies about toxic commercial mortgages are choking the republic.

It isn't just Ireland though. Wherever this toxin has touched, there's been a crash, not unconnected with the mortgage-related products that unregulated banks used to fuel the derivatives boom. 44% youth unemployment in Spain, hundreds of billions in hidden German bank debt, a trillion-dollar deficit in America and Britain's accelerating crisis--they're all tied back to this. We just need to find a way to tie the banks and the state to the land.

So I agree with you, and not for the first time with James Connolly and Michael Davitt too. There is a Northern Ireland side to my family as well as the Donegal one, I might point out....

many thanks for the comment. I'm back off to Dublin in a couple of weeks time and will explore what's going on there further. Just listening to conversations and looking around made me wonder what a mess the country had got itself in, when I wasn't lost in the baroque section of the national gallery. God save Ireland, frankly--and God help her.
DBC Reed said…
Brit land taxers are starved of news about what gives in Ireland with LVT.Looks like its not going to make it (be enacted).If you hear anything on your next trip..?There is a good LVT blast by way of background on the internet from Emer O'Siochru who has been until recently our main source of Irish gossip,(though there is a lot of uncertainty how we pronounce her name. Any ideas,phonetically rendered?)
Martin Meenagh said…
Hi--I did try and respond earlier but the computer failed! Aymer ohshuckrew is what I'd say.

The land value point is getting stronger and stronger--the republic's been sold for greed and the delusion that shared equity on the basis of bank credit is full ownership...

God help us. I'm just waiting for phase three of this storm the idiots are all declaring over to break.
DBC Reed said…
Crikey! None of us has been pronouncing it anything like that.
If you've been in the LVT game as long as I have,you don't get your hopes up,even with unpredictable Ireland!