Banking Inquiry and the Celtic Tiger Villain

Two well-known villains were back in the media last week, making headlines for different reasons. Lance Armstrong was in France to ride the Tour de France route as part of a charity race to raise money for leukemia research, while at home in Ireland, the chief Celtic Tiger villain, Bertie Ahern, appeared before the Banking Inquiry.

Armstrong lied and cheated his way to the top of cycling. Did Bertie, the man Charlie Haughey said was “the most cunning and devious of them all”, do the same, lie and cheat, to propel himself to the highest echelons of Irish political life? The drug tests are conclusive on the one-time cycling legend, but the record is a little bit murky when it comes to the politically nimble Ahern.

He is viewed as one of the poster boys for political corruption in Ireland, but more interestingly for me, is the casting of Bertie as some of kind of heartless mastermind who orchestrated an Irish property Ponzi scheme. This is nonsense. His government’s policies certainly set the stage for the bubble and left us unprepared when the bad times hit, but he simply gave the people what they wanted. Why else is he the second longest serving Taoiseach behind De Valera?

If anything, the affable Northsider is less a Bernie Madoff type and more like Jim Jones, the man who made infamous the term “drinking the Kool-Aid”. In 1978, Jones, the leader of the People’s Temple cult, convinced his following to participate in a mass suicide, drinking Kool-Aid laced with lethal potassium cyanide. 913 members of the cult died and the term has come to be used to describe those who have adopted an almost cult-like belief in a particular philosophy, an unwavering acceptance of an ideal.

In Ireland, almost everyone wanted to drink the property Kool-Aid. I was studying and working in the US from 2003-2007 so I was sheltered from the Celtic Tiger madness but I do remember the sage advice over the odd Christmas pint, ‘rent is dead money you should buy’. Bertie can be blamed for facilitating this mass frenzy to own or invest in property, but individuals who followed the crowd must also bear some personal responsibility.

In his testimony, Bertie said “from the time I was Lord Mayor of this city of Dublin and through being Minister for lots of things, but particularly Labour and Finance, I spent my time giving a positive message about this country”. That was his strength but it was also his biggest weakness. By taking a view that if you weren’t positive you were a naysayer, he missed an opportunity to better prepare the Irish economy for a hard landing.

Retired astronaut Chris Hadfield, calls it the power of negative thinking, ‘anticipating problems and figuring out how to solve them as part of a plan for dealing with unpleasant possibilities’. Bertie never did that, nor did anyone else who was complicit in the Celtic Tiger bubble. Nobody wanted to ask what if property prices don’t go up forever? But that’s what in happens in bubbles, the only way is up. It is not a new phenomenon!

For me, the Banking Inquiry is a waste of millions and public resources to tell us what we already know. The Central Bank and Financial Regulator spectacularly failed in their oversight duties, enabling banks to overleverage and engage in reckless lending, the public played their part in driving demand, while the incompetent political establishment – government and opposition – were focused more on votes in the short term than mapping out a sustainable Ireland for the future.

The resources dedicated to providing the political and business elite of that time a platform to shift the blame around, would be better served in addressing the legacies of the Celtic Tiger crash, in particular, the mortgage arrears crisis. Remember, the Banking Inquiry has no legal power to bring anyone to account for the massive tab the taxpayer was left with when the banks were bailed out.

The real question that needs to be answered is, why in God’s name are we, the Irish taxpayer, paying Bertie Ahern and Brian Cowen over €134,000 a year in pension benefits, soon to be increased to €136,000, with an unfunded pension crisis looming around the next corner?